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Topic: High water rates were to cover city shortfalls!
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untanglingwebs
El Supremo

New Flint proposal would use water and sewer fund to eliminate $19.1 million deficit




A look at Flint water plant's facilities

The Flint water plant is treating Flint River water for one month and will add softening to its process for the first time since 2007. The plant is running in preparation to make the Flint River the primary drinking water source for city residents while the Karegnondi Water Authority pipeline is built. Jake May | MLive.com



Dominic Adams | dadams5@mlive.com By Dominic Adams | dadams5@mlive.com

on October 09, 2013 at 6:00 PM, updated October 09, 2013 at 6:09 PM



FLINT, MI – A new proposed deficit elimination plan would allow Flint to climb out of its $19.1 million hole in two years, said the city's departing emergency manager.

The measure is possible because Flint ended the 2013 fiscal year with a $4.2 million surplus, city officials said. That surplus reduced the deficit to $14.9.

Another $1 million would be set aside from the general fund in 2014 and would put the deficit at $13.9 million, the city said.

The city would borrow $10.8 million from the water and sewer funds in 2015, according to a plan outgoing Emergency Manager Michael Brown detailed in his quarterly statement to the Michigan Department of Treasury. The debt service would be paid from the capital improvement fund.

“It’s a huge thing because it means we wouldn’t have to borrow a lot of money from the state,” Brown said. “This is a formal way of borrowing that’s legal.”

Another $1 million would be set aside from the general fund in 2015, there would be $1.5 million set aside in 2016 and $550,000 in 2017 to clear the deficit.

The previous deficit elimination plan called for the city to sell $12 million in bonds and erase the remaining $7.1 million by setting aside money from the general fund over the next five years. The state, however, has never committed to the city's request for the bonds.


Brown said the idea for the new deficit elimination plan came from Finance Director Jerry Ambrose.

Related: Read Brown’s report here.

Ambrose said the concept was discussed in Ecorse, which was under control of an emergency manager until April.

“This is kind of looking internally and can we look at the liabilities we have and, in essence, pay ourselves back,” Ambrose said, adding this is the third deficit elimination plan Flint’s submitted to the state. “Obviously, treasury has to weigh in and say they agree. We’re confident – saying it’s worth vetting with treasury.”

If the state approves the measure it would take two years for Flint to get out of its deficit.


“It was something we didn’t know we could do before,” Brown said of the new proposal. “I’m really pleased that we were able to put the concept together, have a legal opinion that says we can do that and will allow us to take care of the deficit in a much swifter fashion.”

Treasury Spokesman Terry Stanton said his department just received the proposal on Tuesday, Oct. 8, and said it is too early to comment on measure.

Brown said the 2013 surplus was possible because of a 25 percent increase in water and sewer rates, passage of a 6-mill property tax increase for police and fire, eliminating 20 percent of the city’s workforce, 20 percent pay cuts for remaining workers and the restructuring of health and retirement benefits for current employees and retirees.

“I think we did much better on health care than we anticipated,” Brown said.

City Council President Scott Kincaid said the latest proposal to eliminate the deficit is exactly why Brown raised water and sewer rates so high.

“That proves the point that that’s the reason they raised the water and sewer rates – so they could pay back the city’s deficit,” Kincaid said. “I’ve been saying that all along. That’s what got us in the problem before.”

Kincaid had his lawsuit against the city dismissed in June. The suit claimed the city improperly raised rates in 2011 and misspent the money collected.

“It just confirms even more why my lawsuit important,” Kincaid said.

He said he suspects the state won’t accept the proposal because then Flint would not need new Emergency Manager Darnell Earley.

The Flint Journal could not reach Earley or Mayor Dayne Walling for comment.

Dominic Adams is a reporter for MLive-Flint Journal. Contact him at dadams5@mlive.com or 810-241-8803. Follow him on Twitter, Facebook or Google+.
Post Wed Oct 09, 2013 6:46 pm 
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untanglingwebs
El Supremo

Orr says he'd consider using Detroit water funds for pensions ...


www.detroitnews.com › Metro › Wayne County

Sep 18, 2013 · Orr says he'd consider using Detroit water funds for pensions, bills. Robert Snell, Christine Ferretti and Steve Pardo; The Detroit News; Comments
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Cries of Betrayal as Detroit Plans to Cut Pensions - NYTimes.com


www.nytimes.com/2013/07/22/us/cries-of-betrayal-as-detroit-plans-to...

Jul 22, 2013 · Now there is a new worry: Detroit wants to cut the pensions it pays retirees like Ms. Killebrew, who now receives about $1,900 a month. “It’s been ...

EM ORR’S PLAN FOR DETROIT: PHONY DEBT MORATORIUM, …


voiceofdetroit.net/2013/06/20/em-orrs-plan-for-detroit-phony-debt...

Three of the six insurers who wrap the city’s debt pledged to cover ... the Detroit Water and Sewerage ... water, Belle Isle, pensions » Cancel Detroit’s ...
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End Wall Street's Theft of Pensions: Re-Enact Glass-Steagall
Post Wed Oct 09, 2013 6:55 pm 
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untanglingwebs
El Supremo

September 18, 2013 at 1:00 am
Orr says he'd consider using Detroit water funds for pensions, bills
Robert Snell, Christine Ferretti and Steve Pardo
The Detroit News

Siphoning water repair money to fund pensions could harm Detroit's aging system, which needs repairs. (David Coates / The Detroit News)
Detroit— Emergency Manager Kevyn Orr is considering taking $1.2 billion designated for repairing the city’s water and sewer system and spending the cash elsewhere, possibly on retiree pensions.

