Correspondence between

Wayne L. Workman Deputy State Treasurer Michigan Department of Treasury

Importance: High Randy, Per your request, attached is the updated final timeline. The attachments are located here V:\LGOV\OFR\Cities\City of Flint\KWA Water Authority\2015 Water Quality Issues\Flint Water Timeline RWidigan 11-06-15 \f additional information is desired please let me know. -Rob Robert Widigan Local Government Financial Services Division Michigan Department of Treasury Office (517) 373-3227 Cell (517) 243-8645 xxxEND_PAGE:treasury01_b33_5236_5444_073 4425 (Rev 04-15) STATE OF MICHIGAN RICK SNYDER DEPARTMENT OF TREASURY NICK A. KHOURI GOVERNOR LANSING STATE TREASURER Flint Water Timeline (11-06-15) 1. June 26, 2012 — Letter from Flint EM Mike Brown to DWSD for permission to begin blending Flint River water with treated water from DWSD. The letter indicates that the DEQ is supporting this option and its implementation would save the City between $2M and $3M annually. 2. September 20, 2012 — Letter from Flint EM Ed Kurtz to DWSD requesting written permission to implement the blending option. Approval is requested by October 1, 2012. 3. October 31, 2012 — Analysis by the Flint Finance Director suggests that the annual cost to purchase water from DWSD will steadily increase to $23M per year by fiscal year 2020. 4. November 2012 — Treasury retains Tucker, Young, Jackson and Tull (TYJT) to evaluate the KWA proposal to the City of Flint. 5. November 6, 2012 — Letter from Flint Emergency Manager Ed Kurtz to State Treasurer Dillon that a proposal from DWSD is expected but that the initial assessment is that switching to KWA is in the best interest of the City of Flint. 6. February 6, 2013 — TYJT issues a final report to Treasury on the comparison between Karegnondi Water Authority (KWA) and DWSD. Analysis suggests that the KWA option is the cheaper option for the City of Flint. 7. March 2013 — DWSD contacts the City of Flint to begin direct negotiations on a contract extension. Multiple options are provided to the Flint Emergency Manager (EM) Ed Kurtz. 8. March 25, 2013 — The Flint City Council endorses joining KWA. 9. April 11, 2013 — State Treasurer Andy Dillon authorizes Flint EM Ed Kurtz, pursuant to Section 12(3) of P.A. 436 of 2012, to enter into a contract with KWA if a final offer from DWSD is either not received for rejected in good faith based upon specific objections. 10. April 15, 2013 - DWSD provides a best and final offer to the City of Flint. Analyses by Flint EM Ed Kurtz, the Department of Environmental Quality and Treasury’s Office of Fiscal Responsibility independently conclude that the KWA option is cheaper for the City of Flint. PO BOX 30728 e LANSING, MICHIGAN 48908-8228 www michigan gov/treasury e 517-373-3227 xxxEND_PAGE:treasury01_b33_5236_5444_074 Page 2 11. 12. 14. 15. 16. 17. 18, 20. 21. 22. April 16, 2013 —Flint EM Ed Kurtz informs the State Treasurer that the City will join KWA. This decision was officially announced May 1, 2013. April 17, 2013 — DWSD transmits a letter to Flint EM Ed Kurtz terminating service to the City of Flint, effective April 17, 2014. . June 26, 2013 — Groundbreaking for the Karegnondi Water Authority. Flint also requests full time use of the Flint Water Treatment Plant with Flint River water as a source. June 28, 2013 — Financing Contract between the City of Flint and KWA is approved. Effective August 1, 2013. This document was signed by EM Mike Brown. July 08, 2013 — The City retains Lockwood, Andrews & Newman engineering firm to get the City’s water plant up and running while the KWA pipeline is built. February 19, 2014 — The KWA Board of Directors adopts Resolution 2014-01, authorizing KWA to bond for water line construction on-behalf of the City of Flint. April 17, 2014 — Water service from DWSD officially ends. The City of Flint also conducts two separate public forums regarding the use of Flint River water, upgrades to the City’s water system and the overall cost of the switch to KWA. April 25, 2014 — City conducts public event marking the transition to the use of Flint River water. DEQ information shows that transition complete by May 2015. . January 2, 2015 — The City issues a public notification stating the City water system exceeds the TTHM maximum contaminant level. March 3, 2015 — Flint EM Jerry Ambrose provides a memorandum to Deputy State Treasurer Wayne Workman stating that a reconnection to DWSD will cost the City $10.1M/year and that water purchases could be as high as $1M/month. March 12, 2015 — Veolia issues the final operational evaluation of the City’s water system. November 4, 2015 — The EPA issues its final report on high lead levels at three residences in the City. xxxEND_PAGE:treasury01_b33_5236_5444_075 Byrne, Randall (Treasury)

