Township assigns contract with Great Lakes Water Authority

By: Nick Mordowanec | Fraser - Clinton Township Chronicle | Published December 9, 2015

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CLINTON TOWNSHIP — Clinton Township is officially aligned with the Great Lakes Water Authority.

On Nov. 16, the Board of Trustees unanimously voted to assign a wholesale customer service contract in accordance with the Detroit Water and Sewerage Department and the Great Lakes Water Authority, or GLWA.

This plan comes after months of debate and further research, not only by Clinton Township but by numerous municipalities in Macomb County. The new CEO of the GLWA, Sue McCormick, initially sent the township a letter June 25 for request of consent to the assignment of a water contract.

The letter described the “historic agreement” reached between the city of Detroit and the GLWA to lease the assets of the Detroit water supply and sewage disposal systems. Under terms of the Regional Water Supply System Lease Agreement, the GLWA has assumed responsibility for the Detroit-owned system and will be the future provider to wholesale customers.

McCormick promised the same high water quality that customers have come to expect over the years, but municipalities like Clinton Township needed to contractually oblige to the assignment of the contract. The only difference, she said, is the change in service provider.

Clinton Township and Detroit had previously entered a contract in February 2009.

Township Attorney Jack Dolan mentioned how some cities, like Sterling Heights, don’t have the same storage capacity as places like Clinton Township. That results in huge spikes during peak use, he said, and he recommended for the board to sign the contract.

“We might come back later with some proposal for a county-wide entity,” Dolan said.

Under the agreement, the GLWA has assumed all of Detroit’s rights, duties, liabilities, responsibilities and obligations. The GLWA is bound to perform in accordance with the terms and conditions of the contract.

On Oct. 10, the city of Detroit and Macomb, Wayne and Oakland counties adopted the Articles of Incorporation of the GLWA. On June 12, Detroit and the GLWA executed two 40-year lease agreements regarding two facets: the operation and management of the Detroit water supply system and the operation and management of the Detroit sewage disposal system.

Some aspects of the Detroit-GLWA facilities lease agreement include: GLWA revenue requirements that are targeted not to increase by more than 4 percent per year, including a $50 million lease payment, $4.5 million Residential Assistance Program payment and GLWA employee-related frozen pension obligation as expenses shared nationally; DWSD bonds are to be assigned to the GLWA and are payable solely from net revenues of the system; and the $50 million lease payment may only be used, at the city’s discretion, to pay for Detroit local capital improvements or Detroit’s debt service obligations for bonds.

Some aspects of the Detroit-GLWA facilities services agreement include: the city of Detroit is relegated responsibility for setting retail rates, billing, collection and enforcement; and the authority to establish a two-year budget that is periodically adjusted and requires quarterly financial reporting on Detroit retail performance.

The agreement comes on the heels of multiple meetings involving Macomb Area Communities for Regional Opportunities, or MACRO, and DWSD representatives — including McCormick, who is also the DWSD director — to discuss forthcoming contracts in relation to the GLWA.

MACRO features members of the following municipalities: Clinton Township, Eastpointe, Utica, Warren, Sterling Heights, Shelby Township, New Baltimore, Roseville, Harrison Township and Mount Clemens.

Other members include the Southeast Michigan Council of Government, or SEMCOG, and MSU Extension.

Township Supervisor Bob Cannon initially expressed hesitance, calling it a “step-by-step process.” In July, he said there was no relative urgency with the signing of the contract, though he did say he hoped McCormick would become the CEO of the GLWA.

At the Nov. 16 board meeting, he reiterated the numerous discussions that have taken place, noting the date of the letter and how long the township waited to sign the contract. At Dolan’s recommendation, Cannon said it was in the best interest for the township to get on board.

“We didn’t rush into this,” Cannon said. “We have brought it up a number of times at our MACRO meetings. Sue McCormick did come out with her staff and make a presentation — a very good presentation. I was very impressed.”

He called McCormick’s position switch from interim CEO to full-time CEO “a very good choice.”