Water Equity and Security in Detroit's Water and Sewer District

Executive Summary

Executive Summary

Introduction

Ensuring access to drinking water and wastewater service is a nationwide policy challenge. Across the United States access is increasingly insecure for many people and places. In this report we comply with scholarship and legal precedent that defines access to include access to residential in-home service, quality service that serves environmental and personal health, and affordable service.

Water security is a term in this report used to describe the presence of structural, systemic, and institutional arrangements that ensure everyone has consistent access to drinking water and wastewater services. Water insecurity looks different in the humid east than in the arid west, different in the Midwest from the South, different between urban, suburban, or rural. However different water insecurity problems look at the local level, they are the result of similar institutional, systemic, and structural problems. This is a study of the what persistent water insecurity looks like in the service area of Detroit’s drinking and wastewater system (DWSD) and specific places within that system, notably Detroit.

A 2017 Michigan State University study estimated that if water costs continue to increase at the same rate for the next five years, a third of households in the US may be unable to afford water costs.1 This alarming figure highlights the scale of water insecurity due to barriers to affordable access. Detroit’s regional system fits patterns of water and sewer insecurity across the country and creating water security is an effort that must also consider the operator and manager of the system—the Great Lakes Water Authority (GLWA).

Water and sewer systems in the US have to meet federal regulatory standards to maintain or improve environmental quality and public health. While the federal government has a uniquely vast capacity for funding local infrastructure.2 It has provided far less than needed to supplement state and local government investments. Inadequate federal investment creates a pervasive problem for local system revenue. The costs of system repair and upgrade to meet regulatory standards is high. The Congressional Budget Office data records that federal investments in the nation’s drinking and wastewater systems constituted between 5.7 and 4.0 percent of total annual spending since 2010. The rest falls to state and local governments.3 The bulk of investment then trickles down to revenues from system users in the form of service rates or fees. To complicate the matter, many cities, particularly deindustrialized cities, have experienced economic trends that challenge the capacity for system revenue to cover costs. Some cities’ systems are a century old. In the case of many systems, when the system grew into a regional system the most aged parts of the infrastructure are those serving the city’s urban core. Even though the EPA has documented 228 water affordability programs across the country, we did not find note or reference to a plan that adequately addresses the local needs.4 In Detroit, evidence of barriers to drinking and wastewater service are primarily described as affordability challenges although there are concerns about the water shutoffs’ impact on drinking water quality vis a vis increasing water age—the amount of time water spends within the system infrastructure.5

In the context of global climate change, it is critically important that drinking water and wastewater systems are designed to be adaptable and resilient. Extreme and unpredictable weather conditions and higher temperatures affect the distribution of rainfall, snowmelt, and ground water, ushering in more frequent floods and droughts—patterns that should be anticipated and

integrated in local water and sewer system planning and design. Balancing necessary improvements in the context of shrinking public resources is a common problem with dire impacts.

Communities across the US need solutions to what has been described as among the primary infrastructural challenge of the twenty-first century.6

The mission of the DWSD system is clear—as is GLWA’s mission: It should meet the universal goal that everyone benefits from region-wide water security and improved environmental quality and public health. This universal goal of water security is not realized for everyone and every place in the service area and so the entire region is deprived of the environmental and public health benefits of widespread water security.

The national attention brought to Detroit and its water system is driven by the city’s bankruptcy and the use of water shutoffs as a dysfunctional incentive for bill payment. The moving personal accounts of the effects of water shutoffs have mobilized compassion and the attention of policy makers to address affordability and rate setting. National attention is now directed at how GLWA operation and management of Detroit’s water and sewer system will handle the challenges to providing water security and its salutary effects on public health and environmental quality.

Detroit is a focus in this report for two reasons. Firstly, even among other cities within GLWA service area, Detroit is uniquely positioned because of its ownership of the system and operation and its management of the system since 1836. The City of Detroit built out the infrastructure into suburban municipalities which allowed new municipalities to avoid great expense to establish and develop.

It’s an ambitious task to design and align a set of targeted strategies that will enable everyone to enjoy water security and its contributions to public health and environmental quality. These strategies cannot be designed without a careful analysis of the unique relationships between Detroit, the system, GLWA, and the region.

It is with the interests of the entire service area that we analyze the potential of the regional and exceptionally valuable water and sewer utility and its impact on regional environmental quality and public health. The next phases of the project will more fully engage the regional aspects of the system. This will entail broader engagement and consultation with the system’s municipal and county governments within the service area, as well as advocate and community groups that serve those communities. The project aspires to create structural and institutional coordination between Detroit, Detroiters, DWSD, and GLWA. As ambitious a goal as that is, we aspire to do more—to promote regional coordination and alignment to ensure water security for everyone in the region and maximize the system’s ability to lift up regional economic and public health.

Secondly, Detroit is a focus of this report because it exemplifies another national trend in water and sewer insecurity. People and places most directly impacted by water and sewer insecurity are also those historically neglected by public institutions and left out of key decision-making processes. In the case of GLWA and DWSD—and “pockets of water poverty” across the country—this means poor Black Americans and other people of color, and places where data shows higher rates of poverty, unemployment, and disability.

Targeted universalism policy requires a detailed understanding of the problem—a process that is not trivial and requires scrutiny from every direction.7 Accomplishing this initial broad base of participation is critical and not just because “community engagement” is best practice. It is critical because novel viable strategies cannot be created without understanding all of the complicated ways people—and the places they live—are experiencing water and sewer insecurity and their different relationships with relevant institutions. This report is a first step in synthesizing and analyzing these components of a targeted universal platform for water security in the DWSD system service area that lifts up public health and environmental quality.

Local governments and households across the GLWA service area and state and federal government are at a critical juncture. National leaders in community organizing have emerged from the area. They have provided emergency assistance to communities and defined and conducted areas of research into water insecurity. These people, organizations, and groups are instructive for people across the country.

Opportunities for national leadership exist in other domains and are needed by local residents and many more. The incredibly valuable asset that the City of Detroit has built can become a powerful lever of economic growth—for the city and the region as a whole. They system’s operation can be an example of how to ensure water security across the region and design practicable urgent adaptation to climate change. It can be an example of practical adaptation that also raises the level of public health and environmental quality. It can also provide a model of how to provide benefits to everyone and can be best and most fairly accomplished by designing strategies to help places and people who most urgently need relief from structural, systemic, and institutional barriers. The regional context of the DWSD system and its environmental and public health impacts are exceptionally well suited to see how “we all live downstream” and stand to benefit or be harmed by the way our neighbors fare.

This report outlines a number of technical findings and suggests targeted interventions that can begin steps to create water security. Resolving problems is not only a matter of technical correctness and sophistication. Resolutions must also address deeper social cleavages around race and poverty. Solving the problem of region-wide water security and its contribution to environmental quality and public health requires technical and social science.

Each section in this Executive Summary corresponds to a full chapter in the report expanding and elaborating on the topic. We encourage review of the full chapters, particularly if questions or concerns arise after reading this summary.

We first appraise the way the city is positioned within the GLWA through an analysis of the lease and services agreements between the DWSD and GLWA. This is an area of great concern to organizations and individuals we spoke with. It is also the core text encoding institutional relationships that set the rules of how decisions about water security, public health, and environmental quality will be made. Some details of these relationships we discuss respond to persistent questions that were raised and others raise the profile of well-known community concerns.

This analysis leads to the next section where we summarize seven recommendations, or opportunities, that can be pursued to remove structural barriers to region-wide water security and its environmental and public health benefits. These strategies target specific concerns raised by Detroiters, city leadership, and community organizations and advocacy groups. Many of them are the focus of current discussions, advocacy, or projects. The recommendations are raised in general terms and within these descriptions we identify areas of further inquiry that can further implementation correspond to information gaps that must close.

An additional chapter details the well-established work linking health outcomes to the accessibility to drinking and wastewater services, access to affordable, in-home, and high-quality service. We discuss the deleterious effects of water insecurity on both individual and community health. This discussion was warranted because of concerns related to systemic health effects of water shutoffs and its cascading effects within communities and an ongoing desire to develop research in this domain.

The final chapter provides historical context of the drinking and wastewater system. When groups discuss the need for structural changes, the implication is that structures can either be a force for marginalization or inclusion. In Detroit’s regional area, and across the US, drinking and wastewater infrastructure can become a force for inclusion. At the moment, the system functions such that some places and groups of people experience greater water insecurity than others. Furthermore, the entire area is missing out on the potential for water security to improve public health and environmental quality. The full history of how local structures are artifacts of the national and local history of racial animus have been studied and documented in great detail and rigor. It is beyond the scope of this report to reflect the breadth and depth of that work. Ours is an effort to note specific moments in that history and overlay those moments with key moments in the evolution of the DWSD system.

Institutional Relationships: The Great Lakes Water Authority and the Detroit Water and Sewer District

The Great Lakes Water Authority (GLWA) operates and manages the Detroit Water and Sewer District system. The GLWA is a “public body corporate”8 created in fall 2014. By the end of 2014, Detroit and Wayne, Oakland, and Macomb counties joined the Authority. The DWSD system was formally regionalized in June 2015 when a 40-year lease agreement was approved and GLWA took over operations and management of the system. Under the current arrangement, the authority leases the regional water system from Detroit. GLWA pays a $50 million per year lease payment, pays a $26.2 million credit to Detroit’s revenue requirements as a “return on equity,” and commits $4.5 million (or 0.5% of budgeted operating revenues) for a water assistance program.9

The terms of the institutional relationships between DWSD and GLWA are detailed in the lease and services agreements. Here we identify structural design flaws in these agreements that our research suggests are some root causes of many community concerns. There are other important documents that require further detailed analysis in future studies—for example GLWA’s master bond ordinance.

The first chapter of the report focuses on how the agreements create structural barriers for water security in Detroit and throughout the system’s service area. These barriers have to be addressed in order for the system—an exceptionally valuable asset—to create and build opportunities for the City of Detroit. This is a regional approach that responds to regional inequality but also is practical in considering economic development in the region.

Additionally, we find that some of the strategies designed to target Detroit will in effect also benefit a more diverse group of people and places. Creating water security in Detroit will improve water security in other municipalities and among their residential users. The presence of wide-spread water security implies that a number of critical conditions would also be intact. For example, improved fiscal health in local communities, quality infrastructure, adequately funded and well-designed water affordability programs, and quality management and operation structures. Furthermore—and most important to understand the universal regional benefit—wide spread water security provides improves environmental quality and public health throughout the region.

The universal and individually unique benefits of this public asset inspire this project. The potential of Detroit’s system is also the potential of similar public water and sewer systems across the country. This is the basis for expanding our project’s reach and participation in the coming phases of the work. This is also the basis for proceeding with designing a platform that meets the immediate and more urgent needs for some people and places in the service area—in the process improving the outcomes for people and places throughout the service area.

Water affordability

We first discuss water affordability throughout the system. This is because of the exceptionally urgent need to address water affordability issues in the city and the associated regime of water shutoffs. We make recommendations that can respond to this structural problem in both the short and long term. We primarily spoke with Detroit-based organizations and their primary reason to attend to affordability is due to the specter of shutoffs within the city. However, there are clear affordability problems throughout the service area. While we have further work to do in evaluating the details of affordability problems in other locations, the bulk of recommendations pertaining to affordability will provide relief to users throughout the service area.

The agreement contains provisions for a $4.5 million water assistance program. However, the program is demonstrably underfunded, making it impossible to effectively meet the needs on the system’s service area. Even though all those eligible to enroll do not enroll, when the program began in March 2016, funds allocated to Detroiters for the year ran out by August.10

The solution is not to simply pour more money into the existing customer assistance program. It is important to note that the current affordability program merely provides assistance to customers whose bills are already overdue, rather than structuring rates to make them affordable in the first place. Affordability—rather than assistance—programs designed to align with the general principles of our recommendations will be more durable and do more to expand water security throughout the service area.

