Credit Presentation Riverside Public Utilities Water System Update
Section 1 Introduction Section 2 City of Riverside Update Section 3 Management and Key Strategic Initiatives Section 4 Water System Update System Update Financials Update Section 5 Conclusion
Introduction Presentation Participants Riverside Public Utilities • Brent Mason, Finance Director • David Wright, Public Utilities General Manager • Reiko Kerr, Assistant General Manager, Finance and Administration • Kevin Milligan, Assistant General Manager, Water Financial Advisor, Public Financial Management • Daniel Hartman, Managing Director • William Frymann, Senior Managing Consultant Underwriter, De La Rosa • Guillermo Garcia, Vice President 2011 Rating Presentation – April 19, 2011 Page 3
Introduction RPU Key Credit Strengths RPU has exceeded its financial targets during the last five years and continues to improve financial metrics which already compare favorably to the highest rated retail water credits in California • Riverside‘s ‗AA‘ rated service territory continues to be strong, and the City of Riverside remains the cornerstone of Riverside County • Strong debt service coverage and high liquidity levels with substantial additional assets • Revenue flexibility is created by the significant rate differential between RPU and other California utilities, including other municipally owned utilities • Riverside‘s City Council has shown a clear willingness to raise rates and protect and build the financial strength of RPU‘s systems • Water supply is secured for the life of the Bonds — RPU does not rely on the Metropolitan Water District — and RPU is developing new water sources • Diverse customer base with balanced customer concentration • Experienced and successful management team with proven strategic vision and ability to execute plans • Proactive capital plans to maintain key infrastructure; RPU is well ahead of peer utilities in the completion of capital plans • Peer reviews and other utility ratings support best in class ratings for RPU 2011 Rating Presentation – April 19, 2011 Page 4
Section 1 Introduction Section 2 City of Riverside Update Section 3 Management and Key Strategic Initiatives Section 4 Water System Update System Update Financials Update Section 5 Conclusion
City of Riverside Update The Riverside Service Territory is Strong The City of Riverside is the primary economic driver of the region It is the 12 th largest city in California and continues to grow • Encompasses 81.5 square miles • Additional $1.8 billion of commercial/industrial/retail/ residential building permits over the past five years • Net importer of jobs over the past five years • 4,401 housing units added during the past five years City of Riverside Largest Employers As of June 30, 2010 • Southern California‘s third largest suburban retail Employer Number of Employees center with $4.8 billion in annual sales University of California, Riverside 6,470 County of Riverside 6,395 Riverside is home to four internationally recognized Riverside Unified School District 3,867 City of Riverside 2,619 universities and colleges which support 50,000 students Riverside Community College District 1,669 Alvord Unified School District 1,669 Riverside Community Hospital 1,600 Top 10 employers in Riverside are primarily government The Press Enterprise 1,090 agencies, educational institutions, and hospitals Parkview Hospital 900 Goodrich Corporation 500 Source: City of Riverside, Development Department 2011 Rating Presentation – April 19, 2011 Page 6
City of Riverside Update Riverside Demographics and Statistics Population continues to grow at manageable pace Consistent Population Growth • 6% increase in population over the past five 310,000 years and continued development 305,000 • Current population of 304,051 300,000 295,000 54% of the 94,000 housing units are owner occupied 290,000 • 67% are single unit structures 285,000 • 2% are foreclosed 280,000 2006 2007 2008 2009 2010 The City has a lower foreclosure rate than the County and Inland Empire overall Assessed Valuation for 2010 was $17 billion The average household income is $66,293 • Approximately 30,766 households have an average income greater than $75,000, and approximately 16,653 households have an average income greater than $100,000 2011 Rating Presentation – April 19, 2011 Page 7
City of Riverside Update The City General Fund Credit Remains Strong Riverside is highly rated, reflecting the strength of the regional economy, and the City‘s AA category General Obligation ratings reflects Riverside‘s strong role as the hub of the County economy • Riverside has a strong balance sheet and income statement that demonstrate consistent efforts to live within the City‘s means The City of Riverside‘s General Fund has built up and maintained substantial reserves in excess of $40 million despite the economic downturn • Total reserves are more than 20% of budgeted FY 2010/2011 expenditures • $30 million is set aside for economic contingencies • Additional $10 million available for use by the General Fund • FY 2009/2010 ended at $44 million (and projected at $44 million for FY 2010/2011) RPU‘s General Fund Transfer to the City is at the maximum level (11.5%) and is anticipated in RPU‘s budget and rates 2011 Rating Presentation – April 19, 2011 Page 8
City of Riverside Update Riverside is Fiscally Prudent Despite revenue challenges, the City‘s FY 2009/10 budget yielded a surplus of approximately $4 million that has been directed to City Council priorities • The City‘s FY 2010/2011 budget is balanced • Achieved through prioritizing program delivery and holding positions vacant, while maintaining all City services • City management has consistently demonstrated a conservative budgetary approach $300 MM $250 MM $200 MM $150 MM $100 MM $50 MM $0 MM Budgeted Expenditures Actual Expenditures 2011 Rating Presentation – April 19, 2011 Page 9
City of Riverside Update Riverside is Committed to Future Development The five-year Riverside Renaissance has entered its final months and the $1.5 billion dollar plan is 80% complete The City‘s commitment to the Renaissance program reflects a long -term approach to inspiring private investment and increasing the quality of life for all citizens Riverside Renaissance is the most ambitious public investment program in Riverside‘s history • Includes replacing infrastructure, and expanding and improving police, fire, parks, library, and other community facilities • Residents have demonstrated very strong support for the Renaissance Initiative 2011 Rating Presentation – April 19, 2011 Page 10
City of Riverside Update Riverside New Business Development Riverside has very limited undeveloped industrial/commercial land and is able to be very selective regarding how that space is developed, focusing on high-tech/high- wage prospects • University Research Park – The 39-acre park is a hub for emerging technology business and is already home to several technology companies – Newly constructed 35,000 s.f. Surado Corporate Center • Turner Riverwalk – 1 million s.f. mixed-use, commercial/retail project • Downtown Projects – 10 story, newly developed 250,000 s.f. office building purchased by Riverside County – Citrus Tower – 6 story 132,000 s.f. office building under construction – Hyatt Place Hotel – 5 story, 125 room hotel – Convention Center Expansion – 29,000 s.f. expansion, and remodel of existing facilities – Fox Entertainment Plaza – 12,000 s.f. restaurant/retail space, 10,000 s.f. exhibition space, 4,000 s.f. black box theater, 400 parking space garage Riverside is a high-technology community and offers free high-speed wireless internet that covers 77% of the community 2011 Rating Presentation – April 19, 2011 Page 11
Section 1 Introduction Section 2 City of Riverside Update Section 3 Management and Key Strategic Initiatives Section 4 Water System Update System Update Financials Update Section 5 Conclusion
Management Strategy and Key Initiatives RPU is a Community Asset for Riverside Riverside invests in the community through RPU which functions as a great partner for the City • Improve and protect the excellent financial base of the Utility • Build a high quality, modernized infrastructure • Safeguard Riverside‘s supply of quality water for the next 100 years • Riverside‘s 55 local wells supply 100% of City‘s drinking water needs RPU provides reliable low cost service which is valuable to customers • RPU rates are significantly below those of other local providers City Council has shown a willingness to maintain the financial health of RPU and to preserve the strength of these important assets 2011 Rating Presentation – April 19, 2011 Page 13
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