FDCVT Grant for Flint
- From
- Sean Kammer
- To
- Treasrevenuesharing
To whom it may concern:
Please find the Fiscally Distressed Cities, Villages, and Townships Grant application for the City of Flint,
Michigan attached. This application seeks reimbursement for the DWSD reconnection made by the City last fall
and is intended to supplant the Dupont Street Project submitted by the City in October 2015.
Please let me know if the information submitted is sufficient.
Thank you.
Sean Kammer
Sean Kenneth Kammer, MPA
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CITY OF FLINT
Dr. Karen W. Weaver Natasha L. Henderson
Mayor City Administrator
Tuesday, January 26, 2016
Michigan Department of Treasury
Office of Revenue and Tax Analysis
P.O. Bax 30722
Lansing, MI 48909
Re: Letter of Support for Financially Distressed Cities, Villages, and Townships Grant
County: Genesee Local Unit Code: 252040
To whom it may Concern:
Please accept this letter as the City of Flint’s commitment to the Michigan Department of Treasury's
Financially Distressed Cities, Villages, and Townships Grant Program for the Detroit Water and Sewerage
Department Reconnection reimbursement.
On October 16, 2015, the City of Flint reconnected to the Detroit Water and Sewerage Department as its
source of water, ceasing the use of the Flint River. The water from the river, combined with the absence
of corrosion control additives, caused severe damage to the City’s water infrastructure. It negatively
affected the water quality in terms of color, smell, and taste. It was the cause of several threats to the
public health, most notably, the leeching of heavy metals from solder and old pipes. Many children in
the City were found with elevated levels of lead in their blood, placing them in direct harm of the
irreversible effects of lead poisoning. The City contributed two million dollars to a total cost of $12
million for the reconnection to Detroit, which was a safer source of water. The City seeks to recuperate
this two million dollars while it faces financial challenges posed by this State of Emergency.
Even though the City has progressed to strategically reduce deficits by seeking new millages, reducing
staff, and reducing services, the City still faces critical financial obstacles. The City does nat have the
financial stability to expend this level of resources. The FDCVT Grant is essential for the successful
reimbursement of this project, which has contributed to improving the safety, reliability, and
sustainability of the City’s water system, so that the City can continue operations in a time of financial
stress.
City of Flint, Michigan
City of Flint 1101 S, Saginaw St.. Rm 101 * Flint, Michigan 48502
www.cityofflint.com * (810) 766-7346 * Fax: (810) 766-7218
xxxEND_PAGE:treasury01_b41_7622_7971_156
8188 (07-16), Page 6 Application Due Date:
October 15, 2015
Financially Distressed Cities, Villages, and Townships Application (FY 2016)
tesued under autharity of 2015 Public Act 64 a
PART 1; APPLICANT INFORMATION
Name
2. Applicant Local Unit Goda
7. Applicant
City of Flint 252040
3 Applicant FEIN 4, Applicant County
36-6004611
Walling Address ‘i 5 .
B
1101 South Saginaw
PART 2: PROPOSAL OVERVIEW
10, Estimated Stat Date 11, Estimated Completion Date
06/01/2016 08/30/2016
73, Gront Amount Requested
$ 3,985,267.00 $ 2,000,000.00
14, Altona Lose Uns, W Parlipating na Shaved Service Project (nclude county and Vocal unl cade) Atiach letiors of suppor rom each oY tw parGcipating Weal
NA
15. ts the applicant(s) willing to devote appropriate resources and Ume to this propasal?
Yes [)No ttno, expiain wy the applicant(s) Is unable to devote appropriate resources and time lo the proposal,
16, Plan for Parted Funding; (f full funding fa net awarded, frow will you fund (he proposal? Can you go fonvard wih the proposal Hf partial funding le awarded?
Due to the City's fiscally distressed condition, the City seeks reimbursement of the $2 million the
City incurred to reconnect to the Detroit Water and Sewerage Department (DWSD) as its water
supply on October 16, 2015.
—
PART 3: PROPOSAL CONTACT INFORMATION
Note: The proposal contact individual should be a vital part of the grant proposal and will be the Michigan Department of Treasury's contact.