There is a need to update and expand upon the work of the 2005 affordably plan and determine the costs of comprehensive water affordability in the region today. We have begun a study that includes the full-service area. Additionally, the study compares the EPA metrics with proposed alternative metrics more suited for targeted place-based affordability standards.

Rate Setting

Designing rate structures is incredibly complex and limiting room to maneuver can limit options for novel designs that accomplish multiple objectives—including affordability. Rate setting is entangled with a proposition in the final report from the state’s Flint Water Advisory Task Force. It was suggested that the crisis in Flint “prompt local and state re-investment in critical water infrastructure, while providing mechanisms to advance affordability and universal access to water services.”11

The lease agreement contains terms that can be obstacles to fundamentally reevaluating pricing structures. Such reevaluation may be required for effective cost-recovery, as well as for guaranteeing water security, improving environmental quality, and increasing public health.12 The current agreement could inhibit the development of a rate-setting structure that recovers costs while ensuring equity, efficiency, and sustainability.

For example, the agreement prohibits increasing rates by more than four percent per year for the 10 years of the 40-year lease agreement, except when necessary to meet legal obligations.13 This is locked-in but this may not be adequate depending upon the future decisions and practices of GLWA. The four percent cap could present significant limitations to recovering costs and therefore a barrier to funding a water affordability program and improvements to Detroit’s urban infrastructure. Consultants who recommended the 4 percent cap factored in funding for the customer assistance plan—but did not account for expanding that program or creating a robust affordability program.14

Rate increases can be difficult—even impossible— for some wholesale customers to meet without significant financial assistance. For example, a more affluent community with an increasing population and high employment rate would be able to better absorb and distribute a rate increase than a community struggling with a shrinking economy, stressed finances, and population decline. The design of a fair and adequate rate structure should be sensitive to differences among places and sensitive to different needs of wholesale customers.

As we propose in the recommendations section of this report, parties with expertise and experience in developing equitable rate setting strategies should conduct a rigorous and detailed assessment of the current rate structures and their impacts. Additionally, possible alternatives should be considered.

Annual Lease Payment

A lease payment should be based on the value of the leased asset and compensation for the risk its owner faces in such an arrangement. While this detail is not directly connected to appraising the value of DWSD’s asset, popular objection to Detroit having to pay for part of the lease of their own asset drew our attention to analyzing structural features of the lease payment. The lease agreements categorize the lease payment as a “common-to-all” meaning that DWSD-R will contribute $13.6 million—out of the total $50 million—toward the lease payment in fiscal year 2018.15

We discuss three primary reasons that analyzing the methodology used to calculate the least payment and the valuation of DWSD’s asset is warranted. Two of them relate to the fact that GLWA and DWSD are positioned to be national leaders on infrastructure being a site to build regional equity and development by promoting water security. The last relates to the prospect that the current lease amount of $50 million may not be fair.

Firstly, it is of national consequence. There is little publicly accessible methodology on valuing drinking and wastewater systems. When there has been cause for such a valuation, the process is usually conducted by consultant firms and detailed calculations and rationale are often not disclosed. This is of great concern given the growing practice of public systems entering into operation and management agreements and leases with public or private corporations. Either scenario is very different and warrants different valuation processes tailored for the context. However, each scenario does put great importance on ensuring the calculation derives a reasonable and fair amount. And, the valuation methodology should be open to public review and influence.

Secondly, leasing to a public corporation rather than a private corporation may be preferable if the only other option is purchase by a private corporation. Notably, though, there is a clear overall objection registered by Detroiters of any corporate control of DWSD—whether by private or public corporations. GLWA is in precisely this situation of a public corporation leasing what was formerly a publicly controlled asset. Therefore, such analysis and system valuation will be a significant contribution to water security in the DWSD service area but also to systems across the US facing similar decisions. Furthermore, ensuring the process is conducted in concert with participation by DWSD customers and other service area customers will set an exemplary model for systems across the country.

Finally, in the case of GLWA, we offer three “data points” that suggest that analysis of the determination of the lease payment and valuation of the system is warranted. None of these three points definitely shows that the lease payment is artificially low. However, each point does highlight the why we feel the lease payment does not reflect the value of the asset and the risk the lease—DWSD— assumes within the agreement. There is a need for a professional evaluation of the methodology used to calculate the lease payment and a valuation of the drinking water and wastewater systems.

One signal of the potential for this problem is raised by the substantial value of the system—ultimately the system’s revenue—that enabled GLWA’s successful bond offerings in 2016 and 2018. In August 2016 GLWA was able to issue $1,339,100,000—$1.34 billion—in bonds following the adoption of a master bond ordinance.16 These bonds were comprised of $421.3 million in revenue refunding bonds for the sewerage disposal system and $917.8 million water supply system revenue and revenue refunding bonds. Months prior to their sale date, the 2016 bond series’ credit ratings were upgraded by Moody’s

“[r]eflect[ing] improved financial metrics resulting from revenue growth, rate restructuring to enhance collections, and ongoing implementation of operating efficiencies, …[and] the massive scale of water operations in southeast Michigan."17

Again in 2018, GLWA was able to issue $413,060,000—$413.1 million—in system revenue and revenue refunding bonds.18 Similarly, these bonds’ credit ratings were upgraded by Moody’s prior to their sale. The investors service explained that:

[t]he upgrade[s]…reflec[t] the continued trend of strong financial performance by an essential service enterprise whose customer base includes a substantial share of the state’s population. The rating balances the sewer system’s healthy debt service coverage and liquidity against high leverage. The rating also considers the large share of system-wide revenue generated by retail operations in the City of Detroit...19

The rationale for the bond series’ credit upgrades in 2016 and 2018 reflects some circumstances that would also have been applicable to DWSD had the operations and management not been leased to GLWA: for example, the fact that the system provides an “essential service” to a sizeable share of the Michigan’s population. Other circumstances may have been met by DWSD has their debt been restructured with creditors: for example, operational improvements and improved liquidity and leverage ratios. Circumstances related to increased revenue collection in the city and rate restructuring is the basis of strong community resistance as these are understood to be a rationale for dramatic increases in water shutoffs beginning in 2013 but most pronounced in 2014 and thereafter.20

Another data point might suggest the lease payment does not appropriately reflect the value of the asset. We can find results of the valuation of water and sewer systems when it is purchased or acquired by a private corporation. We can then compare DWSD to such a privatized system. In 2017, Aquarion Water sold one of its systems to Eversource Energy for $880 million.21 The DWSD system serves 6 times the number of people and the debt per capita—per utility system customer— is similar.22 This comparison is not one that is nuanced to all the different features of both systems.

It is difficult to compare the value of one system to another and difficult to map the sale of a utility to an investor owned corporation. However, this does raise the need make sure the lease payment reflects the value of the system and is designed to promote water security among customers across the region. Such a valuation needs to also be tailored to the context of a public corporation being the lessor—which may further complicate this comparison.

Finally, the systems’ audited 2014 Certified Financial Annual Reports value the net capital assets of the water system at $2,011,642,990—$2 billion, and the net capital assets of the sewer system at $2,837,994,840--$2.8 billion.23 The Governmental Accounting Standards Board accounting rules are primarily designed to design comparable reports of the overall financial condition of governments or government entities. The accounting rules for valuing the capital assets of water and sewer system capital is not necessarily well suited to calculating a systems value in the context of a lease agreement to a private or public corporation.24 However, in the absence of established methodology or precedent, this does highlight the need to adequately analyze the methods used to calculate the lease payment amount and to properly appraise the value of the system in the context of leasing it to a public corporation.

The amount at which the DWSD system is valued and the process used to calculate the lease payment of that asset is a necessary component of GLWA’s governance going forward. These studies will determine a well-informed position on whether the lease payment is fair and in the interests of system-wide water security—including service affordability, water quality, wastewater service adequacy, and improved environmental quality and public health.

Cost Allocations

Under the lease and shared services agreements, some costs of operating and improving the regional system are considered “common-to-all,” meaning that DWSD-R and other wholesale customers contribute to them, while others are “Detroit-only.”The ways costs are allocated within these classes tends to be unfairly burdensome for Detroit and neglects the city’s unique relationship. These unfair cost allocation practices perpetuate regional inequities and endanger the sustainability of the portion of the infrastructure that is within the city’s borders.

For example, as stated above, under the current arrangement, the $50 million/year lease payment is a common-to-all cost, meaning that when costs are divided, Detroit contributes $13.6 million to the lease payment for its own system.25 Our conversations and research do not find documentation discussing the rationale for categorizing the lease payment as a common-to-all cost explained. This should be pursued and be available for public review and debate. This is the case even in light of the $26.2 million “return on equity” GLWA pays Detroit on an annual basis.26

On the other hand, substantial costs associated with the combined sewer system are allocated to Detroit. Due to the absence of necessary investment and improvement, a large portion of the water and sewerage infrastructure within municipal Detroit’s boundaries, including that under the domain of DWSD-R, is left with a combined sewer system (CSS) in need of repair and upgrade.27

In a CSS system, wet weather events—melting snow or rain-can degrade water quality and may cause public health and environmental quality issues. A CSS system collects rainwater runoff, domestic sewage, and industrial wastewater into one pipe.28 When the volume of wastewater exceeds the capacity of the system or the treatment plant, usually during wet weather events like heavy rainfall or snowmelt, combined sewer overflows (CSO) may result. This means that untreated or partially treated human and industrial waste, toxic materials, debris, and stormwater discharges directly into streams, rivers, and other water bodies.29 State EPA agencies, like Michigan’s Department of Environmental Quality, are tasked to regulate and track CSO events and issue permits. Each permit sets specific conditions that the system must conform to such that the EPA’s CSO Policy—a national framework that is designed to ensure CSO events will not violate Clean Water Act standards.30 Despite this regulatory system, there is a nationwide problem with the capacity of CSS systems to make adequate upgrades to meet water quality standards. This is, in part, due to a lack of federal spending on drinking and wastewater infrastructure that could supplement state and local government spending.

Infrastructure to reduce CSO events—creating a separate sewer or building new infrastructure— can be too costly. Because local governments finance 98 percent of water and sewer infrastructure costs, financing capital intensive projects like this can be difficult. Combined sewer systems can no longer be built and cities with CSO systems often try to convert to sanitary sewers or reduce the likelihood of CSO events through green or grey infrastructure projects. Traditional remedies include filtering contaminated overflow or relieving pressure on the system by way of large retention basins. These initiatives can take the form of either “grey” or “green” CSO management.31 While green infrastructure projects are a promising strategy to reduce CSO events, cities under compliance schedules with the EPA can be ‘locked into’ traditional grey infrastructure projects and may have to seek approval to implement those projects.

Under the current agreement, Detroit covers 83 percent of the costs of several CSO facilities leased by the regional system, while the wholesale customers cover only 17 percent.32 Additionally, Detroit is required to cover 83 percent of the costs of some “future green facilities,” as well as grey facilities which are deemed to “primarily serve Detroit”—a distinction which is unclear considering that the systems are, literally, interconnected.33

This 83/17 split is rooted in the 1999 Rate Settlement Agreement, passed while DWSD was under federal court oversight as part of the effort to oblige the utility to comply with regulatory standards.34 83 percent of the construction costs for any CSO control system is covered by Detroit residents while suburban wholesale customers pay the remaining 17 percent—even if the CSO system exclusively serves non-Detroiters. The agreement enforces an exceptionally questionable cost structure for CSO management. It puts additional fiscal stress on DWSD-R and the city, which are already struggling to provide quality service and properly maintain urban infrastructure. There is also frustration in the community that the rationale of the 83/17 split is not clear—leaving the cost allocation to seem arbitrary from the perspective of community members. The city has begun charging high unmetered drainage fees to DWSD-R customers.

From our research, it almost certain that this is a direct consequence of this 83/17 split.35 These drainage fees are for Detroit’s residents, but also challenge the fiscal sustainability of important social institutions in the city, including faith-based institutions that are a foundation for community services and social bonding in Detroit.

