City of Phoenix Civic Improvement Corporation Junior Lien Junior Lien - PowerPoint PPT Presentation

City of Phoenix Civic Improvement Corporation Junior Lien Junior Lien Water System Water System Revenue Bonds, Revenue Refunding Bonds, Investor Presentation Series 2014A Series 2014B November 18, 2014

Disclaimer The investor presentation you are about to view is provided as of November 18, 2014 for a proposed offering of the City of Phoenix Civic Improvement Corporation Junior Lien Water System Revenue Bonds, Series 2014A (the “2014A Bonds”) and Junior Lien Water System Revenue Refunding Bonds, Series 2014B (the “2014B Bonds” and together with the 2014A Bonds, the “Bonds”). This presentation has been prepared for information purposes only and for your sole and exclusive use in connection with the proposed transaction. The information contained herein is subject to completion and amendment. Any offer or solicitation with respect to the Bonds will be made by means of a final official statement. If you are viewing this investor presentation after the date stated above, events may have occurred that have a material adverse effect on the financial information presented. This presentation does not constitute nor does it form part of an offer to sell or purchase, or the solicitation of an offer to sell or purchase, any securities or an offer or recommendation to enter into any transaction described herein nor does this presentation constitute an offer, commitment or obligation on the part of the issuer, underwriter or any of its affiliates to provide, issue, arrange or underwrite any financing or enter into any other transaction. You will be responsible for making your own independent investigation and appraisal of the risks, benefits, appropriateness and suitability of the proposed transaction and any other transactions contemplated by this presentation and neither the issuer nor the underwriter is making any recommendation (personal or otherwise) or giving any investment advice and will have no liability with respect thereto. Neither the issuer nor the underwriter nor the financial advisor makes a representation or warranty as to the (i) accuracy, adequacy or completeness of any information in this investor presentation or (ii) legal, tax or accounting treatment of any purchase of Bonds by you or any other effects such purchase may have on you and your affiliates. This investor presentation contains “forward ‐ looking” statements that involve risks, uncertainties and assumptions. If the risks or uncertainties ever materialize or the assumptions prove incorrect, the results may differ materially from those expressed or implied by such forward ‐ looking statements. Accordingly, we caution you not to place undue reliance on these statements. All statements other than the statements of historical fact could be deemed forward ‐ looking. All opinions, estimates, projections, forecasts and valuations are preliminary, indicative and are subject to change without notice. THE PRINTING, DUPLICATING, DOWNLOADING, SCREEN CAPTURING, ELECTRONIC STORING, RECORDING, PUBLISHING OR DISTRIBUTING OF THIS INVESTOR PRESENTATION IN ANY MANNER IS STRICTLY PROHIBITED. By viewing this investor presentation you acknowledge that you understand and agree to the provisions of this page. 1

Key Personnel Neal Young , Chief Financial Officer City of Phoenix Denise Olson, Assistant Finance Director Finance Department Kathleen Gitkin, Acting City Treasurer Kathryn Sorensen , Water Services Director Water Services Department Troy Hayes , Assistant Water Services Director – Water Division Financial Advisor: Ken Cushine, Principal Frasca & Jessica Soltz Rudd, Senior Director Associates Underwriter: Jeffrey Bower, Managing Director Bank of America Merrill Lynch 2

Financing Summary • $155,230,000 * Junior Lien Water System Revenue Bonds, Series 2014A • $454,840,000 * Junior Lien Water System Revenue Refunding Bonds, Series 2014B 2014A: New Money (Redemption of Commercial Paper) Purpose 2014B: Refunding of callable 2003 & 2005 Bonds 2014A: July 1, 2019 ‐ 2044 Amortization 2014B: July 1, 2015 ‐ 2029 Tax Status Tax Exempt Optional Redemption Callable July 1, 2024 at par* Security Junior Lien on Water System Net Operating Revenues Pricing Date December 2, 2014* Delivery Date December 17, 2014* Moody’s: Aa2 (Stable) Confirmed Ratings Standard & Poor’s: AAA (Stable) Co ‐ Senior Managers BofA Merrill Lynch; J.P. Morgan Barclays; Ramirez & Co., Inc.; US Bancorp; Wedbush Securities; Co ‐ Managers William Blair & Company 3 *Preliminary, subject to change.