Orr made the disclosure Monday under oath during a nearly eight-hour deposition related to the city’s historic bankruptcy case, according to a transcript obtained by The Detroit News.

It is unclear under what circumstances Orr would consider funding Detroit retiree pensions with money paid by city and suburban water and sewer customers. A major pillar of his plan to restructure the city and its $18 billion in debt includes pension cuts, a proposal that triggered a fight with unions and retirees who want to kick Detroit out of bankruptcy court.

In the deposition, Orr did not commit to taking money from the Detroit Water and Sewerage Department, and there were no indications his team has developed a plan.

“In the eyes of retirees, they don’t care where the money comes from as long as we get the money,” said Michael VanOverbeke, an attorney for the city’s general pension fund.

The development sparked complaints from suburban leaders, including Macomb County Executive Mark Hackel, who said spending repair money on retiree pensions would be as unpopular as selling masterpieces from the Detroit Institute of Arts to satisfy creditors.

“I would expect this will come with an equal, if not more intense, negative reaction,” Hackel said. “This is going to come with a lot of push-back.”

Retirees, he added, deserve their pensions and shouldn’t be punished for the mismanagement of the system.

“But water system customers shouldn’t be punished either. It’s a very concerning issue for me,” Hackel said. “For the taxpayers of the region to be punished for mismanagement of the (pension) funds — it’s not right.”

EM was under oathOrr was questioned under oath Monday by a lawyer representing city retirees during a daylong probe aimed at bolstering a bid by creditors to show that the city is not eligible for Chapter 9 relief because, among other reasons, the bankruptcy would slash constitutionally protected retiree pensions.

The questioning focused largely on whether the state constitution prevents Orr from cutting vested pensions but also shed light on how much money the city could get by leasing parts of the Detroit Institute of Arts collection.

At one point, lawyer Anthony Ullman, who represents the official committee of Detroit retirees, asked Orr about using money from the Detroit Water and Sewerage Department’s capital fund to satisfy other obligations, including pensions.

“Can you tell me how much you believe or understand the city can take from the capital fund from DWSD in order to satisfy its ongoing obligations if it chose to do that?” Ullman asked.

“I didn’t say that we would take any capital, I said we will, we would consider it,” Orr said, according to a transcript filed in U.S. Bankruptcy Court on Wednesday.

Siphoning water repair money could harm an aging water and sewer system that serves more than 4 million customers across southeastern Michigan. It is one of the country’s largest public utilities and needs major repairs.


“Obviously the preference would be not to do this, but he’s being honest when he says it’s a possibility,” said Douglas Bernstein, a Bloomfield Hills lawyer and expert on municipal bankruptcy.

“He’s got to look at all sources of funds and be creative and not preclude anything.”

$1.2B in upgrades neededThe water and sewer system needs more than $1.2 billion in improvements within the next four years, according to city records.

In January, the city proposed spending $322.4 million this fiscal year on water and sewer projects.

“To use the (Detroit Water and Sewerage Department) as some kind of cash cow to pay off other obligations would be met with tremendous opposition,” said state Rep. Kurt Heise, R-Plymouth Township.

Orr said spending water department money on another purpose is problematic.

There might be bond restrictions, or federal court orders, preventing the money from being spent on other obligations, Orr said.

The water department plays a major role in Orr’s proposed restructuring of the city. He has proposed spinning off the department to an outside group.


An Orr spokesman declined Wednesday to elaborate about the emergency manager’s deposition.

“We are not commenting on deposition testimony,” Orr spokesman Bill Nowling said.

Mike Mulholland, vice president of AFSCME Local 207, which represents about 950 water department employees, said he has no idea about what type of leeway Orr may have “to do anything like that.”

“That’s really nuts,” Mulholland said, noting that funding for improvements comes from bonds sold for capital improvements, not operations or maintenance. “I don’t know what laws are being overridden now. Now it’s suddenly OK because Kevyn Orr is in town? That sounds crazy to me.”


Orr also was questioned about the DIA artwork during the AFSCME deposition. The city has hired Christie’s Appraisals, the New York-based international auction house, to put a price tag on the artwork.

Orr said a sale of artwork to pay creditors is possible. So is leasing pieces of art.

But making money off a lease deal is difficult, Orr said.

“You would have to have the right pieces at the right time at the right market to generate cash,” Orr said during the deposition.

Orr was asked how much money could be generated by leasing artwork.

“There was some discussion about $1 million, for instance, or something like that, but it’s nothing substantive,” Orr said.

AFSCME officials on Wednesday said they want to force Orr to answer questions under oath for a second time and talk about conversations with Gov. Rick Snyder before the city filed bankruptcy July 18.

During the deposition, Orr refused to answer some questions about communications he had with Snyder and the governor’s team, citing attorney-client privilege, according to a bankruptcy filing Wednesday by AFSCME .


rsnell@detroitnews.com
(313) 222-2028




From The Detroit News: http://www.detroitnews.com/article/20130918/METRO01/309180089#ixzz2hGwtJEdP
Post Wed Oct 09, 2013 7:02 pm 
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untanglingwebs
El Supremo

Kincaid is absolutely right about the misuse of the water and sewer funds. The financial review committee that placed Flint into an Emergency manager situation noted misuse of the water and sewer fund under the Walling administration. Also significant amounts of funds were siphoned from the water and sewer funds to build Smith Village because of commitments made by walling and Eason to HUD.

