Jody Lundquist

Please see below in response to #5. As I stated during our conversation yesterday, I am unaware of additional testing and treating costs beyond those included in the City's adopted capital improvements budget and as described in the most recent LAN contract change order. Thanks, Jody N. Lundquist Chief Financial Officer City of Flint 1101 S. Saginaw Street, 2nd Floor Flint, Mi 48502 (810) 237-2441 ---------- Forwarded message ----------

ft is under capital improvement on bs&a $4,123,906 and on your cash flow as follows: contractual services 2,293,580 equipment operation 942,866 repairs and maintenance 887,460

In follow up to my previous email, please assist in responding to 1,2&5. I will handle the others. Thanks for all you do. I hope you know how much it's appreciated! conececene Forwarded message ----------

Larry, I think it was a productive meeting this moming. My team will continue to keep you informed as conversations progress with BS&A re: design of the "Credit Generator". The City's next steps are: 1. Work with Treasury to draft Top Q&A for review and approval by State officials and Mayor. 2. Develop technical implementation plan with assistance from BS&A, Yeo & Yeo, State Treasury, and City staff 3. Provide implementation cost estimate to State 4, Review legal implications of implementation strategy with Counsel 5. Develop comprehensive communication plan Top Q&A: 1. Time line for implementation - application of credits to customer accounts and reimbursement to City dependent upon policy decisions by State/Mayor and development of software program 2. How credits will be disbursed - Determine whether credits will be applied to total bill (more immediate customer relief, benefits sewer fund cash as well) vs. applied only to water billing (keeps water and sewer separate and maintains habit of monthly payment) ~> ci, nay, Sal — med Boles w/ 3. Determination of how water penalties will be relieved - relief of penalties not included in State's initial estimate for relief 4. Application of residential relief to commercial accounts for multi-unit housing customers - Ability to ensure that potential relief is passed from owner to tenants is an issue. Redistribution from 20% relief to 65% relief will put further strain on the ability of $30 million to cover relief amount and time period covered 5. Inactive accounts - how will inactive accounts be addressed if credit amount is greater than any other amount potentially due to the City? The question of inactive accounts also begs the question of accounts closed while a credit is still active on the account. For instance, if the credit is to be applied to water charges only, someone could close their account with a credit still due. After applying the remaining credit to the total balance owed (water AND sewer), would the customer then be due a refund? If so, what control or policy will be put in place such that someone doesn't come in and close their account to qualify for a refund and then immediately open a new account? Amanda/Al please brainstorm. bo clans, dalaay? Our next meeting will discuss the 24 month cash flow and to review/finalize the Q&A list for presentation to the State and Mayor's office for their approval before proceeding with finalizing the Credit Generator's parameters. xxxEND_PAGE:treasury01_b39_6977_7316_078 T have reattached the 24 month cash flow for ease of reference. I have noted that of the total cash balance shown, $5,848,116 is a restricted cash balance in compliance with the Revenue Bond Act (Act 94 of 1933), Reducing the beginning cash balance for the restricted amount immediately impacts the City's ongoing cash position. As distribution of the appropriation from the State to City is coordinated, | cannot reiterate often enough how dire the need is to provide support as quickly as possible. We are dedicated on our end to ensuring all procedures and policies are in place to provide the State with any requisite information and documentation to make it happen. As always, please feel free to contact me with any questions or for additional information. Have a great weekend. Jody N. Lundquist Chief Financial Officer City of Flint 1101 S. 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P roms nina ie tum] ems get aes eset as] as ass mts] tama mms isegers Lage erase wu MAE sr) ae te) aes] pees neta | tienes pet aise une apap Beas want umes | ases Rien satay eres karat —aeenats | aicgrns doe dba aed Diener aoaea]| arin Gene ah cone mone meat] wea gem neem pun ae (entire) ietoteey me me IE TR LEM UROT DRORG SoA SMR) nae, rere ere BRST ae 7 EEE] tye te curled xxxEND_PAGE:treasury01_b39_6977_7316_081 ORAFT - For Discussion Purposes and Subyect to Revision ea abt reflecs water cantuenpton fer aN MH Bm eta water fe aos fr eater each fy mech the TO" Fink mlagalis autscraed laruany 2a ard Fabaaary HE Ce, speek) “ure Date at f rater eangumpten Dereriner 2218 ant Bich gre erchated me perp Cm, Se average morte recone son bem STO ecotcavaten 45% eres apne 2 arcras rate the 6 gach be Sy atm tng ‘sain dace Thor rycn sean Ys ereigeree Manager 188.282.48 254,513.56 254 513 56 254,513 56 xxxEND_PAGE:treasury01_b39_6977_7316_082 DRAFT - For Discussion Purposes and Subject to Revision anna Water Service $3295 390 701 ns Ear Kosswe | 3 : $417 558 66 $3.38K.50D neu [nor THO $1035 25.30 ee) S233 954.67 | Sep 22498 wiao | siomeso7 | $2351 @ 4, 776.8829 [Can Ex) 5 7 srvssa77 | 76 R367 E04 | Nene Re ioe | __sarasmisg 308 ; $3.371355.91 | Dec ia 28235 [Be 5a2 ‘s9B00.s7 76 $4920 64 | $433 257 a8 "s330759324| tan 2.290 [espa 93127 7 im B06 ¥ cna nan % { $433 439 69 $4063.25 © | Feb 25055 a3493 $iaaa 0845 & $930 O11 oS | $ 433.033 81 S27 | eis | ar aia? $1057 362 05 ? Ferm tt weeiTtE 53,222 589 95 | Apr Er WS.257 $850,822.21 0 $000, $584 599 08 $556.934 44 | y ami3e2 99 | 3 53.209,549.87 | hay Ex 19 818 394153974 D $957 457.31 azz $613.3008 | § «2256173 | $ (5.78 20839 [nats 20.305 my 432 | S33L216 5 % Ras 3940 817 45 239 3520087 [3 43220751 $ 1543 965.07] u-15 24179 153 OCD S2L 12097 Ezy $203" 98 $583 095 do 27,950, S 7aa sara | § 430267 2 |S 5298296108 [Ag 15 al Eur) WS. 18S qaneatar | ry Ta PSR Tas $2550) Pit 432.580 71} 3 $2903 485 | e015 26.230 wr $790.852 9C kira 77 4 $584 422 93 28,065, $514,090.39 [§ 432,512 70 | $ S357 7635 | Oars Ee abe | $57a54068 | 7 Toa $364 622.0 20re § Giz 154 05 | § 433 0045 |S S290 tt | hae 5 20.357 REST $774,334.26 308. T3126 82 ‘$550h4505 | $984 7ad 78 2a. 38 S303 77 27 | § 43283905 | $2.833.947 54 | Des 15 2s it T.gs= | $697-049.89 36 54,553 04 $475 $89.50. $995,169 17 20245 $4n3.naz 43 | $434 564.35 | $ $3139 542 56 [an tb oar’ [steve] sa 097.95 W Oa sean 537 Bt | $905.08400 28s 5 562,963 67 | $435 06502 [$ xxxEND_PAGE:treasury01_b39_6977_7316_083 ciaiges Sever Senviee Chai rsSiled Genesee County Commediy ctarge ja. 3 Ccssumpion ee 2 Geagasptien Charges! tse 1s wumem sarzzosue9 | anya s_a72a7a] syengssazt $__vosumas] same 1 @auen)s sae |) smalimsmlsmeos un me |) moenls nee] eds ax] ave [eo eomel) meen] se am fimsenleumels fs Te $_mave2s| spomsa2-4t smarism|s marcas { | s_ermi|s samme sewanls seszels ‘aca: xxxEND_PAGE:treasury01_b39_6977_7316_084 | eocre'eze'ez + $025 (upseuiuio> pus fey COPISeW) 3579 Ro}7a [Odd PHB |EIHOUNH IOI DUE [SHUOPSeU) pasinquilau 25 03 1509 jean ab TER WT [ab 266 voc BP C£o Ybe " Tfeanes tron o£ t hon dL 23a WYLOL [ vUros eset Ft luveget s lezstssctor $ (i = 1 wt tne see lezstsserm $ fue nent Ife uotsiaay 07 129/qNs pUE sasarling WoIssN>siC 404 L3¥UC PA Mee ee ie (Lie I gente Su Work pe Flea wy 1 UpL ate 1 Yen asi mi [Tee eter ULL eete teak SO) Way rR CAIN ye nee Rtg tee. spans trea 6 Son vTRAUIE & SEN} E52 POL ely 2 FTA HE sub UrpanpRN ant ae | Shek penny Sere eT ae Ta) re stuene g) oanlion sae Hoe inne Ue mapanann nn te ar fey ead we ney tease pa Paaors were PU A Ree UL RN 4 msanee renne | emaraer G1 ang ' Syebeay Hy 18 Rhee ee Oe eo Ce Ce a eT ee eT ee Ud mit UH MOTE Fed ma ap fer peu iD TAR TLE PAULA UAVS TIO nasa abe AGH) AREAL te ENE PEO Oe xxxEND_PAGE:treasury01_b39_6977_7316_085 ; S PINT TUM gas NET Mth valde yt De ares SP i Ue ee | $s BTW HUET Made 7 SE yd ) { LIDIA © (BAF Erase Bae rte ORE TL . 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Please find attached the updated 24 month cash flow modified to include additional assumptions for collection rates after the $30 million appropriation is applied to customer accounts. The appropriation has also been extended to show as being received by the City beginning in May. Boxes for assumptions regarding the receipt of the appropriation are also included. Please let me know if you have any questions. Best regards, Jody N. Lundquist Chief Financial Officer City of Flint 1101 S. Saginaw Street, 2nd Floor Flint, Mi 48502 jlundquist@cityofflint com (810) 237-2441 xxxEND_PAGE:treasury01_b39_6977_7316_058 {ogo‘poa’s} (as0'so0'e) s6s'one's See'sn0'9 Ste’s00'r see's00'v 156 CTE ET ot) By6'eS ove'eS evv'one evr'ost evr'osz o0'000'2 E tas'ezt TSS's2t eset etg'Ote etg‘ore etg'OTe TS'OTE erg‘ore eT9'OLe Teor SETTL Tos'6s ose'sse: ste’or Beet oge'Zst O8E'ZST OTE'SCE OTE HOE ote"sce Ote'WOE ote'soe DrE'DoE Tee'sot Ste'psz 6yy'TST tte'zaz, SpO'tRT ‘Osz's0t osz'sot oSz"s0T eat'S8t 20°S8T eer'sat ‘e2r'S8t S2T'S8T eLt'set sores 6zz'os oeo'es. earts ee'eot See'ERe'T eee'ecet SEE°CEET oo0'o00 : 3 : 2 = ooo'o00'ot are 8zt'6y9 SeT'609 zayste TERE zea'ze ci £374 ces'te 26e'9tL ooe’zst Sv6'9zS eet'o06. one’szs't esr atyetz ts'etz ets'etz ‘ee0'eay 880'609 6E0'Gor sen'cor 6£0'60P eEo'eoy Ses'ap Ber'sy zsT'set ees'egt 850'EoT 924'966 922'968 9t2'9665 Ose's2s SeS'zeyT ose'aes Ose'aes Ose'sas ose’ess £66'268 6s'006 Ooe'e0r't svo'rTs cosets 963°T00T sea'to't vés'ose'ot | pev'ces‘ot —spap‘ee‘Ot gt ezee't seetzest STSZEET ote'ree’z ssr'et0% Sye'ves‘t oor'osa'e Doxa soy'ses'z : : Ss = - Ts09) BOvOr Seeeet (zeta? eee'e tees gees S668 eees see's cee See's eS ss aa - DOO'DED'DT «= DodoDN'oT boo'poo'ot ¢ : Ec “ = - - Doo‘D00"t - o00°000't z : o09'000's 3 : zae'e6s zse'e6s THE'SeZ Tattes Tete eey'reet E80'Dze't EBy'evet eay'ove'T err‘oz0z var'ves't LvOse't see'vtze sov'ses'z ‘TeeBST'S2 Tos‘er'sz «= eOS‘tTS'TZ =| eee'ece'st Qpreveot «= TEETOTSTT. «= sEmDTex'et = oaT’oae‘st = sseB'ONT'ST seorzoe'st «= «eeb'eue'yt = Bb 'vaz‘eT eey'89Z'0R —BE“TZG‘ET —_. Eivrd ‘at0e 9702 staz am ‘9t0z ‘Str ‘STZ o10z stoe StOz cd St0z st0z wawaieas = snony arnt |aNnr mee HOU asenuess aSenNYT UsGNGIGd «=—«-«UBGINJAON = 8380190 wanes = sony Gussoud = CaLaONs §=— GLDTONd «=f aau23fOed Biwoui qguzafOWd = Gaafoud «= aaldafowd «= aasarous §=— awn Thay why Twnisv way , panezey UpAs SION 70 8 42D 0; pamnogy sinuW 30 : AnD 03 parmoyy nyo 0g SL apa) Suamoay ce ovens $ PIPE MS PBsy ers jo mmoury 7 $ Beene YanTD partiesy eters jo ney JERE WANT TAs 59 HALON 10 “KAT $8 pavaiUd Bq IEMUI ts jo LONDOIOLd 2 TAs PaIeEpNG %Zz AjBreuNKodde stenbs apayos 204 Ise Wy Jo UORSIOIEAL TAY “adweKg 504 — $ asmyping 2reM YNTD ‘STA4 4j Spe uoNdumssy gies Aue apn Ose IsMw ZT Ag 10; uOgdUINSSe SseouIKy ayes ALY STOR RURWN uy Supwudiog saq edu] pom aseaDU Ue ey) WINS LOE UBEH Sey STAT = = “ peeessiy age jesse way Bppissey < ese ‘SP bo] ByEy DORATED ALAUOIN eREZDAY atorsifi ayy stogstfe aay Stor /eRfa RUN umoys 5 Satodund aes soy Tunowe Uy ZTAg JO 22uENb yy at YBnoA AoumTy JB1eA Saye] yeUD OYI WOy JETeM pareag Buyseyzund anvjusd 0} Bagy Alex YA AYD UL Japio safeuew Avefiews dq pordope se leSpng 214399 9TAg Tenaga U) Bapny se uogzaloud wa8png 1 TA ay) SOUNSTe TOY JaqIusIaG-OT OZ Aint poyad ays 20y AYAHIE auNpUady “cameh jeomy ang jo suauoW 9 Bupreurar bya zaK0 Aneba pap STOZ “Te saquiased Jo $e spuny wadsun Daya’ GTOZ BUNT-GTOZ Arenuer pentad ay so} AaRTe eanpUDdag, SSNOLLGWMSSy FEPLUCGNSS! “Sat Fo soga030 ¥ pnO wor yA "4EB 01 UOTE) Sey STO # eral ESN SOY poland af poei aes aBe1OAe UL BRE sum D1e1 UONDI_OS AYILOW BBLIOAR “sates LOTISNOS pus AyAIsIe Lung OLA US HUTEY Brom gTOT soqETEN-STOT AueNUsy Posed aus 30) seRMYD IVs; mopeg paryng suopdunssy STZ TE oquiesed Winona payodey AyARzy [emoy ét0z ‘os ENN HONOMNUL STOR “t AINT GOR AHL HOT O13 HSV HANDLE CNN ALY ANTI 40.410 xxxEND_PAGE:treasury01_b39_6977_7316_059 sae) texcseyel (steer) _ervime's) ___ lewis) (sos’sso't] —(Gos'eso's) ~—(sos‘se0't)] —sas‘saa't) —_—‘{sas’ago'r) eeeoees eevee tuvontt—ewv'one’t vont 2gT ve LST ts EST tS eats EST'B Sye'ED 96'S. ore'es 9v6'ED ove'es Lyr‘osz exT'0Sz eytose ‘£0T‘097, éot‘osz D00'ss oon'es o00'ss ooo'ss ooo’es T8S'BeT Tes'eer Tes'szt TSS‘EZT Bi y44 O8E‘ZST OSE‘Zst GBE'éST ‘OgE'ZST Ose'2st OSé'ROT OSZ‘BOT osz’eoT ose's0r ‘OSe'80T ‘8zT'609 BzT'6s9 Bet'6rg BzT'6tS. SzT60S. at9ETZ EISEN LT9'E1Z eIgerz rac eatd 9te'966 922986 ote's66 922'966 9TL'968. £66'E99'T dee’ese't 2e6'E9S°T ée6'Eo9't eeS'ES9T ees eee'8 fEE'S eee’s 314: 9 pos’sso'r yos’ssoT yoo"sss'T pos’sso'r ‘pOs’sssT {ezt’vos's) —tmrs'zos'c) (ETT 'tED's) ~—tean'ete’s) —(eor'ete'el £t0e eT0z pated £102 £102 gnnr aA Ted HRW auynuais aa3f0"d aqaljafoed a313afokd oaaowd qqssoud xxxEND_PAGE:treasury01_b39_6977_7316_060 Pleyte, Beth (T reasury)

