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Good morning, Please find attached an electronic communication with attachments from Emergency Manager Ambrose. Thank you. Maxine Murray Executive Assistant to Mayor Dayne Walling Gerald Ambrose, Emergency Manager Natasha Henderson, City Administrator 1101 S. Saginaw Street Flint, MI 48502 810.237.2035 Telephone 810.766.7218 Fax xxxEND_PAGE:executiveofficeemails19_b004_007_007_1

Good morning, Please find attached an electronic communication with attachments from Emergency Manager Ambrose. Thank you. Maxine Murray Executive Assistant to Mayor Dayne Walling Gerald Ambrose, Emergency Manager Natasha Henderson, City Administrator 1101 S. Saginaw Street Flint, MI 48502 810.237.2035 Telephone 810.766.7218 Fax xxxEND_PAGE:treasury01_b31_4719_5108_001 CITY OF FLINT OFFICE OF THE EMERGENCY MANAGER Gerald Ambrose Emergency Manager TO: Wayne Workman, Deputy Treasurer Treasury Department State of Michigan FROM: Jerry LE fncy Manager City of F DATE: March 3,4015 As the Emergency Manager for the City of Flint, I am charged with restoring the City government to financial solvency, and working to assure that the City moves forward on a financially sustainable basis. The steps taken over the past three years have been difficult. Taxes and fees have been raised, services and workforce reduced, and ongoing costs, including legacy costs, have been constrained. The current controversy surrounding the provision of water, and the path for resolution, has a potentially significant impact on the progress that is being made. I am satisfied that the water provided to Flint users today is within all MDEQ and EPA guidelines, as evidenced by the most recent water quality results conducted for MDEQ. We have a continuing commitment to maintain water safety and to improve water quality, and have dedicated resources to assure this commitment will be made. The oft-repeated suggestion that the City should retum to DWSD, even for a short period of time, would, in my judgment, have extremely negative financial consequences to the water system, and consequently to the rate payers. By the most conservative estimates, such a move would increase costs by at least $12 million annually, with that amount achieved only by eliminating virtually all budgeted improvements in the system. For a system with Unrestricted Assets of only $740,745, according to the June 30, 2014 audited financial statements, the only recourse within the City’s control would be to increase revenues significantly. And in my judgment, that would come from raising rates for water by 30% or more . Further, changing the source of the city’s water would not necessarily change any of the aesthetics of the water, including odor and discoloration, since those appear to be directly related to the aging pipes and other infrastructure that carry water from the treatment facility to our customers. City of Flint ¢ 1101 S. Saginaw Street « Flint, Michigan 48502 www.cityofilint.com ¢ (810) 766-7346 ° Fax: (810) 766-7218 xxxEND_PAGE:treasury01_b31_4719_5108_002 Wayne Workman March 3, 2015 Page 2 This direction of discussion also deviates from what, in my judgment, should be the focus: How can we not only operate and maintain a system to assure the delivery of safe and quality water dependably, but significantly reduce the cost of water and sewer to the users? At an average of $149 per month for water and sewer service for a residential user, the cost is extremely high in comparison to surrounding areas, as well as most areas across the state, and creates a significant financial burden for many users. In my judgment, we should all be concentrating on how to reduce rates by 50% or more. Unfortunately, there are no easy or evident answers, and continuation of the status will be an impediment to the sustainable recovery of the City of Flint. It is a conversation that I expect we will have with the recently created Water Quality Advisory Committee. My reasoning for this conclusion is as follows: One of the decisions made in the context of beginning to eliminate deficits and to restore financial stability to the City of Flint was to increase water and sewer rates significantly — the only choice available to financially stabilize a system that as of June 30, 2012, had a deficit of $8,758,091. Another was to leave DWDS for the KWA because it offered the