'I could not sell this to one rate user in Macomb County right now. If someone asks me as to how and why we are doing this, I could not give them a responsible answer,' said Macomb County Executive Mark Hackel. (Todd McInturf / The Detroit News)
Suburban leaders say they need more detailed financial information from Detroit — and evidence their customers won’t bear the brunt of future costs — before they are willing to join a regional authority to run the city’s Water and Sewerage Department.
Oakland County Deputy Executive Bob Daddow said Tuesday the county isn’t ready to sign off on the deal, which is a key element of Emergency Manager Kevyn Orr’s proposed bankruptcy restructuring plan.
“We’re going to walk” unless we get more information, Daddow said. “(Detroit officials) know what we’ve needed for six months. This is no surprise. They have our telephone number. They know our position.”
Daddow said water rates could “at least double and could be as high as triple” for the suburbs if the deal went through. He said the city is seeking capital improvements costing between $2.5 billion to $4 billion over the next decade. “It’s startling,” he said.
Daddow said Oakland County has been demanding additional financial records from Detroit, including the water department’s audited financial statement for 2013; the interim financial statement since the city filed for bankruptcy; details of labor contracts; lawsuits the department faces; planned capital improvements; and an explanation of how the city estimates it can generate $47 million annually on the deal while retaining ownership of the department.
Daddow said he believes the city has failed to respond to requests for information because it could make the deal look worse. He also believes mostly suburban users could be on the hook for future capital improvements given the city of Detroit’s low income tax collection rate.
The preliminary plan calls for the suburbs to pay $1.88 billion to lease the Detroit Water and Sewerage Department. Orr has been working with the department and suburban officials for the creation of a regional authority.
The yearly sum is a key component in Orr’s plans to secure a funding source for the bankrupt city and help erase Detroit’s $18 billion debt.
The board would include two members each from Wayne, Oakland and Macomb counties, two city appointees and one from Snyder.
Orr’s spokesman, Bill Nowling, said Tuesday the water department plan “addresses many long-standing issues that have been raised by regional officials for decades.”
“The city continues to believe that is in all parties’ interests to reach an agreement on creating a water and sewer authority that benefits the region both today and in the future,” Nowling said.
He cited a University of Michigan Gerald R. Ford School of Public Policy study this week that indicated 79 percent of local leaders consider service-sharing agreements between communities as a top priority. “The city has proposed to do just that with regards to region’s sewer and water system,” Nowling said.
Macomb County Executive Mark Hackel on Tuesday agreed with Oakland leaders that the city has not released enough information.
“I don’t think there’s a fair opportunity for us to look into the terms and conditions,” Hackel said. “I could not sell this to one rate user in Macomb County right now. If someone asks me as to how and why we are doing this, I could not give them a responsible answer.”
Hackel suggested the state — with a newly found budget surplus — could play a role in the process.
“I would think if there’s a billion (surplus) at the state level, some opportunity is there to fund some kind of consultants to work on our behalf,” Hackel said. “Here we’re talking about a life source of water and their expectation is having Wayne, Oakland and Macomb resolve the problem by coming up with a money stream? I question where the state involvement is in this.”
Privatization of the department — suggested earlier in the process — has been ignored, Hackel said. It should still be considered given the department’s history of graft and corruption, he said.
Wayne County Executive Robert Ficano said Tuesday that negotiations in regional matters are often contentious. The 2009 formation of the Detroit Regional Convention Facility Authority wasn’t easy, he said. Neither were negotiations on Aerotropolis, the “airport city” off Interstate 94.
“Eventually everybody came together in the end,” Ficano said. “Regionalization is the better way to go. Everybody wants more information there’s no doubt about that. It’s important that we get to that deal. It’s better that we’re at the table when decisions are made.”