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Topic: More Flint woes- water costs & pension- bankruptcy near?

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El Supremo

Detroit Free Press

Genesee County may be stuck with Detroit water
Paul Egan , Detroit Free Press 10:32 p.m. ET Feb. 16, 2017
Flint plant may not be ready to operate until 2019

LANSING The Flint Water Treatment Plant wont be ready to start treating raw water from the new Karegnondi Water Authority pipeline by Oct. 1, and that means not just Flint but all of Genesee County may have to stay on Detroit water much longer than planned.

Genesee County, which is relying on water payments from its local communities to make bond payments on the $285-million KWA project, says either Flint or the State of Michigan must pick up the cost of what would be a major change in plans, which the county estimates at more than $45 million over two years.

That's how long a new engineering report says it will take to make $108 million in improvements so the Flint plant can put out water that is safe to drink.

►Related: Water shutoffs to resume in Flint before spring
►Related: Michigan orders Flint hospital to address Legionella risks

The future source of Flint's drinking water is a complex question that is continuing to unfold. But Oct. 1, 2017 the date the new KWA system is expected to start serving customers with Lake Huron water has emerged as the crucial date.

Officials now say that not only will Flint not be able to treat raw KWA water by that date, but Genesee County won't be able to supply Flint with treated KWA water by that date either, because its new water treatment plant wasn't designed to serve the nearly 100,000 people who live in Flint.

That leaves only one practical option for Flint continued use of a 9-mile stretch of pipeline, now owned by Genesee County, to continue getting treated drinking water from the Great Lakes Water Authority in Detroit. But that same stretch of 72-inch pipe which Flint sold to Genesee County when it was under state receivership and strapped for cash is needed to serve other Genesee County communities with treated KWA water. So if Flint stays on Detroit water, the other communities must stick with Detroit, too.

Michigan Department of Environmental Quality officials wouldn't confirm the scenario this week, saying the picture should become more clear when Flint makes a required submission to the U.S. Environmental Protection Agency on March 1. But they didn't dispute assertions, compiled from public records, that other options to serve Flint with drinking water starting Oct. 1 have - one by one proven impossible.

The City of Flint did not respond to e-mailed questions.

Flint's original plan, approved by former emergency manager Ed Kurtz, was to use the Flint River for its drinking water starting April 1, 2014, when it left the Detroit water system, and to continue treating Flint River water at the Flint Water Treatment Plant until the KWA was able to start supplying Flint with raw Lake Huron water for treatment.

But the switch to the Flint River, combined with the DEQ's failure to require corrosion-control chemicals as part of the treatment process, led to a public health catastrophe in which lead leached into the water and exposed Flint residents to toxins. Flint switched back to the Detroit water system, with state assistance, in October 2015.

Under the next plan, Flint was supposed to leave the Detroit water system on Oct. 1, 2017, when it would start receiving raw KWA water and treat that water at the Flint Water Treatment Plant before sending it to city customers.

A Jan. 30 engineering report from Boston-based CDM Smith dashed any hopes of putting the Flint Water Treatment Plant back into operation this year. The report said $108 million in plant improvements are first needed, and they aren't expected to be completed before late 2019.

With that option unavailable, state and county officials looked at Flint receiving treated KWA water starting Oct. 1, until the Flint Water Treatment Plant is ready to start treating raw KWA water.

In a Dec. 22 letter to Department of Natural Resources Director Keith Creagh who remains a lead state official on the Flint water issue because of his previous role as DEQ director Genesee County Drain Commission official John O'Brien said getting treated water from Flint was one of only two options for Flint if the Flint Water Treatment Plant couldn't be ready by Oct. 1.

"If Flint is not ready to deliver treated KWA to its residents in October 2017, it must either stay on the GLWA system or reach a supply agreement with GCDC (the Genesee County Drain Commission)," O'Brien said in the letter.

If Flint stays on the Detroit system, "this will, in turn, require the county to also stay on the GLWA system," O'Brien said.

Though Flint since late last year has been making monthly payments to both the KWA and the GLWA, Genesee communities under contract to start receiving treated KWA water starting Oct. 1 will have no desire to pay for two sources of water, while only receiving one.

"The city and/or state must then pay the cost for GCDC to also stay on GLWA's system," O'Brien said. "GCDC estimates the cost to be over $45 million for the two-year proposal."

O'Brien added that "it is imperative for Flint to reach agreement for water supply to avoid unnecessary legal problems."

