DALLAS -- Flint, Michigan is spending an extra $600,000 a month because of its indecision over its future water use.
According to Rich Baird, a senior aid to Michigan Gov. Rick Snyder, that is the cost of paying for the more expensive rate under a short-term water contract with the Great lakes Water Authority – where the city currently draws it water from – plus the cost to cover the city’s bond obligation for the Karegnondi Water Authority's partially bond-financed pipeline to Lake Huron that is under construction.
“Given that the city of Flint is paying for two water sources and does not have a favorable long term contract with GLWA, the lack of action is costing the city an extra $600,000 each month,” Baird said at a meeting with the Flint Water Interagency Coordinating Committee on Friday. “The city has projected that it will deplete its water and sewer fund reserves by the 4th quarter of 2018, which will necessitate a significant rate increase for residents and business if the matter is not resolved.”
Mayor Karen Weaver recommended back in April with the support of Genesee County, GLWA and state officials that the city extend its contract with GLWA for 30-years. The contract 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.
Weaver said the decision ensured water quality for the city that is still recovering from a water contamination crisis that stemmed from the decision of its previous state appointed emergency managers to shift water sources and participate in the KWA project.
Under Weaver’s plan the city would recoup the roughly $7 million in annual debt service by transferring its KWA water rights to GLWA. Flint pledged to repay about 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.
As Flint awaited the completion of the Karegnondi pipeline, it drew water from the Flint River and improperly treated it at a city plant, corroding pipes and causing contamination from lead. Flint was preparing to shift to KWA supplied, untreated water in 2019, with plans to make much needed upgrades to its treatment plant to meet federal standards. In April Weaver dropped the plan to make the switch to the bond-financed pipeline and recommended the city continue to purchase water from GLWA.
Weaver said sticking with GLWA supplied and treated water is more affordable and avoids the risk of another supply shift. Switching to long term contract with GLWA would result in a $2.4 million savings because GLWA would charge a more favorable rate that isn’t available under the current short term contract the city negotiated with the water provider.
The Flint city council last Wednesday voted to postpone the vote on the water plan for another 30 days, according to a Weaver spokesperson. On June 23 the council voted to extend the city’s contract with GLWA to September. 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.
"The council’s inaction has necessitated the state petitioning of the federal court to determine of property authority exists for Mayor Weaver and the state of Michigan to move forward on the execution of the agreements to secure a long term water source on behalf of the people of Flint,” Baird said.
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 GLWA negotiated by Flint Mayor Karen Weaver.
Baird said that a preliminary hearing between the MDEQ and the city is slated for Aug. 1 before Detroit U.S. District Judge David Lawson.