William Rustem

Folks - this is getting tiresome. It saps time and energy that is diverted from the resolution of the MOU efforts. There are three basic issues included in the below string of emails (I have taken the sender and receivers of these emails out in order to protect them to the extent that they can be). At this juncture, the time | would have otherwise spent on other DWSD matters, such as reading some of the material (not least of which is Amanda Van Dusen's changes of about a week ago in the MOU) is postponed in favor of resolving these new issues. On the more detailed rate matter, lam now going to have to schedule a WRC meeting with the appropriate parties to get up to speed on the status -more time. The issues include: First paragraph under the asterisks - resistance in releasing actual financial information and contacts. Okay. We can wait. Second, Flint (a very fiscally distressed city under an EM) - it is my understanding that Flint's contract ends in April 2014 at which time they are transitioning off of the water system. Not unlike Highland Park, Flint will be requested to pay for stranded costs as they stand up their new system. Fine. But, what incentive will Flint, not then receiving services

FYI - my understanding is that this is all worked out and everyone's on same page, yes? Sent from my iPad Begin forwarded message:

When: Friday, April 19, 2013 3:00 PM-4:30 PM (UTC-05:00) Eastern Time (US & Canada). Where: Governor's SE MI Office Attendees: RDS/GT in person, Val Brader by phone Mr. Orr by phone Harvey Hollins by phone or in person Attending from DWSD: Jim Fausone, Sue McComerick (Director), Nikki Bateson (CFO) Attending from Flint: Ed Kurtz (he is sending his attendee list over shortly) Attending from Treasury: Andy Dillon TO: Governor Snyder cc: Dennis Muchmore, John Roberts, Harvey Hollins, Allison Scott FROM: Bill Rustem SUBJECT: Flint Water System DATE: April 18, 2013 Governor, this information was compiled by the Department of Treasury. 1 xxxEND_PAGE:executiveofficeemails19_b243_651_653_1 Summary In November 2012 the Department of Treasury commissioned the firm of Tucker, Young, Jackson & Tull, Inc. (TYJT) to analyze options for the City of Flint to either remain a customer of the Detroit Water & Sewer Department (DWSD) or to join the Karegnondi Water Authority (KWA) in Genesee County. The purpose of this study was to provide objective analyses to the State Treasurer and Flint’s Emergency Financial Manager (EFM) in order to secure future potable drinking water for the City. In December 2012, staff from TYJT met with representatives from the Department of Treasury and the City of Flint to provide a preliminary report on their findings. At this meeting, five options were presented: These options ranged from the Flint Water Plant providing 100% water, to 100% provision of untreated Lake Huron Water by KWA, to 100% provision of treated drinking water by DWSD, or provision of variable amounts of water from DWSD using a combination of blended DWSD water and Flint River water.

> > Good Afternoon, Sete ete eee ee eee RR RRR AAA ee Not Responsive > Thanks > > Eric > > Dr. Eric Scorsone > Faculty Member and Workgroup Leader > Department of Agricultural, Food and Resource Economics and MSU Extension Michigan State University > 202 Agriculture Hall > East Lansing, MI 48824-1039 > > (517)353-9460 > [email protected] > > xxxEND_PAGE:executiveofficeemails21_b0646_1499_1500_1

When: Friday, April 19, 2013 3:00 PM-4:30 PM (UTC-05:00) Eastern Time (US & Canada). Where: Governor's SE MI Office Host: 4§9-— SClayton to dial in as Host Attendees: RDS/GT in person, Val Brader by phone Mr. Orr by phone Harvey Hollins by phone or in person Attending from DWSD: Jim Fausone, Sue McCormick (Director), Nikki Bateson (CFO) Attending from Flint: Ed Kurtz and Flint Mayor Dayne Walling Attending from Treasury: Andy Dillon, Amy Hichez Attending from DEQ: Dan Wyant George Karmo from Tucker Young Jackson Tull Inc xxxEND_PAGE:treasury01_b04_0379_0503_059 4 89 (Rev 02-11) STATE OF MICHIGAN RICK SNYDER DEPARTMENT OF TREASURY ANDY DILLON GOVERNOR LANSING STATE TREASURER SUMMARY REPORT TOs Brom Stibitz, Senior Policy Advisor; Department of Treasury FROM: Eric Cline. Unit Operations Specialist SUBJECT: Flint Water System Summary DATE: April 18, 2013 Summary In November 2012 the Department of Treasury commissioned the firm of Tucker, Young, Jackson & Tull, Inc. (TYJT) to analyze options for the City of Flint to either remain a customer of the Detroit Water & Sewer Department (D WSD) or to join the Karegnondi Water Authority (K WA) in Genesee County. The purpose of this study was to provide objective analyses to the State Treasurer and Flint’s Emergency Financial Manager (EFM) in order to secure future potable drinking water for the City. In December 2012, staff from TYJT met with representatives from the Department of Treasury and the City of Flint to provide a preliminary report on their findings. At this meeting, five options were presented: These options ranged from the Flint Water Plant providing 100% water, to 100% provision of untreated Lake Huron Water by KWA, to 100% provision of treated drinking water by DWSD, or provision of variable amounts of water from DWSD using a combination of blended DWSD water and Flint River water.

