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Shelby Township

December 18, 2013

Shelby clerk holds water rate citizens advisory meeting

By Sarah Wojcik
C & G Staff Writer

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Shelby Township Department of Public Works (DPW) acting Director Dave Miller discusses how the Board of Trustees and the DPW have worked to keep rates down as water continues to cost more money.

SHELBY TOWNSHIP — Clerk Stanley Grot called a meeting with residents to discuss water rates, which have an uncertain future matching that of the Detroit Water and Sewerage Department (DWSD), the sole supplier of water and sewer service to the township.

Grot said the purpose of the meeting was to expose the truth about what is going on with water and sewerage rates and to come up with a solution on how to free the township from an unjust monopoly.

More than 100 residents listened to presentations by Shelby Township Department of Public Works (DPW) acting Director Dave Miller, DWSD Board of Water Commissioner and Macomb representative Fred Barnes, and Wayne County Commissioner and Water Task Force Chairman Shannon Price.

The DWSD serves 4 million water and 3.2 million sewer customers, and its waste water facility is the largest in North America. Of 126 communities served, 80 percent of revenue is generated from the suburbs and 20 percent from the city of Detroit.

Miller said in Shelby’s 35-square-mile area, the DPW has 26,000 water and 14,850 sewer customers, and purchases 3 billion gallons of water annually, which amounts to about 75 percent of the department’s total revenue.

He said the township has a 30-year contract with DWSD, approved by the previous Township Board, that is due to expire in 2041 and can be opened for renegotiation every five years. The next renegotiation year is 2016.

In order to reduce water rates, the previous board passed a true cost of service initiative in 2009 to charge residents the price the township pays for water, instead of rounding up, Miller said. He said the DPW also reduced labor costs by a quarter of a million dollars and saved taxpayers several million dollars in insurance by paying off long-term debt in 2012.

Barnes said that while the DWSD obtained its own director, plus finance, HR and legal departments separate from Detroit — due to a decision of U.S. District Court Judge Sean Cox — and has been able to improve its system, save money and downsize, it is still owned by the city.

“The Board of Water Commissioners is not able to control its own destiny. Whether or not there is going to be an authority or a sale or things are going to continue as they have is not up to (us),” Barnes said.

It is, he said, up to executives from Oakland, Macomb and Wayne counties, and Detroit Emergency Manager Kevyn Orr. He said their ongoing discussions have not included the board.

“I’ve been told that in recent meetings, there are 50 people in the room and 92 percent are attorneys from the counties and the emergency manager’s office,” he said. “I’ve been told that we’re going to have a deal done by Dec. 31, but I’m not sure I can see that happening.”

According to figures at the meeting, the DWSD is $6 billion in debt and has $800 million in bond costs that must be paid off if the system were to be sold to a private buyer. The department also needs $1.5 billion in capital improvements, such as automation of manual tasks and new equipment, in the next four years to remain functional.

Price said Orr must find revenue to pay off the DWSD’s debt and help the city out of bankruptcy, but he cannot do that with the department as it stands, since its revenue is controlled internally. However, Price said, if Orr created a regional authority consisting of tri-county leadership, which leased the DWSD, then a revenue stream could be directed to Detroit.

Price added that if an authority leased the DWSD, they would also be able to sell it to a private buyer, but he felt that option was becoming less likely because of the expense and because he said there is legislation in Lansing that would mandate any third party purchaser go before the Public Service Commission for approval of rate increases.

Price added that Orr has a self-imposed Dec. 20 deadline for a DWSD agreement and that he is hoping for letters of intent from Macomb County Executive Mark Hackel, Oakland County Executive L. Brooks Patterson and Wayne County Executive Bob Ficano by that time.

With two proposals regarding the authority rejected by press time, Price said he feels that the counties are miles away from a deal and he does not see the Dec. 20 deadline as feasible. He said he wants more representation and a fair rate.

Grot said Genesee County is constructing its own 65-mile water pipeline from Port Huron to Flint and is scheduled to break off from the DWSD by 2016, which would leave the rest of the communities to pick up a loss of 20 percent of revenue — $25 million annually.

He suggested that a regional authority be set up with full partnership with DWSD, consisting of a nine-member board: two representatives from each of the three counties, including one appointed by the county executive and one by the Board of Commissioners; two representatives from Detroit, including one appointed by the mayor and one by the Detroit City Council; and one representative appointed by Gov. Rick Snyder.

“The (Township) Board has been doing everything we can to minimize water rate increases, but the board has no voice anymore,” Grot said. “I want to bring awareness. I want to scream as loud as I can so everyone knows that we are in trouble.”

He advised residents to call county executives, state representatives, Orr and Snyder to express their concerns.