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Bankruptcy #3–Oakland Foolish to Build New Water Plant

Posted to MichiganNow.org on Thursday, May 15, 2014

INTRO: Detroit’s water & sewer system needs repair. It’s $6 billion in debt. Suburbanites are on the hook for 80% of that. Detroit residents will have to pay for the rest. Oakland County leaders want their own system so they can avoid the bills. But is that possible? Michigan Now’s Chris McCarus reports.

The Detroit Water & Sewerage Department has seven commissioners. 4 from Detroit. One from Wayne, one from Macomb and one from Oakland County. That county’s executive, L. Brooks Patterson, is taking no responsibility for the department. He portrays himself and his residents as innocent victims of Detroit.

“As payers in this system who have had nothing to do with the corruption and organizational failure of the Detroit Water & Sewerage system over the past decades we are still going to be the ones held responsible for the repairs of the infrastructure.”

Metro Detroit water rates are among the cheapest in the country. But they will go up to pay off the system’s debt. In February, Patterson gave his State of the County speech:

“Instead of sending billions of dollars to help the Detroit Water & Sewerage system come into compliance with the EPA standards why not use those billions to build our own water and sewer authority? (applause)

But not all of Oakland County’s residents are applauding.

“It’s all about politics. It’s not operating in the interest of the citizens.”

Dennis Green lives in Farmington Hills. He worked at the water department for 41 years. He was head water systems engineer for facilities design. Green gives an example of why the department got deep in debt.

“They laid off the electricians that used to inspect the sub-station transformers. So nobody noticed the oil leak at Newburgh and a $75,000 transformer blew up. It was $150,000 with labor to replace it. That’s because nobody would spend the $125 for the annual oil test on it.”

Instead of paying a small amount for labor you pay a huge amount by borrowing money to replace things.

“So you have a piece of equipment that’s supposed to last for 50 years. It was built with 30 year bonds. It fails in 10 years. So now you build another and finance it with 30 year bonds and don’t maintain it. So you’re paying twice for it. And that’s why you’ve got all this debt building up.”

The water department was built in 1836. 100 years later, it had the largest water treatment plant in the world. That’s the Springwells facility in Dearborn. Engineers came from around the world to see how it worked.

“The system is not designed to be separated. You got one main going down 8 Mile road feeding north into Oakland County and south into Wayne County. It’s one water main. How do you separate it?”

Metro Detroit fights itself over schools, governments and roads. But suburban leaders forced regionalization of water in the 1950’s. They wanted new subdivisions and malls. City officials feared losing residents. But suburban leaders pressured Detroit to extend the network and make Detroiters pay for it.

Dennis Green started work at the water department in 1969. He’s an electrical engineer.

“It’s not an accounting problem only. You’ve got to look at the engineering of this system. Can you connect stuff up? What pipelines are available? It’s not just the water plant. That’s what I feel they’re overlooking in this. It’s a lot more complicated. The water system if you look at a map grew according to watersheds and population patterns that have nothing to do with county lines. The counties don’t even do the business with Detroit. Detroit contracts with townships and consortiums. It sells a small amount of water to counties. Counties aren’t even involved in the process. So why are we negotiating with counties to take control of it?”

Detroit’s emergency manager has asked the suburbs to pay an extra $47 million a year to help pay off the department’s debt. See his April 7 request seeking potential operators of the system. Dennis Green says that’s a better deal than what Oakland County is proposing: billions for a new system.

“I don’t think they can justify it. They can downscale it enough that they might be able to do it. But they can’t do it for the kind of money Orr was asking. The $47 million a year is not going to pay for a water plant. You can’t start from scratch.”

“But we’re talking about over 40 years,” said another journalist.

“I can’t see where you can do that,” said Green.

Patterson is starting with a $500,000 study of the costs of a new water plant. He doesn’t appear to be taking advice from Dennis Green..

What do you imagine a City of Detroit pensioner looks like? Can you picture Dennis Green?

He retired in 2010. He tallied up his salary, benefits, retirement, and office space and all cost the government $120 an hour. He signed the checks for consultants who did his job replacing him. They cost $240 an hour.

“I traded the big bucks for what I thought was the security. I thought a constitutional guarantee was better than having my IRA in the stock market. That’s why I stayed. Plus I liked my job. It became like a hobby.”

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A $75 million contract was made for work at Springwells during the Bing administration.

A $75 million contract was made for work at Springwells during the Bing administration.

The Connors Creek Pumping Station on East Jefferson.

The Connors Creek Pumping Station on East Jefferson.

The Water Works Plant at 10100 E. Jefferson in Detroit.

The Water Works Plant at 10100 E. Jefferson in Detroit.

IMG_4872
Dennis Green at Oakland County headquarters in Pontiac, April 2014. He worked at the dept. 41 years. He engineered facilities throughout the system.

Dennis Green at Oakland County headquarters in Pontiac, April 2014. He worked at the dept. 41 years. He engineered facilities throughout the system.

Unidentified national republican leader at left with Irene McCabe and L. Brooks Patterson who stood against racial integration in 1971.

Unidentified national republican leader at left with Irene McCabe and L. Brooks Patterson who stood against racial integration in 1971.

Brooks County
Springwells at 8300 W. Warren in Dearborn become the world's largest water treatment plant when it was dedicated in 1935.

Springwells at 8300 W. Warren in Dearborn become the world's largest water treatment plant when it was dedicated in 1935.

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