Recently Brown in his resignation letter bragged about the $40 million in pooled cash up from $10 million. Pooled cash is the money the city uses for investments and the fund had dropped incredibly low. Brown noted the Police Millage which Brown previously said he would save and the 25% increase in water rates helped build the surplus. Brown never hired the new officers hat were anticipated fro the millage two years ago.

Water and sewer funds are by law only to be used for water and sewer projects and costs. Even when borrowed, they must be paid back with interest from the department that borrowed the funds. Since the pension issues are continuing and ongoing , how will these funds be paid back? Brown never addressed that issue.

In the meantime, more people will leave the city because of the cost of water and sewer. Flint residents are paying in one month what some county residents pay in three months and the county buys water from the city.

Water is the gold of the future. Lawsuits in the west have been ongoing o this subject for over 20 years. What about those who cannot pay the costs? There have been some Republicans that recently said that water was not a right that citizens could expect. Who will be deemed worthy of water?
Post Wed Oct 09, 2013 7:19 pm 
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untanglingwebs
El Supremo

Rand Paul: Water is not a right, giving water to others is ...


freakoutnation.com/2013/08/26/rand-paul-water-is-not-a-right-giving...

Rand Paul has made some mind boggling statements and this one is no different. The Kentucky Republican gave a speech which was followed by a Q&A with medical …
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Rand Paul: Water is not a right, giving water to others is ...


www.democraticunderground.com › … › General Discussion (Forum)

Aug 26, 2013 · August 26, 2013 By Anomaly Rand Paul has made some mind boggling statements and this one is no different. The Kentucky Republican gave a …
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Rand Paul: Food, Water, And Healthcare Should Not Be …


www.addictinginfo.org/2013/08/27/rand-paul-food-water-and...

For Rand Paul to say food and water are not human rights is to grant corporations permission to maximize commercial profits at the expense of those in need.
.…
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Rand Paul: Food, Water And Health Care Are Not Human Rights


progressivepopulist.org/2013/08/26/rand-paul-food-water-and-health...

Rand Paul: Food, Water And Health Care Are Not Human Rights ... on whether health care’s a right or not,” Paul, in a red tie, white button-down shirt, ...
Post Wed Oct 09, 2013 7:26 pm 
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untanglingwebs
El Supremo

Rand Paul: Water is not a right, giving water to others is servitude


August 26, 2013
By Anomaly

Rand Paul has made some mind boggling statements and this one is no different. The Kentucky Republican gave a speech which was followed by a Q&A with medical students at the University of Louisville.

Paul was asked whether health care is a commodity or not.

National Review reports, “There’s a philosophic debate which often gets me in trouble, you know, on whether health care’s a right or not,” Paul, in a red tie, white button-down shirt, and khakis, tells the students from the stage. “I think we as physicians have an obligation. As Christians, we have an obligation. . . . I really believe that, and it’s a deep-held belief,” he says of helping others.”

First off, not everyone is a Christian. This is not a Christian nation, but one with various held beliefs.

Paul then asked rhetorically, if students have a right to food and water. “As humans, yeah, we do have an obligation to give people water, to give people food, to give people health care,” Paul muses. “But it’s not a right because once you conscript people and say, ‘Oh, it’s a right,’ then really you’re in charge, it’s servitude, you’re in charge of me and I’m supposed to do whatever you tell me to do. . . . It really shouldn’t be seen that way.”

That sounds familiar.

“Access to water is not your right. Believing you have a right to water – is an extreme belief. Water is a raw material and a “foodstuff” that should be privatized and commercialized.”

That quote is from the Nestles corporation.


I’ll take his GOP Jesus and raise him my long-haired Liberal Jesus: When Jesus walked the Earth, did He pay for water? Would He charge the poor for water? Did He say, “LOL! I can’t heal you .., that’s Socialism!”

WWJD, Rand Paul? It’s a fair question to a man that thinks this is a Christian nation.
Post Wed Oct 09, 2013 7:32 pm 
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untanglingwebs
El Supremo

Water wars: Projects grow, ideas flow as cost of water rises

BY SUSAN DEMAR LAFFERTY slafferty@southtownstar.com January 11, 2013 9:50PM


Updated: February 14, 2013 6:43AM



Homeowners and businesses throughout the Southland already have seen in their ever-rising bills what officials are saying these days about water: It is the new oil.

But fueled by the second of four annual rate increases imposed by the city of Chicago for Lake Michigan water, towns throughout the region are seeking more efficient, more conservative ways to provide this valuable natural resource so they can stem the tide of rising prices and ensure an ample supply for the future.



Just as motorists have turned to more fuel-efficient vehicles and more conservative driving habits, officials here have tapped into a variety of ideas: build new water delivery systems, buy pipelines from private companies, upgrade existing infrastructure and reconsider using wells.

“Water is a very hot topic right now,” Oak Lawn village manager Larry Deetjen said. “Water wars are occurring all across the country, not just in the Chicago area.”

To secure its future supply, Oak Lawn plans to ink a new 40-year deal with Chicago that would allow it to double the water supply for the village and the 12 other Southland towns that tap into Oak Lawn’s delivery system.

Oak Lawn last week approved interim water rate hikes to those towns — passing on Chicago’s 15 percent increase — and is negotiating to have all of them sign a 50-year master water supply agreement, detailing how all will share in an estimated $162 million infrastructure upgrade of the Oak Lawn system, which is separate from Chicago’s infrastructure upgrade.



The four-year project will provide a 60-inch water main — an increase from the existing 40-year-old, 48-inch line — and an alternate line in case of a main break.

