GLWA CEO Sue McCormick Resigns

In the wake of several heavy rain storms in late June and early July, and the flood of criticism that followed (pun intended), the CEO of the Great Lakes Water Authority, Sue McCormick, submitted her resignation on Tuesday. Ms. McCormick was appointed to lead the GLWA in October, 2015.

Comment:  During her nearly six year tenure, Sue was instrumental in standing up the GLWA as a brand new authority and restoring integrity and transparency to a system that was marred by scandal and corruption. Running one of the country's largest water and wastewater systems is a tough job on a good day. Sue did a good job and is to commended for her efforts.   

 

Sue McCormick Selected to Lead Great Lakes Water Authority

The Board of Directors of the Great Lakes Water Authority voted 5-1 this afternoon for Sue McCormick to serve as the Authority's first CEO.  Ms. McCormick currently serves as the Interim-CEO. She most recently served as Director of DWSD from January, 2012 until two weeks ago when Gary Brown was selected to replace her. 

The only opposition to Ms. McCormick among the Board members was from Robert Daddow, who is the Oakland County representative on the GLWA. Mr. Daddow favored Randy Moore, an executive from American Water. Under the GLWA By-Laws, a minimum of 5 affirmative votes was required to approve the resolution approving Ms. McCormick's selection. The Board still must approve an employment agreement with Ms. McCormick.

For more about DWSD Update, click here. 

Great Lakes Water Board Reduces List of CEO Candidates, Delays Final Vote until Monday

The Great Lakes Water Authority Board of Directors met this afternoon at 4:00 p.m. to select a new CEO, but decided instead to cut the list of candidates down to two - Sue McCormick and Randy Moore - and postpone a final vote until Monday, October 19th at 1:30 p.m. 

Ms. McCormick and Mr. Moore reportedly garnered the highest rankings among the four candidates, following a lengthy interview process on October 12th that ran more than 4 hours.  So, the decision was made to cut the short list in half.  

The decision to delay a final vote until next Monday was to give the Board enough time to receive and review complete background checks on the two finalists.

The GLWA Board meets in the 5th Floor Board Room in the Water Board Building at 735 Randolph.   

For more about DWSD Update, click here.

Great Lakes Water Authority Approves Short List of Candidates for CEO (UPDATED)

On October 7, 2015, shortly after the Detroit Board of Water Commissioners approved a new Director and Deputy Director, the Board of Directors of the Great Lakes Water Authority (GLWA) held a public meeting and approved a short list of 4 candidates to fill the top position with the new Authority. 

The four finalists for the CEO position are:

• Kofi Boateng
• Tom Heikkinen
• Sue McCormick
• Randy Moore

The GLWA Board will interview the 4 candidates in an open session on Monday, October 12, 2015 at 3:00 p.m.  (Update: According the GLWA's Calendar - http://glwater.org/event/glwa-special-meeting-ceo-selection/ - the CEO interviews are scheduled for Tuesday, October 13th at 4:00 p.m.)  The GLWA Board meets in the 5th Floor Board Room in the Water Board Building at 735 Randolph. 

The GLWA Board is also expected to deliberate in open session and select a CEO candidate with whom it will engage in contract negotiations.

Comment: Other than Sue McCormick, who is currently serving as Interim-CEO, and served as Director of DWSD for the past 4 years, I don't know any of the other candidates. I have linked each candidate to their LinkedIn profile. If any of you have insights about the other three candidates, now is the time to speak up!  

For more about DWSD Update, click here.     

Water Board Approves New Leadership at DWSD

Earlier this morning, the Board of Water Commissioners approved the appointment of Gary Brown to serve as Director of the Detroit Water and Sewerage Department. Mr. Brown will replace Sue McCormick, who was appointed in November, 2011 to lead the Department. 

Mr. Brown currently serves as Group Executive of Operations for the City of Detroit. He previously served on the Detroit City Council and was a member of the "Root Cause" Committee created by Judge Sean Cox in 2011.

The Board of Water Commissioners also confirmed the appointment of  Palencia Mobley, P.E. to serve as Deputy Director and Chief Engineer.  Ms. Mobley currently serves as Transition Manager for DWSD, a position she's held since December, 2014.  

