Saturday, February 01, 2014

A Supposed Bargain For Detroit's DWSD Pig In A Poke?

Detroit's EFM, Kevyn Orr, has recently come down in his asking price for the suburbs to "lease" the Detroit Water a Sewer Department.

Previously,he was pushing them to pay $9 Billion for a lease on the water department.

He's now down to offering the lease for $1 Billion.

The deal would still keep the city the titular owner of the water department and the suburbs would pay $47 million a year in lease payments and in return get equal spots on the Water Board to oversee operations.

The Detroit Free Press: Suburban leaders cautious on regional water authority proposal

No kidding they're cautious. The EFM a few months back tried to take them for nine times the current offer, and the current offer doesn't disclose all the details of what really needs to be done to fix and maintain the water department after its been used as a political slush fund and featherbedding unit of the corrupt Detroit administrations for years.

Even at a better price, Orr is still trying to offer it as a Pig In a Poke:

Oakland and Macomb counties have been demanding updated financial details from the city on the department’s operations, as well as engineering studies that would outline expected maintenance and repair costs. Without that information, it’s impossible to agree to a lease payment, Hackel said.

In a regular deal, the financials would be provided up front to the prospective buyer would know what they're getting into. That they're not being given this information suggests that Orr wants to sell the DWSD off to them before the reality of the situation is shown and the cat is out of the bag.

The suburban executives are darn right to be cautious and insist on full disclosure before proceeding, especially given Detroit's duplicitous track record.

My bet is the financials reveal a shambles, display there's tons of outstanding required deferred maintenance, and that if the suburbs accept the latest offer, We're going to be hosed.

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