1. ACMA Conference February 8, 2007 Evaluating Investments in Infrastructure Panel Overview of Public Infrastructure Financing in the City of Phoenix

2. Public Infrastructure Needs for the City of Phoenix Streets, Transit and Light Rail Fire and Police (Public Safety) Parks and Open Spaces Water, Sewer, Flood, Solid Waste Neighborhoods and Housing Libraries Education and Cultural Facilities Airport Improvements

3. Total Assets $8.9 Billion Infrastructure and Improvements CITY OF PHOENIX CAPITAL ASSETS BY TYPE FY 2005-06

4. Revenue Sources to Pay for Infrastructure Secondary Property Taxes Local Sales (Excise) Taxes State Shared Revenues Water, Sewer, Solid Waste Fees Airport Fees and Charges Impact or Development Fees Grants Other User Charges

5. How will Infrastructure be Funded? Pay-As-You-Go (Cash)? Debt Finance (Short or Long Term Borrowing)?

6. Can the project be funded with current year revenues or be deferred until revenues are available? Availability of a long-term stable revenue source to make debt payments. Available debt capacity. Is credit already leveraged? The useful life of the projects being financed (defines term of the debt). The credit quality of the municipality and revenues pledged (i.e., property taxes vs utility revenues). The borrowing cost or interest rates for the credit. Factors to Consider When Debt Financing

7. City of Phoenix Debt Program

8. Types of Bonds Issued General Obligation Highway User Revenue Utility Revenue Municipal Corporation Obligations –Revenue Pledge –Excise Tax Pledge

9. DEBT FINANCINGS BY TYPE FY 2005-06 Municipal Corporation Obligations Revenue Bonds/Other G.O. Bonds Total $6.1 Billion

10. Civic Improvement Corporation Non profit corporation established in 1973 Main Financing Arm of City for Other than G.O. Bonds Debt Obligations Issued by Corporation Secured by Enterprise Fund Revenues or Excise Tax Pledges

11. Municipal Corporation Outstanding Obligations June 30, 2006 $ MillionsPledge General Govt. 254.7Excise Taxes Airport 885.1Revenues Sewer 610.3Revenues Water1,058.8Revenues Sports Facilities 116.0Excise Taxes Convention Center/Garage. 611.1Excise Taxes/ State Distributions Solid Waste 159.5Excise Taxes Hotel Corp. (separate nonprofit for Hotel) 350.0Hotel Rev./Excise Taxes Transit 508.0Excise Taxes Total $4,553.5

12. General Obligation Bond Program Primary mechanism used historically to fund non-enterprise fund capital needs Debt secured by secondary property taxes of the City Require voter approval

13. History of Voter Approved G.O. Bond Programs City of Phoenix $ Millions $436 $525.7 $1057.4 $753.9 $878.5

14. Public Review Process for General Obligation Bond Programs Departments develop requested capital projects Citizen Bond Committee and subcommittees appointed (600 citizens) Fiscal Capacity Subcommittee reviews Assessed Valuation forecast and debt capacity analysis Operations and Maintenance Subcommittee review of operating costs

15. Public Review Process for General Obligation Bond Programs Subcommittees hold public hearings (over 80 public meetings) Subcommittees recommend projects to Executive Committee Executive Committee develops recommendation within fiscal capacity Council approves Bond Program Citywide vote on Bond Program

16. Financing Downtown Public/Private Partnership Project (CITYSCAPE )

17. Project to develop 3 blocks in core of Downtown between Jefferson and Washington Streets, 1 st Street and 2 nd Ave. Led by Red Development in partnership with Baron Collier Planned 2.5 million sq. ft. of four mixed-use residential and commercial towers, including 150 room hotel and 220,000 sq. ft of retail space Total project cost approximately $900 million Cityscape Project

18. City Excise Tax capacity leveraged for Convention Center Expansion and for backing of new Downtown Hotel No reserves or pay-as-you-go funding available due to other City commitments Speculative nature of the project and large financing required by the Developer (more than $800 million) Uncertainty of revenue and sales tax generation from the project Challenges of City Participation

19. No City purchase of parking until construction in form of Certification of Completion (C of O) of parking garage, 220,000 sq. ft of retail, 500,000 sq. ft of commercial and 150 room hotel are completed. Developer guarantees projected parking and sales tax revenues from project for first five years through a letter of credit from a bank approved by the City that can be drawn upon for any shortfalls to finance $70 million in excise tax bonds. City sells Jefferson Street Garage near U.S. Airways Center to provide for $20 million to purchase additional underground parking from the Project. City Participation TERMS OF DEVELOPMENT AGREEMENT

20. Questions?