DIA Seeks Millage Renewal

Throughout the Metro-Detroit region there are multiple millages being levied to support regional entities, most of which were born out of Detroit’s bankruptcy and the economic downturn. When some of these millages were originally levied, the initial intentions expressed to the public were that they were for only a specific amount of time, such as with the Detroit Institute of Authority (DIA). However, the Detroit Zoo for example passed a 0.1 millage in 2008, and then came back to voters in 2016, two years before the 10 year millage was set to expire, and asked for a renewal. The 0.1 millage renewal passed, and this public support for the Detroit Zoo continues to be levied; the cost of the Zoo millage for a home valued at $100,000 ($50,000 taxable value), is $5. We have also seen the Suburban Mobility Authority for Regional Transportation (SMART) continuously seek millage renewals and increases, the most recent being a 1 mill renewal for four years that was approved by voters in 2018.

Now, as the end of 2019 nears, the Detroit Institute of Arts (DIA) recently announced it is up against the clock to put millage renewal language on the March 2020 ballot. The 10-year millage was originally approved by voters in Macomb, Oakland and Wayne counties in 2012, and it was stated at that time that it was a one time request, allowing the museum time to build up its endowment for long-term financial support of operations, according to news articles of 2012 and present. Now seven years into the one-time millage, DIA officials have announced a 10-year renewal is necessary to continue offering the services the public has come to expect. In order to do this the three Art Authorities in Macomb, Oakland and Wayne counties (which were born out of articles of incorporation crafted and approved by the corresponding Board of Commissioners) must approve the ballot language. Just last week the Wayne County Art Authority approved putting the 0.2 mill renewal on the ballot, Oakland County is expected to debate the potential millage renewal later this month and the Macomb Art Authority will do so on Dec. 3.

As discussions again begin to ramp up over whether another regional millage renewal is necessary, it is important to consider what benefits the current tax dollars levied for the DIA may have created the region. In addition to free general admission for Macomb, Oakland and Wayne residents additional benefits can be covered under three main areas: investment in schools (free field trips with bussing, teacher professional development, and curriculum development), investment in the senior population (free group visits for older adults on Thursdays with free transportation and special programs), and investment in community partnerships (Inside/Out program, partnerships with area non-profits).

The first chart below shows the amount of money invested into the schools in the region by county and by year. In total, between 2013 and 2018 392,231 students in the tri-county region have had access to the school programs now offered by the DIA, with that investment totaling about $4.3 million. Of the three counties the most amount of money has been invested into the Wayne County schools, with that total being about $2.2 million. Wayne County has the highest population of the three counties.  It should also be noted though that investment into these various programs in the counties requires participation from the residents.

When looking at the amount invested in the senior programs since 2013 that total is about $1.7 million with the total number of seniors being reached by these special programs being 32,422. The largest investment with the senior programs since the millage has been in Oakland County with a total of  $725,362 being invested into the senior population.

Finally, the area where the most investment has been made is in the community partnerships area. Between 2013 and 2018 about $5.3 million was invested. The largest investment was in Oakland County at about $2 million. In Wayne County $1.9 million was invested, and in Macomb County about $1.3 million was invested.

It appears a new trend is emerging where millages will be needed to support regional entities and interests (the Zoo, the DIA, transit) along with day-to-day services in some cities and counties. For example, in Detroit there are currently discussions about a March ballot proposal to levy additional funds to move blight removal in the city along at a much faster pace. In Macomb County residents will asked to decide if they want to pay additional taxes in order to build a new jail. So it may be even more important for taxpayers to understand what additional taxes are appearing on their tax bill and what their priorities are. In the coming weeks we will look at the additional taxes residents pay in certain communities throughout the region to shed further light on what tax bills are now looking like.

Prison Most Common Sentence for Felony Assaults

As part of the annual Michigan Department of Corrections report assaultive felony offensives are also examined to better understand what percentage of the  offenders are sentenced to either prison, jail, probation, community service or another combination. According to the data, prison sentences tended to be the most common. Monroe County had the highest percentage of felony assault offenders sentenced to prion at 39.6 percent. Wayne County had the second highest sentencing rate at 36.6 percent and Macomb County had the lowest rate at 27.5 percent.

