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Home My Public Portal AboutCity Council - 27 Mar 2017 - Agenda - Pdf Agenda City of Beaumont City Council Meeting Closed Session 4:30 PM Regular Session 6:00 PM Beaumont Financing Authority Beaumont Utility Authority Beaumont Successor Agency (formerly RDA) 550 E 6th Street, Beaumont, Ca Monday, March 27, 2017 Materials related to an item on this agenda submitted to the City Council after distribution of the agenda packets are available for public inspection in the City Clerk’s office at 550 E. 6th Street during normal business hours Any Person with a disability who requires accommodations in order to participate in this meeting should telephone the City Clerk’s office at 951 769 8520, at least 48 hours prior to the meeting in order to make a request for a disability related modification or accommodation. Any one person may address the City Council on any matter not on this agenda. If you wish to speak, please fill out a “Public Comment Form” provided at the back table and give it to the City Clerk. There is a three (3) minute limit on public comments. There will be no sharing or passing of time to another person. State Law prohibits the Council from discussing or taking actions brought up by your comments. Page Closed Session A Closed Session of the City Council / Beaumont Financing Authority / Beaumont Utility Authority / Beaumont Conservation Authority / Beaumont Successor Agency (formerly RDA), may be held in accordance with state law which may include, but is not limited to, the following types of items: personnel matters, labor negotiations, s ecurity matters, providing instructions to real property negotiators and conference with legal counsel regarding pending litigation. Any public comment on Closed Session items will be taken before the Closed Session. Any required announcements or discussion of Closed Session items or actions following the Closed Session with be made in the City Council Chambers. CALL TO ORDER Mayor White, Mayor Pro Tem Carroll, Council Member Lara, Council Member Orozco, and Council Member Martinez 1. Public Comments Regarding Closed Session 2. Conference with Legal Counsel - Regarding Existing Litigation Pursuant to Government Code Section 54956.9(d)(1) - Western Riverside Council of Governments et al. v. City of Beaumont and related cases (Case Nos. RIC 1211222; G051840; G050794; 30-2010-0035976) Appeal filed. 3. Conference with Legal Counsel regarding anticipated litigation: Significant exposure to litigation pursuant to Government Code Section 54956.9(d)(2) and/or (3) (Discussion and possible action to approve, settle or deny claim by AC Propane and David Castaldo) 4. Conference with Legal Counsel - Anticipated Litigation: Significant exposure to litigation pursuant to Government Code Section 54956.9(d)(2) Page 1 of 173 and/or (3) – (This matter involves an investigation by the Securities and Exchange Commission) 5. Conference with Legal Counsel - Regarding potential initiation of Litigation pursuant to Government Code Section 54956.9(d)(4) (one potential case) 6. Conference with legal Counsel Regarding Existing Litigation - Pursuant to Government Code Section 54956.9(d)(1) - Oak Tree Alternative Care v. City of Beaumont, Case No. RIC 1109687 7. Conference with Legal Counsel - Anticipated Litigation: Significant Exposure to litigation pursuant to Government Code Section 54956.9(d)(2) and/or (4) - Consideration of one (1) claim and discussion of possible acceptance, rejection or settlement of claim: Arambula. Adjourn to Closed Session REGULAR SESSION CALL TO ORDER Mayor White, Mayor Pro Tem Carroll, Council Member Lara, Council Member Orozco, and Council Member Martinez Report out from Closed Session: Action on any Closed Session items: Action on any requests for excused absence: Pledge of Allegiance: Approval/Adjustments to Agenda: Conflict of Interest Disclosure: ANNOUNCEMENTS/RECOGNITIONS/PROCLAMATIONS/CORRESPONDENCE PUBLIC COMMENT PERIOD (ITEMS NOT ON THE AGENDA) Any one person may address the City Council on any matter not on this agenda. If you wish to speak, please fill out a “Public Comment Form” provided at the back table and give to the City Clerk. There is a three (3) minute time limit on public comments. There will be no sharing or passing of time to another person. State Law prohibits the Council from discussing or taking actions brought up by your comments. CONSENT CALENDAR Items on the consent calendar are taken as one action item unless an item is pulled for further discussion here or at the end of action items. Approval of all Ordinances and Resolutions to be read by title only. 1. Ratification of Warrants dated March 2, 2017 Warrants 03.02.17 5 - 19 2. Ratification of Warrants dated March 9, 2017 Warrants 03.09.17 21 - 26 3. Ratification of Warrants dated March 16, 2017 27 - 51 Page 2 of 173 Warrants 03.16.17 4. Approve Resolution Adopting an Amended Conflict of Interest Code 2017 Conflict of Interest Code 53 - 58 5. Approval of February 2017 City Attorney Invoices in the amount of $55,677.67 SBEMP FEB Invoices 59 - 82 ACTION ITEMS/PUBLIC HEARINGS/REQUESTS Approval of all Ordinances and Resolutions to be read by title only. 6. Workshop on Beaumont's Mello Roos/Community Facilities District Program - Options for Relief Recommended Council Action(s): 1. Council conduct a comprehensive workshop on Beaumont's Mello Roos (CFD) program and finances; 2. Council provide informal input on the various options for change with an emphasis on taxpayer relief; 3. Council provide direction to proceed with a bond refinancing plan; 4. Council provide direction to proceed with town hall meetings on the CFD program and solicit preferences for change; 5. Council direct staff to return with community input and specific recommendation on timing of potential changes before the FY 17-18 tax roll is completed. CFD Workshop - Options for Relief CFD Workshop Presentation Beaumont Presentation Refunding Analysis, Process and Opportunities 83 - 173 COUNCIL REPORTS  Carroll  Lara  Martinez  Orozco  White CITY TREASURER REPORT CITY MANAGER REPORT CITY CLERK REPORT CITY ATTORNEY REPORT FUTURE AGENDA ITEMS Adjournment of the City Council of the March 27, 2017 Meeting at ____ p.m. The next regular meeting of the Beaumont City Council, Beaumont Financing Authority, Beaumont Utility Authority, Beaumont Conservation Authority, and the Beaumont Successor Agency (formerly RDA), is scheduled for Tuesday, April 4, 2017, at 5:00 p.m. or thereafter as noted on the posted Agenda for Closed Session items in the City Council Board Room No. 5, followed by the regular meeting at 6:00 p.m. or thereafter as noted on the posted Agenda at City Hall. 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MOVED, PASSED AND ADOPTED by the City Council of the City of Beaumont at a regularly-scheduled meeting of the City Council held on March 7, 2017, by the following vote: AYES: NOES: ABSTAIN: ABSENT: ______________________________________ Mayor, Alfred Lloyd White Page 53 of 173 2 ATTEST: __________________________________ City Clerk, Andreanna Pfeiffer Page 54 of 173 3/07/2017 EXHIBIT “A” DESIGNATED POSITIONS Designated Positions Disclosure Categories Administrative Services Director 1 Administrative Oversight Committee 7 Associate Planner 1 Building Grounds/Maint Supervisor 4 Building Official 1 Chief of Police 1 City Attorney 8 City Council Member 8 City Clerk 1 City Manager 8 City Treasurer 8 Community Development Director 1 Community Services Director 1 Deputy City Clerk 1 Economic Development Committee 7 Finance and Audit Committee 7 Finance Director 1 Fire Marshall 6 Management Analyst 4 Planning Commissioner 8 Page 55 of 173 4 Designated Positions Disclosure Categories Police Commander 1 Police Lieutenant I 4 Public Works Director 1 Public Works Utility Manager 4 Transit Director 1 Transit Operations Supervisor 4 Vehicle Maintenance Supervisor 4 EXHIBIT “B’ Page 56 of 173 5 DISCLOSURE CATEGORIES Broad Disclosure 1.Must report investments, business positions, and income from sources located in, planning to do business in, or doing business in the City of Beaumont; and Interests in real property located in the City of Beaumont and also within a two mile radius of any property owned or used by the City of Beaumont which is not within the City limits. Real Property Disclosure 2.Must report interests in real property located in the City of Beaumont and also within a two mile radius of any property owned or used by the City of Beaumont which is not within the City limits. Financial Interest Disclosure 3.Must report investments, business positions, and income from sources located in, planning to do business in, or doing business in the City of Beaumont. Disclosure Based on Department 4.Must report investments, business positions, and income from business entities located in, planning to do business in, or doing business with the City of Beaumont subject to the following: no financial interest need be reported unless it is in or from a source which provides services, supplies, material, machinery or equipment of the type utilized by or which is subject to the regulatory permit or licensing authority of the department which filer is employed. Disclosure Based on Position 5.Must report investments, business positions, and income from business entities located in, planning to do business in, or doing business with the City of Beaumont subject to the following: no financial interest need be reported unless it is in or from a source which provides services, supplies, material, machinery or equipment of the type utilized by or which is subject to the regulatory permit or licensing authority of the position which the filer currently fills. Consultant Disclosure 6.Must report investments, business positions, and income from business entities located in, planning to do business in, or doing business with the City of Beaumont subject to the following: no financial interest need be reported unless it is in or from a source which provides services, supplies, material, machinery or equipment of the type utilized by or which is subject to the regulatory permit or licensing authority of the department by which the consultant is employed. Disclosure Based on Board and Commission Membership 7.Must report investments, business positions, and income from business entities located in, planning to do business in, or doing business with the City of Beaumont subject to the following: no financial interest need be reported unless it is in or from a source which provides services, supplies, material, machinery or equipment of the type utilized by or which is subject to the regulatory permit or licensing authority of the department with which filer’s board or commission is associated. State Filers Page 57 of 173 6 8.Need not file an additional Statement of Economic Interests under this code as their filing with the Fair Political Practices Commission fulfills reporting requirements. They are included in this code only for disqualification purposes. *Nothing contained in this conflict of interest code shall be interpreted to require the reporting of gifts from outside the City of Beaumont's jurisdiction if the purpose of disclosure of the source of the gift does not have some connection with or bearing upon the functions or duties of the position for which the reporting is required. Nothing in this language is intended to create an inference that all gifts within the jurisdiction are reportable. (2 California Code of Regulations section 18730.1). 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P a g e 8 0 o f 1 7 3 mumau m>_.>zom ccmM_u_.m>mmmcma?_u><_<_mz._.” _u_.o$mm_o:m_mm2_omm==.o.._m:_3?: m_.o<>xm>mozm_s_um<Z=.