Officials from Detroit and Oakland, Wayne and Macomb counties Tuesday morning announced the creation of a Great Lakes Water Authority that maintains Detroit’s ownership of the system, The Detroit News reports.
The deal calls for the city to lease infrastructure to suburban communities in exchange for a $50 million annual fee and an annual $4.5 million payment assistance fund, The News writes.
The deal must be approved by the Detroit City Council or if not, by the Detroit emergency manager.
A press release issued by Mayor Mike Duggan's office states:
The agreement lays a foundation for a more financially stable system, an opportunity to create efficiencies to better control rates and greater transparency.
The deal continues Detroit’s ownership of its assets while providing suburban communities a greater voice in the operation of the regional system.
The agreement also guarantees funding to rebuild the system’s aging water infrastructure, as well as financial assistance for customers throughout the region who are struggling to pay their bills. The annual revenue required rate increases charged by GLWA are expected to be limited to 4% a year for the next 10 years.
The News writes that Detroit and suburban officials had been negotiating in closed-door meetings for months over the water and sewerage department, but a federal gag order prevented anyone from talking about it.
The news release went on to say:
If the new authority is established, the city of Detroit will retain ownership of its 3,000 miles of local pipes and lease its 300 miles of suburban pipes to the local communities in which they are located. Five water treatment facilities also would be operated by the Regional Authority.
In exchange for the use of its assets, suburban communities will pay the city of Detroit $50 million per year for the next 40 years. This will allow Detroit to finance up to $500-800 million in bonds to rebuild the city’s aged water and sewer system. The majority of the city’s water mains are between 70 and 90 years old and failing at a rapid rate. Detroiters have suffered through more than 5,000 water main breaks in just the last 3 years.
Rebuilding 1% (30 miles) of its system each year at a cost of about $25 million would have put the city on par with the national average. However, DWSD has spent no more than $3.4 million in each of the last three years to rebuild its mains.