The deal crafted earlier this week putting a regional authority in charge of the Detroit Water and Sewerage Department creates the political and legal foundation for the largest privatization of a municipally owned water department in the United States. ….The bankruptcy and moves toward the privatization of the water department are fully backed by the Obama administration, which has pushed cash-strapped cities to enter “public-private partnerships” to fill the gap from reduced federal and state funding for infrastructure needs, just as it has done in public education and health care. Under the agreement signed by Detroit Mayor Mike Duggan and executives from three metropolitan area counties, the city will lease, for 40 years, pipelines servicing suburban communities in exchange for $50 million a year payments. A new six-member board made up of unelected officials—two from Detroit, one each from Wayne, Oakland and Macomb counties, and one appointed by the governor—will make decisions on water rates, contracts, labor agreements and the privatization of services….
Source: >Mitch Jones, Food and Water Watch blog, September 9, 2014
Earlier today, Detroit and three of its suburbs announced the creation of a new, independent regional water authority. The deal creating the authority is part of the ongoing bankruptcy proceedings in Detroit. And while it’s being sold as a panacea to the woes of Detroit’s water system, it’s anything but. In fact, it’s another false solution that will likely leave Detroiters worse off than they are already — with no way to hold decision makers accountable. The city and the suburbs released the Memorandum of Understanding (MOU) that forms the basis of the agreement. A reading of the agreement reveals that it will likely lead to the privatization of the water system. The creation of the regional authority, the Great Lakes Water Authority, corporatizes the system by putting appointed, unelected officials fully in charge of the big decisions that determine the cost and quality of service. The agreement treats water provision as a business instead of a public service. Corporatization itself is the first step to privatization. The new authority can privatize the management and operation of the water and sewer system without real city input or public approval. Currently, the Detroit city council must approve any privatization deal because it has oversight of water contracts worth more than $2 million. With this new agreement, the city council will lose that power. In fact, an independent authority will not give ballot-box accountability to county residents, either; it will just cost city residents their ability to hold the system’s decision makers accountable….
Detroit Agrees To Lease Water System To Neighboring Counties
Source: Quinn Klinefelter, NPR, Morning Edition, September 10, 2014
As Detroit struggles to emerge from bankruptcy, the city reaches a historic deal. After years of acrimony, the city and its suburbs have a tentative deal to share control of Detroit’s water system….
Detroit water department questioned for contracts, avoiding council scrutiny
Source: Joe Guillen, Detroit Free Press, August 29, 2014
After the Detroit City Council refused to support a $48-million no-bid contract with a consultant proposing massive job cuts, the Detroit Water and Sewerage Department board hired the consultant, anyway, approving a series of less valuable contracts small enough to avoid the council’s scrutiny. The Board of Water Commissioners has approved four contracts since November 2012 with consultant EMA, each worth $2 million or less — just below a threshold requiring additional approval for a service contract. The contracts are for work that was initially part of the larger $48-million contract. The council is now questioning whether two sewer construction contracts with Lanzo Cos, totaling $30 million, also were sliced up into $5-million increments to avoid a council vote. This summer Detroit’s inspector general launched an investigation into that deal. … The contracts with EMA, based in St. Paul, Minn., are designed to help the water department undergo its own internal restructuring by evaluating job descriptions, the department’s information technology network and assets of the water system. But rather than lump those contracts into one deal, the water department over eight months approved contracts of $2 million, $1.99 million, $1.99 million and $1.55 million. It approved its first $2-million contract with EMA a week before the council’s refusal to approve the $48-million deal. The most recent two contracts were approved at the July 2013 meeting of the Board of Water Commissioners. …
Private firm to look at Detroit water department, seek cost savings
Source: Joe Guillen, Detroit Free Press, August 22, 2014
An international private water operator that has shown an interest in managing Detroit’s water department has been hired to evaluate the department’s operations, water director Sue McCormick announced to her staff this week. Veolia Water is expected to review the Detroit Water and Sewerage Department’s finances and staffing and will provide recommendations for cost savings, McCormick said in an internal memo obtained by the Free Press. ….
No “grand bargain” for Detroit’s water department, as Orr considers private bids
Source: Sarah Cwiek, Michigan Radio, June 4, 2014
As “grand bargain” legislation sails through Lansing, the fate of Detroit’s water department could become the biggest issue holding up a speedy exit from bankruptcy. Detroit emergency manager Kevyn Orr maintains the city needs to find some way to generate revenue from the system, which serves more than 4 million people in southeast Michigan.