=~_uI<F u_zxzm<_.._:_u P a g e 8 1 o f 1 7 3 mumau P a g e 8 2 o f 1 7 3 Agenda Item No. Staff Report TO:Mayor and City Council Members FROM:Todd Parton,City Manager DATE:March 27,2017 SUBJECT:Workshop on Beaumont's Mello-Roos/Community Facilities District Program-Options for Relief Executive Summary: City staff,along with the City's consulting team,has been reviewing the Beaumont Mello- Roos/Community Facilities District program to identify restructuring options that might provide financial relief to homeowners.The enabling legislation for this program is referred to as the Mello—R0os Community Facilities Act of 1982.However,the more common name for the program is simply the Community Facilities District ("CFD") program. Beaumont's CFD program has been an important financing mechanism to fund the infrastructure and maintenance services costs directly associated with new development. It has also been a funding source for major infrastructure projects indirectly tied to that same growth.However,this practice has added an extreme burden to many of the taxpayers located within the boundaries of the City's CFD No.93-1.Also,the accountability and transparency of this program's finances was lacking under prior City administration for some time.Thus,City Council directed that: 1.Transparency and accountability be applied to this program in a manner consistent with what is expected for the balance of the City's financial operations;and 2.Options be identified and evaluated to reduce the burden on taxpayers either through immediate rate relief or over time,or through reducing or eliminating the 2%annual escalator on the facilities portion ofthe CFD special tax levy. City staff and the consulting team undertook the extremely challenging task of reconciling and cleaning up the CFD program's financial records,which were in disarray due to many years of poor accounting and management practices.The first complete financial accounting of the City's CFD program has been prepared (see Attachment A —City of Beaumont CFD Program Fiscal and Budget Model].In addition to the resources included in Attachment A is approximately $8.8 million in unspent bond proceeds kept by the bond trustee.These additional bond proceeds are under review by the City's bond counsel to determine their potential use and disposition. Page 83 of 173 CFD No.93-1 is massive and was created to encompass nearly the entire City.The district is comprised of several Improvement Areas (IA)that function as separate entities within the CFD.This is likely the first time that a comprehensive report has been prepared to segregate the finances by each IA.At the top of Attachment A’s schedule a listing of the characteristics for each IA is provided.The lAs are segregated by "Facility"or "Services" which describes the purpose of each.For the purposes of this workshop,the focus is on "Facility"lAs.All lAs have been shown in this model for the sake of transparency and accountability. Options available for providing taxpayer reliefinclude the use of one or more variables: 1.Fund Balance Available for Discussion (monies left over from previous fiscal years that are not specifically earmarked now—see Row 28]; 2.Reduction in "Future Facilities,”sometimes called "pay go"in a "mature"IA (a portion of the budget that is not currently needed to meet the CFD's financial obligations such as debt service,administration expense,or delinquency reserve—see Row 41);and 3.Refinancing for Debt Service (reflects the necessary payment of principal and interest for current bonds outstandingasee Row 37).Refinancing bonds will result in a lower debt service payment which can translate into special tax reductions for the property owners (see Rows 56 to 58). "Mature”IAs is a term to describe lAs where all bonds are issued and the area is fully developed.With respect to the Debt Service variable,the City can refinance some of the bonds to achieve lower interest rates,thereby reducing the annual special tax levy to cover debt service costs for the bonds in that IA.To the extent there is available Fund Balance and/or Prepayments (Mello-Roos assessments paid in advance of being due to extinguish the CFD lien on the property —see Row 21)in the same IA that is eligible for refinancing;it might be possible to use these resources to “buy down”the outstanding bonds,thus reducing debt service costs even more.The potential use of these prepayments may change since there is still some ongoing research into the history,the amounts and the options for using them. City staff's objectives for this workshop consists offour parts: 1.Provide for a full understanding of the CFD financing mechanism,how it has been applied in Beaumont,and how it might be applied going forward; 2.Outline how the financing variables described above currently come together by IA, the way these variables might be used for relief to taxpayers,and receive Council's preferences in this area; 3.Provide for a fully understanding of the bond refinancing initiative and give staff the direction to move "full steam"ahead;and 4.Secure Council’s direction to reach out to the community and solicit feedback on the CFD program.City staff recommends that pro-active efforts be taken to inform residents on the purpose of their CFD assessments,how their dollars are being spent,and how their financial burden might be reduced.City staff also wishes to receive taxpayer feedback on their preferences before asking for final Council action 2 Page 84 of 173 on this program.For example,residents may wish to use "Future Facilities"monies to replace or build local infrastructure or they might prefer immediate or long term CFD tax relief. Background and Analysis: CFD 101 Basics The CFD mechanism is very common in California,especially in Southern California where growth has occurred at a rapid pace.Per the California Debt and Investment Advisory Commission's (CDIAC)FY 2012-13 report —Riverside County contained 40 agencies responsible for 319 separate CFDs with a total of$2.9 billion in bonds outstanding. Beaumont has four stand-alone CFDs and one very large CFD No.93-1 which has 72 lAs. There are currently 29 [As with bonded debt with an outstanding balance of $208 million as of September 2,2015. CFDs are formed under the enabling legislation called the Mello—RoosCommunity Facilities Act of 1982 [the "Act")or commencing with California Government Code Section 53311. This legislation was passed soon after the Proposition 13 Property Tax Limitation Measure was approved by voters.The purpose of the Act was to provide agencies an alternative means to fund growth-related,public infrastructure and services due to the lost revenues associated with Proposition 13.The list of eligible infrastructure or "facilities"is very broad and includes essentially all governmental facilities/infrastructureso long as the assets have at least a five—yearuseful life.The City can construct the facilities or reimburse a developer who can construct them.Generally,the eligible costs to be reimbursed to developers includes the acquisition and construction costs and development related fees directly tied to public infrastructure.If a developer is to be reimbursed for facilities,fees, etc.,it is typically memorialized in an agreement with that developer.The cost of facilities and applicable fees are financed through the issuance of bonds secured by a lien on the properties and repaid through CFD special tax levies.The list of eligible services that can be funded by the CFD/IAincludes:police and fire services,ambulance and paramedic services,maintenance of public improvements,?ood and storm drainage facilities,and removal/remediationof hazardous substances.The CFD can reimburse the City for administrative related costs as well. The facilities and services that can be supported by the CFD/IAare set forth in the formation of each and approved by the City Council and the eligible voters.If there are less than 12 registered voters within a CFD/IAat the time of formation,then eligible voters are the property owners.If there are 12 or more registered voters 90 days prior to formation, then only the registered voters within the CFD/IAcan vote.Most of the formations occur prior to developing and selling homes,thus voters are typically the developer/owners of the property. Page 85 of 173 The benefits of a properly managed CFD to the City include reimbursements for public safety services and facility maintenance costs.It can also be a source of funds for major infrastructure that benefits multiple IAs and may not be entirely paid by a developer or another funding source.However,facilities costs are ultimately borne by the property owner including the interest costs of that money over time. With respect to policy options going forward,3 key variables have been identified that can be used singularly or combined to produce rate relief to Beaumont taxpayers. Variable #1 for CFD Relief —The Unused "Future Facility"Portion of the Annual Special Tax Levy The cost components of the Beaumont CFDs and IAs that determine the annual special tax levy can be found in Rows 37 to 42.They include a debt service payment (consistent with the Bond covenants),maintenance costs of facilities in CFD No.93-1,police/fire service costs for new CFDs formed in 2016 or later,administrative expenses,and a small delinquency reserve to cover possible non-payment of the special tax levy by some property owners.Finally,as described below,the City has previously calculated a special tax amount more than the items listed above.In some cases,the maximum special tax has been levied.The balance of the levy that is not used for the expenses mentioned above is called "Future Facility."This amount can be used to pay for any eligible public facilities that were identified in the CFD/IAformation documents.It can pay or reimburse developers directly for costs of facilities [in-lieu of issuing a larger bond)or fees associated with the development.However,ifthe CFD or IA falls into the "mature"category where it has issued all its bonds and the area is fully developed,then these "Future Facility"funds can be used to repair,replace or construct more facilities.This portion of the budget can also just go away,thus reducing the budget and the levy for that line item.A total of 19 IAs are fully mature and are levying total of$1.97 million in annual assessments that can be eliminated or set aside for facilities.The average savings for each property owner have been calculated with the assumption that the levy was reduced by this entire amount [see Rows 51 through 53).It is important to mention this is an average amount and each individual property savings would be ultimately determined by that property's classification in the Rate and Method of Apportionment (RMA). Additionally,there are 8 other IAs that are not yet mature (i.e.not fully developed nor all the bonds issued to date)and are optimal targets for future restructuring.Once these IAs reach the mature stage and the City has reconciled its obligations with the developer,they would be eligible for restructuring via the same options described herein.It should also be noted that,pursuant to a recent agreement with Pardee and Co.that covers IAs 8c,d,e and 17c,all current and future "Future Facility"monies will be retained until the City reimburses itself for uncollected Development Impact Fee (DIF)monies up to $6,017,745. Page 86 of 173 Variable #2 for CFD Relief —Available Fund Balance (Carryover from Previous Years) City staff laboriously reviewed the accounting records for prior years to account for the accumulated unspent resources in the CFD program through June 30,2016.The results of this effort are accounted for in Rows 20 —28.Once the financial audit is completed for fiscal year 2016,up to $32 million in assets might be established;however,this is misleading as explained below.Given that outstanding issues remain,City staff will recommend that the Council retain $6 million for contingent liabilities.This will be released after more research is completed and disputes are resolved. As oflune 30,2016,the City collected CFD assessments (almost $11.1 million in total)for a large debt service payment on bonds that occurred in September 2016.These funds are restricted for that purpose (see Row 20).As described in Variable #1,some lAs are not fully mature,thus any past monies collected for Future Facilities are retained until a final accounting takes place [see Row 22 ~$1.5 million in total).Again,for Pardee projects,the City has forgone some development impact fees and was to take the money out of bond proceeds.As part of the settlement agreement the funds previously collected through the special assessments is to be transferred to the Development Impact Fee Fund [Row 23 ~ $3.2 million in total).Finally,those funds previously collected for Future Facilities for [As that are now fully mature (issued all bonds and the area is fully developed)are available for use in a similar way [Row 24 —almost $6.6 million in total)as described in Variable #1. These monies can be set aside to repair or construct much needed facilities that benefit these lAs or provide a one-time form of rate relief or the monies can be used to buy down debt,thus reducing the necessary debt service payments in that IA,another source for savings. Variable #3 for CFD Relief--Bond Refinancing (Refunding)Program Another option that might reduce the costs of the program,thus providing CFD special tax relief to the property owner,is to refinance some of the bonds and hopefully receive a lower interest rate.The debt market uses the term refunding which essentially means refinancing to the layperson.Michael Busch of Urban Futures,the City's Financial Advisor and Piper Jeffrey (Underwriter)have analyzed the current bonds outstanding and have estimated potential savings from roughly a dozen outstanding bond issues based on current market rates.Mr.Busch and Piper Ieffrey representatives will be presenting this option at your workshop. Typically,bonds are considered good candidates for refinancing when the estimated Net Present Value (NPV)savings would be at least 3 percent.NPV is a calculation that considers the schedule of reduced debt service payments and is a function of actual debt service payment reductions and when they occur over the term of the bond (recognizing the time value of