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Water Takeover Bill Squeezes Detroit, Granholm

Rates reveal suburbs push up prices

March 7, 2006 | By Charlene Crowell
Great Lakes Bulletin News Service


Detroit’s Water and Sewerage Department is the nation’s third-largest municipally owned and operated water utility.

LANSING—Three years after passing a bill that would have handed control of Detroit’s huge, regional water and sewer system over to the city’s surrounding suburbs had it not been vetoed, the state’s Republican-led Legislature is pushing hard to pass a new version of the original proposal.

The new proposal, like its predecessor and numerous other, similar proposals made by state Republican legislators throughout the 1990s, is inflaming already strained city-suburb relations in southeast Michigan. And its political ramifications could be as large as the system itself, which serves 4.3 million residents in 125 communities located in eight southeast Michigan counties.

Republican legislators, whose support of the new proposal is virtually unanimous, say the bill will rectify what they claim to be rampant mismanagement, inflated water and sewer rates, and other problems that prevent suburban users of the system from getting adequate service at fair prices. But the bill’s opponents characterize the bill as yet another in a long line of perhaps unconstitutional attempts by those legislators to score political points by allowing Detroit’s suburbs, many of which are heavily Republican, to take control of one of the heavily Democratic city’s most valuable assets.

The bill’s opponents also reject claims by suburban officials that Detroit’s system needs new management because its rates for bulk water, which the suburbs buy from the city and then resell to their own residents, are overpriced. They point out that the city’s bulk and retail rates—the rates charged, respectively, to other municipalities and to residents—are significantly lower (see box, page 2) than the national average for large, city-based systems.

They also say that the pricing problem the bill’s supporters claim needs fixing actually originates with the suburbs themselves, not with the city: Many suburban municipalities add substantial markups—sometimes approaching 400 percent—to the city’s bulk rate when computing their own residents’ bills. In fact, they say, given new surcharges added to Detroit residents’ bills that are now paying for recent, federally required upgrades of the water and sewerage system, many suburbanites are actually now paying less than Detroiters.

Some political observers note that the slightly revised bill sat in committee with no action taken for almost a year before the committee’s chair, who authored the proposal, rolled it out a few weeks ago. Action on it since then, in both state chambers, has been swift, fueling speculation that Republican leaders will now try to use the issue in November, when Democratic Governor Jennifer M. Granholm, who likely will also veto this latest takeover bill, runs for reelection.

“Oversight” or “Takeover”?
The new proposal is by state Senator Laura Toy, the Livonia Republican who authored the previous, 2003 bill. If her proposal, Senate Bill 372, becomes law, suburbanites appointed to a new, expanded water board will by this fall have the upper hand over city representatives in directing the Detroit Water and Sewerage Department’s operations, appointments, contracts, and policies.

In an interview with the Great Lakes Bulletin News Service, Senator Toy said that her bill would not constitute a takeover of the vast, expensive, complicated system that is financed by Detroit residents. Ms. Toy insisted that all she and her Republican colleagues are interested in is “oversight,” not takeover, in order to gain greater accountability from Detroit official for the water system’s many suburban customers.

The bill, as currently written, would replace the existing, seven-member Detroit Board of Water Commissioners, which is appointed by the mayor of Detroit, with an entirely new one. It would strip appointment powers for the board's three existing county representatives from the mayor, reduce Detroit’s representatives on the board from four to three, and require the Detroit City Council to concur on the mayor's appointments. It would also add a new representative for Genesee County who, together with longstanding representatives from Oakland, Wayne, and Macomb Counties, would then comprise an automatic, four-to-three, non-city majority. The Wayne County representive would not be allowed to live or work in Detroit, which is within that county. And all county representatives would be selected by county commissioners, who could replace their appointees at will and at any time. 

Senator Toy said there are many good reasons for her proposed revamping of the board.

“We’re talking about the wholesale rates that keep going up and up, the unexplained contracts that are being given out,” Ms. Toy said in the interview. “The discrepancies in charges—sometimes overcharges.”

She said that the Detroit system’s personnel “still does their bookwork by pencil and paper” and criticized water and sewer “infrastructure that is almost 100 years old and leaking,” and the department’s alleged lack of proper training in equipment operation.

“If they have nothing to hide,” Ms. Toy said, “then why not open up and say, ‘We don’t mind a check and balance on this system, we don’t mind another set of eyes and ears.’”  

Earlier, in remarks on January 26 to the Senate Local, Urban, and State Affairs Committee, which she chairs and where she allowed her proposal to languish for months, Senator Toy spoke at length about “roller coasting” rates as well as her attempts to address specific points set forth in the governor’s earlier veto message.

A Wedge Issue
But Detroit officials flatly reject Senator Toy’s claims, and those of others who attack Detroit’s water and sewer operation. Steve Tobocman, a state representative from southwest Detroit, took aim at the most common complaint heard from suburbanites who use the city’s water: Its price.

