1 June 14, 2016 Capital Financing Plan: Exploring Options

2 Capital Financing Plan—An Overview 1.Review Current Capital Plan 2.Project Planning 3.Credit Ratings - if appropriate 4.Document Review 5.Structuring 6.Marketing 7.Financial Close 8.Monitoring

3 Current Capital Plan Assets Inventory Prioritized Projects

4 Project Planning Financing Schedule Financing Team Financing Alternatives Plan of Finance

5 Document Review Existing Terms

6 Enterprise Fund—Underlying Document 1.Ongoing Covenants 2.Additional Bonds Test 3.Definitions

7 Additional Bonds Test – Part 1 A certificate signed by the Finance Director Setting forth the respective amounts of the Principal and Interest Requirements for each Fiscal Year thereafter including the Additional Bonds then requested to be delivered; and stating that the adjusted Net Operating Revenues (as determined by subparagraph (i) above) for the Computation Period shall have equaled at least the sum of: (1) one hundred ten percent (110%) of the Maximum Principal and Interest Requirement on all Bonds to be Outstanding as of the date of such issuance, plus (2) one hundred percent (100%) of all required deposits to the Reserve Account during the Computation Period.

8 Additional Bonds Test – Part 1 Setting forth the respective amounts of the Principal and Interest Requirements for each Fiscal Year thereafter including the Additional Bonds then requested to be delivered; and stating that the adjusted Net Operating Revenues (as determined by subparagraph (i) above) for the Computation Period shall have equaled at least the sum of: (1) one hundred ten percent (110%) of the Maximum Principal and Interest Requirement on all Bonds to be Outstanding as of the date of such issuance, plus (2) one hundred percent (100%) of all required deposits to the Reserve Account during the Computation Period.

9 Additional Bonds Test – Part 1 Setting forth the respective amounts of the Principal and Interest Requirements for each Fiscal Year thereafter including the Additional Bonds then requested to be delivered; and stating that the adjusted Net Operating Revenues (as determined by subparagraph (i) above) for the Computation Period shall have equaled at least the sum of: (1) one hundred ten percent (110%) of the Maximum Principal and Interest Requirement on all Bonds to be Outstanding as of the date of such issuance, plus (2) one hundred percent (100%) of all required deposits to the Reserve Account during the Computation Period.

10 Principal and Interest Requirements "Principal and Interest Requirements” or "Debt Service Requirements” means the respective amounts which are required in each Fiscal Year to pay (a) principal and interest on all Bonds then Outstanding; and (b) the Amortization Requirements, if any, for all Term Bonds then Outstanding for such Fiscal Year, provided, however: (i) the amount of such Principal and Interest Requirements for any Fiscal Year may be reduced by the amount of any capitalized interest to be used to pay interest in such Fiscal Year and by the anticipated earnings on the money in the applicable Bond Service Account, and such earnings will be deposited to the credit of the applicable Bond Service Account; and (ii) the Principal and Interest Requirements for any Bonds bearing interest at a Variable Rate shall be determined as provided in the definition of "Variable Rate" herein.

11 Variable Rate “ Variable Rate” means… …if no Hedge Agreement relating to such Bond shall be in effect, the mean average interest rate borne by such Bond during the preceding twelve (12) months (or such shorter period as such Bond has been outstanding)… …if a Hedge Agreement relating to such Bond is in effect… the interest rate determined by taking into account the payments expected to be made or expected to be received by the … under such Hedge Agreement (other than Hedge Charges) shall be used for such period…

12 Impact of Definition 7 Day VariableMaximum Rate of 12% 12% $275,000$6,000,000

13 Additional Bonds Test – Part 1 Setting forth the respective amounts of the Principal and Interest Requirements for each Fiscal Year thereafter including the Additional Bonds then requested to be delivered; and stating that the Adjusted Net Operating Revenues (as determined by subparagraph (i) above) for the Computation Period shall have equaled at least the sum of: (1) one hundred ten percent (110%) of the Maximum Principal and Interest Requirement on all Bonds to be Outstanding as of the date of such issuance, plus (2) one hundred percent (100%) of all required deposits to the Reserve Account during the Computation Period.

14 Additional Bonds Test—Part 2 A certificate signed by the Consultant setting forth : (i)the estimated date on which such Improvements will be placed in operation (if the improvements being financed or refinanced have not theretofore been placed in service); (ii)the Consultant's estimate of the Net Operating Revenues for each of the three Fiscal Years following the Fiscal Year in which the Improvements will be placed in operation as estimated in item (i) of said certificate, taking into account the rates and charges in effect on the date of delivery of such Additional Bonds and any revised rates and charges that shall become effective prior to or during such Fiscal Year; and (iii)that after taking into account (i) and (ii) above, the Adjusted Net Operating Revenues will satisfy the ratio set forth above, and that the Adjusted Net Operating Revenues remaining after deduction of the Maximum Principal and Interest Requirements on all Bonds shall be at least equal to one hundred percent (100%) of all debt service and reserve requirements on Subordinate Obligations;

