CHICAGO - A deal to create a new bond-issuing authority to take over the troubled Detroit Water and Sewerage Department has advanced, with all participating counties approving the plan.
The Oakland County board gave the Great Lakes Water Authority proposal the green light Oct. 8 by a vote of 18-2.
Macomb County approved it by a 10-3 vote on Oct 9. Wayne County, home to Detroit, was the first to approve the deal the previous week. The Detroit City Council has also okayed the deal.
U.S. Bankruptcy Judge Steven Rhodes, who is overseeing Detroit's bankruptcy, still needs to sign off on it.
The leaders of the counties as well as Detroit Mayor Mike Duggan announced the plan in August and urged their local bodies to support it.
Oakland County Executive L. Brooks Patterson said that creating the regional authority was the hardest thing he had achieved during his 21 years, according to local reports.
The troubled DWSD, which serves 40% of the state population, requires billions in capital upkeep and is plagued by unpaid bills.
The new authority will be run by a six-member board made up of two Detroit mayoral appointees, one appointee from each county, and one appointee of the governor. Major decisions on issues like contracts or future privatization will require five out of six votes.
The deal calls for Detroit to get a $50 million annual lease payment for at least 40 years. The city can only use the money for upgrades to its water and sewer system, and cannot divert it to the general fund.
The city will retain control of its 3,000 miles of local pipes, while the counties will assume control of all regional assets, which include 300 miles of suburban pipes. The new authority will operate the five water treatment facilities.
The regional authority plans to sell between $500 million and $800 million of bonds to repair Detroit's part of the system.
The debt will be backed by the $50 million annual lease payment. The state of Michigan is expected to help back the bonds in some way to help achieve a higher rating.