money). Another criterion used to determine whether a bond is a candidate for refinancing is the call provision.CFD bonds are typically sold with 10-year call protections,i.e.the bonds 5 Page 87 of 173 cannot be redeemed for 10 years after they have been issued.Thus,bonds issued in 2007 or prior might be "callable”and can be refinanced.Sometimes bonds can be "refunded"for significant savings by purchasing securities,put into an escrow account to earn interest, and then used to redeem the bonds at the callable date.This is called "advance refunding.” The metrics for this approach must be closely analyzed,but generally,the later the callable date the less savings result from this approach. It may also be advantageous to pool certain bonds with like credit qualities (e.g.similar assessed values,bond to lien ratios and similar completed homes).By pooling certain bonds,reduced bond issuance costs are realized,a larger bond is created that likely attracts greater market interest,bond insurance is acquired thereby reducing interest rates and potentially reducing the size of the debt service reserve fund.Mr.Busch and Piper Jaffrey are still evaluating this option. Mr.Busch and Piper laffrey have identified 12 bond issues that meet the criteria for refinancing and 10 that do not [see Attachment B).For those 10 that are not available for refinancing,they will be candidates for refinancing when callable dates are met or when interest rates produce adequate savings for an "advance refunding"scenario.It is the role of the Financial Advisor to monitor these activities and recommend options for bringing cost relief. Method of Sale There are two basic ways to issue or sell bonds.One is through a public offering of the bonds in the open market where extra documentation,costs and processes (e.g.public offering statements,bond rating presentations)are required and additional disclosure standards must be met.These bonds are traded in the bond marketplace.In the near term, this is not a viable option given the ongoing SEC investigation. Bonds may also be sold through a private placement.This is a viable option to place a bond where the focus is on selling bonds to sophisticated,institutional investors,typically banks. The bonds are sold to a single or limited number of accredited investors or qualified institutional buyers.Through a private placement,the City is not required to prepare or disseminate any public offering statements related to the bonds,the CFD/lAsor the City. Since the bonds have limited transferability on secondary market trading,ongoing disclosure requirements are less than those for publicly traded bonds,the terms of the offering can be negotiated,the bonds can be sold faster,less staff resources are required and interest rates may be locked in prior to closing,similar to a traditional mortgage. Besides the staff time,the City is projected to save approximately $35,000 to $40,000 for each bond issuance using the private placement approach. Disadvantages include:a shorter term (10-15 sometimes up to 20 years];possible concerns about liquidity due to restrictions on transfers or credit risk due to less public disclosure that may result in a slight interest penalty;less uniformity on bond terms and covenants; and the City needs to understand and work with different regulatory standards for the 6 Page 88 of 173 banks who purchase these bonds (see Attachment C for a listing of the advantages and disadvantages]. Due to the ongoing SEC investigation and the need to conform to all security law standards when "speaking to the market,"bond counsel has advised that private placement is the best option for now.Beaumont has an opportunity to take advantage of the current interest rate environment which increases taxpayer savings. Examples 0fB0nd Re?nancincL019D0rtum'ties 2004C Bonds The proposed 2004C Bonds (Improvement Area 8A)are callable on any date and would be approximately $6.845 million in par refunding amount with a final maturity in 2035.The final interest rate will be determined when the 2017 Bonds are priced and sold,but for purposes of our analysis staff is using an indicative rate of 4.08%provided by Western Alliance Bank.The pricing date would be targeted for some time late summer,if interest rates remain attractive and the Council authorizes staff and its financing team to move forward.The bond closing and distribution ofnet proceeds is expected to occur in August. Based on current interest rates and funds held by the Trustee,total gross savings over the life of the bonds is nearly $1.4 million,or,on average,approximately $76,000 annually.This results in net present value (NPV)savings of $617,000,or 8.5%of refunded par amount. The public finance industry rule of thumb considers a refinancing that results in at least 3.0%of refunded par—amount are "in the money.”Savings from the refinancing will lower the special tax for each resident within the Improvement Area 8A subject to the CFD assessment. 2005A &2005C Bonds The proposed 2005A bonds [Improvement Area 6A1)are callable on September 1,2017 and any date thereafter and the 2005C are callable at any date and would be approximately $31 million in par refunding amount with a final maturity in 2035.The final interest rate will be determined when the 2017 bonds are priced and sold,but for purposes of our analysis staffis using an indicative rate of 4.10%provided by Western Alliance Bank.Like the assumptions used for the 2004C bonds above,the pricing and closing dates are targeted for this summer. Because of the outstanding par amount remaining on the bonds and potential savings,the refunding of the Series 2005A and C bonds could be structured with escalating debt services,which is the current structure,or with level debt service thus eliminating the 2% escalator.Based on current interest rates and funds held by the Trustee,total gross savings over the life of the bonds ranges from $7.8 million for the escalating debt service structure to $8.1 million for fixed debt service structure equal to average savings range of $433,500 to $450,900 annually.This results in net present value savings of $3.76 million,or 11.28% of refunded par-amount,which is well above the public finance industry rule of thumb of 7 Page 89 of 173 3.0%of refunded par amount.Savings from the refinancing will lower the special tax for each resident within the Improvement Area 8A subject to the CFD assessment. Savin 5 rom Bond Re nancin -0 tions or Their Use Again,the fiscal model (Attachment A—Rows 56 to 58)identifies potential debt service savings from the 12 bond issues eligible for refinancing.The actual savings would be ultimately determined by the interest rates and the market conditions at the time of the sale. For some bond issues (see footnote 5),it is estimated that the savings are adequate to make them candidates for refinancing to eliminate the automatic 2%inflator for the portion of the levy that covers this expense item.However,City staff recommends that the city solicit input from the affected property owners to gauge their preferences (i.e.receive an immediate reduction in the tax levy vs.rate smoothing over the balance of the term).The current debt service schedules have been structured so that the debt service payments increase over time.This is the basis for the 2%escalators.Accordingly,restructuring these schedules to eliminate the 2%escalator will mean that it will take longer to realize the savings over time since earlier debt service payments will be increased. Summary In summary,the fiscal details of Beaumont’s CFD program have been deconstructed and reported in more transparent manner than ever before.The revenue/costvariables of the program have been discussed and options for their restructure and the resulting benefits to the taxpayers explained.This is a significant change from the past where the CFD program was not accounted for with this measure of detail.The CFD program was a valuable resource for larger infrastructure projects in the City’s Capital Improvement Program.In other words,some of the major CIP projects throughout the City were partially or wholly funded by this funding source.By changing this program,funds for the City's ongoing CIP needs will be reduced which will have the net effect of putting more pressure on other, more traditional funding sources typical in other cities like developer impact fees, additional conditions placed on developers,general purpose tax sources,federal,state and regional funds (via active participation with regional consortiums such as Riverside County Transportation Agency RCTC and Western Regional Council of Governments WRCOG]. As the Council deliberates on the City's Work Out Plan to Sustainability and options for success,this change in CFD administration practices should be considered as part of determining the fiscal needs to return to "service solvency.”By far,the biggest deficit the City has in returning to long-term fiscal viability is the need to maintain and expand Beaumont’s street network. Page 90 of 173 Next Steps City staff recommends that the Council provide direction and support for the City to immediately proceed with the bond refinancing program to take advantage of interest rates.Furthermore,City staff requests the Council's support in reaching out to the community with the information shared tonight and seek preferences on ways to reform the CFD program for Beaumont.Once,this input has been solicited,City staff will return to the Council to make a final report and seek final direction. Since the FY 17-18 special tax roll must be developed in ]une,City staff is unsure which of the CFD options can be implemented by that date while still soliciting community preferences;however,City staff will endeavor to maximize our efforts. Fiscal Impact: The largest fiscal impacts from this agenda item are found in the Fiscal Model and contingent upon the Council's policy choices.The costs to produce a bond refinancing program are typically charged as part of the bond issuance costs and ultimate bond sale. There may be some incidental consulting time to assist in the community discussion and ultimate presentation ck to the Council. Finance Director R1vie \ Recommendation: [1]Council conduct a comprehensive workshop on Beaumont's Mello Roos (CFD)program and finances; (2)Council provide informal input on the various options for change with an emphasis on taxpayer relief; (3)Council provide direction to proceed with a bond refinancing plan; (4)Council provide direction to proceed with town hall meetings on the CFD program and solicit preferences for change; (5)Council direct staff to return with community input and specific recommendation on timing of potential changes before the FY 17-18 tax roll is completed. City Manager Review:% CC:Attachment A—Beaumont CFD Fiscal and Budget Model Attachment B—Beaumont Schedule of CFD Bonds Attachment C—List of Advantages/Disadvantages ofa Private Placement of Bond Page 91 of 173 ATTACHMENTA CITYOF BEAUMONT CFD Program Fiscal and Budget Model DRAFT Uses Fiscal Year 2016-17 Information HES IAEC IMPYEVEHIEHCAYES/CFD IA1 IAZ IA3 IA3 5 IA“IA5 IA GA I I?6A1 IA EKIS I IA 65 I IA 7A1 r IA 7A15 IA 75 IA 735 l I?7C ll 7C5 IA 7D IA 7DS IA3 IAXS IR 8A IA KAS IR 35 III Improvement Area/CFDCharacteristics ,_.........1. District Type i_,H 'I:E5:l«Ilt',’i WW Facility Facility service Facility Facility _ _F_acility1NB Facility_service Facility I service Facility service ,___Facility SggilceFEW‘!55]‘/its FWIIW 59$“F3;‘V AririualEscalation 2%27’.2% _VCFI 2%72%2% I 2%CW CPI °/“ e ——» V ' Boridslssueol if i V v v ii v W v 7 v N 7 Y ,«)V 'y 7 :—T in‘—% Fully Bonded __l My _K N N _N ii"/W5 //‘WV — J ”77' FullyDeveloped v N N___ N L v @ /0%V e — N —— Eligible For Rate Reduction‘v A/#_N N __ N _ v 1/J A T 112 V 94‘;192*T655 Number of Parcels 1 512 511 7 860 2 954]954 Z83 City Held Fund Allocation (Balance as of 06/30/16)__422 51,, __%erviceTDLIe:(_l1£i/_01/2016)3 103,00_97_$10,671 _§,g§,_9g5T—_75 186,793i§77$7V_1V6l,Z78__$_$3,52-341,5 g ,.5_.'_ 5 :5 _5:_:§§i...:_:.§“.°£97.—:_ —T7 —:57'700 estirnatedi>rei;ayment____V___V___s _. V s ___.s 2s1_,s10_i_-,5 —_$____,_-_5 §_5_5‘?83 .5;L —»—$3 g ——'— W Future FacililyiRestrictecl—cjitoHind)i_,— _ $—$ N 7 A _$-S S 12§Q2_5 3 _:.,’_%’.. 3 :— ' ?——_ 5 S >S —$ , |_’a_rEe_5ett|e_m3ri_t_(,ToD|FFund)s A s -_s,,_-#5,,;_,$—S, , ,—_,,$.5 —V:e———————— '— —--W5 ' . Remaining Balance 5 -$-_S 191,574 5 -$—5 5 :6:3:2 :357 A73:2,f,§i'§§;:.:33$::.$563,838 3 1 :2,360,028 Totalclty Held Funds 5 103,009 5 10,671 5 672,275 5 —5 292,050 5 293,930 5 -5 2,023,363 -S r 4 4 '' _._.-304,877 »- Funds Balance Available For Discussion 5 .s .5 191,574 5 —5 -5 -5 -5 373,643 5 —5 -s 301.285 5 -TS -T5 -$63539 5 3 5 5 493-957 5 5 31°32“5 5 5 $ FY 016-17Revenues _ ’‘V M _ “i _ i ’(y,y_,r V?i5f§.'-71715355 .. I $§6%'9?'9§‘§l $3Z§'729.8.".259§$ZI"l9f9~i§7.5.E?7$,i‘112,8.i5.l-‘I541 5}:59 i‘E$F:”‘l€A25.55o7¥§5.iB8,8§§3%,? ._'=‘vi’-{*§2*fs‘§a=‘‘”-17s0ids";3s14.Elma:iC§LeE:lie11lwl:u:eEta1r.c.e'|-.I“-5%3T33 Eh 5--~aw»-4‘*'~~-“-~~ FY 2016-17 Expenses 7 __786 779 20173btservicel>aymerit____ _ 5 —_$263,785 3 269,123__5 4,216 5 2,633,965 5 —_S - _ 5 7117.731,3 —__$104405 ,5 . F 13,_'gel“338 e:—52°'9f'4.