opportunity to lower future rate increases. A third decision was to utilize the Flint River on an interim basis when DWSD unilaterally terminated the City’s contract for water purchase. That decision was made because it also offered an immediate cost savings opportunity which translated into the ability to upgrade the Water Treatment Plant without having to seek financing. It was a reasonable decision because of our experience in using the river in a back-up capacity, including test runs on a quarterly basis for several decades. Unfortunately, the switch to the river as a primary source was more challenging than anticipated, and the harsh winter of 2013-2014 resulted in much more damage to the aging water infrastructure than in previous years. The result was the issuance of required notices that water exceeded established guidelines for safety as it could affect certain vulnerable populations, and some users of the system experienced unpleasant odors and discoloration. Some users also appeared to have had some negative reactions to the new source of water. However, as soon as the test results were known, City staff took immediate actions to address the concerns. These actions are evidenced today by the fact that MDEQ has certified that our most recent testing shows water from all testing sites to be well within acceptable guidelines. Additionally, the City is continuing to taking the necessary actions to assure that the water supply remains safe and that water quality continues to improve. As the City has moved to address the situation, the suggestion continues to be made that the City should re-engage with DWSD and purchase water at least until the KWA pipeline is supplying water. As evidenced by the most recent letter from DWSD, such a decision would immediately increase the City’s cost by $846,700 per month, or $10,160,400 per year, just for the fixed cost portion of the price. The actual purchase of water would be an additional fee, and dependent upon xxxEND_PAGE:treasury01_b31_4719_5108_003 Wayne Workman March 3, 2015 Page 3 the quantity purchased. We estimate the actual water purchase cost to average more than $1 million per month, for a grand total of approximately $22 million per year. Finally, the DWSD offer is conditioned upon the City (or presumably the K WA) agreeing to negotiate a long term contract (30 years) for back-up. The $22 million annual estimate of increased costs to purchase water from DWSD would be minimally offset by an approximate $3 million in reduced operating costs, and could be further offset by an additional $9 million, but only if all funding for capital improvements to the system are eliminated. To eliminate all funding dedicated to repairing, stabilizing, and improving the system would be totally irresponsible and would have long term negative consequences to the City and to future rate payers. As you are aware we have recently brought in outside expert assistance to evaluate the steps we have taken to assure that the water is safe and to continue to improve water quality. We are expecting specific recommendations within the next few weeks, and are committed to implementing those recommendations in a timely manner. Many steps have already been taken. I am confident that implementing their recommendations will assure a continuing supply of safe water as well as improved quality, and at far less cost than re-engaging DWSD. We have also created a 40-member Water Advisory Committee and a 13-member Technical Advisory Committee to assure two-way communication with the public and users of the system, Those committees will begin to meet this week, and we look forward to answering their questions and receiving their input. It is unfortunate that problems and concerns with quality have arisen, and we are working every day to address the issues that caused them. 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Good afternoon, Please find attached an electronic communication from Emergency Manager Earley. Thank you. Maxine Murray Executive Assistant to Mayor Dayne Walling Darnell Earley, Emergency Manager 1101 S. Saginaw Street Flint, MI 48502 810.237.2035 Telephone 810.766.7218 Fax xxxEND_PAGE:treasury01_b22_3033_3514_426 CITY OF FLINT OFFICE OF THE EMERGENCY M4NAGER Darnell Earley, [CMA-CM, MPA Emergency Manager TO:

