The water department could soon operate as an independent authority.
The board that oversees Detroit’s water and sewer system and a court-ordered committee that includes that mayor’s office signed an agreement Wednesday afternoon to help the water department step out of the shadow caused by Detroit’s financial woes.
The agreement, which still needs several layers of approval, would allow the water department, currently a branch of city government, to operate as an independent authority. Once separated, the department would still be supervised by the Board of Water Commissioners.
“The Root Cause Committee and the Board of Water Commissioners are to be commended for their courage and vision in embracing a structure that will assure stability for the department, while providing customers with quality and affordable service,” said Detroit Water and Sewerage Department (DWSD) Director Sue McCormick. “It also insures continuity, and equally important, assures final decision making rests with the authority.”
The restructuring would put some distance between the water department and the city’s shaky finances, in hopes of assuring both bondholders and customers, said Bill Johnson, a DWSD consultant.
“The city doesn’t have a reputation for being well run,” Johnson told Circle of Blue. “The water department is connected to that.”
Detroit’s bond rating has dropped in recent years and the city’s financial problems have taken the water department’s rating along for the ride. Last November, credit rating agency Moody’s downgraded the water department’s revenue debt, citing the uncertainty caused by talk of a municipal bankruptcy.
On March 1, Michigan Governor Rick Snyder (R) recommended a state-appointed “emergency manager” who would have broad powers over Detroit.
The agreement signed today is just a concept and the “first step in a long process,” Johnson said.
The water department will include the agreement as part of a compliance report it will submit March 15 to a federal judge. Johnson said the DWSD hopes that the court will release the department from federal oversight, which has been in place for more than three decades because of Clean Water Act violations.
Under the agreement signed today, the city would still own the water and sewer assets, and it would receive annual payments from the independent authority, payments currently valued at $US 50 million.
In a statement, Mayor Dave Bing said that he agreed with the concept, and he welcomed the revenue it would bring.
“We are prepared to move forward to develop a plan that meets the needs of our region and also protects the long-term interests of the people of Detroit,” he said.
Brett writes about agriculture, energy, infrastructure, and the politics and economics of water in the United States. He also writes the Federal Water Tap, Circle of Blue’s weekly digest of U.S. government water news. He is the winner of two Society of Environmental Journalists reporting awards, one of the top honors in American environmental journalism: first place for explanatory reporting for a series on septic system pollution in the United States(2016) and third place for beat reporting in a small market (2014). Brett lives in Seattle, where he hikes the mountains and bakes pies. Contact Brett Walton