Edenville Dam owners file for bankruptcy, blaming regulators for floods

Companies that operate a mid-Michigan dam that failed in May have filed for bankruptcy protection, blaming the regulators for the tragedy and nearby homeowners for failing to help pay for repairs.

Facing a host of class-action lawsuits after massive floods damaged 2,500 homes around Midland, Boyce Hydro LLC and Boyce Hydro Power LLC sought reorganization (Chapter 11) bankruptcy protection on Friday and will most likely seek to retain control of the business.

Controlled by Lee Mueller and heirs in the William D. Boyce Trusts, which controls the fortune of a Chicago newspaper magnate, Boyce Hydro Power claimed revenue of $1.6 million and $2.1 million in expenses. It owes its 20 largest creditors more than $7 million, including $6.1 million from a Chicago bank loan.

Mueller’s companies own the Edenville Dam and three others nearby. He had been in negotiations to sell it to a group of nearby homeowners known as the Four Lakes Task Force before the May 19 flood.

In declarations filed in the bankruptcy, Mueller criticized the group and cheered efforts by some lake owners to split off from the task force.

“I am frustrated by years of unwillingness by homeowners to contribute to improvements that could have improved the (d)am for everyone, and with the regulatory decisions that directly caused this catastrophe,” he wrote.

The flood caused some $200 million in damages and spurred lawsuits, including one seeking $500 million.

In court papers, Mueller said he has reached a deal with insurers to pay $3 million toward damages.

As he has for years, he also used the bankruptcy filing to blast federal officials who demanded for decades that the Edenville Dam make improvements to withstand heavy rains.

When Boyce failed to make the repairs, the Federal Energy Regulatory Commission revoked its hydroelectric power licence in September 2018. Then, after heavy rains bloated the Tittabawassee River watershed, the Edenville Dam failed on May 19, triggering the failure of the Sanford Dam downstream that Boyce also owns.

Mueller is still negotiating with the task force on a purchase. But now the task force has lowered its offer from $16 million to $100,000. In court papers, Mueller claimed the group is “taking advantage” of the flood to get a better price.

In court papers, he claimed the Four Lakes group is afraid that homeowners who live along lakes less affected by the floods will break from the task force and buy Boyce’s two other dams, Smallwood and Secord.

Homeowners around all four lakes — Sanford, Wixom, Smallwood and Secord — formed the task force, agreeing to annual dues to pay for the dams and repairs. 

Dave Kepler, the president of the task force, has said the total repairs, post-flood, could stretch to $340 million, largely because of the damage to dams at Edenville, which forms Wixom Lake and Sanford. 

Included in Kepler’s estimate was $24 million to repair the Secord Dam.

But Mueller, who raised the prospect of working with a splinter group on restoring both the Secord and Smallwood dams in the bankruptcy filing, recently told a group of neighbors that the repairs to the Secord Dam could be as low as $30,000.

Boyce is willing to make those repairs, he said, but “we just don’t have the funds to do it.” For years, Mueller has sought to get others to pick up costs related to repairs at the dams.

Mueller does have support from some Secord Lake residents who want to avoid sharing the larger repair costs.

“It’s not necessary for us to wait for the water to be restored, because we only have minor issues with our dam that were pre-existing prior to the flood,” Christine Ringo, the group’s leader. 

Ringo declined to further discuss the group’s effort. 

But Kepler told Bridge that Secord and Smallwood will have their own repair plan, and will not be assessed for rebuilding the two failed dams. 

“Right now we’re focused on recovering these dams and addressing the erosion in these lakes … not to help Lee in his bankruptcy,” Kepler said.

Another Secord Lake group, the Secord Lake Association, which is part of the Four Lakes Task Force, is still behind the larger effort. A statement posted to the group’s website contends that Boyce is merely “trying to extract more money out of the community before going into bankruptcy.”

“We cannot rely on Boyce Hydro looking after our best interest,” the statement reads. “We need to get our Lake Back and the [Four Lakes Task Force] plan is the best path to achieve this.”

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Comments

LOL
Tue, 08/04/2020 - 9:13pm

Didn't see that coming. [sarcasm]

I wonder what will happen when Line 5 ruptures.

Joe
Tue, 08/04/2020 - 10:24pm

I am here to give my testimony about FREEMAN who helped me.. i want to inform the public how I received my investment profit of $15,650.00 within 4 working days with the minimum of $800 contact him now for your investment @ +1450-231-4925 thanks man..

middle of the mit
Wed, 08/05/2020 - 10:33am

Do I get to blame everyone else for not paying for the upkeep of my home if I fall into financial problems because I am not the business person I think I am?

[[[In declarations filed in the bankruptcy, Mueller criticized the group and cheered efforts by some lake owners to split off from the task force.

“I am frustrated by years of unwillingness by homeowners to contribute to improvements that could have improved the (d)am for everyone, and with the regulatory decisions that directly caused this catastrophe,” he wrote.]]]

Here comes the sowing of dissension. Pitting those in the "Task force" who didn't suffer as much damage against those who did.

[[[In court papers, he claimed the Four Lakes group is afraid that homeowners who live along lakes less affected by the floods will break from the task force and buy Boyce’s two other dams, Smallwood and Secord.