Prior to entering government service, Ms. Mobley worked as a Project Engineer for two private engineering firms -- Malcom Pirnie (now part of Arcadis) and Tetra Tech. Ms. Mobely has a B.S. in Chemical Engineering (Univ of Michigan, 2001), and a M.S. in Civil Engineering (Wayne State Univ, 2004). She is also a licensed professional engineer in the state of Michigan since 2006.  Click here for Ms. Mobely's complete professional profile. 

Mayor Mike Duggan recommended the appointment of Mr. Brown and Ms. Mobley in a September 21, 2015 letter to the Board of Water Commissioners. 

For more about DWSD Update, click here. 

DWSD Hires General Manager for Wastewater Operations Group

Wendy R. Barrott has been hired by DWSD to serve as General Manager for the Wastewater Operations Group, which includes the City of Detroit’s Wastewater Treatment Plant. This is not a new position. 

Wendy Barrott

Ms. Barrott is expected to take the lead in administering Air Emissions (incinerators, emergency generators), and Residuals Disposal Management (disposal of grit, bio-solids, screenings, grease, and rubbish). She will also assist in the further development and implementation of the Department’s Green Infrastructure plans.  As General Manager, Ms. Barrott will report to the Assistant Director for Wastewater Operations, Sam Smalley.   

Prior to joining DWSD, Ms. Barrott served in 2011 as the City of Ann Arbor’s Community Energy Coordinator, and helped implement the City’s Property Assessed Clean Energy (PACE) program (read more here, and here). 

Prior to her work in Ann Arbor, Ms. Barrott worked as the Director of Energy and Environmental Services for the City of Fort Wayne, Indiana (2006-2010); as the Board Administrator to the Detroit Area Regional Transportation Authority (DARTA) (2004); and as the Director of Air Quality for the Wayne County Department of the Environment (1997-2003). 

Ms. Barrott began her professional career at General Motors in 1983 where she worked as an engineer responsible for environmental compliance, permitting, and plant operations issues. Ms. Barrott held various positions with GM between 1983 and 1997, including Superintendent of Environmental Operations. 

Ms. Barrott holds both a B.S. and M.A. in Environmental Engineering from Purdue University (1983) and is a Certified Energy Manager (CEM), Certified Hazardous Materials Manager (CHMM), and was awarded a Smart Growth Leadership Certificate from the University of Maryland.

Ms. Barrott has two LinkedIn Profiles (here and here).

For more about DWSD Update, click here.

Detroit Water Department Hires General Counsel

As part of its move toward independence from the City of Detroit, the Detroit Water and Sewerage Department has hired William Wolfson to serve as General Counsel.  DWSD previously relied on attorneys from the City's Law Department, notably Robert Walter  and Laurie Koester.

Mr. Wolfson previously served as Interim Corporation Counsel and Assistant Deputy CEO for Wayne County before retiring at 50 in 2009.  Most recently, Mr. Wolfson maintained a private law practice in Detroit. Click here for his LinkedIn profile.

Mr. Wolfson will be paid $132,500 per year by DWSD.  Mr. Wolfson will also receive a $118,000 a year pension from Wayne County. 

For more about DWSD Update, click here.

Judge Cox Orders DWSD to Hire Chief Operating Officer, per Request of Root Cause Committee

Earlier today, at the request of the members of the Root Cause Committee, Judge Sean Cox entered an Order creating the position of Chief Operating Officer (COO) within the Detroit Water and Sewerage Department.

In a joint letter to the Court's Special Master, David Ottenwess, dated last Friday, March 23, 2012, the four members of the Root Cause Committee -- James Fausone, Charles Pugh, Gary Brown, and Mayor Dave Bing -- plus Director Sue McCormick, laid out the need for another position within DWSD, reporting to the Director, and urged Judge Cox to create the position of Chief Operating Officer:

The undersigned are the members of the Root Cause Committee originally appointed by the Hon. Sean F. Cox in his Order of September 9, 2011 with continued authorized responsibilities in his subsequent Order of November 4, 2011.