The upgrades also call for emergency backup, upgraded pumping stations with energy-efficient turbines, and improved technology to detect problems in the system before there is a water main break, Deetjen said. They are now working on design drawings and will seek low-interest loans.

“This could only happen with tremendous cooperation,” Deetjen said, calling the project, “a model of intergovernmental cooperation.”

Each town will know what others are paying and rates can be adjusted every year. The agreement also establishes a formal advisory committee.

“We all agree this is the most effective solution,” Tinley Park village manager Scott Niehaus said. “Chicago water is a known entity. It’s not going anywhere. It’s not a private company, so there is no profit motive. By law, Chicago cannot charge us more than it charges its own residents.”

“It’s no secret the rates will be rising,” Mokena village manager John Downs said. “We just don’t know how much or when.”

Water rates in Mokena already went from $5.46 per 1,000 gallons to $5.86 as of Jan. 1. For a family using 9,000 gallons of water per month, that’s a $43-per-year increase.

In Orland Park, the average customer will see an annual increase of $64.26, according to the village. Of that, $40.61 is due to Chicago’s increase, while $18.80 is attributed to Oak Lawn’s increase and $4.86 due to Orland hiking its operating and maintenance charge by 3 percent.

In Flossmoor, homeowners will pay more for water improvements regardless of whether their actual water bill rises. Voters in November approved a bond issue allowing the village to spend $7.2 million over the next eight years to replace old water mains and plug the leaking of one-third of its water, village manager Bridget Wachtel said.

The owner of a $200,000 home will pay an extra $107 per year, or about $9 per month, according to village estimates.

Fighting back

While many Southland officials are fed up with Chicago’s rising rates, Deetjen said Chicago’s system is recognized as the “best in the world.”

“It is the best example of how to have a good, safe quantity of water. We’re fortunate to be a neighbor to a world-class city,” he said. “There has never been a disruption in water service. That’s the key.”

Alsip Mayor Patrick Kitching, however, said four years of steady increases from Chicago — 25 percent in 2012, and 15 percent each year through 2015 — is “just insane.”

His town and six others have formed the South Suburban Joint Area Water Agency in hopes of bypassing Chicago and tapping into the lake at Whiting, Ind., with their own pipeline.

The agency includes seven key members: Midlothian, Markham, Alsip, Harvey, Robbins, Blue Island and Calumet Park. Harvey sells water to Homewood, Flossmoor, Dixmoor, Hazel Crest, East Hazel Crest and Posen, while Alsip provides water to Crestwood and Palos Heights.

The agency has moved forward with a $5.5 million bond issue for a feasibility study and hopes to have cost estimates this spring, at which time it will decide whether it pays to move forward.

“We are not buying water from Indiana,” Midlothian Mayor Terry Stephens said. “We are taking it from the same lake. We will treat it and transmit it ourselves. I can’t say the costs will be lower, but we can prevent further increases.”

It is not just a matter of cost, but it is also “very important” to control the system, Blue Island Mayor Don Peloquin said, especially for towns that don’t want big water consumers — such as MetroSouth Medical Center in Blue Island, and the Coca-Cola plant in Alsip — to be chased away by high water bills.

“Chicago has been a good neighbor and I’m sure its increases are justified,” Peloquin said. “It has an antiquated system. It needs to upgrade the whole system and the best way is to pass the cost on.”

But if these towns can do it cheaper on their own, why not do it, he said. If it proves to be a cost-effective move, the South Suburban Joint Area Water Agency hopes to have pipes in the ground by 2015-16.

“It’s either this or be stuck with Chicago and keep getting burned,” Kitching said. “Why should we tolerate what the city is doing to us? This is the future of our community.”

But creating a new water system is “extraordinarily difficult” to do, said Daniel Injerd, of the Illinois Department of Natural Resources. Not only will these towns face financial and technical challenges, but also interstate issues. Members of the South Suburban Joint Area Water Agency would be subject to Indiana regulations in addition to Illinois’.

Chicago has a huge water system that is built and paid for, Injerd said. Creating a new system would be like “building a highway next to an existing one,” he said.

It’s “inevitable” that rates go up, Injerd said, noting that there has been a “significant uptrend” in water rates in the last five years. But that revenue should be used to maintain the system and not for something else, he said.

Brett Postl, of Postl-Yore and Associates, the engineer for the project that would bring water from Whiting, conceded it’s “a very big project.”

“Everyone is looking at the cost of infrastructure over time, and operation and maintenance costs. Very preliminary numbers say it would be cost-effective,” he said. “Water is not going to be cheap .”

A route for this new system has not yet been established.

More towns and teamwork

Water itself is not getting more expensive, according to Josh Ellis, director of water resource programs for the nonprofit Metropolitan Planning Council. But it is more costly to capture, clean, transport and pump it, and pay for the associated energy, labor, chemicals and infrastructure projects to reduce leaks.

Rates need to keep pace with those costs, he said.

“Often, we do not pay for the true cost of water. We defer capital improvement projects and maintenance or subsidize water systems with other revenue. Water services are not free, and people are waking up to that,” Ellis said.

Public partnerships, such as Oak Lawn’s system and the South Suburban Joint Area Water Agency, are a more efficient and equitable way to provide water than going it alone or using a private company, according to Food and Water Watch, a Washington, D.C.-based nonprofit that advocates for access to safe and affordable water.

It claimed on its website that a typical Illinois household with Lake Michigan water pays more than twice as much for water service from a privately owned company than from a municipality.

Homer Glen residents — who get Lake Michigan water via Illinois American Water — are well aware of that.

