Deal reached to overhaul Detroit water agency
DETROIT (AP) — The Detroit water department would be turned into a regional agency with a 10-year limit on annual rate increases and an infusion of millions of dollars from the suburbs, under a deal the mayor and other officials announced Tuesday.
Only two of the governing board's six members would be appointed by Detroit, but rate increases would need approval from five. The Water and Sewerage Department provides water to people in eight counties, approximately 40 percent of Michigan's population. It would be renamed the Great Lakes Water Authority.
The agreement was announced at the federal courthouse, several floors below Detroit's bankruptcy trial, after months of negotiations. Judge Steven Rhodes had encouraged city and suburban leaders to use the bankruptcy as an opportunity to overhaul the agency.
"This is a plan I would not have hesitated to make even if we were not under bankruptcy," Mayor Mike Duggan told reporters. He took office in January.
In exchange for the use of pipes, the suburbs would pay $50 million a year to Detroit for the next 40 years, money that would be used to rebuild the creaky water and sewer system. The majority of water mains are at least 70 years old. Water comes from Lake Huron and the Detroit River.
Rate increases would be capped at 4 percent a year for the next 10 years. The agreement includes a $4.5 million fund to help people pay bills. Recent waves of shutoffs in the city have caused controversy.
The deal still requires approval from the Detroit City Council and at least one county. If they don't act, Detroit emergency manager Kevyn Orr could turn the department over to a third party.
"As we move into the future we will have a water system which is fair, affordable, accountable and transparent. That was our goal," said Oakland County Executive L. Brooks Patterson, who for months had pledged that he wouldn't be strong-armed into a bad deal.
The agency has been a regular target of criticism from the suburbs, especially over rates. The department's reputation took a hit during the 2012-13 corruption trial of former Mayor Kwame Kilpatrick, who was convicted of ensuring that a pal got millions of dollars in construction contracts.