Paul Egan

Detroit Free Press

LANSING -- When the state loaned Flint $7 million in April 2015 so the city could erase its deficit and get out from under emergency management, the loan included a condition that barred the city from returning to Detroit as its source of drinking water without state approval, records show.

Michigan Democrats, who obtained those records under the Freedom of Information Act, said Wednesday that the state sought through the loan to tie the city to lead-contaminated tap water drawn from the corrosive Flint River, despite the fact alarms were going off at the time inside the governor's office about serious problems with the quality of the water.

State officials said the loan condition was intended to help ensure continued financial stability for Flint. Nothing precluded the city from asking to have the water-related condition waived, but that never happened until the city returned to Detroit water with state financial assistance in October 2015, once the extent of the lead contamination and poisoning problem became known.

Also Wednesday, House Minority Leader Tim Greimel, at a Capitol news conference, and the Toledo Blade newspaper, in a lead editorial, both called on Gov. Rick Snyder to resign over the public health crisis.

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As part of the loan deal, in addition to barring a new water deal with the Detroit Water and Sewerage Department without state approval, a condition of the loan was that Flint not leave the Karegnondi Water Authority -- a new pipeline to Lake Huron backed by Genesee County that Flint opted to join early in 2013, resulting in its split with Detroit as its source of drinking water.

Former Flint emergency manager Ed Kurtz opted to draw water from the Flint River as an interim drinking water source, beginning in April 2014, after Flint and Detroit could not agree on an interim price for Flint to continue receiving Detroit water while it waited for the pipeline, slated for completion this summer, to be built.

Flint's drinking water became contaminated with lead after the switch. Despite the October return to Detroit water, a threat remains because of damage to the water distribution system resulting from corrosive river water and a lack of chemical treatment to correct that.

During a telephone news conference Wednesday morning, Brandon Dillon, chairman of the Michigan Democratic Party, called on state Treasurer Nick Khouri, who signed the loan agreement on behalf of the state, to "resign or be fired immediately." Dillon earlier called on Snyder to resign, on Feb. 4.

"This dirty deal was forced on Flint by the Snyder administration, even after alarm bells were going off all over the governor's office that lead and Legionnaires' disease were poisoning families," Dillon said in a news release.

Terry Stanton, a spokesman for the Treasury Department, said any provision of the loan deal could be waived if the city requested and the treasurer agreed.

That waiver happened when the state provided $6 million to help Flint pay to reconnect to Detroit in October, he said.

Dillon said the Snyder administration "effectively put a financial gun to the heads of Flint’s families by using the emergency manager law to lock the City into taking water from a poisoned source."

And he said by "dangling $7 million to get out from the emergency manager," the state through the loan agreement was attempting to lock Flint into using Flint River water, even after the city returned to local control.

The Michigan Department of Environmental Quality has acknowledged it failed to require the city's water treatment plant to add needed corrosion-control chemicals when the switch to the Flint River took place. As a result, the corrosive water caused lead to leach from pipes, joints and fixtures, sending water with unsafe lead levels into an unknown number of Flint households and causing a spike in toxic lead levels in the bloodstreams of an unknown number of Flint children.

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Dan Wyant, who was DEQ director at the time, resigned in December over the public health crisis.

A month before the April 2015 emergency loan from the state, the Flint City Council had voted to return to the Detroit water system amid complaints from citizens about discolored water that smelled bad and health warnings about high fecal coliform and disinfectant byproduct levels. Gerald Ambrose, who was Flint emergency manager at that time and who requested the $7-million deficit elimination loan from the state, overruled the decision and said Flint would stay with Flint River water.

Greimel, in calling on Snyder to resign, said "it is inconceivable that the governor wasn't aware of what was going on" long before Oct. 1.

"The governor must have known back in 2014 about how serious this water contamination problem was," Greimel, D-Auburn Hills, said at a news conference Wednesday at his Capitol office. If he didn't, "he's the worst manager ever."

Greimel made his remarks after the voluntary release by Snyder of thousands of e-mails related to Flint drinking water dating to 2011, the year he took office. The e-mails included ones from Snyder's top two legal advisers in the fall of 2014 recommending that Flint be moved off Flint River water immediately and back onto the Detroit water system.

Greimel said Snyder's conduct with respect to the lead contamination of Flint's drinking water and a possible link to outbreaks of Legionnaires' disease that killed nine people have been marked by inaction and a lack of transparency and accountability. Only Snyder's resignation will restore public confidence in state government, he said.

"He needs to resign."

Ari Adler, a spokesman for Snyder, said it was unfortunate Greimel held "a politically charged press conference" rather than attending a Wednesday morning briefing with officials in the governor's office to update lawmakers on what is happening in Flint.

"Gov. Snyder is fully committed to remaining in office and fixing the problems with the water in Flint and the problems within state government that caused this crisis in the first place," Adler said.

"We need to restore safe water to the pipes of Flint and we need to restore trust in their government to the people of Flint. Finding solutions, fixing problems and moving Flint forward by working together will deliver safe water and real results for the people of Flint now and far into the future.:

Greimel joined Michigan Democratic Party Chairman Brandon Dillon, who called on Snyder to resign on Feb. 4. The Toledo Blade also called for Snyder's resignation in a Wednesday editorial, saying the Flint water scandal leaves him "disgraced and politically damaged beyond repair."

On Thursday, the national women's advocacy group UltraViolet is taking out full-page ads in the Free Press and The Detroit News with cut-out signs reading "Gov. Snyder Not Welcome." An insert is also planned for Sunday's Flint Journal. They're intended to be placed in the windows of Flint homes and businesses, the group said in a news release.

House Speaker Kevin Cotter, R-Mt.Pleasant, said he was not surprised by Greimel's call for Snyder to resign, because the Democratic House leader is "all politics all the time," and "largely irrelevant," spokesman Gideon D'Assandro said.

Senate Minority Leader Jim Ananich, D-Flint, who has not called on Snyder to resign, said Wednesday he wants Snyder to testify under oath about Flint while he is still in office.

Contact Paul Egan: 517-372-8660 or pegan@freepress.com. Follow him on Twitter @paulegan4.