Task force plans to use eminent domain to take dams from Boyce Hydro
A nonprofit that once sought to purchase four dams in Midland and Gladwin counties plans to obtain them instead through a government taking known as eminent domain.
The Four Lakes Task Force plans to begin condemnation proceedings related to the Edenville, Secord, Smallwood and Sanford dams this week in circuit courts in Midland and Gladwin counties in an effort to acquire the dams at no cost by the end of the year.
A representative for Boyce Hydro, the owner of the four dams, promised a vigorous court fight over the properties — a legal battle that might take years to resolve.
The filing by Four Lakes Task Force — the group authorized by Midland and Gladwin counties in 2018 to purchase the dams — comes two months after the Edenville Dam broke in historic rains, causing flooding throughout the Midland area. It also follows the failure over many years by the dam's current owner Boyce Hydro to comply with government requirements to shore up the structures.
"There is no viable scenario where the existing owner or any other private owner can restore the dams and lakes," said David Kepler, chairman of the Four Lakes Task Force. "It was not viable before the dam failures, and now is a barrier to moving forward."
The dams' owners will vehemently defend the property, said Lawrence Kogan, a lawyer for Boyce Hydro. Kepler's plan for the property is "insincere," "dangerous" and dependent on hypothetical funding, he said.
"The values he has placed on the dams are zero, that’s also false," Kogan said. "He’s trying to get something for nothing.”
Eminent domain can be used on any private property that could be condemned for public use, but the manner in which this proposed government taking is being deployed in Midland could be a recipe for trouble, said Charles Ten Brink, professor of law at Michigan State University College of Law.
"They’re not going to have any trouble showing this is going to be a public use," Ten Brink said. But by demanding Boyce Hydro give the property away for nothing, the task force appears to be "begging for a fight," he said.
"The main issue that comes up in cases like this is valuation, and it turns into a war of expert witnesses about the actual value of this," Ten Brink said.
Boyce Hydro faces "huge liabilities and cleanup costs" without access to state and federal funding that would help with those efforts, Kepler said.
The Four Lakes Task Force argues it has the authority to condemn and take the Boyce Hydro properties because it was delegated authority by Midland and Gladwin counties under the state's Natural Resources and Environmental Protection Act. If obtained through eminent domain, the dams would fall under the ownership of Midland and Gladwin counties.
The Four Lakes Task Force had planned to create a special assessment to pay for the purchase and maintenance of the four dams that helped create four man-made lakes. The ownership arrangement could also increase the dams' eligibility for government grants.
In a Wednesday webinar with lake association members, Kepler estimated the immediate stabilization of the dams would cost more than $30 million and the long-term cost of rebuilding and repairing them over the next four to six years would cost $250 million to $400 million.
The group is working on the assumption that a complete reconstruction will be needed for the Sanford Dam and most of the Edenville Dam. A return to hydro power at the Secord, Smallwood and Sanford dams is "very likely not worth doing," Kepler said.
"The best and only purpose of this property is these lakes," the Four Lakes chairman said about the dams. "That has to be repaired and put back. And that's why we're going after the offer to Boyce and now we're going to file suit with Boyce out of the necessity to need the property for the community."
Kepler added he didn't see a feasible way to raise lake levels back up this year or next.
But some property owners have taken issue with that timeline, arguing that upstream dams less damaged in the flooding — such as Smallwood and Secord — will be held hostage until the futures of Sanford and Edenville dams are clear.
In a Zoom meeting last week, the Secord Lake Preservation Association said it was exploring the possibility of Secord Lake "unwinding" from the Four Lakes Task Force and forming a separate special assessment district.
"We do not want to be roped in with the southern dams any longer, and we have a right to take care of our own dam and lake in my opinion," said Christine Ringo, a member of the association.
Lee Mueller, a manager at Boyce Hydro, told participants in the Zoom meeting that he would work with them to refill Secord Lake first if they would pitch in to help with roughly $30,000 in repairs.
"With some help from the community, certainly Secord and Smallwood can be put in a position that will basically satisfy or pacify FERC (Federal Energy Regulatory Commission) and there could be a long 20-year operation that should be stable," Mueller said.
Eminent domain proceedings allow a government agency to take possession of private land when it is for the public good. The law usually requires a governmental unit to offer fair market value for the property.
Under a 2006 voter-approved constitutional amendment, there were restrictions put on the use of eminent domain. They included banning government from taking private property for transfer to another private individual or business for purposes of economic development or increasing tax revenue as well as requiring that an owner of a primary residence be compensated for at least 125% of a property’s fair market value.
But the Four Lakes Task Force will seek the acquisition of the dams at no cost, arguing the $797,500 already invested in repairing the dams over the past year and a half was payment enough. Separately, the task force spent $3.7 million in grant money on engineering studies, regulatory and legal costs and has $1.3 million remaining.
In recent weeks, both Midland and Gladwin counties approved resolutions supporting the acquisition through eminent domain. Four Lakes Task Force is developing transition plans for each of the structures.