Good morning, Please find attached the Quarterly Report of the Emergency Manager of the City of Flint as required by Section 9 (5) of P.A. 436 of 2012. Thank you. Maxine Murray Executive Assistant to Mayor Dayne Walling Darnell Earley, Emergency Manager 1101 S. Saginaw Street Flint, MI 48502 810.237.2035 Telephone 810.766.7218 Fax xxxEND_PAGE:treasury01_b22_3033_3514_401 CITY OF FLINT OFFICE OF THE EMERGENCY MANAGER Darnell Earley, 1CMA-CM, MPA Emergency Manager “” Michigan Department of Treasury October 15, 2014 Mr. R. Kevin Clinton. State Treasurer Bureau of Local Government Services 4th floor Treasury building 430 West Allegan Street Lansing, MI 48922 Dear Mr. Clinton: I am attaching for your consideration the quarterly report of the Emergency Manager of the City of Flint as required by Section 9 (5) of P-A. 436 of 2012. The report details activities for the period of July 1, 2014 through September 30, 2014. Respectfully submitted, Zh Darnell Earley, ICMA- weet MPA Emergency Manager = Attachments ce: Wayne Workman, Deputy Treasurer Edward Koryzno, Bureau Director of Local Government Services Randall Byme, Office of Fiscal Responsibility James Ananich, State Senator Woodrow Stanley, State Representative Phil Phelps, State Representative Dayne Walling, Mayor City of Flint City of Flint + 1161 S. Saginaw Street « Flint, Michigan 48502 www.cityofilint.com + (810) 766-7346 « Fax: (810) 766-7218 xxxEND_PAGE:treasury01_b22_3033_3514_402 QUARTERLY REPORT TO THE STATE TREASURER REGARDING THE FINANCIAL CONDITION OF THE CITY OF FLINT October 15, 2014 This quarterly report covers the period from July 1, 2014 through September 30, 2014 and addresses the financial condition of the City of Flint. Per P.A. 436 Section 9 (MCL141,1549) requires that you submit quarterly reports to the State Treasurer with respect to the financial condition of your local ~~" “government, seCondly, a4 copy to each slate Séfator and state representative who represents your local government. In addition, each quarterly report shall be posted on the local government’s website within 7 days after the report is submitted to the State Treasurer. xxxEND_PAGE:treasury01_b22_3033_3514_403 Status of the Financial Condition of the City of Flint July 1, 2014 through September 30, 2014 The City of Flint has adopted a biennial budget for fiscal years 2015 and 2016, and is committed to ongoing review of revenues and expenses. Summary of FY15 First Quarter and FY 15 Budget Status In summary, at the end of the 1* quarter, the financial outlook for the remaining FY15 appears to be on track. In total, revenues and expenditures are generally meeting expectations. The City continues to make timely pension contributions and healthcare premium payment for both active employees and retirees. (Attachment A: Summary and Revenue & Expense Report Ist Quarter FY 15) Some further observations on the current budget status: ~~ ~=——~s— In the Getieral Fund, actual revenues are just above 20% of budgeted revenues. At the time of the report, however, the City had not received its portion of State Shared Revenues, and when those revenues are received (approximately $2.4 million), they will be accrued back to the 1* quarter. * General Fund expenditures are reported at 22% of the budgeted expenditures, in line with expectations. However, it has been discovered that $13,000 in communications expenses was inadvertently deleted from the District Court budget. It will be necessary to consider an adjustment to the District Court budget to address this shortfall. e Also, we continue to monitor the personnel expenses in the Police and Fire budgets to determine the budgetary impact that reducing staffing levels through attrition rather than layoffs at the beginning of the year will have. It appears that attrition is moving staffing levels down to the budgeted levels, with Fire already at its reduced level of 75, and Police currently at 121 (VERIFY), with a target of 115. By the end of the second quarter we anticipate that the reduced levels will be met by then and in addition, we will have the results of the ICMA orgamzational and staffing study. We will also be beginning to receive a portion of the $1 million allocated for police and fire expenditures in the state budget. We presently = = anticipate that these funds -will be sufficient to offset amy shortfall in the personne!