According to Homer Glen village manager Cameron Davis, village customers are paying $9.01 per 1,000 gallons, plus a flat, monthly fire-protection fee of $6.55, to Illinois American Water. According to a 2010 survey by the Illinois Department of Natural Resources, the rate is among the highest of any municipalities that get Lake Michigan water.

Because of that, Homer Glen has teamed up with Bolingbrook, Lemont, Woodridge and Romeoville to create the Northern Will County Water Agency, which is attemping to acquire pipelines owned by American Lake Water Co., a sister company of Illinois American Water. Last month, the agency filed an eminent domain lawsuit after the company rejected a bid to purchase the system.

Officials from Illinois American Water said Homer Glen will need to file a second eminent domain action to acquire pipelines within the village. Illinois American Water senior manager Michael Smyth has said eminent domain is “expensive, lengthy and divisive to a community.”

The cost of water has more than tripled for Chicago Heights and its customers — Glenwood and Ford Heights — which get lake water from Hammond.


After Chicago’s price hike, Hammond Mayor Thomas McDermott Jr. decided his city could raise prices for Illinois customers, to 12 percent below Chicago’s rate, still beating the going rate and thus maybe attracting even more customers.

For 30 years, Hammond sold water to Chicago Heights for 57.5 cents per 1,000 gallons. When the contract expired in November, the price gushed to $2.20 per 1,000 gallons.

With operation and maintenance costs, Chicago Heights customers’ total rate went from $2.47 to $5.50 per “unit” or 748 gallons, city attorney TJ Somer said.

Claiming Hammond’s increase was unjustified, Chicago Heights filed a lawsuit in U.S. District Court in October and requested a hearing with the Indiana Utility Regulatory Commission to have it intervene by establishing a new rate.

Last week, Chicago Heights asked the regulatory commission not to issue a ruling and put the lawsuit on hold to give the two cities time to reach a settlement on their own, Somer said. He hopes that can be accomplished by the end of this month.

McDermott, however, said the two sides have reached a verbal agreement on the $2.20 price for the next 20 years. A report filed in federal court Monday said the parties had reached a settlement in principle and stayed any action by the court and the regulatory commission until Jan. 31.

Somer said there is “no logic” to Hammond’s increase, because unlike Chicago, Hammond is not planning any major infrastructure improvements.

As a Chicago Heights customer, Glenwood Mayor Kerry Durkin said he is thinking about returning to well water. His contract with Chicago Heights expires in 10 months.

“We have a lot of options — buy from Chicago, buy from Hammond or use wells,” he said, adding that his town is now doing a well study. “I understand Hammond’s position, but I don’t agree with it.”

Years ago, no one was concerned about the cost of water, Durkin said. Now, people will have to change the way they use water.

“They will have to use rain barrels, take shorter showers and fix running toilets,” he said.

Contributing: Mike Nolan, Sun-Times Media
Post Wed Oct 09, 2013 7:44 pm 
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untanglingwebs
El Supremo

Less then ten years ago the cost of upgrading the water and sewer infrastructure exceeded $50 million. One way to assist in the cost was to upgrade the service lines while upgrading and rebuilding major roads

The pension issue cannot be resolved with one loan from the water and sewer fund. Does this mean they want to make an ongoing loan system to remedy the pension shortfalls? Higher water and sewer rates will deter residents and many businesses that are water dependent from moving into Flint.

For at least the last week Rowe Engineering has been doing survey work around the Mott Golf Course and the residential area surrounding the park. Today they were in the area east of Chevrolet and just south of Mackin. Someone had to be paying for their services and yet I don't recall any public notice about what project they are working on.

Road work? Water and sewer infrastructure ? Infrastructure? Whatever happened to these promises of transparency by Snyder and the EM?
Post Wed Oct 09, 2013 7:54 pm 
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00SL2
F L I N T O I D

quote:
untanglingwebs schreef:
Higher water and sewer rates will deter residents and many businesses that are water dependent from moving into Flint.
If rates continue to increase, and drinking water is made to be "soft" they will also lose more existing residents!
Post Thu Oct 10, 2013 11:25 am 
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untanglingwebs
El Supremo

quote:
00SL2 schreef:
quote:
untanglingwebs schreef:
Higher water and sewer rates will deter residents and many businesses that are water dependent from moving into Flint.
If rates continue to increase, and drinking water is made to be "soft" they will also lose more existing residents!


I am hearing that residents are giving Earley until Spring to reduce the crime or they are gone. Many are older and have family in other states that want them to leave. Comments include "no one listens to us", they are tire of sleeping on the floor when the gunshots start and they are so afraid of stray gunshots that some block windows.

The second issue is the high water and sewer rates, and the special assessments. Some seniors are unable to pay for their critical prescriptions and they only take a portion of what they need.

When more leave how will the city deal with more abandoned homes?
Post Thu Oct 10, 2013 7:50 pm 
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Crowfeeder
F L I N T O I D

Perhaps having then leave is part of the plan.It's called gentrification.
Post Thu Oct 10, 2013 9:12 pm 
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untanglingwebs
El Supremo

Remember this report? The huge deficit projection in the proposed future budgets of Kurtz and brown may be due to a fear the City will lose the lawsuits regarding pensions.
While a deficit started in the Williamson administration when the foreclosure fiasco impacted cities nationwide, this report demonstrates a widening gap and misuse of funds under the Walling-Eason administration.



