DWSD FY2027 Budget Hearing - March 13, 2026
Detroit Water and Sewerage Department FY2027 Budget Hearing - March 13, 2026
The Detroit City Council held a budget hearing for the Detroit Water and Sewerage Department (DWSD) on March 13, 2026, at approximately 6:00 PM. Director Gary Brown presented the proposed FY2027 operating budget, which includes a 3.5% system-wide rate increase, new infrastructure programs, and staffing additions. The hearing covered affordability, capital projects, and customer service improvements. Public comment was limited to one minute per speaker.
Public Comments & Testimony
- Wanda Lowe Anderson, a community advocate from 48217, requested attention to a designated library site on Fort Street that has remained vacant since 1974, stating residents must leave the neighborhood for library services. She asked council to support the development of a library in the underserved area.
- Brother Cunningham (caller) reported on a productive trip to Lansing regarding increased local bus operating funding and encouraged passion in advocacy. He provided his contact information and noted he works without payment.
- Betty A. Byrne, president of DeSoda Else for Black Association, praised Brother Cunningham and urged council to provide him with financial support for his advocacy work. She also requested funding for a land use hearing fee for black clubs ($1,500) and allocation for quarters.
- An iPhone caller (anonymous) asked council to post Zoom transcripts on the website for easier public access and noted communication issues with the water department, describing a failed appointment attempt.
- A caller (owner Papa) from District 7 called for a new library and criticized the use of the Legal News for public notices, stating 80-90% of its funding goes to staffing. She also opposed tree cutting for reservoir installations on Outman Boulevard, asking who authorized it.
- Norrell Hemphill, legal and public policy manager at We the People of Detroit, encouraged viewing the water system as one contiguous system, challenged the GLWA lease agreement (arguing Detroit should receive $218 million instead of $50 million), and supported water affordability using ratepayer funds. He asked council to support House Bills 455 and 5170.
Discussion Items
- Budget Overview: Director Brown presented the FY2027 operating budget, developed to keep rate increases below 4% (proposed 3.5% system-wide). Key factors: affordability, compassionate customer service, public health, employee safety, water/sewer upgrades (lead service line replacement, flood mitigation), and employee focus. Total system-wide revenue requirement is $543.8 million, with a rate revenue requirement of $520 million after non-rate revenues. The increase of $22.5 million is driven by GLWA wholesale charges ($13 million, +57.8%) and personnel expenses ($4.8 million, +21.3%) due to 15 new positions (primarily operations). Non-departmental expenses (77% of costs) include wholesale charges (62%), debt service (18%), and bad debt (16%). Collection rate is in the mid-80s, down from 93% pre-pandemic and 77% immediately post-pandemic; national average is 95%. Director Brown noted bad debt is passed to paying customers in rates.
- Infrastructure Investments: DWSD plans to clean 600 miles of sewers annually, clean 8,000 catch basins, replace at least 3,500 lead service lines (8,000 if federal/state funding received), paint 5,000 fire hydrants, and continue the Lifeline Plan and EasyPay program. A $184 million CDBGR grant will fund the Alley Sewer Repair Program over three years, reconnecting 10,000 private sewer laterals. The program will be evenly divided among seven council districts, prioritizing homes with known separated laterals (letters already sent). Director Brown stated one-third of Detroit homes have lateral problems. The first contracts are expected within 30 days.
- AWR Contract: Asked about the American Water Resources Service Line Protection Program (expiring September 2026, not May as initially thought), Director Brown said DWSD is evaluating performance data (including participation rates and claim utilization) and considering renewal, rebid, or discontinuation. An update will be provided within seven days after receiving latest data from AWR.
- Preventative Maintenance and Leaf Education: Councilmember Santiago Romero raised the issue of leaves clogging catch basins and suggested public education, composting, and vacuuming leaves. Director Brown agreed to produce informational packets and work with DPW. He noted leaves are the biggest contributor to basin blockages.
- Commercial vs. Residential Shutoffs: Councilmember Callaway asked about claims that commercial customers avoid shutoffs longer. Director Brown and General Counsel Scott McGriff stated that DWSD does not differentiate; they sue commercial customers (25 pending lawsuits) and shut off as needed. Commercial collection rates exceed 90%, so fewer shutoffs occur.
