Counties Object to Detroit’s Bankruptcy Plan for Water and Sewer Departments

As described by Governing, two Michigan county governments that are users of Detroit’s water and sewer departments objected to Detroit’s bankruptcy restructuring plan this week.

Macomb County said in a court filing that Detroit’s restructuring plan is “not feasible” and protested that the city’s plan to spin off its water department would raise rates on suburban customers.

Oakland County accused Detroit emergency manager Kevyn Orr’s restructuring team of “putting the water and sewerage systems at risk” by considering transferring the assets to an outside authority in exchange for lease payments that could help reduce the city’s debt and reinvest in services.

Bloomberg News describes further,

Macomb County said the city hasn’t given it and other agencies negotiating over the proposed new water agency enough information.

“Because these services constitute a public service monopoly, the debtor does not have the unfettered right simply to transfer operations to anyone it chooses under any terms it prefers for its own economic advantage or otherwise,” Macomb County said in its objection.

The next hurdle for the plan is a confirmation trial.  As described by Governing,

. . . [T]he restructuring plan faces a litany of legal, political and logistical hurdles. U.S. Bankruptcy Judge Steven Rhodes will conduct a massive confirmation trial starting July 24 to decide whether the plan is fair to creditors and feasible.

Detroit’s bankruptcy proceeding is shaping up to be a topic in an educational session at this year’s MACo Summer Conference, with more details to be announced at a later date.  For more information on Detroit’s bankruptcy proceedings, see the full story from Governing and the full story from Bloomberg News.