-------------------------------------------------------------------------------------------


STATE OF MICHIGAN
DEPARTMENT OF TREASURY ANDY DILLON
STATE TREASURER
DATE: September 12, 2011
TO: Rick Snyder, Governor
FROM: Andy Dillon, State Treasurer

SUBJECT: Preliminary Review of the City of Flint

I. Background
On August 29, 2011, the Department of Treasury commenced a preliminary review of the finances of the City of Flint to determine whether or not a local government financial problem existed. Section 12(1) of Public Act 4 of 2011, the Local Government and School District Fiscal Accountability Act, requires that a preliminary review be conducted if one or more of the conditions enumerated therein occurs. The preliminary review of the City of Flint resulted from the condition enumerated in subdivision (j), (m), (o) and (r) of Section 12(1) having occurred within the City.1 As summarized below, based upon information received and considered as part of the preliminary review -- including the inability of the City to operate within budgets and to avoid fund deficits, recurrent accumulated deficit spending, severe cash flow shortages resulting in an improper reliance on interfund borrowing and appropriations, the lack of funding of the City’s pension plans and other post-retirement benefits, -- I conclude that probable financial stress exists in the City of Flint and recommend appointment of a financial review team. Appointment of a financial review team is a prerequisite step in the Act 4 process to the appointment of an emergency manager.

II. Preliminary Review Findings
The preliminary review found the following:
The City has incurred deficits in many of its funds over several years. The following are fund deficits from 2007 to 2011 : 1 Subdivision (j) provides that the “local government has violated a requirement of sections 17 to 20 of the uniform
budgeting and accounting act, 1968 PA 2, MCL 141.437 to 141.440.” Subsection (m) provides that a “local government is in breach of its obligations under a deficit elimination plan or an agreement entered into pursuant to a deficit elimination plan”. Subsection (o) provides that a “municipal government has ended a fiscal year in a deficit condition as defined in section 21 of the Glenn Steil state revenue sharing act of 1971, 1971 PA 140, MCL 141.921, or has failed to comply with the requirements of that section for filing or instituting a financial plan to correct the
deficit condition.” Subsection (r) provides that “[t]he existence of other facts or circumstances that in the state treasurer’s sole discretion for a municipal government are indicative of municipal financial stress.”


Governor Rick Snyder
September 12, 2011
Page Two

Unaudited
Fund 2007 2008 2009 2010 2011
General $ (7,046,820) $ (10,113,744) $ ( 14,621,546) $ (11,149,907)
Building Department (1,550,369) (576,276) (1,251,459)
Central Maintenance $ (226,349) (4,233,859) (3,183,144) (1,922,489) (2,029,230) *
Data Processing (778,458 ) (245,488 ) (72,773)
EDC (26,772) (10,721) (58 ) (7,404)
EDC - Oak Business Ctr (28,403) (19,843) (5,285) (24,898)
Garbage Collection (909,283) (1,444,581)
Golf Course (473,294) (1,909,377) (282,670) (576,861) *
Self Insurance (33,580)
Parks & Recreation (163,096) (185,255)
Senior Citizens (26,709)
Water Supply (5,795,973) (9,009,825) *
Total $ (1,533,276) $ (15,016,477) $ (13,375,004) $ ( 24,303,635) $ (25,707,407)
* Estimated

Deficit Elimination Plans submitted by the City have not been followed. Starting with a deficit in 2008 of $7,046,820, the City submitted a five-year deficit elimination plan that projected a 2010 general fund deficit of 9,124,747. However, the 2010 actual deficit was $14,621,546 or $5,496,800 higher than projected and the 2011 deficit is estimated to be almost $11 million. The plan projected the deficit to be eliminated by 2014, but the updated deficit elimination plan submitted for 2010 does not eliminate the deficit until the year 2030 relying heavily on issuing additional debt of $12 million in 2013.

The general fund has had operating losses since 2007 and fund deficits since 2008.
Unaudited
6/30/2007 6/30/2008 6/30/2009 6/30/2010 6/30/2011
Revenues $ 69,212,013 $ 66,823,137 $ 63,937,302 $ 57,189,454 $ 52,201,018
Expenditures 70,908,742 79,475,612 66,703,149 64,741,451 58,969,882
Net Income (1,696,729) (12,652,475) (2,765,847) (7,551,997) (6,768,864)
Other Sources (Uses) (866,831) (568,589) (478,527) 3,044,195 10,598,701
Net Change (2,563,560) (13,221,064) (3,244,374) (4,507,802) 3,829,837
Beginning Fund Balance 8,915,254 6,351,694 (6,869,370) (10,113,744) (14,621,546)
Ending Fund Balance $ 6,351,694 $ (6,869,370) $ (10,113,744) $ (14,621,546) $(10,791,709)

It appears the City is a year behind in matching expenditures to revenues. For example, the expenditure for 2009 match the revenues for 2008 and the expenditures for 2010 match the revenues for 2009.

The City relies on transfers from the water supply fund and the sewage disposal fund for general city operations. In 2009, the City increased its overhead charges from the water supply fund and the sewage disposal fund from $1 million to $2.4 million. Also in 2009, the City started charging a return on investments against the water supply and sewage disposal

Governor Rick Snyder
September 12, 2011
Page Three


funds of $2.9 million. Combined, the City uses $5.3 million of water supply and sewage disposal money for general fund operations annually. This amount of annual appropriation is not a loan and is not expected be paid back to these funds.
The water supply fund has an unrestricted deficit, yet the City continues to transfer money from the fund. The unrestricted deficit was $5,795,973 in 2010 and is estimated to be $9,009,825 for 2011. In addition to the transfers out, both the water supply fund and the sewage disposal funds have lost money in their operations. The sewer disposal fund has lost over $61 million since 2001 and the water supply fund has lost almost $10 million since 2009. The City has recently implemented a 35% increase in water and sewer rates.