Financing costly and vital updates to older infrastructure is not just a problem for the City of Detroit. Many municipalities served by the system are more affluent suburbs with greater financial resilience and these municipalities are those most likely to have newer separate sanitary sewers. However, there are many suburban municipalities that are struggling with development and aging infrastructure—including water and sewer infrastructure. These are the types of suburban areas that are also populated by more diverse people—meaning these suburbs counter the stereotype of affluent white suburbs. Nationally, these struggling and diverse suburbs are the fastest growing suburbs.

This is the pattern in the service area of the DWSD system—while the City of Detroit has experienced dramatic population decline, the regional area has not.

Mitigating the harm of CSO events is not only in the interest of the people living in the immediate area of the discharge into surface waters. The environmental principle “we are all downstream” is well suited to this problem. Ensuring surface water quality is a service provided not only to Detroiters or communities with combined sewers is a service provided to the entire service area—and many more. Maintaining water quality within the Great Lakes Water Basin contributes to the quality of 20 percent of the globe’s fresh surface water. Water security and its impacts on environmental quality and public health are a perfect example of universal benefits

There is also more area for research to ensure fair cost allocation within the agreements between DWSD and GLWA—agreements that are currently operating and those coming in the future. The allocation of other types of costs have yet to be determined and the precedent for making such allocations is to limit public debate and contestation. This allocation is important given that if Detroit is unable to meet its financial commitments, there are substantial negative consequences for Detroit. The city has already lost significant control of the system and the associated potential to benefit from investments in the system—but it is threatened with loosing even its remaining authority.

Governance Structure

GLWA has a six-member board, which includes: two positions appointed by the Detroit mayor, one appointed by the governor (who will soon be replaced by a representative from Flint, which returned to the regional system in 2017), and seats for each county in the service area—Wayne, Oakland, and Macomb counties. 

Detroit has two of six positions on the GLWA board of directors. The system provides 125 suburban communities with water service and 77 communities with sewer service. These are represented by GLWA board representatives from their respective counties. One of the seats currently apportioned to the state of Michigan is marked for a representatative from Flint, MI. This arrangement signals an acknowledgement of the unique relationship Detroit has with GLWA—how DWSD-R is not similarly related to GLWA.

However, Detroit’s authority is limited relative to its historic contributions to the region and its historic operation and system management since 1836. GLWA’s institutional structure should benefit from expanding the role of Detroit within GLWA. This general principle could suggest any number of changes to GLWA and strategies may include, but should not be limited to, considering GLWA board structure. This is the rationale for our identification of a structural governance problem within the GLWA service and lease agreements—one that is clearly communicated in the work of and our conversations with many of Detroit’s community-based organizations.

Detroit has vested interest in the operation and management of the system as owner of the asset. This is at the heart of many objections from organizations and the simple arrangement of seats on the board are not seen to adequately reflect the city’s unique relationship with GLWA. In fact, the arrangement is seen as an expression of disrespect for the role of the city in building the system and enabling the creation of suburbs through expanding its infrastructure. It is seen to also express the popular discourse of recent decades that represents the city as incompetent and in need of outside leadership and direction.

A super majority is required for all major decisions, and Detroit only has two members appointed by the mayor. This is in contrast to the three representatives from the counties and one appointed by the governor, soon to be replaced by a representative from Flint.36 This governance structure diminishes Detroit’s influence in making long-term decisions about the future of the system. To many community groups, particularly those suffering under the weight of unaffordable bills, the GLWA board structure echoes the disenfranchisement felt under emergency management. Notably, this design also presumes that the full diversity of water security problems within counties is adequately represented through the county-level representatives. It is reasonable that there is a reasonable limit to the number of seats on the GLWA board.

However, the limits of expecting few board representatives to adequately represent a wide diversity of needs suggests the need for GLWA to design additional structures for local influence in its governance structure. Additionally, it is possible that DWSD-R will be unable to meet its financial obligations under the GLWA agreement, especially given the lack of clarity in the way costs will be shared in the system. Should the city be unable to meet these obligations, current governance structures can create serious issues for Detroit. Firstly, DWSD-R can lose its ability to set rates, issue bills, or establish collection practices.37 The city can also forego future lease payments if it withdraws from the Authority.38 Finally, should conflict arise between GLWA and DWSD-R, dispute resolution occurs through an arbitration process that blocks access to courts.39

In identifying strategies that respond to the GLWA governance structure we must think more deeply than simply adding a seat to the board or giving another seat to the city. There is much more at stake. And, to simply make those changes does not respond to the way other suburban areas are very differently situated within GLWA. Having a county-level representative is a profound problem for representing the very different needs of places and people within that county.

The Creation of GLWA

The prospect of regionalizing the utility was previously raised in a number of venues before the city’s bankruptcy process. For example, the state legislature introduced legislation to regionalize the system and negotiations of DWSD under the EPA suit also attempted to regionalize the system.

The Great Lakes Water Authority, created in 2014, leases the regional water and sewerage infrastructure from Detroit for $50 million per year for 40 years. Those funds are set aside in an account managed by GLWA to fund capital improvements on Detroit’s urban water and sewerage systems. The authority also commits $4.5 million or .5 percent of based budgeted operating revenues for a water assistance program.40 As a “return on equity,” GLWA provides a $26.2 million credit to revenues Detroit is required to collect under the agreements. 41

From our research, we found these technical details critically important. Equally important and meaningful were the social conditions of the regionalization process. A notable factor that has alienated many people and groups we spoke with was that negotiations occurred under the suspension of ordinary democratic process. Substantive decisions and negotiations took place under the period of the city’s emergency management.

Under emergency management residents were effectively disenfranchised from democratic representation and contestation in formal governance. It is widely thought that the regionalization of the DWSD system would not have occurred if the regular process of public referendum were required. It has also been suggested that regionalizing the system in the absence of a referendum would be contrary to the state’s constitution.

The alienation expressed in our conversations also had profound racial dimensions. This is evidenced by seeing the racial footprint of places where emergency management has been instituted within the state. Since 2009, nine Michigan cities were appointed emergency managers by the state—six of those cities constitute 49.8% of the state’s African American population. Whether or not there was an intentional design to sever local control of local government for the majority of the state’s African American population, there were clearly uneven racial impacts of the implementation of emergency management. The state law enabling emergency management is, in and of itself, an artifact of state government rejecting the democratic will of state residents. State legislation enabling emergency management, PA 4, was repealed in 2012 in a statewide referendum. A month after this repeal the legislature passed PA 436 which effectively replaced the repealed legislation. While multiple circumstances alienated Detroit residents from the decision made in recent years, emergency management was at the root cause of most objections.

GLWA operates and manages ‘parts’ of the DWSD system within Detroit’s municipal boundaries. DWSD-Retail (DSWD-R) continues to operate and manage the remaining ‘parts’ the system within its municipal borders. The ‘parts’ of the system are defined and itemized in the lease and services agreements and subsequent DWSD and GLWA documents. It is not entirely clear how tasks associated with management and operation of system components are parsed out, nor is the rationale of the division clear. Suburban customers remain wholesale customers, meaning that suburban municipalities purchase water and sewerage services from GLWA at a wholesale rate. DWSD-R is created to be another wholesale customer of GLWA although it is situated differently than other wholesale customers.

Recommendations

We identify and outline seven recommendations that address the barriers discussed in the previous section. In our conversations to this point, we find that some of these recommendations are new, some are already underway and are expanded upon here, and others are in discussion among different groups that may or may not already be coordinating. The recommendations are accompanied by preliminary analysis, and we outline and suggest points for further inquiry.

This report intends to illuminate meaningful and potentially powerful changes that directly respond to the most pressing community needs. To further this work in its future phases, we must broaden the cast of collaborators and consult with experts to rigorously explore and pursue the proposed strategies.

Recommendation 1: Moratorium on Residential Water Shutoffs and Redesign Decision Making on Water Shutoffs

We propose instituting an immediate moratorium on residential water shutoffs until such time adequate processes are established that allow individuals a form of due process in the course of a water shutoff. Processes should enable effective and easily navigable processes to challenge to shutoff orders and access financial support programs. The moratorium should also be in place until there is a clear sufficient process to distinguish between accounts that are able or unable to pay. During of the period of that moratorium, it is essential for GLWA, DWSD, and other service providers to seriously consider the objections raised by the Detroit community and international agencies and implement long-term, dramatic changes to service disconnection practices.

There are many industries that rely on customer revenue to stay afloat; however, the inability to pay for services ought not result in an acute threat to health and safety. Any policies that pursue service disconnection to incentivize payment should be designed to apply only to situations in which there is an ability and unwillingness to pay. This will disqualify the vast majority of service disconnections.

An expanded and effective water affordability program and changes to current rate structures will reduce instances of inability to pay, thus curbing the need for residential water shutoffs. These possibilities are detailed in recommendations three and four.

Fair disconnection policies could be established by encouraging service providers to adjust their customer service policies or by implementing legislation that forbids water shutoffs where failure to pay is based on economic hardship.

Recommendation 2: Implement a Comprehensive Water Affordability Plan

For many people in the service area, drinking water and wastewater service rates are simply unaffordable. In order to safeguard environmental quality, public health, and water security we recommend designing and implementing a comprehensive income-based water affordability plan. This recommendation reflects a primary concern of Detroit leaders and community members.

In 2005, with the support of Detroit’s robust activist community, affordable utilities expert Roger Colton designed an income-based water affordability plan for Detroit in response to increasing rates of shutoffs. The plan, known as the Water Affordability Program (WAP) was approved by the Detroit city council in 2006 but never implemented.

We recommend adopting a revised and expanded version of Colton’s plan that includes customers across the entire GLWA service area. In the fall of 2015, Philadelphia became the first major city to adopt an income-based affordability program, and similar cities are following suit. By implementing a robust water affordability plan, GLWA, DWSD, and other wholesale customers will join the cast of cities implementing similar policies to ensure water security.

Further research should identify the precise needs across the service area and match these to program design features. It is possible that components of the original WAP are best suited to this effort. These included providing fixed credits to GLWA customers’ bills. The fixed credit is calculated by determining (i) a burden-based payment (i.e. an affordable percentage of household income), (ii) the annual bill amount, and (iii) the fixed credit necessary to reduce annual bill to a burden-based payment. 

The 2005 WAP plan required that water and sewerage rates not exceed between two to three percent of annual household income. As there is also a diverse and consistent call for basing affordability plans based on criteria other than household income, we recommend further inquiry into the most effective metrics for determining affordable burdens.

In 2016, the Senate Appropriations Committee directed EPA to contract with the National Academy of Public Administration (NAPA) to “conduct an independent study to create a definition of, and framework for, community affordability of clean water”42 that encompassed both drinking water and wastewater. NAPA produced a comprehensive literature review, over 100 stakeholder interviews--including PA Financial Advisory Board, Council of Mayors, water industry groups, academics, consultants, governmental entities, and others—a stakeholder survey, and a roundtable discussion with stakeholders and experts.43 Their 2017 report produced a set of findings and recommendations related to affordability concerns and improvements to EPA metrics, among other things.

… In discussions with NAPA about the above critiques, EPA noted that the RI was intended to assess overall system affordability rather than individual household affordability, that it desired a “common starting point” for negotiations between regulators and individual permittees, and that an adjustment to the metrics would increase staff workload by reopening negotiation around existing consent decrees (legal agreements between EPA and permittees regarding actions and timelines required to achieve compliance with CWA and SDWA regulations).44

There is a need to update and expand upon the work of the 2005 affordably plan and determine the costs of comprehensive water affordability in the region today. The above quote is taken from a report in publication that compares the EPA metric and two alternative metrics that enable more targeted place-based analysis of water affordability. This type of study is a prerequisite to designing an robust and adequate affordability plan.

Recommendation 3: Incorporate Basic Consumer Protection in GLWA Policies

This recommendation acknowledges that many systems already have consumer protections in place—many states require such programs. The term itself, “consumer protection” is misleading in that a public utility “consumer” is different than a “consumer” of hamburgers or electronic equipment—and this difference should be reflected in the design of protection policies. In many places— Detroit included—the failure of consumer protection programs in the context of drinking water and wastewater systems is inadequate.