The Root Cause Committee has met recently to address a number of serious issues facing the DWSD which involve matters of finance and internal structural changes originally mandated by the Court in its November 4 Order. Specifically, we have determined, based on the current level of activity required to implement the November 4th Order by the Board and the Director, it is appropriate and imperative that the DWSD management structure include the position of a Chief Operating Officer (COO) reporting to the Director.

The COO should have significant experience in municipal law, municipal finance, and operations oversight which would include, human resources, procurement, finance and law. These are the four divisions DWSD must stand up to implement the November 4th Order and achieve short and long term compliance with environmental permits.

Judge Cox granted this request. Earlier today, the Court entered an Order directing Mayor Bing (or his designee) to hire a Chief Operating Officer / Compliance Officer at the DWSD. 

2012-03-26.Order by Judge Sean Cox Appointing Chief Operating Officer (COO) for DWSD

Comment: What about the Deputy Director?

Update (3/29): Mayor Bing's office announced yesterday that DWSD has hired Matthew Schenk to serve as the new Chief Operating Officer for the Department.  Mr. Schenk, 40, most recently served as Chief of Staff for Wayne County Executive Robert Ficano. According to the Free Press (here), Mr. Schenk will be paid $194,000 per year, just shy of the $195,000 per year paid to DWSD Director Sue McCormick.

Update (4/16): Matthew Schenk's hiring continues to raise questions. The Detroit News reports today (here) that both Oakland County Water Resources Commissioner, John McCulloch, and Macomb County Public Works Commissioner, Anthony Marracco, were unaware of the decision to hire Schenk.

For more about DWSD Update, click here.

Tarolyn Buckles to Serve as Technical Advisor to Detroit Board of Water Commissioners

On January 25, 2012, the Board of Water Commissioners hired Tarolyn Buckles to serve as the Board's Technical Advisor.  The Board approved a one-year, $100,000 contract with Ms. Buckles.

Tarolyn Buckles - Technical Advisor

Ms. Buckles is President and CEO of Onyx Enterprise, Inc., a firm providing engineering consulting, project management, and construction management services.  She previously served as Project Manager for METCO Services, and Project Engineer and Diversity Manager for Arcadis. Ms. Buckles earned a Bachelor of Science in Civil and Structural Engineering from the University of Michigan in 1993.

Ms. Buckles joins Butler Benton, who was hired as the Board's Financial Advisor in October, 2011.  Ms. Buckles and Mr. Benton will assist the Board in reviewing rate setting, capital projects and other financial and operational matters. 

Staff positions were created under the February 11, 2011 Order, and formalized under Article VII of the Board's Amended By-Laws. A third staff position, not yet filled, will advise the Board on legal matters.

For more about DWSD Update, click here.  

Emergency Financial Manager, Appointment Would Trigger "Credit Event" and Hit DWSD Hard

Governor Snyder's announcement last Friday that the State of Michigan was initiating a review of the City of Detroit's finances, the first step in the appointment of an Emergency Financial Manager (EFM), has triggered concerns about the financial impact such an appointment would have on the Detroit Water and Sewerage Department.

Following the Governor's announcement, The Bond Buyer, a national trade publication that covers the municipal bond industry, warned (here) that DWSD could face "huge fees" triggered by the appointment of an EFM, which would be a "credit event" under insurance policies that accompany $1.6 billion worth of water bonds.

[T]he appointment of an emergency manager . . . would trigger termination events on [credit default] swaps that hedge $948 million of pension obligation certificates issued in 2006 and $1.6 billion of water bonds. Detroit in early 2009 narrowly avoided a $400 million termination fee tied to the pension certificates after it was hit with a downgrade that prompted a termination event. Local officials negotiated for months with the two counterparties to achieve an amended agreement that avoided the payment. If the state appoints an emergency manager, Detroit would face the same problem again.

* * * 

Last April, Fitch Ratings downgraded the city's $2.1 billion of water bonds, citing in part an extensive derivative program at the Detroit Water and Sewerage Department that hedges $1.6 billion of the debt. "In recent years the negative fair value of the department's swaps have risen, increasing the termination risk associated with the swaps," Fitch's Doug Scott wrote. "Should the department be required to post collateral, it would negatively affect the department's financial profile to some extent."

