Flint Water Treatment Plant, Costs to Upgrade Could Now Exceed $100 Million (UPDATED)

A new draft report prepared by CDM Michigan pegs the cost to upgrade Flint's Water Treatment Plant at  more than $100 million. Completion of these upgrades may be required before Flint is permitted to switch its source water (again) to the Karegnondi Water Authority. 

In 2011, before the Flint Water Crisis erupted, the estimated capital upgrades for Flint's WTP were estimated at $61.5 million.

So, what's changed to drive the estimated capital costs 50% higher?   

Update (2/7): MLive.com is reporting here that a final report has been issued by CDM Michigan that puts the estimated upgrade cost at $108 million. And the time to make these upgrades? According to CDM Michigan, it will be somewhere between August, 2019 and October, 2020. Without a current source of funding, these dates seem very optimistic. In 2012, when DWSD contracted for upgrades to the Springwells Water Treatment Plant, it allotted 1,710 days for the $75.8 million project.  

For more about DWSD Update, click here.

City of Flint Set to Return to DWSD for its Drinking Water, at least Temporarily (UPDATED)

On October 8, 2015, nearly 18 months after ending its 50 year relationship with Detroit, the City of Flint has decided to resume buying its drinking water from the DWSD system after encountering a myriad of problems with its source water, the Flint River.

The problems the Flint encountered with drawing water from the Flint River have ranged from taste, foul odor, and most recently, high levels of lead. The increase in lead levels is thought to be caused by corrosive elements in the Flint River. The finding of elevated lead levels in the blood of Flint children was the last straw, and compelled local and state leaders to support a return to DWSD. 

The issues concerning Flint's water problems are well documented in the FlintWaterStudy.org, which is a website published and maintained by Virginia Tech researchers who are involved in studying Flint's drinking water. The Flint Journal has also followed this issue very closely.

Flint's return to DWSD is expected to take 2 weeks to complete. However, this will only be a temporary measure as Flint is committed to joining the Karegnondi Water Authroty (KWA), which is still constructing its new 63 mile raw water intake pipe. KWA's pipeline project is slated for completion in mid-2016. Once completed, Flint will receive raw water from Lake Huron, which it still must process through its own water treatment plant. Water from DWSD is already purified potable (drinking) water.  

Update (10/11): The Detroit Free Press has a very comprehensive article about Flint water woes and how better advanced planning and testing might have averted the current crisis.

Update (10/14): A copy of the water licensing agreement between the City of Flint and Genesee County Drain Commissioner can be found here. This agreement was required because after Flint terminated its contract with DWSD, it sold off a segment of water main to Genesee County.

For more about DWSD Update, click here.

Oakland County to Study (Again) Alternatives to Remaining with DWSD

Oakland County is reportedly set to spend $500,000 to $3 million for a study of alternatives to remaining with the Detroit Water and Sewerage Department. Crain's Detroit Business published a story here, and the Detroit News reported a similar story here.
 

Reading these stories reminded me that in April, 2007, Oakland County committed $125,000 to study alternatives to DWSD for drinking water. The Oakland County Commission approved funding this study on April 26, 2007.  This was at the time that Genesee County was looking to form its own authority, the Karegnondi Water Authority, which is now a reality; construction of the first phase of a new intake pipeline began in 2013 and the KWA recently sold its first round of water bonds.  

So what became of the 2007 study of alternatives to DWSD?

I don't know if its the same study, but in 2007 the then Oakland County Drain Commissioner published an extensive, 5 volume "Water and Wastewater Master Plan" prepared by URS Engineers. Volume 4 of the Master Plan is a 125 page "Alternatives Analysis." The "alternatives" being being alternatives to DWSD. 

   Oakland County Drain Commission, Water and Wastewater Master Plan - Volume 4 - Alternatives Analysis - Sept...

I haven't thoroughly studied this "Alternatives Analysis," but obviously Oakland County didn't join the Karegnondi Water Authority, and didn't leave DWSD in 2007.  If they're serious about doing so now, this report will offer some clues as to why they might (or why it didn't make sense to do so in 2007). 

But this report also begs the question - why spend upwards of $3 million to update a study that already exists? And if this isn't the report that cost $125,000 in 2007, where is that study?

The Oakland County Board of Commissioners is scheduled to meet on April 17, 2014, and the $3 million expenditure is on page 17 of their agenda here. 
 

For more about DWSD Update, click here.  

Karegnondi Water Authority to Sell $220 Million in Water Bonds for New Pipeline (UPDATED)

The Bond Buyer reported earlier this week [3/26] that the Karegnondi Water Authority (KWA) is making plans for an initial $220 million bond offering to finance its new 63 mile pipeline, which was first proposed in 2009. Bonds could be sold as early as next week [4/1].  

As the Detroit Water and Sewerage Department's bond rating falls deeper into junk territory, the Karegnondi Water Authority has been assigned an initial A2 rating by Moody's in advance of this first bond sale. 

The Bond Buyer article details some of the particulars about the KWA's bonding offering:

"In light of Flint's severe fiscal distress — the city has been under state controlled emergency management since late 2011 — the bonds feature a back-up pledge from Genesee County.