For the jail category, St. Clair County had the highest sentencing rate for felony assault offenders at 38.8 percent; this was 10 percent higher than those in St. Clair County who were sentenced to prison for felony assault charges. Oakland County had the second highest at 23.3 percent. Wayne County had the lowest percentage of felony assault offenders sentenced to jail at 6 percent; the county with the second lowest sentencing rate was Monroe County at 11.7 percent.  

For a sentencing combination of jail and probation, Monroe County had the highest sentencing rate for felony assault offenders at 48.1 percent; Livingston County had the second highest rate at 44 percent. Wayne County was the only county in the region to have a jail and probation combination sentencing rate below 20 percent. According to the data, 15.1 percent of felony assault offenders in Wayne County were sentenced to a jail/probation combination.

Livingston, Monroe, Oakland and St. Clair counties all sentenced less than 5 percent of felony assault offenders to probation, with Monroe County having the lowest sentencing rate at 0.6 percent. Conversely, Wayne County had the highest probation sentencing rate at 42.3 percent, a trend we’ve seen throughout this series. Wayne County’s probation sentencing rate was nearly 20 percentage points higher than the county with the second highest rate (Washtenaw County had a rate at 24 percent).

No county in the region sentenced more than 2 percent of the felony assault offender population to community service, restitution, fines and/or costs.

Prison appears to be the most common sentencing type for felony assault offenders, except for Wayne County where nearly half the felony assault offender population was sentenced to probation.  

Southeastern Michigan Communities Working to Fund Pension Systems

In 2017 the Protecting Local Government Retirement and Benefits Act was passed, with the goal of identifying the systems that are underfunded. According to the State of Michigan, a retirement fund is underfunded if less than 60 percent of the fund is funded, and there is an annual required contribution that is over 10 percent of governmental fund revenues. While 60 percent is the current threshold, there are discussions that eventually that number will continue to increase to 100 percent to more accurately reflect the funded status of a retirement plan. There are also thresholds that determine if a local government entity has an underfunded retiree health care system, an issue we will explore next week.

Currently, in the State of Michigan local government entities are facing, in total, over $18 billion in unfunded liabilities for retirement and retiree healthcare funds, according to the Reason Foundation. This foundation worked with the State of Michigan to develop the Protecting Local Government Retirement and Benefits Act and the reporting system that goes along with it.

The maps below provide details on what local government retirement plans are preliminary funded or underfunded in Southeastern Michigan, as determined by the Michigan Department of Treasury through implementation of the Protecting Local Government Retirement and Benefits Act. These are deemed preliminary due to the fact the new oversight body for determining funded, unfunded and waiver status must still review information submitted. Note, information is not displayed for all local government units in the region because not all units had provided their funding as of June 9, 2018. Additionally, some local government units beyond cities and townships are included in the data provided by the State, such as public safety retirement funds.

Of the 183 local government entities (this includes multiple funds for one municipality) that submitted their retirement funding information to the State for the Southeastern Michigan region, 37 of them were reported as having an underfunded status, or less than 60 percent of the retirement fund being funded. Of those that were reported as being underfunded, the majority of them had 45 percent or more the entity’s retirement system funded. However, there were five entities with 25 percent or less of the retirement system funded. These entities were:

  • Capac (St. Clair County): 24.2%
  • Highland Park General Employee fund: 2%
  • Highland Park Public Safety Fund: 3.7%
  • Highland Park Police and Fire Fund: 6.8%
  • Taylor City Housing Commission Authority: 0%

It should be noted that while the City of Taylor’s Housing Commission Authority retirement fund is underfunded, the City of Taylor’s general employee and police and fire retirement funds met State guidelines to be determined funded.

As part of the newly adopted State legislation related to retirement and retiree health care plans a Municipal Stability Board was created to review the corrective plans that underfunded entities must create and submit to the State. This board is housed under the Michigan Department of Treasury is made up of three individuals appointed by the governor. Corrective plans must be developed and submitted within 180 days of the State determining an entity’s retirement system is underfunded.