Please find the most recent cash flow iteration provided to Treasury attached. Best regards, Jody N. Lundquist Chief Financial Officer City of Flint 1101 S. Saginaw Street, 2nd Floor Flint, Ml 48502 jlundquist@cityofflint com (810) 237-2441 soneeneee- Forwarded message ----------

"Khouri, Nick (TREASURY)" <[email protected]> Cary, Per our conversation, please find attached the cash flow which extends projections through June 30, 2017. I have also included additional assumptions for: 1. how customer bill relief will be distributed from the State to the City (amount and # of months) 2. an area for assumptions should the State appropriate additional funding for GLWA water purchase (amount and # of months) 3. Rate increase and collection rate assumptions for the period following 1/1/2017 through 6/30/2017 Please let me know if you have any questions. Best regards, Jody N. Lundquist Chief Financial Officer City of Flint 1101 S. Saginaw Street, 2nd Floor Flint, MI 48502 (810) 237-2441 xxxEND_PAGE:treasury01_b39_6977_7316_003 Aaxenptions Oetined Below ‘REVENUE ASSUMPTIONS, 11 User Charges forthe parted January 2025-December 2018 were based on YTD billing actin end colective rates 2. Reto iocrease sssorttions fective March 1. 2016 end lty 1. 2018 enay be modified inthe (rrr box below Bestorieg the FIS Master Fee Schedule ates pat the scteaded praleinary iojuncnon order woud reat ma rete Increase of apprommatety 27% ard woskd meet cobectiont beperang i Mart 2016 4 ifthe Macher Fee Schacht canes are restora in FPS then any rate crease axcoraption for FYI? trast abo wakes 27%. 3 eo tne siento of eres sree pat ston DCRR ASNT. Expenditure act tor the parce arnmary 2026-lue 2018 reflect orspent fds 93 of Deceesbe’ 71, POLS domed 2 Cxperchtare actiny fr the pervod Joly 2016- December 2018 essames the FYI? budget projectice at liad ia the Biennial FYE & FY17 taclgn ms adopted by emnerpyncy manson oer 41 Tee Cry wl BinWy haw to conti pearchaung traated war freem the Great Laloas Water Autharey throags the Mrst quarter of PYI7 Aa sracost fo dartrative Dorpows 0 shows + Regarding Rate travers Pri has been set sock that an wcresce would apc? tals begenciag @ March 2018. Any rate crane sseretion for FY1T mat abo iociade any rate axemptice mae fot FYI6 For Example FY16 restoration of Master Fee Scmedaie eqesh eporonkastel 27% Budgeted FYLT propection cf 5% cst be eaternd 4s 27%. = Ancernct Se As Bett $ 060809 ot Months Allocated to Clty - ‘Bol Mentha Allocuted to Cry D PROTECTED © PRORCTED © PRARCTED =‘ PROFECTED. aay AuGust SIVTIMIZR §=—_OCTORER x | ff 0 PROIECTED —PROIECTED © PROVECTED © PROIRCTED © PROVECTED © PROHECTED. a ” a ‘APR, 2016 5 8) 8 6 ProsecTe RtcnaNd CAE BALANCE 0. 22200827 OSL © ASOAG? = 22 BH SES 107,300 P2228 Grvasn — TLenssr) sezesz SAME) (4,778,872) (8AT2TT ASH RECEITE see Charges 2921,59 205485 124,75 Lmoi7r seks = aazozes | tage ass 993,362 sme sna36 993,362 1.909000 Pe: 993,362 933,302 (SSS EO LOSS EON LSS God 1055 68 3333 xxxEND_PAGE:treasury01_b39_6977_7316_004 f bees Ru RWLibs is “Zeta iv — Pec Ren? iat Hat dues or Chebit Senor ed J 10 a eh Bide Mn ee mache gue pefion | hlling Lal: Wn, ee fe OS Ngee We ailing a lined neh, wat (if ES ) tpt Xk the ae oe ox 7 apts / of sae stmeliic ob huudldl (an evel) ll ta 22 thc dalls te sll ae 2 epee Cory aug, ate C8) | | oe is Mawe # : dc eg de set? loi Yash three xxxEND_PAGE:treasury01_b39_6977_7316_005 teal Qua. Zu tau keilonire Hat Kio Z lM ietitedse Ges AttSe Orin lawucte t/kelbon M4 ppt7 ra j BSS ta 200 223-2 7 oe Me, (Nistor the Sthhhals of xxxEND_PAGE:treasury01_b39_6977_7316_006 xxxEND_PAGE:treasury01_b39_6977_7316_007 Top Ten Questions 1. How to handle residents who have moved 2. Whether residents in apartments get the 65% or the owner of the building receives 20%, a. Ifthe residents are to receive the credit, how will this work? 3. By accepting the credit, do the residents waive their rights to future claims? a. Ifso, how would this work? 4. When will the water fund run out of cash? 5. What is needed when the water fund runs out of cash? 6. Should the $30 million be distributed over several months or should it be credited to a customer’s account at one time. 7. When will the water be given a clean bill of health? 8. When will the city be able to resume collecting past due accounts? xxxEND_PAGE:treasury01_b39_6977_7316_008 Is the assumption that the consumption for the water remains constant throughout the cash flow period? Please clarify GLWA fees. $10 million and $2 million in escrow? Is the $10 million already spent (in October of 2015)? Bond payments for KWA — We see the 2016 payment of $7 million. Is this a yearly payment? Once each year? The copy from last Friday from the Jones & Henry Engineers shows a $690,000 payment for FY 2015. This does not show on the cash flow. Why? Would you please give me the amortization schedule for the bond payments to KWA? Upcoming bond sale — What and when? What does that do to the bond payment? How many gallons of usage is the cash flow based on? Is the usage number for 2017 (1.6 million) the expected final number or is there reduced payment or usage — GM water usage — in 2015 numbers (the 2017 numbers look reduced)? Will GM come back? The cash flow takes into account the GM exit. Jody does not know about when or if they will reenter the system. What is the contractual obligation for Detroit water? When does that end? What needs to be negotiated? Start/stop date — runs through? GLWA payments of $1.3 million after June 2016 is speculative. There is no contract. $12 million for FY 2016 is in escrow. The actual amount of outflows could be more or less depending on what happens with the water. Is there a cost for testing and treating water for KWA? Does not show on cash flow. You mentioned that the testing and treating of KWA water is in the line item, Capital Improvements. Which line is that on your cash flow? If it is in the cash flow, do I understand you correctly that you know of no additional costs for this? Transition, backup, and treatment fees baked in? Does the “Transfers to Debt Service Fund” line item take into account the restructuring of DWRF loans? We have a yearly amount of $1.8 million. Is that what this line is? xxxEND_PAGE:treasury01_b39_6977_7316_009 I Notes aT uw QULSTT ORL Fon. Aarry. © Cash Fine Aptsnr AppeBR fo revclucle Payments Te KW. foe Gehe. Ls? sane place thee oR thy SAT it pithudé? @ Seuxa furd pay weed Cig. Caw if Fake Prom (kee (ohh. IN Flay OF isspsmmee) oR oes cf Aave_te fake fro GETZ SeSe SONTEL RDA REY AOTE PAGES 7a5? CAT PMERS re « PAINTED IN USE xxxEND_PAGE:treasury01_b39_6977_7316_010 Stanton, Terry A. (Ti reasury)

Good morning, Gentleman. I'm not sure what is being communicated on the State's side, but yesterday in a meeting between Governor Snyder, Treasurer Khouri, Mayor Weaver and City Administrator Henderson, the Treasurer informed the Governor that he is not receiving information from the City. I believe that I have been incredibly timely in providing complete, accurate, and quality information as soon as it is requested by Treasury. Although I'm obviously dismayed by his comment, I continue to strive to provide all necessary information to ensure that the City is able to obtain the financial resources it so desperately needs. I kindly ask that you assist in notifying all relevant parties that we are actively working together and if there is information still necessary that you simply let me know. Please let me know if there is any area that may be improved to facilitate this effort. Thanks, Jody N. Lundquist Chief Financial Officer City of Flint (810)237-2441 direct Begin forwarded message:

Natasha / Jody — xxxEND_PAGE:treasury01_b41_7622_7971_302 As I will report during our meeting this morning, the Governor’s office has requested that we undertake an analysis to provide critical information by the close of business on Friday to position the options regarding water bill relief. We would like to meet at 9:30am after the Flint Forward Committee meeting. Mark Davidoff Michigan Managing Partner Deloitte LLP Office: 313-396-3317 Mobile: 248-705-1996 200 Renaissance Center Detroit, Michigan 48243-1895 >» Driving towards Detroit 2030 Follow me on Twitter: @DavidoffDTW2030 This message (including any attachments) contains confidential information intended for a specific individual and purpose, and is protected by law. If you are not the intended recipient, you should delete this message and any disclosure, copying, or distribution of this message, or the taking of any action based on it, by you is strictly prohibited. v.E.1 xxxEND_PAGE:treasury01_b41_7622_7971_303 Pleyte, Beth (T reasury)

