Detroit’s New Regional Water Authority: A Prelude to Privatization

Earlier today, Detroit and three of its suburbs announced the creation of a new, independent regional water authority. The deal creating the authority is part of the ongoing bankruptcy proceedings in Detroit. And while it’s being sold as a panacea to the woes of Detroit’s water system, it’s anything but. In fact, it’s another false solution that will likely leave Detroiters worse off than they are already — with no way to hold decision makers accountable.

The city and the suburbs released the Memorandum of Understanding (MOU) that forms the basis of the agreement. A reading of the agreement reveals that it will likely lead to the privatization of the water system.

The creation of the regional authority, the Great Lakes Water Authority, corporatizes the system by putting appointed, unelected officials fully in charge of the big decisions that determine the cost and quality of service. The agreement treats water provision as a business instead of a public service. Corporatization itself is the first step to privatization. The new authority can privatize the management and operation of the water and sewer system without real city input or public approval.

Currently, the Detroit city council must approve any privatization deal because it has oversight of water contracts worth more than $2 million. With this new agreement, the city council will lose that power.

In fact, an independent authority will not give ballot-box accountability to county residents, either; it will just cost city residents their ability to hold the system’s decision makers accountable.

The MOU says that the city will hire Veolia Water North America to review the water and sewer systems and to make recommendations “in evaluating operating models.” Veolia is the largest private operator of municipal water systems in the United States. We can expect that Veolia will likely recommend that the authority privatize the operation and management of the systems. And, we can expect the new authority to pursue those recommendations.

According to the MOU, the authority will be established if Detroit and one of the three suburbs formally approve it. If the other two counties refuse to officially join, the governor would appoint representatives for those counties to the new authority’s six-member board of directors. Because of this and because the MOU allows the governor to appoint one board member anyway, the governor could potentially appoint half the members of the new authority’s board.

Should Detroit approve the deal now, while under the rule of Emergency Manager Orr, but decide to withdraw once the city is returned to democratic governance, the MOU states that the governor would then be able to appoint the city’s representation to the authority’s board and the city would lose the “sweetener” funding for local infrastructure it is being given to buy into the deal.

We know what happens when cities privatize water systems: rates tend to go up, service tends to go down and jobs tend to be cut. That’s why the powers that be try to distance themselves from these decisions and insulate themselves from the potential fall out by establishing these undemocratic boards to do the dirty work. There’s a word for this: cowardice.

But the city council still has the opportunity to reject this deal — and it should. The elected representatives of the people of Detroit should stand up against this sham agreement. It’s possible Emergency Manager Orr will overrule them, but it is the one opportunity they have to put on record that the people of Detroit deserve better. It may even give pause to the unelected forces behind the deal.