Flint city council approves 30-year water contract

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DALLAS -- The Flint, Mich., City Council ended months of wrangling and signed off on a 30 –year contract for water delivery with the Great Lakes Water Authority.

The council, faced with a deadline set by U.S. District Judge David Lawson, voted 5-4 in favor of a newly-negotiated version of the 30-year agreement with GLWA during a special council meeting Tuesday.

The contract saves the city about $9 million by locking in a more favorable rate with GLWA and addresses $7 million in debt service payments the city is currently obligated to pay on bonds issued to finance the Karegnondi Water Authority pipeline under construction.

After Flint's water contract with Detroit ended, the city's emergency manager shifted to Flint River water as the city awaited completion of the new KWA pipeline. Flint did not treat the water properly, leading to the contamination crisis that drew national attention and was the subject of congressional hearings and criminal charges.

The version signed by the council on Tuesday also includes amendments to the original contract negotiated in April between Mayor Karen Weaver’s administration and GLWA, the authority created last year to serve as a regional water provider and includes the Detroit system. Weaver said sticking with GLWA supplied and treated water is more affordable and eliminates the risk of another supply shift. Weaver's administration has been at odds with the city council over the water deal.

“I still don’t think it’s the best, but there are now some deal sweeteners in there that will certainly benefit the citizens of Flint,” Council President Herbert Winfrey said at Tuesday’s special council meeting.

The amendments introduced at a special council meeting held on Monday morning promise the city a seat on the GLWA board, which is responsible in determining water rates. The contract also asks that $750,000 will be granted to the city for water bill relief. The funds will come from “some combination” of funds from the GLWA Water Residential Assistance Program (WRAP) and the State of Michigan Reserve Fund.

The new version also calls for $100 million in relief funds from the Water Infrastructure Improvements for the Nation Act be immediately released from the state to Flint. In March, the EPA awarded a $100 million grant to fund drinking water infrastructure upgrades in Flint.

On Monday Lawson heard arguments from the Michigan Department of Environmental Quality urging him to authorize and order the Mayor to sign off on the water deal, bypassing the city council. Lawson denied the request and ordered the council to make a decision by Tuesday evening. The judge ordered council members into mediation talks with the MDEQ, representatives of the GLWA, the KWA, the Genesee County Drain Commissioner, and Flint's legal counsel.

The council had requested Lawson an additional 7 days to allow newly elected council members to work through the contract negotiated between Weaver’s administration and GLWA back in April. Councilman Eric Mays said on Monday that the council had already worked in amendments to the contract and he hoped that with the extra time they could negotiate a better deal for the city.

Flint’s city council had delayed the vote on the contract for several months. The city in the meantime made a series of month-to-month extensions with GLWA that Weaver said costs the city much more for water than it would have cost had the long-term recommendation been approved months ago as planned.

Since July 2017, the city has continued to make the KWA bond payment of $444,006 a month. As part of the long term contract previously negotiated with GLWA, the KWA bonds that are currently being paid by Flint would continue to be paid, but GLWA would issue credits to the City of Flint to offset the cost.

GLWA will receive the rights to the raw water that Flint has through the KWA and Flint will receive approximately $1.8 million in savings for the 30-year model contract, as compared to the non-contracted charges it otherwise would have incurred.

Flint is responsible for about 35% of the debt service on the $220 million of KWA bonds, which are to be repaid over the next 28 years. If Flint doesn't make its bond payment, Genesee County — the other primary partner in the KWA — is on the hook to take over the city's debt, because the county pledged its full faith and credit to the project.

In addition to the bond payment savings, right now the city is paying GLWA more for water every month due to the higher rate of the month-to-month payment versus the payment negotiated in a long-term deal, which costs the City $1.14 million each month.

Flint said it has budgeted $12.9 million for water with GLWA for the year. If the city continues to operate at the current rate/cost with short-term deals, it will ultimately cost the city $13.7 million or more this fiscal year.

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