Good morning, Mr. Vaughn. Please find below a summary of three of the top critical needs/concerns currently facing the City of Flint as a result of the Water Crisis. 1. Cash Flow - The City's cash flow continues to decline at an increasing rate as a result of decrease collections and reduced water rates. a. Collection Rate - By not performing shut offs, the City's collection rate has dropped drastically. This trend is confirmed by the steadily decreasing number of payments received each day which is tracked on a daily basis. b. Billed Revenue - The City was required to reduce its water and sewer rates as a result of the Preliminary Injunction Order issued by Judge Hayman. Although the amended order authorizes the City to restore rates to those included in the EM adopted Master Fee Schedule, the City has not implemented any changes at this time. This has resulted in an average loss of monthly billed revenue of over $600,000. However, billed revenue is meaningless if it cannot be collected (see bullet point 1). c. Delinquent Accounts prior to August 17, 2015 - As a result of the original preliminary injunction order, the City was prohibited from performing shut offs on any delinquent accounts as of the date of the Order. The City was forced to effectively "set aside" all past due accounts as of August 17 in the amount of $10.2 million. 2. Capital Needs - All scheduled FY2016 capital improvement projects for General Fund, Water and Sewer postponed or cancelled as well as those necessary to prepare for receipt of KWA water and all water infrastructure replacement and repairs related to removal of lead lines. 3. Litigation - Shears litigation costs and litigation costs of emerging class action lawsuits against the City as a result of the lead water crisis. Thave also attached a Summary of Water Crisis Financial Needs provided to the Governor on January 15, 2016. Please let me know if you have any questions or require any additional information. 1 xxxEND_PAGE:treasury01_b41_7622_7971_258 Best regards, Jody N. Lundquist Chief Financial Officer City of Flint 1101 S, Saginaw Street, 2nd Floor Flint, Ml 48502 (810) 237-2441 xxxEND_PAGE:treasury01_b41_7622_7971_259 CITY OF FLINT SUMMARY OF WATER CRISIS FINANCIAL NEEDS Shears v. City of Flint Litigation Description Loss in monthly billed revenue The Preliminary Injunction Order issued by Honorable Judge Archie Hayman on August 17, 2015 required the City to reduce water and sewer rates to exclude the September 16, 2011 rate increases This resulted in a loss of monthly billed revenue of approximately $616,000 per month for approximately 5 months Loss in monthly revenue collections As a result of the City's inability to enforce payment through shut offs, which was later accelerated by the declaration of the water emergency, the City's collection rate has fallen from 98% in August to 75% in November before improving shghtly in December The average collection rate for the period August to December 1s now 84% The City issued its first round of shut off notices in November but has not resumed processing as of January 14, 2015 No disconnection of service for nonpayment on active accounts has occurred since August 2015 Based on the reduced average monthly billed revenue of $4 6 million and the increased delinquency rate, the City's allowance for uncollectible accounts must be increased The coltection rate is expected to remain low until shut off notice processing 1s resumed and processed consistently ($4 6 million x 15% x 7 months) Loss due to uncollectible delinquent accounts at August 17, 2015 The onginal preliminary injunction order eryoined the City from disconnecting any accounts for non payment for which the delinquency arose between September 16, 2011. This effectively forced the City to set aside approximately $10.9 million in outstanding customer balances as uncollectible Rate increase for the period September 16, 2011 through June 30, 2012 Judge Hayman has stated in open court that the rate increase from September 16, 2011 to June 30, 2012 was illegal While a ruling regarding this matter is anticipated, the increase to rates and charges during that tme period resulted in approximately $15 million of billed revenue Should the judge order the City to repay these billings or provide credits to customer accounts in that amount, the City’s current revenue will need to offset this enormous cost Collections for the penod October 2011-July 2012 for which the September 16, 2011 rate increase would have been billed in received total $46 million Refunding the amount of collections during that period resulting from the rate increase witl cost the City over $16 million Capital Improvement Projects removed from Fiscal Year 2016 Budget As a result of the immediate and drastic impact of the preliminary injunction order, the City issued a spending freeze for all non-critical items. In order to offset the reduction in billed revenue and collections, the City reviewed tts capital improvement plan and cancelled or postponed nearly all projects with the exception of those necessary to prepare for the Karegnondi Water Authority (KWA) The removal of $3.9 million and $1 7 million in planned capital improvement projects for the Sewer and Water funds, respectively, were included in the adopted FY16 First Quarter Budget Amendments Legal costs associated with litigation The State has agreed to reimburse the City 75% of legal costs associated with this lingation not to exceed a total rermbursement of $300,000 Total legal expense of representation by external legal counsel Is anticipated to reach $600,000 leaving a gap of $300,000 borne entirely by the City (25% of the first $400,000 = $100,000 plus an additional $200 000 through final ruling) TOTAL FINANCIAL IMPACT OF SHEARS V. CITY OF FLINT LITIGATION Amount $ 3,080,c00 $ 4,830,000 $ 10,890,947 $ 16,100,000 $ 5,600,000 $ 300,000 Sa aT xxxEND_PAGE:treasury01_b41_7622_7971_260 CITY OF FLINT SUMMARY OF WATER CRISIS FINANCIAL NEEDS Declaration of State of Water Emergency Description Additional Corrosion Control Procedures Implementation of the additional corrosion control procedures totaled approximately $45,000 and ts being maintained at an estimated cost of $100/day ($45,000 + $100/day x 365 days/year x 5 years) Purchase of DWSD Water The City expended $2 million towards the $10 million escrow required by the Detroit Water and Sewage Department (DWSD) to resume purchasing water through June 30, 2016. Itis expected that the City will need to continue purchasing water from Great Lakes Water Authority (formerly DWSD) for an additional three months until the City is ready to begin receiving water through KWA. Backflow system necessary for testing and future back flow supply As a result of switching the City's water supply to DWSD, the pipe that would have been used to transport raw water from Lake Huron to the City's water plantisin use The City must develop an alternate path from which to receive water during the period for which raw water must be tested pnor to full conversion to KWA as the City's water supplier PSI contractor for locating and mapping lead lines Histoncal data maintained by the City is incomplete and inaccurate. A third party contractor has been engaged to assist in locating lead lines and testing water samples obtained from those sites Additional services may include integrating the results of their efforts with the City's GIS maps University of Michigan for data compilation The University of Michigan has agreed to assist the City in tts efforts to compile historical data on the location of lead lines and any additional data obtained through the course of this emergency Excavation of residential service lines The excavation of 6 residential services lines is necessary for additional testing ($5,000/lne x 6 lines) Replacement of service lines Replacement cost included in other estimates provided to the State of Michigan detailed each residential line to cost $1,500 to replace ($1,500/lne x 15,000 lines) 8" residential water mains and 24" transmission mains It is estimated that there are approximately 600 miles of 8" residential lines and 60 miles of 24" transmission mains needing replacement. Preliminary estmates place replacement of residential lines at $145 per foot and $800 per foot for tansmission mains {$145/foot x 600 miles x 5,280 feev/mile plus $800/foot x 60 miles x 5,280 feet/mile) Loss of monthly County backup revenue ($40,000/month x 9 months) As a result of the media coverage and declaration of a health emergency, Genesee County has decided to discontinue its contractual payment to the City per its backup agreement. The City has not received payment since September 2015 Assuming another agreement for backup supply is negotiated with Genesee County, $360,000 in revenue adopted in the City's FY16 budget will be lost or remain uncollectible without litigation Fire Department overtime The Fire Department is now operating an additional! fire station as a distnbution center 7 days per week With the necessity to designate staff to the EOC and overseeing distnbution at each of the other sites, overtime costs are being incurred daily ($2,000/day x 180 days) PTO's for counter ($3,000/month x 6 months) In order to carryout staffing of the EOC and distnbution counter at City Hall, civilian staff within the police department has been assigned to fulfilling this specific function Additional wages are estimated at $3,000 per month ($3,000/month x 6 months) TOTAL FINANCIAL iMPACT OF DECLARATION OF WATER EMERGENCY Amount $ 227,500 $ 6,000,000 $ 6,342,326 $ 75,000 $ 3,600 $ 30,000 $ 22,500,000 $ 712,800,000 $ 360,000 $ 360,000 $ 18,000 $ 748,716,426 xxxEND_PAGE:treasury01_b41_7622_7971_261 Robert, Carla M. (Ti reasury)

Cash Flow.pdf Good afternoon, Suzanne. As Cary is out of the office this afternoon, I was instructed to provide you with the updated 18 month cash flow for the City's Water Fund for review. There are three tabs. Assumptions for each scenario are listed. The tab "Water CF-With Variables" is set to allow users to manipulate and modify the assumptions by entering data into the grey highlighted cells. Because reviewing the financial position of the City's Water Fund only illustrates half of the financial picture for the City's utility services, I encourage all users to be mindful of the impact that the Shears Lawsuit and Water Crisis has also had on the Sewer Fund. I will begin working on creating a cash flow for the Sewer Fund this week to be reviewed in conjunction with the Water Fund cash flow attached. Please let me know if you have any questions regarding the information provided. Best regards, Jody N. Lundquist Chief Financial Officer City of Flint 1101 S. Saginaw Street, 2nd Floor Flint, Ml 48502 jlundquist@cityofflint com (810) 237-2441 xxxEND_PAGE:treasury01_b41_7622_7971_138 xxxEND_PAGE:treasury01_b41_7622_7971_139 www see carrot eevee) Leet ve) «= Uert'onst = Laztons) «= uztezel «© azventl «= sst'zeo't) «= fctzccet! sorry © ixtsotel «fesse t)irse'ral Beet sar) isrtsect] (reset) see lass mens Her3 As cRsater «—orwsNs'd CRE WESE ORME OUST TS'S = EET vse «=e mevee's = eewers'e covert. «= eev’ste'e | ssvucct, = Tozer? sersewztsov'imsts— sestens't sorrss? suxawasenend HSA WII reset zest west ist resist mas ANS atte sn rit are ates sie sre aes este cd ATW FoumeL sos ‘597951 SUSI SORT sau'est 550351 sre cere core went ast tetver cotta eseeit wrt wevott sort aban cot ont cover worn tte aerose cortee mrs oit Es oe resvat uss eset rest mst | BST rst wes Besser ay easy eoasng 2px 0 ya, eons, eset ves'eet teserlesaet ves et eset figure = etsute avoir sisore uso ecoune wort srt 15 5 owe 532 Siva ponerse mocunxqen por dey care are rod a asae od ‘ote'rar ote'ees cis vor ed ed aad Eset Sab NE owist Teese svore art dojyaudo waudbs stot eestor faster AWS BOT rustot sot ost overer owt oopact corer owsit ma ees ores os aos'evt weit sworn eT covtborot eM protes pee SaoTert | MOTET | SOUTER. «= STITT. UOTE‘ «= BUTE. s0stuL sosz svt 503 rez sostue soszee coresr — Sretwes sat 005, verses tas 8t sree ‘reg rena) san compte qeobiz ODI repre ewort 06 159 wre = Sas Sorte = Sore sores? ose aed estar asin ewen PSE vaniers Sti RL 6 sree SRL 866 azn 966 ses ews worl BSL ewrsec orn sarsce feszes—zes005 on rort seals OF ORS 97S opens poe tapers sLRaRMES Kv garvore _carost___saroast __ewrvere __neroose _enrwost muy sore tevez RY ERTS SET OORT vavORNE ava cartwe veer __owromrs _aweere__ ssp ses eusrere Susur WP WiLL iesaal 209 OF Soret ev IS) a ~ Taare wiodeg js ape) eee eee area ‘era ce are se80 2 cad ees Cy ra % us eer Lmeennd wots ‘0 0001 00'000' ‘wore noxdiy oats pur S299 Cn se he a a a a a a se eM cl Ls saree sano ase, ars ED ee sor'une'ot Deva vsY> DaENTO aE Wor rg rae we ine 308 te ror oz Re see ou ia sae wine Toe se WgMDIa | WIEWWIAON BODO WENA ASont ane mn aN rv fowen arma nme = TERING NSBIAON§WBODO MENTS ASN ant Ce ee a eed way ww wy ru SERTT $ eeore mye = = sean ay ost sora ere Ae emely ach steal mR lemon kanodind ane ceo) 10] Rao Uy Tad po AnLAEND Bey ays nM LOLI MERA Ka] arom yl WoU4 JeaTM pereea Berm erUTEIOS Oh Ona AERO Om AED OUL (og Wer? map sre 7 URORTE w apma persetan (Las Pevdope oe: w pawns area OI NS OL, RAID ad inn euocstume enuaany s9pu0 uBracts Luanne Aq pextope se Mom Ltad 8 STL Fas Syn pape se won seeNd Hg {Tad OO ROR TOE IMEI SIGE AEM pened Me) of Ame en snd pay hej peng nn ge eo pe ec spon meng sins pg bic eu one ssn donee scared xxxEND_PAGE:treasury01_b41_7622_7971_140 xxxEND_PAGE:treasury01_b41_7622_7971_141 Pleyte, Beth (T reasury)

Good morning, Mr. Steckelberg. On behalf of Ms. Henderson, please find attached an invoice summarizing costs incurred since the declaration of an emergency on the state level directly related to performing the necessary actions to administer emergency assistance to the City's residents. Please let me know if you have any questions or require any additional information. Best regards, Jody N. Lundquist Chief Financial Officer City of Flint (810)237-2441 direct Begin forwarded message:

