Flint City Council Backs 30-Year Water Deal That Ensures Bondholder Profits

On Tuesday, November 21, the Flint City Council passed a motion to sign a 30-year contract with the Great Lakes Water Authority (GLWA), the regional entity that took over the Detroit public water system in January 2016, for the provision of wholesale water services to Flint.

The city, still suffering from the lead poisoning crisis prompted by its switch to the Flint River as a source of drinking water in 2014, has been receiving water via a temporary arrangement with the Detroit-based water system, its former supplier, since state officials approved reverting to this source in late 2015. The move occurred a full year and a half after residents began protests over tainted, odorous and discolored water, which later proved to be poisonous owing to lead levels far exceeding that allowed by federal standards.

Since 2015, the city government has been engaged in a series of temporary patchwork measures. To begin receiving water from the GLWA, it was compelled to negotiate a leasing arrangement with its intended alternative water supplier, the Karegnondi Water Authority (KWA). As part of its previous deal to receive water from the KWA in the future, the city had sold to the KWA a six-mile section of pipeline connecting itself to the GLWA system. To revert to the GLWA, the city needed access to the very asset it had just sold.

Financially speaking, however, far more significant was the prospect of Flint paying for its ongoing water supply from GLWA while still bearing its assigned portion of debt issued by the KWA to build a separate, redundant pipeline.

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