Detroit EM office reviews bids to privatize Water and Sewerage Department
Source: Joe Guillen, Detroit Free Press, June 2, 2014
Detroit emergency manager Kevyn Orr’s office is studying several bids to privatize the Detroit Water and Sewerage Department and could have a selection process completed within two weeks, a spokesman said Monday. But Orr spokesman Bill Nowling would not release any information about which companies submitted bids by Sunday’s deadline to operate and manage the system relied on by millions of people in southeast Michigan. Nowling said the bids are considered confidential under a federal mediation order.
Detroit Plan to Profit on Water Looks Half Empty
Source: Mary Williams Walsh, New York Times, May 25, 2014
As Detroit seeks to settle its debts and chart a viable course for the future, one of its best sources of revenue, clean water for sale, may be evaporating. The fresh water in Lake Huron is still plentiful, but the customers are having second thoughts about Detroit and its vast, aging water system. Detroit pipes much of its water from the lake, and Detroit Water and Sewerage, the city’s water department, sells it wholesale across southeastern Michigan, generating about two-thirds of the city’s water revenue.
Opinion: Privatize Detroit water for the public’s benefit
Source: Joe Recchie, Peter Hammer, Detroit News, May 7, 2014
One of Detroit’s most valuable assets and a key to its long-term fiscal health is hidden in plain sight: its expansive water and sewer system. Safe and affordable water is far more than a commodity. Access to water is a fundamental right with profound economic and sociological repercussions. The city of Detroit should treat it as such. Currently, the city has explored only two options regarding utilities: either forming a Great Lakes Regional Authority or pursuing privatization by selecting one of several dozen proposals submitted by major corporations. A better solution exists. The Detroit Water and Sewerage Department should be transferred to an entity that directly benefits the people of the city that established it. ….
Metro water group calls Detroit’s regional proposal ‘viable solution’
Source: Nathan Bomey, Detroit Free Press, May 2, 2014
A water group representing 11 Oakland County communities and a collection of western Wayne County municipalities has said in a court filing that a regional water authority is a “viable solution” to Detroit’s bankruptcy restructuring, potentially giving new life to the proposal and undercutting the Oakland County government’s bid to block a deal. The Southeastern Oakland County Water Authority — whose membership includes Royal Oak, Birmingham and Southfield — filed a motion in Bankruptcy Court this week requesting entry into confidential mediation talks between Detroit and Oakland, Macomb and Wayne counties…..
Detroit: Bankruptcy water deal with suburbs is dead, unless court orders mediation
Source: Nathan Bomey, Christina Hall and Bill Laitner, Detroit Free Press, April 14, 2014
The City of Detroit has ended negotiations with Wayne, Oakland and Macomb counties over the potential spinoff of the city’s water department as a regional authority, but the city and counties signaled they haven’t ruled out a deal entirely. After Wayne County last week asked Judge Steven Rhodes to appoint a mediator to resolve the dispute between Detroit and the counties, the city asked Rhodes to reject the request. Detroit bankruptcy attorneys said in a court filing that they have ended talks with the counties, leaving the possible privatization of the system as the city’s main focus….
Editorial: What we’d lose by privatizing Detroit’s water system
Source: Detroit Free Press, April 6, 2014
Detroit’s fast track to private water risks high rates, bad service, experts say Oakland County seeks alternatives to ‘monopolistic’ Detroit water and sewer The meltdown over the future of the Detroit Water and Sewerage Department is Exhibit A in southeast Michigan’s epic regional dysfunction. Everyone knows the system has to be “rationalized” in the city’s municipal bankruptcy — not just leveraged as an asset, but changed to manage debt and long-term maintenance better. The solution that Detroit emergency manager Kevyn Orr favors is best for all players: an authority that would give the suburbs a say in the way the system is managed, and give the city much-needed cash for relinquishing its ownership.
Detroit’s fast track to private water risks high rates, bad service, experts say
Source: Brent Snavely, Detroit Free Press, April 6, 2014
Detroit risks higher water and sewer rates, poorer service and a mountain of administrative headaches if it insists on an aggressive timetable for choosing a private company to run the city’s sprawling system, experts told the Free Press. The city, as part of its plan to restructure $18 billion in debt and emerge from bankruptcy, asked private companies in March to provide initial proposals by this week and will ask some from the pool to submit binding bids by June….
Detroit seeking offers for private management of water and sewerage department
Source: Brent Snavely, Detroit Free Press, March 25, 2014
With negotiations with suburban counties deadlocked, the City of Detroit has issued a request for offers from private companies to operate and manage the Detroit Water and Sewerage Department. Detroit emergency manager Kevyn Orr, who is steering the city through the largest municipal bankruptcy in the nation’s history, said the city has a duty to its creditors to explore all options, especially since the city’s proposal for the creation of a regional authority with Oakland, Macomb and Wayne counties is stalled.