Cash Flow 1-21-2016 jnl v2.xisx Good evening, Cary. Please find responses to each of your inquiries below: 1. As noted in the assumptions narrative, the activity shown summarized total recorded debits and credits to the GL and NOT actual cash receipts and disbursements. I have removed this completely so as not to give any other user a false impression of cash receipts and disbursements being greater than they were. In response to your question, during the months of September and October the City recorded a number of entries as it implemented various components required by the Preliminary Injunction Order. Among these requirements was to separate water and sewer cash accounts from pooled cash. The debit and credit activity reflected journal entries among which the establishment of these accounts were recorded. In the process of doing so, my staff posted, reversed then corrected such an entry. 2. For the "As budgeted" tab, you are correct. Annualized receipts and disbursements differ from total budget. If you unhide columns B-D on either tab, you will find the underlying Budget, YTD Activity and Available Balances for the Fund through 12/31/2015. For revenues, $28.3 million was budgeted. As a result of the Preliminary Injunction Order, the City had to "set aside" over $10.2 million in billed water and sewer revenue. When the Utility Billing Department posted these changes to the customer accounts, it reversed current year billed revenue recorded to our GL. This was taken into account for the RTAB reports submitted to the State yesterday. It appears that the AJE has not been posted yet. I have adjusted YTD activity shown on this report accordingly. Even as such, with 50% of the year complete the City is slightly below its revenue projection. Projected revenue was reduced with the first quarter budget amendment based upon estimates and early assumption immediately following issuance of the Preliminary Injunction Order. The lower projected revenue is included in the amended budget amounts. As we continue to analyze the ongoing impact of the order on billed revenue and collections. further adjustment may be reflected in future quarterly amendments. Similar to revenue, as of 12/31/2015 only 33% of total expenditures had been recorded. This would leave approximately two-thirds of the total budget to be expended during the remaining 6 months of the fiscal year. Annualizing the monthly amounts shown does not make sense in this case. As discussed, there are items within the budget that may not be equally divided over a 12-month or even 6-month period. Capital expenditure and debt service payments for instance, may be paid in lump sums. Total budgeted depreciation for the water fund is $1.5 million. I have removed depreciation from Water Plant Operations line for now so that net cash flow will reflect this item as removed. 3. Debt service payments are reflected by the line item "Transfers out to fund 493". Again, this is a rough draft for your review and remains a document in progress. As I begin to populate actual cash receipt and disbursement activity for July 1-December 31, 2015, the line item descriptions shown may be xxxEND_PAGE:treasury01_b41_7622_7971_037 subject to change. If anything, they will be more detailed as opposed to less and I will do my best to mirror the audit. I will touch base with you again tomorrow to discuss this further. Please let me know if you have any additional questions, comments or concerns regarding the revised report and information provided. Thanks, Jody N. Lundquist Chief Financial Officer City of Flint 1101 S. Saginaw Street, 2nd Floor Flint, MI 48502 (810) 237-2441

Good evening, Ms. Henderson. xxxEND_PAGE:treasury01_b41_7622_7971_044 Please find an invoice attached for your review summarizing the costs incurred as a result of the water crisis. Please let me know if you have any questions or if any additional information is required. Best regards, Jody N. Lundquist Chief Financial Officer City of Flint 1101 S, Saginaw Street, 2nd Floor Flint, MI 48502 (810) 237-2441 cee eeenen Forwarded message ----------