Angela: Here are a few more updates: Flint The city is implementing the Veolia recommended improvements to its water system, including water plant improvements, distribution system improvements, new policies and procedures, and better communication with customers. The city has installed a $1.5M granulated active-charcoal filter system to improve water quality. All of the filters were completely installed in early August. Allen Park On May 15, 2015, an updated five year budget projection from the city was received. The RTAB approved this item at their August 5, 2015 meeting. Aretired city employee has brought a breach of contract and age discrimination lawsuit against the city. The city’s insurance policy covers only a small portion of the alleged damages. A Settlement Conference was held between all parties on July 20, 2015 but no resolution to this case has been announced by the city. Treasury continues to monitor this case. Randy, Randall Byrne | State Administrative Manager Local Government Services - Office of Fiscal Responsibility State of Michigan | 430 W. Allegan Street, 3rd Floor | Lansing, MI 48922 (517) 335-2521 | (517) 373-0633 (fax) | [email protected] Think Green! Don't print this e-mail unless you need to. CONFIDENTIALITY NOTICE: This e-mail, and any attachments, is for the sole use of the intended recipient(s) and may contain information that is confidential and protected from disclosure under the law. Any unauthorized review, use, disclosure, or distribution is prohibited. If you are not the intended recipient, please contact the sender by reply e-mail, and delete/destroy all copies of the original message and attachments. xxxEND_PAGE:treasury01_b25_3630_3729_015 Byrne, Randall (Treasury)

Randy: This looks good the way you have it set up. | just added a title. Angela Dempkowski Senior Executive Management Assistant Michigan Department of Treasury [email protected] (517) 373-4415

Angela: This is the list of bullet points. Please put this into an agenda format for me. The title of the meeting is,” Local Government Update Agenda”, March 30, 2015, 11:15 a.m. Please return to me, | will have to change some of the content of the bullets. Thanks, Randy, Randall Byrne | State Administrative Manager Local Government Services - Office of Fiscal Responsibility State of Michigan | 430 W. Allegan Street, 3rd Floor | Lansing, MI 48922 (517) 335-2521 | (517) 373-0633 (fax) | [email protected] Think Green! Don't print this e-mail unless you need to. CONFIDENTIALITY NOTICE: This e-mail, and any attachments, is for the sole use of the intended recipient(s) and may contain information that is confidential and protected from disclosure under the law. Any unauthorized review, use, disclosure, or distribution is prohibited. If you are not the intended recipient, please contact the sender by reply e-mail, and delete/destroy all coptes of the original message and attachments. xxxEND_PAGE:treasury01_b31_4719_5108_244 March 30, 2015 Meeting with Governor Agenda EMERGENCY MANAGER (EM) Flint Deficit Elimination Plan: Emergency Manager (EM) Gerry Ambrose is preparing an E- Loan application that would provide a $6M E-loan to assist in eliminating the City’s $9M General Fund deficit by June 30, 2015. The Michigan Department of Environmental Quality (MDEQ) Testing Lab has provided results to the City of Flint showing that test results for total trihalomethanes (TTHM) levels for the month of February are well within Environmental Protection Agency (EPA) guidelines for safe water. However, because EPA regulations require that the four month average for all testing sites be within guidelines, the City is still considered to be out of compliance by the MDEQ. The City was awarded $2M through the Financially Distressed