Detroit — Officials in Wayne, Oakland and Macomb counties can expect an analysis over the pros and cons of creating a regional water authority to operate the Detroit Water and Sewerage Department within the next few weeks.
Officials from the counties agreed to pay $100,000 each to fund the study by the Farmington Hills accounting firm UHY Advisors weighing the viability of a regional authority. The department serves more than 125 municipalities over 1,079 miles in southeast Michigan.
The current DWSD board and Detroit’s Emergency Manager Kevyn Orr are in favor of forming an authority. Under the proposal, the authority would run and operate the system from Detroit and make lease payments to the city. Savings and subsequent payments to the city would come from refinancing billions in existing bonds at a lower interest rate, according to water department officials and Orr’s spokesman, Bill Nowling.
But the estimates of the lease payments have varied widely, from $50 million to $120 million a year.
Wayne County Commissioner Shannon Price asked about the range of estimates Tuesday at a Wayne County water task force meeting.
Pinning down just how much an authority would pay is one of the answers county officials are looking for, said Solon Phillips, an attorney with the Wayne County executive office of Robert Ficano.
“What we don’t want to do is overpay,” Phillips told commissioners Tuesday. “The counties want to come to an agreement with the city that reflects their concerns on what they consider is a reasonable payment ... and also what is fair to the city as well.”
Reorganizing the water department is a key component in Orr’s plans to get the city out of bankruptcy. The city has limited options for a steady stream of revenue, Phillips told commissioners. Part of the plan is contingent on refinancing bond obligations and creating savings.
The DWSD carries more than $5 billion in outstanding debt. Orr plans on having the beginnings of a regional authority in place by the end of the year, Nowling said.