Jody, I am attaching a copy of the invoice, along with copies of the supporting documents. Please let me know if you need anything else. Vickie xxxEND_PAGE:treasury01_b41_7622_7971_045 TREASURER'S OFFICE CITY OF FLINT, MICHIGAN (810) 766-7015 BILLING DATE: 01/21/16 Dr. Karen Weaver, Mayor CUST #: 05-3887 INVOICE #: 1600027175 SERVICE DATE: 01/20/2016 MISCELLANEOUS RECEIVABLE BILL INVOICE DATE: 01/21/2016 MICHIGAN DEPT OF TREASURY DUE DATE: 02/28/2016 430 W. ALLEGAN ST. 1ST FLOOR SERVICE ADDRESS: LANSING MI 48922 Description Amount WATER EMERGENCY EXPENSES $15246 61 REQUEST FOR REIMBURSEMENT OF PERSONNEL COSTS ASSOCIATED WITH WATER EMERGENCY RESPONSE FLINT FIRE DEPARTMENT $11,366.69 DPW - TRAFFIC ENGINEERING TRAFFIC CONTROL $565.48 DPW - WATER PLANT $620.84 FLINT POLICE DEPARTMENT- WATER EMERGENCY CALLS $2,693.60 TOTAL CHARGES INCLUDE PERSONNEL AND EQUIPMENT RELATED COSTS ASSOCIATED WITH THE WATER EMERGENCY FOR THE PERIOD 1/5/16-1/20/16: $15,246.61 TOTAL $15246.61 PLEASE REMIT BOTTOM PORTION WITH YOUR PAYMENT REMIT PAYMENT TO: MISCELLANEOUS RECEIVABLE BILL CITY OF FLINT, TREASURER CUST #: 05-3887 1101 S. Saginaw Street, Room 10 INVOICE #: 1600027175 Flint, MI 48502 SERVICE DATE: 01/20/2016 Phone: (810) 768-7015 INVOICE DATE: 04/21/2016 DUE DATE: 02/28/2016 TOTAL INVOICE $15246.61 MICHIGAN DEPT OF TREASURY 430 W. 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$ S69 $ 97°99 $ pér'Sz 966°9T $ 97% UOssiod aluBjeW UE{-9T “ $ SES $ 66'0S $ v6p'SZ 966°9T $ z uossiod uBio UPl-GT - $ o3°0 $ SoZ S$ v6p'sz 966'9T $ £0 UOSSIOd SIUBjSW UPL-PT dINDIWLOL IJOVIWA GISNSHH = #3F1DIH3A JONI Laud TWLOL-NS LAO =3iV¥10 3ALVY9S3SY 8 dayHOM JaAO TINA Alva sy¥H LO a2ue}sissy 19]U9) SudITe18dQ AdUadiaWy jUelg JaIeEM SAIN xxxEND_PAGE:treasury01_b41_7622_7971_049 09'e69'7$ 91/02/T-9T/0T/T GOlad HOs JINVLSISSY ADNADYAINA HALYM OL G3LV13Y GAYYNINI SISNIdX3 LNIWLYVd3d 39110d WLOL OB'OTT$ SS°OTS'TS 2990'TS age 4 1301 ZO'TS 08'Ez$ 60 [043U0 pmosy/IYJedL UOSIAld “M STZ vb9zs eH 4O T BpLT-VS9T Lvl LE'vES ET [osU0D pmosy/IYJed) UasIald “M STL vb'szs neysseW =—- YO T OEZT-STIL = 9TOZ/BT/T ZL'0$ 9L°91$ T 9L°9TS afiuay 40 EUTS we'97$ T WMAL/dn mojjos umouyun, vb'szs Yywus 4O Zz OOzZZ-00T2 = 9T0Z/ZT/T TeTt$ 7227s OL vb'9z$ uosyem = 40) T@'TTS WHLL2S oz ve'9es sions = 430 TO'TIS tH LLZS Oz vb's2$ dapAus YO SUETS ep'etes oz Ayjey re joQuOD Jyes. =—- yNowyed “AA 2077 S8°6Z$ xjnoi9, 38s v O€ST-OE80 9TO2/ZT/T 99'TS 18 8€$ eT HEH AqD 32 Ayey soyUoW =» MeU|eS “Ss TOTT S8'6Z$ sjouewng 485 T OOZT-SPST ye'es £8°9S$ OT HEH AyD 32 Alley ZoyuoW = MeUlBes ‘Ss TOTT T6'LES uapjoy = ade T Sb9T-SbST 9T02/9T/T LES yS°%6$ SE JOsUoD paros3/3yyes] UOSIBId “AA OTL yb'9zs spletd yo T O£6T-009T Sv'ETS EV'ETES o£ [Osu] pmosz/IyyesL UOSIS8Id “AA OTL sB'6z$ Aajpueq ws T O09T-0060 9102z/9T/T oB'T$ 06'Tes 4 9£°9TS SuUM “N YO etzs 06"0S$ se JO4juO} pmosd/IysesL UOSIdld “MA OTZ 9€°0z$ oysejeg 340 c OOTZ-OE8T v8'Z$ oT'995 st Joaquo} pmosy/yyesL UOSJ8Id “MA OTL vy'aes Meld 4O T O€8T-009T gta2/ST/T 192s 1809S ez vy'9zs weysuliA 3O T OOTZ-cv9T ve'ss 169ZT$ sv fosjuoD pmosD/IedL UosJatd “M OTL vy'9zs i®H 40 T SSZT-OTET 910Z/vT/T €T'o$ vores Ta UOReIO] JB a]qQnoIL uovayry "y Z0Z SE'OES HEH yas T C2bE-LT VT 9TOz/ET/T vss 9£°SOTS av bv'97z$ UOSIIM 40 S'S 92°SOTS Ov woes spe 40 (4 £907-VS9T cats 08"€z$ 60 vb'97$ uosuyor "Mm 30 T SbLT-vS9T so'es @LL8T$ TL JO.UO} pMo‘D/IyJed I UOSIdId “MA OTL w'9zs Spiety 40 T SOZT-PS60 9TOz/TT/T eos E64 £0 ye'9ozs UOSTEM 40 vE'0S £6'L$ £0 yeas AaquanH =O 2 SSbT-bebT E6TS S6'bbS £1 [O3}U0D parosz/2NjEAL UOSIaId “M OTL vr'azs JapAus 40 T STOT-PEPT 910Z/0T/T asuadx3 PICEYSTIAO awe sess BWILIIAQ aw JURENS ysanbay uolje307 ayey Ano SWeEN yuey SuaIYjO# Sat, ajeq asuly pag @ pledsasvey pieg saver, JADIANAS HOI STIVD ADNADYIIANZ YALYM - LNSIANLYVd3d 490d LNITd xxxEND_PAGE:treasury01_b41_7622_7971_050 January 22, 2016 Governor Rick Snyder Office of Governor P.O. Box 30013 Lansing, Michigan 48909 Dear Governor Snyder: The Flint Water Advisory Task Force (FWATF) appreciates your recent efforts to secure federal and mobilize state emergency response resources to address the immediate water supply issues in Flint. This letter is to encourage a similarly robust response to the challenges of re-establishing a reliable, trusted potable water distribution system in Flint. This is required as soon as possible to replace the unsustainable and expensive bottled water and filter distribution program that has been necessitated, but which clearly must serve as an interim, emergency response. Consistent with the priorities identified in the Safe Drinking Water Emergency Order issued by the EPA on January 21, 2016, we recommend the following actions to address scientifically grounded concerns that the water system in Flint remains unsafe because of lead contamination and Legionella. Public trust in the safety of the water supply may only begin to be re-established through the state’s forthright engagement of the scientific experts who overcame state and federal agency intransigence to expose the lead poisoning. Our recommendations are: « Engage US EPA staff experts versed in Lead and Copper Rule (LCR) requirements — specifically Miguel del Toral, Darren Lytle and Michael Shock. These individuals should be empowered to guide implementation of a comprehensive LCR sampling program in Flint that will monitor lead levels now and throughout the conversion to raw water supply by the Karegnondi Water Authority (KWA) and full-time use of the Flint Water Treatment Plant. » Establish an inter-disciplinary work group comprising subject matter experts drawn from respected public utility associations and institutions of higher learning in Michigan and elsewhere (including Marc Edwards of Virginia Tech), to oversee the conversion to KWA- supplied raw water. ® Commission and/or contract with an unbiased third-party organization or consortium (hereafter: Flint water safety scientific assessment team [FWSSAT]) that will be responsible for assessing the quality and safety of drinking water in residences, schools and child care settings in Flint, and hospitals and other healthcare facilities served by the xxxEND_PAGE:treasury01_b41_7622_7971_051 : Flint Water: : dvisory Task Force Flint water system. The explicit focus of FWSSAT activities will be lead and Legionella; however, the FWSSAT may include other considerations in its work. The FWSSAT will be invested with the responsibility of declaring when the public water supply in Flint is safe for routine consumption. The FWSSAT will employ the most rigorous scientific standards, using a sampling strategy that is designed to optimize detection of water contamination in home, school, and child-care settings, and healthcare environments. All schools and healthcare facilities must be included in the sampling approach. Rigorous sampling of residences and child-care settings (whether centers or in-home) will also be implemented, using any and all available information about lead water service lines. In addition, if a homeowner or renter whose dwelling has not been included in sampling wishes to have the dwelling included, they will also be sampled. The sampling efforts and reporting process of the FWSSAT will be fully transparent to the public; results of testing should be published on local, state, and federal (EPA) websites. ® To assure the re-building of community trust and assure sufficient expertise for future water quality and safety, the FWSSAT should partner with local (Flint Water Treatment) and state (MDEQ) personnel in its activities. The FWSSAT should have an inter- disciplinary advisory committee that includes local community leaders, local and state officials, national scientific authorities regarding water quality and safety and public health, and the leader of the interagency state effort regarding the Flint water crisis. When the FWSSAT advisory committee is satisfied that the FWSSAT scientific procedures have thoroughly assessed water quality and safety in Flint residences, schools and child care settings, and healthcare facilities and found the water to be sufficiently free of contamination, then the committee will advise the public of the findings. The FWSSAT will then organize the transfer of responsibility to local and state authorities to sustain the sampling and reporting methods thereafter, including the conversion to KWA raw water in the future. We also believe that a forthright response to the Legionella outbreak must similarly engage trusted, scientific experts drawn from independent institutions. Accordingly, we recommend: e The Michigan Department of Health and Human Services (MHHS) should make a formal request to the federal Centers for Disease Control and Prevention (CDC) for assistance in assessing the outbreak of Legionnaire’s disease in Flint, if they have not already done so. MHHS, working with CDC, should develop a strategy for improving prevention, rapid detection, and timely treatment of cases of Legionellosis in Michigan in 2016 and beyond. While the MDHHS evaluation of the dozens of cases of Legionellosis in 2014 and 2015 has strongly suggested a link to the shift to drinking water from the Flint River in 2014, further and more intensive evaluation of clinical isolates (i.¢., samples from infected patients) is necessary to understand the route(s} of transmission from contaminated water to humans. The unique set of outbreak circumstances in the setting of a change in water source strongly indicates that support from federal public xxxEND_PAGE:treasury01_b41_7622_7971_052 health authorities would be a welcome way to amplify the public’s collective understanding of risk of contracting Legionella in residences served by the Flint water system, and in Flint healthcare facilities. ® The state should specifically request federal support from the CDC — and, as appropriate, additional federal experts and agencies — to advise and assess Flint healthcare facilities and Flint-based healthcare providers regarding: (a) appropriate application and timely re-application of biocides to air treatment systems and cooling towers in all healthcare facilities in Flint, in order to prevent colonization with Legionella; and (b) proper assessment and timely diagnosis of Legionella among patients in Flint who present with characteristic signs and symptoms and have a history of potential exposure to contaminated water. Of note, the risk of resurgent Legionellosis in Spring 2016 is on the horizon; the first cases of Legionellosis in the 2014 and 2015 outbreaks were diagnosed in June and May, respectively, and Legionella is known to be much more common in the spring, summer, and fall than in the winter months. Time 1s of the essence. ® MDHHS should work with its federal partners ta assure that investigative efforts related to Legionella regarding quality and safety of water are conducted in coordination with the FWSSAT described above. Furthermore, MDHHS should regularly communicate its findings to the Flint community regarding its efforts to prevent, detect, and treat cases of Legionella until case levels return to pre-2014 levels. We expect that these measures will provide members of the Flint community with assurance that the quality of their tap water is being appropriately monitored and that forthcoming announcements that Flint’s tap water is safe to drink are well-founded. Notwithstanding earnest state agency actions, we believe that the engagement of independent subject matter experts, whether to assess drinking water quality or public health concerns, is critical to overcome, over time, the understandable skepticisms that prevail in the Flint community. We hope that you will receive these recommendations in the same spirit with which they are offered — to advance the recovery and reinvigoration of the Flint community. Respectfully, Matthew Davis, M.D. Chris Kolb Lawrence Reynolds, M.D. Eric Rothstein, CPA Ken Sikkema xxxEND_PAGE:treasury01_b41_7622_7971_053 Weekly Conference Call Notes — Jan. 25, 2016 Allen Park —Jan. 25 —Mayor Matakas, M. Kibby, B. Cady, P. Dostine, A. Heimann, D. Hudson Priorities o Order 55-A. CBRE marketing the 11 acres where old city hall is located. Allen Park wants permission to allow CBRE to market the property rather than issuing a RFP as required by Order 55-A. Question: would using CBRE satisfy or be non- compliant with Order 55-A? Treasury-LGFSD to take the city’s request to management for a decision. Order 29. This order mandates that city comply with the 80/20 cost-sharing model as provided for pursuant to Public Act 152 of 2011. Cady said by offering the city the option of a hard-cap, it would save families $2,500 per year or singles $1,200 per year. A real money saver for Allen Park employees and, Cady adds, would help the city recruit employees, especially police. The Mayor expressed concer over the delay in the RTAB Evaluation. Treasury explained that there have been some extenuating circumstances and staff unavailability and assured the Mayor that a delayed evaluation report would not negatively affect the outcome. Treasury discussed the possible cancellation of the Feb. 3 RTAB. The city was ok with the cancellation. There was agreement that there were no pressing agenda items that needed consideration in Feb. They just requested that they be informed of the Chair’s decision by early next week. Claims and Accounts (Dec. v Jan. numbers) o The city explained that Dec was near normal ($1.8M from Nov. activity) and Jan. was low ($346K) because December was a short month due to the holidays and time off from many department heads, including Cady. Invoices simply weren’t processed, Two, F 250 Trucks. Not enough money in the Capital Outlay Fund ($47,968) to cover $65,805 cost. o Cady reminded Treasury that that was one of eight budget amendments the city recently submitted for RTAB approval (in Jan.) and now is awaiting State Treasurer approval. City was told the paperwork was submitted early last week (wk of Jan. 11). Benton Harbor —Jan. 21 — D. Watson, D. Hudson, E. Cline Public Notice — Personnel & Finance Committee Meeting 1/27/16 o Settlement of Public Safety — discussing end of negotiations of FOP xxxEND_PAGE:treasury01_b41_7622_7971_054 o City Manager Contract Renewal — Mayor appears to be on board with renewing contract for 2 years. Darwin believes all but possibly 2 commissioners will support his renewal. e Commissioner Replacement o Special meeting being held on 1/25/16 for interviews o Planning to announce replacement on 2/1/16 o 5 candidates being considered e Personnel Issues o Met with Joyce Parker on 1/20/16. Cemetery audit on schedule for 2/1/16. Infrastructure valuafion report