Commissioners Can Only Be Removed for Cause, City of Detroit Concedes

When Mayor Bing agreed on February 11, 2011 to give Wayne, Oakland and Macomb Counties greater participation in the oversight of the Detroit Water and Sewerage Department, it remained an open question whether members of the Board of Water Commissioners would serve at the pleasure of the Mayor or whether they could only be removed for cause. 

In a recent federal court filing, the City of Detroit agreed that Commissioners can only be moved for cause. Judge Sean Cox accepted this as a stipulation and entered an Order on April 29, 2011 to the effect that Detroit Board of Water Commissioners can only be removed for cause.

Comment: A "for cause" standard is a much higher standard than merely "serving at the pleasure of the Mayor." It means that a Commissioner cannot be removed absent a showing that they are unfit or unable to perform their duties as a Commissioner. Suburban stakeholders in the Department pressed for this higher standard and now it appears they have prevailed. In my view, this is designed to protect the integrity of the Board of Water Commissioners, which should exercise more oversight and ask more questions about how DWSD functions.

2011-04-29.ORDER.Members of Detroit Board of Water Commissioners Shall Only Be Removed for Cause

DWSD - Crain's Article Highlights Operational Woes at Detroit Wastewater Treatment Plant (WWTP)

Crain's Detroit Business published a feature article on May 22, 2011 outlining the problems at the City of Detroit's main wastewater treatment facility. Problems include inadequate sludge de-watering, leading to a build-up of the "solids inventory," delayed repairs, cumbersome purchasing practices, and a looming personnel problem as a large percentage of DWSD management personnel approach retirement without an effective succession plan in place. 

 

DWSD Update outlined these same issues in an article published last September, 2010 shortly after DWSD submitted its Corrective action Plan to the federal court.

Judge John Feikens Dies, Oversaw DWSD for 33 Years

U.S. District Judge John Feikens died May 15, 2011. He was 93 years old. Judge Feikens oversaw the Detroit Water and Sewerage Department for 33 years until stepping aside last November. Details of his death and funeral are not known. 

Update: The State Bar of Michigan blog published an In Memoriam (here).

DWSD Suspends Upcoming Projects, New Strategic Plan in the Works

On May 3, 2011, the Detroit Water and Sewerage Department announced that it would revisit the spending outlined in its 2011-2015 Capital Improvement Program (CIP), for both water and wastewater construction projects.  The CIPs are updated annually; the last update was in July, 2010.

Deputy Director Darryl Latimer notes that DWSD "will be engaging in a detailed review of every project in the CIPS, striving to produce revised plans to be published by July 1 [2011]." 

Therefore, effective immediately, ALL projects that have not yet been initiated are to be halted until further notice. Work can only proceed with specific and formal authorization from the office of the Assistant Director of Financial Services prior to the final authorization from the Deputy Director. This includes task authorization of as needed services, amendments and new contracts.

Commentary: It is unclear whether Mr. Latimer's reference to "projects that have not yet been initiated" means some or all of the projects listed on DWSD's April, 2001 "Proposed Quarterly Construction and Consultant Contracts." If so, this would mean further delays in bidding and construction of the Springwells Water Treatment Plant 1958 Filter Rehabilitation Project (SP-563).  The Springwells WTP project is listed as a "New Project" in the July, 2010 Water Supply System CIP, with an estimated budget of $120 million.  This highly-anticipated project was to have come out for bids in late-2010, and then early-2011. Stay tuned as things develop.  

DWSD Strategic Planning Initiative - May 3, 2011

Final Additions to New Detroit Water Board Members Announced

On April 1, 2011, Mayor Bing appointed Linda Forte, and Bradley Kenoyer to the City of Detroit Board of Water Commissioners. Mayor Bing retained Commissioners Mary Blackmon and James Thrower.  These four join the three Commissioners appointed in March by Wayne, Oakland and Macomb County. 