 

On the opposite side of the spectrum, while there were far more local government entities that were determined have funded retirement systems, than not, there were several that were more than 100 percent funded. The entities with the highest percentage of funding for their retirement funds were:

  • City of Ferndale (General Employees): 253%
  • City of Dearborn (Chapter 24): 239%
  • City of Pontiac (General Employees); 176%
  • City of Ypsilanti (General Employees) 126%
  • City of Grosse Pointe: 119%
  • City of Troy: 117%
  • Lima Township: 112%
  • City of Grosse Pointe Farms: 111%
  • City of Gibraltar (General Employees): 106%
  • City of Dearborn (General Employees): 104.3%
  • City of Mt. Clemens: 103%
  • Oakland County: 103%
  • City of Gibraltar (Public Safety): 102%
  • Groveland Township: 101%

Funding of retirement plans is vital for all local government entities as underfunded plans can lead to long-term financial troubles for a government entity, not excluding bankruptcy. Additionally, underfunded plans can also affect recruitment and retention of employees.

Pedestrian Deaths Out Number Cyclist Deaths in Southeastern Michigan

In 2017 there were more vehicle related crashes and fatalities involving pedestrians than there were ones involving bicycles in Southeastern Michigan. According to the data from the Michigan Department of Transportation, there were 1,226 crashes involving pedestrians in Southeastern Michigan in 2017 and 84 pedestrian fatalities. Regionally, Wayne County had the highest total number of pedestrian related crashes at 688. Oakland County had the second highest total number of pedestrian crashes at 213. Of the seven counties in the region, Wayne, Oakland, Washtenaw and Macomb counties all had more than 100 involved pedestrian related crashes. Livingston County had the lowest number of pedestrian crashes at 17.

Just as Wayne County had the highest number of pedestrian crashes, it also had the highest number of pedestrian fatalities. In total, there were 38 pedestrian fatalities in Wayne County in 2017. Regionally, there were 84 pedestrian fatalities in 2017 and St. Clair County had the lowest at two. The map below shows the range of pedestrian accidents by color and presents the number of fatalities next to the county label.

The Detroit map below shows the total number of pedestrian crashes by city block in 2016. This data was provided by the Detroit Open Data portal. The block with the highest number of pedestrian crashes is on the Eight Mile border on the more eastern side of the City. However, you will see the highest concentration of pedestrian crashes was located in the downtown up through Midtown area.

Just as Wayne County had the highest number of pedestrian crashes, it also had the highest number of pedestrian fatalities. In total, there were 38 pedestrian fatalities in Wayne County in 2017. Regionally, there were 84 pedestrian fatalities in 2017 and St. Clair County had the lowest at two.

In 2017 there were 914 bicycle related crashes, with Wayne County having the highest total at 428. Wayne, Oakland and Macomb counties were the only three counties in the region with more than 100 bicycle related crashes. Livingston County had the lowest total at 19. When examining the total number of bicycle related fatalities there were five in the region, with Macomb County having the highest total at two.

While fatalities for cyclists were lower than pedestrian fatalities, in recent years there has been an increase, according to an MLive analysis of fatality numbers. While no specific reason for the increase has been identified, cyclists are encouraged to yield at appropriate intersections, wear bright clothing and utilize bike lanes when possible. Additionally, motorists are also expected to pay attention and provide appropriate distance between their vehicle and a cyclist.

Southeastern Michigan Poverty Levels Drop Slightly

Throughout Southeastern Michigan, majority of the communities in the region experienced a decrease in the percentage of residents living below the poverty level between 2015 to 2016, according to data from the U.S. Census Bureau. In 2016, a family of four was considered to be living at the poverty level with an annual income of $24,250, according to the U.S. Department of Health and Human Services; this was the same for 2015.

Southeastern Michigan was -0.2 percent. However, Summerfield Township in Monroe County experienced a 7 percent increase in the percentage of residents living below the poverty level between 2015 and 2016. In 2015, 9 percent of residents in Summerfield Township lived below the poverty level and in 2016, 16 percent of residents lived below the poverty level. Of the 28 municipalities (out of 213 in Southeastern Michigan) where there was a 1 percent or higher increase in the poverty level between 2015 and 2016, the majority were located in the rural suburbs of the region.

