HomeMy WebLinkAboutResolutions - 2014.04.17 - 21263REPORT (misc. #14064) April 17, 2014
BY: Planning and Building Committee, Jim Runestad, Chairperson
RE: MR #14064 — 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:
The Planning and Building Committee, having considered the above titled resolution on
April 1, 2014, hereby recommends that the resolution be adopted.
Chairperson, on behalf of the Planning and Building Committee, I move the acceptance of
the foregoing report.
PLANNING AND BUILDING COMMITTEE
PLANNING AND BUILDING COMMITTEE
Motion carried unanimously on a roll call vote.
FINANCE COMMITTEE
t7/1
REPORT (MISC. #14064) April 17, 2014
BY: Finance Committee, Thomas Middleton, Chairperson
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:
The Finance Committee, having reviewed the above referenced resolution, recommends
the following:
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; and
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; and
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 (GL#383395) to support the on-going evaluation of alternatives;
and
The Board appropriates $500,000 of the DVVSD Evaluation/ Alternatives fund balance
assignment (GL#383395) to support the evaluation and necessary resources.
Chairperson, on behalf of the Finance Committee, I move the acceptance of the foregoing
report.
FINANCE COMMITTEE VOTE:
Motion carried unanimously on a roll call vote.
MISCELLANEOUS RESOLUTION # 14064
BY: Jim Runestad, District #6; Mike Bosnic, District #16; Kathy Crawford, District #9; Bill Dwyer,
District #14; Mike Gingell, 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, MCI
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 1T 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 (GL#383395) 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 $500,000
Expenditures
1010101-181000-731458 Professional Services $500,000
Total Expenditures $500.000
Mr. Chairman, I hereby move adoption of this resolution.
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Resolution #14064 March 19, 2014
The Chairperson referred the resolution to the Planning and Building Committee. There were no
objections.
Resolution #14064 April 17, 2014
Moved by Crawford supported by Zack the resolutions (with fiscal notes attached) on the amended
Consent Agenda be adopted (with accompanying reports being accepted).
Discussion followed.
Vote on amended Consent Agenda:
AYES: Dwyer, Gershenson, Gingell, Gosselin, Hatchett, Hoffman, Jackson, Long, Matis,
Middleton, Quarles, Runestad, Scott, Spisz, Taub, Weipert, Woodward, Zack, Bosnic,
Crawford. (20)
NAYS: None. (0)
A sufficient majority having voted in favor, the resolutions (with fiscal notes attached) on the amended
Consent Agenda were adopted (with accompanying reports being accepted).
ilt
I HEREBY APPROVE THIS RESOLUTION
CHIEF DEPUTY COUNTY EXECUTIVE
ACTING PURSUANT TO MCL 45.559A (7)
STATE OF MICHIGAN)
COUNTY OF OAKLAND)
I, Lisa Brown, Clerk of the County of Oakland, do hereby certify that the foregoing resolution is a true and
accurate copy of a resolution adopted by the Oakland County Board of Commissioners on April 17, 2014,
with the original record thereof now remaining in my office.
In Testimony Whereof, I have hereunto set my hand and affixed the seal of the County of Oakland at
Pontiac, Michigan this 171h day of April 2014.
Zen 6-1114-
Lisa Brown, Oakland County