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.
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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.”