Creagh responded to O'Brien's letter on Dec. 29, saying he was pleased that Genesee County was prepared to enter into an agreement to supply Flint with treated water.

"The cost estimates you provided will be helpful to Flint as they are developing the alternative analyses," Creagh told O'Brien.

But on Thursday, Genesee County Drain Commission spokesman Kevin Sylvester told the Free Press that the county won't be able to supply Flint with treated KWA water for 18 months, at the soonest. Since O'Brien wrote his December letter, the county learned Flint would need 24 million gallons of treated water per day about twice as much as earlier thought, Sylvester said.

"The possibility of treating additional water to service the 100,000 residents of Flint would require additional testing periods, a thorough shakedown process, as well as potential upgrades, many of which would not be known until the plant is operational later this year," Sylvester said in an e-mail.

Amanda Abukhader, a spokeswoman for the GLWA, said the authority is currently working with Flint to extend the city's contract for Detroit water to Oct. 1.

"As demonstrated by our swift response to the Flint water crisis and continued service to Genesee County, if there is a request for continued service, GLWA is more than willing to discuss continuing to provide water of unquestionable quality to both the City of Flint and Genesee County communities," Abukhader said in an e-mail.

Contact Paul Egan: 517-372-8660 or pegan@freepress.com. Follow him on Twitter @paulegan4.

Last edited by untanglingwebs on Sat Feb 18, 2017 6:08 am; edited 2 times in total
Post Fri Feb 17, 2017 6:00 am 
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El Supremo

Water shutoffs to resume in Flint before spring
Paul Egan , Detroit Free Press 4:33 p.m. ET Feb. 15, 2017
636227713989981377-Lisia-Williams.jpgBuy Photo

FLINT Water shutoffs will resume in Flint by spring, the citys chief financial officer said Wednesday.

David Sabuda made the disclosure to the Free Press after a news conference at City Hall at which Mayor Karen Weaver expressed her disappointment and anger at Gov. Rick Snyders decision to terminate, at the end of this month, state payments that help Flint residents and businesses pay their water bills and help Flint pay for the treated Detroit drinking water it receives from the Great Lakes Water Authority.

Sabuda said there isnt a direct link between the end of the state credits and the resumption of water shutoffs, except that the end of the credits makes it even more important for Flint to collect the water payments businesses and residents owe, while at the same time making it harder for many customers to make those payments.

"We are going to follow the law," said Sabuda, who noted that potential commercial shutoffs were already in the works before Snyder announced the end of the water credits, though none have happened yet. For residential customers, "we are now in the process of developing the shutoff list, and both the mayor and the councilors have been informed."

Flint water shutoffs were halted in 2016 amid a national furor over city residents paying one of the highest water rates in the nation for water that was not safe to drink. Lead contamination began in April 2014 when the city, under the control of a state-appointed emergency manager who was trying to cut costs, switched the city's drinking water source to the Flint River, from Lake Huron water formerly supplied by Detroit. The city switched back to Detroit water, with state assistance, in October 2015.

The state notified the city about the end of the payments Feb. 7. Snyder said after a Tuesday meeting with Weaver at his Lansing office, that the payments were ending because the level of lead in the citys water no longer exceeds the federal limit, though residents are still encouraged to use faucet filters provided by the state.

Weaver, who expected the credits to continue at least until the end of March, said she's angry and disappointed about the decision, and that Flint received insufficient notice. Even if the water in the pipes is now OK, the fixtures inside Flint homes have been damaged by lead, so the danger persists, Weaver said. The state says financial help will be provided to replace those fixtures, along with the city's lead service lines, but that hasn't happened yet, she said.

Continuing the credits "would have showed some continued goodwill that we are working together to move Flint forward," Weaver said.

Still, "this is a small setback," she said. "We're not going to let this stop us from moving forward."

Snyder spokeswoman Anna Heaton said city officials were notified in December and again in January that the credits would end the month after it was verified by federal, state and independent scientists that the water quality met federal standards. That happened in the June to December monitoring period, she said. She added that the tests are done on Flint tap water poured without filters.

Sabuda said one reason the end of the credits is particularly hard on Flint is because the city has two water bills of its own to pay since late last year. Even though it's expected to be many months before Flint starts receiving Lake Huron water from the new Karegnondi Water Authority pipeline, the city is now paying about $440,000 a month to cover its KWA debt, on top of the $1.1 million a month it pays the Great Lakes Water Authority for Detroit water, he said.