City of Phoenix Overview 6 th largest city in the U.S. • 2014 Phoenix MSA Employment by Sector (based on population) Manufacturing • Phoenix MSA is the largest Other 6.4% Government 5.5% 12.5% economic center in Arizona: Construction 5.0% o Approximately 72% of the State’s employment o Healthy mix of employment Trade 16.1% across industry sectors Services 45.5% o Unemployment rate of 6.2% as of June 2014 (lower than Arizona at 7.1% and U.S. at 6.4%) Financial Activities 9.0% 4 Sources: Arizona Department of Economic Security & U.S. Department of Labor

Prudent City Management Achieves Real Results • Pension Reform: March 2013 voter approved changes for employees hired on or after July 1, 2013: Increased retirement age by 3.5 years o Changed multiplier for years of service to same as the State o 50/50 contribution split between City/employees (employee contribution for o employees hired before July 1, 2013 capped at 5% of salary) • OPEB Solution: Full funding of OPEB ARC since 2007 • Balanced Budgets: Arizona law and the City Charter require a balanced budget • Innovation and Efficiency: Joint task force of private sector business leaders and department heads initiated changes saving over $97 million since 2010 • Zero ‐ Based Budget: Provides defined cost and other information on over 400 City programs • Long ‐ Range Planning: All enterprise funds and the general fund develop five ‐ year or longer capital and financial plans • Transparency: Proactively address bond investors’ needs with dedicated staff and interactive investor relations website 5

Water System Overview • Service area covers 540 square miles, with 416,623 water accounts • Provides reliable, high ‐ quality water to 1.5 million people in and around the City of Phoenix • Ample water supply, treatment, and water distribution capacity • Exceptional record of environmental compliance • Responsible reinvestment in critical infrastructure • Current CIP is nearly 100% Pay ‐ As ‐ You ‐ Go funded Water Treatment Plants Treatment Capacity 5 635 mgd Miles of Water Mains Maximum Day Demand 6,867 386 mgd Average Daily Demand Active Groundwater Wells 265 mgd 24 Storage Capacity Lost & Unaccounted ‐ for Water 500 mg 8.2% 6 Source: Preliminary Official Statement Appendix A.

Water User Account Characteristics Single ‐ family residences comprise the majority of the Water System’s customer base FY 2014 Accounts FY 2014 Billed Volume by User Group by User Group 4% 8% 15% 51% 34% 88% # of Accounts – 416,623 Billed Volume – 120,713,333 ccf ■ Single ‐ Family ■ Non ‐ Residential ■ Multi ‐ Family 7 Source: Preliminary Official Statement page A ‐ 2.

Diversity of Water Users Lends Stability to the System • Top 10 water users comprise 8.07% of revenue and 6.27% of consumption • 5 of the top 10 customers are governmental entities • No private entity accounts for more than 0.5% of total revenue 2014 % of Total % of Total Water Customer Rank Revenue Consumption 1 City of Phoenix 4.07% 3.26% 2 Maricopa County 0.73% 0.57% 3 Paradise Valley Unified School District 0.50% 0.37% 4 Sheraton Phoenician Resort 0.47% 0.35% 5 Sitix of Phoenix 0.45% 0.33% 6 State of Arizona 0.42% 0.32% 7 Shamrock Foods 0.41% 0.31% 8 Phoenix Union High School District 0.37% 0.28% 9 Niagara Bottling 0.33% 0.24% 10 Pointe Hilton Tapatio Cliffs Resort 0.32% 0.24% Total 8.07% 6.27% 8 Note: Customers shown in bold font are governmental entities. Source: Preliminary Official Statement page A ‐ 2.

Phoenix Water Sources & Treatment Facilities MAJOR WATER SOURCE MAJOR WATER SOURCE CENTRAL ARIZONA PROJECT SALT RIVER PROJECT (Colorado River) (Salt/Verde Rivers) 9

Phoenix is Built for Drought • Diverse and robust water supply portfolio is sufficient to meet decades of projected demand • Existing water treatment and delivery infrastructure provides a high level of reliability with relatively minor losses • The City has been preparing for drought for decades 10

Phoenix Water Supply Phoenix Water Supply is Sustainable • Diverse portfolio of water supply from various sources • Current excess supply creates a robust buffer for drought • All wastewater is reclaimed, reused, or exchanged for water rights • Phoenicians embrace a culture of wise water use and desert landscaping • Proactively maintain and replace infrastructure to ensure reliability and minimize system losses • Plan for a future that is perpetually hot and dry 11