(Reuters) – A major final piece of Detroit’s bankruptcy exit plan fell into place on Friday with the approval of a lease agreement by a regional water and sewer authority.
The Great Lakes Water Authority board, comprised of representatives from the city of Detroit, the state of Michigan, and Macomb, Oakland and Wayne counties voted 5-1 for a long-term lease of Detroit’s water and sewer utilities.
“Detroit will have the resources we need to rebuild our city’s crumbling water and sewer pipes,” Detroit Mayor Mike Duggan said in a statement. “County leaders will have a true voice in running the part of the system that serves the suburbs.”
Under the agreement, Detroit will continue to own the water and sewer system and lease it to the authority for $50 million a year for 40 years. The lease payments will enable the city to repair the system’s ageing infrastructure.
The Great Lakes Water Authority grew out of federal court-ordered mediation in Detroit’s historic bankruptcy case. The city exited the biggest-ever U.S. municipal bankruptcy last December, shedding about $7 billion of its $18 billion of debt and obligations.
Macomb County’s member on the water authority board cast the sole “no” vote. County Executive Mark Hackel said the lease agreement benefits Detroit more than it does suburban rate payers.
Under the agreement, each community served by the authority will be responsible for paying its own bills. The deal does not address $26 million in water and sewer bills Highland Park owes Detroit, which plans to pursue enforcement of a court ruling ordering the payment.
The lease deal creates a new $4.5 million fund to help low-income families pay their water bills.
Detroit cut off water to thousands of residents last summer in an effort to collect on $90 million in unpaid bills, fueling national outrage that the city’s poorest people went days without access to fresh water.
(Reporting By Karen Pierog; Editing by James Dalgleish)