DWSD: Deal clogged?

DWSD: Deal clogged?

Detroit’s Emergency Manager Kevyn Orr is ramping up the rhetoric about the Detroit Water and Sewerage Department, pushing the idea that it could be sold and privatized if the city doesn’t reach a regional agreement with suburban communities.

“I do think we’re at a crossroads now having had this discussion for decades about DWSD,” Orr told The Detroit News in an interview Tuesday. “We’re going to run on parallel tracks. We’re not walking away from the creation of an authority. We’re going to start looking at other alternatives as well.”

With Orr’s Plan of Adjustment calling for paying pennies on the dollars to creditors, including bond holders, and slashing pension benefits by almost 30 percent for some retirees, the governor-appointed EM needs to also find revenue generators for the cash-strapped city. DWSD is one of his few options with such potential.

Suburban leaders haven’t exactly been receptive. Some of them are telling the News that their counterproposals to Orr’s suggestions are rebuffed.

“By and large, this hasn’t been a negotiation,” said Robert Daddow, deputy county executive for Oakland County. “It’s been a stampede to an end point. We’ve been stuck in first gear for a long time because everything we put on the table gets rejected.”

Some of the obstacles, they say, are DWSD’s roughly “$1.5 billion in operating losses over the past seven years; more than $500 million in abandoned projects, and more than $500 million to terminate bad debt; $142.5 million in unpaid water bills; and fears that an authority’s dismal credit rating would make it difficult to issue bonds.” There are also the potential $60 million annual payments that Crain’s Detroit Business reported could be owed by the suburbs for DWSD pensions if a regional deal isn’t worked out.

With an April 18 deadline set by Bankruptcy Judge Steven Rhodes for the city’s final disclosure statement “resolving any objections that the Court has sustained,” the parties continue to meet. But there are no public indications that a deal is anywhere near done.