wAgreement to create water authority guarantees funding to rebuild regional system and to assist customers in need
• Detroit will lease infrastructure to suburban communities in exchange for $50 million annual fee, annual $4.5 million payment assistance fund
A historic deal has been reached between the Mayor of the City of Detroit, the Chief Executives of Wayne, Oakland and Macomb counties and the Governor to create the Great Lakes Water Authority (GLWA) to manage water and sewer operations in the tri-county area. The agreement lays a foundation for a more financially stable system, an opportunity to create efficiencies to better control rates and greater transparency.
The deal continues Detroit’s ownership of its assets while providing suburban communities a greater voice in the operation of the regional system. The agreement also guarantees funding to rebuild the system’s aging water infrastructure, as well as financial assistance for customers throughout the region who are struggling to pay their bills. The annual revenue required rate increases charged by GLWA are expected to be limited to 4% a year for the next 10 years.
The regional authority will be governed by a board made up of two members appointed by the Mayor of Detroit and one appointed from each from Wayne, Oakland and Macomb Counties and the Governor. Major decisions, such as rate increases, will require five of the six votes to be approved.
In order for the provisions of the agreement to take effect, Detroit City Council and at least one of the counties must approve the creation of the Great Lakes Regional Water Authority. If the authority is not approved, the Emergency Manager could make a decision himself on the fate of DWSD and could hand it over to a third party.
Currently, the Detroit Department of Water & Sewerage department manages two distinct systems. First is a regional system of approximately 640 miles of large water and sewer pipes that serve 127 communities in Wayne, Oakland and Macomb counties. This regional system also includes five water treatment facilities and a major sewage treatment plant. Local communities are responsible for their own local water/sewer system and the billing and collections system for their residents.
The Detroit water and sewer system consists of more than 3,400 miles of local water mains, 3,000 miles of local sewer pipes, 27,000 fire hydrants and an extensive billing and collection system.
Of the 1,400 DWSD employees today, it is expected that approximately 500 will remain working at DWSD on Detroit’s local system and approximately 900 will transfer to the GLWA to run the regional system. GLWA will honor all collective bargaining agreements of DWSD employees.
Funding to replace broken mains
If the new authority is established, the city of Detroit will retain ownership of its 3,000 miles of local pipes and lease its 300 miles of suburban pipes to the local communities in which they are located. Five water treatment facilities also would be operated by the Regional Authority.
In exchange for the use of its assets, suburban communities will pay the city of Detroit $50 million per year for the next 40 years. This will allow Detroit to finance up to $500-800 million in bonds to rebuild the city’s aged water and sewer system. The majority of the city’s water mains are between 70 and 90 years old and failing at a rapid rate. Detroiters have suffered through more than 5,000 water main breaks in just the last 3 years.
Rebuilding 1% (30 miles) of its system each year at a cost of about $25 million would have put the city on par with the national average. However, DWSD has spent no more than $3.4 million in each of the last three years to rebuild its mains.
Dedicated assistance to help customers struggling to pay bills
The agreement creates for the first time a fund dedicated to providing financial assistance to water customers in throughout the region who are struggling to pay their water bill. The fund – established at $4.5 million – will be replenished annually. Today, DWSD sets aside only $168,000 annually to assist its customers.