Title
Revised Flint Master Agreement
Body
Agenda of: November 3, 2017
Item No.: 2017- 433
Amount: N/A
TO: The Honorable
Board of Directors
Great Lakes Water Authority
FROM: Sue F. McCormick
Chief Executive Officer
Great Lakes Water Authority
DATE: November 1, 2017
RE: Revised Flint Master Agreement
MOTION
Upon recommendation of William M. Wolfson, Chief Administrative and Compliance Officer, The Board of Directors (Board) of the Great Lakes Water Authority (GLWA):
1) Approves the attached amendments to the Master Agreement (Master Agreement) between and among the City of Flint. The Department of Environmental Quality of the State of Michigan (DEQ), the Genesee County Drain Commissioner (GCDC), and the Karegnondi Water Authority (KWA) for the purposes of effectuating the overall agreement described in the Statement of Principles for Long Term Water Delivery to the City of Flint signed by the parties and dated 18 April, 2017; and
2) Approves the attached amendments to Exhibit A of the Master Agreement
3) Authorizes the Chief Executive Officer (CEO) and counsel for GLWA to finalize and execute on behalf of the GLWA the Master Agreement including Exhibits.
4) Authorizes the CEO to take such other action as may be necessary to accomplish the intent of this vote.
BACKGROUND
On April 18, 2017, representatives of the GLWA, MDEQ, GCDC, KWA, and Flint (Collectively the Parties) entered into a Statement of Principles for Long Term Water Delivery to the City of Flint. The Principles would provide benefits to all parties and represented a regional approach to water planning. Perhaps more importantly the Principles, if effectuated, represented another tool Flint could bring to bear in its efforts to address its ongoing water crisis.
Immediately after signing the Statement of Principles, the Parties began work on a Master Agreement to effectuate and codify their common understanding. While there were many agreements between various members of the Parties necessary to effectuate the understanding, the parties recognized the necessary interrelationship between these agreements and agreed that they should all become parts of a single Master Agreement. The Master Agreement would then provide third party benefits to each of the Parties in any of the agreements attached and incorporated as a part of the Master Agreement.
At the June 28, 2017 Board Meeting, this Honorable Body, subject to certain conditions, authorized the Chief Executive Officer (CEO) to finalize and execute the Master Agreement with Exhibits on behalf of GLWA. Ultimately, the CEO and all parties except for the State and Flint, executed the Master Agreement and placed their signatures into an escrow, which expired on September 30, 2017.
Subsequent to the CEO’s signature being placed in escrow, the Master Agreement was presented to the Flint City Council (Council), and the Council refused to act upon it or propose a viable long-term alternative. Council’s inaction led to the State filing suit against Flint. Ultimately, Council intervened and the case of Michigan Department of Environmental Quality v City of Flint and Flint City Council, USDC Case No. 217-cv-12107-DML-SDD (the Litigation) is still pending.
While the GLWA is not a party to the Litigation, it has voluntarily participated in mediation proceedings related to the Litigation. As you were previously advised, the mediation proceedings did not resolve the Litigation. On October 17, 2017, the Court issued an Order, directing the Council to approve the Master Agreement or a viable alternative to the Master Agreement on or before October 23, 2017.
In response to the Court’s Order, the Council (1) filed a motion seeking the Court to reconsider its decision and (2) approved a two-year agreement for GLWA to provide water services to Flint.
In the face of the Council’s refusal to obey the Court’s Order and in response to Council’s Motion for Reconsideration, the Michigan Department of Environmental Quality (MDEQ) requested that court enforce the Order by compelling Flint to execute the Master Agreement. On October 27, 2017, the Court denied Council’s requested relief but noted that the escrow having expired and the Court could not order Flint to execute the Master Agreement without an Agreement with binding signatures of the Parties.
Faced with the Court Order, the parties to the Master Agreement met to negotiate certain changes to the Master Agreement and its Water Service Contract Agreement Exhibit reflected in the attached documents.
JUSTIFICATION
The Board has been previously briefed in the benefits of this regional transaction to each of the Parties to the Master Agreement. A copy of the current draft Master Agreement is also attached to this resolution. In addition, a copy of the current draft of Exhibit A “Water Service Contract Between Great Lakes Water Authority, a Michigan Municipal Authority, and City of Flint, together with Irrevocable License of Essential Water Mains and Raw Water Rights” within the Master Agreement is also attached. Under these circumstances, it is recommended that the Board authorize the CEO to finalize and execute the Master Agreement.
BUDGET IMPACT
The projected revenue from the proposed Master Agreement was considered in the adoption of the budget for FY18.
COMMITTEE REVIEW
This item is being presented directly to the full Board of Directors.
SHARED SERVICES IMPACT
This item does not impact the shared services agreement between GLWA and DWSD.