47. Contact Name
Natasha Henderson Administrator
19. Contact Telephone Number 20, Contact Fax Number
(810) 766-7346 (810) 766-7218
21, Contact E-mail Address
22, Contact Entity Name
City of Flint
PART 4: CONDITIONS OF PROBABLE FINANGIAL DISTRESS
23. Indieata the conditions affecting the applicant that indicate probable financial distrans (check all that apply and attach proof of existence fer eash condition
Cc 1, The goveming body or the chief administrative officer of the city, village or township has requested a preliminary review. The request shalt be
tn writing and shall identify the existing or anticipated financial conditions or events that make the request necessary.
oO 2. The state financial authority has received a written request (rom a creditor with an undisputed claim, that remains unpaid 6 months after Its due
date, against the city, village, or township that exceeds the greater of $10,000.00 or 1% of the annual general fund budgat of the clly, village,
or township, provided that the creditor has notified the city, vilage or township in writing at least 30 days before tha creditor's request to the
State financial authority of the creditor's Intention to submit a written request.
xxxEND_PAGE:treasury01_b41_7622_7971_157
8193, Page?
PART 4: CONDITIONS OF PROBABLE FINANCIAL DISTRESS, CONTINUED
O 3. The state financial authority has received a petition containing specific allegations of financial distress signed by a number of registered
electors residing within the city's, village's, or township's Jurisdiction equal to not less than 5% of the total vote cast for all candidates for
govemor within the city’s, vilage’s, or township's Juriadiction at the last preceding election at which a governor was elected. The petition shui
not have been filed within 60 days before any election of the city, village, or township.
ml 4. The state financial authority has received a written notification that the cily, village, or township has nat timely deposited ita minimum obligation
payment to the city’s, vilaga’s, or township's pension fund, as required by law.
| §. The state financial authority has recelved a written notification that the city, village, or tewmship has failed, for a period of 7 days or more after
the scheduled date of payment, to pay wages and salaries or other compensation owed to employees or benefits owed to retirees.
oO 6. The state financial authority has received a written notification from a trustes, paying agent, bondholder, or auditor engaged by the city, village,
or township of a defaull in a bond or note payment or a violallon of 4 or more bond or note covenants.
| 7. The state financial authority has received a resolution from either the senate or the house of representatives requesting a preliminary review
of the city, vilage, or township.
| 8. The city, village, or township has violated a requirement of, or a condition of an order issued pursuant to, former 1843 PA 202, revenue bond
act of 1933, 1933 PA 84, MCL 141.101 to 141.140, the revised municipal finance act, 2001 PA 34, MCL 141.2104 to 141.2821, or any other
law governing the issuance of bonds or notes.
| 9. The city, village, or township has violated (he conditions of an order issued by the local emergency financial assistance loan board pursuant to
the emergency municipal loan act, 1980 PA 243, MCL 141.831 to 141.942.
oO 10. The city, village, or township has viclated a requirement of sections 17 to 20 of the uniform budgeting and accounting act, 1888 PA 2, MCL
141,437 to 141.440,
im 11, The city, village, or township has falled to timely file an annual financial report or audit that conforms with the minimum procedures end
standards of the stale financial authority and is required for cities, villages, and townships under the uniform budgeting and accounting act,
1888 PA 2, MCL 141.421 to 141.4402,
C] 12. The city, village, or township Is delinquent in the distribution of tax revenues, as required by law, that it has collected for ancthar texing
Jurisdiction, and that taxing jurisdiction requests a preliminary review.
&] 13. The city, village, or township Is in breach of its obligations under a deficit elimination plan or an agreement entered Inte pursuant to a deficit
elimination plan.
im 14, A court has ordered an addifional tax levy without the prior approval of the goveming body of the city, village, or township,
[[) 16. The city, vitage, or township has ended a fiscal year In a deficit condition as defined in section 21 of the Glenn Stell state ravenua sharing
act of 1971, 1971 PA 140, MCL 141.921, or has falled to comply with the requirements of that section for filing or Inatituting a@ financial plan
to correct the deficit condition.
x] 16. The city, village, or township has been assigned a long-term debt rating within or below the BBB category or its equivalent by 1 or more
nationally recognized credit rating agencies.