requesting additional time to submit. Thinking the information will be available by 4/1/16. © Community & Economic Director 0 Interviewed a candidate on 1/20/16. Darwin feels he is a great candidate. He wants to offer him the position but is concerned regarding the salary expectations. The position salary range is $60k - $70k. He is thinking of offering $68k with room for re-evaluation once he is on the job (would like to observe his interaction with staff/community). e Lawsuits o Lange — A closed session was scheduled but postponed. Looking to resolve this case in March 2016. o Unruh and O’Brien are slated to be complete November 2016 — strongly suggesting mediation for these cases. © The insurance company wants Benton Harbor to contribute $300k to the settlement of the lawsuits. A representative from the insurance company is scheduled to attend a commission meeting to discuss the city’s contribution. © Meeting schedule o Our meetings will continue to occur bi-weekly beginning 1/28. Ecorse — Dec. 22 — W. O’Neal, R. Byrne, D. Van de Grift, P. Dostine, A, Heimann, R. Widigan e Priorities: o Council will receive and file the audit tonight ~ shows a decrease in fund balance, had to “book liabilities for lawsuits and pensions” = Ended with an overall debt of $34K o Council will be approving a $1.9M payment on the E-Loan = City would like a DEP schedule o 47% cash fund balance — the restriction on the U.S. Steel payment has ended. = However, this will drop after the $1.9M payment for debt service o 5-year budget is being reviewed by treasury xxxEND_PAGE:treasury01_b41_7622_7971_055 = Wayne said to fund police and fire it is coming from PA 33 assessment = Wayne said if the arc payment goes up, the city has a judgment levy (Order) against it, the city can then levy it. e Drew said that the city attorney needs to review the Order before the next RTAB meeting. e Wayne said he will read it and talk to the attomey about it o City will do training every two months with employees — will have an employee book everyone will sign. o Wayne will be meeting with city council on an individual basis to discuss where he would like to head in regards to city attorney and DPW. = Wayne thinks he can bring a full time attorney on board for current cost or less. e SEV. Assessments: co Decrease of 10% on residential tax base = Roughly $250K e Miscellaneous: Wayne stated the City is headed in the right direction, needs to do various capital improvement projects, etc... Flint — Jan. 20 —Council President Nelson, N. Henderson, P. Dostine, E. Cline, A. Heimann, W Lamphier, F. Headen 1. Water Update: Water, Lead Test Kits, and Filter Distribution Update: - Council President Nelson has been uplifted by the significant donations of water. filters, and volunteers to help distribute water - The City has a partnership with the MTA to distribute water to people who are homebound, or who lack transportation to retrieve water on their own. - The City has been strained financially and operationally in its response to the emergency. Henderson also said, “It’s becoming a really big strain for staff.” Henderson said that the city is using resources that: o Accrue unbudgeted financial costs to the city, like its sanitation contractor being dispatched to fire stations to clean-up from distribution efforts ; or o Borrow limited resources that are needed in other areas. N. Henderson told an anecdote about how the city wanted to place a police officer by all of the fire stations to help manage traffic (where water distribution is happening) and that they could not justify removing officers from their duties in the neighborhoods where crime is a problem. . xxxEND_PAGE:treasury01_b41_7622_7971_056 N. Henderson said Flint needs to be reimbursed for the additional expenses that the city is accruing. Asked the Treasury participants on the call to help if there is “anything that we can do about that”. Said that she has been keeping a record of how much this has cost the city, and will be sending that document to E. Cline from Treasury. Deloitte has offered to help the city with crisis management. They are sending in (3) consultants, and one of them has worked with cities to manage the aftermath of hurricane Katrina. Water Billing/Water Fund N. Henderson stated that the City was attempting to combat false information about water bills. The city says that “the judge’s ruling” allows them to send out water shut off notices, but they currently are not doing so. People are still not paying their water bills, the city suggests that part of the reason is that there is so much confusion about the bills, especially around whether or not the state is going to pay for the past-due bills from when the water was tainted with lead, which the city suggests is the common conception. The city expressed concern that they did not find money to pay delinquent water bills in the Governor’s Supplemental Budget. The water usage rate has not decreased since the news broke about the lead. Water Operations The city is working to formalize a plan to connect the city to its neighboring communities to back up each other’s water supply. This plan would cost $6.4 Million, but N. Henderson feels confident that the city would only be responsible for paying a portion of the costs. This plan would serve two purposes: o It would prevent the city from having to spend an estimated $3.1M to build a temporary above ground water line for testing the connection to the KWA © It would allow the city to use its neighbors for a water supply backup and not have to rely on the Flint River as a back-up source Efforts to control the corrosion from city water are going well. N. Henderson said that they have been doing field testing of water, and that lead levels are decreasing. Drinking Water Emergency Loan Fund The city intends to apply for this fund, and hopes that a portion of this loan money is forgivable. The city’s proposal would likely be $25M annually (the maximum is $15M according to the city) for (5) years, at a total of $125M Would be working on public and private infrastructure by prioritizing areas in the highest need of infrastructure improvement. The city knows, for example, where water sits in the system. Areas like those would be targeted for these monies. xxxEND_PAGE:treasury01_b41_7622_7971_057 - The city is aware that their initial estimates of over a billion dollars to replace all lead infrastructure is an unrealistic request - The city has already conducted a Reliability and Sanitary Sewer study, which they say is a requirement of the application - Their data suggests that the city has about 600 Miles of water infrastructure, but their engineering consultant suggests that this number might be 100 Miles low 2. Other issues Police and Fire Department updates - There is not much to report in crimes, the city is about at where it would expect to be at this point in the year - Fire stations are being utilized as water and filter distribution centers Shears v Flint - The $15M transfer from the Sewer Fund has been resolved. The City Council voted to approve that transfer, and now it is awaiting RTAB approval. Hamtramck — Jan. 14—K. Powell, P. Dostine, A, Heimann Miscellaneous e The city started plowing its own streets for the first time since 2001. Using pick-up trucks purchased through Act 84 monies, Katrina said the crew plowed every street during the last snow event. The cost was $5K. Katrina said under the old contract with CPI, the cost would have been $46K. e Katrina reported that the city settled a lawsuit for $999.00. The plaintiff originally wanted $175K. e Katrina had a question about whether or not the FO applies to the court. The court wants to make personnel changes and increase salaries. Does the FO prevent the courts from doing that? e Since the recent exchange of emails between Councilman Miah and K Powell, things have settled down. Katrina said the last council meeting was actually cordial. °15 Budget Audit e Katrina expects the audit to be completed week of January 18. Police Study e Katrina reported that the new Chief is expecting up to 4 proposals from firms interested in conducting a study. Election fraud xxxEND_PAGE:treasury01_b41_7622_7971_058 No update. Highland Park— Oct. 14- C. Square, R. Byrne ° The cellection firm has approximately $7M in past due accounts to collect. However, many of these accounts are no longer active. Meadowbrook will be providing an updated report on OPEB costs which show a substantial reduction of the annual costs. The new estimated annual costs will be between $200K and $300K. New water bills with the new water and sewer rates have been sent out to the customers. Wade-Trim has opened its customer service center on Woodward Avenue. BSA software installation has been completed. The City will be submitting several FDCVT grant applications including master water meters, LED streetlights, and building improvements. Wade-Trim has received several shipments of residential water meters that will be installed soon. Inkster — Jan. 14 — M. Stuhldreher, R. Byrne, A. Heimann, D. Hudson, P. Dostine Charter Change Attempt to revise the role of the Mayor by using a charter amendment has not been fruitful Will attempt to put a Charter revision on the ballot for March If it is successful, there will be a charter commission established in May Financials 2" Qtr Budget amendment will be voted on by the City Council on February Ist The city will be maintaining a positive operating surplus or $600k even after this amendment Drop in residential property values Residential property values are slated to decrease by 17% next year, which will be a $700,000 decrease in revenues xxxEND_PAGE:treasury01_b41_7622_7971_059 - Suggests that the City, who will have approximately a $2M fund balance, and alluded to potentially using this as a financial buffer Treasury Financial Assistance - City Manager Search/Economic Development Has not heard anything about whether or not the city will be receiving some assistance to pay for this search from the Treasury. Eric and Pat will be following up with Randy and finding out what the status of this is, and getting back to him. Relationship with new Mayor and City Council Currently struggling to build a working relationship. Told a story about how one City Councilor asked to sit in on a staff meeting, and was outraged to be denied. Rouge Valley Lawsuit $4.7M lawsuit that has been ongoing - Had gotten approval from the previous City Council for this - Wayne County has agreed to, and signed the lawsuit - Awaiting a judge’s order to put payment of this lawsuit on 5 years of tax rolls Regional Service Authority - Has expressed interest in doing some kind of service consolidation, Eric will have Randy follow-up with him to find out where MMSA is, and what they are currently working on Lincoin Park — Jan. 25 -M. Coppler, A. Heimann, P Dostine, R Byrne e Priorities - Coppler said he is working to get financial policies of the city in-line with the Final Order and Best Practices. Historically, Coppler said Lincoln Park has not amended its ordinances. The city council has always changed or revised policy by way of resolution. Going forward, Coppler will be eventually bring the ordinances up-to-date with previously passed resolutions by the amendment process. - Coppler said Lincoln Park residents have been requesting a lot of documents from the city. In an effort to build back trust, Coppler generally has been giving residents what they ask for without having them file a Freedom for Information Act request. (Soon, many of these documents will be on the city’s website, Coppler added.) Coppler did note that attorneys have been filing FOIAs to get information on addresses with delinquent xxxEND_PAGE:treasury01_b41_7622_7971_060 water bills (and most likely taxes too). They are trying to get ahead on the process to purchase homes that have been left vacant but not yet turned over to the county. MERs Coppler said he has not heard anything from MERs regarding the city’s under-payment and whether or not MERs is going to sue the city or kick the city out of MERs. MERs met either Jan. 14 or 15 about Lincoln Park. Pontiac — Jan. 15 - Deputy Mayor Jane Bais-DiSessa, J. Sobota, N. Narzarko, R. Widigan, Weekly priorities: © Will be meeting with the mayor to go over proposed budget amendments of FY 16 o Departments will be turning in annual reports today What is the taxable value 14-15: 1.6% What is the assessed value 14-15: 4.9% OPED Mediation: Actively working on counter proposal; meeting with plaintiffs on Tuesday. Phoenix Center: Nothing new, Nowak & Fraus Engineers did a presentation on the center, regarding all engineering that had been done. © Structure is not in danger of collapse, but identified required structural repairs. Royal Oak Township — Dec. 14 — Supervisor Squall, R. Burgess, P. Dostine, D. Hudson ° Priorities Burgess and Fedewa are working to complete reports that are owed to Treasury per the Consent Agreement and F & O plan. Burgess said with police service agreement still uncertain the township has only produced a’16 budget. Can’t project without the police agreement in place. The 5-year is on hold. Burgess put two Capital Improvement Projects into the 16 budget. He is not currently working on the 6-year CIP. * The two projects are 1) Widening of Wyoming Road, and 2) Updating of the accounting system. Burgess said for years the township has paid $20K annually for use of Grant School. MERS xxxEND_PAGE:treasury01_b41_7622_7971_061 o Burgess did not want to discuss this issue. He said he would like to bring it up during the next call. (Note: Because the supervisor was on the line I think Burgess was reluctant to talk about the MERS money.) * Police Update o The Supervisor said she had recently talked to the city of Southfield. The city told her it was interested in providing police services, but currently was under-staffed. Southfield said it was a year away from being at full capacity. Until then, it couldn’t talk agreements with the township. o Supervisor said Treasury told the township it could continue to collect the special assessment while it looked for an agreement with a local unit. o Supervisor pledged to continue to work hard at finding a solution to the issue of no police service. e Clerk o Supervisor expressed great frustration at the Clerk’s unwillingness to perform her statutory responsibilities. o Supervisor said this happens every year around Christmas time. o Supervisor will be sending a letter to Treasury requesting advice on handling the situation. xxxEND_PAGE:treasury01_b41_7622_7971_062 Cline, Richard (T: reasury)