Cities, Villages, and Townships Grant Program. These funds will be used to enhance the City’s water system through improved waste management and leak detection and pipe assessments. EM Ambrose’s exit from the City is tentatively scheduled for April 2015; however, to ensure water quality for the residents and eliminate current water issues, the EM’s exit date should be delayed until July 2015. An EM Order is being prepared that would restructure Water System Revenue Bonds Series 1999 thru 2002 with the Michigan Finance Authority. This would postpone principal payments and free up $2.24M, allowing the City to further improve its water distribution system. Lincoln Park FY 15 is projected to conclude with a $500k deficit, which may be offset by the one-time proceeds from the sale of a cellular tower, expected revenues of $900K. Pensions are poorly funded; police and fire pension is 31% funded while the general employees’ pension is 22% funded. Retiree healthcare is funded on a pay as you go basis. Emergency Manager Coulter’s plan to fund pensions to the 60% level by 2035 requires significant reductions to retiree healthcare. The current annual cost of $4.1M will be reduced to $600k, via section 12(1)(k) collective bargaining agreement (CBA) modification. An additional police and fire pension millage has been placed on the May 5 ballot. If passed by the electorate, this would raise 6 mills ($3M) for pension funding and other uses. FINANCIAL REVIEW COMMISSION (FRC) xxxEND_PAGE:treasury01_b31_4719_5108_245 Detroit RECEIVERSHIP TRANSITION ADVISORY BOARD (RTAB) Ecorse The Ecorse RTAB continues to monitor the deteriorating conditions of the City. Preliminary assessment figures show a 26% decline in residential property values citywide. The City has been unable, during the past two years, to produce a balanced five-year budget. Such a multi-year budget is mandated by Emergency Manager Order. Previous financial projections predict significant operating deficits for FY 2016, and total exhaustion of the General Fund balance in FY 2017. The City’s pension fund is 41% funded. The City is paying out more in benefits than in contributions to the plan. The Municipal Employees Pension System has suggested several options to improve the funding of the plan. Hamtramck Current budget to actual reports show that the City is on track to realize the General Fund balance predicted in year one of Emergency Manager Square’s two-year budget. The Police Chief resigned on March 11. Allen Park City Administrator Karen Folks resigned on March 12, 2015, after RTAB approval of a Separation Agreement negotiated with the City Council. Finance Director Bob Cady was appointed Interim City Administrator. Treasury will be participating with the City in a search process for a permanent City Administrator. Renovation has begun on a temporary City Hall facility. The City expects to relocate to the new facility in May 2015. The City is preparing to issue a bond tender offer to reduce its outstanding debt. The tender offer process was previously delayed due to the uncertainty between the City Council and the City Administrator. A meeting is being scheduled. Benton Harbor The City is projected to end the FY with a General Fund balance of $200k. The City was awarded $910K through the Financially Distressed Cities, Villages, and Townships Grant Program. These funds will be used to enhance the water system through water main replacements and fire hydrant repairs, and complete a property reappraisal to provide updated and accurate assessing records. Additionally, the City will provide community enhancement through blight management and sidewalk replacement. An estimated 35 residents are without water due to frozen water lines. The City has hired a local company to assist the residents in thawing the lines for $150 per residence. Even xxxEND_PAGE:treasury01_b31_4719_5108_246 though residents are responsible for maintaining the water lines on their property, the City stepping is offering assistance by paying $75 of the $150, and the resident paying the rest. Pontiac The City was awarded $125K through the through the Financially Distressed Cities, Villages, and Townships Grant Program. These funds will be used to supplement the City’s ongoing blight management