For example, in Detroit’s system there is an appeal process, but due to data systems in the DWSD we understand that many users were not provided notice or were provided notice but were unable to navigate the process for appealing the collection process or arranging existing financial support systems. The scale of the shutoffs in Detroit is larger than in other areas we found through our research. 

In other places where shutoffs have taken place there are also consumer protection measures on the books. For example, in Baltimore there were 1,400 shutoffs in 2016 and 8,000 the year before. Some media reporting on the Baltimore shutoffs have described the effects being less severe than in Detroit, in part because the accounts with the largest balances were primary focus and this included some private corporate accounts. Additionally, it was reported that there was priority also given to collect balances in areas with lower poverty rates and it is presumed that this meant fewer people who could not pay were shutoff.

The process of shutoffs can be better designed. Other state utility organizations have protection for utilities—including water. Many allow for a delay, usually 30 days, in the case of medical events and this stay can be renewed. However, in the absence of doing a full survey of consumer prote tions from water shutoffs throughout US states there seems to be a pattern that focuses on age, ability, and health—and that these circumstances only offer temporary relief. It also seems very common to offer payment restructuring programs.

These orthodox consumer protection plans are not adequate to address the needs of a family who is unable to pay a water and sewer utility bill. Fundamentally, any consumer protection plan needs to be linked to and designed alongside with an adequate affordability plan. However, consumer protection can be part of that process and enable the system to distinguish between account holders who are able or unable to pay their bills—and who is or is not subject to a water shutoff.

Some components to a consumer protection plan were described in Colton’s 2005 Water Affordability Plan (WAP). We propose adopting protections in the following areas:

  1. Late fees: Late fees disproportionately impact low-income people and worsen financial stressors. Currently, DWSD-R charges a five percent late-fee for overdue accounts. As that five percent well exceeds the costs associated overdue accounts, we recommend lowering that percentage or eliminating late fees all together.
  2. Deferred payment plans for arrears: Customers with seemingly “affordable” bills burden can still be left with unaffordable bills when they have past due bills. We recommend implementing renegotiable payment plans and allowing arrears to be paid in regular monthly installments.

Currently, DWSD-R and wholesale providers have their own customer service policies. To implement policy reforms region-wide, each service provider could adopt the policies, or GLWA could develop new policies which apply to all of its regional customers.

Recommendation 4: Implement Legislative Reforms

The universal goal is wide-spread water security— of access to affordable, high quality, and residential drinking and wastewater service and benefitting from its contributions to environmental quality and public health. This universal goal should animate legislation and regulatory standards.

Several states and municipalities have implemented protective water legislation, and we recommend further inquiry into potential legal and legislative strategies. Federal legislation that bears on the water security—access to drinking water and wastewater service—includes S.2015, the Water Affordability Act that would create low-income drinking and wastewater assistance pilot program.45 This program is a targeted strategy as eligibility for the program is set by particular geography, income, and enrollment in other assistance programs. This bill was introduced in June 2018.

At the end of October, America’s Water Infrastructure Act of 2018 was signed into law.46 This type of legislation requires re-authorization every two years and makes modest increases in investments in drinking water. Terrain of debate on this bill pertains to provision that enable greater participation of private corporations in the work of public infrastructure. For example, there is an interest to remove a cap on private activity bonds and other terms of the legislation that could impact regulation of infrastructure that runs through waterways which has been an interest of the energy sector.

The National Coalition for Legislation on Affordable Water (NCLAWater) advocates for a variety of measures at the state and federal levels.47 Those efforts include legal measures to ensure access to water, fair water billing and rates, water quality, and citizen oversight and transparency. NCLA Water’s Michigan statewide legislative package, which offers a sample of a viable legislative model, includes the following:

  • Access to Water
    • HB 4291 Michigan Access and Affordable Water Act. Creates the “Accessible and Affordable Water Act,” which would require that all state departments and agencies employ all reasonable means to adopt policies to ensure that water is affordable and accessible as long as those policies do not affect eligibility for federal funds.
    • HB 4360 Water Access. Requires access points for safe drinking water be available in places where residents are not supplied municipal water hook-ups.
  • Water Billing and Rates
    • HB 4394 Affordability. Addresses water rate structures that unduly burden low-income residents by amending the Social Welfare Act to create a residential water affordability program within DHHS in order to ensure that water bills are based on household income.
    • HB 4389 and HB4390 Decriminalization. Decriminalizes the act of re-connecting water service from a five-year felony to a civil infraction or misdemeanor.
  • Water Quality
    • HB 4124 Program for Schools and Child Day Care. Establishes water testing and interventions in schools and child daycare centers, as well as mechanism for repairing and replacing sources of lead contamination.
    • HB 4120; HB 4372, 4378, 4379 Water Quality Testing. Requires water quality testing at regular intervals in schools, colleges, universities, nonpublic schools and hospitals.
  • Citizen Oversight and Transparency
    • HB 4201 and HB 4214 MDEQ Citizen Oversight Commissions. Restores a gubernatorial-appointed citizen oversight commission on water quality.
    • HB 4375 Water Ombudsman. Establishes a Water Ombudsman to advocate for residents throughout the state on water-related issues.

Recommendation 5: Evaluate the Fairness of GLWA’s Annual Lease Payment

We recommend conducting a comprehensive appraisal of the regional water and sewerage system, and given that value, recalculating the annual lease payment. 

This issue is at the center of the inequity of the currently-in-place agreements between the City of Detroit and GLWA. In order to ensure the distribution of affordable high-quality water and establish an equitable relationship between the city and the region, the annual lease payment must reflect the value of the system as assessed through proper review.

Though information about how the lease payment was calculated is not readily available, it appears that the value of the Detroit Water and Sewerage Department and its infrastructure was underestimated. At minimum DWSD-R should not need to contribute $13.6 million to the lease payment of a portion of its own asset.48

The lease payment ought to be recalculated following comprehensive appraisal. Given the sensitivity and centrality of this matter, it is imperative information about those negotiations be publicly available. Local systems in a growing number of places in the US are entering into operation and management contracts, leases, and other types of arrangements with public and private investor owned corporations. Assessing the lease payment amount and decisions that were involved is an opportunity to provide leadership at the national level. Systems across the country are facing similar difficulties and complexities in setting the terms of arrangements they enter. This is both a problem for policy makers to gauge their expectations and for community members to impact and influence decisions.

Recommendation 6: Rework the Terms of the GLWA Service Agreement

The existing framework of the agreements between the City of Detroit and GLWA creates unnecessary structural burdens for the City of Detroit to exercise its unique role as owner of the system. Additionally, its position within the GLWA governance structure is similarly limited to other municipalities in the service area. We recommend changing some aspects of the current agreements in order to build towards water security for everyone and every place in the service area.

We discuss five concerns to address:

  • Depending on the results of analysis of the process that calculated GLWA’s annual lease payment and the valuation of the system there may be need to adjust the lease payment accordingly.
  • The allocation of costs between DWSD-R and GLWA can contribute to Detroit’s unaffordability problem and other regional areas similarly disadvantaged.
  • Contain provisions can impede the establishment of fair and sustainable rate-setting structures.
  • Institute a flawed governance structure that diminishes Detroit’s agency as a steward and owner of the system and diminishes the role of other retail customers to have their unique concerns adequately represented.
  • Terms of the agreement were based on funding an inadequate customer assistance program and there was no consideration of designing terms to build a robust affordability program.

In addition to researching and possibly adjusting the annual lease payment we recommend reframing the Detroit/GLWA agreements by:

  • Establishing a more equitable cost-sharing model that takes regional inequities into account. This will likely involve making expenses associated with the combined sewer overflows (CSO) common-to-all and not requiring Detroit to contribute to the lease payment. Current rate structures should be reappraised based upon a more thorough analysis of water affordability throughout the region
  • Reconsidering current rate-setting structures in order to develop a system designed to balance cost-recovery, conservation, affordability, and economic development while also preserving water security throughout the service area. This may involve abandoning the four percent rate cap. Crucially, any rate increase that exceeds the four percent cap must be accompanied by a robust affordability plan, 
  • Reworking the GLWA governance structure to ensure that Detroit and other places in the region have fair representation in decision making bodies. Addressing this concern can extend beyond simply adding seats to the board. Rather, deep analysis should be conducted into best practices and alternative structures that can adhere unique community concerns to influence in decision making. Additionally, legal resources and protections should be created such that Detroit or other wholesale customers have access to proper legal remedy if there are disputes or failures to meet obligations or a decision is made to withdraw from the authority.
  • Creating structures to fund an affordability plan.
  • Reworking any terms of the agreements should not be conducted in the spirit of decisions during bankruptcy processes that alienated the GLWA from those receiving its service.49 The very best practices and even new processes that provide meaningful influence by community groups should drive decisions. Detroit and other areas facing water insecurity ought to be fairly represented, expert opinions should be taken into consideration, and information about the renegotiation process ought to be made readily available to the public and express a commitment to transparency and community accountability. It is likely that achieving comprehensive water equity in Detroit will require the agreement to be renegotiated more than once. We recommend that fair, periodic negotiation be a central aspect of the of the relationship between the City of Detroit and GLWA.

Recommendation 7: Implement Green Infrastructure Initiatives

Addressing the problem of systemwide water insecurity in isolation is a disservice to the effort to design a system that provides region-wide environmental quality, public health, and water security. Water insecurity, as we have suggested earlier, is a result of many entangled social, economic, and environmental issues. These issues include, but are not limited to, aging urban infrastructure, historical imbalances of power, austerity and systemic divestment, and stressed municipal finances.

In response to these interconnected challenges, we recommend enacting a broad green infrastructure initiative in Detroit. Green infrastructure offers a dynamic, multidimensional solution to Detroit’s interrelated problems.

Green infrastructure involves natural and engineered environmental upgrades that promote water reuse and infiltration into the natural aquifer. Green infrastructure offers an opportunity to relieve pressure on Detroit’s aging water and sanitation infrastructure while also facilitating economic growth and sustainable urban development. While traditional grey infrastructure improvements are necessary, GI projects can provide resilience to the effects of climate change and reduce the demands on the scale of grey infrastructure needs. Additionally, investing in drinking water and wastewater systems have positive and significant impacts on state and local economies. Green infrastructure has an array of potential social, environmental, and financial benefits for Detroit and the region. These multidimensional benefits, which comprise a “Triple Bottom Line” framework, have been well-documented in other cities.50

Based on a 2016 assessment by the American Society of Civil Engineers, this study estimates that the US needs to invest an additional $82 billion per year in water infrastructure at all levels of government over the next 10 years to meet projected capital needs. If the estimated investment gap were closed, it would result in over $220 billion in total annual economic activity to the country. These investments would generate and sustain approximately 1.3 million jobs over the 10-year period.51

A study should be commissioned that applies this analysis to the economic effects of investment in southeast Michigan. A design for a study of this type is underway and meets industry standards for rigor and quality.

Michigan’s Department of Evironmental Quality has developed and implemented several extensive green infrastructure projects in the city and the region in recent years.52 The initiatives we propose here complement green infrastructure projects underway in Detroit. These existing initiatives set precedent for the potential of green strategies.

This table, title “Two Paths for Detroit” shows in the first column, what it will be like in 10 years if we continue to make the choice not to act, and in the second column is what it will be like in 10 years if we make the choice to implement the recommended changes.

What we suggest here is a significant increase in scale of these programs and also principles that should be integrated into current efforts underway.

Green infrastructure can also reduce costs associated with the combined sewer system by lessening the quantity of impervious surfaces, and thus reducing the amount of water entering the system. This diversion of runoff results in savings in labor, chemical, and energy costs, as well as costs associated with preventing combined sewer overflows.

Detroit offers an ideal setting for an ambitious green infrastructure initiative for four reaons.

  1. Green infrastructure requires a large amount of low-cost land, which Detroit has in abundance. EXECUTIVE SUMMARY haasinstitute.berkeley.edu/detroitwaterequity Water Equity and Security in Detroit’s Water & Sewer District 21
  2. Green infrastructure offers a lowest cost, highest reward strategy for dealing with the city’s aging infrastructure.
  3. Green infrastructure creates jobs in response to issues of sufficient employment and living wages in Detroit.
  4. Detroit has a rich community of local leaders with knowledge of the capacity and needs of neighborhoods.