Cary, ‘ Please find attached a draft 18-month cash flow with the preliminary formatting and content assumptions that we discussed this morning. I'd like to highlight the following two matters: 1. The "As Budgeted" projection is overly optimistic as it includes the 5% increase as originally projected in the EM Adopted FY16 and FY17 Budget. Further, it continues to (falsely) assume a near 98% collection rate. Both tabs include the same assumptions for the remaining FY 16 expenditures. 2. Although the emergency was declared over a water crisis, the impact of the preliminary injunction order affected rates and collections for both the Water AND Sewer funds and the further decline in collections as a result of public perception over water impacts sewer equally as the City issues combined utility bills. If the State is to provide support for the Water Fund, I would implore them to consider the devastating impact this is having on the Sewer Fund as well. Indeed, the large majority of capital improvement projects eliminated with the City's 1st quarter budget amendment were from sewer. If financial support as a result of the combined billing process of the City is not an option for the State, then we will absolutely need the State and elected officials support for billing sewer separately and forcefully pursuing non payment, otherwise both funds will go under. Please let me know if you have any questions regarding the information as shown. I am stepping into a meeting but should be available around 4:45 to discuss. As always, it is a pleasure working with you. Best regards, Jody N. Lundquist xxxEND_PAGE:treasury01_b41_7622_7971_039 Sanders, William (TREASURY)

