The City of Phoenix Civic Improvement Corporation Junior Lien Water System Revenue Bonds, Series 2020A and Series 2020B (Sustainability Bonds) Investor Presentation March 12, 2020
Disclaimer This electronic Investor Presentation you are about to view is provided as of March 12, 2020 for a proposed offering by the City of Phoenix, Arizona (the “City”), through the City of Phoenix Civic Improvement Corporation, of the Junior Lien Water System Revenue Bonds, Series 2020A and Series 2020B (Sustainability Bonds) (the “Bonds”). Market prices, financial data, and other information provided herein are not warranted as to completeness or accuracy and are subject to change without notice. If you are viewing this presentation after March 12, 2020, there may have been events that occurred subsequent to such date that would have a material adverse effect on the financial information that is presented herein, and neither the City, nor Morgan Stanley & Co. LLC, as representative of the Underwriters, have undertaken any obligation to update this electronic presentation. This Investor Presentation is provided for your information and convenience only. By accessing this presentation, you agree not to duplicate, copy, download, screen capture, electronically store or record this Investor Presentation, or to produce, publish or distribute this Investor Presentation in any form whatsoever. This Investor Presentation does not constitute an offer to sell or the solicitation of an offer to buy any security or other financial instrument, including the Bonds, or to adopt any investment strategy. Any offer or solicitation with respect to the Bonds will be made solely by means of the Preliminary Official Statement or Official Statement, which describe the actual terms of such Bonds. The Underwriters make no representations as to the legal, tax, credit or accounting treatment of any transactions mentioned herein, or any other effects such transactions may have on you and your affiliates or any other parties to such transactions and their respective affiliates. In no event shall the Underwriters or the Issuer be liable for any use by any party of, for any decision made or action taken by any party in reliance upon, or for any inaccuracies or errors in, or omissions from, the information contained herein and such information may not be relied upon by you in evaluating the merits of participating in any transaction mentioned herein. Nothing in these materials constitutes a commitment by the Underwriters or any of their affiliates to enter into any transaction. No assurance can be given that any transaction mentioned herein could in fact be executed. Any investment decision regarding the Bonds should only be made after a careful review of the complete Preliminary Official Statement. You will be responsible for consulting with your own advisors and 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 the Issuer and the Underwriters are not making any recommendations (personal or otherwise) or giving any investment advice and will have no liability with respect thereto. Transactions involving the Bonds may not be suitable for all investors. You should consult with your own advisors as to the suitability of the Bonds for your particular circumstances. Past performance is not indicative of future returns, which will vary. This Investor Presentation may contain “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. 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. Prospective investors should contact their salesperson at, and execute transactions through the Underwriters for the Bonds qualified in their home jurisdiction unless governing law permits otherwise. 1
Transaction Summary The City of Phoenix Civic Improvement Corporation Issuer Issue Junior Lien Water System Revenue Bonds, Series 2020A and Series 2020B (Sustainability Bonds) Par Amount* Series 2020A: $169,030,000 and Series 2020B (Sustainability Bonds): $235,810,000 Expected Pricing Date* Tuesday, March 24, 2020 Expected Dated/Delivery Date* Tuesday, April 14, 2020 Credit Ratings Aa2 (Moody's) / AAA (S&P) Tax Status* Tax-Exempt Interest Payment Dates On January 1 and July 1 of each year, commencing July 1, 2020 Series 2020A: Serial Bonds Maturing 7/1/2030 to 7/1/2040; Term Bonds Maturing 7/1/2044 Maturities* Series 2020B: Serial Bonds Maturing 7/1/2030 to 7/1/2040; Term Bonds Maturing 7/1/2044 Optional Call Feature* Any