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HomeMy WebLinkAboutResolutions - 2014.03.19 - 21244MISCELLANEOUS RESOLUTION # 14064 BY: Jim Runestad, District #6; Mike Bosnic, District #16; Kathy Crawford, District #9; Bill Dwyer, District #14; Mike Gingen, District #1; Robert Gosselin, District #11; Bob Hoffman, District #2; Christine Long, District #7; Jeff Matis, District #15; Tom Middleton, District #4; John Scott, District #5; Mike Spisz, District #3; Shelley Taub, District #12; Phil Weipert, District #8; Marcia Gershenson, District #13; Mattie Hatchett, District #10; Janet Jackson, District #21; Gary McGillivray, District #20; Nancy Quarles, District #17; Dave Woodward, District #19; Helaine Zack, District #18 IN RE: EVALUATION OF ALTERNATIVES TO CONTINUED UTILIZATION OF THE DETROIT WATER AND SEWERAGE SYSTEM (DWSD) BY OAKLAND COUNTY GOVERNMENT AND COMMUNITIES To the Oakland County Board of Commissioners Chairperson, Ladies and Gentlemen: WHEREAS the provision of clean water supplies and the disposal of sewage in a safe and cost effective manner is essential to the personal and economic health, safety and welfare of our community, and WHEREAS Michigan law authorizes counties to establish county water and sewage disposal systems and allows counties to join with one or more other municipalities to incorporate an authority for the purpose of acquiring, owning, improving, enlarging, extending, and operating a sewage disposal system and or a water supply system (See, 1939 P.A. 342, MCL 46.171, et seq.; 1955 P.A. 233, MCL 124.281 et seq.) WHEREAS Section 13(c) of 1973 P.A. 139, the Optional Unified Form of County Government Act, charges the County Executive with preparing comprehensive plans for the overall development of the county, with coordinating the preparation of county capital improvement plans, with supervising economic development functions and with representing the county in joint planning activities with other jurisdictions, and WHEREAS the Oakland County Board of Commissioners has designated the Water Resources Commissioner to act as the County Agency for projects established under the County Public Improvement Act of 1939, 1939 P.A. 342, and WHEREAS the Detroit Water and Sewerage System (DWSD) currently provides water services to 34 Oakland County Communities and provides sewerage services to 37 Oakland County jurisdictions. These communities are home to thousands of Oakland County businesses and some 1.03 million (85.8%) Oakland County residents, and WHEREAS while the service area of the DWSD touches 8 counties, the main service area for the DWSD includes the Counties of Oakland, Macomb and Wayne which are home to some 3.8 million residents, some 38.8% of the Michigan population, home to 1.6 million jobs which is 41.3% of Michigan's jobs total and whose economic activity generates 47.4% of Michigan's total GDP, and WHEREAS the DWSD is a department of the government of City of Detroit, a Michigan municipality currently in bankruptcy, and WHEREAS the City of Detroit, through the Office of Emergency Manager, has indicated in court filings that the City intends to monetize the assets of the DWSD in order to divert funds out of the DWSD to be used by the City to satisfy City of Detroit obligations outside of the water and sewer system, and costs away from City taxpayers and City retail DWSD customers and to direct the burden of those costs to suburban wholesale DWSD customers using a variety of mechanisms, including but not limited to, rate of return payment subsidies, greatly accelerated payments for City pension obligations, "affordability programs" designed solely for City retail customers and/or via the use of payments in lieu of taxes (PILOT) charges, and WHEREAS DWSD financial operations have been troubled over the past seven years when $1.5 billion in operating losses have been incurred in part because of transactions adding no value to the operations of the system including the abandonment of $514 million in capital projects and $547 million in swap termination fees, both costs having been "written-off" and charged to ratepayers, and WHEREAS the operating losses have so weakened the balance sheet of the DWSD that the combined net equity position as of June 30, 2013 of the water and sewer operations is a meager $20 million and declining, and WHEREAS the DWSD is carrying approximately 700 positions it's management has