Water Wars

The future of Detroit’s Water and Sewage Department after the city’s Chapter 9 bankruptcy.
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Do we really need as many as three separate operating water systems in southeastern Michigan? Under Detroit’s Chapter 9 bankruptcy reorganization, emergency manager Kevyn Orr has proposed the formation of a regional authority that would lease the assets of the Detroit Water and Sewerage Department at a minimum of $47 million annually over 40 years. Orr also has floated the idea of selling the city’s water department to a private company, without much success.

In response, officials from Oakland and Macomb counties balked, saying they may be better off collectively building and operating their own water system. The concern is the counties may have to pay higher rates or pay off the debt racked up by the Detroit Water and Sewerage Department, especially as it concerns pensions and legacy benefits of retired employees, or those soon to retire.

Taking matters into their own hands, the city of Flint, along with Genesee, Lapeer, and Sanilac counties, recently sold $221 million in tax-exempt bonds to build a 63-mile pipeline to operate its own water system. It would stretch from Lake Huron to Flint, and supply some 500,000 people with water once operational, most likely by 2017.

In April, following 30 years of service, Detroit stopped supplying water to Flint when the latest contract expired. The city had been paying $12 million a year to Detroit for water. As the community works to complete the new pipeline, Flint is providing water to residents via an existing water treatment plant it operates along the Flint River. Flint officials say the city can better manage water generation and distribution than Detroit, and at a lower cost. Still, the city doesn’t plan to pass any savings from the new system on to users; rather the funds will be reinvested back into water treatment and distribution.

Now come Oakland and Macomb counties, who say they have been stymied by the lack of financial details provided by Orr. In April, Oakland County approved spending $3 million to explore the establishment of a water system that would include Macomb County.

Experts say a redundant system would be incredibly expensive, and may be unworkable given the long-term water contracts the counties have with Detroit. Unlike Flint, Oakland and Macomb do not operate their own water treatment facilities. In total, Detroit supplies water to 4 million people in the region, including 127 suburban communities.

Given redundancy never promotes efficiency, Oakland and Macomb should be provided with all the financial data they need to make an informed decision on behalf of residents and businesses. Orr, whose 18-month term expires in September, should make every effort to supply the data less the bankruptcy stretch on for years.

It’s not the first time Orr has been accused of foot dragging. The Detroit Police & Fire Retirement System said they too have been thwarted in getting financial data from Orr’s office. The emergency manager has proposed cutting pensions as a way to help alleviate $18.5 billion in debt the city racked up due to mismanagement, falling property values, and questionable financial dealings.

Rather than have two separate water systems where pipes literally run side-by-side, regional leaders, the state, and the emergency manager should work much more cooperatively to find a solution to Detroit’s debt issues and establish a workable outcome to the formation of a regional water authority.

The reason the Detroit Water and Sewerage Department was set up in 1836 was to ensure residents and businesses had access to clean drinking water. The alternative of having multiple water systems offering differing standards of clean water was untenable, and unsustainable. db

R.J. KING
RJKING@DBUSINESS.COM

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