—— ——- ———~ line items in these budgets. With the second quarter report, we will provide any necessary budget amendments in these areas. e Special Revenue Funds, Major and Local Street Funds are operating below budgeted revenues and expenditures. Major Streets, Fund 202, revenues are down due to timing in which State revenues of the Gas and Weight Tax allocations have not been received as of the date of the report. Budgets in the Grant Funds, Funds 274, 295, and 296 reflect timing differences as wel]. The revenues in these funds have not been received as of the date of the report. In addition, it will be necessary to create a budget for Fund 297 to reflect the final expenditure of a COPS Hiring Grant, with funds carried over into the FY15 budget year. » Revenues in the Building Safety and Inspections Fund (Fund 542) are coming in tugher than anticipated for the first quarter of the year. This was due largely to xxxEND_PAGE:treasury01_b22_3033_3514_404 the new construction of the paint shop on the General Motor’s property expamisyon. Revenues in the Water and Sewer funds are coming in at 19% and 16% Tespectively in comparison to the budgeted totals. At the same time, expenditures are coming in a 13% and 11% of the budgeted totals. It appears that the trend of reduced water billings are continuing, and efforts are underway to increase comphance and to identify areas of water loss from leaks as well as from theft. Actual expenditures currently do not include many of the capital improvement projects that are budgeted this fiscal year. The DPW and the Finance Department will continue to closely monitor the Utilities revenues and expenditures to keep them in line. The June 30, 2014 ruling by the Federal Court which modified its injunction to allow the City to implement certain changes to retiree health care benefits should provide some financial relief to the City budget, at least for the time during which “the matter is being litigated. However, at this time it is not possible to project the — amount of relief from the $5 million which was added to the budget for retiree health care as a result of the Courts initial decision prohibiting any change to retiree health care. This is because implementing the approved changes will not be effective until] November 1 because of the time necessary to incorporate the changes into the current plans. With the second quarter report, we anticipate being able to project the anticipated costs in comparison to the budgeted amounts. Current Cash Flow The City’s cash flow has improved significantly from the $13 million cash on hand in December of 2011. Thirteen million dollars is less than one month’s operating expenses. By comparison, the cash on hand on September 30, 2014 was in excess of $61 million. (Attachment B Cash Flow Comparisons) FY 15 AND FY 16 Budget The FY 14 budget was developed within the context of a five year projection of revenues and expenses. This exercise pointed out the continuing challenge the City of Flint will have in achieving long term financial stability. The Finance Department and the Council Finance/‘Administration Committee completed the —~ FY15-19 strategic plan and financial projections. The City Council has also adopted a Mission, Vision, Goals and Budget Priorities statement. This was incorporated into the FY 14/15 and FY 15/16 Budget document (Attachment C Final FY15 & FY16 Budget Document). Consulting firm Emst & Young assisted the City with an update to the five year financial projections. The biennial budget was adopted on June 23, 2014 via EM Order #13.

xxxEND_PAGE:treasury01_b20_2634_2931_149 Wayne Workman to host Call in - 14 Access Code sy Maxine: Please forward this meeting notice to Peter Bade. Thank you. Poter M Bade Chiet Tegal Oiticer Cat ot Flint p X10 766 7140 f Xiu 2322114 xxxEND_PAGE:treasury01_b20_2634_2931_150 EMERGENCY MANAGER CITY OF FLINT GENESEE COUNTY MICHIGAN ORDER No. 13 PROHIBITING COUNCILMAN ERIC MAYS FROM ACCESS TO LOCAL GOVERNMENT FACILITIES BY THE POWER AND AUTHORITY VESTED IN THE EMERGENCY MANAGER ("EMERGENCY MANAGER”) FOR THE CITY OF FLINT, MICHIGAN ("CITY”) PURSUANT TO MICHIGAN'S PUBLIC ACT 436 OF 2012, LOCAL FINANCIAL STABILITY AND CHOICE ACT, ("PA 436"); DARNELL EARLEY, THE EMERGENCY MANAGER, ISSUES THE FOLLOWING ORDER: Pursuant to Public Act 436, the Emergency Manager has broad powers in receivership to rectify the financial emergency and to assure the fiscal accountability of the City of Flint and its capacity