So, the city of Rochester Hills wants to spend possibly as much as $20 million to build two water reservoirs.
Why? They say it is to be done in a effort to reduce the cost of water from the Detroit Water Department.
Ah, a good return on investment (ROI)? NO, not in this case.
You see the business case is flawed from the very beginning and could place the city in financial distress.
The idea is to borrow and nearly deplete the money from existing capital fund reserves. This way they don't have to ask the residents whether or not they agree with this project.
Then they plan to repay the money with interest from the the savings they hope to incur in water rates from Detroit.
The problem is there is no guarantee that there will be a savings in the water rate after the first year.
The Detroit Water Department has fixed costs ranging at around 80 percent. They also have an aging infrastructure that is going to need a major investment.
You see, if cities find a way to reduce their rates, then the Detroit Water Department will just have to raise the base rate again to recoup the difference.
So, we will have spent $20 million on a water reservoir project and the residents are not apt to see projected benefits, they will most likely have exorbitant water rates or a tax increase to pay it all back.
According to the Rochester Hills Herald, the city received a AAA rating from Fitch ratings and then boasted a stable outlook for the city based on the rating.
However, "According to Fitch's assessment, key rating drivers include the city's internal funding of capital projects (which they are now going to borrow against) combined with a rapid debt payout as well as lack of future borrowing plans should allow the city to retain its favorable debt profile. Additionally, the presence of ample general fund reserves..."
Yikes - they are planning to do just the very opposite for what they were given the high rating for!
So I ask, "Just who is going to benefit from these projects?"
You are completely dependant on an old, broken, and corrupt water system.
ReplyDeleteWhat do you pay now for water?
How much will you pay before you demand that "they do something" about it?
Fact: the establishment south of 8 Mile will continue to jack up your rates to cover those who will not pay in the city.
The resiviors would almost work with a system of community wells when Detroit completely screws you.
I have watched some of this jocking going on for the water resevoirs. I also believe that there is an agenda at work here, and it doesn't involve saving the city, or it's residents any money in the long term. We've seen this time and time again, a decision is made, everyone around the room does hi fives for their fabulous work and in the end, it is an abject failure but those who engineered it are long gone. The leaning tower of Pisa seems to come to mind.
ReplyDeleteI fear that in this case, while the structures may not lean, the books will. The savings will never be realized, only to leave the residents holding the bag in the long run. However, the real objective will have been well served for those who have been the architects.
I'm saying here, that if you have read the Mayor and the Councils campaign literature over the last few years, it has many bullet points detailing the fabulous accomplishments. It is a virtual certainty that if this project goes through, you will see claims of the millions of dollars that was saved by this administrations vision. What you won't see is how it all works, or doesn't.
I would love it if I were wrong, but are we willing to bet $ 20M on this? I'm not.