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The Board of Water Commissioners for the City of Detroit Water and Sewerage Department authorizes the Director to enter into a Memorandum of Agreement with the State of Michigan Department of Transportation regarding drainage charge assessments on state trunkline highways and authorizes the Director to take such other action as may be necessary to accomplish the intent of this vote.
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Agenda of August 17, 2022
Item No. 22-0905
TO: The Honorable
Board of Water Commissioners
City of Detroit, Michigan
FROM: Debra N. Pospiech, Esq., Chief General Counsel, Detroit Water and Sewerage Department
RE: Michigan Department of Transportation - Assessment of Drainage Charges
Memorandum of Agreement
MOTION
Upon the request of Chief General Counsel Debra N. Pospiech, Esq., the Board of Water Commissioners for the City of Detroit Water and Sewerage Department authorizes the Director to enter into a Memorandum of Agreement with the State of Michigan Department of Transportation regarding drainage charge assessments on state trunkline highways and authorizes the Director to take such other action as may be necessary to accomplish the intent of this vote.
BACKGROUND AND JUSTIFICATION
In the early 1980’s, the State of Michigan sued the City of Detroit to dispute assessment of drainage charges on state freeways running through the City. On October 10, 1989, the parties entered into a Stipulation for Settlement and Entry of Consent Judgment to resolve the litigation. Pursuant to the terms of the Consent Judgment, the City of Detroit Water and Sewerage Department (DWSD) charges the Michigan Department of Transportation (MDOT) for the conveyance and treatment of storm water run-off that drains from certain MDOT roads into DWSD’s combined sewer system. The rate was based on the City’s previous class methodology, multiplied by the prescribed impervious highway acres attributable to MDOT.
Sometime in 2106, based upon DWSD’s interpretation of the 1989 Consent Judgment, DWSD imposed a revised methodology and increased the number of MDOT’s billable impervious highway acres. MDOT disputed the change in methodology, DWSD’s calculation of billable impervious acres and DWSD’s interpretation of the judgment.
After lengthy, multi-year negotiations, the MDOT and DWSD desire to enter into a Memorandum of Agreement to resolve their dispute. The parties agree that effective July 1, 2022, storm water run-off charges will be assessed against 1,469.40 acres of state trunkline highway (versus the 1989 settlement of 714.22 acres). Further, the parties agree that the annual drainage charge rate approved by the Board of Water Commissioners applies to state trunkline highways on a per acre basis, reduced by a 40% partial conveyance credit recognizing that state highways assist with conveyance of stormwater. This agreed methodology results in MDOT paying substantially more per acre than the prior methodology (that is, approximately $400/acre vs. $93/acre).
Additional background and justification for this action were discussed in closed session pursuant to Section 8(e) of the Michigan Open Meetings Act (MCL 15.261 et. seq.).
BUDGET IMPACT
This Memorandum of Agreement does not adversely impact DWSD’s budget. The terms of this agreement were factored into the FY2023 drainage charge rates.
COMMITTEE REVIEW
This item is being presented directly to the full Board of Water Commissioners.
Respectfully Submitted,
Debra N. Pospiech
Debra N. Pospiech, Esq.
Chief General Counsel