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.