Detroit — An attorney representing Oakland County told Detroit Water and Sewerage board members Wednesday the utility is overcharging suburban customers and overestimating Detroit water usage, and has ignored needed repairs.
Jaye Quadrozzi, of the Farmington Hills firm Young and Associates, said recent unaudited financial statements show the costs to operate the Detroit water system are greatly higher than what is being taken in, “leaving the system significantly short of what’s needed to run the system.”
Quadrozzi, speaking Wednesday at a public hearing on water rates, said the department has a system “badly in need of repairs” that can be traced to the department’s failure to properly maintain the facilities.
Suburban customers are scheduled to pay an average of around 4 percent higher rates for water service. The rates vary widely by community
The Detroit system’s proposed increases range from a hike of more than 14 percent in Romeo and Rockwood to a drop of more than 16 percent in Harrison Township. Detroit residents will see their rates rise 4.6 percent.
The formation of a regional authority and restructuring the department is a key part of Detroit Emergency Manager Kevyn Orr’s plan to cut the city’s debt and exit bankruptcy.
It is believed the department’s debt could be refinanced under more favorable interest rates by bringing in suburban partners whose credit ratings are higher than the city of Detroit’s.
Under the plan, suburban communities would take over the operation of the department and make millions of dollars a year in lease payments to the city.
Wayne County Executive Robert Ficano supports the regional authority idea, while Oakland and Macomb County officials remain skeptical and have balked at paying millions of dollars into the department every year for 30 years.
Detroit Water and Sewerage Department Director Sue McCormick said the department has undergone a rigorous process in setting rates for fiscal year 2014-15 and is now on the final steps. Rate changes go into effect July 1. With Detroit’s bankruptcy and Orr’s plan to change the operations of the Water Department, the challenges were even greater this year, she said.
“We acknowledge this process we are in is a very complicated environment with things that are outside our sphere or control,” McCormick said. “Everyday business balancing with the unknowns is a challenge.”