Two days ago, a deal was reached on the future of the Detroit Water and Sewerage Authority that will allow the city's bankruptcy case go forward. Like most bankruptcy agreements, it involved a good measure of arm twisting and Hobson's choices. But it has the potential to benefit most of the people in southeastern Michigan who use water -- in other words, everybody.
The outline:
1. The system will now be governed by a regional authority, the Great Lakes Water Authority. The authority will have six members: 2 from the city of Detroit, 1 each from Wayne, Oakland and Macomb counties, and one appointed by Michigan Gov. Rick Snyder. (Oakland and Macomb counties cover most of the Detroit suburbs. Wayne is mostly the city with a few downriver suburbs.)
2. The suburbs will be contributing $50 million a year to repair and rebuild the system for the next 40 years, a total of $2 billion. That will finance $500 to $800 million in system upgrades and repairs.
3. Water rate increases would be capped at 4% a year for the next 10 years.
4. The authority will provide up to $4.5 million a year to assist Detroiters living below the poverty line with water bills.
5. The Detroit Water and Sewer Department will continue to operate and maintain the system's pipes and plants within the city borders.
6. All union deals with Detroit water workers will stay in place, though 900 workers will transfer to the new GLWA.
Continue across the fold for a bit of detail.
The broad outline of the deal is pretty much what people have been saying had to happen for the last five to ten years. The amazing thing is that they couldn't actually bring this deal together until the bankruptcy court was looming over the system. Looking at who was trying to negotiate the deal, though, you can see why it took so long.
Emergency Manager Kevin Orr has been threatening to privatize the system, but most of the parties to the deal knew that it was an empty threat. The system is such a white elephant that there wasn't any private business willing to take it on.
The major roadblock to the agreement has been Oakland County Executive L. Brooks Patterson. Patterson is an old-time Republican. He has made a lot of public statements that make it clear he stands solidly behind the GOP tendency to oppose ethnic diversity. (That's about as politely as I could put it.) Patterson's stated reason for opposing a regional authority was that money from the system would pay for Detroit water department pensions. That's right, he was opposed to black retired people being able to buy food and keep a roof over their heads.
Macomb County Executive Mark Hackel (Democrat) has also raised objections to the deal over the past couple of years. Hackel's public statements haven't been as nakedly racist as Pattersons, but Hackel is still a bit of a conservadem. Hackle became Macomb County's first executive (up until just a few years ago, Macomb County was led by the chairman of the county board rather than an executive) after several years as the Macomb County Sheriff -- a job he succeeded his father (Bill Hackel) in. The Hackel family have been pillars of the Macomb County Democratic Party for a very long time. The Macomb County Democrats, particularly during Bill Hackel's time, were of the machine persuasion.
The third county executive is Wayne County Executive Robert Ficano, who last month lost his primary to Warren Evans, current Wayne County Sheriff, and former Detroit police chief (forced out of that job over a personal scandal). Ficano's tenure has been marked by gross financial incompetence. If you want to see just how bad he's been, look up the Wayne County Jail construction project.
Put those three executives in a room with Kevin Orr and you'll see why a deal was pretty much impossible. Personally, I think Orr handing off the water department to Mayor Mike Duggan was the break that made a deal possible. Of course, there was also judicial mediation ordered by the bankruptcy Judge Steven Rhodes.
Patterson has said he'll support the deal, though he had to throw in that he had no choice in the matter. Hackel says he's supporting the deal, though he still has reservations. Ficano said... well nobody really cares what Ficano says these days.
Kevin Orr still has to sign off on the deal, but he likely will. It gives him less of a revenue stream (he had wanted to divert a lot of money from the water system to the Detroit general fund to make up his deficit), but it opens a path to the broader bankruptcy deal.
The good in this deal is finding money to repair and maintain the system that pipes water to about 4 million people in southeastern Michigan. Water rates will only increase gradually over the next decade. Money is being put aside to help the poorest Detroiters keep their water turned on. And the suburbs will now have a say in the administration of one of their vital utilities.
Overall, I think this looks like the best deal that could have been struck out of a really bad situation.