Weaver/McCormick Flint-GLWA Deal Transforms Water From Obscene Tax To Outright Theft
Flint Mayor Karen I Love Rizzo Weaver and Great Lakes Water Authority CEO Sue McCormick have reached a 30 year deal for Flint to purchase water from the Great Lakes Water Authority. The City of Flint had signed up to purchase its water from the nascent Karegnondi Water Authority in March 2013 and the State of Michigan concurred in April. Everyone in Flint City government, save one councilman, has agreed to source Flint’s water from the KWA. Even Mayor Weaver. Until this week.
The Weaver/McCormick deal has GLWA paying Flint at least $ 7 million a year to cover Flint’s share of the bonds issued to finance the KWA. A total of $ 210 million over the 30 year contact period.
Where will that $ 210 million come from? GLWA is not the Federal Reserve, they cannot just create money out of thin air. GLWA will extract the money from the victims ratepayers in the other communities it ‘serves’.
Mayor Weaver and CEO McCormick will transform GLWA water rates into yet another exaction imposed upon most of Southeastern Michigan to subsidize Flint. Without any input from those victims ratepayers. A blatant fee as taxevasion of Headlee. Governor Snyder, of course, approves wholeheartedly.
This is government theft, Headlee evasion, and a rich fount of future corruption.
No word yet from the Great Lakes Water Authority whether all those Detroit Water & Sewerage Department employees they absorbed from the City of Detroit have the same AAL calculation error in their pension funding schedules. You can bet they did, and the suburban geniuses politicians who spent a year doing due diligence also missed it. The DW&SD pension funding schedules were determined by the same very expensive bunglers who wrote the Detroit Plan of Adjustment.
Albert Einstein Called Him "The Greatest Mind in American History."
Josiah Willard Gibbs 1839 – 1903
The second phase of Governor Snyder’s plan to restore Flint’s damaged water infrastructure was announced today. Michigan’s taxpayers will pay the pirates at Detroit Water & Sewerage $ 6 million to reconnect the Flint water system to DW&SD’s Lake Huron water supply. The Charles Stewart Mott Foundation will ante up $ 4 million more and the City of Flint will will pay $ 2 million extra as well. Governor Snyder said: “The technical experts helping the city on its water advisory all agree this move back to the Great Lakes Water Authority provides the best public health protection for children and families.” Note that our devious Governor gives you the impression that the funds will be going to the GLWA. No, they will all be going straight to the pirates at DW&SD unless Flint’s new Karegnondi water pipeline is seriously delayed.
As we pointed out last week, the Flint water distribution system has been seriously damaged by 17 months of amateur chemistry and government incompetence after resourcing their water supply to the Flint River. Incompetent control of water chemistry after April 2014 has dissolved protective pipe linings, allowing lead, iron and steel corrosion which has released lead and iron compounds into Flint’s water on its way to customers. A process called leaching. The finished water coming out of the Flint Water Treatment Plant is seemingly fine, but it certainly isn’t by the time it arrives at their customer’s taps.
Because the damage to Flint’s water infrastructure commenced with this resourcing, a hue and cry went up to reconnect Flint to Detroit water. A logical fallacy. Detroit water did not damage Flint’s water infrastructure when it was used prior to April 2014, at least as far as we know. (Do we really know?) However it cannot – by itself – repair the damage done since. Flint pipes may not have been corroding before April 2014, but they certainly are now. Detroit water is controlled just enough to prevent damage to water infrastructure, but not enough to repair damaged infrastructure. Flint is going to require a distinctly different water chemistry than Detroit.
The technical experts are touting corrosion control plans to stop the corrosion in Flint’s water distribution piping. By corrosion control, they intend to load up Flint’s water with orthophosphate forming chemicals to prevent further corrosion and attempt to restore the protective scale linings in Flint’s water piping. This is the EPA’s stock recommended practice, derived from their statistical analysis of water systems across the nation. The problem here is those statistical analyses were made of more or less functional water distribution systems. Not a heavily damaged system like Flint’s. Flint’s water problems are an ex novo case. The only recent case of lead pipe leaching even close occurred in Washington, DC, but is enough different in its particulars that Washington’s corrective actions do not provide an assured plan of action for Flint.
