Kadner: Hammond mayor proudly turns water into cash
By Phil Kadner email@example.com November 15, 2012 4:40PM
The Chicago Heights Water Department building on U.S. 30 Thursday, November 15, 2012. Chicago Heights and some other towns get water from Hammond, Ind. Hammond is jacking up its rates and mayor Thomas McDermott Jr. is unapologetic about it, saying water is their future and Indiana can't stop him from raising rates in Illinois. | Brett Roseman~Sun-Times Media
Updated: December 19, 2012 12:35PM
Hammond Mayor Thomas McDermott Jr. makes no apologies for quadrupling the price of water to some south suburbs.
“I have to do what’s best for my city,” McDermott told me during a telephone conversation.
“Bottom line, our location near the Illinois border has a lot of advantages and disadvantages, and while we live with the disadvantages we make the most of the advantages.
“Our location in the northwest corner of Indiana means people in Illinois are going to come across the border for cigarettes, fireworks, gas.
“Water is just another one of those things that Illinois, through its wisdom, has allowed Indiana to sell at a cheaper price.”
For 30 years, Hammond has been selling Lake Michigan water to Chicago Heights for 57.5 cents per 1,000 gallons.
That contract expired on Nov. 12, and Hammond now wants $2.20 per 1,000 gallons for its water.
Chicago is now selling water to its suburban customers for $2.51 per 1,000 gallons.
Hammond pays about 46 cents per 1,000 gallons, and Indiana utility regulations prohibit it from selling water at a profit to other Indiana municipalities.
“So I prefer to sell to Illinois communities for more money,” McDermott said. “And there are a lot of potential customers in Illinois who would rather pay $2.20 than the $2.60 or whatever that Chicago is charging.
“If Chicago Heights doesn’t like our price, let them go somewhere else,” McDermott said. “That’s fine with me. I’ve been talking to Sauk Village, Flossmoor, Glenwood, and I can tell you they would all love to buy our water at that price.
“I would love to have Olympia Fields as a customer.”
Chicago Heights has filed a lawsuit in federal court, contending that Hammond doesn’t have the right to charge whatever it wants for Lake Michigan water.
A federal judge has decided not to rule on that lawsuit pending the outcome of hearings before the Indiana Utility Regulatory Commission, where Chicago Heights has also filed a complaint.
Chicago Heights contends that in its original contract with Hammond, the water rates were linked to those set by the Indiana regulatory authority.
The commission has set a hearing for Monday on the issue.
Until the issue is settled in court or by the commission, McDermott said he will continue to provide water to Chicago Heights, but at the $2.20 price authorized by court decree pending the outcome of the various appeals.
Chicago Heights is technically a customer of the Hammond Water Works, a utility company owned by the city of Hammond.
Chicago Heights buys its water from the utility and sells it to Glenwood, Thornton, South Chicago Heights and Ford Heights.
Chicago Heights Mayor David Gonzalez has accused McDermott of price gouging some of the poorest communities in Illinois.
“We’ve been selling water to Chicago Heights for 57 cents for 30 years, and they’ve been charging their customers $3.20 and they accuse us of price gouging,” McDermott said.
Gonzalez told me the price difference is used to maintain the infrastructure for the water system in the south suburbs, not as a profit center.
“In court, the mayor said the city loses about 17 percent of its water through leakage,” McDermott said.
“That’s a lot of water to lose if you’ve been spending money to maintain your water system.
“I’m not pointing the finger at him; he’s only been in office a short time (Gonzalez was elected last year) so he’s not responsible for what went on in the past.
“But if there was any price gouging that was taking place, it was Chicago Heights gouging its own customers.”
Gonzalez said he provided evidence in court that Chicago Heights is not making a profit on its water system, although when asked if water revenue in the past had been used to subsidize the city’s general revenue fund, the mayor said, “I don’t know.
“The mayor of Hammond doesn’t understand we have to maintain four water pumps (and) the water lines that run from Hammond to Chicago Heights, and pay the salaries and benefits of the employees who work there. That’s very costly.”
In fact, Gonzalez said his city has to make $19 million in infrastructure improvements and, regardless of how much Hammond charges, Chicago Heights will be adding on the cost of those improvements to the water it sells.
When Gonzalez notified Glenwood of that recently, the village threatened to sue Chicago Heights, claiming it is a part owner of the water line that brings Hammond water to Chicago Heights.
“I still contend that Hammond is raising its water rates to us because the mayor knows Illinois is considering legislation that would create a casino across the border and he’s retaliating,” Gonzalez said.
“How much longer are Illinois legislators going to let this sort of thing go on?
“When the state Legislature passed a casino bill last year (vetoed by the governor), it was site-specific, naming Chicago, Rockford, Park City and Danville, but when it came to the south suburbs they said we all have to compete with each other.
“Cook County has now passed a $1,000 tax on every slot machine, and with 1,200 slots allowed in a casino that means any developer would make $1.2 million less here than somewhere else. That’s going to discourage development here.
“We see this over and over, and our legislators just don’t stand up for us. We have 16 percent unemployment in Chicago Heights, but the state keeps offering financial incentives for companies to locate in the northwest suburbs or downstate.
“We see jobs and businesses relocating to Indiana and no one in this state does a thing to stop it,” Gonzalez said.
I told the Hammond mayor that reaction to a previous column about his water price hike had been overwhelmingly positive, with people saying, “I wish I had a mayor like him.”
“I do my best for my city,” he said. “That’s what elected leaders are supposed to do.”