The elements of our proposed green infrastructure initiative include the following:

  • An initial capital source sufficient to fund a larger array of green infrastructure installations on properties throughout the City of Detroit.
  • A strategy for identifying the most beneficial areas for reduction in peak combined sewer overflow in order to make the greatest economic and environmental impact.
  • A strategy for assembling land for green infrastructure installations, primarily among the many parcels already assembled in the land bank.
  • The development of several engineering prototypes for green infrastructure designed for permitting and priced for financing and contracting.
  • The cultivation of a cohort of local, minority-owned small business enterprises equipped and trained to perform contracts for green infrastructure installation.
  • The establishment of a small business association (SBA) or micro-lending loan program to provide working capital and equipment financing for small contractors who can efficiently and economically execute contracts for green infrastructure.
  • The establishment of a protocol for measuring economic and environmental benefits of each type of green infrastructure installation and translating these economies into aggregated savings to the DWSD-R and GLWA for purpose of reinvestment.
  • The development of a strategy for tax increment financing or other long-term investment strategies for the purpose of monetizing cash flows for additional capital investments in green infrastructure.

The Costs of Water Insecurity

The starting place for this project is a focus on Detroit. A primary feature of water insecurity in Detroit is a profound problem with access to affordable drinking and wastewater services. The expression of this access barrier is water shutoffs that have been implemented throughout historically, but dramatically increased in and since 2014. The implementation of water shutoffs in Detroit took place regardless of whether or not someone was able to pay, and collections seem to have been targeted at residential accounts rather than commercial accounts that have higher arrears.

The profound harm to an individual’s physical and mental health is reflected in volumes of personal accounts that have been shared. Additionally, because of the geographic patterns of households who find drinking water and wastewater service unaffordable, there are clear effects at the neighborhood level.

We include this section because of the extreme and unique harms that arise from losing residential access to water service. In our conversations with community members it was clear that the defense of water shutoffs was felt to be disconnected from empathy and understanding of this harm—and therefore those defending the practice are viewed as disinterested in providing relief to people who experience shutoffs. Additionally, there is clear disregard for appreciation of the direct regional impacts of large scale water shutoffs and water unaffordability. We review here research that details the deleterious impacts of water insecurity—in particular the inaccessibility of affordable drinking and wastewater services.

There is near-consensus among those whose water has been shutoff and people who advocate and provide emergency services to them—people “touched” by water shutoffs—that water shutoffs are a crisis. However, among people who rationalize and argue there is a need for residential water shutoffs there is a sense that shutoffs are routine ordinary practice and that incentivizing bill collection is not a crisis—that the crisis is that system revenues have been too low in recent decades.

Consistent and secure access to clean water that runs in your home is taken for granted by many until there’s a plumbing leak. It’s common for homeowners to know—or learn quickly— where the shutoff valve is for their home’s sink or toilet in the event of a water leak. The relatively minor inconv nience of the disconnection of a single fixture is, for many people, the only experience of not having the water access one would like to have. For pe ple advantaged in this way, decisions of whether and how long to wash vegetables and fruits are not considered a decision—it’s just a routine task. Decisions of whether to steam or fry potatoes is governed by the preference of those you’re coo ing for. If there’s a scraped knee or a finger cut it is washed with soap and water: migraines or ankle sprains get ice and fevers are cooled with chilled water. One can use the toilet whenever they need, wash their hands after, and waste can be quickly ushered out of the home through sewer lines. These basics are not basic for people without running clean water in their home. It is not controversial to characterize the large number of water shutoffs as a crisis.

When adults or children are facing these challenges in their day-to-day lives they realize that it’s not normal and that a vast majority of people do not face these struggles. These are the material conditions of being othered and structurally marginalized. The relief of getting access to water and sewer systems can be a force for structural belonging and inclusion. Our previous recommendations can get us there

Detroit’s water shutoffs have been widespread and have raised the visibility of water affordability problems across the country. In Detroit, at least 100,000 households have had water shut off since 2014.53 While the annual number of shutoffs has decreased since 2014, in March 2018, the Detroit Free Press reported that at least 17,000 households were at risk for shutoffs.54 Data suggests that in Detroit, as in other places across the country experiencing water shutoffs—there is not a reticence to pay, but rather the problem is being unable to pay. Records obtained by Bridge Magazine show that the number of residential shutoffs dropped from 33,000 in 2014 to 23,000 in 2016 and increased again to 27,552 in 2016.55 Critics have noted the way in which shutoff practices have targeted residential rather than commercial account-holders, though arrears owed by commercial customers far exceed that of residential customers.56

Because water affordability is a growing problem across the US, water utilities use shutoffs as an incentive for utility customers to bring their bills up-to-date. Shutoffs are not unique to Detroit, but the number of shutoffs in the city is remarkably high and many of the strategies implementing shutoffs are particularly harmful for household residents. In 2016, Baltimore shutoff water to 1,400 accounts and 8,000 the year before. They enforce shutoffs if a bill falls behind by $250 for two billing periods.57 In Baltimore, unlike Detroit, household residences were not always the primary focus on shutoffs and utility customers with remarkably high pastdue amounts were primary targets and these were larger corporate accounts. Additionally, in Baltimore there was a focus on collections from areas outside of the urban core where poverty rates were lower. Water shutoffs cannot be defended as an incentive system for collection from households who are unable to pay. This matter was not adequately addressed in Baltimore. However, differences between implementation strategies are meaningful. In our conversations the practice of shutoffs for people willing but not able to pay was a fundamental problem.

In addition, the conversations explained that the execution of shutoffs was deeply problematic and existing avenues to appeal or delay shutoffs were practically unnavigable for people.

Across the US, there are similar problems with the use of shutoffs to increase system revenue from people who cannot pay and a pattern of lacking mechanisms to appeal or suspend a shutoff. In the course of our research we did not find any appeal process that effectively prevented a shutoff in the case of an inability to pay—although we did find allowance for establishing an income-based repayments plans. However, these repayment plans do not resolve the problems that arose in the course of our conversations. We noted accounts of many repayment plans that were still not affordable for households and the water was shutoff after the first failed installment plan.

In May 2017, 40,000 Philadelphia households were eligible for water service disconnections.58 Their process provides two notices instructing the household to set up a payment plan or else their water will be cut off. The main pipe to the house would be turned off and a lock installed on the meter box.59 The work of the shutoff is done by a crew that will usually identify those with thousands of dollars owed.60They visit and do the shutoff at that location and then turn off other accounts in arrears in nearby locations, without discretion of the amount owed.61 This is thought to be a more efficient strategy and a crew can do 3,000 shutoffs with this method.62 In Seattle shutoffs are triggered at $300 past due and 52 days; Phoenix is triggered at $75 and 30 days; Denver shutoffs are triggered at $125 and 50 days. Some states establish water utility consumer protections that delay a shutoff in the case of sick children, seniors, or medical conditions.63

In many ways across the US there is a gap between standards set by international human rights law and the function of fundamental resources to levers of opportunity. For example housing, education, or food. Despite these persistent gaps it is useful to document these gaps in the aspiration to meet universal goals outlined therein. In 2014, following an upsurge in shutoffs during Detroit’s bankruptcy negotiations, Catarina de Albuquerque, the United Nations Special Rapporteur on the human right to water and sanitation, and Leilani Farha, the Special Rapporteur on the right to adequate housing, visited Detroit. Albuquerque explained that “it is contrary to human rights to disconnect water from people who simply do not have the means to pay their bills.”64 In the visits to states across the US, the UN Special Rapporteurs have connected water insecurity to poverty and the right to clean water, sanitation and housing.65

Water shutoffs are a collections system universally designed to incentivize users to pay bills. Water and sewer utilities in the US are considered "natural monopolies" and rate setting is typically dominated by studies that measure the willingness of users to pay (WTP) for water. This is mismatched to the empirical reality of entrenched poverty and inadequate federal, state, and local funding for system operation, management, and upgrade. These studies have also shown that lower income households have an elastic relationship to water rates—meaning that if there are any changes in the rates these are the households most likely to use less. It is a perverse system design to make the assumption that all users can pay and accommodate this reality by explaining universal rate-setting designs that produce “inelastic” relationships with low-income users—rather than making accessibility to affordable water possible.

This section of the report details the wide-ranging negative outcomes produced by using water shutoffs as a bill collection practice. Resorting to shutoffs is directly rooted in the historical challenges faced by service providers in the regional and issues with the current Detroit/GLWA agreement, described in Sections I and II, respectively. Not only are shutoffs ineffective in recovering revenue, but they also endanger peoples’ livelihood in a myriad of ways. The burdens caused by water shutoffs are disproportionately endured by low-income people and people of color.

The Health Costs of Shutoffs

Water shutoffs can threaten public health and exacerbate or deepen disparities in health outcomes. Studies overwhelmingly confirm the links between water scarcity and a variety of health issues.66 The link between living without access to drinking water and wastewater services and vulnerability to a number of diseases and sicknesses is well-documented and studied with consistent findings in places across the globe.

A primary risk associated with water scarcity is dehydration. It can have lasting effects on individuals’ health and intensify other health problems. Moreover, poor hygiene resulting from lack of water access can spread and create a variety of health problems, such as skin diseases and gastrointestinal issues, as handwashing is the first line of defense against several communicable diseases. Lacking water in the home can also negatively impact nutrition, as the preparation of healthier foods is particularly dependent upon water.

There is little scholarly study of the effects of water shutoffs and public health in the context of circumstances like those in Detroit. An abstract of an unreleased study by the Henry Ford Health System’s Global Health Initiative and Division of Infectious Disease offers a preliminary analysis of the effects of shutoffs on public health in Detroit. The study examined 37,441 cases of water-related illnesses at Henry Ford Hospital between January 2015 and February 2016. Researchers found that patients with water-related illnesses were 1.48 times more likely to live on a block that had experienced water shutoffs.67 The study was criticized due to its failure to document causation and the geographic scale of its analysis. Lacking the full text, it is difficult to appraise the methodology, however the findings are consistent given what we know about the consequences of lacking access to water and sewer services. Furthermore, questions regarding the study’s focus on correlation—not causation—and the geographic scale are unlikely to prove a solid ground for contesting the study’s findings. As presented in the abstract, finding causation and geocoding and aggregating patient diagnoses at the census tract level are standard features of scholarly study in the field.

There are also a variety of mental health issues associated with water poverty, and water deprivation can exacerbate existing mental health problems as well.68 For example, irregular bathing and sanitation can create lasting feelings of shame and negatively affect people’s sense of self-worth.

In these ways, among others, the suspension of residential drinking water and wastewater services creates lasting mental and physical stress for individuals that has measurable effects on the body. The “toxic stress” associated with the cascading effects of shutoffs must be considered when appraising the health costs of water deprivation.

A variety of studies have discussed the way in which toxic stress contributes to disparate health outcomes for people—in particular poor people and people of color.69 The day-to-day stressors of living as a person who is considered “other” and deprived of resources and opportunities have demonstrable physiological effects. This chronic stress may be related to experiencing micro-aggressions, persistent unemployment, residential segregation, and subpar educational options.

While studies have not explicitly examined the relationship between toxic stress and water scarcity, the connection is plausible. This is especially considering the way in which water access is a precondition for realization of other positive out-comes associated with toxic stress. For example, maintaining family cohesion, housing, healthy food, and health.

Not only are marginalized groups disproportionately exposed to health risks, but they also often have limited access to health care. These social determinants of health—that is, increased exposure to risk and limited access to care—combine to perpetuate disparate outcomes.70

The wide-ranging health consequences of water deprivation endangers the well-being of individuals, families, and entire communities. Water access is a precondition of human health, and depriving people of it constitutes a violation of basic human rights.