The city is planning to come to market with a water bond refunding to shed the swaps and avoid termination payments. The price tag of the termination fees remains uncertain, but it would likely be in the hundreds of millions. At the end of 2010, the negative valuation of the water and sewer bond swaps was $165 million. (emphasis added)

Cite: "Detroit May Face Huge Termination Fees for Swaps." The Bond Buyer 2 Dec. 2011

The issue (and risk) of termination fees is discussed in the financial notes section of DWSD's 2010 Water Fund Financial Statement (here) beginning at p. 25.

Comment: I profess no expertise in this area, but this report seems rather alarming to me. At a minimum, faced with penalties in the "hundreds of millions" range, DWSD would have to delay or defer a number of significant capital improvement projects. If someone with a background in public finance or municipal bonds (or credit default swaps) can shed light on this issue, please comment. Your input would be appreciated.  

Update (12/6): The Detroit News reports this morning (here) that "The [State of Michigan] has yet to approve a deficit elimination plan Detroit submitted in July, a delay that puts a hold on the sale of about $900 million in bonds for capital improvements of the city water-sewer system."

Additional Resources:

• “Moody’s: Detroit Ratings On Review For Cut On Possible State Takeover,” Wall Street Journal, December 7, 2011 (subscription required)
• “Detroit on Review by Moody’s Will Pay $211 Million to Cut Swaps,”  Bloomberg Business Week, December 8, 2011 
• “Moody’s Puts Detroit GO, Water Debt on Negative Watch,” The Bond Buyer, December 8, 2011 
  

For more about DWSD Update, click here.

Detroit Water Board Votes to Hire Ridgway to Advise on Technical Matters (UPDATED)

Update (1/11): At the Special Meeting on January 11, 2012, Commissioner Mary Blackmon, reported that Jim Ridgway had declined the contract offered by the Water Board. It appears that the Board will consider another candidate for this position.   

The Board of Water Commissioners voted yesterday to approve the hiring of Jim Ridgway as Technical Advisor to the Water Board.

Mr. Ridgway has a B.S. in Environmental Engineering and a M.S. in Civil Engineering, both from the University of Michigan. Mr. Ridgway also has prior DWSD experience. He served as Assistant Director of Wastewater Operations for 5 years during the mid-1980s. Click here for his LinkedIn profile. 

Mr. Ridgway joins Butler Benton, who has been hired as the financial advisor to the Board of Water Commissioners.  Messrs. Ridgway and Benton will assist the Board in reviewing rate setting, capital projects and other financial and operational matters. 

Staff positions were created under the February 11, 2011 Order, and formalized under Article VII of the Board's Amended By-Laws. A third staff position, not yet filled, will advise the Board on legal matters.

For more about DWSD Update, click here.  

Detroit Water Board Approves Hiring of New Director, Sue McCormick

The Detroit Board of Water Commissioners earlier this afternoon  approved Mayor Bing's candidate for Director of the Water and Sewerage Department. At a Special Meeting held earlier this afternoon, the Water Board voted unanimously to approve the hiring of Sue McCormick as the new Director.  She will be paid $195,000 annually and begin work on January 2, 2012. 

According to Chris Brown, Mayor Bing's COO, Ms. McCormick was selected after considering a pool of some 85 candidates for the position.

Under the terms of the Plan of Action adopted by Judge Cox on November 4, 2011, the new Director will have broad new powers to bring DWSD back into compliance with the Clean Water Act.

DWSD has been without a permanent Director since Pamela Turner retired (or was forced out) more than 18 months ago.

The Water Board also used the occasion of the Special Meeting today to approve a one year contract with Butler Benton (B2 Advisors, LLC), who will serve as the financial advisor to the Water Board. B2 Advisors will be paid an amount not to exceed $100,000.


For more about DWSD Update, click here. 

Mayor Bing Announces Choice for New DWSD Director

Sue McCormick was introduced to the Detroit Board of Water Commissioners on November 9, 2011 as Mayor Bing's choice for the new Director of the Detroit Water and Sewerage Department.