programs. A new search process to hire a Deputy Mayor will begin shortly after a suitable candidate was not found through a Michigan Municipal League (MML) search. A new City Charter has been proposed by the City Charter Revision Commission and will appear on the May 5 ballot for approval by the electorate. CONSENT AGREEMENT Royal Oak Township The Township is continuing negotiations with the City of Hazel Park for the provision of police services. The Michigan State Police is currently providing dedicated police patrols to the Township on a temporary basis. The proposal from the City of Hazel Park for this service currently exceeds the Township’s available revenue by over $200K. Discussions regarding the needed level of dedicated patrols within the Township are continuing between both entities. The Township is evaluating a proposal from the Ferndale School System to acquire Grant School (where the Township offices are located) for $1. The Township has retained McKenna & Associates to assist them in evaluating the feasibility of the Township owning and operating this facility. The building’s unmet capital needs have been identified at $1.2M. Giarmarco, Mullins & Horton, P.C. has been appointed the Township Attorney via the issuance of a Consent Agreement Order. This firm replaces the firm of Pentiuk, Couvreur & Kobiljak. This change is estimated to save the Township $78K in budgeted legal service expenses. Inkster City Treasurer Mark Stuhldreher currently has the Consent Agreement powers; City Manager Richard Marsh has requested that he be given those powers. The City was awarded $855K through the Financially Distressed Cities, Villages and Townships Grant Program. These funds will be used to complete a property reappraisal program, repair and replace fire hydrants and enhancing public safety by providing an officer to the multi-jurisdictional narcotic team and the deployment of one additional police officer, and a backup power supply and technology improvements. The City anticipates a General Fund surplus of less than $100K by the end of the current fiscal year, June 30, 2015. This is one year sooner than the approved Deficit Elimination Plan had indicated. xxxEND_PAGE:treasury01_b31_4719_5108_247 A Consent judgment levy by the Detroit Water and Sewer Department and Wayne County will likely be placed on the July tax roll. The City owes DWSD $682K for unpaid water service and Wayne County $4.9M for unpaid sewer services. River Rouge The City was awarded $592K through the Financially Distressed Cities, Villages, and Townships Grant Program. These funds will be used to enhance public safety through improved street lighting and infrastructure improvements to City Hall. A reduction in the healthcare benefits for active employees and retirees was implemented on November 1, 2014. The City estimates an annual savings of $400K. The City must develop a sustainable five year budget and have no funds with a deficit in order to exit from the Consent Agreement. NEUTRAL EVALUATION Highla nd Park The City has hired Pierce, Monroe & Associates to assess the adequacy and accuracy of billing records, develop a methodology for calculation of amounts due to the City per customer, develop a work plan for implementation of an accounting program, and calculation of outstanding account balances per customer account. The City made an initial offer of $2.2M to settle past due accounts to the Detroit Water and Sewerage Department (DWSD). The offer was rejected by DWSD. Discussions are ongoing. The City was awarded $2M through the Financially Distressed Cities, Villages, and Townships Grant Program. These funds will be used to enhance the City’s water system through meter replacement, leak detection, and system repairs. The Request for proposal (RFP) for the selection of a third party to operate and maintain the City’s water and sewer systems, as required by the City’s Plan of Adjustment, are due on April 20, 2015. In August 2015, an emergency loan of $16.4M, which includes the restructuring of $4.8M in existing loans, will be used to refund $2.7M in Fiscal Stabilization Bonds, $5.2M in Financial Recovery Bonds, and $3.7M in State Revolving Fund Bonds. BenStaff has been hired by the City to make recommendations to reduce healthcare