A long-troubled south suburb was able to avoid outside oversight of its shaky finances in a court ruling Wednesday that also raises questions about who enforces laws meant to safeguard the stability of the region’s water system.
The ruling comes amid a long-running legal battle between the city of Chicago and the suburb of Harvey — a place the Tribune found last year was arguably the area’s most lawless and nearly insolvent. Records show the suburb has survived financially for years largely by taking water from Chicago, not paying for it, and reselling it to residents and other suburbs. Records and interviews show the surplus cash was used to pay other expenses not related to the water system — a scenario that Chicago argued broke state law.
Cook County Associate Judge Rita Novak had already ruled that Harvey owed Chicago $26 million in unpaid bills and late fees — more than the suburb levies in property taxes in an entire year. Chicago asked the judge to declare Harvey broke the law by misspending the cash it should have paid Chicago and then appoint a trustee to control the water cash Harvey collects and spends.
In a win for Chicago, Novak ruled that state law requires towns use water cash first for debts and operating expenses tied to the water system before spending it elsewhere. But, in a win for Harvey, Novak ruled that she still couldn’t impose court oversight of Harvey’s water cash because, among other reasons, the particular statute in question doesn’t explicitly allow her to grant Chicago’s request, even if Harvey had been breaking the law.
The ruling leaves open a question about who ensures towns play nice with each other in a region where many residents rely on water passed from Chicago, to inner-ring suburbs, and then across outer reaches of the metro area in a spiderweb of pipes. Chicago and the suburbs must, by law, provide water to other suburbs seeking it, but — under the ruling — lack a key tool to ensure they’re paid for it.
Chicago’s Law Department, in a statement, said it was “disappointed” in that aspect of Novak’s ruling and was “considering our next steps to protect Chicago taxpayers’ investment in a clean and sustainable water supply.”
A Harvey spokesman did not return an email for comment. Harvey has argued that it’s doing all it can to pay its bills while avoiding raising water rates too high for residents.
While avoiding court oversight in this case, Harvey did recently agree to allow a federal court to monitor how the suburb borrows money and tracks its spending — including the completion of long overdue, legally required annual audits. That came after the U.S. Securities and Exchange Commission accused the suburb of defrauding lenders in a failed development deal, first exposed by the Tribune, that enriched a political insider while costing Harvey taxpayers up to $20 million.
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