THE GRAND RAPIDS PRESS / SUNDAY, MAY 8, 2016 / D7
The mistakes made
It started as a cost-savings move A state-appointed emergency manager and Treasury officials decided to disconnect from Detroit water system
By John Counts
johncounts@mlive.com
Clean water and public health aren’t generally concerns of the Michigan Department of Treasury. But that’s precisely where the Flint water crisis started. State-appointed emergency managers, who report directly to the treasury department, were behind the decisions that sparked and prolonged the crisis — to go off Detroit water and not reconnect even as problems arose. The Flint Water Advisory Task Force has found that, instead of making decisions in the best interest of Flint residents, the emergency managers made decisions in the best interest of the budget, according to its members. And that’s the beginning of how a city of roughly 100,000 was exposed to lead and possibly Legionnaire’s disease. The treasury department first heard the idea of Flint going off Detroit Water and Sewerage Department water and joining the Karegnondi Water Authority in late 2012, Andy Dillon, the state treasurer at the time, said in an interview. “I remember warning the governor’s office” that Flint wanted to make the switch, Dillon said. Dillon told MLive he was skeptical of the deal at first, but that as he understood it, Flint city leaders were keen on controlling their own water source. “There was bad blood between Flint and DWSD,” Dillon said. Flint was just one unhappy municipality on Detroit water. There had been animosity between the DWSD and its noncity customers for decades. The sprawling, city-controlled system that brought water into the homes of millions across Southeast Michigan was consistently accused of overcharging its non-city customers. For decades, leaders of communities throughout the DWSD system tried devising ways to end reliance on the system. Flint had been exploring options for a decade, including the long-term use of the Flint River, which had been a backup for years. But it wasn’t until the city was under a state-appointed, budgetcutting emergency manager that such a move was made. Flint’s emergency manager Ed Kurtz and local leaders would have to get Dillon to sign off on the KWA deal because it involved an expenditure over $50,000, however. So, Dillon and others in Snyder’s administration started looking at what Flint joining the KWA would entail. But they didn’t have much time. As Dillon remembers it, the KWA was eager to know whether Flint was in or out because the authority needed to know what size pipe to get. “They were getting very impatient,” Dillon said about the water authority. “They were putting timing pressure on us.”
With the push of a button, then-Flint Mayor Dayne Walling shuts a valve to halt the supply of water from Detroit on April 25, 2014, at the Flint Water Treatment Plant. The city was switching to the Flint River as its water source. (Samuel Wilson | MLive.com)
Since the treasury department isn’t made up of water experts, they brought in the Department of Environmental Quality, the state agency that is supposed to have that expertise. The Treasury also contracted with the engineering firm Tucker, Young, Jackson, Tull — which, in February 2013, issued a report recommending Flint stay on Detroit water. However, Tucker, Young, Jackson, Tull is the same firm used by the DWSD. And the DEQ didn’t agree with the firm’s opinion that it would be cheaper for Flint to stay with the DWSD, Dillon said. He was told the report’s cost analysis didn’t take into consideration operations the DEQ could perform at lower costs during and after the switch. Dillon said he listened to the DEQ. He also was told that farming communities between Lake Huron and Flint might benefit from the new water pipeline. There is some discrepancy about just how much money joining the KWA was going to save Flint. On March 29, 2013 — just a few days after Flint City Council symbolically voted 7-1 to join the authority — Treasury spokesman Caleb Buhs sent an email to six officials in three state departments saying the switch would save Flint at least $100 million over the next 25 years, and possibly as much as $300 million. When interviewed recently, Dillon said the switch was, at the very least, not supposed to be a financial risk to the city. Chris Kolb, a member of the Flint Water Advisory Task Force, went a little further. “It was a wash going forward,” Kolb said about the deal. Eric Rothstein, another member of the task force, echoed his colleague. “There was a very, very strong desire by the local people to be independent and have their own water system,” he said. “The notion going into this that there
were significant cost savings is a dubious proposition.” Gov. Rick Snyder got involved before Dillon signed off on Flint joining the KWA. By that time, Detroit was also under an emergency manager. Snyder held a meeting with Dillon, KWA officials, Kurtz, Flint Mayor Dayne Walling, Sue McCormick of DWSD and Kevyn Orr, Detroit’s recently appointed emergency manager, according to Dillon. The governor didn’t want Detroit, which was on the verge of declaring bankruptcy, to lose its biggest water customer, Dillon said. Snyder failed to negotiate a deal at that meeting, however. The DWSD offered Flint better water rates at the last minute, but Flint leaders were still gung-ho about joining the KWA, Dillon said. He signed off on the deal soon afterward. Dillon is quick to point out the KWA deal he approved was completely separate from the decision to use the Flint River as an interim water source. He said he assumed Flint would broker a short-term deal with DWSD until the KWA came online. But that’s not what happened. Later that summer, Kurtz made the call to use the Flint River as a water source. Jerry Ambrose, who was Flint’s emergency manager by March 2015, wrote a memo to Treasury explaining the financial rationale behind the decision. “That decision was made because it also offered an immediate cost savings opportunity which translated into the ability to upgrade the Water Treatment Plant without having to seek financing,” Ambrose wrote in the memo. “It was a reasonable decision because of our experience in using the river in a back-up capacity, including test runs on a quarterly basis for several decades. Unfortunately, the switch to the river as a primary source was more challenging than anticipated.”