 

The municipality with the largest percentage decrease in residents living in poverty was Port Huron Township in St. Clair County at -5 percent. In 2015, 23 percent of the residents in Port Huron Township lived below the poverty level and by 2016 that decreased to 18 percent.

While there was an overall average decrease in the percentage of residents living in poverty between 2015 to 2016, the two cities with the highest overall percentage of residents living below the poverty level experienced an increase. In 2016, about 50 percent of the residents in Hamtramck lived below the poverty level; this was a 2.4 percent increase from 2015. In 2016, Highland Park had about 47 percent of its residents living below the poverty level, which was an increase of 2.5 percent.

 

Detroit

In 2016, about 39 percent of residents in Detroit lived below the poverty level, which was a decrease of 1 percent from 2015. A closer look at the Census tracts in Detroit though show that poverty levels did not decrease across the board. One Census tract specifically, which is located along the Detroit River in Southwest Detroit, experienced a 49 percent increase in the percentage of residents living below the poverty level. In addition to that Census tract, several others surrounding it also experienced poverty level increases up to 19 percent.

When looking at the Census tracts east of Hamtramck, with the exception of seven, all experienced a decrease in the percentage of residents living below the poverty level. It was this area of the City of Detroit that had the fewest number of Census tracts with percentage increases in the poverty level but also had among the highest poverty levels in 2016. It was just west of Highland Park though that had the most number of Census tracts with poverty levels below 35 percent in 2016.

Overall, the most recent poverty data released by the U.S. Census Bureau does show that poverty levels are decreasing, but not a rapid rate. The data also shows that there were 19 municipalities in the region with 20 percent or more of residents living below the poverty level. While this was a decrease from the 23 municipalities with the same statistic in 2015, the numbers still tell a story that Southeastern Michigan isn’t climbing out of poverty rapidly. We will need many years of broad based economic growth to reduce poverty levels substantially.

Four Southeastern Michigan School Districts Eliminate Budget Deficits

By the end of Fiscal Year 2016 there were four public school districts in Southeastern Michigan that eliminated their deficits while one new district was added to the list of having a deficit, according to the Michigan Department of Education. The four public school districts that eliminated their deficit by June 30, 2016 were Clintondale Community School (ended with a fund balance of about $1.4 million) and Warren Consolidated Schools (ended with a fund balance of about $5.7 million), both in Macomb County, Southgate Community Schools (ended with a fund balance of about $375,000) in Wayne County and Lincoln Consolidated Schools (ended with a fund balance of about $3.6 million) in Washtenaw County. Grosse Ile Township Schools in Wayne County began FY 2016 with a fund balance of $189,441, but ended the fiscal year with a deficit of $152,299. This was the only public district in the region and state to be added to this list. However, there were four charter schools in the region (Blanche Kelso Bruce Academy, Experienca Prepatory Academy, Frederick Douglas International Academy, Taylor International Academy) that began FY 2016 with a fund balance and ended with a deficit.

While there were districts that eliminated their deficit by the end of FY 2016, there were five public school districts in the region that ended the fiscal year under the oversight of the Michigan Department of Treasury (these districts are distinguished in red in the map, however if a district also increased or decreased its deficit they are highlighted in a different color in the map). A district is put under the oversight of the Department of Treasury if it maintains a deficit for five years. The public districts in the region under such oversight are: Detroit City School District, Hazel Park City School District, Mt. Clemens Community School District, New Haven Community Schools and the Pontiac City School District. Additionally, while the New Haven Community Schools and Hazel Park City School District began and ended FY 2016 with deficits, and under the supervision of the Department of Treasury, by the end of FY 2016 both districts had reduced deficits. At the beginning of the fiscal year New Haven Community Schools had a deficit of about $296,000 and by the end it had a deficit of about $65,000. The Hazel Park City School District had a deficit of about $8 million at the beginning of FY 2016 and by the end the fiscal year the deficit was reduced to about $6 million. There were also three other public school districts in the region that began FY 2016 with a deficit but reduced it by the end of the year; these districts were Dearborn Heights, Garden City and Pinkney.

