Correspondence between

Background information from DEQ on KWA. They also believe that KWA remains the best option, even in light of the most recent offer by DWSD.

Please prepare a response to “Fred the Engineer” to be signed by Roger on behaif of Andy. Will you please let me know today how long it will take to get a response out and then also CC me on the letter once it does go? Thanks.

xxxEND_PAGE:treasury01_b04_0379_0503_031 Received by Flint yesterday evening.

Importance: High Do we have a sense on "when" review will be complete? At last word, Caleb was working up talking points to be used after the review is complete...but hoping ta have a sense of when it all could shake out...

FYI General Office Assistant Executive Office - Department of Treasury (517)241-2840 - direct (517) 373-3223 - main

FYI

Just FYI. | will work with G’s office on this.

ASSESSMENT. Version VIILO2-21-13.doc Attached is our assessment of the KWA issue in Flint. The questions Andy raised are specifically addressed. As you may recall, while receiving water from DWSD, an ongoing requirement, imposed by DEQ, is for a backup water system in Flint in case of failure of the DWSD service. To that end, Flint has been required to maintain their water plant, even though it rarely has been used. In the parallel line option, Tucker Young suggests that the need for Flint to maintain their water plant while receiving water from DWSD, might be resolved by running a parallel line from Imlay City that would provide a second means of delivery for DWSD treated water. That parallel line could, in the thoughts of Tucker Young, also resolve certain backup issues for other parts of the DWSD system. We are unaware of any discussions with DWSD on this issue. An obvious concern would be where the cost for the parallel line fits in DWSD capital planning. From Flint's perspective, the value proposition has to be concerning as the City spent approximately $45 million upgrading the plant recently, still has debt to pay related to those improvements, and would be faced with the longer term issue of what to do with the plant. Use by the County was suggested. Because of the low geographic elevation of the Flint plant, its use as other than a backup for the Genesee County water services would be difficult. Based on what we understand of the somewhat dynamic circumstances around this decision, the KWA option still seems best for Flint.

We've been working on the final touches to our KWA report, which includes our recommendation. However, we learned within the past few days that Tucker Young apparently met with Andy and is exploring another alternative. Do you have any information about that? I asked for some additional edits on the Highland Park plan, which has been evolving along with the KWA report.

Did we ever track down the responses to Andy's KWA questions? What about the Highland Park plan?

| believe Ed Kurtz stated that the Flint City Council is 100% in favor of the KWA option. —---Original Message-——

Andy is pretty reluctant to have an unelected EM/EFM make the decision on the KWA. Do we have any sense where the council is on this issue? | think he would feel much better if we had a supportive resolution from the Council. Can you please inquire? Sent from my iPad xxxEND_PAGE:treasury01_b06_0561_0924_066 89 (Rev 02-11) STATE OF MICHIGAN RICK'SNYDER DEPARTMENT OF TREASURY ANDY DEON GOVERNOR LANSING STATE TREASURER ANALYSIS TO: Edward Koryzno, Administrator; Office of Fiscal Responsibility FROM: Eric Cline. Unit Operations Specialist SUBJECT: Flint Water System Status Assessment DATE: January 22, 2013 On November 26, 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 (K WA) in Genesee County. The overarching purpose of this study was to provide objective analysis to the State Treasurer and to Flint’s Emergency Financial Manager (EFM) in order to secure potable drinking water for the City for the foreseeable future. The Office of Fiscal Responsibility (OFR) has been the lead office representing Treasury on this project. On December 21, 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, TYJT outlined $ options that they had analyzed. These options were: 1) 100% water provision by the City of Flint Water Plant from its water source of the Flint River; 2) 100% provision of untreated Lake Huron Water by KWA (which would require treatment by the Flint Water Plant); 3) Effective 100% provision of treated drinking water by DWSD,; 4) Provision of variable amounts of water from DWSD through the existing Potter & Baxter mains (this option called for Flint to treat and blend river water into DWSD water in order to reach their daily needs); and 5) Provision of variable amounts of water from DWSD through the 72” Imlay City main (this option also called for Flint to treat and blend river water into DWSD water in order to reach their daily needs). Each of the blending options looked at Flint purchasing 4, 8, or 12 Million Gallons per Day (MGD) from DWSD and blending the balance in river water to achieve their maximum daily water needs of 18 MGD. The Imlay City option also provided for DWSD to sell the 72” main to the City of Flint, which would then become the operational and maintenance responsibility of Flint.