The Social Costs of Shutoffs

Water shutoffs also compound social problems caused by the systemic marginalization of communities. We the People of Detroit’s Community Research Collective has documented the ways past due amounts on delinquent water bills are rolled over to liens on homes. This lien can then combine with any other liens and therefore accelerate the process of home foreclosure.71 Foreclosures have a number of negative outcomes for households and communities at large. Additionally, Child Protective Services (CPS) considers homes without access to running water to be unfit environments for children, water shutoffs can break up families.72 Whether or not the child is actually removed from the house, living with the possibility of separation creates psychic harm and contributes to toxic stress.

If the problem is the ability to pay—not the willingness to pay—then the fundamental problem is located in pricing structures and processes within the DWSD and GLWA. Under the current GLWA agreement, DWSD-R customers bear the burden of costs associated with the combined system by paying $750 per square acre of impervious surface in monthly “drainage fees.”73 One symptom of this structural design flaw is that high fees actively threaten the fiscal sustainability of Detroit churches and other important social institutions in the city.

Churches are especially burdened by drainage fees given the large quantity of impervious surfaces they maintain and occupy—including the size of the church itself, parking lots large enough to accommodate whole congregations, satellite community buildings, and even vacant properties churches have acquired for neighborhood improvement projects. Detroiters feel that these fees are arbitrary, particularly in the context of alternative reasonable approaches to determining drainage costs.

Drainage fees and water shutoffs in Detroit offer a particularly glaring example of how problems surrounding public infrastructure can actively disrupt communities. Shutoffs across the US pose acute threats to human health and play a critical role in accelerating cascading effects that erode historically marginalized communities, threatening the well-being of neighborhoods, families, and community spaces.

The Long History of Detroit’s Water and Sewerage District

Studies have found that people who experience affordability barriers problems to water and sewer access are also areas where there are higher populations of people in poverty, disabled, people of color, and higher enrollments in public service programs.74 These “pockets of water poverty” are consistently characterized in this way and the GLWA service area is no exception.75 Areas of unaffordability throughout the GLWA service area are marked by these patterns, including Detroit.76

Race, physical ability, and socioeconomic status correlate with affordability access barriers to water and sewer service security. These are also groups that are underrepresented in institutions that determine rate structures and other procedures for utilities. These are also groups that are on the lower side of disparities—including disparities in political power. These circumstances can create conditions for utilities to function with ostensibly neutral and objective processes that are universal and “color-blind” with the intention to not treat everyone the same. These universal policies often, in execution, perpetuate disparities and end up providing greater outcomes to the groups that are already better-served by dominant institutions. If GLWA and DWSD pursues universal policy to treat municipal retail customers and system users with the same brush, it will neglect important differences and fail to respond adequately and fairly to the different ways some places and groups of people relate to their water and sewer services. In an EPA study of 795 utilities, 228 offered some form of affordability plan—28 percent of the sample.77

By examining the history of water and sewerage services in Detroit, we can begin to understand the way in which historical factors created structural problems for the regional utility that disproportionately impacts othered groups—and in Detroit history demonstrates these are largely poorer lower-wealth Black and African American people. These factors include the racial dynamics of labor unions and within industrial firms, racially disparate application of federal financial support for home mortgages and opportunities to move outside of areas of the region and city with richer opportunity networks. Accordingly, inequity is baked into the way the way the system functions today.

Our account of the history of the system contributes to an explanation of how water and sewer systems were designed alongside and during profound periods of hostile and explicit racial animus. While this animus may not animate and drive current policy the institutional design and structural design reflects deeply racialized outcomes. To re-engineer these systems to promote inclusion there needs to be deliberate effort to understand the dynamics of the creation of DWSD. While the details in this section are necessarily unique to Detroit, the general principles are not. Many of the details unique to Detroit are the result of waves of policy and development that shaped places—and water systems—throughout the US There is a script for this past and there is a script to arrest the historical momentum inherited from a troubled history.

The history of Detroit’s water system begins in 1836, when the city purchased the Water Works. For the next century, a booming, industrializing Detroit thrived, growing and expanding into region surrounding the city. The Detroit Water and Sewerage Department (DWSD) system and infrastructure grew along with it, serving as the backbone for regional expansion.

Suburbanization in the southeast Michigan region skyrocketed in the latter half of the twentieth century, largely in response to urban economic decline and growing racial tensions. Suburbanization in southeast Michigan offers a prime illustration of the migration of white people from urban centers to more racially homogenous suburban regions—a trend that was deepened through federal and local government policies that incentivized different groups to move or stay in place.

Before suburban areas could be created and established, the DWSD would have to extend the system infrastructure to those places. In this way Detroit “subsidized” the suburbs. This was brought up as another example of why Detroiters today are further alienated from GLWA’s control of the formerly Detroit asset. The city enabled the development of suburbs by building the system—but during the bankruptcy process the city was deemed incapable of operating the resource and, therefore, benefiting from the incredibly valuable asset. Between 1955 and 1973, 51 municipalities were added to Detroit’s water system.78 While jobs moved to the suburbs, in the city, population numbers plummeted, the job market shrank, and poverty and segregation grew. Since development does not occur where infrastructure is unavailable, the very existence of the suburbs depended on Detroit.

Today, the regional water system serves 3.8 million people—over one third of Michigan’s population. Over 80 percent of people served by the system live outside of Detroit.79 In 1977, Detroit was sued by the EPA for failing to meet the newly amended Clean Water Act.80 While many public systems found themselves struggling to meet newly imposed federal regulations, Detroit’s case was unusual in that the process to create a mutually agreeable compliance schedule between EPA and DWSD was protracted over 37 years, during which DWSD was “overseen” by a federal judge. While this time proceeded, some Detroiters explained that they felt this process distanced the influence of community members from the operation and function of the DWSD even though the process was one designed to ensure water quality and public health outcomes.

Another court decision that Detroiter’s have described as unfair and arbitrary was the “1999 Rate Settlement Agreement,” which obliges Detroit to pay for 83 percent of the costs associated with several combined sewer overflow facilities, leaving the suburbs responsible for only 17 percent.81 As detailed in Section II of this report, this unfair arrangement has resulted in considerable expenses for Detroit and is still in place today. This agreement was part of the 37-year court-mediated process. This agreement is not felt to have served the interests of Detroiters and the DWSD relationship with suburban retail clients. It is characterized by many Detroiters to be an arbitrary division of responsibility and an unjustified separation of components of a system that services Detroit and suburban users.82

During the latter period of EPA oversight, the DWSD continued to accumulate debts to manage and operate the system. Some of this debt financed the needs to meet environmental standards. However, some of the debt instruments were exceptionally and unnecessarily risky—carrying fees and costs that were not associated with traditional bonds. In order to shift to more secure bonds DWSD took out ‘refinancing bonds’ as a form of ‘refinancing.’ By 2012, 40 percent of DWSD revenue was going toward debt service. However, this is not to say that these management decisions ruined and degraded the value of the DWSD system. With more than 2,700 miles of transmission and distribution mains and 3,000 miles of sewage collection pipes, the DWSD system is one of the city’s most valuable assets.

Conclusion

The layers of social, political, and environmental issues that have contributed to the inequitable distribution of power and resources in southeast Michigan demand a multidimensional response. It is our intention that by offering a preliminary explanation of those issues, we can highlight a path forward for Detroit that is socially, economically, and environmentally sustainable.

It is important to note that the solautions offered here are preliminary, and we hope that this report will lay the groundwork for further efforts to realize water security and the benefits it provides to environmental quality and public health. In crafting and implementing multidimensional solutions to Detroit’s problems, community support and input is crucial. As we expand the base of participation in this project to expand and diversity, this report has openings for a range of parties and interest groups to collaborate to develop strategies that foster lasting benefits throughout the service area.

The report offers solutions that are tailored for Detroit but also responsive to nationwide patterns of expanding water insecurity. With this design there is an emphasis on Detroit working to better its regional area, but also to provide national leadership in effectively and innovatively tacking the task of building water security and access.

The problems discussed in this report are not insoluble, and inaction is not an option. Choosing not to respond to the pressing inequities at hand only passively enables the continuation of today’s system, which, if left unchecked, will likely worsen existing problems: increasing water and sewerage bills, contaminated water, and failing infrastructure accessibility, and correspondingly, poverty and insecurity.

We envision a different path forward for Detroit and the region—one where vital resources are fairly distributed, where the region’s residents can enjoy a dignified life in health communities, and where lasting economic and social equality is fostered and nurtured.

