DETROIT, April 17 The federal judge overseeing
Detroit's historic bankruptcy case brought the idea of a
regional water authority back to life on Thursday, ordering the
city and three counties to mediate over the issue.
The order by Judge Steven Rhodes comes after Detroit said in
a court filing earlier this week that it had dropped the concept
of a Great Lakes Water Authority from its plan to adjust $18
billion of debt and other obligations and exit from the biggest
municipal bankruptcy in U.S. history.
Detroit provides water and sewer services to millions of
customers in its home county of Wayne and neighboring Oakland
and Macomb counties.
The proposal pushed by Detroit's emergency manager, Kevyn
Orr, to lease the city's water and sewer departments to a
regional authority for a hefty annual fee and using that money
for unrelated purposes drew objections by officials in Macomb
and Oakland counties.
But Rhodes said the concept had merit.
"The creation of a regional water authority is not only in
the best interest of the city but in the best interest of the
customers of the water department," Rhodes said.
The city's bankruptcy presents a "unique opportunity" for a
regional authority that may be otherwise lost forever, Rhodes
Oakland County Executive L. Brooks Patterson said the county
will participate in mediation and will insist on protections for
suburban Detroit rate-payers.
"Any solution that may be found in mediation cannot merely
divert funds from water and sewer customers to Detroit's general
fund so the city can meet its obligations," he said in a
statement. "Revenue from all rate-payers must remain in the
water and sewer system to pay for critical upkeep and
There was no immediate reaction to the judge's decision from
the two other county executives.
Detroit had solicited entities interested in bidding to
operate and manage the services and received 41 initial
responses earlier this month.
Rhodes is holding a hearing on Thursday mainly on unresolved
objections by Detroit creditors to a key supporting document for
the city's debt adjustment plan.
(Reporting by Cherie Curry; Additional reporting by Karen
Pierog in Chicago; Editing by Leslie Adler)