FYI 1 Sent from my iPad Begin forwarded message:

Follow Up Flag: Follow up Flag Status: Flagged Sent from my iPad Begin forwarded message:

Fyi... in case you missed it I heard about this on the news this a.m. Flint City Council approves resolution to buy water from Karegnondi, state approval still needed By Dominic Adams | dadamsS@émiive.com on March 25, 2013 at 10:45 PM, updated March 26, 2013 at 1:28 AM FLINT, MI - Flint is one step closer to getting its water from Lake Huron as part of the Karegnondi Water Authority. The vote, approved 7-1 at the Flint City Council meeting Monday, March 25, may have set in motion the end to Flint paying to get its water from Detroit. Under the proposal, Flint would get 16 million gallons per day of raw water from Lake Huron, pipe it to Flint for treatment and then sell it to customers throughout the city. Another 2 million gallons per day would come from the Flint River and will be treated in Flint. Mayor Dayne Walling said the Department of Environmental Quality must approve Flint’s getting 2 million gallons per day from the Flint River. Tuesday’s meeting followed weeks of discussions and special meetings surrounding the resolution. “We got there,” Councilman Joshua Freeman said. “That’s the important thing.” There were more than 50 people at Monday’s meeting. “Going with Karegnondi is the best decision. We have no opinion on the economics of the decision,” said Rebecca Fedewa, Flint River Watershed Coalition executive director. “If we start drawing water out of the Flint River, we are at risk of having to start releasing water from our reservoirs.” Genesee County Drain Commissioner Jeff Wright said the decision must still be approved by a county water and waste advisory board. The KWA board will then be reconvened for final approval. Wright said construction could start in May. State treasury officials still must approve the city council's move because Flint has an emergency financial manager. All expenditures over $50,000 must be approved. Genesee County Drain Commissioner Jeff Wright has said that Flint would pay roughly $6.4 million annually for water service if it joined the pipeline — a nearly $4 million savings on what it 1 xxxEND_PAGE:executiveofficeemails21_b0654_1526_1527_1 pays Detroit for water. Walling previously said the city would save $19 million over eight years by getting water from the KWA. “It’s a historic night in the City of Flint,” Walling said. “The savings will be less with the capacity level approved by city council because there will be increased treatment cost for the river water.” He said the DEQ told the city it needed to get 18 million gallons per day or there would have to be additional work done at Flint’s water plant. Flint’s water plant and the Flint River is currently the backup for Flint and Genesee County, however, the plant only operates four times per year. Councilman Bryant Nolden was the lone dissenting vote. “Tt was a protest vote,” Nolden said. “I knew they had enough votes. I just feel like the Flint River is our best option.” Karengnondi is the regional water authority that includes Genesee, Lapeer and Sanilac counties and the cities of Flint and Lapeer. Flint is the second municipality, behind Genesee County, to officially decide to purchase raw water through the KWA. Lapeer city officials said they intend to purchase water, but an agreement has been finalized. 810-241-8803. Follow him on Twitter, Facebook or Google+. }. All rights reserved. xxxEND_PAGE:executiveofficeemails21_b0654_1526_1527_2

Follow Up Flag: Follow up Flag Status: Flagged Rick Hammel just called to find out if Flint will participate in this project. | think we owe it to the proponents to give them an answer. Concern | had/have was based on what the engineering firm Tucker Young told me, i.e., that all the costs were not put into the analysis that supported the project. | think we should ask Tucker Young to help us review the rationale and get one of our CPAs to crunch some numbers. | saw we recently hired TY and suspect they will do some preliminary analysis pro bono. Dennis, | understand Dept of AG may support this project so we may consider having them at the table as we work through this. Sent from my iPad xxxEND_PAGE:treasury01_b03_0010_0378_094 Lake Huron Water Supply Study Karegnondi Water Authority o City of Flint o Genesee County Appendix 20 October 2012 Preliminary Engineering Report Update Final Report October 4, 2012 42 ROWE PROFESSIONAL 1 SERVICES COMPANY 540 S. Saginaw Street Suite 200 P.O. Box 3748 Flint, Mi 48502 xxxEND_PAGE:treasury01_b03_0010_0378_095 Lake Huron Water Supply Study Appendix 20 — PER Update 20.1 Introduction The September 2009 Preliminary Engineering Report — Lake Huron Water Supply (2009 Study) compared alternatives for a new regional water supply. Since the 2009 Study, Genesee County and the City of Flint have continued planning and confirmed the capacities to be provided for each. This memorandum updates the capital costs for the proposed new water supply based on the confirmed capacities. 20.2 KWA Water Supply Ongoing planning has resulted in modifications to the preliminary design developed in the 2009 Study. This cost update is based on the modified preliminary design. For this update, the KWA water supply is assumed to include the following primary components: e Water Supply Intake e Lake Huron Pumping Station (LHPS) «* Transmission Mains (Segment 1, Segment 2, and Flint Segment) * Intermediate Pumping Station (IPS) It is assumed that the new KWA supply will deliver raw water to a new WTP constructed and operated by Genesee County in western Lapeer County and to the City of Flint’s existing WTP. Construction of the new GCDC-WWS WTP and needed upgrades to the Flint WTP will be the responsibility of each agency and these costs are not included in KWA costs. 20.3 Economics Costs are based on the following criteria: e Assume construction occurs in 2013 through 2015 « Assume construction is financed by 25 year bonds at a rate of 5% e Assume engineering, legal, administration, and contingencies are 25% of construction cost e Adjust construction costs to the current Engineering News-Record Construction Cost Index (ENR CCT) which in August 2012 had a value of 9351 Costs for pump stations and the intake have been updated based on the current design concepts. New material costs for pipe have been obtained from pipe suppliers. Pipe sizes and lengths are revised