Law firm with history of similar lawsuits suing City of Coldwater

A lawsuit has been filed against the City of Coldwater, accusing it of overcharging residents through its payment-in-lieu-of-taxes (PILOT) fees. Last December, resident Jason Mate filed the complaint in Branch County Circuit Court, claiming that the city has been improperly charging a 6.5% PILOT on the electric fund. The lawsuit alleges that calculating the fee based on gross revenue instead of gross income has led to the city failing to deduct nearly $33 million in power supply costs. As a result, over $12 million in improper transfers to the general fund were made between 2020 and 2024. Approximately 7,000 residential, commercial, and industrial customers are seeking representation through this legal action, demanding a full refund of all PILOT fees collected over the past six years. Responding to the claims, City Attorney Amanda O’Boyle released a statement characterizing them as “baseless” and announced the city’s intention to mount a “meritorious defense.”

The law firm Kickham Hanley, behind this lawsuit, has a history of pursuing similar litigations in the state. Their involvement goes back as early as March 2022 when then City Attorney Megan Angell alerted the city council about the possibility of a lawsuit.

The City of Coldwater asserts that the fees are permitted under a voter-approved 1960 charter. In contrast, the plaintiffs argue that the current fee collection practices exceed the legal justification for such tax-equivalent payments.

Residents have expressed their dissatisfaction with the city’s response to the lawsuit. Some believe that City Attorney Amanda O’Boyle’s dismissal of the claims as “baseless” is an insult to the people of Branch County. There are calls for additional legal action to be taken beyond the initial lawsuit filing, showing community resentment towards the perceived lack of transparency in the city’s actions.

There appears to be confusion among residents regarding the city’s statements. A commenter pointed out that the city attorney contradicted her claims when she stated that legal challenges similar to the ongoing lawsuit had been resolved. Residents are questioning the consistency of the city’s position and expressing concerns about potential deception in the handling of the situation.

The lawsuit against the City of Coldwater highlights a contentious issue surrounding PILOT fees and has the potential to alter how municipalities in Michigan assess and collect such charges. Both the city and its residents remain entrenched in the legal battle, with diverging views on the legality and fairness of the fees in question. The outcome of this lawsuit could set a precedent for future litigation surrounding similar practices in municipalities across the state.