Chicago Heights sues Hammond over water supply contract
BY Teresa Auch Schultz email@example.com October 1, 2012 2:33PM
Updated: November 3, 2012 6:14AM
The city of Chicago Heights, Ill., is suing the city of Hammond over a dispute about whether Hammond can more than quadruple what it charges for water and concerns that the city might cut off the only source of drinking water for about 44,000 people in Illinois.
A lawsuit, filed Monday in the U.S. District Court in Hammond, says the two cities agreed 30 years ago for Chicago Heights to buy all of its drinking water from Hammond. Chicago Heights then uses this water for its own citizens and also sells it to the suburban communities of Glenwood, Thornton, South Chicago Heights and Ford Heights.
The contract allows for Chicago Heights to add 20 years onto the contract and it must notify Hammond of that wish a year before the contract ends, which is in November.
Chicago Heights has provided ntoification but is taking issue with Hammond’s proposed rate increase from 44 cents per 1,000 gallons to $2.20 per 1,000 gallons.
The suit says that Chicago Heights bought an average of 13.4 million gallons of water a day last year. At the current rate, the city spent about $5,896 for a day’s worth of water and about $2 million a year. At Hammond’s proposed rate, the city would spend $29,480 a day and about $10.3 million a year, five times the amount of the current rate.
Hammond Mayor Thomas McDermott Jr. defended the increase Monday, saying that Calumet City, Ill., was given the same proposal a few months ago and was happy to agree to it.
“Chicago Heights doesn’t like (our price), but they can say no,” McDermott said. “We’ll go find somebody else and they’ll be super happy.”
McDermott said the city decided to raise its rate for Illinois communities after Chicago, Hammond’s main competitor for water customers, raised its rates even higher. He compared Hammond’s water utility to a company and said a company’s main goal is to make a profit. When Chicago raised its rate, it gave Hammond an opportunity to increase its profit but still charge less than Chicago, he said.
“Don’t blame Mayor McDermott; blame Mayor (Rahm) Emmanuel,” he said. “He’s the one that changed the whole market.”
He did say that by increasing the rates for Illinois communities, Hammond can charge less to other Indiana communities and to its own residents. That in turn can act as economic development for the city by encouraging more people to move there, McDermott said.
The mayor added that the city is ready to cut off its water supply to Chicago Heights in November if a new contract isn’t reached.
“We absolutely plan to cut them off if we don’t have an agreement,” he said.
Chicago Heights is claiming that Hammond has breached its contract and wants an injunction to stop Hammond from turning off the water.
“If Hammond and the Water Department were to discontinue the water supply to Chicago Heights before such a time as a viable alternative source is obtained, it would risk a public health catastrophe,” according to the suit. “Thousands of households and businesses would be left without a practical source of safe drinking water.”
The lawsuit claims it would take Chicago Heights about five years and millions of dollars to establish another source of drinking water.
Chicago Heights has also filed a complaint with the Indiana Utility Regulatory Commission, asking for it to oversee proceedings that would help to establish a “reasonable” rate.
McDermott questioned whether the IURC would even have jurisdiction over a contract made between an Indiana city and an Illinois community.
If the IURC does not take up the case, Chicago Heights asks in its federal lawsuit for the court to set the rate.