  • 1. Elizabeth A. Mack and Sarah Wrase. "A Burgeoning Crisis? A Nationwide Assessment of the Geography of Water Affordability in the United States," PloS One 12, no. 1 (2017): e0169488, http://journals.plos.org/plosone/article?id=10.1371/journal.pone.0169488.
  • 2. States and local governments are directed to take the lead in investing in infrastructure. There is rationale to this recommendation because investments in water infrastructure can have greater benefit to economic growth than other types of investment. Vale of Water Campaign, “The Economic Benefits of Investing in Water Infrastructure,” Available at www.thevalueofwater.org. However, the federal government has capacity for investments that local and state governments do not possess. The recommendation for states to take the lead on infrastructure investment is often one based in pragmatism because the federal government has not made adequate investments in recent decades and the current presidential administration is not an exception in this regard. “President Trump’s infrastructure proposal seems to omit many important areas of need. The plan in the President’s proposed 2018 budget consists of tax credits to private-sector investors, which would boost investment in projects that will generate revenue like tolls or user fees (such as new roads and bridges) but leave out maintenance of existing roads, bridges, and water lines, and construction of public schools and many public transit projects. [1] Also, less profitable projects like roads in rural areas likely wouldn’t attract private investment even with new tax credits.” Elizabeth McNichol, “It’s time for states to invest in infrastructure,” August 10, 2017, Center for Budget and Policy Priorities. Accessed August 28, 2018. https://www.cbpp.org/research/state-budget-and-tax/its-time-forstates-to...
  • 3.
  • 4. Congressional Budget Office, “Public Spending on Transportation and Water Infrastructure, 1956-2014,” March 2015, available www.cbo.gov/publication/49910.
  • 5. United States Environmental Protection Agency. 2016. “Drinking Water and Wastewater Utility Customer Assistance Programs.” https://www.epa.gov/waterfinancecenter/compendium-drinking-water-and-was....
  • 6. This was mentioned primarily regarding the potential for the large scale of water shutoffs to increase water age in the system. Water age is a well-known problem for water quality and is currently under discussion for further research.
  • 7. Elizabeth A. Mack and Sarah Wrase. "A Burgeoning Crisis? A Nationwide Assessment of the Geography of Water Affordability in the United States," PloS One 12, no. 1 (2017): e0169488, http://journals.plos.org/plosone/article?id=10.1371/journal.pone.0169488.
  • 8. The project team orients its work and research within the attempt to enable the formation of a targeted universalist policy agenda for the future of GLWA’s operation and management of the DWSD system—and the alignment of interests across the region. In short, targeted universalist policy is a platform that will enable groups with disparate needs to benefit from different strategies that are tailored for their circumstances. At the same time, designing policies that are designed to resolve structural barriers for those groups can also benefit other people and places. Ultimately, a well-aligned and well-designed set of targeted policies and strategies can supplement each other such that the entire service area can enjoy a universal goal of water security, increased environmental quality, and public health.
  • 9. Articles of Incorporation of Great Lakes Water Authority, Article 4. https://www.oakgov.com/exec/Documents/great_lakes_water_authority/All_Co... Final_090814_GDP.pdf Further details on the formation and defintions of Authorities are found in MCL 124.281 Sec. 1 and 2. MCL 124.281 Sec. 1. found here https://www.legislature.mi.gov/(S(yq05baucoujntx4xbgjqqpwg))/documents/ mcl/pdf/mcl-124-281.pdf MCL 124.281 Sec. 2. Found here https://www.legislature.mi.gov/(S(fylbv2zccv1kr4bkkmuy0ctr))/mileg.aspx- ?page=getObject&objectName=mcl-124-282 The general powers that a municipal authority has include adopt bylaws, sue and be sued in its own name, the ability to issue bonds, including revenue bonds, and the ability to “acquire, hold, and dispose of real and personal property in the exercise of its powers and the performance of its duties.” See Act 233 of 1955, MCL 124.284 here https://www.legislature.mi.gov/(S(guvjpzhk1pmukhv4muvbthys))/ mileg.aspx?page=getObject&objectName=mcl-124-284
  • 10. The key elements of GLWA/DWSD lease agreement are described in the “Memorandum of Understanding Regarding the Formation of The Great Lakes Water Authority,” September 9, 2014, http://www.dwsd.org/downloads_n/announcements/ general_announcements/ga2014-09-09_regional_authority_MOU_executed.pdf/.
  • 11. Joe Guillen, “For Poor Detroit’s, Help for Water Bills Dies Up,” Detroit Free Press, August 17, 2016, https://www.freep.com/story/news/local/michigan/detroit/2016/08/17/fundi...
  • 12. Flint Water Advisory Task Force, “Final Report,” State of Michigan (March 2016), p14. https://www.michigan.gov/documents/ snyder/FWATF_FINAL_REPORT_21March2016_517805_7.pdf
  • 13. See Peter Rogers, Radhika de Silva, and Ramesh Bhatia, “Water is an Economic Good: How to Use Prices to Promote Equity, Efficiency, and Sustainability,” Water Policy (2002), 1-17, https://sswm.info/sites/default/files/reference_attachments/ROGERS%20et%... to%20promote%20equity.pdf.
  • 14. “Memorandum of Understanding Regarding the Formation of The Great Lakes Water Authority,” September 9, 2014, executed by representatives from the City of Detroit, Wayne County, Oakland County, Macomb County, and the State of Michigan, http://www.dwsd.org/downloads_n/announcements/ general_announcements/ga2014-09-09_regional_authority_MOU_executed.pdf.
  • 15. The four percent cap was the result of the study conducted by the public accounting and business advisory firm Plante Moran, which identified the possibility of capping rates at four percent given that only $4.5 million was budgeted for water affordability. A comprehensive affordability plan would require significantly more funds, and thus the cap is based on an artificially low estimate of the costs of affordability. Some key points from Plante Moran’s study are described in a presentation delivered in July 2015, see https://outreach.glwater.org/LinkClick.aspx?fileticket=YrzXZJuQfIY%3D&ta....
  • 16. Detroit Water and Sewerage Department, “Trust Receipts and Disbursements Worksheet: DWSD Local System,” secured through a F.O.I.A. request to DWSD, submitted November 2, 2017.
  • 17. GLWA’s compiled Master Bond Ordinance No. 2015-02 is available here on GLWA’s website, https://www.glwater.org/wp-content/uploads/2018/06/GLWA-Compiled_Master_... as_amended_through_8_10_2016. pdf This text reflects the initial October 2015 ordinance and amendments adopted in December 2015 and January and August 2016. The issuance documents for the 2016 Series B and C sewage disposal system revenue refunding bonds is available here on MSRB’s website, https://emma.msrb.org/EP960481- EP745021-EP1146524.pdf The issuance documents for the 2016 Series A & B water supply system revenue bonds and Series C and D revenue refunding bonds is available here on MSRB’s website, https://emma.msrb.org/EP960480-EP745020-EP1146523.pdf
  • 18. Bond series were upgraded to A3 from Baa1 or Baa2. Moody’s Investors Service, September 30, 2016, Rating Action: Moody’s Upgrades GLWA’s (MI) Water Revenue Bonds to A3 and Baa1; Outlook Stable. Accessed August 5, 2018, available here https://www.moodys.com/research/Moodys-Upgrades-GLWAs-MI-Water-Revenue-B...
  • 19. The issuance documents for the 2018 Series A sewage disposal system revenue bonds and Series 2018B and C revenue refunding bonds is available here on MSRB’s website, https://emma.msrb.org/ES1200337-ES937769-ES1338587.pdf The issuance documents for the Series 2018A water supply system revenue refunding is available here on MSRB’s website, https://emma.msrb.org/ES1200329-ES937761-ES1338580.pdf These bonds’ credit rating was also raised by Moody’s to A2 or A3. Moody’s Investors Service, August 31, 2018, Rating Action: Moody’s upgrades Great Lakes Water Authority, MI’s sewer revenue bonds to A2 and A3; outlook is stable. Accessed August 5, 2018, available here https://www.moodys.com/research/Moodys-upgrades-Great-LakesWater-Authori... In Moody’s words, “The upgrade…reflects the continued trend of strong financial performance by an essential service enterprise whose customer base includes a substantial share of the state’s population. The rating balances the sewer system’s health debt service coverage and liquidity against high leverage. The rating also considers the large share of system-wide revenue generated by retail operations in the City of Detroit… The A3 rating on sewer revenue bonds incorporates the subordinate claim on pledged net revenue...”
  • 20. These bond series’ credit rating was raised by Moody’s to A2 or A3. Moody’s Investors Service, August 31, 2018, Rating Action: Moody’s upgrades Great Lakes Water Authority, MI’s sewer revenue bonds to A2 and A3; outlook is stable. Accessed August 5, 2018, available here https://www.moodys.com/research/Moodys-upgrades-GreatLakes-Water-Authori... In Moody’s words, “The upgrade… reflects the continued trend of strong financial performance by an essential service enterprise whose customer base includes a substantial share of the state’s population. The rating balances the sewer system’s health debt service coverage and liquidity against high leverage. The rating also considers the large share of system-wide revenue generated by retail operations in the City of Detroit… The A3 rating on sewer revenue bonds incorporates the subordinate claim on pledged net revenue...
  • 21. We the People of Detroit Community Research Collective, “Mapping the Water Crisis: The Dismantling of African-American Neighborhoods in Detroit: Volume One,” available to order online at http://wethepeopleofdetroit.com/communityresearch/water/.
  • 22. Luis Garcia, “Macquarie Sells Water Company for $1.7 Billion,” Wall Street Journal, June 2, 2017, https://www.wsj.com/articles/macquariesells-water-company-for-1-7-billio....
  • 23. See more details about this comparison in the full chapter on recommendations and institutional relationships.
  • 24. KPMG and City of Detroit, June 30, 2014, City of Detroit Sewage Disposal Fund Basic Financial Statements, Detroit Water and Sewer District, p3. Accessed Jane 4, 2015. KPMG and City of Detroit, June 30, 2014, City of Detroit Water Fund Basic Financial Statements, Detroit Water and Sewer District, p3. Accessed Jane 4, 2015.
  • 25. The rules for presenting financial statements in Annual Financial Reports are set by the Governmental Accounting Standards Board (GASB). Government entities are required to report infrastructure assets in their CAFR statement of net assets. This is set forth in GASB 34.
  • 26. Detroit Water and Sewerage Department, “Trust Receipts and Disbursements Worksheet: DWSD Local System,” secured through a F.O.I.A. request to DWSD, submitted November 2, 2017.
  • 27. “Regional Water Supply System Lease” between City of Detroit and Great Lakes Water Authority, Section 3.1 (iii), 13, https://outreach.glwater.org/LinkClick.aspx?fileticket=a3vJj7J12y8%3D&ta... “Regional Sewage Disposal System Lease” between the City of Detroit and Great Lakes Water Authority,” Section 3.2 (iii), http://glwater.org/wp-content/uploads/2015/11/REGIONAL_SEWERAGE_SYSTEM_L....
  • 28. In the region, 3,800 miles of sewerage pipes are in Detroit, and 8,770 miles are in suburban areas. Of the 8,770 miles of suburban sewer, only 970 miles are combined sewer systems, while the vast majority of Detroit’s sewer is combined sewer. See Detroit Water and Sewerage Department, “Wastewater Master Plan Volume 1,” October 2003: 3, https://www.nrc.gov/docs/ML1126/ML112620177.pdf.
  • 29. United States Environmental Protection Agency, Website, National Pollution Discharge Elimination System (NPDES), Combined Sewer Overflows (CSOs). Accessed August 7, 2018, https://www.epa.gov/npdes/combined-sewer-overflows-csos
  • 30. United States Environmental Protection Agency, Website, National Pollution Discharge Elimination System (NPDES), Combined Sewer Overflows (CSOs). Accessed August 7, 2018, https://www.epa.gov/npdes/combined-sewer-overflows-csos
  • 31. United States Environmental Protection Agency, Website, National Pollution Discharge Elimination System (NPDES), Combined Sewer Overflows (CSOs). Accessed August 7, 2018, https://www.epa.gov/npdes/combined-sewer-overflows-csos
  • 32. See United States Environmental Protection Agency, “Green Infrastructure Permitting and Enforcement Series: Factsheet 2– Combined Sewer Overflows,” accessed March 14, 2018, http://allaboutwatersheds.org/library/EPA-Green-Infrastructure-Factsheet....
  • 33. “Shared Services Agreement” between City of the Detroit and Great Lakes Water Authority, Attachment 2, “Agreement to Revise CSO Project List,” June 12, 2015, http://www.glwater.org/wp-content/documents/about_us/Shared-Services-Agr....
  • 34. “Shared Services Agreement” between City of the Detroit and Great Lakes Water Authority, Attachment 2, “Agreement to Revise CSO Project List,” June 12, 2015, http://www.glwater.org/wp-content/documents/about_us/Shared-Services-Agr....
  • 35. “Shared Services Agreement” between City of the Detroit and Great Lakes Water Authority, Attachment 2, “Agreement to Revise CSO Project List,” June 12, 2015, http://www.glwater.org/wp-content/documents/about_us/Shared-Services-Agr....