§—51754 r—:55683":—’—_—r .59'Vi°=‘-5M.£""'e"E"£5£°_5‘5a""‘Re59'V£F“"d5 ,1 ,Lj’r56Z,5 '$ , ‘i ,5 is 2594518.$—1—5l’L7—$ —* ‘$79362 5 4’$105579 ’$"A ’S 262773 30000 75'41127 3 5,537($’\3E)000 Admirlistrat'l\£E><pense_s _______ _$15,429 _$30,000 5 30,000 5 5 5 27,358 314,585 5 730,000 $7._910 $_§0.0_01i_11,41_3 30r00_0 5 4i2_25_?_..éi68F$T1I625 es —lg50——$—4'955— Delinquency Reserv 5 1,300 5 - _ 5 —5 s 5 2,500 ,3 1175 ,5 4626 5 97:5 710 é.325 A .-5 S r _$1.154681s — $_—$791415 FumeFwI“y S I s 16'662 s ZM10 3 V s A S _S 273,1?[T53905121:30::117421 :8138851013940 5304 0205 772,305557,515 $577,775 $61,870 5 1,613,143 Total Expenses $167,291 5 310,447 5 319,533 5 5,836 5 2,798,259 5299575 5 168.597 5 425,5 0 5 ...r .r i r r Estimated city Held Funds (Balance as of 09/02/2017);407 351 __ praiecteu Available Fund Balance (Estimate Only)5 1 s .s 247,736 5 -5 -s -5 -s 494.072 Is -Is -Is 354,944 Is .|s -5 -5 7s,715 s -s -s -5 644.931 5 -s 425,707 5 5 »5 3 Preliminary Budget Reductions to Improvement Areas Scenario 1-Reduction of Future Facilities Amount _...02,474 -- _VTotalReductioninAmiuallevv S -5 56,212 5 » _ -5 -S -$110,429 5 -5 -57 53,660 $7:$:5 '5 15°35 :‘ —E‘::“Eli::115,211’::17534:-:- _Average Reduction per parcel‘5 —5 110 5 - 7 V -5 -_$,-$_g_116 $-_§-5 .110 5 '5 :5 ;.,5 "3 . ' e. '——';—I ' ——r ' 157W MW’*— 000% Average Percentage Reduction per Parcel 0.00%14.09%0.00%0.00%0.00%0.00%3.95%0.00%0.00%6.98%0.00%0.00%0.00%10.06%0.00%0.00%000/.14.40%0.00%14.93%0.00%.. scenario 2 -Band Re?nancing’2 083 '100 765 _ _i'otalReductionin Annual Levy __$7 7 _26/,§_lJ‘Q__5 3,616 5 6,085 5 ~__5 _44,940 5 46,255 75/-5 433.591$-S -$-s -$-S - K §‘5 '5 _'5 3'5"5 ‘ e 75'::——:——:5 '271:—»:'15‘ __.A_"°'3€e"e""°“°"P°"’3"°°'°i ,.3_3§s_5.3515 5 11 5 ‘5 4 “Z0 5 54 E '$454 5 I ‘ 5‘_S -‘T 3 ’-T15000°’/'5 0007Is 0007T5“000/5 000%$03520}0.00%’9.90%”0.00%9.01%0.00%”5.25% Average Percentage Reduction per Parcel 14.43%14.40%1.53%0.00%14.43%14.43%0.00%15.49%0.00%14.43%0.00%0.00%0.00%.....,..,.... Total Combined Reductions to Improvement Areas _154 557 _100 765 TotaliieductioninAnnual Levy 5 26,300_5 3,616 5 61,297 5 5 46,25575 «S _543.9Z0_5 - N 5 4,126 §53.660 $;I 5 _ ‘$' .5 154"“:':'%—':—14%;:::191::'80s%_ 7 2 '154 Average Reduction oerirarcel‘5 333 5 3,616 5 122 5 $54 S -5 A 570 $- _5 375 5 110 5 -$ _, -5 :_ 5 ‘I3 ' . ‘ e ' —r—-—'W—16.15%000%625% Average Percentage Reduction per Parcel 14.49%14.43%15.61%0.00%14.43%14.40%0.00%19.44%0.00%14.43%6.98%0.00%0.00%o.00%|10.06%0.00%0.00%0.00%14.74%0.00%24.33%0.0 u ... Revised Estimated Revenues w/Reduction A ?&E20';V% T ’’1 §HAv's'r‘5?'§L?MT5'..sr?iatcel BIG _0133}5535715355$$T4%‘§i?l'.’ [$I$.§5.é*z‘5§A1'.tsizizi”-1srs175sfs‘i1s.*i"s3,4”:zl.e' xsm'11.'9‘.i:4.152872772f$?13’573i§.0)QSEEFEZEK$.‘I".t{3i1&7iE1E , 6g .1,363 0%???Bfé?ii?i Notes: ‘lA‘seligible for rate reduction rneet tne following criteria:i)fully developed and iiifully bonded. 7'AverageLevy per Parcel based on multiple cIassl?cat'lons and land use category. ’estirnatedcity Held Fund balance as of 09/02/2017represents the beginning "Funds Available lor Use“balance (row 28),plus the additional Fey-Go collected during the Fv 2016-17 levy from |A's that are eligible for rate reductions (defined in footnote 1). ‘AverageReduction per Parcel for illustration only.Actual reduction may vary by classification and land use category. ‘Thecity will review options which may led to the elimination or reduction ofthe annual 2%escalator on the facilities portion of the special tax.These figures are subiectto criange based on market conditions and available interest rates at the tirne oieacri refunding. 3 zelzoi 7AlbertnWebbnscuciato;Page 1 Uf3 I P a g e 9 2 o f 1 7 3 ATTACHMENTA CITYOF BEAUMONT CFD Program Fiscai and Budget Model Uses Fiscal Vear 2016-17 Information ,CFD No.93-1 Associated Improvement Areas 6 5 IA 17A IA 17A 5 IA 170 IA 170 5 IA 17: Improvement Area/CFD IA sc 5 IA so IA an 5 IA 85 IAas 5 IA 9 IA 9 5 IA 10 IA 10 5 I IA 11 I IA 11 s I IA 12 IA 12 s I IA 13 I IA 14 I IA 10A I IA 140 IA 14 5 IA 15 IA 16 iA 1 Improvement Area/CFDcharacteristics........,_..,...1'5 *F ’|'t s .i F2:my service Paciiity District Tyge 7 service Facility _service Faciiity service 7 Faciiity service 7 7FaciIity ieqice Facility 7 7 service FECIIIIL service I Service 7 Fa?iify Fa.i_Ii5y Faciiiry service Se:/iceFa;/ItyI $<r:\:‘L‘ea;AIy ei ice i _ Annual Escalation _ 7 V CPI 2%CPI 2°/V07 CPI 2% I CPI 2%CPI 2%CPI 2%CPI CPI/V__ 0%70 07 CPI _, Pi T7»_,,VT 7 , _Bondsissued /V v /?y _N ,0’¢V v _k v_V V T1 ‘’V 4 4 44 . Y — Fuily Bonded 7 _> 09/!N N /?fy v v )4 __ L__V 7 L4 4 4 ——V—— Fuiiy Developed /0547 N N v v _ _V Y .V __ V 44 :z —— —'2 i—'7 vEilgibieForRateReduction‘?g N /JW N v v v ___v A I __ V __W V V _40%M1 4 24404 241 e 7 488 388 '39;2'15 4444444 4 44 4 4 4444 44 u Number of Parcels 89 187 187 188 188 69 69 146 147 140 140 107 108 107 1,908 1,255 310 1,941 City Held Fund Aiiacatian [Balance as of 06/30/16) ,S — _DeI7tie[vice Due(09/01/2016) __Hi _4__i_3§,1_9s s _ 4 7_s_7_;__3 *4 sW3_7,2%3 _4 5 115,644 $ , ~,i 85.50073_g-$_7§,79§S —4:4 ‘ijigfg §— Estimated Pre0a_yment_S _-_S —__-___$_—__$-__$17,4_10_5_'5 - g 5 * _ 5 Z_§i920_i__“ _44 '4T—’3 7g FutureFjciIity(Restrict_ 7 if 77_ S — _ S —S —§7 -_$— _ $__» _ S —S - I S ,$_5 -$3 3 ’ is 4'4?s _$4 _$1090 317 _Parde_e_settIernent(ToD|FFlmd) __is _7 4 s_2_38,3_s13 _-7 _$”—_S _—,_$_,:5 ,, _~__i_-,,5:,,'5 §,',§,_:5 4 9;S 297 5394434264484?_4?:S 672427 5 _——$—418 if?'39216277 '$"'7 '_ RemaI'ningBa|ance S -$-S -$-8 —S -3 14,370 3 -$112,678 5 5 6,870 $-S 111.1 .i S sluoisms _3 96147615 .865461 31420017 Tota|’CityHeid Funds 5 4 $274,579 s 4 5 -5 37.294 s -$147,924 5 -$199,178 5 -s 112.586 5 -5 —510494551 517808.578 5 2192075 5 --v 1 I ' ..4 4 302.527 4 5 - FundsBaianceAva|lableForDiscussion s 4 s 4 s -s -s 4 s -s 4 s 14,270 5 -s11z.s7sIs 4 s 6.870 s 4 s 4 s 111.193 5 297.539 s 2.646 5 5 5 672,427 5 5 ‘"8-111 5 $5 I=v2016-17 Revenues ~;s —»~ §$*..'9'60.’3f2i‘:f$;897§27:2s‘?,201:~7zIsisi”29,’§151 1:‘"”‘'5' §’$'3$5:{i_E'f;E$}§;:§§1r.':?$$’.+‘i9.1i ‘‘ FY2015417 Expenses 790 188 I 5 _ e,2M,2er1§eivicePavment ,, ?g —,$,6,7i,045 ,5 -,$_,,;45 ”°425°544'5 'i is 302306 $'7:A 5 550594 ’*”:1io2oo’”’ __§ewic nce costsgd_Res_ervePu_nds $199_,8]0 _$_7__-$80,034 $55,929 3 L_-A _3_3,1:,31Q 5 5 4 ~—300'06 *5 ‘T’ ' AdministrativeEx_5 21,558 5 30,000 3 3,993 _$6,325 f S S 30,000 $2,§42_$3480 2 S 4:234:34:48/538 §— oeiinqu_en_eyReserve __ s__650 s 4 Is _4 s 4,s s s g V 5 1,683 s_gsso_1 '__..4 ,_4 44 44-4 ' —— —— _—m73 _448845 F”"'eFa°""V 3 '$363167 3 7 $310357 5 'S 7 S 'S @282 3 _s 49512 IS7 3 I S 7 S 7 S lam S 2,904 S 7263241975 5 21532123924,70131224443473,245 Total Expenses $222,070 $460,312 $39,927 $340,057 $63,754 5 63,259 $13,637 $211,907 $29,158 fs 201,745 $29,915 5 145,301 $34,000 $37,595 $876,054 $1,527,566 5 333,210 $565.3 ,....7 Estimated City Held Funds (Balance as of 09/02/2017)’_491 600 __ ProIectedAvaiiahieFundBa|ance(Est|mate0n|v)s 4 s 4 s 4 s 4 s 4 s 4 s 4 s 21,152 5 4 s 102,439 5 -3 14.99:;s 4 is -is 111.193 5 405,320 5 5.552 5 —$-$832.018 $-S 581593 5 5 -5 5 Preliminary Budget Reductions to Improvement Ar Scenario 1 -Reduction of Future Facilities Amount ...4 93.973 -- Tota|ReductioninAnnua|Levy __ A 3 4,5 s 4 5 -s ;,__i 6,232 i 4 5 49.312 5 -5 42.129s -5 -,5"~i E8-781%Jv9°“_:4 i:4 44:159:::44:1512224:—%——355 :_2 —— Averageizea_..nperP§er‘__s _.i V;s 4 5 4 s -_g 43:,s 356 s 5 -3 -5 4 87 94 ' 4 :44 44 ' 444 ' 1070,,000%300.; Average Percentage Reduction per Parcel 0.00%0.00%0.00%0.00%2.96%0.00%24.69%0.00%000%742%0-35‘/="-09%°t°‘7"4’=21-93%°'°°%1°36"/°°’°°%'' Scenario 2 4 Bond Refinancing‘___ TolaiReductioninAnnuaILevv W ___s_4 a s ,-5 1,533 (5 -gs 5.135 s ;5 3.077 s -s 2.533 s -s -$,374011 :,54159 ,:-:4 :' 4 :444:':4:_:_ Averageeeducrianperigarcei‘ I /__‘_s__,4V_,"s_V s -_,s 22 s -_,s 35 _s 4_s 22 5 -_$33 s »,5 -$, 19 _e 17 ''34 ’ 4 ‘ 4 ‘D ' 0W———o—o—‘%OW Average Percentage Reduction per Parcei 0.00%0.00%2.42%0.00%2.42%0.00%1.53%0.00%2,42%0.00%0.00%1.53%2.42%1.53%0.00%000/.0.00%0.00%0400/!)0.00%0..o Total Combined Reductions to Improvement Areas __98 973 __ fetalReductioninAnnua|Levy .5 3,445 s 4 s 5 1,52:s 11.41::,s -s sz.as9 s -__$_>,11,ss2 s‘;s -_S 13.362;1454802 87061.:-4:4_-:159:::4 1534::'554:-——_——:——— N Average Reduction per Parcel‘5’4 5 45 s 4 s s 22 5 73 ($7 -5 3737$-$__109 $- , $-$7 S 116 26 ,_ - , - _, ' 0 _T,4 00%10 my 44 000%ME Average Percentage Reduction per Parcel 0.00%1.33%0.00%2.42%5.39%0.00%26.22%0.00%0.00%0.00%0.00%1.53%9.54%2.30%.0.00%0.00%21.03%0.00/.15.962 0.. Revised Estimated Revenues w/Reduction Applied ‘72153-?i517'ZiTa,?3'|'I§‘§IZ3?‘i7?%‘ ’ ' 473..y.e_res,e§P41¢v‘‘iI>eI'.E’er.' 15113352745525200089.:2'09:13:!iisiazarssai ¥s‘.‘.'1’fzi1““9Ts7,k'sE’§&:'3'7_5_1¥.‘.?§71§_§§IE$'%1}&T3§"'7 55?N31‘: NAB; ‘iA'seiiglbie for rate reductian meet the faiiowing Criteria:iIfu 2AverageLevy per Parcei based on muitiple classifications and I ’Estimatedcity Heid Fund balance as of 09/02/2017represent: ‘AverageReduction per Parcei for iiiustratian aniy,Actual redu ‘TheCity wiII review options which may Ied to the eiiminatiani .~23i:0I7 AiberirkWebb ,-tssociaies Pa0e20f3 P a g e 9 3 o f 1 7 3 ATTACHMENTA CITYOF BEAUMONT CFD Program Fiscal and Budget Model Uses Fiscal Vear 2016-17 Information Ncm lila.2o1s-1 | Improvement Area/CFD IA 17CS IA 18 IA 185 IA 19A IA l9AS IA 19C IA 19CS IA 20 I IA 205 IA 23 2016-1 |_2IJ16-1S Total J%ofTntaI improvement Area/CFDcharacteristics Distri?/ge ii? Service Facility Se;/ice’Facilit,service Facility service Facility service service 7 Facility service —_V — Annual Escalation 7 7 _CPI _ 2%CPI 0%’CPI , 5 , ’. 7Bon(15Issued _____ ,y/7 v 1",,7,' , Fuliy Bonded _AW i N i , Fullyoeveloped __ 7 _r N , 7 , ‘ t:"‘,,,,,/ , V ,,, 1‘——“— M e——‘——‘— Number orParceis 215 193 194 543 545 669 559 105 105 55 10 10 23,500 — city Held Fund Allocation (Balance as of 06/30/16) _ _0e_ot§e_rvice Due 109/01/2015l_ ____ _____$—$295,772_:_;5 1,11§g L ,5, , ,5 ,2 5,,5 -,511iP35r,7§,,41,”/: Estimated Prepayment $-$22,200 $—5 131,400 5 5 _ _$—§5 ,5 4-5“°v5Z7,,,1L/° 7 7 S ‘,7 §~ T 3'' $5 —S 5,1507.55,“% ”’'5 .5’2 3"”5’s ‘I '3 , ,s 03.512_,1z% Remaining Balance T’7 $—$254,455 75 7 - ’ $623,312’577/5 5 1,523,330 S S —S 5 5.581.393 24% Total city Held Funds 5 -$573,425 5 .5 1,570,725 5 —5 2,505,757 5 -5 251,953 $-S 5 26,925,137 Funds BaIanceAvaIIabIe Forniscusslcn s e $254,455 $-$523,312 $-5 1,523,330 5 -$107,233 $-$-$-$-5 6,581,393 FV Z016-17 Revenues zeli 166 .3 E5923 .1i‘I.&ye.ralz‘eI|?5.l7y:we3"r‘fc'§l?..,-,.‘I531 FY2015-17 Expenses __2017_gelgervice Payment _____W ___ _$— V s 1,sg2_,425 $—_$2,045,725i_7—_$237,27§V_$7-3 ;_$_— _gvicesMaiLnance§ostsano Reserve Funds $54,_t;1_7_s__—$155,542;_s ___—_$190,529 $_a _$30,153 _$z1,74 S — _,___ 3 5,766 $30300 $35,935 $£3,000,5 19,552_L$30,000 $3,355 is 2,354 7$19,g4 _ggiguency Reserve ________V 5 $325 75 9,527 3 1,300 _s 14,225 S »1,e2s__s .i —S —§_— _,_,,, Future Facility 3 S —3 337,114 $»$282,924 3 -S 29,265 S -S -S —$4386.987 rotalexpenses $70,939 $490,618 560,508 $1,929,155 $172,331 5 2,375,074 $211,755 $295,543 $33,553 $23,638 $19,234 $3,140 $25,400,430 estirnateri city Held Funds (Balance as of 09/02/2017)‘ Pra]el:tedAvaIlabIeFund BaIance(EstImate0ri|y)5 —$327,862 3 -$1,010,426 5 -$1,006,754 5 -5136.543 s -S —$—$-5 8.551.572 I Preliminary Budget Reductions to Improvement Ari Scenario 1 —Reduction of Future Facilities Amount T TotalkeductioninAnnua|I.evy ____ $7_.$73,40_77_$» 7 _$337,114 $-__$232,924 $-5 29.265 §-$» 7 5 -_$_-$1.97,”-179 ,, Average Reduction per parcel‘ _____¥s ~5 330 s .My;713 s ~is 423 s ,-_5 276 s -$- _ 5 -_$_- ,, Average Percentage Reduction per Parcel 0.00%14.95%0.00%20.07%0.00%11.91%0.00%9.37%F0.00%0.00%0.00%0.00% Scenario 2 -Bond Re?nancing‘ Total Reduction inAnnualLevy_ _W W _$_V-5 -_$- 7 5 -s -5 245,525 5 _; 7 $—_$7 -$-S -_$-$1.120.445 I,,, Average ite_du_ctionper igarcel‘5 .5 .__s —s_._s -_$357 s __»_ s a 5 —$-__,_$-3;__,, Average Percentage Reduction per Parcel 0.00%0.00%0.00%0.00%0.00%10.33%0.00%0.00%0.00%0.00%0.00%0.00% Total Combined Reductions to Improvement Areas TntaIReductioninAnnn?Levy 7 ___ i_-5 73,407 $337,114 5 - _ $523,450 3 -S 29.265 S -S $-S -S 3,090,624 Average Reducticln per parcel‘ V ____ j__.5 _s 713 $- _5 790 5 _-$276_P-$,_-5 —_$- ,F_ Average Percentage Reduction per Parcel 0.00%20.07%0.00%22.24%0.00%9.07%0.00%0.00%0.00%0.00% Revised Estimated Revenues w/Reduction Applied “iv:-zaiis‘7“'7"*7 ;”'“”“$.’s0,’9.'If87.._”is12J_r2»’7s:_.:2mr:e”E‘e3““”"<"”"evv.r.er.te..037»'Fs§E.’s’,?'5IZ$. N_0¢A ‘lA'seligible tor rate reduction meet the foiiowing criteria:i)ru 2A\/erageLevy per Parcei based on multiple cizssifications and l ‘Estimatedcity Held Fund baiance as ores/02/2017 representi “AverageReduction per Parcel far illustration only.Actual redu ‘Thecity will review options which may ied to the elimination. 3 23i20i7 Alton A ‘NebbAssociate;Page 3 of 3 P a g e 9 4 o f 1 7 3 O:<o__wmmcaaos. Oo33::=<_umo=_:mmU_m=._o»8-.can:P.o2_m>:mn=3m3w, nm=._:a__._m oaaama w.m.:m .53:Dmmmoa= 2a._..