"The governments expect to make their payments from the system's revenues, but the debt carries the limited-tax general obligation pledge of both credits. Genesee has promised to cover Flint's payments within 15 days if the struggling city is unable to make its payments.

* * *

"Flint is set to no longer receive water from the DWSD as early as April 17, relying on its own water treatment plant and water drawn from the Flint River. The city expects to see significant savings from the move.

"Genesee will pursue a separate contract with the Detroit system through at least 2016. The DWSD and Genesee are also negotiating a separate contract that would require Detroit to provide a long-term emergency stand-by service if the new system fails.

The bonds sold by Genesee County will mature in 30 years and are payable from the water supply contracts as well as Long Term General Obligation (LTGO) pledges of the City of Flint and Genesee County.

For more background on the Karegnondi Water Authority, click here. 

For more about DWSD Update, click here.

Update (4/2): Bloomberg is reporting (here) that KWA completed its $220 million bond sale yesterday.

"The water agency's sale included debt maturing as late as November 2043 that priced to yield 4.89 percent, or about 1.2 percentage points more than benchmark munis. The securities are rated A2 by Moody's Investor Service, five steps below the top."

Detroit Emergency Manager Reportedly Considers a "Regional Authority" Minus 2/3 of the Region

The Detroit Free Press reports this morning that Emergency Manager Kevyn Orr is contemplating a regional water authority without Oakland and Macomb Counties if they don't get on board with his plan that would have the suburban communities pay the City $9 billion over 40 years to operate DWSD under the auspices of a new authority. That would leave the City of Detroit and Wayne County, whose finances are not much better than Detroit's, to form the core of a new authority.  

Comment: Huh, what?!?  Cut off about 2/3 of your paying customer base, and go it alone with Wayne County? You can't be serious? The old expression - "cutting off your nose to spite your face" comes to mind when I read this story. 

For more about DWSD Update, click here.

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.  

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.

Flint Approves Deal with Karegnondi Water Authority, Plans to Leave DWSD

Last night, the Flint City Council voted 7-1 to approve a resolution to buy its water from the Karegnondi Water Authority (KWA), rather than Detroit.  Flint would buy up to 16 million gallons of raw water per day from the KWA, which took bids on February 26, 2013 to construct an intake pipeline. No contract has been awarded, and work has not started.

Under the new plan, Flint will be required to treat the raw water it buys from KWA, and also rely on the Flint River as back-up. In either case, Flint will have to rely on its existing water treatment plant to process the raw water it receives from KWA. In 2011, a Flint engineering firm (Rowe) estimated that Flint's water treatment plan needed $61 million in capital upgrades. Because Flint is still under the control of an Emergency Manager, state approval is required to sign a new water supply contract with KWA.

For previous posts about the Karegnondi Water Authority, its creation and history to date, click here.    

For more about DWSD Update, click here. 

DWSD Challenges Savings Touted by Karegnondi Water Authority

On March 19, 2013, the Detroit Water and Sewerage Department took off the gloves publicly took issue with claims made by the Karegnondi Water Authority that joining the new authority would save money for communities like the City of Flint, which is weighing a decision to leave DWSD. 

Citing a report prepared in February, 2013 by Tucker Young Jackson & Tull for the State of Michigan, DWSD asserts that the plan advanced by Genesee County and other members of the KWA "is rife with financial discrepancies and false assumptions." As an example, DWSD cites Tucker Young's analysis of estimated construction costs, which puts construction costs at $357 million(*), or more than $80 million higher than KWA's estimate of $274 million. 

To read the entire report, entitled "City of Flint Water Supply Assessment Final Report," prepared by Tucker Young, click here. 

Update (3/20): The Flint City Council is scheduled to meet later today at 5:30 p.m. to discuss a new 25 year contract with KWA. 

Comment: DWSD's press release cites a construction cost figure of $374 million from the Tucker Young report, but I only saw $357 million when I read it. See page 15 here.      

For more about DWSD Update, click here. 

D'Agostini Submits Low Bid on Karegnondi Water Intake Pipeline Project (UPDATED)

Earlier today, Genesee County received and opened bids for the first phase of the new Karegnondi water pipeline. The first phase involves construction of a 78" intake pipeline that will extend 2 miles into Lake Huron. The low bid was submitted by L. D'Agostini & Sons.

1.     L. D’Agostini & Sons . . . . $24,600,000
2.     JayDee / Schoolcraft . . . . . . $25,800,000
3.     Southland JB . . . . . . . . . . . . $26,800,000
4.     RicMan / Super Exc . . . . . .  $27,900,000
5.     Durocher / Michels . . . . . . .  $29,830,000

For previous posts concerning the creation and evolution of the Karegnondi Water Authority, click here. 

Update (5/22):  The Flint Journal reports here that Genesee County has executed a contract with L. D'Agostini & Sons for this contract, and expects work to begin in 30 days.  

Update (10/23/14): The Times Herald reports today (here) that construction of the raw water intake pipeline is almost complete. 