But Mueller, who raised the prospect of working with a splinter group on restoring both the Secord and Smallwood dams in the bankruptcy filing, recently told a group of neighbors that the repairs to the Secord Dam could be as low as $30,000.

Boyce is willing to make those repairs, he said, but “we just don’t have the funds to do it.” For years, Mueller has sought to get others to pick up costs related to repairs at the dams.

Mueller does have support from some Secord Lake residents who want to avoid sharing the larger repair costs.

“It’s not necessary for us to wait for the water to be restored, because we only have minor issues with our dam that were pre-existing prior to the flood,” Christine Ringo, the group’s leader.

Ringo declined to further discuss the group’s effort. ]]]

Yet the Mueller still claims not to have the $30,000 he says is needed to repair the Secord dam. Is anyone going to believe any thing this man has to say?

[[[Another Secord Lake group, the Secord Lake Association, which is part of the Four Lakes Task Force, is still behind the larger effort. A statement posted to the group’s website contends that Boyce is merely “trying to extract more money out of the community before going into bankruptcy.”

“We cannot rely on Boyce Hydro looking after our best interest,” the statement reads. “We need to get our Lake Back and the [Four Lakes Task Force] plan is the best path to achieve this.”]]]

WE can't rely on any of these people to do anything at all. They have ALL known for decades that there dams are unsafe and/or have serious problems, yet they haven't done anything except form groups to buy up the dams, and that only happened within the last decade. And then they at least petitioned to have the levels raised to their full legal level.

How long will it take them to fix the dams now?

If you can't afford the fixes in a timely manner, DRAIN them until you can. The State can not afford to keep paying for private failures. If we can't afford to help our poorest citizens with food or money, WE sure can't afford to keep paying for court battles between lake front owners and dam owners with the State being responsible for the catastrophic damage that may happen.

This is a hard truth...........but I thought a lot of you like the idea of tough love. Or is that only for the poors?

middle of the mit
Thu, 08/06/2020 - 7:50pm

I have had a change of heart! I am tired of those who live below the dams complaining about lakefront property owners. These are the people that allow your town to have the nice things that you and your town benefit from! You should be Greatfull to them! You should ask for more of these people to come into your area, and you should definitely vote to take any tax burden in your local area to be spread around to every homeowner so that the benefits and costs of living in an area of a lake is SHARED BY ALL THAT BENEFIT FROM THAT LAKE, but, you can only access it from a few certain areas. You are poor and should deal with it even if you own backlots. You understand, don't you? Of course you do!

This is how America runs...............and I am going with the flow!

lostinacointoss
Wed, 08/05/2020 - 11:31am

Would be interested in seeing a follow-up story on what this means for those who are part of the class action law suits and mass torts. Midland News included quotes from one of the prosecuting attorneys who says this is a stall tactic by Boyce and that they're still going after the trusts.

Would also be interested in a follow up on what this means for the efforts of going after dam ownership under condemnation/eminent domain. Will this help or hinder progress on that? I believe I read that Mueller or his lawyer said they believe the dams will be condemned. I have heard that the $6.1 million he owes to the Chicago Bank is leftover from the loan he used to initially pay for the dams. Is that true? If so, wouldn't the $30k that the Secord group is seeking to pay Boyce to fill the concrete hole in Secord dam go straight to Chicago Bank? Lot's of unanswered legal questions I think people would like definitive answers on. But maybe it's not clear at this point.

Anonymous
Wed, 08/05/2020 - 4:44pm

Was this dam generating electricity or just made to create a recreational lake? Why was the dam even there?

William C Plumpe
Wed, 08/05/2020 - 8:45pm

Mueller is and has been clever, devious, deceptive, irrascible and totally uncooperative from the beginning. Mueller deserves NO sympathy from me or anybody else. I simply DO NOT believe he couldn't afford repairs.
Mueller's "divide and conquer, take no prisoners" approach exhibits the most venal, corrupt, self serving and dastardly business practices reminiscent of the Robber Barons of the 19th Century.
If it were up to me Mueller would be in prison right now.
Wonder if Mueller is giving lessons to or maybe taking them from Trump. Just shows how much harm a bad businessperson focusing only on personal gain can do. Think of how much power Trump weilds.
But we know very little about Trump's business practices which are not subject to the same scrutiny as publicly traded companies. What is Trump hiding? After the Midland dam disaster does America really want a venal and greedy "businessman" in the White House?
I say "No way"!

Jake K.
Thu, 08/13/2020 - 10:52am

Great transition, William. You begin with Mueller and end with Trump bashing. Curious as to why there's no mention of the inept management by the State of MI admin? Oh yeah, they are Dems.
Hey I had to wait for 20 minutes to return empty soda bottles. That must be Trump's fault. My wait at the Sec of State office was brutal. Must be Trump's fault too. Be realistic.
Mueller, Trump, Soros and others like them have no allegiance to anyone but themselves. But you can't legitimately blame just them for the challenges we face. Blame ourselves for allowing a system to feed itself and continue the exploitation.

Sandra Gail Hof...
Fri, 08/07/2020 - 10:09am

When cheapskates cause death and destruction because they are too greedy to spend the money to maintain safety, it should be a felony, punishable with many years in prison. Instead, this guy is seeking court protection through bankruptcy. It is just SO wrong.