By
Chad Selweski
The Macomb Daily

Saturday, February 22, 2014
As officials sort through Detroit’s voluminous plan to get out of
bankruptcy, the suburbs appear no closer to agreement on one key piece of
Emergency Manager Kevyn Orr’s blueprint – a 40-year deal to lease the
Detroit water system to Wayne, Oakland and Macomb counties for $47
million a year.

Kevyn Orr

A Feb. 11 memo shared among suburban officials outlines in blunt
language the many areas where suburban officials do not trust EM Orr’s
negotiating team. Portions of the detailed, 11-page memo indicate that
Oakland and Macomb leaders fear that they are being scammed.


“I’m a little appalled with the deal that’s on the table. It’s such a
bad deal,” said Macomb County Commissioner Jim Carabelli, a Shelby
Township Republican. “This … is some scary stuff.”

The document lays out suspicions that the high-powered lawyers
handling the negotiations for Orr have withheld or manipulated
information about the Department of Water and Sewerage’s legacy costs
related to pensions and retiree health care, anticipated expenses for
upgrading a neglected network of pipes and pumps, and $113 million worth
of past-due water bills, mostly among Detroit customers.

Beyond a brief mention of Detroit’s past political corruption
problems, the memo also complains about a “gotcha” approach by Detroit,
with EM representatives aggressively pursuing a quick deal under the
guise that the suburbs will buy in “at any price” to gain control of the
DWSD system.


Instead, the counties have balked at every step of the process as
they privately wonder: “Can the city’s representatives be trusted” to
strike a fair deal?

By allegedly hiding financial and infrastructure problems, the
document said frustrated suburban negotiators are asking “What haven’t
the counties found that will result in serious, adverse fiscal and/or
programmatic impacts once discovered?”

Bill Nowling, spokesman for Orr, said that the memo that emerged from
a 3-hour meeting of suburban officials on Feb. 11 “is dated and the
city is hopeful it no longer reflects the counties’ view of the
negotiations.” According to Nowling, a new bargaining session held on
Tuesday was productive.

“The city took issue with the tone of the memo at the time it was
written and believes it did not accurately represent the state of the
discussions,” he said.

“… Since discussions began, the city has provided current information
and responded to the counties’ questions to the fullest extent
possible. It will continue to operate in a forthright and professional
manner.”


Detroit presented its long-awaited road map for climbing out of
bankruptcy Friday, outlining an elaborate plan to restructure $18
billion in debt, demolish thousands of blighted homes and invest in the
broken-down infrastructure that has made the city a worldwide symbol of
urban decay.

But the proposal still faces numerous obstacles, and most aspects are
still being negotiated in mediation sessions with stakeholders.

The ultimate goal for the water department is the creation of a
regional authority that will oversee the system and relieve Detroit of
billions of dollars of costs over the next four decades.

One high-ranking Macomb County official said that water service is
the “lifeblood” of southeast Michigan and the governor and Legislature
should step up and pay most of the costs associated with the proposed
DWSD transaction.

“The state of Michigan cannot stand by and let a region that
represents 40 percent of the population of the state and 40 percent of
the economy of the state deal with an unstable water system,” said
Assistant County Executive Melissa Roy.


The memo was written by Oakland County officials assisting a
study group that has been dissecting the offers and assertions by
Detroit. Macomb County Executive Mark Hackel has said he may, in the
end, favor privatizing the entire system and putting it in the hands of a
contractor.

Overall, Gov. Rick Snyder called the first full bankruptcy plan “a
critical step forward.” But it leaves unanswered many questions,
including whether creditors and labor unions will accept the deal or
fight it, and how long that process might take.

It appears that Detroit’s eagerness to separate the city from the
water and sewer department, a massive system with more than 120 suburban
municipalities as customers, may still face a rocky road.

“The DWSD,” the memo said, “needs continuing, widespread reform – in
financing, in operation and maintenance, in purchasing, in capital
improvement, in technology, in personnel and labor optimization, and in
service delivery.”

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