Ms. McCormick, who currently serves as the Administrator of Public Services for the City of Ann Arbor was introduced by Chris Brown, Mayor Bing's COO, to members of the Water Board who were participating in a workshop meeting. The Board must vote to approve her selection at its next scheduled meeting on November 16, 2011. If approved, Ms. McCormick would start January 1, 2012.  

Update (11/11): The next Water Board meeting is November 30, not the 16th as originally reported. Click here for the Board calendar.  Also, AnnArbor.com has a story (here) detailing Ms. McCormick's responsibilities with the City of Ann Arbor. 

Update (11/14): The Water Board will be holding a Special Meeting on November 16, 2011 to consider and vote on Sue McCormick for Director. 

For more about DWSD Update, click here.

Judge Cox Adopts Plan of Action for Overhaul of DWSD

On November 4, 2011, Judge Sean Cox entered an Order adopting the Plan of Action submitted by the Root Cause Committee that was created by his September 9, 2011 order.

Comment: We are studying the Court's Order and Plan of Action, and will have a complete review and analysis shortly. Suffice it to say, the Plan of Action put forward by the Root Cause Committee, which Judge Cox has now adopted by his Order, requires major changes to the way DWSD operates going forward, including its procurement policy. These changes are long overdue. 

2011-11-04.Judge Cox Order Adopting Plan of Action for DWSD Proposed by Root Cause Committee

For more about DWSD Update, click here.

Former DWSD Director Files Federal Lawsuit, Alleges Discrimination in Pay

Former DWSD Director Pamela Turner last Friday filed a lawsuit in U.S. District Court alleging 2 counts of sex discrimination against the City of Detroit.  Ms. Turner seeks unspecified money damages.

Ms. Turner, who was appointed Interim Director in September, 2008 and reportedly retired in May, 2010, alleges that her immediate (male) predecessors, Victor Mercado and Anthony Adams were paid an average $240,000 per year, while she was paid only $130,000.  Ms. Turner won praise, but apparently only a modest pay increase (to $155,000) during her tenure as Director. Ms. Turner's lawsuit alleges that her departure in 2010 was by way of resignation, not retirement as the press reported at the time.

DWSD has been seeking Ms. Turner's replacement for more than a year. In March, Detroit City Council approved Mayor Bing's request to increase the money that could be offered to potential Directors to $256,000.

2011-07-08.Pamela Turner v City of Detroit - Lawsuit

More Money Available to Land New DWSD Director

More than 9 months after starting the search process for a new DWSD Director, the Detroit City Council today approved Mayor Bing's request to increase the salary range for a new Director to a maximum of $250,000 from the previous $156,000. 

It appears that the City is looking at national candidates rather than promoting someone like Deputy Director Darryl Latimer for the Director position. If you believe that $250,000 is too much to pay a new Director, please check out the job description (here).  DWSD is one of the largest water utilities in the United States. The Director plays a huge role in the successful operation of the Department. 

Update:  The Detroit Free Press reports (here) that  the amount approved was $256,000.   

For more about DWSD Update, click here.

DWSD Management, Judicial Oversight Teams Shuffled

In the past several weeks, Mayor Dave Bing has taken steps to fill major gaps in DWSD's Management Team, and U. S. Judge Sean Cox has taken steps to clear away some of the supporting elements crafted by his 93 year old predecessor.  

Judicial Oversight

In his first official moves since taking over control of the 33 year old federal lawsuit involving the Detroit Water and Sewerage Department, U. S. District Judge Sean Cox last week issued orders disbanding and discharging an advisory panel and special master appointed by Judge Feikens. 

The Southeast Michigan Consortium for Water Quality was an advisory panel  of regional business leaders and stakeholders formed in 2001 by the Court to provide a forum for discussing and resolving problems between DWSD and its suburban customers. The Consortium was led by Timothy O'Brien, an attorney and an executive with Ford Motor Co.  Judge Feikens clarified the role of the Consortium in a 2003 Order. It was that Order that Judge Cox recently vacated.

Thomas Lewand was appointed in 2002 as Special Master by Judge Feikens. His role was detailed in a December 8, 2008 Crain's Detroit Business profile (here). Judge Cox also vacated the order appointing Thomas Lewand. It is unclear whether Judge Cox intends to replace Mr. Lewand. 