Linda Forte,  is a senior vice president of business affairs at Comerica Bank and has more than 30 years of business and finance experience.  Bradley Kenoyer is 33 year old mechanical engineer with Ford Motor Co. He has a bachelor's degree from Rensselaer Polytechnic Institute (RPI) in New York and a master's degree in product development from the University of Detroit Mercy. 

The newly reconstituted Board of Water Commissioners is scheduled to meet for the first time on April 27, 2011 at 2:00 p.m.  

Update: DWSD has now updated its website to include background information and pictures of all the new Water Board Member. 

For more about DWSD Update, click here.

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.

New Detroit Water Board Takes Shape

The New City of Detroit Board of Water Commissioners is taking shape. Following the February 11, 2011 Agreement between Mayor Bing and Wayne, Oakland and Macomb Counties, the suburban appointees to the Water Board have now been announced:

• Oakland County - J. Bryan Williams, Esq
• Wayne County - James Fausone, Esq
• Macomb County - Fred Barnes, P.E.

Mr. Williams was selected by Oakland County on March 15, 2011. He is an attorney who practices in Bloomfield Hills with Dickinson Wright.  Among his clients, Mr. Williams represents the Oakland County Water Resources Commission. Mr. Williams replaces Marilynn Gosling, who served on the Water Board since 2003.

Mr. Fausone was selected by Wayne County on March 16, 2011. He is an attorney who practices in Northville with Fausone Bohn, LLP.  Mr. Fausone is an experienced environmental attorney. Mr. Fausone replaces Hilliard Hampton. 

Mr. Barnes was selected by Macomb County on March 17th.  He is a former public works chief engineer and West Point graduate. He worked for the Macomb County public works office from 1976 until his retirement in 2000. He has 40 years experience in the field of engineering. Mr. Barnes replaces William Westrick.

Comment: Under the terms of the Mayor's February 11, 2011 Agreement, two of the existing Board Members will be reappointed to maintain continuity.  In my view, Mayor Bing should retain Mary Blackmon and Carla Walker-Miller, both of whom have significant experience serving on the Board, and have a deep understanding of the challenges facing DWSD.

Of the two remaining positions, I would strongly encourage Mayor Bing to appoint John McGrail, P.E., who served DWSD as Head Engineer, Wastewater Construction, for more than 30 years. Mr. McGrail, a long-time resident of Detroit, has considerable experience and understanding of the engineering, procurement, and personnel issues facing DWSD, particularly at the main wastewater treatment plant.

For more about DWSD Update, click here.

WW-536, Lakeshore Submits Low Bid on DWSD Water Works Park Project

Earlier this afternoon, Lakeshore Engineering was read low bidder on the project known as “Water Works Park Yard Piping Replacement," DWSD Contract No. WW-536.  There were 11 bids received. The lowest bids are as follows:
  
1. Lakeshore Engineering - - - - - - - $ 31,837,949

2. Walsh Construction - - - - - - - - - $ 31,925,000
3. Ric-Man - - - - - - - - - - - - - - - - $ 33,580,000
4. Tooles Construction - - - - - - - - - $ 36,228,000
5. Lawrence Clark  - - - - - - - - - - - $ 39,595,000
6. Weiss Construction - - - - - - - - - $ 40,357,000
7. L. D'Agostini & Sons  - - - - - - - -  $ 42,281,961
8. Detroit Contracting (DCI)  - - - - - $42,995,700
9. Walbridge - - - - - - - - - - - - - - - $ 44,750,000
10. Colasanti Construction  - - - - - - $ 45,294,000
11. DeMaria Building Co.  - - - - - - - $ 49,108,830

Update (7/26): Dodge Reports indicates as of this morning that Contract WW-536 is on indefinite hold, pending future funding. Other sources have reported that the project has been canceled outright by DWSD.

 

Should Federal Oversight of DWSD End?

