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Mayor Rahm Emanuel announced today that the City of Chicago has entered into a settlement with the City of Harvey to pay $20 million to Chicago for past unpaid water charges. With this action, the City has settled and will be receiving payment from all four outstanding suburban water scofflaws for Chicago taxpayers.
“Chicago taxpayers should not have to spend their hard earned money to subsidize the water used by suburbanites,” said Mayor Emanuel. “Taxpayers were owed millions and I have been clear that my administration will not stand by as the residents of Chicago are taken advantage of when suburbs do not pay their bills for the water we all depend on as a region. This settlement amounts to a fairer deal for Chicago taxpayers and ensures that all four municipalities will finally make good on the water payments they owe.”
When Mayor Emanuel took office in 2011, more than $15 million in unpaid water debt had been accrued by four suburban municipalities. Since then, under the Mayor’s direction, the Department of Law and the Department of Water Management have worked to establish payment plans and reach settlements with each municipality to ensure these debts are paid. Once the payment plans are completed and settlements have been paid, more than $30 million will have been recouped for Chicago residents.
“This settlement is the product of lengthy negotiations between the parties, and we believe it fairly balances and carefully addresses the interests of – and has the support of – all parties, including the downstream municipalities that purchase Chicago water from Harvey,” said Chicago Corporation Counsel Stephen Patton.
Harvey – which sells Chicago water to and collects revenue from five downstream municipalities – stopped making regular water payments to Chicago in November of 2008. The settlement requires Harvey to pay current Chicago water bills in full and on time and establishes a reasonable payment plan for Harvey to pay the past due principal amount of $18.5 million in monthly installments over seven years with three percent interest. It also requires that Harvey use water-related revenues first to pay for water-related purposes, including making water payments to Chicago, before being used for non-water related purposes.
To ensure that Harvey is complying with this agreement, Chicago will have access to Harvey’s financial system and Harvey will be required to provide accounting reports related to its Water Fund.
If Harvey defaults on its payment obligations and fails to promptly rectify any payment default, the unpaid balance plus three percent interest will become immediately due and owing, and any amounts due will be paid by the bank directly out of the Water Fund Account or General Fund Account. Additionally, downstream municipalities will send their water payments directly to Chicago and the City of Chicago will be entitled to pursue any other remedies it has under law or equity.