 The City has borrowed from other funds to compensate for its cash shortfalls. For example at June 30, 2010, the general fund owed other funds a total of $18,002,907 of which $11,698,376 was due to the sewage disposal fund. Another part of general fund borrowing was from the restricted local street fund in the amount of $1,059,914. Local street funds may only be spent on local streets in the City since they derive from Federal and State grants.

Other uses for these funds is contrary to State statute. Another significant balance includes $1,683,733 that is due to the public improvement fund. Once money is put into the public improvement fund, it may not be used for any other purposes. Lastly, a major part of this interfund borrowing is from the self insurance fund for $2,139,590. Interfund borrowing continued to take place in 2011 as can be seen by cash shortages illustrated below.

 The City continues to experience a cash shortage. The City recently borrowed $8,000,000 in fiscal stabilization bonds, authorized under Public Act 80 of 1981, to assist with cash flow shortfalls. However, there remains many negative cash balances in the June 30, 2011 City records. For example, the general fund is over $9.5 million negative. The rubbish collection fund is almost $1.5 million negative and the drinking water revolving loan fund is over $3 million negative.


These and other negative cash balances represent interfund borrowing that is not booked as such in the City records. As stated in the 2010 audit report, “[t]he majority of the City funds does not have their own cash accounts, but participate in a ‘pooled cash account’ where each fund’s cash resources are pooled with the cash balances of other City funds. Pooling individual fund cash resources provides flexibility in investment options and allows for consolidated and more efficient accounting.”

The audit report continues, “[h]owever, pooling cash resources also allows individual funds to spend more money than they receive, creating a lending relationship between funds with a negative balance and those with a positive balance, making the funds financial dependent on each other
.”

The City’s ability to pay short-term obligations is uncertain. For 2010 in the general fund, the City had $9 million in short-term assets to cover almost $22 million in short-term obligations. There was not enough information to reach a meaningful conclusion in the unaudited records of the City for 2011 since total current assets equated to a negative figure.


Governor Rick Snyder
September 12, 2011
Page Four


The City’s pension is under 60% funded. Benefits are based on a factor ranging from 1.7 to 2.6 of the final average compensation. As of June 30, 2008, the last actuarial report for the 2010 audit period, there were 1,676 active members compared to 2,820 retirees. The unfunded accrued pension liability was over $39 million with a one year increase in the net pension obligation of $1,202,047 .

The City has failed to make staff reductions in accordance with its Deficit Elimination Plan. According to the 2010 audit report between 2001 and 2010, the City has reduced staffing from a total full time equivalent positions of 1525.8 to 767. Many of these reductions came from Police (336 to 122) and Fire (216 to 110). The City continues to reduce staff. However, of their planned 40 layoffs by July 2011, only 18 were made. Of the planned 25 layoffs after July, only seven were made.


cc: Roger Fraser, Deputy State Treasurer
Frederick Headen, Director, Bureau of Local Government Services


Last edited by untanglingwebs on Sun Oct 20, 2013 4:52 pm; edited 1 time in total
Post Sun Oct 20, 2013 4:23 pm 
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untanglingwebs
El Supremo

EM Edward kurtz


Five Year
Financial Projections and Challenges
City of Flint, FY14-FY18

Year 1 of the five year financial projection starts with a balanced FY14 budget, made
possible in large part by continuation of several major grants supporting police, fire, and the update of the City’s Master Plan, as well as the cost reduction strategies related to employee compensation which were implemented in Fy13. These, plus continued effort to restructure work processes and to reduce the size of the workforce make it possible to provide services in FY14 at generally the same level as FY13. It also reflects the initial steps necessary to begin to eliminate the accumulated $19.1 million deficit. However, it affords little ability to improve services, reduce taxes or fees, or to address the monumental amount of unmet capital improvement needs.

Years 2—5 show the continuing challenge of the City’s structural deficit, with property tax
revenues continuing to fall through FY15, and then stabilizing but with no growth until FYI8. At the same time however, legacy and compensation costs are projected to increase by 5% per year, and major grant sources will disappear. The City will be faced with a significant challenge of attempting to choose between reductions in public safety and other reductions; however, finding other reductions may not be possible, given the minimal level of resources available. Again, without additional new significant levels of revenue, there is little ability to improve services or address continually increasing capital improvement needs.

Core General Fund revenues and millage proceeds are projected to remain substantially unchanged at $58 million from FY14 to FY18. Taking into account current grant levels supporting general city services, however, revenues are projected to drop from $66.1 million in FY14 to $58 million in FY18. If the services and service delivery mechanisms supported by the FY14 revenues were left untouched through FY18, it is projected that the gap between revenues and expenses would be more than $19 million by FY18 . That gap amount would be even greater if some reductions (such as fire operations with the end of the SAFER grant) were not already incorporated into projections. This gap coincidentally is virtually the same amount as the $19.1 accumulated General Fund deficit as of June 30, 2012.

Balancing city expenditures with projected revenues will be an ongoing challenge for the next several years. While FY14 is balanced, there is a projected $9.1 million gap between revenues and expenditures for the FY15 budget, which begins July 1, 2014. This large gap is due primarily to the anticipated loss of some major grant sources, including SAFER (which provides finding for 39 fire fighters); Master Planning (which provides resources for the revision of the City’s Master Plan) state support for operation of the City’s Lock-Up; and the Mott Foundation grant which has supported the cost of several police officers. While solutions to closing this gap have not yet been formulated, work to do so will begin once the FY14 budget is finalized.