costs. The law firm of Lewis & Munday has been hired to assist the City with the restructuring of the other post-employment benefits (OPEB) benefits. R COMMUNITIES OTHE Melvindale The City was awarded $88K through the Financially Distressed Cities, Villages, and Townships Grant Program. These funds will be used enhance public safety through fleet replacement of police vehicles and updated technology. xxxEND_PAGE:treasury01_b31_4719_5108_248 Wayne - The City anticipates a General Fund deficit in the next two years. - The City Manager signed a six month contract. This may lead to more instability in the City’s administration. - The City has approved a May 2015 ballot proposal of 3 mills for five years that if approved by voters, would assist in funding police and fire retirement costs. Wayne County - The Michigan Supreme Court ruled unanimously in favor of retirees who receive a 13th check to offset inflation. The County is required to return $32M to the Pension Equity Fund. - Cash reserves reached its lowest point in August 2014 with pooled cash falling to approximately $73M, the average balance is $170M. This includes proceeds from a short term borrowing of $75M. xxxEND_PAGE:treasury01_b31_4719_5108_249 Lamphier, Wendy (T reasury)

Importance: High Ed/Randy: Attached is the Flint Water Report. Given the volume of information, | have kept the report focused upon the issues germane to the DEQ violation notice and the offer from DWSD. | have tried to keep technical jargon to a minimum, but some inclusion was necessary in order for some items to be clear. (also went back into our records to see what rate projections were assumed to be in order to cross-compare the City’s analysis of the DWSD proposal. However, | kept references to all of this at a minimum. If there are any questions, let me know. Eric Cline | Department Manager State of Michigan | Michigan Department of Treasury | Office of Fiscal Responsibility 430 W. Allegan Street, 3rd Floor | Lansing, MI 48922 Lansing Office (517) 335-2078 | Cell Phone (517) 243-8350 | Traverse City Office (231) 922-5228 E-mail cliner 1 @michigan.gov CONFIDENTIALITY NOTICE: This e-mau, and any attachments, 1s for the sole use of the intended recipient(s) and may contain information that is confidential and protected from disclosure under the law. Any unauthorized review, use, disclosure, or distribution 1s prohibited. If you are not the intended recipient, please contact the sender by reply e-mail, and delete/destroy all copies of the original message and attachments Thank you. 26 xxxEND_PAGE:treasury01_b28_4390_4585_084 72 (Rev 11-13) STATE OF MICHIGAN GOVERNOR LANSING STATE TREASURER SUMMARY REPORT TO: Wayne Workman, Deputy State Treasurer FROM: Eric Cline. Department Manager; Office of Fiscal Responsibility SUBJECT: Summary of Flint Water System Issues DATE: January 22, 2015 Summary On December 16, 2014, the City of Flint received a violation notice from the Michigan Department of Environmental Quality (DEQ). This notice stated that the City water samples were in violation of Maximum Contaminant Levels (MCL), a violation of the Safe Drinking Water Act (PA 399 of 1976). The DEQ considers the violation period to have begun December 1, 2014. The violation was triggered when water sample reports showed that the City’s water quality, on average, exceed the total allowable level of Disinfection Byproducts during the first three quarters of 2014. Further, four of the City’s eight water sample site locations individually exceeded allowable MCL levels during the same period of 2014. These conditions are considered a Tier 2 violation and, as a result, the City was required to notify the public of these contamination levels by January 10, 2015 (which was done) and continue to notify them every three months until the violation is resolved. The City must also update its Operational Evaluation Report, which is on-file with the DEQ, as to how it will correct this issue by March 1, 2015. Causes & Possible Solutions According to information provided by the City, the high levels of Disinfection Byproducts, which resulted in the DEQ violation notice, can be caused by high levels of chlorine. The City is required to perform testing every three months and the yearly average exceeded