§=.a_=n nmaa?mam E68..o:§m:%:u_u::n_um.mmlmmzm_3m<mm«_$__2.?aw._sm:==<Oocuonmanna28:Om:um?_3u3<m.:m:.EmmiEu3gaze wmlmm32>_.N...m23mm6%$.$m.ooo?oo?.>:<Um?N»_um_. mmaom~83 . m) .....meow..$.33........5me\Tm.mo..\w... Dunnm:um_..,.T 9:888>mi388Smuaboo.88woo:.we:m:w.<»».mm. wasM28 .___..... ... .A 7 .. . ‘I BeA ....?_§.?..._§... ....T... W...,§....§.39:am..... $1888>soa ...88..§..§_a.._..~,_..d.:..§....e_g....»..<.om..a...~,_...._u._2 m2.8noomu ........... 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E._.:n8<m3m:.33503.3.woaamEvmn._>_u.uD>< _ m Page 95 of 173 _.u1<mnmEmomami<m.._._.mn=:o:m__<_::.o.Um_mozam A .P41.<...€r,31.«(3.r:n.\»v..l,!...muI..q..év<...c.Jx~Zn..¢.Il.o}!..\11.?/..3.if:.... ‘.4~\"II4(“_1v...ws«! >:mn:3m_.:n §_.§a 2o33%1mo_:__,ma 53:3o:-mo3@a_mo_omSm:.5:=m3m3m<<3_O3 «macomm__m_u=:<0+:o:-oo3u:m:om* oOcm3m1<munm:::m_zsmznimwmia=mo:<8 S<mw8«w.sozmmwamo3<o_<m3m3 _ro<<m1mm:m:omnow”SovombmUamumqmzos oomwm.::Qm2<3m«.wooc:wm_..mmmmag«maze m@m3o<Ewmv ®m:mE=<30$smoozmimman:wx=u_m2:: «mmumo».8_um<3m3#mncm3o<.om:+mmE8m. «manage:owm__3_:m:o:Sommmoo<m:m3 Bouaomzozm.?mmmman33.. 136.‘mxmoczosas1Amam<mv\_mmmm?m23¢ «magma rmmm_:<o_<m3m30*mam:23mmanwmmocaomm mm?m_ooxwEw:m__<81moQm<mv3.6%338% $6am: rmmm3:03.min.o_mm1_<338$36wan oo<m:m2m msoz...m:o«2romsw6m:m1m__<S;m.<mm:mv Oo:m.:m.2m0:m3oc3m32333Um<<____:©.8 .853m<m_moUm:3:_:o 00383m3o:©_:<mm8..wmin$35mmmz?mw =6:_mox3EgoQ_mo_omEm_3vm:m=6:mU__:< 8mmmmwmmUo?oémxm9.8:Uxoam _mm:o..3cm»czamwm?mza«mm:.m8_‘<mxvmo?mzozm ?owUmzxw5m:94?9.60.”_m:a_:m >:o=_m2Ucmimmm8nc=.m3m2m9.mo3m5.33 mxmoczosmax _u_\m3_c33m<UmEaoo3Um$Q8Uc.u__oommasm. ‘02¢:Emmin=mo_ow:_.moosomazm.mmomanmm.3<¢m:mm:o=m‘Emn.._U__o3m2$..m<<_____xm_<«mn_c_$w¢<m_1m_<362a.mo_om:$oo:..u_.m:oo9.9 8m__o<<3©Bmqxm»moommw.8om_u:m_. 22¢.Eta»Lmasma..m26:?mcuREa .m:m>...mocM_o3.3.um~._.:.:mQ3.Q=..§.mn.mmmama‘himQé?nmbmn3m&<mamaQ‘,.53$mzasmsa.~m:mum«m:3\manan339%a$2uamnzommuuxomn:8.823&2bcazmmmQoo:3m:~m:o:8m§§\..mQmn_.mQEm3m::m~ Eumn,_>nmm>< _ 3 Page 96 of 173 Strength through History & Innovation CFD Program March 27, 2017 P a g e 9 7 o f 1 7 3 California Statistics CFD use in California 1.Mello-Roos Community Facilities Act of 1982 California Government Code Section 53311 2.Statewide 891 agencies 1,392 separate bond issues totaling $16.1B outstanding 3.Riverside County 40 agencies 319 separate CFDs $2.9B bonds outstanding 4.City of Beaumont 1 CFD comprised of approx. 72 Improvement Areas (IA) 4 stand alone CFDs and counting 29 bonded IAs $208.1M bonds outstanding (as of 9/2/2015) Source: Items 2 & 3 above per California Debt and Investment Advisory Commission (CDIAC) California Mello- Roos CFD Yearly Fiscal Status Report 2012-2013 P a g e 9 8 o f 1 7 3 Scope of the Presentation The City’s CFD Program Includes Two Types of CFD/IA 1.Facilities –Issues bonds, matures, and finances the construction/acquisition of facilities 2.Services –Cannot issue bonds, generally does not mature, pays for the annual maintenance costs associated with landscaping, lighting, parks, streets, drainage, etc. New CFDs include police, fire, paramedic, and ambulance services Primary Focus of the Presentation is the Facilities IAs Services information is included in the budget for reference P a g e 9 9 o f 1 7 3 Special Tax Requirement -Defined How are the special taxes calculated each year? The Special Tax Requirement –means the amount required in any Fiscal Year to pay: (i) the debt service or the periodic costs on all outstanding Bonds due in the Calendar Year that commences in such Fiscal Year, (ii) Administrative Expenses, (iii) the costs associated with the release of funds from an escrow account, (iv) any amount required to establish or replenish any reserve funds established in association with the Bonds, (v) the collection or accumulation of funds for the acquisition or construction of facilities authorized by the CFD, less (vi) any amounts available to pay debt service or other periodic costs on the Bonds pursuant to any applicable bond Indenture, fiscal agent agreement, or trust agreement. P a g e 1 0 0 o f 1 7 3 Calculating the Special Tax Requirement Calculating the Special Tax Requirement =‘s Creating a Budget The Calculation (or Budget) can include the following: Past Calculation Practices: Debt Service Payment + Administrative Expense + Delinquency Reserve + Future Facilities = Special Tax Requirement An Option Moving Forward: Debt Service Payment + Administrative Expense + Delinquency Reserve + Future Facilities (or Reducing Future Facilities) = Reduced Special Tax Requirement P a g e 1 0 1 o f 1 7 3 Why this is important? Why are we explaining the Special Tax Requirement (or Budget)? Answer: Reduced Special Tax Requirement Reduced Special Tax Rates = P a g e 1 0 2 o f 1 7 3 IA Eligibility Needs to be Case by Case! Not All IAs are Eligible –The Criteria for Reduction To be eligible an IA must be both: 1.Fully Developed; and 2.Have all Bonds Issued Simple Test: If Both #’s 1 & 2 = True, Then Eligible If Either # 1 or 2 = False, Then Future Facilities Remains Reasons: Funds collected now used to offset future bonding Less Bonds =‘s Lower Taxes Could be Requirement with Developer Creates a Consistent Tax for Property Owners P a g e 1 0 3 o f 1 7 3 What a Budget Means Real World Examples -Illustration using FY 2016-17 Budget with Proposed Reductions ***Example only. FY 2016-17 special taxes have already been enrolled.*** Description IA 16 (Column AT) IA 19A (Column BD) Eligible For Rate Reduction(1)Yes Yes Number of Parcels 240 543 FY16-17 Expenses/Special Tax Revenues IA 16 Total IA 19A Total 2017 Debt Service Payment $ 560,594 $ 1,502,425 Administrative Expenses $ 30,000 $ 30,000 Delinquency Reserve $ 8,538 $ 9,627 Future Facility $ 159,591 $ 387,114 Total Expenses (FY16-17 Tax Revenues)$ 758,722 $ 1,929,165 Avg Levy per Parcel(2)$ 3,161 $ 3,553 Removal of Future Facility $ 159,591 $ 387,114 Avg Reduction per Parcel(3)$ 665 $ 713 Avg % Reduction per Parcel 21%20% Alternate FY16-17 Tax Revenues $ 599,131 $ 1,542,052 Avg Levy per Parcel(3)$ 2,496 $ 2,840 (1)IAs eligible for rate reduction meet the following criteria: i) fully developed and ii) fully bonded. (2)Average based on aggregate tax rates. Individual property within each IA may have had higher/lower actual rates. (3)Reduction based on aggregate savings. Individual IAs as well as property within each IA may result in more or less savings. P a g e 1 0 4 o f 1 7 3 What this Means A Look at the Total Potential -Illustration using FY 2016-17 Budget with Proposed Reductions ***Example only. FY 2016-17 special taxes have already been enrolled.*** Budget Category Total 2017 Debt Service Payment $ 16,597,166 Services Maintenance Costs $ 3,068,198 Administrative Expenses $ 1,181,932 Delinquency Reserve $ 166,155 Future Facility $ 4,386,987 Total Budget $ 25,400,438 Reduction Category Total Removal of Pay-Go from Built Out IAs $ 1,970,179 Refunding of Select IA Bonds $ 1,120,445 Combined Potential Savings $ 3,090,624 Revised Budget $ 22,309,814 Percent Reduction(1)12% (1)Reduction based on aggregate savings. Individual IAs as well as property within each IA may result in more or less savings. P a g e 1 0 5 o f 1 7 3 Past Accounting of CFD Funds 1.CFD Fund Accounting –Past Practices Not tracked by Improvement Area (IA) Lumped together in one account Historic uses of funds are not clear 2.Clean Up and Moving Forward City attempt at separating the funds Allocated into the following categories (Balance as of 6/30/2016) Debt Service (9/1/2016) Estimated Prepayments Collected Future Facilities (Restricted Funds) Pardee Settlement (To DIF Fund) Reserve Remaining Balance Moving forward all funds will be held in separate IA accounts P a g e 1 0 6 o f 1 7 3 CFD Funds Allocation Methodology and Definitions for Allocating 6/30/2016 Funds 1.Debt Service –amount required to pay the principal and interest due on 9/1/2016 2.Estimated Prepayments –amount estimated to have been collected from property’s which prepaid their CFD taxes 3.Future Facilities –funds collected for the acquisition or construction of facilities 4.Pardee Funds –funds collected from select Pardee IAs to be transferred to the City’s DIF fund 5.Reserve –funds to be held until all obligations are identified and satisfied 6.Remaining Balance –use of these funds to be discussed and subject to change pursuant to identified obligations P a g e 1 0 7 o f 1 7 3 CFD Funds Allocation (cont.) Our Best Effort -Estimate and accounting of funds held as of 6/30/2016: ***The following is an estimate based on available information.*** Let’s take a look at the budget file and see the total picture! Fund Category Total Debt Service Due (09/01/2016)$ 11,086,755 Estimated Prepayment $ 4,540,827 Future Facility (Restricted -City to Hold)$ 1,507,650 Pardee Settlement (To DIF Fund)$ 3,208,512 Reserve $ 6,000,000 Remaining Balance $ 6,581,393 Total $ 32,925,137 P a g e 1 0 8 o f 1 7 3 MINNEAPOLIS | BOSTON | CHICAGO | LONDON | LOS ANGELES | NEW YORK | SAN FRANCISCO | ZURICH March 27, 2017 City of Beaumont Community Facilities District No. 93-1 Workshop (Refunding Analysis, Process and Opportunities) P a g e 1 0 9 o f 1 7 3 Required Regulatory Disclosure Piper Jaffray is providing the information contained herein for discussion purposes only in anticipation of being engaged to serve as underwriter or placement agent on a future transaction and not as a financial advisor or municipal advisor. In providing the information contained herein, Piper Jaffray is not recommending an action to you and the information provided herein is not intended to be and should not be construed as a “recommendation” or “advice” within the meaning of Section 15B of the Securities Exchange Act of 1934. Piper Jaffray is not acting as an advisor to you and does not owe a fiduciary duty pursuant to Section 15B of the Exchange Act or under any state law to you with respect to the information and material contained in this communication. As an underwriter or placement agent, Piper Jaffray’s primary role is to purchase or arrange for the placement of securities with a view to distribution in an arm’s -length commercial transaction, is acting for its own interests and has financial and other interests that differ from your interests. You should discuss any information and material contained in this communication with any and all internal or external advisors and experts that you deem appropriate before acting on this information or material. The information contained herein may include hypothetical interest rates or interest rate savings for a potential refunding. Interest rates used herein take into consideration conditions in today’s market and other factual information such as credit rating, geographic location and market sector. Interest rates described herein should not be viewed as rates that Piper Jaffray expects to achieve for you should we be selected to act as your underwriter or placement agent. Information about interest rates and terms for SLGs is based on current publically available information and treasury or agency rates for open-market escrows are based on current market interest rates for these types of credits and should not be seen as costs or rates that Piper Jaffrey could achieve for you should we be selected to act as your underwriter or placement agent. More particularized information and analysis may be provided after you have engaged Piper Jaffray as an underwriter or placement agent or under certain other exceptions as describe in the Section 15B of the Exchange Act. P a g e 1 1 0 o f 1 7 3 Table of Contents I.Executive Summary II.Refunding Basics III.Private Placement Process IV.CFD No. 93-1 Refunding Opportunities Appendix A: CFD No. 93-1 Refunding Cash flows P a g e 1 1 1 o f 1 7 3 Section I Executive Summary P a g e 1 1 2 o f 1 7 3 PIPER JAFFRAY | 5 City of Beaumont Community Facilities District 93-1 Debt Profile Series Name CFD 93-1 Improvement Area(s) Year Issued Outstanding Principal (as of 9/30/16) Final Maturity Coupon Range Next Call Date Refunding Candidate Status Main Reason if Not Refunding Candidate Series 1994A 1,2,4,5 and 6B 1994 $3,885,000 2023 7.00% Any Date at Par Yes Series 2004C 8A 2005 $7,235,000 2035 4.75% – 5.50% Any Date at Par Yes Series 2005A 6A1 (1) 2005 $15,370,000 2035 5.00% - 5.70% 9/1/17 at Par (Any Date) Yes Series 2005C 6A1 (1) 2005 $17,940,000 2035 5.00% - 5.50% Any Date at Par Yes Series 2006A 19C (2) 2006 $13,230,000 2036 5.00% - 5.35% Any Date at Par Yes Series 2006B 8B 2006 $6,655,000 2037 4.70% - 5.05% Any Date at Par Yes Series 2007A 3, 11, 14, 14B 2007 $15,695,000 2037 4.00% - 4.625% 9/1/17 at Par (Any Date) Yes Series 2007B 8 2007 $8,590,000 2032 4.00 – 4.375% 9/1/17 at Par (Any Date) Yes Series 2007C 9, 10A, 12A, 14A 2007 $18,190,000 2033 4.25% - 5.00% 9/1/17 – 8/31/18 at 101%; 9/1/18 at Par Yes Series 2007E 8C 2007 $6,295,000 2038 5.00% - 6.25% Any Date at Par Yes Series 2008A 19C (2) 2008 $3,960,000 2036 5.75% - 6.875% Any Date at Par Yes Series 2009B 8D 2009 $715,000 2039 8.50% - 8.875% Any Date at Par