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Criminal Justice Center Update: County Reaches Tentative Deal with DTE on Central Utility Plant

Excavation work 55% complete, foundation work 25% complete for overall CJC project

DETROIT - Wayne County Executive Warren C. Evans announced today that the County has reached a tentative agreement with DTE Energy Services, a non-regulated subsidiary of DTE Energy, to construct and operate the central utility plant for the new criminal justice center on East Warren Ave. The deal, which is being submitted to the County Commission today for approval, estimates the cost of the plant to be between $32 million and $37.7 million.

"As construction advances, the central utility plant was the last major remaining item from a county perspective and we are pleased to reach a tentative deal with DTE Energy Services to construct and operate it," Evans said. "We are in a position to cover this component without jeopardizing our rainy day fund, which we've systematically built up after getting the county back from the brink of bankruptcy and on a stable financial foundation."

The central utility plant's purpose is to distribute hot and cold water for heating and cooling and also to distribute electricity and gas throughout the criminal justice center. Building the central utility plant was included in the Development Purchase and Sale Agreement approved by the Commission on June 7, 2018, which left open the cost of building the central utility plant because of the time it would take to determine the price and negotiate a deal with a utility provider.

"Agreeing to the deal with this one open issue allowed demolition and construction work to begin and continue for almost a year," Deputy County Executive Richard Kaufman said. "Any delay from the central utility plant would have caused the construction costs of the criminal justice center to increase significantly and further delay the savings the County will realize from the new facilities."

Under the tentative deal with DTE Energy Services, the County will pay up to $35.2 million to construct the central utility plant while Rock Development will contribute $2.5 million based on the gross maximum price of approximately $37.7 million. The cost of building the central utility plant is not included in the $533 million criminal justice center agreement under which the County pays $380 million and Rock Development covers the remainder, including construction overruns.

As a result of operational savings and higher than anticipated property tax collections, the County will be able to pay for the central utility plant without significantly impacting its current fund balance which is over $140 million.

At the time the Commission approved the Agreement on the criminal justice center, the parties anticipated the County would reach a deal with Detroit Renewable Energy to provide all the utilities to the criminal justice center. Within a short time after the Commission approved the Agreement, Detroit Renewable Energy was sold and executive leadership changed. The new owners of Detroit Renewable Energy made a proposal to the County to build the central utility plant for as much as $51 million. At that point, the County began discussions with DTE Energy Services and negotiated with both entities and eventually reached an agreement with DTE Energy Services to build and operate the CUP.

Construction Update: Structural Work to Become More Visible in Fall

The deal to build the central utility plant comes as excavation and foundation work continues on the criminal justice center. Structural work is expected to become more visible in the fall.

Demolition, which started last fall, was completed earlier this March. Ongoing mass excavation began in February and is about 55% complete. Ongoing foundation work began in late March in conjunction with some utility work. This work, which includes laying rebar and pouring concrete, is currently about 25% complete.

"We are pleased with the construction progress, but 2022 can't come quick enough. That's when the County will start realizing the cost-savings and operational benefits from the state-of-the-art facility," Evans said.

The Development Purchase and Sale Agreement for the criminal justice center project is available at waynecounty.com/jail.

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