allowable MCL levels. Some of the potential causes for this high level of chlorine include: Inefficient ozone system operation. A sewer leak discovered upstream of the intake, resulting in the need to increase the chlorine feed. An improper softening process. Unlined cast iron pipes in the distribution system. Recirculating water in the distribution system due to poor configuration of two pump stations. Broken valves resulting in stagnant water. High chlorine demand in filters. PO BOX 30716 » LANSING, MICHIGAN 48809 ww michigan govftreasury e (517) 373-3200 xxxEND_PAGE:treasury01_b28_4390_4585_085 Page 2 e High potential of impurities in the source water. © Less than optimal removal of impurities. The City outlined some potential remedies to this problem in its initial Operational Evaluation Report, dated November 26, 2014. These potential remedies are intended to be implemented in stages. Stage 1 consists of actions that can be implemented without any new construction within the distribution system and are due to be implemented by early March 2015. Stage | actions include: Troubleshooting of the ozone system. Implementation of different testing methods. Operational changes at the Water Treatment Plant. Increase water main flushing efforts to minimize stagnant water. Identify areas with high water age and implement preemptive measures. Stage 2 consists of long term actions that require major system construction and potentially include: Upgrades to the ozone system. Implement the use of polymer aids. Convert to lime and soda ash softening. Change the disinfectant process. Install a new feed at the intake to optimize disinfection. Implement advanced treatment for precursor removal. Increase main flushing based on water modeling results. Continue valve replacements. Emphasize cast iron pipes on water main replacement priority list. The projected cost of these options is unavailable. It should be noted that all of these potential remedies are intended to be utilized only until the KWA pipeline is operational in late 2016. Further, the City will be providing additional potential solutions when it updates the Operational Evaluation Report, which must be submitted to the DEQ by March 1, 2015. Also, the City’s Emergency Manager has committed to hiring an independent external consultant to assess the steps that the City has taken, to make recommendations as to other steps that can be taken, to oversee implementation, and to monitor operations until KWA is online. DWSD Situation Concurrent to the City addressing the aforementioned issues, on January 12, 2015, the Detroit Water and Sewer Department (DWSD) extended an offer to the City to reopen water connections that have been closed since May 2014 and resume supplying the City with drinking water. DWSD has offered waiving a connection charge if the City will consider a long term agreement. DWSD has offered the City a fixed monthly rate of $846,700/month ($10,160,400/year) plus a commodity rate of $14.92/Mef. DWSD stated that these rates will be guaranteed until June 30, 2015. Any future rate increases beyond the June 30 date are not identified, however, prior projections indicated that DWSD rates would exceed $16-million in 2015. xxxEND_PAGE:treasury01_b28_4390_4585_086 Page 3 The City’s analysis of this offer indicates that the total cost of purchasing water from DWSD would exceed $12- million annually (before any rate increases beginning July 1, 2015). These costs are supported by projections utilized by the City when the original decision to switch to KWA was made. The City’s current water system expenditures are approximately $11.7-million, with operations and capital upgrades currently running below projections. Therefore, the Emergency Manager has made the determination that the City will not be acting upon the offer extended by DWSD. If further information on this issue is needed, please let me know. Copy: Edward Koryzno, Director; Bureau of Local Government Services Randall Byrne, State Administrative Manager; Office of Fiscal Responsibility Oak Township\Consent Agreement\2015 Budget\State Treasurer Action Letter to Township.2015 Budget.v2.12-15- 14.doc xxxEND_PAGE:treasury01_b28_4390_4585_087 Stanton, Terry A. (T reasury)

Yes, after city council, please.