Revenue and expense projections for FY16, FY17, and FY18 all show gaps which must be closed. Current projections for each of these years range between $2.4 and $3.6 million, and again will pose a significant challenge. The continuation of these gaps reinforces the fact that the City of Flint, like most municipalities in the state, faces a structural gap. With ongoing ekpense increases in the conduct of business, including legacy costs, on one side, and flat revenues with little opportunity for growth on the other, there will be a continuing challenge to manage the City’s business in a financially solvent manner while still providing even the most basic of city services. It is becoming even more imperative that serious consideration be given to providing a more realistic funding mechanism for municipalities. In the City of Flint, state legislative approval to allow consideration of an increase in the income tax (as has been done for other municipalities) is an option that could address the city’s plight in a substantial way.

These financial challenges show that it will be difficult for the City to maintain its police and fire departments at current levels. Were it not for the voter approved 6 mill increase in property taxes, as well as continuation of the Neighborhood Police millage, consideration of current levels would be impossible to consider. As it is, it is projected that with the end of the SAFER grant in FY15, staffing for the Fire Department will be reduced from 94 to 75, allowing for the operation of 3 stations. And while staffing for the Police Department may stay close to its current 150 level for a few years, it will likely reduce to 140 in FY18. And that scenario is only possible with continued COPS grant funding.

It will also be challenging to allocate City funds for Planning and Zoning as the grant
funding for these activities ends in FY15. Without dedicated staff to pursue
implementation of the soon to be adopted Master Plan and updated Zoning Ordinance, development goals of the City cannot be effectively pursued.
With current federal funding for community development and code enforcement
significantly reducing over the next few years, city efforts to make even marginal
progress in addressing blight and becoming more aggressive in enforcing building and safety codes is in jeopardy. If progress is to continue, it will be necessary that other sources of funding be found.

Finally, it will become increasingly difficult to address priority areas such as those
mentioned above by further reducing or eliminating other areas of City services.
Restructuring the city’s workforce and compensation structures have been done and are ongoing, and city support of areas such as parks and recreation and human services have been reduced. These have resulted in efficiencies and a balanced budget for FY13 and FY14, and there are more decisions to be made. However, there may become a time when no further reductions of the magnitude necessary to balance budgets can be achieved.
Post Sun Oct 20, 2013 4:51 pm 
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untanglingwebs
El Supremo

With these high rates in place, the City now plans to borrow $10 million from the water and sewer to reduce the deficit.

Go bankrupt and get it over with.
Post Tue Dec 17, 2013 7:14 am 
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untanglingwebs
El Supremo

Flint spends $4 million on water plant in last eight months

A look at Flint water plant's facilities
The Flint water plant treated Flint River water for one month and added softening to its process for the first time since 2007. The plant was running in preparation to make the Flint River the primary drinking water source for city residents while the Karegnondi Water Authority pipeline is built. (File Photo)

Dominic Adams | dadams5@mlive.com By Dominic Adams | dadams5@mlive.com
Follow on Twitter
on January 04, 2014 at 6:00 AM, updated January 04, 2014 at 6:11 AM



FLINT, MI – The city of Flint has spent about $4 million on its water plant in the eight months since Detroit ended its nearly 50-year-old contract for selling water to city.

An analysis by The Flint Journal found that the city has spent more than $3.8 million on improvements and other work at the water plant since April, according to figures listed in resolutions posted on the city’s website.

Work has ranged from paying consultants for studies, to a public water fee to Michigan Department of Environmental Quality and more than $1.5 million to upgrade the switchgear for the power distribution to the facility’s motor control center.

Detroit Water and Sewerage Department Director said it would stop selling water to Flint and Genesee County on April 17, 2014.

The move came after Flint agreed to purchase raw water from Lake Huron as a member of the Kargenondi Water Authority. The water will be pumped to Flint and treated at its plant.

"Some of the money that we're spending are on upgrades that are necessary for when we start getting our water from the KWA," said city council President Scott Kincaid. "There are guidelines as far as the quality of our water."

In July, city officials said they were still trying to figure out if they’d renegotiate a temporary deal with Detroit while the KWA pipeline was built.

Kincaid said a decision about who the city will get its water from during the KWA construction hasn't been finalized.

"I'm not concerned that Detroit is going to cut our water off," he said. "We're preparing our water treatment facility for the KWA and when we do that of course that will give us the capability to take water from the Flint River."

Here’s a look at five different expenditures associated with upgrades at the water plant:

Electrical Distribution Upgrades: Emergency Manager Darnell Earley approved paying McNaughton-McKay Electric $1.51 million to upgrade electrical switchgear at the water plant on Nov. 18. On that same day, Earley signed off on paying McNaughton-McKay $505,000 to replace switchgear at the city’s Cedar Street pumping station.

New pump: McNaughton-McKay also received $349,710 from the city to replace an obsolete pump at pump station No. 4, according to the resolution.

Design work, construction engineering to use the Flint River: The city spent $1.13 million with Flint-based Lockwood, Andrews & Newnam Inc. on design work, construction engineering and regulatory submissions that will allow the plant to be used to convert raw water from Lake Huron delivered via the KWA pipeline into drinkable water in Flint.

Clean up that lime: The city paid Young’s Environmental Cleanup $6,154.61 to remove inactive lime at the water plant, according to a resolution from Aug. 13.

Dominic Adams is a reporter for The Flint Journal. Contact him at dadams5@mlive.com or 810-241-8803. Follow him on Twitter, Facebook or Google+.
Post Sat Jan 04, 2014 8:16 am 
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