© 2009 MWH All Rights Reserved City and Private Equity Sharing Introducing the CAPES™ model

Government-Owned Pension Plans! Do we need a new model? Is it possible to build a true public-private partnership that shares ownership? How can we develop the billions we need for infrastructure development from debt financing alone? Can we develop a model that allows the billions of Private Investment Dollars that want to invest in this infrastructure?

City and Private Equity Sharing (CAPES™) A partnership model where private and public sectors truly share in ownership and responsibility Provide a city the opportunity to monetize a portion of its water and wastewater assets Retain attributes of a city-owned system that allow it to participate in grant programs and issue tax-exempt debt Foster efficiency and economy to pay a return to both the City and third-party owners

Overview of new organization – CAPES™ model Customers New Corporation New Corporation Transfer assets and debts Receive corporate shares & cash Annual return to city 100% 51% Minority Shareholder Ownership Minority Shareholder Ownership Up to 49% Sale proceeds City Ownership City Ownership State Utilities Commission Sets Rates Annual return to shareholders 4 Sale of equity in new corporation retains majority ownership and control for the City Tax Exempt Debt, SRF, and Grants Tax Exempt Debt, SRF, and Grants

Customers New Corporation New Corporation Transfer assets and debts Receive corporate shares & cash Annual return to city 100% 51% Preferred Stock (Mimics Debt) Preferred Stock (Mimics Debt) Up to 49% Sale proceeds City Enterprise Fund City Enterprise Fund 5 There are multiple variations to handle rate setting in the state PUC, or through alternate means. Overview of new organization – CAPES™ model Annual return to shareholders Tax Exempt Debt, SRF, and Grants Tax Exempt Debt, SRF, and Grants

City and Private Equity Sharing (CAPES™) Richard W. Splete, New York Lead Finance Consultant