WUOMFM

Detroit Council reverses course, approves water rate hike

Jul 21, 2015

The Detroit City Council has reversed course and agreed to hike the city’s water and sewerage rates.

The Council voted 5-4 to approve a 7.5% increase Tuesday, after voting it down last month.

Council President Brenda Jones remained opposed. She says there’s still too little transparency in how Detroit’s water department operates, leaving c ouncil members frustrated.

“We can say ‘here, take the money, go spend it however you see fit to spend it,’” Jones said. “But we can’t say where there might be a cost savings.”

City and state officials had warned that if council failed to approve rate hikes, it would leave a $27 million hole in the water department’s budget — and a state-mandated financial review commission could extend its oversight of Detroit’s finances.

They had also warned it could spook bondholders — and jeopardize final approval of the Great Lakes Water Authority.

That new regional authority doesn’t officially kick in until next year. Detroit will become a retail customer of the GLWA, which leases all Detroit water department infrastructure outside city limits for $50 million a year. Detroit still technically owns the whole system.

Gary Brown, Detroit’s chief operating officer, says the GLWA will be able to refinance the water department’s existing debt at lower interest rates.

“We’re going to save millions of dollars that can be passed onto rate payers,” Brown said.

Still, some council members and city residents remain skeptical about whether the GLWA will keep costs down enough to prevent significant yearly rate hikes.

They had wanted better and more detailed plans to help Detroiters — including thousands still facing the threat of water shutoffs — afford their water bills.