Chicago says Robbins, Dolton diverted water funds, owe millions in unpaid Lake Michigan water bills

By Scott Holland | Apr 2, 2018

Chicago is suing the villages of Robbins and Dolton, saying the suburban communities owe a combined $23 million in unpaid bills for water from Lake Michigan.

The city filed two complaints March 26 in Cook County Circuit Court. In each, it cited the Metropolitan Water Reclamation District Act’s provisions that govern the relationships between the municipalities, specifically the requirement that Chicago must provide water to any other municipality that can connect to the city’s waterworks. Through those agreements, Chicago provides water directly to 50 towns and indirectly to 83 others. And although the city is allowed to charge those cities, it is not allowed to shut off the water for nonpayment.

Chicago also cited the Illinois Municipal Code’s stipulation that a municipality that contracts to get water must pay for that water from the revenues it gets from selling the water to its residents and businesses, and that water revenues must be kept “in a segregated account, to be used first for water-related purposes.”

Dolton signed its water supply agreement with Chicago on Aug. 11, 1999, and exercised the first of three optional 10-year extensions on Jan. 25, 2011. Robbins agreed to its contract on Aug. 1, 2002, and is in the midst of an extension activated on June 8, 2012. While the city says it’s been supplying water to Dolton “for decades,” it said Robbins has been getting lake water through Chicago since 1953.

According to Chicago, it sued Robbins in 1990 for falling behind on water payments and in 1991 won a judgment for more than $1.8 million. But Robbins again fell behind, and by July 2013 owed an additional $7.18 million in outstanding charges and penalties in addition to the 1991 judgment.

Dolton also has struggled to keep current on bills, and in 2009 Chicago agreed to conditionally forgive certain interest and penalties provided Dolton made timely payment on current charges. But by Sept. 26, 2011, Dolton owed $1.22 million. The city negotiated another payment schedule, but said Dolton again fell behind, leading to a 2014 settlement agreement that remains in effect but doesn’t cover an additional $2.75 million in unpaid charges since that time.

Chicago said neither Robbins nor Dolton has kept current with bills, and alleged both have spent water revenues on unrelated expenditures. The most recently billed invoice either community paid in full was in June 2016. As of March 19, 2018, Robbins owes $15.3 million for past due bills, late fees and its judgment balance. Dolton owes nearly $8 million.

The city alleged breach of contract and unjust enrichment in both complaints, and is asking the court for declaratory and injunctive relief to force the communities to segregate their water revenues and to repay to their water funds the money allegedly diverted into general funds — nearly $8.9 million for Dolton and more than $2.3 million for Robbins. 

The city also wants the court to force an accounting of funds the villages collected from water customers dating back to the beginning of their current contracts and to appoint “a receiver as an independent monitor over the financial affairs” of the villages’ water systems. It further asked the court to enter judgment “in the amount of water revenues shown at trial to have been transferred and diverted.”

Chicago is represented in the legal actions by attorneys from the city’s Department of Law.

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Organizations in this Story

City of Chicago Village of Dolton Village of Robbins

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