Good afternoon Treasurer Dillon,
As requested in our meeting on Friday, March 15th, I am attaching TYJT’s recommendation
regarding Flint's alternatives for water supply. Please do not hesitate to contact us should you
have any questions or wish us to look into anything further regarding this issue.
Thank you,
Dave
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C
STATE OF MICHIGAN CONTRACT NO. 271N3200089
CITY OF FLINT WATER SUPPLY ASSESSMENT
At the request of the Treasurer, Tucker, Young, Jackson, Tull, inc. (TYJT) makes the following recommendation to the
Department of Treasury concerning Flint’s water supply alternatives. Based on the financial analysis performed of the
various options presented by DWSD to continue treated water service to Flint compared to Flint being supplied by the
new KWA untreated water system, TYJT believes that several of the options presented by DWSD are lower in cost
currently and over the long run than the one offered by KWA. TYJT also believes that DWSD’s most recent offer
(subsequent to the submittal of our report} to build a smaller parallel water main from Imlay to Flint, funded by the
entire DWSOD base of customers, is the best solution offering the least cost alternative and the required redundancy by
MDEQ.
Furthermore, since a majority of the KWA system has not been designed and none of the system has been constructed,
there is an additional risk that the cost of the KWA system may actually be higher than estimated due to potential
construction delays and unforeseen conditions. This risk to Flint could be substantial since the city is responsible for 30
percent of the KWA design and construction costs while still having to purchase water from DWSD during the
construction period.
Finally, there are other issues that were identified in our report that may result in risks to Flint if it were to join KWA that
should be considered by the Treasury in determining how Flint’s potable water should be supplied. These issues are
related to redundancy and reliability, other items affecting cost, and Flint’s desire to control its own destiny related to its
water supply. These are described further below.
= DWSD’s supply to Flint is via a 72-inch water main from Imlay City. This main also supplies Imlay City, Mayfield and
the Greater Lapeer County Utilities Authority (GLCUA). The volume of water contained within the 72-inch main is
approximately 30 million gallons. If Genesee and Flint move to KWA then the three remaining communities’
consumption would most likely not be large enough to maintain fresh water in DWSD’s pipeline (due to loss of
chlorine residual). DWSD may consider shutting down the 72-inch line completely due to the water quality
concerns, which would then create an additional burden for Imlay, Mayfield and GLCUA to finance treated water
supplies.
The KWA supply option is counter to the Treasury's Competitive Grant Assistance Program (Formerly EVIP Grant).
This program has been put in place to allow for communities to consolidate their services and save money. Two
existing customers of DWSD (Flint and Genesee County) along with the potential of others customers (GLCUA,
Mayfield, Imlay City) separating from another water system is in contradiction to the program.
e There is a concern over the ability of smaller systems (KWA) over larger systems (DWSD) to pay for future unfunded
mandates and regulations. Obviously, identifying regulation requirements over 30 years is hard to determine.
However, it is widely accepted that a large system has greater ability to respond to unfunded mandates because the
cost can be distributed over a large customer base.
e Although Flint will be responsible for 30 percent of the construction cost, they will only have a minority vote on the
KWA board. Furthermore, there are other communities (Lapeer County, the City of Lapeer, and Sanilac County) that
sit on the board and vote. However, they are not purchasing water nor contributing to the construction costs. Their
position on the KWA Board will not provide them an ability to “control their own destiny,” as they have stated to the
Treasury.
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Lamphier, Wendy (Treasury)