Coldwater City attorney Megan Angel said Monday that utility customers appear to be in the crosshairs of a Royal Oak law firm that has won tens of millions of dollars in lawsuits against a growing list of municipalities.
Angel expects a freedom of information request from Kickham Hanley for billing addresses to result in inflammatory postcards asking customers to join a class action lawsuit against the city.
Angel said she expects them to challenge the city’s 1963 voter-approved charter, which gives 6.5% of utility revenue as payment in lieu of taxes. Revenue results in a large fund balance reserve.
“They kind of stirred up public opinion against public service. That’s really why I’m speaking to you today to try to give you a tiny bit of a head start,” Angel said.
The company has filed 28 lawsuits in the eastern part of the state. Most dealt with stormwater charges. He won some claims and lost others on appeal and settled most after initial wins.
As a result, Kickham Hanley received millions of dollars, 33% of the recoupment. Citizens received a few hundred dollars each, repaid over several years. In Waterford, it was $5.50 per year per property for four years.
Angel said the problem then was that each municipality had to find other funds to cover the cost of the service. This often turned the fee into a tax.
In most cases, the common thread is the argument that some communities have used their stormwater and sewer rates to pay for public expenditures that the taxes should cover. In Coldwater, electricity could be the target.
According to court rulings, the law firm did nothing underhanded or inappropriate. Instead, Kickham Hanley simply pointed out that many communities violated Michigan’s Headlee Amendment with the judges’ agreement.
Kickham Hanley has earned so much money from so many communities that two bills are pending in Lansing that seek to stop the corporate judgment-winning juggernaut.
City Manager Keith Baker said the Michigan Municipal League “is working on the issue, kind of globally, but doesn’t specifically represent us or any of the other municipal entities.”
Coldwater Councilman Jim Knaack urged the city to release its own information. Baker said he would turn the project over to staff to prepare.
“We are one of the few municipal electric communities to have received FOIA,” Baker said. “We do not know the expected result. But we wanted to inform you in public to put you forward.”
Bill Laitner of the Detroit Free Press contributed to this story.