There were reports last week that Judge Cox was meeting privately with stakeholders, such as Macomb County Public Works Commissioner Anthony V. Marrocco, but no details have been disclosed.

In the coming months, Judge Cox will have to grapple with Oakland County's motion to appoint an Interim Regional Committee to Operate DWSD.  This motion, and Rep. Kurt Heise's proposed legislation to create a regional water authority, both threaten to reignite a long-simmering dispute between the City of Detroit and its suburban customers over water, water rates, and control over DWSD.  

Executive Management Team

Meanwhile, with much less fanfare, Mayor Bing has been quietly filling in most of the gaps in DWSD's  Executive Management Team naming three (3) Assistant Directors in the past month.  All three have extensive experience.   

• A. B. Davis, Jr., P.E. - Assistant Director of Asset Maintenance.  Mr. Davis  is  registered professional engineer with 37 years of experience. He has worked for DWSD for more than 31 years, and formerly served as Assistant Director Facilities and Materials Management Operations. (Welcome back, A.B.!)
• James George - Assistant Director Financial Services Group. Mr. George was Assistant Director - Financial Services and Financial Manager with DWSD from 1987 to 2005. He served a stint with Wayne County before returning to DWSD.
• Rodney Johnson - Assistant Director of Commercial Operations and Public Affairs. Mr. Johnson has worked for DWSD since 1981. He has a B.S. from Wayne State University (MIS) and an MBA from the University of Phoenix. 

Despite these appointments, and the progress they represent, Mayor Bing has yet to find a new Director to replace Pamela Turner, who retired last July.

 

Smalley Named Assistant Director for Wastewater Operations

Samuel Smalley, P.E., was recently appointed Assistant Director of Wastewater Operations for the City of Detroit Water and Sewerage Department (DWSD).
 

Mr. Smalley is a registered professional engineer in California and Michigan, and has over 20 years of experience in engineering design, construction management, and utility management in the water and wastewater industry. He obtained a B.S. in Civil Engineering from San Diego State University, and holds both an F-1 Water Treatment Plant Operator license and an S-1 Water Distribution System Operator license. 

Mr. Smalley joined DWSD in June, 2007 and served two years as Assistant Director of Asset Management before his recent promotion to Wastewater Operations.

Former DWSD Director Testifies Before Grand Jury, Denies Being a Target of Federal Investigation

Former DWSD Director, Victor Mercado, was back in Detroit earlier this week reportedly to testify before a federal grand jury that is investigating corruption during the Kilpatrick Administration. Mr. Mercado denies being a target of the federal investigation. 

Mr. Mercado was Director of the Detroit Water and Sewerage Department between June, 2002 and July, 2008.  He currently serves as General Manager for the Bexar Metropolitan Water District in San Antonio, Texas.

Update: Despite his denials, it turns out that Victor Mercado was in fact a target of federal investigators. On December 15, 2010, Mr. Mercado, age 58,  was indicted along with disgraced, former-Mayor Kwame Kilpatrick, his father, Bernard Kilpatrick, and Contractor Bobby Ferguson, on four charges, including racketeering conspiracy, and obstruction of justice. U. S. Attorney Barbara McQuade acknowledged that there was no evidence that Mr. Mercado received any money other than his salary. Mr. Mercado was fired by the BexarMet Water District Board on December 16, 2010. He is appealing the Board's decision.

Miriam Dixon Promoted to General Manager of Contracts and Grants of DWSD

Miriam Dixon has been promoted to General Manager of Contracts and Grants for the Detroit Water and Sewerage Department. Although there has been no official announcement of her promotion (none that has made it to the web), Ms. Dixon was added earlier today to the Executive Team section of DWSD's website (here). Ms. Dixon replaces Darryl Latimer, who was promoted to Deputy Director in February, 2010.

Ms. Dixon previously served as Manager of Consultant Contracts, where she was responsible for managing the Consultant Contracts, Design/Build and Local Economic Development Units, along with the Print Shop.  Ms. Dixon has been with the Detroit Water and Sewerage Department in 1989.  She holds a B.S. degree in Public Administration from Oakland University.