Compromises in Sister Bay, Liberty Grove Wastewater Plant Battle

In terms of government speed, the Village of Sister Bay and the Town of Liberty Grove are heading at breakneck pace toward a solution about the shared wastewater treatment plant. Three biweekly meetings have resulted in some compromises while the larger question of ownership is still looming.

At the Dec. 11 meeting between the two municipalities, Sister Bay officials stated they were willing to pay the town for its portion of a property that was purchased jointly in 1991. The Larson Property, as it is commonly known, sits atop the hill south of Ellison Bay and was sold to Jim Seaquist in 2012 for $250,000. At the last joint meeting on Nov. 27, Liberty Grove officials demanded repayment for the portion of the sale that the town originally contributed to in 1991.

After discussion between village officials and their attorney, Randy Nesbitt of Pinkert Law Firm, the village agreed to repay the town.

“Sister Bay has agreed, in an act of good will, to pay the town the portion of the Larson property,” said village board president Dave Lienau. “If you agree with our calculation then we will issue a check for the amount in the near future.”

The amount, including the portion paid to the Liberty Grove Sanitary District, is $110,004.67.

Town officials did not immediately bite on the offer, instead opting to speak with their attorney, who could not be present on Dec. 11, and get back to the village.

The question of ownership of the plant is still unsettled, but the two municipalities appear to be heading in one of two directions.

Town board member Lou Covotsos said the original 1988 agreement explicitly states the village as the owner of the plant, but subsequent investment into the plant by the town could result in some sort of ownership.

Covotsos, a former law firm administrator and law professor, said court or mediation would either determine Liberty Grove to be a part owner of the plant, or, if the court did not give Liberty Grove ownership, the town could seek unjust enrichment from the village for the amount the town has invested in the plant during the last 30 years, approximately $2 million.

Nesbitt agreed those are possibilities.

“The reality is the village isn’t going to be able to come up with $2 million,” Nesbitt said.

But Nesbitt also said the village may not be on the hook for anything, similar to someone renting an apartment from a building owner. The renter pays rent and may even contribute to some improvements in the apartment, but at no point is the renter declared a part owner. In this scenario, Sister Bay is the owner and Liberty Grove is the renter.

“To go back and try to say, well the person who contracted should get some money back doesn’t really account for the fact that they got 20 years of housing and that’s what they contracted for,” Nesbitt said.

The municipalities seem to be moving toward a system where Sister Bay is the owner and operator of the plant, and is thus responsible for all capital improvements on the plant. The village would then be taking a risk in absorbing the entire cost for future expenses that are presently unknown.

In 2010, the Department of Natural Resources (DNR) passed a new rule further restricting the amount of phosphorus a wastewater plant can discharge. While the Sister Bay plant was complying and thus did not have to make any large capital improvements, a 2015 analysis of the fiscal impact of the rule estimated a cost of $3.45 billion for municipalities across the state for upgrading their wastewater plants.

“Probably… the DNR is going to come down to some new rule that is going to require a very significant upgrade to the plant,” said town board member Hugh Mulliken. “That would become the village’s expense.”

Although future expenses would technically be the responsibility of the village if it was deemed sole owner, it would likely be paid for by a bond issue that would then be passed on to ratepayers.

Representatives from the village and town will get together outside of a joint meeting to continue exploring extraterritorial zoning and annexation based on density of development near the village border.

The town is expected to come back to the village with a response on the Larson property revenue and other conditions at a joint meeting scheduled for Jan. 8.