EFM Is Moving Quick to Try and Stabilize Detroit - But Will His Water Department Proposal Help Or Is It Playing The Suburbs For Suckers?

After a bit of a rough start over some personal unpaid childcare provider unemployment taxes, the EFM, Kevyn Orr, is moving ahead to get Detroit on a more viable financial footing. As to the whole unpaid taxes thing, look he's rich and he's a Democrat that's standard for them. It's easy for him to overlook $16k in unpaid taxes related to some employees, after all he apparently had outside accountants to handle the whole thing, what did you expect?

The Detroit News: Detroit EM eyes regional water system

Newly minted emergency manager Kevyn Orr signaled Friday he is open to finding ways to generate cash from the city's assets like the water system, and may revisit plans to run Belle Isle as a state park.

Orr said he might consider turning over management of the city's Water and Sewerage Department to a regional authority to leverage lease payments and shed billions of dollars in debt from the city's ledger.

This makes sense, at least to a certain extent:

Detroit's $14.9 billion in long-term debts includes $6 billion in bonds for the Water Department that are backed by revenues from water and sewer users in 124 Metro Detroit communities.

By becoming a separate authority with bonding authority, the water system could refinance its debt and use the savings to make lease payments to Detroit of $50 million or more annually, Johnson said.

"That's a way to take $6 billion right off the books, which is a quick win for a new guy like Mr. Orr," said state Rep. Kurt Heise, R-Plymouth, who is sponsoring legislation to create a regional water authority different from the Detroit Water and Sewerage Department plan.

Of course the usual suspects were quick to dip in:

City residents should be concerned about any plan that affects the city's control over the water department, said the Rev. Charles Williams of the local chapter of the National Action Network, the group that's leading protests against the emergency manager.

"If the emergency manager had serious thoughts about selling the water, Detroiters should be alarmed," Williams said. "It is an asset, and it is a benefit, and it probably will create another hole in our budget that will ultimately lead to bankruptcy.

"There is going to be a community outcry on emergency management itself. We're going to fight this all the way to the very end."

What a maroon. It's an "asset" with over $6 Billion with-a-B dollars in debt.

That's not an asset, that's called a huge liability. For Detroit, having the DWSD was great as it was a perfect location for corruption and feather-bedding, especially as it was mainly the suburban ratepayers who were stuck with the bills for the city's corrupt dealings that enriched the city's democrat powers that be. That may be very well why Williams considers it such an asset.

On the upside to the deal if it goes through, the adults get to be in charge and get to put an end to the corruption and feather-bedding, and the suburbs get some control on the out-of-control rate increases that have been going up constantly to payoff Detroit politicos and connected cronies.

The downside, of course is the regional authority and the suburbs get to inherit the mess, including the 6 billion in debt brought on by corruption and mismanagement, along with what will most likely be revealed as unperformed and deferred maintenance as money went to cronies and not construction. Why the authority (ie the suburbs) would not only want to assume 6 billion in debt but also pay $50 million annually in leasing payments for the water department to the same corrupt city that led it into 6 Billion in debt is rather questionable. Hell, Detroit should be paying the suburbs to take it off the city's hands.

Are the suburbs about to be suckered? Stay tuned.