Sabuda said the city will continue to work closely with residents and businesses to prevent shutoffs, providing for payment plans for those who can't pay their current balance, plus 10% of any prior outstanding balance, as required each month. There are opportunities for payment plans and appeals, and the city is also working with non-profit organizations that can help delinquent customers, he said. Also, no customer will lose water bill credits already issued to them, he said.

Snyder said he and the mayor also spoke Tuesday about replacing lead pipes and ways to bring jobs to the impoverished city. Sabuda, who also attended the meeting, said some aspects of the Tuesday meeting were positive.

Snyders office estimates the state will have spent $41 million partially reimbursing customer bills for a nearly three-year period. Another $17.8 million has been contributed toward Flints Great Lakes Water Authority payments.

I explained that we had authorization really through the time period we had, said Snyder, who has apologized for his administrations role in causing and prolonging the emergency.

Also Wednesday, state Rep. Sheldon Neeley, D-Flint, wrote Snyder and asked him to reconsider his decision to end the water credits.

"For almost three years now, my community has endured a traumatic disruption of their daily lives, and unfortunately, they have not felt fully supported or heard by the state throughout this time," he said.

Flint activist Lisia Williams carried a sign to the news conference and called on Weaver to lower the city water rates.

"It's a disservice to the community; a lot more could have been done," Williams said.

The Associated Press contributed to this report.

Contact Paul Egan: 517-372-8660 or pegan@freepress.com. Follow him on Twitter @paulegan4.
Post Sat Feb 18, 2017 5:40 am 
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El Supremo

Report: Cost of Flint water upgrade rises to $108M
Associated Press 11:04 a.m. ET Feb. 7, 2017

FLINT, Mich. - A consultant says the cost of upgrading Flints water treatment plant is estimated at $108 million, up slightly from an earlier estimate.

The Flint Journal says the recent report by engineering and construction company CDM Smith includes $37 million for the construction of two, 21-million gallon water storage tanks and more than $34 million for pump and transfer station upgrades.

A December draft report put the cost at $105 million.

Flint will treat Lake Huron water from a new pipeline. The plant improperly treated water from the Flint River in 2014-2015, leading to the citys crisis with lead-tainted water.

The report estimates work on the plant can be completed in 2019-2020. The state Department of Environmental Quality must agree to the final version of the consultants report.
Post Sat Feb 18, 2017 6:10 am 
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El Supremo

Flint's Interim CFO Sabuda at the March 9, 2017 RTAB meeting

"right now coming into July 1 of 2017 pension contribution jumped from18 million to 42 million. We've been working with MERS since July to look at various options to fund the pension without interrupting the city. I can favorably report that we have come up with sound financing plan for that benefit and I'm pretty excited about that . The key here is that we have 50 million going out the door, 30 million coming in. and we have to sop that, okay, and also provide city service. So, we're playing that balancing act between the two drivers there. As of 12-31-15 we were 43 percent funded and that is going to fall as we progress. I want also to point out that we also came up with six scenarios on how to fund and we met with the State Treasurer to help us with various assistance. We've framed out the problems and issues and I'm in the process of reviewing those and getting with his team so that they can help us with our financing issues here.
Post Thu Mar 30, 2017 9:41 am 
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El Supremo

..."Council, the Mayor, and the leadership of the Council and the Mayor have selected an option to fund the pension system, which is before the Council this evening, the entire Council this evening. Basically what you see before you on Page 4 of the table shows the required transfers of employer contributions, where we were and where we're going. So, when yo see column 2, the revised retiree transfers employer contribution we're looking at going from 42 to 33 million. Now what we're seeing it's 42 to 33. We're going from 42 to 20.6. And then each year thereafter what we're looking at as far as funding for employer defined contributions , Council will take this up tonight at their study session and then look at it at their Monday meeting of, that would be, today's the 8th, the 13th, you can see where we're going with this, the increased contributions as we progress through life through year '20, '21, '22, and '23. What this does is give us room to build back the fund, the water fund and the various funds back up. This also allows the City to provide city service. Any other scenario would have drained all reserves within a two-year period and we would not be making a 33.7 million-dollar pension contribution that you see on the left."
Post Thu Mar 30, 2017 10:18 am 
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El Supremo

Chairman Headen:
...do I understand correctly, that for the first three years, fiscal "17,'18 & '19, your'e basically, for lack of a better term, backloading the annual contribution by and it looks like, a total of $226 million, so the contributions over those three years would be 22.6 million less under the selected column 4 than it would be under column 2.