day on or after July 1, 2030 at Par Series 2020A: Prepay 2019 Revolving Loan of $200 million and fund System improvements Purpose Series 2020B (Sustainability Bonds): Finance a portion of the System’s CIP targeting drought resiliency The Series 2020B Bonds will be designated as Sustainability Bonds utilizing the City’s Green and Sustainability Bond Sustainability Bonds Framework and in compliance with the Green Bonds Principles The Bonds are special revenue obligations of the Corporation and are payable solely from payments required to be paid by the City of Phoenix, Arizona to the Corporation pursuant to the City Purchase Agreement dated as of April 1, 2020, by and between the City and the Corporation. The obligations of the City to make the payments and any other obligations of the City under the Security City Purchase Agreement are payable from a pledge of Designated Revenues received from the City’s water system and do not constitute a pledge of the full faith and credit or the ad valorem taxing power of the City. The Bonds are issued on a parity basis with certain other outstanding junior lien water system revenue obligations of the City and the Corporation Most recently completed fiscal year Net Operating Revenues must equal at least 110% of all Senior Lien and Junior Lien Additional Bonds Test Revenue Obligations, including proposed bonds Continuously own, control, operate and maintain the System; establish, fix, maintain and collect rates, fees and other charges for all water and services furnished by the System; provide for 100% of the Expenses of Operation and Maintenance; produce Rate Covenant Net Operating Revenues in each bond year which will equal at least 110% of the interest and principal requirement for the then current bond year on all Revenue Obligations then outstanding Senior Manager Morgan Stanley * Preliminary, subject to change 2
City of Phoenix Overview City of Phoenix Population (1) Phoenix MSA Per Capita Personal Income (2) With a 2018 population of 1.7 (MM) ($) million, Phoenix is the 5th largest city in the U.S 1.7 50,000 ‒ Accounts for nearly a quarter 1.6 45,000 of the state’s population ‒ Population growth of nearly 1.5 40,000 15% since 2010 1.4 35,000 Phoenix is the state capital of Arizona and the center of the 1.3 30,000 metropolitan area encompassed 2010 2011 2012 2013 2014 2015 2016 2017 2018 2011 2012 2013 2014 2015 2016 2017 2018 by Maricopa County Employment and income data for Unemployment Rate (3) City of Phoenix Housing Units (4) Phoenix MSA is strong Annual Data, Not Seasonally Adjusted (%) (000) ‒ Phoenix MSA’s 625 12% unemployment rate of 4.2% 4.80% is below that of the State of 10% 615 Arizona 4.20% 8% 605 ‒ Per capita income for 6% 595 Phoenix MSA increased by 4% 26.6% from 2011 to 2018 3.90% 585 2% 2011 2012 2013 2014 2015 2016 2017 2018 City of Phoenix housing permits 575 increased by 32,280 units from Phoenix MSA State of Arizona U.S. 2011 2012 2013 2014 2015 2016 2017 2018 2019 2011 to 2019 Sources : 1. U.S. Census Bureau (December 2019) 2. U.S. Bureau of Economic Analysis 3. U.S. Bureau of Labor Statistics 4. Maricopa Association of Governments 3
Water System Overview The City’s Water Department provides reliable, high ‐ quality water MAJOR WATER SOURCE to 1.7 million people in and around SALT/VERDE RIVERS (Salt River Project) the City of Phoenix Ample water supply, treatment, and MAJOR WATER SOURCE COLORADO RIVER water distribution capacity (Central Arizona Project) Record of environmental compliance Responsible reinvestment in critical infrastructure Water System Key Statistics Service Area 543 sq. mi. Treatment Capacity 646 mgd Water Accounts 430,592 Maximum Day Demand 384 mgd Water Treatment Plants 5 Average Daily Demand 265 mgd Active Groundwater Wells 22 Storage Capacity 500 mg Miles of Water Mains 6,905 Lost and Unaccounted-for Water 8.5% Booster Pump Stations 114 Water System Employees 1,043 mgd– million gallons per day; mg – million gallons 4
Largely Residential System with Diverse Users City of Phoenix is the largest customer, accounting for 3.7% of rate revenue Top ten customers accounted for 7.3% of rate revenue Accounts by User Group Billed Volume by User Group 8% 4% ■ Single-Family 50% ■ Multi-Family 35% ■ Non-Residential 88% 15% # of Accounts - 430,592* Billed Volume – 112,892,724* ccf 5 * Accounts and billed volume as of June 2019
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