Michigan dams restoration delayed amid rising costs, mounting frustration

• Rising costs and a legal battle will suspend work to repair mid-Michigan dams four years after failure and mass flooding
• Property owners are expected to pay more than $200 million collectively, up from initial estimates of $60-$80 million
• The state has already put $200 million into the project

Four years after historic rains wiped out two mid-Michigan dams and caused over $200 million in flood damage, restoration work will soon be suspended as hundreds of property owners balk at the cost.

The Four Lakes Task Force announced Monday it is holding off on upcoming construction work after a group of property owners in Midland and Gladwin counties challenged county-approved assessments that established how much each property owner would be required to pay.

The local cost has more than doubled since the first estimates were released. Now, despite $200 million in state funding to restore the dams, local property owners will have to split the cost of borrowing about $217 million, up from the $60 million to $80 million initially expected.

Property owners now face the prospect of paying over $40,000 over 40 years instead of the initially anticipated $20,000. Specific amounts depend on lot size and location. Owners with multiple lots would pay on each. 

Related:

• Michigan wins $120 million judgment against dam owner
• Judge: Midland dam owners ignored problems, caused ‘environmental disaster’
• Nessel: Edenville dam owner knew of flaws 10 years before breach

Frustration with the mounting price tag prompted the creation of the Heron Cove Association, a group of hundreds of property owners who appealed the assessments last month.

Kim Lavigne, whose family own properties along the lakes, said they were stunned by the cost — and some would rather not pay to fix the dams. 

“To them, having the water back is not worth the 40 to 60 grand,” she said.

Others, though, do want their lakes restored, Lavigne acknowledged.

It could take months to learn when the project will go forward, said David Kepler, president and chairperson of Four Lakes Task Force, who announced the suspension. 

But with uncertainty surrounding the appeal of the assessments, the task force cannot borrow the money in June as intended, Kepler said. That will slow work — and possibly stop it — on all four dams.

“We need to finance (in order) to finish,” he said.

The delays could begin in May on Edenville dam, which was the first to collapse on May 20, 2020. After it failed, torrents of water knocked out the Sanford dam downstream. An estimated 2,500 buildings were damaged and 10,000 people were evacuated in the region.

A federal judge called it “one of the worst environmental disasters that the state of Michigan has ever experienced.”

Since the flooding, the two northernmost lakes, Smallwood and Secord, remain, though the dams on the Titabawassee River still need work. The river now flows where Wixom and Sanford lakes once provided recreation for thousands.

Kepler said over 6,000 property owners have not challenged the assessments, which he said were approved unanimously by the county commissions of both Midland and Gladwin counties.

“Nobody’s happy about any tax increase,” said Kepler, who owns a home on Sanford Lake. “The question is, if you live on a lake, do you want a lake or not?”

The task force blamed the rising price tag on increased labor costs caused by a surge of infrastructure work across the country, as well as increasing costs for steel and concrete. And because the projects are large, smaller firms could not bid, limiting competition, according to the task force.

Hugh McDiarmid, a spokesperson for the Michigan Department of the Environment, Great Lakes and Energy, said the delay announced by the task force will not affect the dam restoration funding already dedicated by the state.

In 2022, state lawmakers agreed to pay $200 million toward the project for the lakes that largely benefit the 6,300 owners whose property surrounded Sanford, Wixom, Secord and Smallwood lakes in Midland and Gladwin counties.

That’s far more than the $120 million the state won last year in a federal court judgment against the dams’ private owner, Boyce Hydro LLC, which filed for bankruptcy following the disaster.

The ruling came after a federal judge agreed with Michigan Attorney General Dana Nessel’s legal team that former owner Lee Mueller had ignored known weaknesses that led to the May 2020 dam failures.

Boyce Hydro had a legal responsibility to alert the state to "alarming circumstances" that "affected the safety of the dam” and failed to do so, U.S. District Court Judge Paul Maloney wrote last fall. 

Mueller and his family first bought the four hydroelectric dams as a family tax break and for years did not comply with orders from the Federal Energy Regulatory Commission to increase the flood capacity.