Yes Series 2011A 17B 2011 $12,110,000 2042 5.00 – 6.375% 9/1/21 at Par No > 1 year to call Series 2012A 8C 2012 $5,650,000 2042 4.5% - 5.875% 9/1/22 at Par No > 1 year to call Series 2012B 20 2012 $3,160,000 2035 5.00 – 5.95% 9/1/22 at Par No > 1 year to call Series 2012C 7B, 7C 2012 $3,535,000 2039 4.00 – 5.25% 9/1/22 at Par No > 1 year to call Series 2013A 19C (2) 2013 $7,305,000 2036 5.00% 9/1/23 at Par No > 1 year to call Series 2013B 17A 2013 $9,820,000 2034 5.00% 9/1/23 at Par No > 1 year to call Series 2015A 7A1 2015 $10,660,000 2045 3.75 – 5.00% 9/1/25 at Par No > 1 year to call Series 2015B 19A 2015 $19,110,000 2035 3.125% - 5.00% 9/1/25 at Par No > 1 year to call Series 2015C 18 2015 $4,950,000 2034 3.50% - 4.125% 9/1/25 at Par No > 1 year to call Series 2015D 16 2015 $7,280,000 2034 3.50% - 4.25% 9/1/25 at Par No > 1 year to call (1)Improvement Area 6A1 Parity Bonds; (2)Improvement Area 19C Parity Bonds P a g e 1 1 3 o f 1 7 3 Section II Refunding Basics P a g e 1 1 4 o f 1 7 3 PIPER JAFFRAY | 7 Types of Refundings Advance Refunding Issued > 90 days prior to bonds being retired Current Refunding Issued < 90 days prior to bonds being retired Limitations: Tax Exempt Bonds are only allowed one advance refunding No limitation on number of current refundings P a g e 1 1 5 o f 1 7 3 PIPER JAFFRAY | 8 Policy Considerations Savings Threshold Levels Industry Standard of 3% NPV Savings (Current) and 5% NPV Savings (Advance) Actual ($) savings per homeowner annually (CFD’s and Assessment Districts) Other goals of the Issuer “Pay-Go” for future facilities Creating level debt service Removing restrictive covenants from the Indenture Negative Arbitrage P a g e 1 1 6 o f 1 7 3 PIPER JAFFRAY | 9 Call Provisions Optional Redemption Used for refundings Any Date or Any Interest Payment Date With or Without Premium Three Types 10 Year Par call Tiered Call Immediate Call Extraordinary Mandatory Redemption Prepayments P a g e 1 1 7 o f 1 7 3 PIPER JAFFRAY | 10 Optional Call Provisions 10 Years at Par Tiered Call Immediate Call Most typical call in current market Provides additional flexibility to Issuer Provides maximum flexibility to Issuer Preferred by institutional investors More acceptable to retail investors Primarily acceptable to retail investors Used primarily in transactions of < $10mm par Used primarily in transactions of < $10mm par Likely to pay a premium to investors Example: Example: Example: 9/1/27 at Par 9/1/24 and 3/1/25 at 103% 9/1/25 and 3/1/26 at 102% 9/1/26 and 3/1/27 at 101% 9/1/27 and thereafter at 100% Any Interest Payment date through and including 3/1/25 at 103% 9/1/25 and 3/1/26 at 102% 9/1/26 and 3/1/27 at 101% 9/1/27 and thereafter at 100% P a g e 1 1 8 o f 1 7 3 PIPER JAFFRAY | 11 Stand Alone v. Pool Refundings Stand Alone Refunding Each improvement area is refunded on a stand-alone basis with the exception of “Parity Bonds” which are pooled Cost of Issuance borne by each IA; can be more costly Pool Refunding Improvement areas are pooled together based on like credit characteristics or similar final maturities No cross collateralization from one IA to another IA (other than potentially the Debt Service Reserve Fund) Costs of Issuance are proportionately spread between pooled IAs; more efficient P a g e 1 1 9 o f 1 7 3 PIPER JAFFRAY | 12 Who’s Who on the Financing Team? Underwriter •Provides financial advice to the Issuer •Structures financing, sets prices, sells bonds to Investors Financial Advisor •Advises Issuer on pricing, terms, policy, etc. Bond Counsel •Provides legal advice to issuer on financing and drafts primary bond documents Rating Agency •Provides credit rating for the bonds, if applicable Trustee/Fiscal Agent •Commercial bank who administers bond payments and redemptions •May hold bond funds in trust on behalf of bondowners Disclosure Counsel •Prepares Official Statement describing the security and its risks for investors •Selects financing team •Determines borrowing needs and key parameters of debt •Authorizes issuance of bonds P a g e 1 2 0 o f 1 7 3 Section III Private Placement Process P a g e 1 2 1 o f 1 7 3 PIPER JAFFRAY | 14 Overview of Municipal Private Placement Issuance Source: SDC/Thomson Reuters. Note: not all private placements are publicly disclosed. Over the last 5 years, banks have increased their direct purchases of municipal credits Access to low cost capital and lack of attractive traditional commercial loan opportunities More profitable and assists in meeting loan growth targets Strong risk profiles and safety of municipal borrowers Heightened investment purchase due diligence (Dodd-Frank) Long-Term Municipal Private Placement Volume Year Par Amount ($ millions) # of Issues Avg. Par Amount ($ millions) 2012 12,503.0 585 21.37 2013 22,261.0 926 24.04 2014 23,891.4 966 24.73 2015 27,320.0 1,218 22.43 2016 27,662.8 1,255 22.04 2017 YTD 1,676.0 84 19.95 585 926 966 1,218 1,255 84 $0 $5,000 $10,000 $15,000 $20,000 $25,000 $30,000 2012 2013 2014 2015 2016 2017 YTD $ M i l l i o n s Long-Term Municipal Private Placement Volume 2012-2017YTD* Note: Figures above bars represent number of issues. 0.00 0.01 0.02 0.03 0.04 0.05 0.06 0.07 0.08 2008 2009 2010 2011 2012 2013 2014 2015 2016 Municipal Private Placement as % of Total Volume 2008-2016 P a g e 1 2 2 o f 1 7 3 PIPER JAFFRAY | 15 What is Private Placement? Qualifying Conditions of a Private Placement Generally sold to a single or limited number of accredited investors Offering must not be made through any form of general solicitation or advertising Piper Jaffray acts as Placement Agent not as Underwriter on the transaction Purchaser must have access to issuer information Direct Purchases structured more like a commercial loan than a security Specific rate secured for specific maturity rather than varying serial/term rates through life of bond for fixed rate transactions Actual physical delivery of executed Bonds, not issued under the book-entry system with DTC No CUSIPs No underlying ratings necessary No public disclosure or offering statements for the Bonds – No POS/OS No purchase contract Limited transferability and secondary market trading P a g e 1 2 3 o f 1 7 3 PIPER JAFFRAY | 16 Private Placement vs. Traditional Municipal Bonds Advantages Disadvantages No ratings required Limited on-going disclosure requirements which reduces liability of non-compliance* Lower issuance cost (no POS/OS preparation costs, underwriter’s counsel fees and rating agency fees) Generally more negotiable and flexible with respect to payment frequency, call features, reduction or elimination of DSRF, covenant modifications, fees and term Faster execution (30 – 45 days) /less staff time required Less involvement of staff time and resources Rate locks (usually 30 – 60 days) mitigate interest rate risk Less uniform and clearly defined terms and covenants Short Tenor of Loans (generally less than 20 years) Constraints on amounts banks may be willing to loan may also be limiting Concern among investors and rating agencies that lack of public disclosure impairs their ability to assess a borrower’s credit profile Issuer must understand regulatory expectations for banks that offer direct lending Ancillary business requirements of some lenders Execution Risk Premium may be paid compared to public offering * Given recent disclosure concerns, SEC and FBI investigations and the unavailability of 2016 audited financials, the City may not be able to access the public markets. Note: Piper Jaffray is highly supportive of disclosure and market transparency and recommends a best practice approach to post direct purchase documentation to EMMA (redacted in a manner analogous to that permitted for liquidity facilities under Rule G-34(c)) promptly after closing. P a g e 1 2 4 o f 1 7 3 PIPER JAFFRAY | 17 Cost of Issuance Comparison of Public Offering vs. Private Placement (1) With a Private Placement, the City could save approximately $40,000 - $50,000 in Costs of Issuance – Not Counting Valuable Staff Time Public Offering Private Placement (2) Prior Fees Paid Bond Counsel $55,000 $55,000 $60,700 Disclosure Counsel $30,000 X $30,000 Financial Advisor $50,000 $50,000 $73,200 Special Tax Consultant $25,000 $25,000 $25,000 Underwriters Counsel 6,000 X $10,000 Rating Agency (S&P) $15,000 Not Rated Not Rated Official Statement Printer $1,500 X $10,639 Bank Counsel X $6,000 X Paying Agent/COI Custodian (3) $3,500 $3,500 $5,954 Escrow Agent $500 $500 New Money Verification Agent $2,500 $2,500 New Money Other Expenses (CUSIP fee, PSA, BMA, Day Loan) $500 X $839 Total COI $189,500 $142,500 $216,332 Staff Time Required Greater Time Required Less Time Required (1)Estimated costs. Costs will vary if City uses a pooled approach. (2)Estimated fee for a Placement Agent is $30,000 per transaction as compared to 2.00% prior Underwriter’s Discount paid previously (Approx. $240,000 on a typical $12 million transaction. (3)Includes Trustee’s Counsel. P a g e 1 2 5 o f 1 7 3 PIPER JAFFRAY | 18 Private Placement Process Piper Jaffray will tailor a competitive and transparent process: Prepare the Term Sheet and relevant source documents Circulate documents to 10 – 15 Banks Prepare analysis of bids including: o Interest Rates o Prepayment Options o Covenant requests o Other relevant financial or legal provisions Piper Jaffray solicits interest from potential institutions and investors Once a lender or group of lenders is selected, a formal commitment and credit approval occurs Documentation will take approximately 4 weeks from formal commitment Optional redemption features are negotiated, and can often result in more favorable call features in comparison to public offerings Documentation will take approximately 4 weeks from formal commitment Terms are negotiated P a g e 1 2 6 o f 1 7 3 PIPER JAFFRAY | 19 Placement Schedule (1) (1) The schedule above could be compressed or extended depending on the goals and priorities of the City. Timing Activity Week 1 Placement Agent begins work on transaction Week 3 First draft of Bond Documents circulated Week 4 Draft Term Sheet/Request for Financing circulated to financing team members National Bank Placement Group compiles list of potential bank purchasers that will be sent Term Sheet/ Request for Financing Week 5 Comments and changes on Term Sheet/Request for Financing sent to Placement Agent National Bank Placement Group circulates Term Sheet/ Request for Financing to potential bank purchasers Week 7 Bank bids received Conference call to review bank bids, Bank selection made Week 9 Bank completes credit work Interest rate locked (assuming bank allows for 4 week lock. If shorter period, the rate lock will take place closer to the closing date) Week 13 Close Bonds P a g e 1 2 7 o f 1 7 3 Section IV CFD No. 93-1 Refunding Opportunities P a g e 1 2 8 o f 1 7 3 Beaumont Financing Authority Series 1994A (Improvement Areas 1, 2, 4, 5 and 6B) P a g e 1 2 9 o f 1 7 3 PIPER JAFFRAY | 22 Summary of Series 1994A Local Agency Revenue Bonds Matured Refunded Non - Callable Partially Refunded Term Blocks Series Series 1994 A Original Par $7,535,000 Dated Date 1/15/1994 Delivery Date 2/9/1994 1st IPD 9/1/1994 Outstanding $3,885,000 Due Date 1-Sep Ratings (M/SP/F) N/A Original Use of Proceeds New Money Maturity Par Amount Coupon 2017 390,000 7.000% 2018 440,000 7.000% 2019 490,000 7.000% 2020 545,000 7.000% 2021 605,000 7.000% 2022 670,000 7.000% 2023 745,000 7.000% 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 Redemption Features 9/1/2003-8/31/2004 @102% 9/1/2004-8/31/20058 @ 101% 9/1/2005 @100% Last CUSIP 074406AG P a g e 1 3 0 o f 1 7 3 PIPER JAFFRAY | 23 Credit Summary and Refunding Assumptions Refunding Assumptions: Direct placement with WAM of 3.87 years Direct lender indicative interest rate of 3.69% (70% of the 5 year LIBOR + 3.30 spread) FY 16-17 Special Taxes used to pay 9/1/17 Debt Service (1st coupon 3/1/18) Prior DSRF used in escrow New DSRF funded with cash at 10% of Par Cost of Issuance (estimate) of $150,000 Placement Agent Fee of $30,000 Savings analysis provided based on: Escalating debt service of 2% (uniform savings); and Level debt service (back-loaded savings) Premium of 126 bps compared to public offering FY 16-17 Levy composition: Improvement Areas 1, 2, 4, 5, and 6B Par Amount Outstanding (as of 2/15/17)* $3,885,000 Final Maturity of Bonds 9/1/2023 DSRF Balance $780,000.14 2016-17 AV $107,670,097 Special Taxes from All Property (FY 2016-17) $865,138 Maximum Special Taxes (FY 2016-17) $3,085,415 Actual Special Tax as % of Maximum Special Tax (FY 2016-17) 28.04% Special Tax Escalator Yes (2%) VTL (excluding Overlapping Debt) 27.71:1 FY 2015-16 Delinquency $0 Current Status of Development 1,085 Parcels (9 of which are Developed Parcels) IA 1 IA 2 IA 4 IA 5 IA 6B Debt Service $152,788 $15,089 $263,785 $269,123 $21,772 Administration 28,951 9,889 30,000 30,000 6,728 Delinquency Reserve 0 0 0 0 0 Future Facilities 0 0 16,662 20,410 0 * Partially refunded P a g e 1 3 1 o f 1 7 3 PIPER JAFFRAY | 24 Summary Statistics Savings Comparison Annual Per Parcel Debt Service