Wednesday, September 10, 2014

Lingering Questions Concerning a New Water Authority

At a press conference Tuesday, September 9, 2014, Detroit’s mayor and leaders of Oakland, Macomb and Wayne counties announced that they had signed a memorandum of understanding to create a regional water authority, called the Great Lakes Water Authority, subject to the approval of the bankruptcy judge, Detroit City Council and at least one county board of commissioners.

An article in the Detroit Free Press on September 9, 2014 asserted, “The DWSD will continue to maintain the plants and pipes that are located within the city’s physical borders.” Apparently, the new water authority will operate the region’s principal wastewater treatment plant (WWTP) in Detroit.  Good idea.  (That’s where most of the mischief over the decades has occurred.)  


Will there be responsible accounting and auditing now at the main WWTP? What guarantees are in place to prevent more annual audit holidays, as occurred at the end of the last two fiscal years under the auspices of the state emergency manager?

DWSD didn't have the talent, equipment or technology to account accurately for the department’s revenues and expenditures.

I wrote here on February 2, 2014, “If you were to look back several decades for the public institution in Michigan most shrouded in secrecy and obfuscation by reason of corruption and incompetence, it’s hard to imagine you would find one more qualified than the Detroit Water and Sewerage Department (DWSD)...

“Traditional annual audits (1) were not, aren't and never will be comprehensible by the public and (2) obviously didn't reveal, stop or even slow down the laundry list of crimes and mismanagement at DWSD.  And anyone who thinks those problems are completely over at DWSD has his or her head in the sand.”

Let's hope that a regional board and new management at the Detroit WWTP will bring crystal-clear transparency.


How well is democracy served in this new regional arrangement? I was stunned when Oakland County Water Resources Commissioner Jim Nash said in an interview September 10, 2014 on WDET, public radio in Detroit, that the only way to make the regional water system more democratic is the plan just announced by the region’s leaders.  How patently false!  The only way to make the proposed Great Lakes Water Authority more democratic is to elect its board, not appoint members, as proposed.

On April 30, 2014, I wrote here, “Before we get too much farther along the path of regional government by means of political appointments (for example, the present Board of Water Commissioners), we should insist on democracy in the form of regional elections...

“The damage done to water services ratepayers in the region by some local officials in Detroit and political appointees is incalculable and unconscionable...

“Every county served by a regional water authority should have at least one elected  representative on the authority’s board.  Under my plan, Wayne, Oakland and Macomb counties would have one representative for every 350,000 residents.  The City of Detroit would not be a segregated unit.  Its (declining) population would be included in Wayne County’s total...

“I would require that each candidate for election be a resident of one of the municipalities served by the authority.”

The governor, the state legislature, county executives and boards and, above all, citizens in the region should give considerable thought to the issues raised here before making formal commitments to revise the region’s water services structure.

Sunday, September 7, 2014

Does Detroit's Bankruptcy Plan Anticipate Double-dipping?

The following quotes are from “Counties: Detroit Bankruptcy Plan Ruins Water, Sewer Department” by Caitlin Devitt in The Bond Buyer on September 4, 2014.  

The article summarizes the objections of Oakland, Macomb and Wayne counties to Detroit’s proposed Plan of Adjustment in bankruptcy proceedings insofar as the plan calls for “monetizing” (i.e. diverting revenues to the city’s general fund from) the water and sewer department, which serves nearly four million residents in the region, more than three million of whom live outside the city.

“Already faced with aging infrastructure and chronic unpaid bills, the DWSD would be subject to ‘capital breakdown’ under the confirmation plan, argued Wayne County's attorney, Max Newman from Butzel Long. The one thing the system can't have is a ‘grossly inadequate capital improvement plan,’ Newman said…”

“Detroit's confirmation plan calls for the diversion of $47 million a year from the system's revenues to pay for city pensions. That would mean the loss of $428 million over the next nine years that should be used for capital upkeep and improvements to the aging infrastructure, attorneys argued.”

“The city's current plan would repair about 1.5 miles of sewer line each year, according to Oakland County's attorney, Jaye Quadrozzi of Young and Associates. At that rate, it would take 561 years to repair it, she said.”

“The city's capital plan totals $2.9 billion over the next 10 years, but recent reports show the system will actually need $4.5 billion in repairs. Rates are already too high...she said.”

Counsel for the counties believe that Detroit has intentionally overestimated its pension liabilities to justify a grab for water and sewer revenues.

“[Detroit Chief Financial Officer John Hill] said the city may be forced to ‘make adjustments’ to the confirmation plan if money for capital investment does not come in as expected.”  

Hmmm.  Sounds to me like he expects water and sewer ratepayers to pay twice, once for tribute and again for capital improvements.