Flint Sticks to its Guns, Will Leave DWSD for New Water Authority

The Flint Journal is reporting (here) that the City of Flint has decided (again) to stick with its original decision to join the Karegnondi Water Authority, and leave DWSD. This decision comes after DWSD made a "second" best-and-final offer last week, which included a seat on the Board of Water Commissioners.

Comment: Whether this is really the end, or just another step in an on-going negotiation is anyone's guess.  My guess? Its not over yet. 

Update (5/2): Flint's EM confirmed the City's decision to leave DWSD yesterday at a news conference. The Flint Journal covered the event and reports here on the decision. 

Update (6/25): The Fling Journal reports (here) that a groundbreaking ceremony for the new pipeline will take place on Friday, June 28th at 10:00 a.m. at the corner of Fisher Road and M-25.   

For more about DWSD Update, click here.  

Jay Dee Submits Low Bid on OMID Contract No. 4

Earlier this morning, the Oakland Macomb Interceptor Drain Drainage District (OMID) received and opened bids for the Segment 3 Repair, Contract No. 4. 

Jay Dee Contractors from Livonia (MI) was the low bidder:

• Jay Dee Contractors  . . . $ 46.4 million
• Michels Tunneling . . . . . $ 55.9 million
• S. J. Louis Construction  $ 60.8 million
• Ric-Man Construction . . $ 64.2 million
• SECAC Tunnel . . . . . . . . $ 65.6 million
• Kenny Construction . . . . $ 67.2 million
• Walsh Construction . . . . $ 68.8 million

For more about other OMID projects, click here. 

For more about DWSD Update, click here.

DWSD Renews, Sweetens Water Supply Contract Offer to City of Flint (UPDATED)

Just two days after notifying the City of Flint that it would terminate its water supply contract in 2014, the Detroit Water and Sewerage Department on Wednesday [April 24, 2013] renewed its efforts to keep Flint as a wholesale water customer. DWSD sent Flint a revised offer (here). DWSD is competing with the Karegnondi Water Authority, which Flint voted to join at the end of March. 

If it accepted DWSD's latest offer, the City of Flint would not only receive an immediate 45% reduction in the cost of water supply, but Flint could get "purchased capacity rights" of 40 MGD in DWSD's Lake Huron Water Treatment Plant. DWSD is also offering  representation on the Board of Water Commissioners ("DWSD is receptive to this concept and will pursue modification of the current governance structure to accommodate it.") 

DWSD is also proposing redundancy in its water supply to address a frequent criticism of present operations:

"Redundancy Solution - Emergency backup supply is provided to the Imlay pump station, with the associated standby charge. A second transmission water main from the Imlay CIty Pumping Station west to either the current connection at Baxter/Potter roads or to another location to be determined by Flint, as necessary to meet the full redundancy requirements specified is assumed for comparison purposes. To maximize Flint's interest in ownership, it is proposed that this line be constructed by Flint or KWA, and owned by Flint or KWA. 

Comment: I applaud DWSD's persistence in seeking a deal with the City of Flint. And while the Governor's Treasurer, Andy Dillon, approved Flint's decision to leave DWSD, I have to believe that when Governor Snyder met with DWSD, Flint and Genesee County officials in Detroit late last week, he urged cooperation.  With the Detroit Board of Water Commissioners already moving in the direction of a regional authority, there's probably no good reason not to make the table bigger and give Flint and Genesee County a seat.  

Note: You can read DWSD's latest offer online (here).  If you would like to read all of DWSD's latest to Flint's Emergency Manager, write me here and put "Flint Offer 2.0" in the subject line.  

Update (4/30): The Flint Journal is reporting (here) that Flint has decided to stick with its original decision to join leave DWSD and join the Karegnondi Water Authority. 

For more about DWSD Update, click here. 

DWSD Serves City of Flint with Notice of Intent to Terminate Water Supply in April, 2014

On April 17, 2013, one day after the City of Flint rejected a best and final offer to remain a customer, the Detroit Water and Sewerage Department served written notice on the City of Flint that it would terminate its nearly 50 year old agreement to provide drinking water effective April 17, 2014.