15 Additional Bonds Test—Part 2 A certificate signed by the Consultant setting forth : (i)Place in Service Date (ii)the Consultant's estimate of the Net Operating Revenues for each of the three Fiscal Years following the Fiscal Year in which the Improvements will be placed in operation as estimated in item (i) of said certificate, taking into account the rates and charges in effect on the date of delivery of such Additional Bonds and any revised rates and charges that shall become effective prior to or during such Fiscal Year; and (iii)that after taking into account (i) and (ii) above, the Adjusted Net Operating Revenues will satisfy the ratio set forth above, and that the Adjusted Net Operating Revenues remaining after deduction of the Maximum Principal and Interest Requirements on all Bonds shall be at least equal to one hundred percent (100%) of all debt service and reserve requirements on Subordinate Obligations;

16 Additional Bonds Test—Part 2 A certificate signed by the Consultant setting forth : (i)Place in Service Date (ii)Net Operating Revenues using rates effective during the Fiscal Year the Bonds (iii)that after taking into account (i) and (ii) above, the Adjusted Net Operating Revenues will satisfy the ratio set forth above, and that the Adjusted Net Operating Revenues remaining after deduction of the Maximum Principal and Interest Requirements on all Bonds shall be at least equal to one hundred percent (100%) of all debt service and reserve requirements on Subordinate Obligations;

17 Additional Bonds Test—Part 2 A certificate signed by the Consultant setting forth : (i) Place in Service Date (ii) Net Operating Revenues using rates effective during the Fiscal Year the Bonds (iii) And stating that Net Adjusted Operating Revenues exceed 110% MADS plus 100% Subordinate Debt Service

18 Structuring Developing a Plan of Finance

19 Plan of Finance Funding Sources 1.Source 2.Authorization 3.Estimated Fiscal Year Amount 4.Current Use 5.Stand alone bondable source? 6.Can source be used without impact current governmental operations?

20 Structuring  Financing vehicle  Term  Fixed or Variable  Credit Support  Maturity Structure, Call Provisions, Couponing

21 Financing Vehicle—Bond or Bank Loan 1.Term 2.Cost 3.Covenants

22 Financial Modeling Pro Forma Analysis

23 Pro Forma Input—Enterprise Fund 1.Consultant projections  Revenue, expenses  Repair and Replacement  Reserves 2.Debt Assumptions  Size  Timing of Future Issues  Debt Structure

24 Pro Forma Output—Enterprise Fund 1.Covenant Compliance 2.Pay Go Capacity 3.Stress Points

25 Pro Forma Output—Enterprise Fund Fiscal Year Ending September PRO FORMA REVENUES AND EXPENSES Net Revenues Available for Debt Service $243,146,199$280,029,328$312,868,487$348,648,612$387,751,449 LONG TERM DEBT (2 ) New Senior Debt N/A (3) $144,772,500$490,810,000$437,345,000$555,220,000 New Senior MADS N/A (3) $169,925,413$198,041,488$224,282,188$257,595,388 ABT Part 1 Additional Bonds Test (1.10x)N/A (3) 1.43x1.41x1.39x1.35x ABT Part 2 Net Operating Revenues N/A (3) 186,257,980220,509,867250,188,208283,278,252 ABT Part 2 Additional Bonds Test (1.10x)N/A (3) 1.10x1.11x1.12x1.10x SENIOR DEBT SERVICE COVERAGE Existing Senior Debt Service (Fiscal Year) $162,778,665$161,193,594$161,195,413$159,813,356$159,832,494 New Senior Debt Service (Fiscal Year) 04,365,00023,454,30051,298,95081,075,900 Resulting Total Senior Debt Service Requirements $162,778,665$165,558,594$184,649,713$211,112,306$240,908,394 Resulting Senior Debt Service Coverage1.49x1.69x 1.65x1.61x

26 Pro Forma Output—Enterprise Fund PRO FORMA REVENUES AND EXPENSES Net Revenues Available for Debt Service $243,146,199$280,029,328$312,868,487$348,648,612$387,751,449 LONG TERM DEBT (2) New Senior Debt N/A (3) $144,772,500$490,810,000$437,345,000$555,220,000 New Senior MADS N/A (3) $169,925,413$198,041,488$224,282,188$257,595,388 ABT Part 1 Additional Bonds Test ( 1.10x) N/A (3) 1.43x1.41x1.39x1.35x ABT Part 2 Net Operating Revenues N/A (3) 186,257,980220,509,867250,188,208283,278,252 ABT Part 2 Additional Bonds Test ( 1.10x) N/A (3) 1.10x1.11x1.12x1.10x New Subordinate Debt N/A (3) $169,675,000$0$178,365,000$50,515,000 Subordinate P&I Requirements N/A (3) $15,982,285$15,145,170$24,938,020$24,126,183 Additional Bonds Test Part 1 N/A (3) 4.58x5.41x3.55x3.77x Additional Bonds Test Part 2 N/A (3) 1.02x1.48x1.04x1.06x State Revolving Loan Test N/A (3) 6.43x8.32x4.78x5.36x Total Long Term Debt Issued (2) N/A (3) 314,447,500490,810,000615,710,000605,735,000 SUBORDINATE DEBT SERVICE COVERAGE Existing Subordinate Debt Service (Fiscal Year) $16,819,399$15,982,285$15,145,170$14,333,332$13,521,495 New Subordinate Debt Service (Fiscal Year) 005,302,34410,604,68816,178,594 Total Subordinate Debt Service Requirements $16,819,399$15,982,285$20,447,514$24,938,020$29,700,089 Combined Debt Service Coverage 1.35x1.54x1.53x1.48x1.43x

27 Still More…  Security Structure  Rating Strategies  Developing New Documents  Marketing of Debt  Post Closing Monitoring