This deal was constructed as a lease to evade the 1963 Michigan Constitution‘s requirement, under Article VII, Section 25, for a vote of Detroit’s electors to approve the sale of any public utility. However, by constructing the deal as a lease, the City of Detroit is essentially granting a lease franchise covering the DW&SD’s water and sewerage operations to GLWA. The 40 year term of this lease franchise clearly exceeds the 30 year maximum permitted by Article VII, Section 30 of our 1963 Constitution: Merriam-Webster defines a ‘franchise’ as “ the right to sell a company’s goods or services in a particular area; also, a business that is given such a right”. Exactly the nature of the GLWA lease agreement with the City of Detroit. Should you doubt that the City of Detroit constitutes a ‘company’, Merriam-Webster defines a ‘company’ as “ an association of persons for carrying on a commercial or industrial enterprise”. Exactly what DW&SD has been doing for over 100 years.
State Representative Kurt Heise (R-20th) from Plymouth has challenged the establishment of GLWA under the 1963 Michigan Constitution’s Article VII, Section 28:
Taken together with the 1963 Michigan Constitution’s Article III, Section 5:
it establishes our Legislature’s authority over intergovernmental units. But these two sections do not unambiguously grant the Michigan legislature exclusive authority over intergovernmental units, so there is probably legal wiggle room here. Contrary to Representative Heise’s contention, a good lawyer could make a case that the U.S. Bankruptcy Court could establish the GLWA under Article VII, Section 28 and Article III, Section 5.
Last Act of the Detroit Bankruptcy Stumbles Behind a Wall of Secrecy
The final Detroit bankruptcy plan established a 14 June deadline to reach an agreement transferring operating control of the Detroit Water & Sewerage Department’s (DW&SD) assets outside of Detroit to the newly created Great Lakes Water Authority (GLWA). The State of Michigan, Detroit, Wayne County, Oakland County and Macomb County all signed a Memorandum of Understanding (MoU) creating the GLWA late last year, subject to a 200-day due diligence period. Under the MoU, the City of Detroit would receive a $ 50 million annual lease payment from the GLWA while retaining full control of DW&SD assets and operations within the city. Erstwhile DW&SD customers outside Detroit were promised a 4% cap on annual water and sewerage increases for a 10 year period, which have been running above 10% per annum, in residential bills, in most Southeastern Michigan communities.
In point of fact, what has actually been occurring are secret negotiations over future tax increases across Southeastern Michigan. Water rates have become a surrogate form of incremental taxation. These negotiations will set tax fee increment rates for decades into the future. For taxpayers ratepayers who haven’t even been born yet. How are these negotiations going?
Detroit Chamber's Mackinac Policy Conference 2015 Starts Today - You Won't Like The Outcome
Is that a donkey in front of the Grand Hotel?
Later today Michigan’s Self Very Important Persons start checking in at the Detroit Regional Chamber’s 2015 Mackinac Policy Conference held on Mackinac Island. At $ 2,150 per person for Chamber members and $ 2,925 for Chamber wannabees, average Michiganders will not be much in evidence. The attendees list reads like the last itemized contribution report for SafeRoadsYes!, along with the clueless Michigan politicians who endorsed Proposal 1.
The Detroit Regional Chamber’s “Vision and Pillars” for the 2015 Conference is innocuous enough, but the Conference’s agenda is far less oblique. A host of left luminaries and crony capitalists orbiting Michigan government will be plotting higher taxes, bigger spending, and more vexatious regulations. When they are not drinking.
The official agenda is all about Detroit, Michigan schools, alternative business subsidies, and the roads, but there is also the transformation of Detroit Water & Sewerage Department into the Great Lakes Water Authority lurking in the background. Roads are the most interesting part of the official 2015 Conference agenda, given the near universal support for Proposal 1 amongst the attendees. Despite touting ‘vision’, expect the Conference to endorse new taxes over improved efficiencies and better engineering.