The rest is history: The brown, smelly water. Boil water notices and high levels of trihalomethanes. The DEQ misreading federal regulations and not using corrosion control. The lead leaching off pipes and into drinking water. An investigation into whether fatal cases of Legionnaire’s were linked to the water. By October 2014, several months after the switch, water problems were well known. There was talk of reconnecting to DWSD water, but this wouldn’t happen for another year, until the state agencies confirmed there was lead in the water. Prior to that, Flint’s emergency managers said a reconnection was too expensive. By April 2015, reconnecting to DWSD without the state treasurer’s approval was also prohibited per the terms of a $7 million loan the state issued to Flint. Ambrose proposed the loan from the state’s Local Emergency Financial Assistance Loan Board as a way to pay down the city’s remaining deficit. Dillon couldn’t comment on the reconnection discussion because he was no longer in office by October 2014. But emails released by Snyder’s office show Treasury officials reiterated several times in the ensuing months that reconnecting would cost too much. Deputy Treasurer Wayne Workman addressed the issue in a report about Flint water rates he sent to his boss, Chief Treasurer Tom Saxton, on Feb. 11, 2015. The reconnection cost was so significant Workman underlined it in the report. “... If Flint reconnected to DWSD for the next 18 months, the estimated monthly cost would be more than $1M per month totaling approximately $18M,” he wrote. A month later, Ambrose adamantly stood by the continued use of Flint River water. “The oft-repeated suggestion that the City should return to DWSD, even for a short period
of time, would, in my judgment, have extremely negative financial consequences to the water system, and consequently to the rate-payers,” Ambrose wrote to Workman on March 2, 2015. That July, a leaked EPA report written by Miguel Del Toral brought lead into the conversation about Flint water problems. Still, the treasury department was advising against reconnecting because of the cost. “Gentlemen ..., in the attached (which you have likely seen before) is a description of the cost to reconnect to DWSD,” Saxton wrote in a Sept. 2, 2015 email to several people, including Snyder’s chief of staff Dennis Muchmore. “I assume/hope no one is still seriously considering that option but if you need anything more give us a call.” Muchmore agreed in his response. “No, makes no sense to do so at all,” he wrote. “We just need to get to the new connection ... just can’t wait to put this one behind me.” Later in September, Virginia Tech professor Marc Edwards and Flint pediatrician Dr. Mona Hanna-Attisha released independent studies revealing the lead problem. In the middle of October — a little more than a month after Saxton wrote the email to Muchmore — Snyder announced Flint would be reconnected to Detroit water. In hindsight, Dillon said he isn’t sure how the state governmental system failed. “I scratch my head as to how this persisted so long,” he said. Roger Fraser, the Treasury official who was the main liaison to the emergency managers, did not return a phone message for this story. Workman and Saxton didn’t responded to email inquiries. Ed Kurtz, the emergency manager at the time Flint decided to join the Karegnondi Water Authority, declined to be interviewed when reached by an MLive reporter.
Flint city leaders and water plant officials stand in front of the Flint Water Treatment Plant A water softening tank is filled during a ceremony to stop the intake of water from Detroit on April 25, 2014, at the Flint Water Treatment Plant. City leaders decided to use the Flint River as on March 12, 2014, during a ceremonial ground-breaking to prepare to draw drinking its water source while the Karegnondi Water Authority pipeline is built. (Samuel Wilson | MLive.com) water from the Flint River. (Sarah Schuch | MLive.com)