Detroit Water, Sewer Bonds Downgraded Deeper Into Junk
Source: Brian Chappatta and Chris Christoff, Bloomberg, March 25, 2014
Detroit’s water and sewer bonds were dropped five levels to CCC from BB- by Standard & Poor’s — its fifth-lowest grade — citing a possible default as the city goes through the largest U.S. municipal bankruptcy. … The city’s water system, which serves about 40 percent of Michigan’s population, accounts for $5.8 billion of Detroit’s debt. Orr has proposed leasing the system to a new regional public authority to help pay for services. Surrounding counties have so far balked. ….
Detroit Threatens to Cut Water Service to Delinquent Customers
Source: John Eligon, New York Times, March 25, 2014
…Although the department said its effort to collect on delinquencies was not related to Detroit’s bankruptcy, the water department has been an issue in the process. The city has been looking to shed some of its $18 billion debt by privatizing some of the system. Kevyn D. Orr, the city’s emergency manager, has proposed folding Detroit’s water department into a regional authority that would handle water service for Wayne County, which includes Detroit, and the wealthier suburban counties of Oakland and Macomb. Those counties have been resistant to the idea in part because of the fear that they will be caught up in Detroit’s delinquencies. Bill Nowling, a spokesman for Mr. Orr, said the water department’s efforts to collect back payments did not affect the city’s push for a regional authority. The authority would give the counties more control in recovering unpaid bills, Mr. Nowling wrote in an email. Besides the effort to create a regional authority, Mr. Orr has also been looking into selling the water department or having an outside company manage it. The city put out a request last Friday seeking bids to buy or manage the department, and Mr. Nowling wrote that interest was strong. …
Detroit Seeks Proposals to Privatize Its Water System
Source: Matthew Dolan, Wall Street Journal, March 25, 2014
This bankrupt city is seeking proposals from private companies to run and potentially buy its regional water and sewer system as talks to lease it to the city’s suburbs have stalled. The move to at least partially privatize one of the nation’s largest water systems comes as the city considers unloading assets to finalize its debt-cutting plan, which is expected to be voted on by creditors this spring. …. Privatizing water and sewer service in southeast Michigan could provide a test case for advocates who argue the private sector would bring greater efficiency and needed improvement to aging systems nationally. Opponents of such privatization efforts fear rate increases and question turning a public entity into a profit-making enterprise….
Detroit water deal not close, Oakland County says
Source: Lauren Abdel-Razzaq, Detroit News, February 11, 2014
Suburban leaders say they’re far from agreeing on joining a regional authority that would run Detroit’s Water and Sewerage Department, despite pressure to reach a deal to facilitate the city’s bankruptcy restructuring. Top aides to Oakland County Executive L. Brooks Patterson made their position clear during a meeting Tuesday night with officials from Macomb and Wayne counties to discuss the proposed authority. Their concerns include forcing suburban customers to bear the brunt of future costs associated with the water and sewer system. Oakland County doesn’t feel it has to make a quick deal with Detroit, deputy executive Gerald Poisson said….
Detroit Suburbs Balk at Spinning Off Water Works to Help City
Source: Chris Christoff and Brian Chappatta, Bloomberg, January 28, 2014
Time is running out for Detroit Emergency Manager Kevyn Orr to persuade suburban leaders and bondholders to help the city wring cash from its water-and-sewer system, a key to resolving its bankruptcy. The Detroit-owned utility serves 127 area communities that now pay for its services. Talks to lease the system to a new regional authority that would generate revenue for municipal services are bedeviled by mistrust and the cost of upgrading a network that serves 40 percent of Michigan’s population across 1,079 square miles (2,795 square kilometers). …
Regional water deal elusive for Detroit emergency manager
Source: Nick Carey, Reuters, December 16, 2013
In bankruptcy and looking for cash, Detroit would like to lease its water utility to raise as much as $9 billion to fund basic services long term, but talks with neighboring suburban counties are stalled. County officials say they are stuck over the price tag and estimates of repair costs, likely delaying plans by Detroit’s emergency manager to deliver a financial restructuring plan early next month. … A key sticking point is the estimate of what it would cost to repair or replace underground pipes and other Detroit Water and Sewerage Department infrastructure. Gerald Poisson, deputy executive for Oakland County – home to 1.2 million DWSD customers – said preliminary financials he had seen estimated it would cost $20 billion to upgrade the system over two decades. Rates would have to quadruple to fund repairs, he said. …