Per Ms. Henderson, I am forwarding this correspondence for additional context and information relating to the City's current position on water rates and shut off notices. Please let me know if you have any additional questions. Best regards, Jody N. Lundquist Chief Financial Officer City of Flint 1101 S. Saginaw Street, 2nd Floor Flint, MI 48502 jlundquist@cityofflint com (810) 237-2441 -+ssuuneee Forwarded message ----------

Good morning, Mr. Steckelberg. On behalf of City Administrator Henderson, I am forwarding the draft summary of financial needs provided to the Governor on January 15, 2015. As we discussed on our call yesterday, an estimate of collections resulting

Harvey (GOV)" Richard (GOV)" <[email protected]> Mr. Baird, Please let me know as soon as possible what your pleasure is in this matter. Thanks, Natasha L. Henderson, City Administrator 1101 S. Saginaw St. Flint, MI Email: Phone: (810) 237-2057 www.cityofflint.com

Good evening, Ms. Henderson. In response to the email from the State regarding Yeo & Yeo's cost, availability and timeline, | reached out to Jamie Rivette. | provided her with exactly the same description of the cash flow report included in the email from Mr. Workman last week. She provided the following response: "Our estimated cost for performing monthly cash flow reports for both General Fund and the Water/Sewer Fund for the period of 7/1/2015 thru 6/30/16 (to include the information you specified below) would be billed at our standard hourly rates. | would expect this to take approximately 60 hours and cost around $15,000. Dave and | would be available to start this project next week Thursday." My original timeline of two weeks was consistent with that confirmed by Yeo & Yeo. | am happy to prepare the cash flow reports as | had intended and can make this a priority for completion by week's end now that | understand the priority and urgency placed on this item by the State. Should the State so desire to completely offset the cost of outsourcing the production of this report, !am happy to engage Yeo & Yeo, however it will cost more, take longer and require nearly the same amount of time and effort by City staff in order to provide them with the requisite information and assumptions. Please let me know how you would like to proceed. Best regards, Jody N. Lundquist Chief Financial Officer xxxEND_PAGE:treasury01_b40_7317_7621_177 City of Flint 1101 S. Saginaw Street, 2nd Floor Flint, Ml 48502 (810) 237-2441

Good evening, Ms. Henderson. In response to the email from the State regarding Yeo & Yeo's cost, availability and timeline, { reached out to Jamie Rivette. I provided her with exactly the same description of the cash flow report included in the email from Mr. Workman last week. She provided the following response: "Our estimated cost for performing monthly cash flow reports for both General Fund and the Water/Sewer Fund for the period of 7/1/2015 thru 6/30/16 (to include the information you specified below) would be billed at our standard hourly rates. I would expect this to take approximately 60 hours and cost around $15,000. Dave and I would be available to start this project next week Thursday." My original timeline of two weeks was consistent with that confirmed by Yeo & Yeo. I am happy to prepare the cash flow reports as I had intended and can make this a priority for completion by week's end now that I understand the priority and urgency placed on this item by the State. Should the State so desire to completely offset the cost of outsourcing the production of this report, I am happy to engage Yeo & Yeo, however it will cost more, take longer and require nearly the same amount of time and effort by City staff in order to provide them with the requisite information and assumptions. Please let me know how you would like to proceed. xxxEND_PAGE:treasury01_b40_7317_7621_187 Best regards, Jody N. Lundquist Chief Financial Officer City of Flint 1101 S. Saginaw Street, 2nd Floor Flint, MI 48502 jlundquist@cityofflint com (810) 237-2441 On Fri, Jan 15, 2016 at 10:08 AM, Natasha Henderson

Good evening, Ms. Henderson. I sent you an email this afternoon regarding the media coverage on the City's intent to begin issuing shut off notices effectively immediately. At this point in time, I have not given such an instruction to Treasury staff nor provided them with a rate schedule to restore water and sewer rates to their pre-injunction amounts. However, there are a number of matters for which I must make you aware. Water Rates On August 17, 2015, Honorable Judge Archie Hayman issued a preliminary injunction order requiring the City to reduce its water and sewer rates. Billing was postponed for a number of weeks while the City awaited an opinion from the Court of Appeals. Having not received a stay, the City moved forward with implementing the reduced rate structure and regular monthly billing resumed on September 1, 2015. On Monday, January 11, 2016, the Judge signed an amended preliminary injunction order restoring the City's water and sewer rates to those set by the master fee schedule as adopted by emergency manager order. City Council and RTAB approved a first quarter budget amendment recognizing the reduced revenue resulting from the rates currently in effect as ordered by the original preliminary injunction order. The court-ordered rates result in rates being insufficient to meet the operations, maintenance, and bond obligations necessary to fulfill 68 xxxEND_PAGE:treasury01_b41_7622_7971_031 the requirements as set forth in the Revenue Bond Act, however the budget amendment authorized the use of unrestricted fund balance to offset the gap between rates and revenue requirements. If the City were not to restore rates pursuant to the master fee schedule, the budget has already been updated accordingly. However, I request that the legal department provide an opinion as to the City's obligation to restore the EM adopted rates as failure to do so may be a violation of PA436. Not doing so, would require further action to set a new master fee schedule. I would also note that with the current financial position of the City, this method of subsidizing insufficient rates cannot be maintained past the end of this fiscal year. Shut off Notices The preliminary injunction order prohibited the City from performing shut off notices on delinquent balances prior to the implementation of the reduced rates. Upon receiving the verbal order on August 7, 2015 the City immediately ceased disconnection of service for non payment. When the reduced rates became delinquent in October, the City worked through some administrative hurdles to "set aside" the balances outstanding prior to September 1 when regular billing resumed. In November the City held a press conference announcing that shut off notices were going to resume. (At the time, lead was not as widely present in the media coverage.) The last cycle to be sent shut off notices were mailed on or around 12/9 with a due date of 12/29/2015. Processing of additional notices was then postponed in consideration of the holidays. No disconnection for nonpayment of an active account has occurred since August. The City has seen a dramatic decline in its collection rate since August. As with any utility, the City performs shut offs to enforce timely payment. The Finance and Treasury Departments have been reviewing the financial impact of the reduced billed revenue and decrease in collections on a regular basis. In August the City's collection rate was 99%. With the issuance of shut off notices, the City received in payments each month approximately the same amount that it billed although payments were often trailing. For instance, many customers were constantly in a state of delinquency, but they were at least coming in each month and making a payment. Without the issuance of shut off notices, the City's collection rate fell to 70% in October before increasing (through issuance of shut off notices) to 89% in December. Average collection rate for the period August to December has now fallen to 84%. As I noted in my previous email, there is an incredible amount of media attention and public outcry regarding the City's policy on shutting off service for nonpayment of "poisonous" water. This does NOT absolve the City

Follow Up Flag: Follow up Flag Status: Flagged Approximately two weeks. We can provide this information to you by February 1. Thanks, Jody N. Lundquist Chief Financial Officer City of Flint (810)237-2441 direct

Why don't you give us an estimate of and then we can talk it over Sent from my iPhone

Ms. Henderson, I will direct my staff to begin compiling this information. While several of the reports will be fairly easily to prepare, others will require analysis and take more time. Are you aware of how quickly this information is needed? Thank you, Jody N. Lundquist Chief Financial Officer City of Flint (810)237-2441 direct