There were several lawsuits, however, reflected in the 1991
audited financial statements, as follows:
Pension Plan. The Pension Plan retirees filed a
lawsuit challenging the calculation of the final average compensation. It was
the retirees contention that many of the fringe benefits and allowances (health,
clothing, etc.) recently received should have been defined as compensation. Once
defined as compensation, the calculation of the retirement benefits would
increase. Retroactive and prospective increases in retirement benefits were
Downriver Sewage Disposal System. The Wayne County
Downriver Sewage Disposal System (System), of which Ecorse is a member, has been
sued by the Environmental Protection Agency (EPA) to improve the sewer system.
The EPA is not satisfied with the combined sewer system and believes that it
does not comply with the Clean Water Act of 1989. The EPA is seeking compliance
by the System, either through sewer separation or other means.
Great Lakes' property tax challenge. Great Lakes
has petitioned the State of Michigan Tax Tribunal to reduce the December 31,
1990 State equalized valuation of its real and personal property taxes from $119
million to $72 million. This reduction would affect the 1992 fiscal year
property tax revenues. Should Great Lakes be successful, the annual reduction in
Ecorse property tax revenues would approximate $1.5 million.
The Pension Plan litigation was recently settled with the
Police and Fire unions and retirees. The language in the labor contract
concerning the inclusion of fringe benefits and allowances has been improved. No
immediate costs to the Pension Plan were incurred. In turn, certain sick and
vacation pay can now be included in the calculation of the final average
compensation. The Receiver eliminated the use of sick and vacation pay in the
calculation of final average compensation in the labor contracts effective July
The Downriver Sewage Disposal System litigation is being
contested by Wayne County on behalf of all downriver communities. Over the past
several years, the System has been upgrading the sewers and treatment plant with
available funds. However, should the System not be successful in defending its
position, a significant level of expenditures may be required by the downriver
communities. The result may be the issuance of debt by the communities or
system, state and federal grants, and / or to significantly increase the fees
associated with the processing of sewage.
The Great Lakes' property tax challenge may not be solved
for several years. Normally, such litigation would affect the year of petition
and any subsequent years absent a specific agreement to the contrary negotiated
as part of a settlement. The effect on the Ecorse operations would be
significant. The challenge is still pending.