17. There is an exstence of other facts or circumstances that, in the stale treasurer's sole discretion for a city, village or township, are Indicative
of probable financial stress
PART 5: PROPOSAL DETAILS
24, Describe Current State of Affairs: What ia working well? What is not working? Expiain the current condition of Infrastructure/equipment
See attached.
xxxEND_PAGE:treasury01_b41_7622_7971_158
§193, Page &
25, Geseribe Strategy, Project, ar Senice Proposal:
The City of Flint reconnected to the Detroit Water and Sewerage Department on October 16th,
2015, due to the contamination of the water caused by the Flint River supply. The cost to the City
to reconnect to DWSD was $2 million. These funds were taken from an already distressed Water
and Sewer Fund.
28. Describe How Grand Funding will Lead the Applicant Toward Financia! Stability’
Reimbursement of the City's two million dollars will offer some financial relief when revenues to
the Water and Sewer fund are at a devastating low. Based on current projections, the City has
estimated that the Water and Sewer Fund will become insolvent by the end of 2016. Returning this
sum will help to reduce the urgency of the impending fiscal crisis.
27. Goals, Measures, and Business Objecilves of this Proposal: What ara the outcomes you hope to achieve? Haw will you measure the outeames?
Provide the measures which will ba used to determine the sucess of the proposal,
The anticipated goal is to recouperate some of the losses the City has incurred during the Flint
Water crisis. Successful completion of this goal will be the reimbursement of the Water and Sewer
Fund to help the City continue operations during a time of financial stress.
28. Polenta) Barriers: Describe any barters that currently exist that may have an impact on the Implsmentation of the proposal.
The City returned to Detroit water on October 16, 2015. This proposal is seeking reimbursement of
the City's cost to reconnect.
29. Continuity of Proposal; How do you plan to fund the proposal gaing forward once awarded grant funds are exhausted?
There are no significant residual costs. This is a one-time request for reimbursement of already
expended funds.
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5163, Pege 9
PART 5: PROPOSAL DETAILS, CONTINUED
‘30, Coat Savings: Will the propose! sava money? Attach a dotalled calculation of the cost savings and provide an explanation of how the cost savings were
calculated. Do not include any anticipated FOCVT grant funding as part of the cost savings calculation.
vee
[_] No
A. SHORT-TERM (1 year er less) [_] ves
i Estimated Short-Term Savings
lo
Estimated 5 Yeur Total Savings
B, LONG-TERM (Greater than 1 year) C1 ves No
31. Work Plan and Proposal Timeline: What ate the implementation steps to ensure this proposal’s success? What are the projected outcomes at each step?
Attach a detalled work plan, if tro narrative will not fit In the spuce provided.
On October 12, 2015, City Council authorized a budget amendment to contribute $2 million from
the Water and Sewer Fund to the total $12 million cost of reconnecting the City to DWSD. On
October 16, 2015, that reconnection was executed. The projected outcome was to improve water
quality by ceasing the use of the Flint River as a primary water source,
32, Total Grant Budget Worksheet: For each budget category, attach a detailed list of proposed expentiltures, Including an indication of the priority for sack
budgeted tom. Explain how the expenditures support and are essential to the proposal,
Reconnection to DWSD $ 2,000,000.00 $ 2,000,000.00
33. Additional Information and Comments;
The total cost to reconnect was $12 million, with the State of Michigan contributing $6 million, the
Ruth Moit Foundation contributing $4 million, and the City of Flint contributing $2 million. To this
date, the Ruth Mott Foundation has contributed half of its pledge ($2 million). Consequently, $10
million has been pald to DWSD.