The Detroit school district and Mt. Clemens Community Schools were the only two public districts in the region that began FY 2016 with a deficit and ended the fiscal year with an increased deficit; these distinctions are shown in the map although they too ended the year under the oversight of the Michigan Department of Treasury. Detroit Public Schools began FY 2016 with a deficit of about $1.8 million and ended the fiscal year with a deficit about $1.9 million. The Mt. Clemens Community Schools district began FY 2016 with a deficit of about $1.3 million and ended the fiscal year with a deficit of about $2.2 million.

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Southeastern Michigan Economy Gaining Strength

  • The unemployment rate across the state remained stagnant while the rate in the city of Detroit decreased (monthly);
  • The number of employed Detroit residents increased, (monthly);
  • The Purchasing Manager’s Index for Southeastern Michigan remains strong, especially after increasing 7 points (monthly);
  • The Commodity Price Index remained the same (monthly);
  • The Standard and Poor’s Case-Shiller Home Price Index for the Detroit Metropolitan Statistical Area shows home prices continue to increase monthly and annually.

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According to the most recent data provided by the Michigan Department of Technology, Management and Budget, the unemployment rate for the State of Michigan slightly increased to 4.7 in October of 2016 from 4.6 the previous month. However, unemployment in the City of Detroit decreased to 11.1 in September, from 12.4 the previous month. The September unemployment rate in 2016 was 0.4 points lower than it was in September of 2015.

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In September of 2016 the number of employed Detroit residents rose to 221,238, an increase of 2,314 from August. Between September of 2016 and September of 2015 there was a total increase of 10,012 employed Detroit residents, according to the Michigan Department of Technology, Management and Budget.

While the number of employed Detroit residents increased between August and September the labor force decreased by 1,067. In August the labor force was reported to be 250,047 and in September it was reported to be 248,971.

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The Purchasing Manger’s Index (PMI) is a composite index derived from five indicators of economic activity: new orders, production, employment, supplier deliveries, and inventories. A PMI above 50 indicates the economy is expanding.

According to the most recent data released on Southeast Michigan’s Manager’s Index, the PMI for October 2016 was 67.2, an increase of 7 points from the prior month. The October 2016 PMI was an increase of 8.4 from the previous year.  With this increase, the PMI is considered to be strong, particularly because it has remained above 50 since June of 2014. Much of this growth, according to the Institute of Supply Management of Southeastern Michigan, is due to the resurgence of the auto sector in the region.

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The October 2016 Commodity Price Index decreased 0.2 points from September but increased 3.2 points from the prior year. The three month average for the Commodity Price Index was 48, which the Institute of Supply Management of Southeastern Michigan states is good for short-term profits.

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The above charts show the Standard and Poor’s Case-Shiller Home Price Index for the Detroit Metropolitan Statistical Area. The index includes the price for homes that have sold but does not include the price of new home construction, condos, or homes that have been remodeled.

According to the index, the average price of single-family dwellings sold in Metro Detroit was $109,660 in August 2016. This was an increase from $103,750 from August of 2015 and an increase from $98,720 from August of 2014.

Housing Prices Continue to Increase in Metro-Detroit

  • From March to April 2016, the unemployment rate across the state and within the city of Detroit declined (monthly);
  • The number of employed Detroit residents increased (monthly);
  • The Purchasing Manager’s Index for Southeastern Michigan increased from March to April 2016 (monthly);
  • Commodity Price Index remained stabled for Southeastern Michigan (monthly)
  • Standard and Poor’s Case-Shiller Home Price Index for the Detroit Metropolitan Statistical Area shows home prices have increased by about $10,000 since February of 2014.

Detroit Unemployment

According to the most recent data provided by the Michigan Department of Technology, Management and Budget, the unemployment rate for the State of Michigan decreased to 4.3 percent in April 2016; the unemployment rate was 5.1 percent in March. During this same period, unemployment in the City of Detroit marginally increased from 11 percent in March to 9.1 percent in April.\Detroit Employment

In Spring of 2016 the number of employed Detroit residents began to stabilize. In March of 2016 the number employed was 217,027 and in April of 2016 that number slightly increased to 217,078. In April of 2015 employment numbers for Detroit residents began to rise, and have since peaked.