Sabuda: Correct.

Headen: And you're dong the reverse beginning in, it would be fiscal year '20 to '23. You're paying more in than you would have, but in the bottom line, when you consider all seven years you're talking about, what, $6 million being contributed less overall, which gets you to an estimated funding ration of 27 percent?
Post Thu Mar 30, 2017 1:16 pm 
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El Supremo

Correct. You're right on target. Know this, too. We're also recommending to the Council is that if we have certain funds left over, let's appropriate those and put them into the system as a contribution at the back end in addition to that. That's part of the recommendation that's coming out to them tonight and that they're going to consider.

But,yes what this allows us to do is make a pension contribution. It's not what the actuary would like, but balancing city services with pension itself, helps us make payments and then provide the service. After this you either drain the reserves or you start cutting services.

And hasn't MERs actually made the decision to change the investment assumption down to 7.75 or is that just a consideration at this time?
Post Thu Mar 30, 2017 1:28 pm 
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El Supremo

Absolutely. There were assumptions, Mr. Chair. There were four assumptions that they had changed, the investment return assumption. On page 38 of the report you can see the actuarial changes. There's a change in investment return. There's a change in mortality table t reflect retirees living longer. And then the unfunded accrued liability was moved to a fixed period versus a floating period. Also, the smoothing of the assets, which will be the fourth one. That's not listed here, went from ten years to five years.

Overall here, the key here, guys, I can't stress enough, you have 50 million going out the door and another 30 million coming in, and that's the amount we had to conquer. S as we go through, we make the pension contributions that are outlined on page 4 in the table, but also as the City can afford it, we start making additional contributions above what the actuary has outlined here in this table.
Post Thu Mar 30, 2017 1:43 pm 
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El Supremo

Please know that the actuary is with the selection, if the City doesn't make those additional contributions the actuary would have an adverse opinion on the report. They would like to see the 14 (?41?) million dollar contribution. So as we go through life I want to make this very clear that the actuary would like to close that spending gap now, and not later, and we need to to do everything we can to get more into the system as we progress in life.

That's all I have.

Mr Finney requests the Chair grant him some question.

Finney; So on the investment return assumption, is that a market number? Is it less than market? Is it better than market? Do you know what selection was made?
Post Fri Mar 31, 2017 11:11 am 
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El Supremo

Sabuda responded the assumption was based on what the fund would earn. He added the last period earnings were between 10 and 11%, but he current assumption in earnings is 7.75%. The february report will provide have the earnings for the last 4 years.

Finney asks how much of an increase in life span did the make to the mortality table. He is curios because his own personal advisor is pushing his out to age 93. Finney would like to know the they originally planning.

Sabuda promises on the next report.

Finney then asks Sabuda if there is any development on a long term solution as he views this as a short term plan.
Post Fri Mar 31, 2017 11:22 am 
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El Supremo

Sabuda indicates the administration is working with the State of Michigan Treasurer and his team to review.

Townsend notes that while Sabuda is wanting to alleviate the next three years, he would like to understand what is anticipated along general fund contributions, and the other fund contributions. "What do you anticipate say in 2020 and beyond being able to make those contributions?"

Sabuda states that everything is going to come down to property taxes, expenditures and revenues as well as the population and the water fund. If these economic issues turn around around, we can continue to build, said Sabuda. "We're buying ourselves 3 years"
Post Fri Mar 31, 2017 11:38 am 
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El Supremo

Sabuda discussed how the City would like water bill payment rates as high as 98% but emphasized that the City required a shut-off tool. He stressed that while they had to work with residents, they had to be out there enforcing it or the city couldn't pay their bills.

Jones addressed the RtAB . Flint is working with the Flint Genesee Chamber of Commerce to develop ways to increase the number of individuals employed. The city is also working with united Way to secure funds for indigent populations.

Finney discussed with Jones how he was working with community on the western side of the state on how to transport people to where the jobs are. Benning, the head of the MTA had indicated over 2,000 individuals are transported daily to jobs in Bridgeport, Lansing, Howell, Brighton, lapeer and sites in Oakland county.

Jones will be working to ensure Flint got the income taxes from those workers.

There will be a salary study because Jones believes Flint Department heads are underpaid.
Post Fri Mar 31, 2017 12:01 pm 
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