The biggest reason the Detroit Water and Sewerage Department now answers to Mayor Mike Duggan is simple:
The brouhaha over the department’s poorly executed water shut-off plan — a program whose time is way past due given $90 million in delinquencies, a legacy of scofflaws and efforts to craft a regional water authority with the suburbs — threatened to derail the largest municipal bankruptcy case in American history.
And that was a risk Emergency Manager Kevyn Orr, his Republican patrons in Lansing, even U.S. Bankruptcy Judge Steven Rhodes, could not afford to see taken. Especially when international, if marginally informed, media and activist rants far from Detroit began landing roughly three weeks from the scheduled start of the case’s confirmation trial.
“We did support it,” Orr’s spokesman, Bill Nowling, said of the DWSD’s delinquency crackdown. “But a wise man changes his mind and a fool never does. It was clear after looking into this they did no preparation to communicate the plan and execute it. This is all about a department gone rogue.”
Whatever preparation the department did, or did not, do is immaterial now that Duggan is in charge. The shut-offs remain halted, the program is being retooled (not abandoned) under his direction, and beefs about the inability of customers to pay their bills have been aired publicly, mostly to the detriment of the department.
Orr’s order giving operational control to the mayor aims to quiet the uproar over the shut-offs, an inconvenient clamor that included Judge Rhodes, members of Congress and talking heads with megaphones. The EM’s move is an effort at risk management, isolating DWSD and its dysfunction from a Chapter 9 case speeding to its culminating phase.
But that’s not all. Absent a mediated settlement with Oakland, Macomb and Wayne counties under U.S. District Judge Sean Cox — which still is possible — Orr’s order increases the likelihood that DWSD could become part of a negotiated regional authority, potentially outside a bankruptcy process that does not assume a water settlement to make its numbers work.
It also decreases the chances the department could be sold outright to investors, as threatened earlier in the process, or managed by a third party. Why? Because DWSD’s troubled operations, coupled with its high-profile regional presence serving 4 million customers, is a challenge tailor-made for Duggan’s get-it-fixed demeanor.
A vocal opponent of privatization, the mayor now has a clear political stake in the final shape of a restructured department. As a practical matter, Duggan’s direct oversight of the water department forms a bulwark against third-party management and likely would boost talks over a regional authority.
Suburban negotiators clashed regularly with Orr’s team, especially Ken Buckfire, a New York investment banker who demonstrated scant sensitivity for parochial political concerns or decades of mistrust amid seeking a deal on deadline.
The mayor’s local pedigree, marked by years at Wayne County, a stint leading Detroit Medical Center back to profitability and a keen grasp of regional sensibilities, stands a better chance of working with his counterparts to make the regional authority reality.
He’s also more likely to be able to deliver a politically defensible arrangement that could survive long-term regional muster, in part because it would acknowledge any regional arrangement cannot force suburban ratepayers to subsidize deadbeats in Detroit and Highland Park. He signaled as much in a statement Tuesday responding to Orr’s order and the water-bill furor:
“When some Detroit residents don’t pay their bills, those bills have to be paid by other Detroiters,” Duggan said. “There is no outside funding from the suburbs, from the state or from the feds. These unpaid water bills are Detroit’s alone.
“So all bills that remain uncollected this year must be paid for by higher rates on all Detroiters next year. As for those who can pay and choose not to, we won't force other Detroiters to pay their bills.”
The mayor is sending a signal that should be obvious to anyone except perhaps those who think the “right” to water includes someone else paying the carrying costs of pumps, piping infrastructure, processing equipment and the people needed to deliver the stuff to roughly 40 percent of Michigan’s homes and businesses:
For those who truly cannot afford to pay, help is available. But residents refusing to pay, and a department marginally capable of collecting unpaid bills, are self-destructive habits the city cannot afford.
He’s right, as much as DWSD’s crackdown may infuriate scofflaws and those seeking the next outrage from Detroit. Proving it to would-be suburban partners and the capital markets are steps toward running a valuable asset in a way worthy of its name.
Daniel Howes’ column runs Tuesdays, Thursdays and Fridays.