Although the sheer number of Detroit residents employed has increased, data also shows that the Detroit labor force decreased to 238,790 in April 2016; it was 243,813 the month prior.

Auto Employment

The above chart shows the number of people employed in the auto manufacturing industry in the Detroit Metropolitan Statistical Area (MSA) (Detroit-Warren-Livonia) from April 2015 to April 2016. In that time frame the number of people employed in this industry has increased by 800, from 93,400 to 94,200.

PMI

The Purchasing Manger’s Index (PMI) is a composite index derived from five indicators of economic activity: new orders, production, employment, supplier deliveries, and inventories. A PMI above 50 indicates the economy is expanding.

According to the most recent data released on Southeast Michigan’s Manager’s Index, the PMI for April 2016 was 62.7, an increase of 3.6 points from the prior month. The April 2016 PMI was a decrease of 3.7 from April of 2015.  Despite the decrease from April 2015 to April 2016, the current PMI represents a growing economy that is currently being pushed forward because of improvements in new orders, employment and production.

Commodity Price Index

The Commodity Price Index, which is a weighted average of selected commodity prices, was recorded at 50 points in both March and April of 2016. The April 2016 Commodity Price Index is a decrease of 7.9 points from the prior year.

Detroit Home Prices

The Commodity Price Index, which is a weighted average of selected commodity prices, was recorded at 50 points in both March and April of 2016. The April 2016 Commodity Price Index is a decrease of 7.9 points from the prior year.

Employment in Detroit Growing, While Unemployment also Increased

  • From December 2015 to March 2016, the unemployment rate across the state remained stable while the city of Detroit’s experienced a slight increase (monthly);
  • Employment in the city of Detroit increased by 8,407 from March 2015 to March 2016 (monthly);
  • The Purchasing Manager’s Index for Southeastern Michigan increased from February 2016 to March 2016 (monthly);
  • Commodity Price Index increased from February 2016 to March 2016 for Southeastern Michigan (monthly)
  • Standard and Poor’s Case-Shiller Home Price Index for the Detroit Metropolitan Statistical Area shows home prices are about $6,900 higher than in January of 2015.

Detroit Unemployment

According to the most recent data provided by the Michigan Department of Technology, Management and Budget, the unemployment rate for the State of Michigan increased to 5.1 percent between December of 2015 and March of 2016. During this same period, unemployment in the City of Detroit marginally increased from 10.9 percent in December to 11 percent in March.

Detroit Employed

Since March of 2015 the number of employed Detroit residents in the labor force increased by 8,407, to a total of 217,137 in March of 2016. While the month of March in 2015 had the lowest number of Detroit residents employed in the labor force in the last year, March in 2016 has had the highest number of people employed for 2016.

The conundrum of increasing employment and increasing unemployment likely is a result of more people entering the labor market in the city, creating a situation in which more are employed, but more are also looking for work.

Detroit Manufacturing

The above chart shows the number of people employed in the auto manufacturing industry in the Detroit Metropolitan Statistical Area (MSA) (Detroit-Warren-Livonia) from March 2015 to March 2016. In that time frame the number of people employed in this industry has increased by 300, from 93,100 to 93,400.

PMI

The Purchasing Manger’s Index (PMI) is a composite index derived from five indicators of economic activity: new orders, production, employment, supplier deliveries, and inventories. A PMI above 50 indicates the economy is expanding.

According to the most recent data released on Southeast Michigan’s Manager’s Index, the PMI for March 2016 was 59.1, an increase of 7.1 point from the prior month. This increase is largely representative of the region’s employment, new order and production indexes increasing.

The March PMI was also a decrease of 5.4 from March of 2015.

Commodity Price

The Commodity Price Index, which is a weighted average of selected commodity prices, was recorded at 50 points in March 2016, which was 1.6 points higher than the previous month and exactly the same as what it was in March of 2015.