publically admitted they consider to be unnecessary, yet they still only intend on reducing through attrition between now and 2022, rejecting a more proactive approach to restructuring that would save system ratepayers millions of dollars, and WHEREAS City retail water and sewer customers and certain other DWSD customers are currently experiencing and can reasonably be expected to continue experiencing, significant and sustained payment deficiencies annually costing the DWSD millions in bad debt expenses and depriving the system of revenues essential to on-going system operations, and WHEREAS the DWSD is an aged, monopolistic system that is admittedly significantly over-staffed, is carrying some $5.5 billion in bond debt, is facing billions in unfunded pension and health care liabilities and, due to a combination of prior poor management, corruption and intentional deferred maintenance and upkeep, requires an estimated, additional $2.5 to $5 billion in revenues to support critical infrastructure maintenance and capital improvements over the next ten years, and WHEREAS given the state of the system and its unmet operating and capital needs, it simply cannot afford the diversion of funds away from the water and sewer operations as is contemplated by the Office of Emergency Manager, and WHEREAS it is fundamentally unjust and unfair to force DWSD wholesale rate-payers to fund basic City of Detroit services unrelated to water and sewer services by diverting revenues out of the DWSD system, thereby forcing substantial rate increases to raise the additional revenue necessary to fund operations, maintenance and improvements already required to maintain the system in compliance with State and Federal law, and WHEREAS responsible governmental stewardship mandates that Oakland County explore for itself and for its municipalities and taxpayers meaningful alternatives to the use of the DWSD for the short, middle and long term, and WHEREAS the FY 2014 First Quarter Financial Forecast and Budget Amendments resolution forecasts the County will complete FY 2014 with an overall favorable variance of $13,184,543 for General Fund/General Purpose operations thereby reducing the utilization of Fund Balance planned for FY 2014; and WHEREAS it is recommended that $3,000,000 be re-assigned from the Committed to FY 2014 fund balance assignment (GL# 383447) to a new assignment of fund balance titled DWSD Evaluation/Alternatives (GL#383395). NOW THEREFORE BE IT RESOLVED that pursuant to the dictates of Act 139 and Act 233 set forth above the Oakland County Board of Commissioners hereby requests that the Oakland County Executive and the Oakland County Water Resources Commissioner promptly conduct a review of responsible alternatives to the continued use of the Detroit Water and Sewer System (DWSD) by Oakland County Government and by Oakland County communities. BE IT FURTHER RESOLVED that the Board authorizes the retention, in a manner consistent with the Oakland County Purchasing Policies established by the Board of Commissioners, of such technical, financial, legal and other experts as may be necessary to assist in the examination of alternatives to the continued, monopolistic use of the DWSD. BE FURTHER RESOLVED that the Board authorizes $3,000,000 be re-assigned from the Committed to FY 2014 fund balance assignment (GL#383447) to a new assignment of fund balance titled DWSD Evaluation/Alternatives (G11t383395) to support the on-going evaluation of alternatives. BE IT FURTHER RESOLVED that the Board appropriates $500,000 of the DWSD Evaluation/Alternatives fund balance assignment (GL#383395) to support the evaluation and necessary resources. BE IT FURTHER RESOLVED that the Board authorizes the following FY 2014 budget amendment: General Fund #10100 FY 2014 Revenue 9010101-196030-665882 Planned Use of Fund Balance $500,000 Total Revenues S500,000 Expenditures 1010101-181000-731458 Professional Services $500,000 Total Expenditures $500,000 Mr. Chairman, I hereby move adoption of this resolution. Commissioner District # Commissioner Commissioner District # District # _ I/4_1111 Commissioner District #3 Commissioner District # 4A/49 1,0)A---- Commissione District #,/Z CLL Commissiorer District # District # bi-nmissioner District # Resolution #14064 March 19, 2014 The Chairperson referred the resolution to the Planning and Building Committee. There were no objections.