Chicago Heights, Hammond wrangle over water contract

2012-10-19T19:15:00Z 2012-10-19T20:47:53Z Chicago Heights, Hammond wrangle over water contractChelsea Schneider Kirk chelsea.schneider@nwi.com, 219-933-3241 nwitimes.com

HAMMOND | Mayor Thomas McDermott Jr. said the Water Department will stay afloat in the event Chicago Heights no longer buys its water from the city.

The revenue the Water Department will gain from Calumet City – one of its largest customers – agreeing to an increased rate is expected to offset the potential customer loss, McDermott said.

“We wouldn't really miss a beat because Calumet City inked their contract with the Hammond Water Company,” McDermott said. “We're anticipating even if Chicago Heights doesn't sign we'd be able to continue to operate.”

In 2011, the Water Department received $1.3 million from Chicago Heights with the city receiving $332,007 of the amount. Calumet City paid $1.1 million in 2011, but that was under the city's old rate of less than $1 per 1,000 gallons, according to Water Department records. Calumet City will now pay $2.20 per 1,000 gallons.

Chicago Heights and Hammond officials are set to meet before state regulators in Indianapolis on Nov. 9 for a prehearing conference and preliminary hearing, three days before the Illinois community's water contract expires.

Hammond has given Chicago Heights officials until March to find a new water provider if the cities can't agree on a rate increase by November and has asked the Indiana Utility Regulatory Commission to dismiss the case Chicago Heights filed.

Chicago Heights has gone to the IURC and federal court in hopes of barring Hammond from shutting off its water and for regulators or the court to decide its new rate. Chicago Heights has argued the proposed rate of $2.20 per 1,000 gallons is “unreasonably high.”

Chicago Heights Mayor David Gonzalez and Corporation Counsel TJ Somer did not return repeated requests for comment.

In a previous interview with The Times, Somer questioned why Lansing received a lower rate at $1.12 to buy Hammond water, but Hammond officials argue that contract dates to 2006 before Chicago decided to implement annual increases in its water rate. For 2013, Chicago's rate is $2.89 per 1,000 gallons.

“It's an exorbitant, quadrupling of the current water rate,” Somer had told The Times, “and to add sort of insult to injury, the Indiana statute says increases in water will be dictated by the actual increase in the price for the cost of delivery of water.”

In Hammond, the Water Department transfers any excess revenue to the city. McDermott said any increase in the city's share would help as the municipality continues to feel the strain of a frozen tax levy.

“If there is an opportunity for a company, the Hammond Water Company, to create more revenue for itself – without gouging Hoosiers by the way – why wouldn't the Hammond Water Company try to take advantage of that opportunity,” McDermott said.

“Chicago Heights, they feel that we can't sell water to Illinois without going through them, and that's not the case.”

Chicago Heights has told the IURC that the March deadline is not enough time for the city to connect to a new water provider. Currently, Chicago Heights provides drinking water to 44,000 residents. Constructing a pipeline to a new water source is expected to take years.

According to Chicago Heights' filing in Hammond federal court, “The only reasonable alternative for Chicago Heights to obtain potable water for its customers would require the expenditure of tens of millions of dollars in costs and legal fees, attendant bond issues, and would take approximately five years to complete."

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