- Flooded Basements: Director Brown explained that 90% of basement flooding complaints are due to private sewer lateral disconnections, not main breaks. The $184 million grant program aims to address these. He noted 200 complaints from recent rainstorms; crews are working 12-hour days.
- Infrastructure Technology and AI: Councilmember Young inquired about 4D printing, smart materials, and AI for predictive maintenance. Director Brown said AI projects are underway internally and with the city’s IT team (Redwood AI for Oracle). He noted water pipes are pressurized and harder to inspect than sewers; a 42-inch main on Jefferson (installed 1875) will be decommissioned and replaced with two 12-inch pipes. The 54-inch GLWA pipe in Southwest Detroit (installed 1970) failed prematurely, requiring full replacement. Councilmember Young provided a cost-benefit analysis showing $861 million savings over 10 years with $200 million investment. Director Brown agreed to review.
- GLWA Lease Agreement: Councilmember Johnson asked about the $50 million annual payment from GLWA and the possibility of renegotiation. General Counsel McGriff explained the lease is part of a complex 40-year agreement (until 2055, automatically extended if bonds outstanding). Renegotiation would be difficult and could open other terms unfavorable to Detroit. Director Brown noted additional benefits: $22 million owner’s premium, $13 million shared services, and $1 billion in debt refinancing savings due to GLWA’s AAA bond rating. The $50 million is not cost-of-living adjusted. Pension payments for 10 years were front-loaded.
- Water Affordability and Lifeline Program: Director Brown stated 1.8% of household income is the target for affordable water. Lifeline currently serves ~4,500 households (funded at $4.5 million), down from 30,000 when $50 million was available. EasyPay has 42,000 customers. Combined, ~50,000 households receive assistance (out of ~150,000 households in Detroit). He called for state/federal funding for a permanent Lifeline source, noting that customers pay when bills are affordable. Councilmember McCampbell expressed concern that 3.5% annual increases could worsen affordability and increase bad debt.
- Contractor Performance: Councilmember McCampbell asked about contractor oversight. Director Brown acknowledged training deficiencies for inspectors and hired an internal auditor to audit contractor accounts. General Counsel McGriff stated that contractors must fix shoddy work, and DWSD is revamping procurement to include past performance history. Lashonda Davis added that DWSD is withholding or delaying payment until work is completed satisfactorily.
- Urban Farmers and Wabash System: Councilmember Johnson raised issues with urban farmers accessing water connections. Director Brown said they should get permits and install new lines, noting that 15 new staff will help service levels, but priority remains on emergency complaints. Deputy Director Sam Smalley is working with urban farmers.
- Alley Collapses: Councilmember Miller reported collapsed alleys in District 5. Director Brown confirmed these are often caused by separated sewer laterals and will be prioritized under the $184 million program. He offered to do a tour with her.
- Brown Water on Jefferson: Councilmember Miller reported brown water calls after a water main repair. Director Brown said crews will flush fire hydrants the next morning; no boil water advisory is needed (turbidity, not bacteria). Bottled water will be delivered to affected homes. He acknowledged the issue is common and easily fixed.
- Grants: Councilmember Waters asked about recent grants. Lashonda Davis stated DWSD is applying for multiple grants, including an EPA WIN grant ($5 million for lead service lines at schools), BRIC federal grants, and others. She noted a decrease in ARPA funds.
- Closing Statements: Director Brown praised the administration’s neighborhood focus and thanked staff for working through extreme weather (cold, water main breaks, flooding). Councilmember Young reiterated his recommendation for AI investment.
Key Outcomes
- No formal vote was taken on the budget; the hearing was part of the budget review process. Councilmembers will submit written questions and continue evaluation.
- DWSD will provide an alley repair list to each council district and coordinate tour for District 5.
- AWR contract evaluation data will be shared within seven days.
- Public education materials on leaf prevention will be developed with Councilmember Romero.
- Director Brown committed to flushing fire hydrants on Jefferson the next morning and delivering bottled water.