A recent Detroit News Editorial (here) urges an end to 33 years of oversight of the Detroit Water and Sewerage Department by the U.S. District Court: 

While the Detroit mayor and council are understandably reluctant to cede any control of the system and justifiably note that the city put a lot of money into water and sewerage infrastructure over the decades, there may be room for some discussions to give suburbs more input to defuse regional tensions. But any changes ought to come about as a result of regional negotiations, not because of a federal court order or legislation from Lansing. Federal courts are not designed to manage municipal water systems indefinitely.

What do you think?

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.

 

Governor Snyder Urges Private Dialogue on Water Issues

As reported by MLive.com earlier today - 

"Michigan Gov. Rick Snyder on Monday refused to take sides in the ongoing dispute over the Detroit Water and Sewerage Department, but he did indirectly criticize both city and suburban leaders for fighting the battle in the media rather than behind closed doors.
 

"Appearing on WJR-AM 760 moments after Detroit City Council President Charles Pugh and Oakland County Water Resources Commissioner John McCulloch made arguments against and for regionalization of the water department, Snyder told host Paul W. Smith he was disappointed by recent developments.

"I would rather have quiet discussions with people asking them to sit down and talk about the facts," Snyder said.  "Because there are many things that should be resolved before it gets to the point it is already.  It's unfortunate it has become a divisive issue at this time given all of the discussions going on.  It would be better if people said it doesn't have to happen on the radio station."

Governor Snyder was responding to recent legislation that would create a regional water authority (See, H.B. 4112 introduced by Rep. Kurt Heise on January 20th), and Oakland County's January 26th request that a federal judge impose an interim regional board through judicial decree. 

Karegnondi Water Authority Solicits Engineering Bids for Design of New Pipeline

Earlier this month, the Karegnondi Water Authority sent out an Request for Qualifications (RFQ) for Professional Engineering Services to approximately 25 engineering firms.  KWA is seeking an engineering firm (or team) for the design and construction of 65 miles of water transmission mains, pump stations and lake intake.

After design, KWA anticipates construction will include:

• 5+ pipeline contracts
• 2 to 3 pump station contracts
• 1 intake contract
• 1 open reservoir contract

Engineering Proposals are Due February 15, 2011. KWA expects to name a Consultant by May 31, 2011.

RFQ for Professional Services - Karegnondi Water Authority

Want more information about the Karegnondi Water Authority?

• Karegnondi Water Authority (Homepage)
• DWSD Update (Prior Posts)
• Peter Cavanaugh

Oakland County Petitions Court to Appoint Interim Regional Committee to Operate Detroit Water and Sewerage Department

In the wake of federal indictments last month, and state legislation to create a regional water authority introduced only 2 weeks ago, Oakland County  today filed a motion in federal court seeking the creation of an Interim Regional Management Committee "with the full power and authority to control, manage and operate" the Detroit Water and Sewerage Department and its wastewater treatment plant (WWTP).  The motion will be considered by Judge Sean Cox, who replaced Judge John Feikens after he stepped down in November, 2010. No hearing date has been set on the motion.

2011-01-26.Oakland County Motion for Appointment of Interim Regional Management Committee

Contract PC-756, Weiss Construction Submits Low Bid on DWSD Clarifier Job

Earlier this afternoon, Weiss Construction was read low bidder on the project known as “Rehabilitation of Primary Clarifiers Nos. 13 through 16 at the Wastewater Plant,” DWSD Contract No. PC-756. 

1. Weiss Construction  - - - - - - - - - $ 10,991,000
2. Walsh Construction - - - - - - - - -  $ 11,359,000
3. Lakeshore Engineering -- - - - - - $ 11,500,000
4. Tooles Construction - - - - - - - - - $ 11,990,000
5. Walbridge - - - - - - - - - - - - - - - - $ 12,150,200
6. DeMaria Building - - - - - - - - - - - $ 12,188,000
7. Detroit Contracting, Inc. - - - - - - $ 12,305,000
8. O’Laughlin - - - - - - - - - -- - - - - - $ 16,728,600

Update: On February 23, 2011, the Board of Water Commissioners approved a contract with Weiss Construction in an amount not to exceed $10,991,000 and a duration of 970 calendar days. 

