DALLAS -- A federal judge ordered Flint and the state of Michigan into mediation over the city’s long term water contract.
U.S. District Judge David Lawson on Tuesday appointed Troy-based attorney Paul Monicatti to facilitate an agreement between the city and the Michigan Department of Environmental Quality.
The DEQ sued Flint in June over its inaction in choosing a long term water contract. The complaint, filed in the United States District Court for the Eastern District of Michigan, seeks a declaration that the city council's failure to act is a violation of the Safe Drinking Water Act and an order that Flint must enter into the long-term agreement with Great Lakes Water Authority – where the city currently draws water from -- negotiated by Flint Mayor Karen Weaver.
Mayor Karen Weaver recommended in April -- with the support of Genesee County, GLWA and state officials -- that the city extend its contract with GLWA for 30-years. Flint was preparing to shift to the Karegnondi Water Authority -- a new bond financed pipeline to Lake Huron that is under construction -- in 2019, with plans to make much needed upgrades to its treatment plant to meet federal standards. The city is legally obligated to repay a portion of the $220 million 2014 bond issue that is financing construction of the authority’s 63-mile pipeline led by Genesee County.
The contract to stay with GLWA would result in about $9 million in savings, because it would lock in a more favorable rate with GLWA and address the $7 million in debt service payments the city is currently obligated to pay on the pipeline bonds.
Weaver said the decision ensured water quality for Fling, which is still recovering from a water contamination crisis after its previous state appointed emergency managers decided to shift water sources and participate in the Karegnondi Water Authority's project.
Under Weaver’s plan the city would recoup about $7 million in annual debt service by transferring its KWA water rights to GLWA. Flint pledged to repay 34% of the $220 million. The city’s bond commitment is estimated at $7 million per year, for 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.
The Flint city council voted in July to postpone the vote on the water plan until later this month, according to a Weaver spokesperson. Flint’s city council has delayed the vote because it wants more time to look at the terms of the longer term water contract and, if required, explore other options.
Rich Baird, a senior aid to Michigan Gov. Rick Snyder, said last month that the council’s inaction is costing the city an extra $600,000 a month because it is paying a more expensive rate under a short-term water contract with GLWA and covering its bond obligation for the KWA pipeline.