For the files Sent from my iPad Begin forwarded message:

Given our conversation today about who approves what can we put the reference in each approval under PA 436 or the EM contract as to who can approve each transaction? Wayne Workman | Deputy State Treasurer State of Michigan | 430 W Allegan Street | Lansing, MI 48922

All: I spoke with Mr. Craig at the DEQ and he was working on the current version of the Consent Order when I called. Mr. Craig indicated that the order is intended to temporarily reopen the lime disposal area so the WTP upgrades can go forward. In the future the area would be evaluated for clean-up or capping (or other measures after an environmental assessment occurs). Mr. Craig stated that he hopes to send his comments back to the City’s attorney at Werner, Norcross & Judd either tomorrow or Monday. I requested periodic updates on the status of this project but if anyone wishes any follow-up, please let me know. Eric Cline | Unit Operations Specialist - Office of Fiscal Responsibility State of Michigan | Michigan Department of Treasury 430 W. Allegan Street, 3rd Floor | Lansing, MI 48922 (517) 335-2078 | clinerl @michigan.gov CONFIDENTIALITY NOTICE: This e-mail, and any attachments, is for the sole use of the intended recipient(s) and may contain information that is confidential and protected from disclosure under the law. Any unauthorized review, use, disclosure, or distribution is prohibited. If you are not the intended recipient, please contact the sender by reply e-mail, and delete/destroy all copies of the original message and attachments Thank you. xxxEND_PAGE:treasury01_b19_2589_2633_07 CITY OF FLINT OFFICE OF THE EMERGENCY MANAGER Darnell Earley, 1CMA-CM, MPA Emergency Manager ELECTRONIC COMMUNICATION March 7, 2014 Ms. Sue McCormick Detroit Water and Sewer Department Detroit, Michigan RE: DWSD Water Rates Dear Ms. McCormick: Thank you for the correspondence dated February 12, 2014 which provides Flint with the option of continuing to purchase water from DWSD following the termination of the current contract as of April 17, 2014. Following DWSD’s April 17, 2013 notice of termination of the water service contract between the City of Flint and DWSD, the City of Flint has actively pursued using the Flint River as a temporary water source while the KWA pipeline is being constructed. We expect that the Flint Water Treatment Plant will be fully operational and capable of treating Flint River water prior to the date of termination. In that case, there will be no need for Flint to continue purchasing water to serve its residents and businesses after April 17, 2014. We are aware that Genesee County has been in negotiations with DWSD to purchase water from DWSD following the termination of our contract, and we understand that an agreement may be imminent. Should that occur, there would be no further need for the City to discuss with DWSD any continuing purchase of water. Should that not occur, however, we would be interested, if Genesee County were to so request, to purchase water from DWDS for some period of time. In such an event, our demand for water would be only for the amount necessary to provide Genesee County with water. That amount would be approximately half of the amount Flint is currently purchasing from DWSD. City of Flint ¢ 1101 S. Saginaw Street + Flint, Michigan 48502 www.cityofilint.com ¢ (810) 766-7346 « Fax: (810) 766-7218 xxxEND_PAGE:treasury01_b19_2589_2633_08 Ms. Sue McCormick March 7, 2014 Page 2 However, in the very unlikely event that the City of Flint is not able to draw water from the Flint River no later than April 17, 2014, then the City would like the option of continuing to purchase water from DWSD for a period of time, up to the time water is available from KWA. Consequently, I am requesting that you clarify your proposal for the City of Flint to continue purchasing water from DWSD under the following scenarios: e Flint, upon the request of Genesee County, purchases water for sale to Genesee County for up to 3 years, beginning April 17, 2014, in an amount approximately 50% of the volume currently purchased by the City; « Flint purchases water from DWSD in approximately the same volume as currently, for up to 3 years, beginning April 17,2014, with the ability to reduce that volume by up to 50% during that period, upon 30 days notice to DWSD e Flint purchases water from DWSD in approximately the same volume as curtently, for up to 3 years, beginning April 17, 2014, with the ability to reduce that volume by up to 50% during that period, upon 30 days notice to DWSD, and further, to terminate the reduced volume purchase should Genesee County and DWSD reach an agreement whereby Genesee County directly purchases water m DWSD. Thank you and please contact me if you have any questions. I look forward to your response. Sincerely, Darnell Earley, ICMA-CM, MPA. f Emergency Manager City of Flint xxxEND_PAGE:treasury01_b19_2589_2633_09 Koryzno, Edward (T reasury)