Savings (Assumes 1,085 Parcels) Escalating Debt Service (Uniform Savings) Level Debt Service (Back Loaded Savings) Par of Refunding Bonds $3,225,000 $3,225,000 Reserve Fund $322,500 $322,500 NPV Savings ($) $207,645 $207,647 NPV Savings (%) 5.34% 5.34% Gross Savings ($) $751,419 $765,633 Average Annual Savings ($) $125,237 $127,605 Series 2017 Bond Debt Service $3,674,231 $3,660,017 TIC 3.96% 3.97% $0$50$100$150$200$250$300$350$400$450$500$550$600$650$700$750 20 1 8 20 1 9 20 2 0 20 2 1 20 2 2 20 2 3 Escalating Debt Service Savings per Parcel Actual Avg.Tax Levy per Parcel $0$50$100$150$200$250$300$350$400$450$500$550$600$650$700$750 20 1 8 20 1 9 20 2 0 20 2 1 20 2 2 20 2 3 Level Debt Service Savings per Parcel Actual Avg.Tax Levy per Parcel P a g e 1 3 2 o f 1 7 3 PIPER JAFFRAY | 25 Savings Comparison Uniform Savings 1A 1 IA 2 IA 4 IA 5 IA 6B Proportionate Share of Annual Special Tax 21.00% 2.89% 35.88% 36.93% 3.29% Proportionate Share of Gross Savings $157,798.15 $21,695.59 $269,639.64 $277,531.98 $24,753.64 Number of Parcels in IA 79 1 7 987 11 Number of Years to Maturity 6 6 6 6 6 Avg. Annual Savings p/IA $26,299.69 $3,615.93 $44,939.94 $46,255.33 $4,125.61 Avg. Annual Savings p/Parcel $332.91 $3,615.93 $6,419.99 $46.86 $375.06 P a g e 1 3 3 o f 1 7 3 Beaumont Financing Authority Series 2004C (Improvement Area 8A) P a g e 1 3 4 o f 1 7 3 PIPER JAFFRAY | 27 Summary of Series 2004C Local Agency Revenue Bonds Series Series 2004 C (Impt. No. 8A) Original Par $8,685,000 Dated Date 2/10/2005 Delivery Date 2/10/2005 1st IPD 9/1/2005 Outstanding $7,235,000 Due Date 1-Sep Ratings (M/SP/F) N/A Original Use of Proceeds New Money Maturity Par Amount Coupon 2017 230,000 4.750% 2018 240,000 5.000% 2019 255,000 5.000% 2020 265,000 5.125% 2021 280,000 5.125% 2022 295,000 5.250% 2023 310,000 5.500% 2024 325,000 5.500% 2025 345,000 5.500% 2026 365,000 5.500% 2027 385,000 5.500% 2028 405,000 5.500% 2029 430,000 5.500% 2030 450,000 5.500% 2031 475,000 5.500% 2032 500,000 5.500% 2033 530,000 5.500% 2034 560,000 5.500% 2035 590,000 5.500% 2036 2037 2038 2039 2040 2041 2042 Redemption Features 9/1/2014 – 8/31/2015 @ 102% 9/1/2015 – 8/31/2016 @101% 9/1/2016 – thereafter @ 100 Last CUSIP 074406EG0 Matured Refunded Non - Callable Partially Refunded Term Blocks P a g e 1 3 5 o f 1 7 3 PIPER JAFFRAY | 28 Credit Summary and Refunding Assumptions Improvement Area 8A Par Amount Outstanding (as of 2/15/17) $7,235,000 Final Maturity of Bonds 9/1/2035 DSRF Balance $624,872.92 2016-17 AV $100,268,737 Special Taxes from Developed Property (FY 2016-17) $ 772,304 Maximum Special Taxes (FY 2016-17) $835,518 Actual Special Tax as % of Maximum Special Tax (FY 2016-17) 92.43% Special Tax Escalator Yes (2%) VTL (excluding Overlapping Debt) 13.86:1 FY 2015-16 Delinquency $8,723 (2 Parcels) Current Status of Development 408 Developed Parcels Refunding Assumptions: Direct placement with WAM of 11.06 years Direct lender indicative interest rate of 4.08% (70% of the 10 year LIBOR + 3.40 spread) FY 16-17 Special Taxes used to pay 9/1/17 Debt Service (1st coupon 3/1/18) Prior DSRF used in escrow New DSRF funded with cash at 50% of Maximum Annual Debt Service (MADS) Cost of Issuance (estimate) of $150,000 Placement Agent Fee of $30,000 Savings analysis provided based on: Level debt service (uniform savings); prior debt service was level Premium of 20 bps compared to public offering FY 16-17 Levy composition: Debt Service $620,944 Administration 30,000 Delinquency Reserve 5,680 Future Facilities 115,681 P a g e 1 3 6 o f 1 7 3 PIPER JAFFRAY | 29 Summary Statistics Savings Comparison Annual Per Parcel Debt Service Savings (Assumes 408 Parcels) Level Debt Service (Uniform Savings) Par of Refunding Bonds $6,845,000 Reserve Fund $274,538 NPV Savings ($) $616,794 NPV Savings (%) 8.53% Gross Savings ($) $1,376,836 Average Annual Savings ($) $76,491 Average Annual Savings p/Parcel ($) $187.50 Series 2017 Bond Debt Service $9,815,820 TIC 4.13% $0 $250 $500 $750 $1,000 $1,250 $1,500 20 1 8 20 1 9 20 2 0 20 2 1 20 2 2 20 2 3 20 2 4 20 2 5 20 2 6 20 2 7 20 2 8 20 2 9 20 3 0 20 3 1 20 3 2 20 3 3 20 3 4 20 3 5 Escalating Debt Service Savings per Parcel Actual Avg.Tax Levy per Parcel Zoom In $0 $50 $100 $150 $200 $250 $300 20 1 8 20 1 9 20 2 0 20 2 1 20 2 2 20 2 3 20 2 4 20 2 5 20 2 6 20 2 7 20 2 8 20 2 9 20 3 0 20 3 1 20 3 2 20 3 3 20 3 4 20 3 5 P a g e 1 3 7 o f 1 7 3 Beaumont Financing Authority, Series 2005A and Series 2005C (Improvement Area 6A1) P a g e 1 3 8 o f 1 7 3 PIPER JAFFRAY | 31 Summary of Series 2005A and Series 2005C Local Agency Revenue Bonds P a g e 1 3 9 o f 1 7 3 PIPER JAFFRAY | 32 Summary of Series 2005A and Series 2005C Local Agency Revenue Bonds Series Series 2005 A (Impt. No. 6A1) Series 2005 C (Impt. No 6A1) Original Par $18,325,000 $19,155,000 Dated Date 2/24/2005 12/15/2005 Delivery Date 2/24/2005 12/15/2005 1st IPD 9/1/2005 3/1/2006 Outstanding $15,370,000 $17,940,000 Due Date 1-Sep 1-Sep Ratings (M/SP/F) N/A N/A Original Use of Proceeds Refunding New Money Maturity Par Amount Coupon Par Amount Coupon 2017 485,000 5.000% 320,000 5.000% 2018 505,000 5.000% 390,000 5.000% 2019 535,000 5.000% 460,000 5.000% 2020 560,000 5.000% 540,000 5.450% 2021 585,000 5.600% 630,000 5.450% 2022 620,000 5.600% 720,000 5.450% 2023 655,000 5.600% 815,000 5.450% 2024 690,000 5.600% 860,000 5.450% 2025 730,000 5.600% 905,000 5.450% 2026 770,000 5.650% 955,000 5.450% 2027 815,000 5.650% 1,010,000 5.450% 2028 860,000 5.650% 1,060,000 5.500% 2029 910,000 5.650% 1,120,000 5.500% 2030 960,000 5.650% 1,185,000 5.500% 2031 1,015,000 5.700% 1,250,000 5.500% 2032 1,075,000 5.700% 1,315,000 5.500% 2033 1,135,000 5.700% 1,390,000 5.500% 2034 1,200,000 5.700% 1,465,000 5.500% 2035 1,265,000 5.700% 1,550,000 5.500% 2036 2037 2038 2039 2040 Redemption Features 9/1/2015 – 8/31/2016 @ 102% 9/1/2016 – 8/31/2017 @101% 9/1/2017 – thereafter @ 100% 9/1/2012 – 8/31/2013 @ 102% 9/1/2013 – 8/31/2014 @101% 9/1/2014 – thereafter @ 100 Last CUSIP 074406ES 074406GE3 Matured Refunded Non - Callable Partially Refunded Term Blocks P a g e 1 4 0 o f 1 7 3 PIPER JAFFRAY | 33 Credit Summary and Refunding Assumptions Improvement Area 6A1 Series 2005A 2005C Par Amount Outstanding (as of 2/15/17) $15,370,000 $17,940,000 Final Maturity of Bonds 9/1/2035 9/1/2035 DSRF Balance $1,342,519.75 $1,634,641.73 2016-17 AV $245,523,192 Special Taxes from Developed Property (FY 2016-17) $2,798,259 Maximum Special Taxes (FY 2016-17) $3,067,902 Actual Special Tax as % of Maximum Special Tax (FY 2016-17) 91.21% Special Tax Escalator Yes (2%) VTL (excluding Overlapping Debt) 7.37:1 FY 2015-16 Delinquency $14,762 (5 parcels) Current Status of Development 954 Developed Parcels * Partially refunded Refunding Assumptions: Direct placement with WAM of 11.57 years Direct lender indicative interest rate of 4.10% (70% of the 10 year LIBOR + 3.43 spread) FY 16-17 Special Taxes used to pay 9/1/17 Debt Service (1st coupon 3/1/18) Prior DSRF used in escrow New DSRF funded with cash at 50% of Maximum Annual Debt Service (MADS) Cost of Issuance (estimate) of $150,000 Placement Agent Fee of $30,000 Savings analysis provided based on: Escalating debt service of 2% for Series 2005C through 2023 then leveling off (uniform savings); and Level debt service (back-loaded savings) Premium of 9 bps compared to public offering FY 16-17 Levy composition: Debt Service $2,638,965 Administration 30,000 Delinquency Reserve 18,865 Future Facilities 110,429 P a g e 1 4 1 o f 1 7 3 PIPER JAFFRAY | 34 Summary Statistics Savings Comparison Annual Per Parcel Debt Service Savings (Assumes 954 Parcels) Escalating Debt Service (Uniform Savings) Level Debt Service (Back Loaded Savings) Par of Refunding Bonds $31,030,000 $30,995,000 Reserve Fund $1,271,035 $1,237,968 NPV Savings ($) $3,757,163 $3,757,177 NPV Savings (%) 11.28% 11.28% Gross Savings ($) $7,802,839 $8,116,293 Average Annual Savings ($) $433,491 $450,905 Average Annual Savings p/Parcel ($) $454.40 $472.60 Series 2017 Bond Debt Service $44,818,674 $44,505,220 TIC 4.10% 4.10% $0 $500 $1,000 $1,500 $2,000 $2,500 $3,000 20 1 8 20 1 9 20 2 0 20 2 1 20 2 2 20 2 3 20 2 4 20 2 5 20 2 6 20 2 7 20 2 8 20 2 9 20 3 0 20 3 1 20 3 2 20 3 3 20 3 4 20 3 5 Escalating Debt Service Savings per Parcel Actual Avg.Tax Levy per Parcel $0 $500 $1,000 $1,500 $2,000 $2,500 $3,000 20 1 8 20 1 9 20 2 0 20 2 1 20 2 2 20 2 3 20 2 4 20 2 5 20 2 6 20 2 7 20 2 8 20 2 9 20 3 0 20 3 1 20 3 2 20 3 3 20 3 4 20 3 5 Level Debt Service Savings per Parcel Actual Avg.Tax Levy per Parcel P a g e 1 4 2 o f 1 7 3 Beaumont Financing Authority Series 2006A and 2008A (Improvement Area 19C) P a g e 1 4 3 o f 1 7 3 PIPER JAFFRAY | 36 Summary of Series 2006A and 2008A Local Agency Revenue Bonds P a g e 1 4 4 o f 1 7 3 PIPER JAFFRAY | 37 Summary of Series 2006A and 2008A Local Agency Revenue Bonds Series Series 2006A (Impt. No 19C) Series 2008A (Impt. No. 19C) Original Par $19,155,000 $4,090,000 Dated Date 12/15/2005 7/24/2008 Delivery Date 12/15/2005 7/24/2008 1st IPD 3/1/2006 3/1/2009 Outstanding $13,230,000 $3,960,000 Due Date 1-Sep 1-Sep Ratings (M/SP/F) N/A N/A Original Use of Proceeds New Money New Money Maturity Par Amount Coupon Par Amount Coupon 2017 225,000 5.000% 50,000 5.750% 2018 255,000 5.000% 60,000 5.875% 2019 285,000 5.000% 70,000 6.000% 2020 320,000 5.100% 80,000 6.000% 2021 360,000 5.150% 85,000 6.875% 2022 395,000 5.250% 105,000 6.875% 2023 435,000 5.350% 120,000 6.875% 2024 480,000 5.350% 135,000 6.875% 2025 530,000 5.350% 145,000 6.875% 2026 580,000 5.350% 165,000 6.875% 2027 635,000 5.350% 180,000 6.875% 2028 690,000 5.350% 205,000 6.875% 2029 750,000 5.350% 225,000 6.875% 2030 815,000 5.350% 250,000 6.875% 2031 880,000 5.350% 275,000 6.875% 2032 950,000 5.350% 305,000 6.875% 2033 1,030,000 5.350% 330,000 6.875% 2034 1,110,000 5.350% 365,000 6.875% 2035 1,195,000 5.350% 400,000 6.875% 2036 1,310,000 5.350% 410,000 6.875% 2037 2038 2039 2040 Redemption Features 9/1/2012 – 8/31/2013 @ 102% 9/1/2013 – 8/31/2014 @101% 9/1/2014 – thereafter @ 100 9/1/2012 – 8/31/2013 @ 102% 9/1/2013 – 8/31/2014 @101% 9/1/2014 – thereafter @ 100 Last CUSIP 074406GX1 074406LR Matured Refunded Non - Callable Partially Refunded Term Blocks NOTE: Series 2013A parity debt outstanding in an amount of $7,305,000 P a g e 1 4 5 o f 1 7 3 PIPER JAFFRAY | 38 Credit Summary and Refunding Assumptions Refunding Assumptions: Direct placement with WAM of 13.26 years Direct lender indicative interest rate of 4.14% (70% of the 15 year LIBOR + 3.32 spread) FY 16-17 Special Taxes used to pay 9/1/17 Debt Service (1st coupon 3/1/18) Prior DSRF used in escrow New DSRF funded with cash at 50% of (125% of Avg. Annual Debt Service) Cost of Issuance (estimate) of $150,000 Placement Agent Fee of $30,000 Savings analysis provided based on: Escalating debt service of 2% (uniform savings); and Level debt service (back-loaded savings) Premium of 5 bps compared to public offering FY 16-17 Levy composition: Debt Service $2,048,725 Administration 30,000 Delinquency Reserve 14,225 Future Facilities 282,924 Improvement Area 19C Series 2006A 2008A Par Amount Outstanding (as of 2/15/17) $13,230,000 $3,960,000 Final Maturity of Bonds 9/1/2036 9/1/2036 DSRF Balance $1,343,911.67 $409,000 2016-17 AV $200,578,407 Special Taxes from Developed Property (FY 2016-17) $2,375,874 Maximum Special Taxes (FY 2016-17) $2,659,225 Actual Special Tax as % of Maximum Special Tax (FY 2016-17) 89.34% Special Tax Escalator Yes (2%) VTL (excluding Overlapping Debt) 11.67:1 FY 2015-16 Delinquency $39,198 (7 parcels) Current Status of Development 669 Developed Parcels P a g e 1 4 6 o f 1 7 3 PIPER JAFFRAY | 39 Summary Statistics Savings Comparison Annual Per Parcel Debt Service Savings (Assumes 669 Parcels) Escalating Debt Service (Uniform Savings) Level Debt Service (Back Loaded Savings) Par of Refunding Bonds $16,170,000 $16,145,000 Reserve Fund $800,828 $777,031 NPV Savings ($) $2,246,949 $2,246,980 NPV Savings (%) 13.07% 13.07% Gross Savings ($) $4,665,002 $5,390,122 Average Annual Savings ($) $245,526 $283,691 Average Annual Savings p/Parcel ($) $367.00 $424.10 Series 2017 Bond Debt Service $24,402,128 $23,677,008 TIC 4.14% 4.14% $0 $500 $1,000 $1,500 $2,000 $2,500 20 1 8 20 1 9 20 2 0 20 2 1 20 2 2 20 2 3 20 2 4 20 2 5 20 2 6 20 2 7 20 2 8 20 2 9 20 3 0 20 3 1 20 3 2 20 3 3 20 3 4 20 3 5 20 3 6 Escalating Debt Service Savings per Parcel Actual Avg.Tax Levy per Parcel $0 $500 $1,000 $1,500 $2,000 $2,500 20 1 8 20 1 9 20 2 0 20 2 1 20 2 2 20 2 3 20 2 4 20 2 5 20 2 6 20 2 7 20 2 8 20 2 9 20 3 0 20 3 1 20 3 2 20 3 3 20 3 4 20 3 5 20 3 6 Level Debt Service Savings per Parcel Actual Avg.Tax Levy per Parcel P a g e 1 4 7 o f 1 7 3 Beaumont Financing Authority Series 2006B (Improvement Area 8B) P a g e 1 4 8 o f 1 7 3 PIPER JAFFRAY | 41 Summary of Series 2006B Local Agency Revenue Bonds Series Series 2006B (Impt. No. 8B) Original Par $7,110,000 Dated Date 11/16/2006 Delivery Date 11/16/2006 1st IPD 3/1/2017 Outstanding $6,655,000 Due Date 1-Sep Ratings (M/SP/F) N/A Original Use of Proceeds New Money Maturity Par Amount Coupon 2017 105,000 