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State Democratic Party leader: Loan deal tried to lock Flint into 'poisoned water supply'

Mar 2, 2016

The state Democratic Party chairman says Michigan’s state treasurer should resign or be fired for his handling of Flint’s water crisis.

The Flint River (file photo)
Credit Steve Carmody / Michigan Radio

Michigan Democratic Party Chairman Brandon Dillon says State Treasurer Nick Khouri made not going back to Detroit water a condition of a deal when the state gave Flint a $7 million loan to get out of debt last April.  

Dillon cites an email exchange between Khouri and a former Flint emergency manager.  

The loan was critical for the city of Flint to emerge from control of a state-appointed emergency manager.  

“It’s clear that this agreement was intended to lock them in to the poisoned water supply,” Dillon told reporters on a conference call this morning. “The deal was clear that they could not switch back to Detroit water -- even after the city was returned to democratic control … and even if Flint citizens were begging them to do so.”

At the time, in April of 2015, Flint residents were routinely holding rallies and marches to demand a return to Detroit water. The Flint city council was also calling for a return to Detroit water. There had been numerous problems with Flint’s tap water since the city switched to the Flint River in April of 2014.  

Eventually, the state helped pay for Flint’s return to Detroit water, after lead was discovered in the city’s tap water. 

State Treasurer Nick Khouri takes issue with Dillon's assertion he tried to prevent the city of Flint from going back to Detroit water.

“As with any emergency loan agreement, there are a number of financial conditions included to ensure that a local unit of government remains on solid financial footing and does not slip back into financial emergency," Khouri said in a written statement. 

Governor's office spokesman Ari Adler issued a statement saying Dillon's accusations are wrong.

"The provisions in the loan agreement were put in place to ensure the proper oversight of money sent to Flint by taxpayers from across the state but nothing was prohibited as this latest round of political rhetoric is suggesting," Adler said in the written statement. "The provision merely means the city couldn’t use the emergency loan for things outside of the request without approval of the state treasurer."

The KWA provision was effectively waived when the state paid $6 million to hook Flint back up to Detroit water last October. Recently, the state reimbursed the city of Flint an additional $2 million.