For more about DWSD Update, click here. 

Genesee County Advertises for Bids for 78" Intake Pipeline for Karegnondi Water Project

The Genesee County Drain Commissioner has released bid documents for the construction of a 78" diameter water intake pipeline that will extend nearly two miles into Lake Huron. This work signals the start of the raw water pipeline project for the Karegnondi Water Authority. 

Bids for the project entitled:

"Lake Huron Water Supply Initiative - Water Supply Intake - Contract S-4000 - Worth Township" 

will be received on February 26, 2013 at 2:00 p.m. 

Work includes tunneling and marine excavation, including two time crib intakes, a 30' diameter x 70' deep concrete junction chamber, and related appurtenances and site work.

A mandatory pre-bid Meeting will be conducted on January 24, 2013 at 10:00 a.m. at the Worth Township Hall, 6903 S. Lakeshore, Lexington, MI 48450.

Engineers for the project include: Lockwood, Andrews & Newman, Inc. (Houston, and Flint) and Rowe, Inc. (Flint). 

The project is located in Sanilac County located at 7705 Fisher, Worth Township, MI 48450, which is only about 6 miles North of Detroit's (DWSD) Lake Huron Water Treatment Plant in Fort Gratiot.

For more about DWSD Update, click here.

Karegnondi Water Authority Inches Closer to the Start of New Pipeline Project (UPDATED)

The nascent Karegnondi Water Authority (KWA) cleared another hurdle last week when the Army Corps of Engineers issued the final permit required for construction of the 1.5 mile intake from Lake Huron. Genesee County Drain Commissioner said a construction contract could be signed for the work at the end of February, 2013. The first phase of construction is expected to cost $35 million.  

At last check, DWSD was still negotiating with the City of Flint to sign a new long-term water supply contract. Flint is considered an integral part of any new pipeline built by the KWA.  

DWSD Update has followed the development of the Karegnondi Water Authority since 2009. For prior stories about the KWA, click here.

Update (1/17): The Davison Index reports here that construction on the KWA pipeline could begin by Spring, 2013.   

For more about DWSD Update, click here.  

Water Board Authorizes Director to Negotiate New Supply Contract with City of Flint (UPDATED)

The Board of Water Commissioners yesterday authorized Director Sue McCormick to negotiate a new 30 year water supply contract with the City of Flint.  The new contract would allow the City of Flint to blend DWSD water with water taken (and treated) from the Flint River, but with at least one caveat.

A condition of accepting the City of Flint's blending request is that the water from Detroit be treated as "source" water and pass through Flint's own water treatment plant (WTP), where it would be added to treated water from the Flint River. Detroit water would comprise 2/3 of the final output.  DWSD currently delivers treated water through Flint's distribution system. The City of Flint would be responsible for any capital costs associated with re-routing DWSD water through the Flint WTP. (Note: This condition might be a deal breaker for Flint, whose Emergency Manager is quoted here as saying that these additional capital costs could off-set any anticipated savings.)

In another interesting development, Director Sue McCormick reported that DWSD had received a written request from the Genesee County Drain Commissioner's Office to purchase up to 85 million gallons per day of untreated (raw) water. In an October 17, 2012 letter, Deputy Drain Commissioner John O'Brien requested the cost and terms and conditions under which DWSD would agree to sell raw water to Genesee County under a 30 year contract.  

Comment: Genesee County's request to buy raw water from Detroit, coming at this point in time, is a very odd request. The Genesee County Drain Commissioner (Jeff Wright) spearheaded the creation of the Karegnondi Water Authority in 2009 (here), with the stated desire to break away from Detroit. The KWA has developed plans to construct its own $600 million pipeline in 2011 (here), and announced just two weeks ago that it planned to sell $35 million in bonds to begin construction of its own raw water intake.  

With the enormous head of steam that's been built up by elected officials pushing for a new $600 million (raw) water pipeline, why would Genesee County suddenly seek an agreement to buy raw water from Detroit? Something doesn't add up here. Does anyone know what's really going on here?


If you're interested in a copy of Genesee County's recent request to purchase raw water from DWSD, I'd be glad to e-mail it to you. Just write me and put "DWSD Raw Water" in the reference field.

Update (10/26): Earlier today, journalist Ron Fonger with mlive.com hosted an online Q&A with Genesee County Drain Commissioner Jeff Wright (here). I was unable to participate live, but I e-mailed Mr. Fonger earlier this morning and asked if would ask Mr. Wright about the timing of Genesee County's recent request to purchase raw water from Detroit. In short, why now? Mr. Wright responded to my question  during the online chat session:

"For three years, we've asked Detroit to consider selling us raw water so we can treat it ourselves, supply it to our people and save dollars. They've refused, up until three weeks ago when the new director of DWSD, Sue McCormick, made a public statement that Detroit would be willing to sell raw water.  
 
"So our request is twofold: 1. if they are willing to sell raw water, at what price? 2. Could this be cheaper than building our own intake. 
 
"We want to know what their terms would be because it may be more cost effective to buy water from them instead of building a new intake."   

For more about DWSD Update, click here.