  • 36. Detroit Water and Sewerage Department, “Detroit Water and Sewerage Department Drainage Charge Questions and Answers,” accessed February 26, 2018, http://detroitmi.gov/Portals/0/docs/DWSD/FAQ%20-%20Drainage%20Charge%20a...
  • 37. See “Memorandum of Understanding Regarding the Formation of The Great Lakes Water Authority,” September 9, 2014, executed by representatives from the City of Detroit, Wayne County, Oakland County, Macomb County, and the State of Michigan, http://www.dwsd.org/downloads_n/announcements/general_announcements/ga20... Oona Goodin-Smith, “30-year Flint GLWA Deal Gets Stamp of Approval,” M Live, November 29, 2017, http://www.mlive.com/news/flint/index.ssf/2017/11/30-year_flint_glwa_ water_deal.html.
  • 38. “Shared Services Agreement” between the City of Detroit and Great Lakes Water Authority, Article 2.2, “Termination of Agency,” 9, http://www.glwater.org/wp-content/documents/about_us/Shared-Services-Agr....
  • 39. “Regional Water Supply System Lease” between City of Detroit and Great Lakes Water Authority,” Section 3.4, “Lease Payment,” 13, https://outreach. glwater.org/LinkClick.aspx?fileticket=a3vJj7J12y8%3D&tabid=39; “Regional Sewage Disposal System Lease” between City of Detroit and Great Lakes Water Authority, Section 3.4, “Lease Payment”, 13, http://glwater.org/wp-content/uploads/2015/11/REGIONAL_SEWERAGE_SYSTEM_L....
  • 40. “Regional Water Supply System Lease” between the City of Detroit and Great Lakes Water Authority, Section 8.2, “Arbitration,” 26, https://outreach. glwater.org/LinkClick.aspx?fileticket=a3vJj7J12y8%3D&tabid=39; “Regional Sewage Disposal System Lease” between the City of Detroit and Great Lakes Water Authority, Section 8.2, “Arbitration,” 27, http://glwater.org/wp-content/uploads/2015/11/REGIONAL_SEWERAGE_SYSTEM_L...
  • 41. The key elements of GLWA/DWSD lease agreement are described in the “Memorandum of Understanding Regarding the Formation of The Great Lakes Water Authority,” September 9, 2014, http://www.dwsd.org/downloads_n/announcements/ general_announcements/ga2014-09-09_regional_authority_MOU_executed.pdf/.
  • 42. “Regional Water Supply System Lease” between City of Detroit and Great Lakes Water Authority, Section 3.1 (iii), 13, https://outreach. glwater.org/LinkClick.aspx?fileticket=a3vJj7J12y8%3D&tabid=39; “Regional Sewer Disposal System Lease” between the City of Detroit and Great Lakes Water Authority, Section 3.2 (iii), http://glwater.org/wp-content/uploads/2015/11/REGIONAL_SEWERAGE_SYSTEM_L....
  • 43. Czerwinski, et al., 2017.
  • 44. For this report I also conducted an independent literature review and interviews with experts and practitioners. My findings are in complete alignment with the National Academy of Public Administration’s findings regarding the critiques of EPA’s existing metrics and possible alternatives. Despite the independence of my own literature review and interviews, there was significant overlap with experts and authors used by NAPA. Because NAPA’s findings are presented as a meta-analysis, and because of NAPA’s unique position as a highly respected and objective organization chartered by Congress and tasked directly by the Senate Appropriations Committee to study this issue and provide recommendations to EPA, they will be referenced more heavily than other sources. It should be understood that a single citation to NAPA rests on input from a very wide variety of published and interviewed sources, both by them and independently by me.
  • 45. Czerwinski, et al., at 48-49. Forthcoming, Zarella, Rick and Wendy Ake (2018) Measuring Water Affordability: Alternative place-based and current metrics, Haas Institute for a Fair and Inclusive Society.
  • 46. S.3015, 115th Congress, Water Affordability Act, June 6, 2018. Available here, https://www.congress.gov/bill/115th-congress/senate-bill/3015/text
  • 47. . S.3021 is America’s Water Infrastructure Act and was signed into law on October 23, 2018. Available here, https://www.congress.gov/bill/115th-congress/senate-bill/3021?q=%7B%-22s... bill/115th-congress/senate-bill/2800/text
  • 48. Founded in Detroit, NCLAWater is comprised of local, state, and national organizations advocating for legislation that guarantees “comprehensive access to safe, affordable drinking water and sanitation – the human rights to water and sanitation.” They are committed to ensuring that water is accessible, safe, and affordable for all people. Learn more at http://affordablewaternow.org/.
  • 49. Detroit Water and Sewerage Department, “Trust Receipts and Disbursements Worksheet: DWSD Local System,” secured through a F.O.I.A. request to DWSD, submitted November 2, 2017.
  • 50. Provisions for periodic review of the terms of the agreement are detailed in the “Shared Services Agreement” between the City of Detroit and Great Lakes Water Authority, June 12, 2015, Section 5.04, (c); Section 5.07, http://www.glwater.org/wp-content/documents/about_us/Shared-Services-Agr....
  • 51. See “A Triple Bottom Line Assessment of Traditional and Green Infrastructure Options for Controlling CSO Events in Philadelphia’s Watersheds,” prepared by Stratus Consulting for City of Philadelphia Water Department, https://www.epa.gov/sites/production/files/2015-10/documents/gi_philadel....
  • 52. Value of Water Campaign, The Economic Benefits of Investing in Water Infrastructure, Value of Water Campaign. Available here, http://thevalueofwater.org/sites/default/files/Economic%20Impact%20of%20...
  • 53. For more on Green Infrastructure projects underway in Detroit, check out DWSD’s website, http://www.detroitmi.gov/Government/Departments-and-Agencies/Water-and-S.... Also see United States Environmental Protection Agency, “Green Infrastructure Targeting in Southeast Michigan: An Outcome-based Strategic Planning Framework to Identify and Evaluate Green Infrastructure Opportunities,” https://www.epa.gov/sites/production/files/2017-02/documents/epa-semcog_....
  • 54. Joel Kurth, “Detroit Shut Water to 1 in 10 Homes this Year. Yes, that’s Progress,” Bridge: News and Analysis from the Center for Michigan, accessed online February 26, 2018, http://www.bridgemi.com/detroit-journalism-cooperative/detroit-shut-wate....
  • 55. Katrease Stafford, “Controversial Water Shutoffs Could Hit 17,461 Detroit Households,” Detroit Free Press, March 26, 2018, https://www.freep.com/story/news/local/michigan/detroit/2018/03/26/moret....
  • 56. Joel Kurth, “Detroit Cites Progess, but Water Shutoffs Actually Rose Last Year,” Bridge Magazine, May 2, 2017, https://www.bridgemi.com/detroit-journalism-cooperative/detroit-cites-pr...
  • 57. See “Protestors Decry Detroit Residential Water Shutoffs,” Detroit Metro Times, June 9, 2014, https://www.metrotimes.com/detroit/protesters-decry-detroit-residential-....
  • 58. Deborah Weiner, “Insurmountable Bills Lead to Water Shutoffs in Baltimore,” WBALTV, February 13, 2017. Accessed online on October 12, 2018 https://www.wbaltv.com/article/insurmountable-bills-lead-to-water-shutof...
  • 59. Brett Walton, “Water News: When the water is shutoff,” Circle of Blue, accessed online October 1, 2018, https://www.circleofblue.org/2018/world/water-shut-off/
  • 60. Brett Walton, “Water News: When the water is shutoff,” Circle of Blue, accessed online October 1, 2018, https://www.circleofblue.org/2018/world/water-shut-off/
  • 61. Brett Walton, “Water News: When the water is shutoff,” Circle of Blue, accessed online October 1, 2018, https://www.circleofblue.org/2018/world/water-shut-off/
  • 62. Brett Walton, “Water News: When the water is shutoff,” Circle of Blue, accessed online October 1, 2018, https://www.circleofblue.org/2018/world/water-shut-off/
  • 63. Brett Walton, “Water News: When the water is shutoff,” Circle of Blue, accessed online October 1, 2018, https://www.circleofblue.org/2018/world/water-shut-off/
  • 64. Deborah Weiner, “Insurmountable Bills Lead to Water Shutoffs in Baltimore,” WBALTV, February 13, 2017. Accessed online on October 12, 2018 https://www.wbaltv.com/article/insurmountable-bills-lead-to-water-shutof...
  • 65. United Nations Human Rights Office of the High Commissioner, “Detroit Water Shut-Offs Target the Poor, Vulnerable, and African Americans,” UNHCR News and Events, October 20, 2014, http:// www.ohchr.org/EN/NewsEvents/Pages/DisplayNews.aspx?NewsID=15190&LangID=E.
  • 66. United Nations Office of the High Commissioner on Human Rights. “Joint Press Statement by Special Rapporteur on adequate housing as a component of the right to an adequate standard of living and to right to non-discrimination in this context, and Special Rapporteur on the human right to safe drinking water and sanitation Visit to City of Detroit (United States of America) 18-20 October 2014.” http:// www.ohchr.org/EN/NewsEvents/Pages/DisplayNews.aspx?NewsID=15188&LangID=E. United Nations Human Rights Office of the High Commissioner. “Statement on Visit to the USA, by Philip Alston, United Nations Special Rapporteur on extreme poverty and human rights,” December 15, 2017. Accessed September 2, 2018. https:// www.ohchr.org/EN/NewsEvents/Pages/DisplayNews.aspx?NewsID=22533. Report of the Special Rapporteur on the human right to safe drinking water and sanitation, Catarina de Albuquerque, Mission to the United State of America. August 2, 2011, UN General Assembly. Accessed August 23, 2018, https://www2.ohchr.org/english/bodies/hrcouncil/docs/18session/ahrc-18-3... Locations that were visited by the Commissioners that experienced various kinds of water access barriers included, among others, West Virginia, Puerto Rico, Alaska, Michigan, and Alabama.
  • 67. See Barry M. Pomplom, Kristen E. D'anci, and Irwin H. Rosenberg. "Water, Hydration, and Health." Nutrition Reviews 68, no. 8 (2010): 439-458; Paul R. Hunter, Alan M. MacDonald, and Richard C. Carter, "Water Supply and Health,” PLOS Medicine 7, no. 11 (2010): e1000361.
  • 68. Alexander Plum, Kyle Moxley, and Marcus Zervos, “The Impact of Geographical Water Shutoffs on the Diagnosis of Potentially Water-Associated Illness, with the Role of Social Vulnerability Examined,” Henry Ford Global Health Initiative, April 8, 2017, the abstract of the study is available at http://wethepeopleofdetroit.com/wp-content/uploads/2017/04/WaterShutoffs...
  • 69. Martina Guzman, “Exploring the Public Health Consequences of Detroit’s Water Shutoffs,” Model D Media, October 6, 2015, http://www.modeldmedia.com/features/water-shut-offs-100615.aspx
  • 70. Jack P. Shonkoff, Andrew S. Garner, Benjamin S. Siegel, Mary I. Dobbins, Marian F. Earls, Laura McGuinn, John Pascoe, and David L. Wood, "The Lifelong Effects of Early Childhood Adversity and Toxic Stress,” produced by the Committee on Psychosocial Aspects of Child and Family Health, and Committee on Early Childhood, Adoption, and Dependent Care, Pediatrics 129, no. 1 (2012): e232-e246; Hollie L. Jones, William E. Cross Jr, and Darlene C. DeFour. "Race-related Stress, Racial Identity Attitudes, and Mental Health among Black Women." Journal of Black Psychology 33, no. 2 (2007): 208-231.
  • 71. For more on social determinates of health, see Kevin Fiscella and David R. Williams. "Health Disparities based on Socioeconomic Inequities: Implications for Urban Health Care." Academic Medicine 79, no. 12 (2004): 1139-1147.
  • 72. We the People of Detroit Community Research Collective, “Mapping the Water Crisis: The Dismantling of African-American Neighborhoods in Detroit: Volume One,” available to order online at http://wethepeopleofdetroit.com/communityresearch/water/.
  • 73. Laura Gottesdiener, “UN Officials ‘Shocked’ by Detroit’s Mass Water Shutoffs,” Aljazeera America, October 20, 2014, http://america.aljazeera.com/articles/2014/10/20/detroit-water-un.html.
  • 74. Detroit Water and Sewerage Department, “Detroit Water and Sewerage Department Drainage Charge Questions and Answers,” accessed February 26, 2018, http://detroitmi.gov/Portals/0/docs/DWSD/FAQ%20-%20Drainage%20Charge%20a...
  • 75. Elizabeth A. Mack and Sarah Wrase. "A Burgeoning Crisis? A Nationwide Assessment of the Geography of Water Affordability in the United States," PloS One 12, no. 1 (2017): e0169488, http://journals.plos.org/plosone/article?id=10.1371/journal.pone.0169488.
  • 76. Forthcoming, Zarella, Rick and Wendy Ake (2018) Measuring Water Affordability: Alternative place-based and current metrics, Haas Institute for a Fair and Inclusive Society.
  • 77. Forthcoming, Zarella, Rick and Wendy Ake (2018) Measuring Water Affordability: Alternative place-based and current metrics, Haas Institute for a Fair and Inclusive Society.
  • 78. United States Environmental Protection Agency. 2016. “Drinking Water and Wastewater Utility Customer Assistance Programs.” https://www.epa.gov/waterfinancecenter/compendium-drinking-water-and-was....
  • 79. Dana Kornberg, “The Structural Origins of Territorial Stigma: Water and Racial Politics in Urban Detroit, 1950s-2010s,” International Journal of Urban and Regional Research (2016): 267-8, https://onlinelibrary.wiley.com/doi/abs/10.1111/1468- 2427.12343.
  • 80. Great Lakes Water Authority, “Capital Improvement Plan 2018-2022,” Version 1.1, November 29, 2016, https://outreach.glwater.org/LinkClick.aspx?fileticket=ZGgKOqkj-es-%3D&t....
  • 81. United States vs. City of Detroit, 2:77-cv-71100-SFC Doc # 2528, March 27, 2013, https://www.mied.uscourts.gov/PDFFIles/77-71100.pdf.
  • 82. While the original 1999 Rate Settlement Agreement is not available, its key tenets are outlined in the “Shared Services Agreement” between City of the Detroit and GLWA, June 12, 2015, Attachment 2, “Agreement to Revise CSO Project List,” http://www.glwater.org/wp-content/documents/about_us/Shared-Services-Agr....