One thing I learned investigating structural damage along the Great Lakes in MI, is every time the water level is high or low, the apocalypse is upon us. And then 5 years later, it's the opposite.
Re: how does the State shut down a dam? You either remove it or modify it so it doesn't impound water anymore and it returns (in this case) to it's pre-1915 natural river valley. But no more lake. Drastic? Yes. But look at the results of not doing it.
The property owners had the beginnings of a plan put together to fix the dam funded by property tax assessments. But the work didn't start until 2 years from now. The State should've emptied the lake and modified the dam to allow natural flow until the repairs were made. No different than the State requiring installation of temporary shoring and bracing to prevent a dilapidated building from collapsing and causing damage to surrounding properties.