Detroit Home Price

The above charts show the Standard and Poor’s Case-Shiller Home Price Index for the Detroit Metropolitan Statistical Area. The index includes the price for homes that have sold but does not include the price of new home construction, condos, or homes that have been remodeled.

According to the index, the average price of single-family dwellings sold in Metro Detroit was $103,590 in January 2016. This was an increase of $6,890 from January of 2015 and increase of $9,670 from January of 2014.

Southeastern Michigan Anticipating Water Rate Increases

With the proposed wholesale water rate changes for the newly formed Great Lakes Water Authority (GLWA)-which now provides water and sewer services to 127 former Detroit Water and Sewer Department (DWSD) customers-only one of the 89 tri-county customers is expected to experience a rate decrease above 10 percent. That community is the city of Novi and the anticipated decrease between 2016 and 2017 is 23.7 percent. The only other government entities expected to experience a decrease are Bruce Township, the city of Warren and the Southern Oakland County Water Authority (which is made up of Royal Oak, Berkley, Clawson, Huntington Woods, Pleasant Ridge, Southfield, Beverly Hills, Lathrup Village, and Bingham Farms). The reason for Novi’s expected wholesale water rate decrease is because of a water reservoir that went online in the city in July of 2015. This reservoir allows the city to hold up to 1.5 million gallons of water; it is filled nightly when demand and costs are lower and discharged at peak hours during the day, according to the Hometown Life article.

While wholesale rate decreases are expected to occur for a select few communities, wholesale rate increases are anticipated to be the norm for the region. The overall average wholesale rate increase for the region is expected to be about 6.1 percent, but Royal Oak Township’s expected increase is estimated to be about 20 percent. New Haven and Romeo were the only other two government entities in the GLWA that are expected to experience a wholesale water rate increase above 10 percent. New Haven is expected to experience an increase of about 14 percent, and Romeo is expected to have an increase of about 12 percent.

Charges for water service are a combination of a monthly fixed cost (which are associated with infrastructure costs) and metered usage. According to an interview the Detroit News held with the GLWA, monthly fixed costs make up about 60 percent of what the GLWA charges a community, and the remainder is metered usage. At the time of this post it is unclear why fixed costs vary so vastly from one government entity to another. However, this is a question Drawing Detroit will be further investigating.

GLWA

GLWA Rate Change

While both Novi and Bruce Township are expected to have wholesale rate decreases, they are two of 22 communities in the GLWA that had 2016 commodity costs above $10 per million cubic feet (mcf). Bruce Township had the highest commodity price per mcf of all the GLWA customers at $22.82 per mcf. Additionally, the township’s fixed wholesale monthly cost was $2,200 in 2016. In 2017 that fixed monthly cost is expected to increase to $2,300, and the commodity price is expected to be $21.44 per mcf. This represents a 6 percent wholesale rate decrease. For Novi, the 2016 cost per mcf is $16.99 with a fixed monthly cost of $560,000; for 2017 those numbers are expected to decrease to $12.96 per mcf and $475,000, respectively.

Royal Oak Township, which is expecting a 20 percent rate increase, has a current commodity cost per mcf of $6.85 and a fixed monthly cost of $10,300. Those numbers are expected to be $8.23 per mcf and $12,400, respectively.

As noted throughout this post, the 2017 rates and costs discussed here are expected; the GLWA has yet to vote on the regional rates and costs. The vote is expected to come in the coming weeks though so the wholesale rates and fixed costs can become effective on July 1, 2016. The proposed figures used for this post were made public by the GLWA in March of 2016.

Additionally, while wholesale rates were discussed in this post, each individual community has the opportunity to set water rates above the wholesale rates set by the GLWA. These rates are known as the retail rates and are ultimately what the customers pay.

GLWA Commodity Costs

GLWA Fixed Costs

The city of Detroit was not included in this post because when the GLWA was formed the city of Detroit was able to maintain operations of its water and sewer infrastructure. DWSD still legally owns the water and sewer infrastructure it used to service the now GLWA members with, but the creation of this regional authority allows the GLWA to lease water and sewer infrastructure from the city of Detroit for 40 years at a cost of $50 million a year.