Andy asked for a little followup on our conversations. Can you guys have someone put together a written response to these questions ASAP? 1) Please show the different projected construction costs provided by TYJT and in the presentation by Flint this week. If different, please indicate why we believe the Flint #s are acceptable projections. 2) Please show the contingency on construction included in both projections. 109 xxxEND_PAGE:treasury01_b06_0561_0924_056 3) What are the protections that Flint has in the case of a) cost overruns on construction, and b) a delay in the construction timeline that forces Flint to use DWSD water longer. Thanks.

Follow Up Flag: Follow up Flag Status: Flagged A document for discussion at this afternoon’s meeting from Ed Kurtz regarding Flint water system options. Edward B. Koryzno, Jr. | Administrator - Office of Fiscal Responsibility State of Michigan | 430 W. Allegan Street, Ist Floor | Lansing, MI 48922 (517) 373-4415 | (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, Thank you

Follow Up Flag: Follow up Flag Status: Flagged FYI - Mike Brown called to say that Mayor Walling will be joining Ed Kurtz, Mike Brown and Jerry Ambrose for this afternoon’s meeting. Edward B. Koryzno, Jr. | Administrator - Office of Fiscal Responsibility State of Michigan | 430 W. Allegan Street, Ist Floor | Lansing, MI 48922 (517) 373-4415 | (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 ts 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_b06_0561_0924_037 Koryzno, Edward (T reasury)

Can you guys please touch base with the City and Tucker to make sure that their analysis takes into account the details

Below is Eric's initial observations of the preliminary TYJ&T report and what DWSD' current offer: | have compared the written proposal received fram DWSD to the Charts and PowerPoint provided by TYJT. As the DWSD proposal is written and contains more detail than the graphic summary provided by TYIJT, it is difficult to completely determine if all points are covered in both presentation formats. However, here is what stands out to me. The DWSD proposals state that the first year of a contract with Flint would be 2014. TYIT states 2013 as Year One. 75 xxxEND_PAGE:treasury01_b06_0561_0924_002 The DWSD proposals discuss a “redundancy credit” to Flint that will result from the blending option by Flint. | do not see this identified in the TYJT information. The DWSD proposals make no reference to the 12 or 8 MGD Maximum Day options outlined by TYJT. The information provided by TYJT makes no mention of DWSD reserving the right to serve existing customers on the 72” pipeline, if purchased). Nor is there a mention of the wheeling charge (paid to Flint) in the TYJT information. DWSD estimates Flint would not begin utilizing a blending option until 2018. Until then, it is assumed that DWSD would provide 100% of water to Flint. This is not referenced in the TYJT information. This is my first analysis. If you wish additional analysis to be done, please Jet 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 | [email protected]

This came in the mail from DWSD on the Friday before Christmas. | have not reviewed it to know whether the proposals it contains match up to those presented by TYJT last week. 76 xxxEND_PAGE:treasury01_b06_0561_0924_003 Koryzno, Edward (Ti Treasury)

Discussion: Brief Treasury on pros and cons of Karegnondi project. There are concerns about cost and engineering constraints. Report for Flint in late 90’s....suggested this project was not financially feasible. Attendees: State of Michigan Andy Dillon - Treasurer

Discussion: Brief Treasury on pros and cons of Karegnondi project. There are concerns about cost and engineering constraints. Report for Flint in late 90’s....suggested this project was not financially feasible. Attendees: State of Michigan Andy Dillon - Treasurer

Discussion: Brief Treasury on pros and cons of Karegnondi project. There are concerns about cost and engineering constraints. Report for Flint in late 90’s....suggested this project was not financially feasible. Attendees: State of Michigan Andy Dillon - Treasurer

Discussion: Brief Treasury on pros and cons of Karegnondi project. There are concerns about cost and engineering constraints. Report for Flint in late 90’s....suggested this project was not financially feasible. Attendees: State of Michigan Andy Dillon - Treasurer

Discussion: Brief Treasury on pros and cons of Karegnondi project. There are concerns about cost and engineering constraints. Report for Flint in late 90’s....suggested this project was not financially feasible, Attendees: State of Michigan Andy Dillon - Treasurer