Flint residential water bills, already among the highest in the nation, are projected to double during the next five years without action to upgrade the system and address fixed costs, according to a new Michigan Department of Treasury report.
“This defined the problem. Now let’s work on the solution,” Gov. Rick Snyder said during a Friday meeting of the Flint Water Interagency Coordinating Committee.
The estimates highlight continued concern over Flint water rates despite the city’s expected switch to the Karegnondi Water Authority, which it joined with state approval in hopes of gaining more control over long-term costs.
The typical Flint resident is currently charged about $53.84 per month on the water portion of their bill, not counting sewer costs, according to the report prepared by Raftelis Financial Consultants of Missouri.
But current residential rates are not projected to cover future costs, assuming the city purchases Lake Huron water from Detroit through fiscal year 2017 before transitioning to the KWA pipeline in 2018.
As a result, the typical water portion of a residential bill is estimated to rise to $110.11 per month by fiscal year 2022 “if no action is taken” to address various issues, according to the report.
KWA Chief Executive Officer Jeff Wright told the committee in late April that the new pipeline would slow projected water cost increases for Flint and save the city at least $600 million through 2047. Then-state Treasurer Andy Dillon also cited savings when he authorized the city to join KWA in 2013.
But officials are reviewing cost projections, with the new report noting the “evaluation of future water supply options is still ongoing.” Flint would remain obligated to make an annual $7 million bond payment for KWA even if the city permanently returned to Detroit water.
Another option would have the city purchase treated KWA water from the Genesee County Drain Commission instead of operating its own treatment plant, according to the report. It would require an expansion of the county plant at an estimated cost of $30 million, along with another $19 million to expand the county’s raw water storage impoundment.
Treasurer Nick Khouri presented the report’s findings at Friday’s coordination meeting, highlighting several reasons for the city’s already high residential water customer costs and projected increases, including the fact that Flint’s population has dropped significantly to roughly 99,000 residents.
“It was a system built for 200,000 people, but you don’t have 200,000 people,” Khouri said. “It’s a system with high fixed costs.”
The system is also plagued by leakage and other water losses, including theft, which amounts to “non-revenue water” use for which the city must still pay.
Flint’s operating costs are higher than some similarly situated cities because it is currently buying water and running its own treatment plant, not one or the other, according to the report. The water utility is responsible for higher health care costs than some similar communities and the city transfers water revenue to other funds at a higher rate than its peers.
Khouri said officials could try to curb the projections by reducing operating costs, making investments to “right size” the system, finding low-costs infrastructure funding and reducing city fund transfers.
“There are no short term fixes,” he said. “When you have a high fixed-cost system, there are things you can do … but it would be marginal changes,” he said. “It really takes longer to get this fundamental change in the system.”
The water cost projections are “shocking,” said top Snyder aide Harvey Hollins, and they come as Flint residents continue to grapple with the city’s lead-in-water contamination crisis.
Snyder and state legislators recently sent $30 million to Flint to cover drinking, bathing and cooking water charges since April 2014, when the city began using Flint River water that lacked proper corrosion control chemicals. The city returned to Detroit water in October while KWA pipeline construction continues.
The state will also cover all Flint water use this month, the governor and Mayor Karen Weaver announced Thursday, as officials urge residents to “flush” their pipes. It is a practice officials hope will speed up chemical recoating of damaged pipes and remove particulate lead from the system.
The governor on Friday challenged coordinating committee members, which include state, city and county officials, to find ways to combat the projected water costs increases in Flint.
“This was really forecasted based on existing pieces of information, and the real question – the real work that needs to be done – is how do we change that curve?” Snyder said.