to provide or cause to be provided necessary services essential to the public health, safety and welfare; and Pursuant to Public Act 436, the Emergency Manager acts in place of local officials, specifically the Mayor and City Council, unless the Emergency Manager delegates specific authority; and Pursuant to Public Act 436, the Emergency Manager has broad power to manage the local government, and may issue orders to elected and appointed officials necessary to accomplish the purpose of the act. An order issued under PA 436 is binding on the person to whom it is issued; and Pursuant to Public Act 436, the Emergency Manager may prohibit a local elected official from access to the local government’s office, facilities, electronic mail, and internal information systems for failure to abide by an order which disrupts the Emergency Manager’s ability to manage the local government; and xxxEND_PAGE:treasury01_b20_2634_2931_151 Emergency Manager Order 3, Directives to Councilman Eric Mays, dated December 13, 2013, a copy of which is attached, attempted to address a pattern of extremely disruptive and disorderly behavior by Councilman Eric Mays that has interfered with my ability to manage the City of Flint; and Councilman Mays has consistently disregarded and not carried out the provisions of Order 3, including but not limited to: 1. Engaging in loud, disruptive and obnoxious behavior during meetings of the Flint City Council. 2. Repeatedly disregarding directives of the Council President during meetings. 3. Continuing to speak after having been called to order by the Council President. 4. Repeatedly engaging in disorderly conduct that causes the Council President to seek police assistance in removing him from Council Chambers. Openly refusing to comply with the Council President’s efforts to restore order at meetings. Openly advocating that the Emergency Manager orders be disregarded at meetings. Interrupting other members of Council and speaking over them. Speaking out of turn and speaking without being recognized by the Council President. Engaging in disjointed, rambling and excessively long diatribes that unnecessarily delay Council action. 10. Inappropriately engaging members of the public during meetings. 11. Being verbally abusive toward staff, other Council members, Council leadership, and the Emergency Manager. ui Cena Emergency Manager Order 8, Council Meeting Protocol, dated March 5, 2014, a copy of which is attached, provides, in part, that “Council members shall not make comments during Council meetings, other than to respond to roll call or to respond directly to a request of the Council President, or at his recognition. When recognizing a member, the Council President shall limit comments, discussion or debate to a reasonable amount of time;” and Councilman Mays has consistently disregarded and not carried out this provision of Order 8. He has repeatedly spoken at meetings without being recognized; refused to follow the directives of the Council President; ignored the Council President’s efforts to call him to order; continued speaking after having been requested by the Council President to stop; and interfered with the Council President’s efforts to conduct meetings in an orderly manner; and Emergency Manager Order 8 and Emergency Manager Order 10, Council Meeting Agenda, dated April 1, 2014, copies of which are attached, seek to ensure that “the business of the City of Flint conducted at City Council meetings occurs in an orderly, dignified, and efficient manner, reflecting the level of professionalism deserved by Council members, City officials, staff and the public;” and Councilman Eric Mays has consistently disregarded and not carried out this provision of Orders 8 and 10. Councilman Mays’ behavior significantly undermines the orderly conduct of Council xxxEND_PAGE:treasury01_b20_2634_2931_152 meetings, and causes an undignified, inefficient and highly unprofessional atmosphere for conducting the important business of the City of Flint; and Governance of the City of Flint is subject to extraordinary circumstances due to a financial emergency necessitating a response to Mr. Mays’ disruptive behavior; and Emergency Manager Orders 3, 8 and 10 are necessary to accomplish the purposes of Public Act 436; and Councilman Mays’ consistent refusal to abide by Order Nos. 3, 8, and 10 has substantially disrupted