“Nowhere in this bill is there any effort to address the add-on charges that localities impose on their own consumers,” Representative Tobocman said of Senator Toy’s bill. “We know that in many communities, the surcharges are the bulk of the bill. That is as much of a problem as anything else. And this bill completely ignores it.”

“This is a wedge issue to divide voters,” Mr. Tobocman added, that is actually an attempt to “portray the governor as a lackey of the City of Detroit.”

Detroit City Council Member Joann Watson, who also testified on January 26 before the same committee about the bill, rejected Ms. Toy’s claim that the bill does not constitute a takeover. Pointing out that the Detroit Water and Sewerage Department infrastructure is financed entirely by bonds that city voters approved and its residents are now paying off, she noted that “oversight is control. We would be wise to differentiate between [suburban] patronage and [city] ownership.” Any other approach, she said, “is disrespectful to the citizens of Detroit.”    

Leave Us Alone, Please
In recent appearances in front of both Ms. Toy’s Senate committee and a House committee considering the legislation, Victor Mercado, the director of the water and sewerage department, pleaded with lawmakers to stop what he clearly viewed as deliberate efforts to stir up yet another city-suburban imbroglio.

Mr. Mercado said that his department has been working to better explain to non-Detroiters the charges they are seeing on their water and sewer bills, which come from each individual suburb, not the Detroit department. Mr. Mercado added that outreach efforts include putting more up-to-date information on the department’s Web site, forming several new advisory committees—one at his district’s own initiative and another at the behest of a federal Judge John Feikens, who has adjudicated several legal disputes involving the city and its suburban water purchasers—and producing ongoing community presentations. Mr. Mercado said the goal is helping customers understand what the department does, how rates are set, and when rates are reviewed.  

“Senate Bill 372 is unnecessary,” Mr. Mercado told the House Local Government and Urban Policy Committee on March 1, “and in the light of the very clearly reasoned opinion and order from Judge Feikens, it is of questionable legality. Rather than providing a regional solution, it will keep the flame of regional tensions alive, separating the city from the suburbs, dividing one county from another, turning neighboring communities against each other.”

“The forum for regional success is not in the Legislature,” he concluded, “but in continued cooperation by local governments.”

Full Speed Ahead
The bill could move to the state House floor for a final vote at any moment. As did its predecessor, the current proposal has rock-solid Republican support and is simply awaiting a decision by House Speaker Craig DeRoche, of Novi, about when that vote will occur, which will move it to Governor Granholm’s desk. 

When it arrives there, the governor’s decision to sign or veto it could affect her gubernatorial reelection race. A Granholm veto could provide her Republican opponent with political fodder, particularly since it would come on the heels of her recent veto of controversial transit legislation that many, including the governor, viewed as an attempt to drive a wedge between southeastern Michigan—her natural constituency—and the Grand Rapids region, a Republican stronghold. Grand Rapids is also the hometown of her likely Republican gubernatorial opponent, Richard DeVos.

But if the governor were to sign the bill, it would cause an uproar among Detroit voters, and possibly ripple throughout other urban areas in Michigan, whose populations are, like Detroit’s, heavily African-American and Democratic. 

Then there are those who say that, even without the politics, signing such a proposal would still be folly. Among them are Russ Bellant, Director of Education and Apprenticeship Coordinator for Local 547 of the International Union of Operating Engineers, whose members work at the Detroit Water and Sewerage Department.

“Little is said about the first question that should be asked,” Mr. Bellant told the Senate committee, “which is whether the Legislature has the constitutional authority to change the governance of the Detroit Water and Sewerage Department. The Michigan Constitution does not give the Legislature any role for controlling municipal water and wastewater utilities.”

Despite opponents’ insistence that SB 372 was at best inadvisable, and at worst, unconstitutional, legislative committee votes in both the House and the Senate were—save one vote cast by Warren Democratic Senator Dennis Olshove, whose city has at times had a rancorous relationship with Detroit—along strictly party lines.

Speaking to his colleagues on the floor of the Senate following that vote, Senator Ray Basham, a Democrat from Taylor, suggested that many of his colleagues were too quick to confuse use with ownership.

“The City of Detroit built the water system,” Senator Basham said. “Its citizens paid for its construction through bonds that the city issued. When the suburbs determined the cost of building their own water system, it was cost-prohibitive. They asked that Detroit’s waterline be extended, which the city did at its own expense.”

“Now legislators from these same suburbs”, Mr. Basham continued, “are attempting to power grab, claiming they deserve control of the system. Let’s set the record straight. The customers who receive water from the Detroit water board are just that. They are customers. Paying the City of Detroit for providing the suburbs with water does not mean that they own the system anymore than, I say again, shopping at K-Mart for 20 years means that I own a share of K-Mart.”

Page two of this article presents a comparison of Detroit's water rates with those of other major cities. Charlene Crowell is the Michigan Land Use Institute’s state policy director. Reach her at Charlene@mlui.org.

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