The City of Flint voted on March 25, 2013 to leave DWSD and join the Karegnondi Water Authority. Flint's decision was subject to approval by the State of Michigan, which approved the decision on  April 11, 2013, subject to consideration of a best and final offer from Detroit.

A contract to construct the raw water intake pipeline for the Karegnondi Water Authority was bid on February 26, 2013. Once bonds and are sold and a notice to proceed is issued to the contractor, construction is expected to take 30 months. 

Its unclear right now what Flint will do for water in 12 months after its contract with DWSD is formally terminated or how it will pay for the more than $50 million in capital improvements that are required for the Flint Water Treatment Plant, which currently serves only as a back-up to DWSD and is operated only a few times a year. In addition, Flint must address the problem of chronic water loss due to leaks and theft. According to a 2011 audit, 30-40% of the water Flint buys from Detroit is lost due to leaky pipes.   

Update: Late Friday, it was reported by the Flint Journal (here) that Governor Snyder met privately in Detroit with officials from Flint, Genesee County and DWSD. 

Click here to read online the full text of the Notice of Termination. If you'd like to get a copy of DWSD's Notice of Termination, write me here, and put "Flint Letter" in the subject line. 

For more about DWSD Update, click here.

DWSD Submits Best Offer to City of Flint, Outlines 48% Reduction in Wholesale Water Rates

On April 15, 2013, the City of Detroit Water and Sewerage Department furnished the City of Flint and Karegnondi Water Authority with an 8-page proposal, which offers  the City of Flint and Genesee County a wholesale water rate of $10.46 per Mcf (per thousand cubic feet of water), as compared with the current wholesale rate of $20.00 per Mcf. That amounts to a 48% immediate reduction. Over 30 years, DWSD contends that its proposal would save Flint and Genesee County $800 million.   

DWSD's proposal comes a few days after State Treasurer Andy Dillon approved a decision by the City of Flint to enter into a contract with the Karegnondi Water Authority, and leave DWSD. The State's decision allowed for DWSD to submit a best-and-final-offer by April 15, 2013 at 5:00 p.m.  As of last night, neither Flint nor Genesee County reported having received DWSD's proposal. 

Note: If you write me (here), I would be glad to send you a copy of DWSD's April 15th proposal. Just put "Flint Water Proposal" in the subject line.

To read DWSD's April 15th proposal online, click here.   

Update (4/16): MLive.com reports here that Flint and Genesee County officials met this morning to discuss Detroit's proposal.  No word yet on whether the proposal offers enough to change Flint's minds.

Update (4/17): No surprise -- the Detroit News reports here that Flint and Genesee County have said "Thanks, but No Thanks" to DWSD's last offer to retain Flint as a customer. Both Oakland and Wayne County executives have openly criticized Flint's decision.        

For more about DWSD Update, click here. 

State Approves Flint Decision to Leave DWSD, Subject to Receipt, Review of Best and Final Offer

On April 11, 2013, State Treasurer Andy Dillon approved the City of Flint's decision to join the Karegnondi Water Authority, but he is giving Detroit until April 15, 2013 to submit a best and final offer to Flint to remain with DWSD. 

The Flint City Council voted to join the KWA on March 25, 2013, but this decision was subject to approval by the State since Flint is under the control of an Emergency Manager. Flint represents approximately 6% of DWSD's annual water revenue.   

Click here to read the full text of the Treasurer's letter.

For more about DWSD Update, click here.

Fitch Downgrades Detroit Water and Sewer Bonds

On April 1, 2013, Fitch Ratings downgraded its rating of $5.87 billion in Detroit water and sewer bonds. Fitch revised its Rating Outlook to Negative from Stable.  

About $1.9 billion of senior lien water revenue bonds were cut to BBB-plus from A, $1.1 billion of second lien water revenue bonds were downgraded to BBB from A-minus, $1.9 billion of senior lien sewer revenue bonds were cut to BBB-plus from A-minus, and $974 million of second lien sewer revenue bonds were lowered to BBB from BBB-plus.

The factors ininfluencing Fitch's decision are discussed here. 

For prior posts about DWSD's debt rating, click here.

For more about DWSD Update, click here.