City of Phoenix Civic Improvement Corporation $405,180,000* Subordinated Excise Tax Revenue & Revenue Refunding Bonds, Series 2020 Subordinated Excise Tax Subordinated Excise Tax Subordinated Excise Tax Revenue Bonds Revenue Bonds Revenue Refunding Bonds Series 2020A Series 2020B Series 2020C (Taxable) $134,010,000* (Taxable) $121,170,000* $150,000,000* Investor Presentation July 2020 *Preliminary, subject to change.
Disclaimer Certain statements included or incorporated by reference in the Preliminary Official Statement and this presentation constitute “forward -looking statements” within the meaning of the United States Private Securities Litigation Reform Act of 1995, Section 21E of the United States Securities Exchange Act of 1934, as amended, and Section 27A of the United States Securities Act of 1933, as amended. Such statements are generally identifiable by the terminology used such as “plan”, “expect”, “estimate”, “anticipate”, “forecast”, “budget”, or other similar words. The achievement of certain results or other expectations contained in such forward- looking statements involve known and unknown risks, uncertainties and other factors which may cause actual results, performance or achievements described to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Neither the City of Phoenix nor any other party plans to issue any updates or revisions to those forward-looking statements if or when their expectations, or events, conditions or circumstances upon which such statements are based occur. 1
Financing Overview Issuer City of Phoenix Civic Improvement Corporation Par Amount* $405,180,000 Subordinated Excise Tax Revenue Bonds, Series 2020, consisting of: • $134,010,000 Subordinated Excise Tax Revenue Bonds, Series 2020A • $150,000,000 Subordinated Excise Tax Revenue Bonds, Series 2020B (Taxable) • $121,170,000 Subordinated Excise Tax Revenue Refunding Bonds, Series 2020C (Taxable) Purpose The Series 2020 Bonds are being issued to fund or reimburse the City for (i) the costs of certain projects, property and equipment and for the acquiring, repairing, equipping and improving real and personal property for the City; (ii) prepaying the Loan with respect to the Hotel. The Taxable Refunding Bonds are being issued for the purpose of refunding and refinancing all or portion of certain issues of the Corporation’s outstanding excise tax revenue bonds. Security Subordinated lien on all excise, transaction, privilege, franchise taxes, state-shared sales and income taxes, and receipts from licenses and permits not restricted to use for a contrary or inconsistent purpose Additional Bonds Test Preceding fiscal year pledged revenues are at least two times the highest combined interest and principal requirements for any succeeding fiscal year Maturity Structure* Series 2020A: July 1, 2021-2045 Series 2020B: July 1, 2021-2045 Series 2020C: July 1, 2023-2036 Tax Status Series 2020A: Tax-Exempt Series 2020B: Taxable Series 2020C: Taxable Ratings S&P AAA; Fitch AA+; Moody’s Aa2 POS Posting July 21, 2020 Expected Pricing* August 4, 2020 Expected Closing* August 25, 2020 2 *Preliminary, subject to change. Assumes market rates as of June 11, 2020, plus 50 basis points.
Agenda • Overview and Economic Information • Excise Tax Plan of Finance • Investor Relations & Contact Information 3
Overview and Economic Information 4
City of Phoenix Overview • The City of Phoenix operates under a Council-Manager form of government The Phoenix City Council consists of a Mayor and eight Council members and is responsible for setting policy The City Manager is responsible for executing Council policies and administering City operations 5 th largest city in the U.S. based on population; 70.9% population • increase since 1990, with current population over 1.6 million • Top national and international tourist destination • Phoenix MSA accounted for 73.3% of annual statewide GDP in 2018 5
City of Phoenix Financial Overview • Budget City Charter & State law requires a balanced budget Transparent budgeting process; zero-based budget • Pensions Per City Charter, fully fund entire actuarial determined contribution Significant pension reform for long-term affordability and sustainability • OPEB ARC fully funded since 2007 implementation of GASB 45 • Strong regional economy, including the housing market Six times as many housing permits issued in 2019 as 2011. 2019 City housing permit values up 29% since 2017 and 152% since 2010 All City building permits up 27% since 2017, up 99% since 2010 6
Demographics • Highest average wage increase in U.S. in 2017, and highest in the west in 2018, second in U.S. in 2019 • Metro expected to become 10th largest in 2020 • Arizona had 5th highest state GDP increase in 2018 City Population: 1,610,071 City Labor Force: 821,866 Regional Labor Force: 2.3 million Median Age: 34 Average HH Income: $80,264 Unemployment Rate: 8.8% Data sources: U.S. Census American Community Survey, 2017 1-year estimates; U.S. Bureau of Labor Statistics; U.S. Bureau of Economic Analysis, 2017, 2018, Arizona 7 Economic Opportunity Office, 2019.
General Fund Revenues General Fund Revenues by Major Source (Budgetary Basis) (in thousands) Actual Estimated FY 2018 - 2019 FY 2019 - 2020 Local Taxes: Sales Tax $ 468,015 $ 470,100 Privilege License Fees 2,957 3,050 Other General Fund Excise Taxes 18,535 18,920 State-Shared: Sales Tax 165,066 168,964 State Income Tax 196,918 214,697 Vehicle License Tax 70,210 71,386 Primary Property Tax 162,130 170,899 User Fees/Other Revenues 136,936 136,012 Total General Fund $ 1,220,767 $ 1,254,028 8
General Fund Balance Actual Estimated Resources: 2018-19 2019-20 Beginning Balance $ 134,620 $ 133,580 Revenue 1,220,767 1,254,028 Recoveries 1,857 3,500 Transfers (9,301) 5,026 Total Resources $ 1,347,943 $ 1,396,134 Expenditures: Operating $ 1,202,259 $ 1,284,500 Capital 12,104 21,870 Total Expenditures $ 1,214,363 $ 1,306,370 Ending Fund Balance (Budgetary) $ 133,580 $ 89,764 (in thousands) 9 Numbers do not include CARES Act Funds
Excise Tax Plan of Finance 10 10
Pledged Excise Tax Revenues REVENUE SOURCES Actual FY 2019 Excise Tax Revenue Sources (in thousands) Sales & Use Tax $471,512* Utility & Franchise Fees 140,489 Licenses & Permits 2,969 State-Shared Income Tax State-Shared Sales Tax 165,066 20% Sales & Use State-Shared Income Tax 196,918 Tax State-Shared 48% Sales Tax FY 2019 Total $976,954 17% Utility & Franchise * Sales & Use Tax includes taxes on retail, restaurant, Fees bars, construction contracting, residential rental, Licenses & 15% hotels, vehicle rentals, and other activities. Does not Permits 0% include dedicated excise tax revenues approved by voters for a specific purpose 11 11
City’s Response to COVID -19 • The City has a history of responding promptly, thoughtfully and responsibly to economic downturns and this time is no different. • The City took immediate actions in the current year to lessen the impact of COVID-19 such as: Hiring freeze initiated for all non-essential positions Spending froze for non-essential projects Procurement curtailed for non-essential items Departments identified budget cuts of 25% 12 12
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