Lakeshore Submits Low Bid on Sludge Pumping Station Rehab Project, PC-780

Earlier this week, on January 11, 2011, Lakeshore Engineering was read low bidder on the "Sludge Pumping Stations Nos. 1 and 2 Rehabilitation at the Wastewater Treatment Plant" project, DWSD Contract PC-780. After applying equalization credits, however, the contract could be awarded to the second bidder, Detroit Contracting, Inc., which was within $10,000. 

Lakeshore Group - - - - - - - - - - - -$ 5,690,000

Detroit Contracting, Inc. - - - - - - -$ 5,699,525

DeMaria Building - - - - - - - - - - -  $ 5,844,000

Walsh Construction - - - - - - - - -  $ 5,896,000

Weiss Construction  - - - - - - - - -  $ 6,060,000

Tooles Construction - - - - - - - - -  $ 6,111,000

Jenkins Construction - - - - - - - -  $ 6,265,744

Update: On February 23, 2011, the Board of Water Commissioners approved a contract with Detroit Contracting, Inc., in an amount not to exceed $5,699,525 and a duration of 790 calendar days. 

$4.6 Billion in DWSD Water, Sewer Revenue Bonds Downgraded

On December 20, 2010, Moody's Investor Service lowered its rating on $4.6 billion of water and sewer bonds issued by the Detroit Water and Sewerage Department.

Moody's lowered to A1 from Aa3 the credit rating on $1.43 billion of outstanding sewer bonds secured by a senior lien pledge of net revenue, and lowered to A2 from A1 on $1 billion of revenue debt secured by a second lien. At the same time, Moody’s lowered to A1 from Aa3 the rating on $1.54 billion of senior lien water bonds and to A2 from A1 on $660 million of second lien water bonds.

All of Detroit's water and sewer revenue bonds are now graded in the "Upper Medium Grade" category, down from "High Grade." Moody's also revised its outlook for Detroit's water and sewer bonds to negative.

Moody's cited the risk from interest-rate swaps and "lean financial flexibility" that could crimp Detroit's ability to service this debt. Moody’s said debt service coverage on the bonds has diminished amid the economic slump that has hit the Detroit area and because of large payments it may face to cancel interest- rate swaps.

Federal Indictments Heighten Calls for Regional Water Authority

Not unexpectedly, the federal corruption charges brought last week against former Mayor Kwame Kilpatrick, Contractor Bobby Ferguson, and former DWSD Director Victor Mercado, have led to renewed calls for the creation of a regional water authority. Many of the allegations in the 38-count indictment involve bid rigging, kick-backs and general corruption in the DWSD contracting process over the past 8 years.

Oakland County's Brooks Patterson (County Executive) and John McCulloch (Water Resources Commissioner) have been outspoken in their calls for a new regional water authority.  

"The entire system has been extremely dysfunctional, and we need to start with a blank sheet of paper as to how the system is governed and how the system is managed on a day-to-day basis," McCulloch said.

Macomb County officials, including Public Works Commissioner Anthony Marrocco also supports a regional authority citing last week's indictments as the final straw. Wayne County Executive Robert Ficano opposes a regional authority. Mayor Bing has not weighed in yet on this issue.

Of the plans being considered, including legislation to be proposed by Kurt Heise, recently elected to the Michigan House of Representatives, most involve the City retaining ownership of the water and sewerage system with management of the system shifting to a regional authority. Advocates of this approach cite the transition of Cobo Hall and the Detroit Zoo to independent authorities with ownership retained by the City of Detroit. As we reported (here) in April, under such an arrangement, the City of Detroit would likely receive a significant annual revenue stream at a time when it desperately needs money. As such, Mayor Bing is unlikely to dismiss out-of-hand  the idea of  creating of a regional water authority. 