- The administration will work with council on prioritizing sewer lateral repairs using the $184 million grant, with council input on lists.
- Council President Corley noted budget review continues, with attention to subsidy reductions (e.g., solid waste fund from $17M to $9M) and the shifting of the Black grant from HRD to OCFO.
- Next budget hearing: Monday, March 16, 2026, at 10 AM.
Meeting Transcript
Well, thank you for your patience. I know we're about an hour behind on this particular hearing, but uh Director Brown, you're used to that. You know how these hearings go. I've been on both sides of the seat. Thank you for having me. I uh Gary Brown, director of the Detroit Water and Sewer Department. I've been through at least four of these uh budget hearings sitting where you sit. So uh however I I don't remember being here at 6 o'clock in the evening, but I've got about I've got about a half billion dollars worth of line items to go through, and I'm gonna try to go through them as quickly as possible. Um can I start out by maybe having my fantastic staff introduce themselves in their the title of their position Scott? Good afternoon, uh City Council. My name is Scott McGriff. I'm the General Counsel and Chief Compliance Officer at the Detroit Water and Sewage Department. Good afternoon, honorable council. My name is Lashonda Davis, and I am the director of finance at DWSD. Good afternoon. Uh my name is Mr. Garalman, I'm the Chief Financial Officer at DWSD. All right, I'm I'm hoping we're going to be able to pull up the uh the presentation. I've got somebody here to run it, so she's so now they're loading it up. So I'll I'll get started and they'll they'll catch up with it. Okay. Floor is yours. In alignment with the uh honorable Madam Mayor Sheffield's vision, the DWS the executive team considers these factors in developing this budget. Affordability. Keep rates increases below four percent and support water conservation initiatives. Uh I think the uh the mayor said to me you were very good for the last 10 years at keeping the rates below 4 percent when the lease required it, and I expect you to continue to do the great job that you did. So you'll see that we stayed under 4 percent, even though the lease agreement does not require that anymore. Compassionate and responsive customer service expanded through providing service in neighborhood-based hubs and working with the administration uh to model holistic services on a wide citywide basis. So I see um I I can envision uh working with the administration. Maybe we'll try to find a church in every one of your district seven churches, and we'll put our customer service representatives along with other city representatives that provide services so that we can have a hub rather than having people come downtown uh at an inconvenient location. We'll have hubs all over the city in order to be able to deliver uh services. All DWSD needs is an internet, uh customer service rep with a headset and a computer, and we can do anything uh from that site that we can do uh from the office. Operations that support and preserve public health, meet or exceed all federal, state, and local regulations. We do that uh as a course of business. Employee and asset safety. I've I've I've been to enough funerals uh in my time with the city, especially in the police department, that I don't want any of my employees to be seriously hurt or die in one of these holes that they're trying to repair an asset. So safety is a big concern. Water and sewer upgrades, including lead service line replacement, flood mitigation, and increasing regional projects in the city by advocating on the Great Lakes Water Authority Board of Directors for Detroit residents. And then finally, employee focus, training, retention, and recruitment. Here's the highlights of the budget that I'm gonna address. The proposed FY 2027 operating budget was developed with the goal to keep the rates affordable, and at the same time, not compromise on service level initiatives. The budget incorporates expenditures required to operate DWSD, both the water and sewer uh portions of the operation. These expenditures become the basis for determining determining the revenues required to operate and in terms and is termed as revenue requirement. Departmental or direct expenses increased by $1.4% or $6.1 million, and non-departmental or indirect expenses increased by 3.3% or $13.4 million over 2026. Revenue finance capital is projected at $5.3 million, an increase of $3 million. The increase in revenue requirement of the $22.5 million for 2027 is primarily due to increases in the Great Lakes Water Authority wholesale charges, $13 million or $57.8%. Also personnel expenses, $4.8 million or $21.3%. Personnel cost increase due to the addition of a net 15 new positions. These new additions are primarily for the operations and are critical to improving DWSD service level and backlog reduction. The total system wide revenue requirement of $543 million $543.8 million is offset by non-rate revenue of $24.1 million, resulting in a rate revenue requirement of $520 million.
openpublica.com