and interfered with my ability to manage the local government; and Implementation of my financial and operating plan requires that Council function in a competent, professional and efficient manner, and that it properly address assignments; and I have assigned important matters to Council, including review of the Fiscal Year 2015 budget; proposed ordinances and ordinance amendments; formation of multiple advisory committees; and have increasingly solicited their input regarding municipal affairs; and It is my intention to increase the assignments to Council, with the expectation that Council will assume greater responsibility for duties mandated in the Flint City Charter, and allowing the City to move to a transition advisory board, as contemplated by MCL 141.1563; and Councilman Mays’ continuous disruptive behavior has significantly impaired Council’s ability to address the assignments I have directed to that body, thereby disrupting my ability to manage the local government; and Order No. 3 was issued as a progressive step in an attempt to persuade Councilman Mays to correct his behavior and participate as a member of Council in a professional, constructive and thoughtful manner, consistent with the purposes of Public Act 436; and If allowed to continue, Councilman Mays’ disruptive behavior will significantly undermine my efforts to address the financial emergency and to accomplish the purposes of Public Act 436; and Based upon the above, Councilman Eric Mays is prohibited from access to Flint City Hall and all other City governmental office facilities, electronic mail, and internal information systems. This Order is effective May 21, 2014. This Order may be amended, modified, repealed or terminated by any subsequent order issued by the Emergency Manager. Dated: By: Darnell Earley Emergency Manager xxxEND_PAGE:treasury01_b20_2634_2931_153 City of Flint xc: State of Michigan Department of Treasury Mayor Dayne Walling Flint City Council Inez Brown, City Clerk S\P Bade\EM2014\Orders\Order No 13 Mays 05 20 14.doc xxxEND_PAGE:treasury01_b20_2634_2931_154 Byrne, Randall (T. reasury)

Good morning, Please find attached the agenda for the Wednesday, December 4, 10:00 am conference call. Thank you. Maxine Murray Executive Assistant to Mayor Dayne Walling Darnell Earley, Emergency Manager 1101 S. Saginaw Street Flint, MI 48502 810.237.2035 Telephone 810.766.7218 Fax 125 xxxEND_PAGE:treasury01_b05_0504_0560_01 City of Flint Weekly 10am Phone Conference Agenda 1) Budget Update 2) 3) 4) 5) 6) 7) 8) 9) FY 13 — Audit FY 14 - current status FY 15 — plan Model Labor Contracts — status KWA, Water Plant Preparation City Ordinance Review Deficit Elimination Plan — Treasury Master Plan Implementation Activity Zoning Ordinance Revision Retiree Law Suit Status Public Safety Activity Status Report on the Flint City Council 10) Governance Revision 11) 9-1-1 Reconsolidation Pian 12) BS&A Upgrade 13) Other Created on 11/12/2013 xxxEND_PAGE:treasury01_b05_0504_0560_02 7 HORE Y 2/4 [13 = Orbe LID Say 3% E- SST 8S 1] - PRIA - City of Flint Weekly 10am Phone Conference Agenda SBE7604 pou 1) Budget Update . FY 13— Audit Fine at's bay Re 12/6/18 CAFR Resoy in | Wh. WTS whe . FY 14- current status wf ME ee FY 15—plan Gudea? } AVOrT PALES ES VIAN War, DOF, Fru Die one state VD pada Abo PLRBIV pte a e fou om 4) Model Labor Contracts — status Cosh estixa te sb s age 0 raion nw, CRON INT IRL Me MTS KER ow raf wr of AFSUAG Mig 2M oe } KWA, Water Plant Preparation PROCEEDING KS PLAQARO 4) City Ordinance Review 1 S\ Fite MOAR compicy opr f ronan 12f¢, Rov NL fvo $) Deficit Elimination Plan — Treasury W “id AWENMe ook 1L0/ccuu Yortl bu ; zB wy Oya pened 6) Master Plan Implementation Activity va) / ) REL LON ( ® wen! Zoning Ordinance Revision TUE Sarre 7) Retiree Law Suit Status NoTHiwis KEW Re S 2Ven_OP LEROY Extrkee) in 8) Public Safety Activity Pewsey w/ ¢ 2” ; a TRE COMnernyes 9) Status Report on the Flint City Council 10) Governance Revision pé&gtLenY , mur Plestartcries) , Le POY TN RR BD NOH 2. ORDER, Prey oe DAWES FNM ex esos 11) 9-1-1 Reconsolidation Plan OME. Give, Rabon) WW NIDA RN NEN Ca Po se 12) BS&A Upgrade WER Se ide PRECEROMA~ BE PAWEL) uo mee 13) Strong Cities, Strong Community Update a 14) 45 Day Financial and Operating Plan unger. Reswen/ 15) Other Created on 11/12/2013 xxxEND_PAGE:treasury01_b05_0504_0560_03 Cline, Richard (Treasury)