Mayor Bing will also have to contend with an issue that is certain to arise -- privatizing daily operation of DWSD's water and sewerage plants. Contracting with a private company for such services will stir up fierce opposition by the unions representing most of DWSD's  employees, operators and professional engineering staff. This debate will play out over the next 12 months. 

Update: Local journalist and political commentator, Jack Lessenberry, has also weighed in on this issue. His December 21, 2010 essay entitled "Time for Sanity," which endorses a regional approach, is published here. 

Judge John Feikens Steps Down, Oversaw DWSD for 33 Years

More than 33 years after he became known as the "Sludge Judge," Judge John Feikens has passed the title. Nearing his 93rd birthday, and reportedly in ill health, Judge John Feikens has turned over control of the case and consent decree involving the Detroit Water and Sewerage Department. 

The 1977 case, originally filed by the EPA, has been randomly assigned to Judge Sean Cox, a man nearly 40 years his junior. A simple Notice of Reassignment was entered by the Court on November 24, 2010, and a 33 year assignment ended quietly. Judge Feikens has served as a U.S. District Court Judge for more than 40 years.   

Commentary:  Judge Feikens' departure adds to a growing leadership void at a utility that provides water and sewerage services to over 4 million residents in Southeast Michigan. While not involved in the daily operations of the Department, Judge Feikens' has played a key stabilizing role over the past 33 years. Director Pamela Turner retired in July. Her position has yet to be filled. Assistant Directors George Ellenwood and Woodrow McCarty have also retired recently. Neither have been replaced. In fact, there are currently three (3) Assistant Director positions vacant on the DWSD Executive Team.  Mayor Bing's COO, Robert Buckler, who was tasked with oversight of DWSD, abruptly retired in early October, 2010. 

At a time when there are renewed calls for a regional water and sewer authority, the Department continues to struggle with compliance issues, and the dark clouds of a 5 year federal investigation continue to loom over the Department, DWSD desperately needs strong leadership. Deputy Director Darryl Latimer, is a very capable administrator, but he cannot be expected to deal with the multitude of issues facing DWSD by himself. Leadership starts with the Mayor. And Mayor Bing must recognize that he has a very serious problem that isn't going to be solved by appointing a new Director or allowing DWSD to limp along. Major change is required.

Oh, and one more thing, within 2 months, DWSD is expected to propose another round of rate increases. Get ready for more public outrage over rates.

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.

House Candidate Kurt Heise Proposes Regional Water Authority for Southeast Michigan

The former Director of the Wayne County Department of Environment, and Republican candidate for the open 20th District House seat in Plymouth, Kurt Heise, has outlined a 6-point plan for replacing the Detroit Water and Sewerage Department (DWSD) with a new regional water authority (Southeast Michigan Water Quality Authority). Heise envisions a regional authority operated by a private company.

My plan would keep ownership of the system with the people of Detroit, but would transfer decision making to a regional board elected by community customers of which Detroit would be a member," Heise said. "State law would also be amended to allow the new Authority to refinance existing and future improvements, saving hundreds of millions of dollars that could stabilize water bills and provide new investment for infrastructure repair both in Detroit and the suburbs.

Mr. Heise is not the first to to promoting the idea of a regional authority -- legislation was introduced in 1999 (S.B. 781) and again in 2003 (H.B. 4206) -- nor is he alone. Earlier this year, in April, 2010, the Citizens Research Council of Michigan issued a report (here) which detailed the financial benefits to the City of Detroit of selling DWSD to a regional authority.  Op-Ed pieces in the Detroit Free Press (here) have also pointed in the same direction. The Mackinac Center for Public Policy also advanced the idea almost 10 years ago in several articles (here and here).

 

Update: The chorus of voices calling for a regional approach to water and sewer matters has grown louder following the federal indictments announced on December 15, 2010. Many of the allegations focus on corruption within DWSD.