HAMMOND — The city of Hammond is getting closer to finalizing a settlement deal with five Northwest Indiana communities that sued the city in November, objecting to newly approved water rate hikes.
Mayor Thomas McDermott Jr. spoke about an ordinance, which if approved, would amend wholesale rates for Indiana communities, during a Hammond City Council meeting last week.
The ordinance, McDermott said, is based upon a settlement agreement the city has reached with the towns of Highland, Munster, Griffith, Dyer and city of Whiting, and should put the pending lawsuit to rest.
In November, the City Council voted 9-0 to raise Hammond residents’ water bills from 44 cents to $1.90 per 1,000 gallons starting Jan. 1.
The rate hike, which also applied to wholesale customers, was swiftly criticized by the officials in Highland, Munster, Griffith, Dyer and Whiting. They argued the sudden, automatic triggering of rate hikes for those cities and towns were "discriminatory, unreasonable, and unjust under Indiana law," and followed up with a lawsuit.
The settlement, once approved, will establish a wholesale water rate with those communities.
Under the plan, the communities will pay nearly double what they're paying now, 95 cents, which is less than Hammond residents' new $1.90 rate.
The wholesale rate will rise to $1.60 by 2030, and in years 11 through 20 will go up to 70% of the retail rate that Hammond customers are charged, McDermott said during the May 24 council meeting.
Currently, Hammond charges most communities 50 cents per 1,000 gallons. For comparison, Crown Point charges $13.20 per 1,000 gallons, Whiting charges $3.56, Griffith $3.78, and Highland $1.61. Munster charges $3.13.
Hammond's last rate increase was in 1985, McDermott said, later noting the wholesale rate hike will not affect contracts the city has with Illinois.
McDermott said the city will not have issues as wholesale rates automatically increase as outlined in the contract, adding, "We all agree to rate certainty for the next 20 years, if this is approved."
"Quite frankly, charging the retail rate to a wholesale customer is not fair. So it was the right course to take," McDermott told The Times this week.
"And it's retroactive to Jan. 1, 2021. Even though the customer communities have been paying higher rates, presumably through this year, it'll all be adjusted at the end of the year, to match 95 cents, which is what the first year's rate is."
If communities don't agree to the rate schedule as presented over the coming 20 years, McDermott said they can either settle the case by signing the settlement agreement or continue litigation.
Robert Tweedle, attorney for Highland Water Works department and one of the lead attorneys on the case, confirmed "all remaining issues" in the case "have been largely resolved."
"I expect the settlement agreement to be finalized within the next few weeks," Tweedle told The Times.
The City Council passed the ordinance on first and second reading 9-0 during its May 24 meeting.
The ordinance is set to have a public hearing during the next Council meeting at 6 p.m. June 14 at the Hammond Common Council Chambers, 5925 Calumet Ave., Hammond.