TOTAL ESTIMATED PROPOSAL COST
$ 2,000,000.00
TOTAL GRANT AMOUNT REQUESTED
$ 2,000,000.00
xxxEND_PAGE:treasury01_b41_7622_7971_160
5193 Page 10
[PART 6: ATTACHMENTS
94 Check the appropnate baxes and aitach the follosang items fo the application All aitachments must be included and labeled appropnately
Xx] Attached NIA 1 Leiter of support from each of the participating focal units identifiad in Part 2, Box 14
x, Attached 2 Proof of existence for each condition of probable financial distress checked in Part 4, Box 23
[x] Allached [| | N/A 3 Detailed calculation of cost savings and an explanation of how the cost savings ware calculated in Part §, Box 30
| Attached x] NA 4 Detaited work plan, if the narrative will not fit in Part §, Box 31
ix] Attached 5 Detailed lst of proposed expenditures to support Part 5, Box 32, including an imdication of the priority for each
budgeted item and an explanation of how the expenditure will support and is essanital to the proposal
| PART 7: CERTIFICATION
35 | certify that all statements in ths apphcation, including all requested supplemental information, are true complete and accurate to the best of my
knowledge if awarded, ! agree to allow the Michigan Department of Treasury and the State Auditor General's Office (and/or any of their duly authonzed
representatives) access, for the purposes of inspection, audit, and examination, to any books, documents papers, and records of the grantee which
are related to this proposal | agree to allow the Mictigan Department of Treasury ta canduct penodic program reviews of the propasa! The purpose of
these reviews wil be to determine adherence to stated proposal goals and to review progress of the proposal in meeting ‘fs objectives | agree to submit
semiannual and final narrative and financial status reports and a one-year Final Follow-up Report to the Michigan Department of Treasury | understand
thet failure to submit any required reports may result in the termination of the grant | understand that this grant may be terminated if the Michigan
Department of Treasury concludes that | am not in compliance with the conditions and provisions of this grant, or have falsified any information By way
of signature, | agree with ali conditions of this grant program
Applicant's Chief Administrative Officer Signature (as defined in MCL 141 422b) Date
01/26/2016
Prinled Name of Appicant’s Chief Administrative Officer (a3 defined in MCL 141 422b) Title
Natasha L. Henderson City Administrator
Applications are due October 15 2015 Completed applications submitted via mail of e-mail must be received by the Michigan
Department of Treasury no later than 11 59 p m on Thursday. October 15, 2015 Incomplete applications may not be considered.
A signed and completed application (including attachments) can be submitted by e-mail to or
by mail to
Michigan Department of Treasury
Office of Revenue and Tax Analysis
PO Box 30722
Lansing MI 48909
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Appendix A
FDCVT Supplemental Answers
Part 5: Proposal Details
Question 24. Describe the current state of affairs. What is working well? What is not working? Explain
the current condition of
The City is currently in a Federal state of emergency. Water from the Flint River, the City’s water source,
had been leeching lead from old pipes and solder, contaminating the water supply. Elevated lead levels
in children were discovered by physicians at Hurley Hospital. Genesee County, the State of Michigan,
and the United States Federal Government have elevated the emergency to their levels as well,
The City of Flint is also currently in a state of fiscal distress at a time in which considerable dernands are
placed upon it relating to the provision of clean and safe water. The City is attempting to cope with
these demands, while revenues are down or drastically reduced. Even though the City has progressed to
strategically reduce deficits by seeking new millages, reducing the number of city employees and related
costs, and ultimately reducing the services to the public, the City continues to face critical financial
challenges. Both the income tax and property tax revenue bases have declined by 55% since the
economic downturn in 2008. The current resources available to the City are very restricted and limited.
The City of Flint has been in receivership since December 2011. At that time, the State of Michigan
Financial Review Team found that the City has a General Fund deficit of $14,621,546 as of June 30%,
2010, which was not eliminated within the two year preceding period.
The City previously submitted a five year deficit elimination plan for a cumulative general fund deficit of
$7,046,820 as of June 30", 2008, However, by June 30", 2010, the cumulative general fund deficit had
grown to $14,621,546. An updated plan submitted for 2010 did not purport to eliminate cumulative
deficit until 2030 and that relied upon the issuance of an additional $12 million of debt in 2013.
A structural operating deficit existed in the general fund as of June 30, 2007, 2008, 2009, 2010, and the
General Fund was projected to have a $6,768,864 deficit as of June 30, 2011.
The Comprehensive Annual Financial Report for the fiscal year ended June 30, 2011 was received in
December 2011. The City’s General Fund, which had a $14.6 million deficit at the beginning of the year,
ended it with an $8.9 million deficit, The reduction in the deficit was due solely to an $8 million Fiscal
Stabilization Bond issued by the city in March 2011. In total, excluding the impact of the FSB proceeds
and the Genesee Towers judgment levy, expenses in the General Fund exceeded revenues. The City's
Comprehensive Financial Report revealed an unassigned deficit in the General Fund of $8,961,427 as of
June 30, 2014, which had resulted from operating deficits.
The City does not have a current bond rating. The most recent bond rating was from over a decade ago
and received a score of Bai, a qualifying indicator of fiscal distress.
As part of a recent judgment, the City was ordered to repay its Water and Sewer Fund 15.7 million from
its General Fund. The recent water challenges have also resulted a lower frequency of bill payments