4.700% 2018 120,000 4.750% 2019 135,000 4.750% 2020 150,000 4.800% 2021 165,000 5.000% 2022 185,000 5.000% 2023 200,000 5.000% 2024 225,000 5.000% 2025 245,000 5.000% 2026 265,000 5.000% 2027 290,000 5.000% 2028 315,000 5.050% 2029 345,000 5.050% 2030 370,000 5.050% 2031 400,000 5.050% 2032 435,000 5.050% 2033 465,000 5.050% 2034 500,000 5.050% 2035 540,000 5.050% 2036 580,000 5.050% 2037 620,000 5.050% 2038 2039 Redemption Features 9/1/2008 – 8/31/2009 @ 103% 9/1/2009 – 8/31/2010 @102.5% 9/1/2010 – 8/31/2011 @102% 9/1/2011– 8/31/2012@101.5% 9/1/2012 – 8/31/2013 @101% 9/1/2013 – 8/31/2014 @100.5% 9/1/2014– thereafter @100% Last CUSIP 074406EG0 Matured Refunded Non - Callable Partially Refunded Term Blocks P a g e 1 4 9 o f 1 7 3 PIPER JAFFRAY | 42 Credit Summary and Refunding Assumptions Refunding Assumptions: Direct placement with WAM of 13.43 years Direct lender indicative interest rate of 4.16% (70% of the 15 year LIBOR + 3.35 spread) FY 16-17 Special Taxes used to pay 9/1/17 Debt Service (1st coupon 3/1/18) Prior DSRF used in escrow New DSRF funded with cash at 50% of (125% of Avg. Annual Debt Service) Cost of Issuance (estimate) of $150,000 Placement Agent Fee of $30,000 Savings analysis provided based on: Escalating debt service of 2% (uniform savings); and Level debt service (back-loaded savings) In order to have savings in every year, debt service is escalated through 2022 and then levels off Discount of 19 bps compared to public offering FY 16-17 Levy composition: Debt Service $438,783 Administration 30,000 Delinquency Reserve 6,518 Future Facilities 102,474 Improvement Area 8B Par Amount Outstanding (as of 2/15/17) $6,655,000 Final Maturity of Bonds 9/1/2037 2016-17 AV $48,667,184 DSRF Balance $651,777.06 Special Taxes from Developed Property (FY 2016-17) $577,775 Maximum Special Taxes (FY 2016-17) $707,657 Actual Special Tax as % of Maximum Special Tax (FY 2016-17) 81.65% Special Tax Escalator Yes (2%) VTL (excluding Overlapping Debt) 7.31:1 FY 2015-16 Delinquency $9,947 (1 parcel) Current Status of Development 192 Developed Parcels P a g e 1 5 0 o f 1 7 3 PIPER JAFFRAY | 43 Summary Statistics Savings Comparison Annual Per Parcel Debt Service Savings (Assumes 192 Parcels) Escalating Debt Service (Uniform Savings) Level Debt Service (Back Loaded Savings) Par of Refunding Bonds $6,395,000 $6,390,000 Reserve Fund $307,021 $299,057 NPV Savings ($) $356,402 $356,411 NPV Savings (%) 5.36% 5.36% Gross Savings ($) $1,041,665 $1,297,107 Average Annual Savings ($) $52,083 $64,855 Average Annual Savings p/Parcel ($) $271.30 $337.80 Series 2017 Bond Debt Service $9,846,520 $9,591,078 TIC 4.16% 4.16% $0 $500 $1,000 $1,500 $2,000 $2,500 $3,000 $3,500 20 1 8 20 1 9 20 2 0 20 2 1 20 2 2 20 2 3 20 2 4 20 2 5 20 2 6 20 2 7 20 2 8 20 2 9 20 3 0 20 3 1 20 3 2 20 3 3 20 3 4 20 3 5 20 3 6 20 3 7 Escalating Debt Service Savings per Parcel Actual Avg.Tax Levy per Parcel $0 $500 $1,000 $1,500 $2,000 $2,500 $3,000 20 1 8 20 1 9 20 2 0 20 2 1 20 2 2 20 2 3 20 2 4 20 2 5 20 2 6 20 2 7 20 2 8 20 2 9 20 3 0 20 3 1 20 3 2 20 3 3 20 3 4 20 3 5 20 3 6 20 3 7 Level Debt Service Savings per Parcel Actual Avg.Tax Levy per Parcel P a g e 1 5 1 o f 1 7 3 Beaumont Financing Authority Series 2007A (Improvement Area 3, 11, 14, & 14B) P a g e 1 5 2 o f 1 7 3 PIPER JAFFRAY | 45 Summary of Series 2007A Local Agency Revenue Bonds Series Series 2007A (Impt. No. 3, 11, 14, &14B) Original Par $21,175,000 Dated Date 1/31/2007 Delivery Date 1/31/2007 1st IPD 3/1/20 Outstanding $15,695,000 Due Date 1-Sep Ratings (M/SP/F) N/A Original Use of Proceeds New Money Maturity Par Coupon 2017 665,000 4.000% 2018 700,000 4.000% 2019 720,000 4.000% 2020 750,000 4.125% 2021 765,000 4.250% 2022 735,000 4.500% 2023 845,000 4.500% 2024 890,000 4.500% 2025 920,000 4.500% 2026 960,000 4.500% 2027 885,000 4.500% 2028 1,055,000 4.500% 2029 1,105,000 4.500% 2030 1,155,000 4.500% 2031 1,210,000 4.500% 2032 1,255,000 4.500% 2033 175,000 4.625% 2034 210,000 4.625% 2035 225,000 4.625% 2036 230,000 4.625% 2037 240,000 4.625% 2038 2039 Redemption Features 9/1/2017 @ Par Last CUSIP 074406JG5 Matured Refunded Non - Callable Partially Refunded Term Blocks P a g e 1 5 3 o f 1 7 3 PIPER JAFFRAY | 46 Credit Summary and Refunding Assumptions Improvement Area 3, 11, 14 & 14B Par Amount Outstanding (as of 2/15/17)* $15,695,000 Final Maturity of Bonds 9/1/2037 2016-17 AV $736,678,962 DSRF Balance $683,189.43 Special Taxes from All Property (FY 2016-17) $1,814,977 Maximum Special Taxes (FY 2016-17) $2,221,955 Actual Special Tax as % of Maximum Special Tax (FY 2016-17) 81.68% Special Tax Escalator Yes (2%) except IA 14 and 14B that have NO escalator VTL (excluding Overlapping Debt) 46.94:1 FY 2015-16 Delinquency $3,196 (1 parcel) Current Status of Development 2,865 Developed Parcels; 7 Undeveloped Parcels Refunding Assumptions: Direct placement with WAM of 9.55 years Direct lender indicative interest rate of 3.97% (70% of the 10 year LIBOR + 3.25 spread) FY 16-17 Special Taxes used to pay 9/1/17 Debt Service (1st coupon 3/1/18) Prior DSRF used in escrow New DSRF funded with cash at 50% Maximum Annual Debt Service (MADS) Cost of Issuance (estimate) of $150,000 Placement Agent Fee of $30,000 Savings analysis provided based on: Level debt service (uniform savings); prior debt service was level and dropped off in 2033 Premium of 5 bps compared to public offering FY 16-17 Levy composition: IA 3 IA 11 IA 14 IA 14B Debt Service $310,281 $120,250 $856,694 $302,906 Administration 30,000 30,000 4,274 30,000 Delinquency Reserve 2,475 1,683 15,086 2,400 Future Facilities 56,212 49,812 2,904 * Partially refunded P a g e 1 5 4 o f 1 7 3 PIPER JAFFRAY | 47 Summary Statistics Savings Comparison Annual Per Parcel Debt Service Savings (Assumes 2,882 Parcels) Level Debt Service (Uniform Savings) Par of Refunding Bonds $15,215,000 Reserve Fund $671,012 NPV Savings ($) $367,349 NPV Savings (%) 2.34% Gross Savings ($) $553,663 Average Annual Savings ($) $27,683 Average Annual Savings p/Parcel ($) $9.60 Series 2017 Bond Debt Service $20,886,988 TIC 3.97% Zoom In $0 $100 $200 $300 $400 $500 $600 20 1 8 20 1 9 20 2 0 20 2 1 20 2 2 20 2 3 20 2 4 20 2 5 20 2 6 20 2 7 20 2 8 20 2 9 20 3 0 20 3 1 20 3 2 20 3 3 20 3 4 20 3 5 20 3 6 Escalating Debt Service Savings per Parcel Actual Avg.Tax Levy per Parcel $0 $2 $4 $6 $8 $10 $12 $14 20 1 8 20 1 9 20 2 0 20 2 1 20 2 2 20 2 3 20 2 4 20 2 5 20 2 6 20 2 7 20 2 8 20 2 9 20 3 0 20 3 1 20 3 2 20 3 3 20 3 4 20 3 5 20 3 6 P a g e 1 5 5 o f 1 7 3 PIPER JAFFRAY | 48 Savings Comparison Uniform Savings 1A 3 IA 11 IA 14 IA 14B Proportionate Share of Annual Special Tax 21.98% 11.12% 48.27% 18.63% Proportionate Share of Gross Savings $121,706.13 $61,542.65 $267,242.05 $103,171.67 Number of Parcels in IA 513 140 1,908 311 Number of Years to Maturity 20 20 20 20 Avg. Annual Savings p/IA $6,085.31 $3,077.13 $13,362.10 $5,158.58 Avg. Annual Savings p/Parcel $11.86 $21.98 $7.00 $16.59 P a g e 1 5 6 o f 1 7 3 Beaumont Financing Authority Series 2007B (Improvement Area 8) P a g e 1 5 7 o f 1 7 3 PIPER JAFFRAY | 50 Summary of Series 2007B Local Agency Revenue Bonds Series Series 2007B (Impt. No. 8) Original Par $11,615,000 Dated Date 3/15/2007 Delivery Date 3/15/2007 1st IPD 9/1/2007 Outstanding $8,590,000 Due Date 1-Sep Ratings (M/SP/F) Aaa/AAA Original Use of Proceeds Refunding Maturity Par Coupon 2017 385,000 4.000% 2018 400,000 4.000% 2019 415,000 4.000% 2020 435,000 4.125% 2021 450,000 4.500% 2022 470,000 4.500% 2023 495,000 4.500% 2024 515,000 4.500% 2025 540,000 4.500% 2026 560,000 4.375% 2027 585,000 4.375% 2028 615,000 4.375% 2029 640,000 4.375% 2030 665,000 4.375% 2031 695,000 4.375% 2032 725,000 4.375% 2033 2034 2035 2036 2037 2038 2039 Redemption Features 9/1/2017 @ Par Last CUSIP 074406JY Matured Refunded Non - Callable Partially Refunded Term Blocks P a g e 1 5 8 o f 1 7 3 PIPER JAFFRAY | 51 Credit Summary and Refunding Assumptions Refunding Assumptions: Direct placement with WAM of 9.51 years Direct lender indicative interest rate of 3.97% (70% of the 10 year LIBOR + 3.25 spread) FY 16-17 Special Taxes used to pay 9/1/17 Debt Service (1st coupon 3/1/18) Prior DSRF used in escrow New DSRF funded with cash at 50% of Maximum Annual Debt Service (MADS) Cost of Issuance (estimate) of $150,000 Placement Agent Fee of $30,000 Savings analysis provided based on: Level debt service (uniform savings) Premium of 44 bps compared to public offering FY 16-17 Levy composition: Debt Service $826,988 Administration 30,000 Delinquency Reserve 10,978 Future Facilities 145,974 * Partially refunded Improvement Area 8 Par Amount Outstanding (as of 2/15/17) $8,590,000 Final Maturity of Bonds 9/1/2032 2016-17 AV $244,845,078 DSRF Balance $380,703.34 Special Taxes from Developed Property (FY 2016-17) $1,013,940 Maximum Special Taxes (FY 2016-17) $1,050,896 Actual Special Tax as % of Maximum Special Tax (FY 2016-17) 96.48% Special Tax Escalator No VTL (excluding Overlapping Debt) 28.5:1 FY 2015-16 Delinquency $17,614 (4 parcels) Current Status of Development 944 Developed Parcels P a g e 1 5 9 o f 1 7 3 PIPER JAFFRAY | 52 Summary Statistics Savings Comparison Annual Per Parcel Debt Service Savings (Assumes 944 Parcels) Level Debt Service (Uniform Savings) Par of Refunding Bonds $8,395,000 Reserve Fund $379,280 NPV Savings ($) $41,303 NPV Savings (%) 0.48% Gross Savings ($) $52,534 Average Annual Savings ($) $3,502 Average Annual Savings p/Parcel ($) $3.70 Series 2017 Bond Debt Service $11,320,617 TIC 3.97% $0 $100 $200 $300 $400 $500 $600 $700 $800 $900 20 1 8 20 1 9 20 2 0 20 2 1 20 2 2 20 2 3 20 2 4 20 2 5 20 2 6 20 2 7 20 2 8 20 2 9 20 3 0 20 3 1 20 3 2 Level Debt Service Savings per Parcel Actual Avg.Tax Levy per Parcel $0 $1 $2 $3 $4 $5 $6 $7 $8 $9 $10 20 1 8 20 1 9 20 2 0 20 2 1 20 2 2 20 2 3 20 2 4 20 2 5 20 2 6 20 2 7 20 2 8 20 2 9 20 3 0 20 3 1 20 3 2 Zoom In P a g e 1 6 0 o f 1 7 3 Beaumont Financing Authority Series 2007C (Improvement Area 9, 10A, 12A, & 14A) P a g e 1 6 1 o f 1 7 3 PIPER JAFFRAY | 54 Summary of Series 2007C Local Agency Revenue Bonds Series Series 2007C (Impt. No. 9, 10A, 12A, & 14A) Original Par $22,490,000 Dated Date 5/10/2007 Delivery Date 5/10/2007 1st IPD 9/1/2007 Outstanding $18,190,000 Due Date 1-Sep Ratings (M/SP/F) N/A Original Use of Proceeds New Money Maturity Par Coupon 2017 680,000 4.250% 2018 715,000 4.500% 2019 745,000 4.500% 2020 805,000 5.000% 2021 850,000 5.000% 2022 900,000 5.000% 2023 945,000 5.000% 2024 990,000 5.000% 2025 1,035,000 5.000% 2026 1,090,000 5.000% 2027 1,150,000 4.750% 2028 1,220,000 4.750% 2029 1,280,000 4.750% 2030 1,345,000 4.750% 2031 1,410,000 4.750% 2032 1,480,000 4.750% 2033 1,550,000 4.750% 2034 2035 2036 2037 2038 2039 Redemption Features 9/1/2015-8/31/2016 @ 103% 9/1/2016-8/31/2017 @102% 9/1/2017-8/31/2018 @ 101% 9/1/2018 @ 100% Last CUSIP 074406KQ1 Matured Refunded Non - Callable Partially Refunded Term Blocks P a g e 1 6 2 o f 1 7 3 PIPER JAFFRAY | 55 Credit Summary and Refunding Assumptions Improvement Area 9, 10A, 12A and 14 A Par Amount Outstanding (as of 2/15/17)* $18,190,000 Final Maturity of Bonds 9/1/2033 2016-17 AV $350,775,794 DSRF Balance $811,962.50 Special Taxes from Developed Property (FY 2016-17) $1,948,532 Maximum Special Taxes (FY 2016-17) $2,442,952 Actual Special Tax as % of Maximum Special Tax (FY 2016-17) 79.76% Special Tax Escalator Yes (2%) except IA 14A that has NO escalator VTL (excluding Overlapping Debt) 19.28:1 FY 2015-16 Delinquency $9,288 (2 parcels) Current Status of Development 1,576 Developed Parcels Refunding Assumptions: Direct placement with WAM of 9.70 years Direct lender indicative interest rate of 3.97% (70% of the 10 year LIBOR + 3.25 spread) FY 16-17 Special Taxes used to pay 9/1/17 Debt Service (1st coupon 3/1/18) Prior DSRF used in escrow (50% cash/50% surety) New DSRF funded with cash at 50% of (125% of Avg. Annual Debt Service) Cost of Issuance (estimate) of $150,000 Placement Agent Fee of $30,000 Savings analysis provided based on: Escalating debt service of 2% (uniform savings); and Level debt service (back-loaded savings) Premium of 18 bps compared to public offering FY 16-17 Levy composition: IA 9 IA 10 IA 12 IA 14A Debt Service $52,668 $174,928 $107,673 $1,377,235 Administration 9,710 30,000 4,274 30,000 Delinquency Reserve 881 698 0 11,550 Future Facilities 0 6,282 8,129 108,781 * Partially refunded P a g e 1 6 3 o f 1 7 3 PIPER JAFFRAY | 56 Summary Statistics Savings Comparison Annual Per Parcel Debt Service Savings (Assumes 1,567 Parcels) Escalating Debt Service (Uniform Savings) Level Debt Service (Back Loaded Savings) Par of Refunding Bonds $18,045,000 $18,040,000 Reserve Fund $966,764 $964,496 NPV Savings ($) $715,403 $715,406 NPV Savings (%) 3.93% 3.93% Gross Savings ($) $755,563 $813,770 Average Annual Savings ($) $47,223 $50,861 Series 2017 Bond Debt Service $24,817,899 $24,759,693 TIC 3.97% 3.97% $0 $200 $400 $600 $800 $1,000 $1,200 20 1 8 20 1 9 20 2 0 20 2 1 20 2 2 20 2 3 20 2 4 20 2 5 20 2 6 20 2 7 20 2 8 20 2 9 20 3 0 20 3 1 20 3 2 20 3 3 Escalating Debt Service Savings per Parcel Actual Avg.Tax Levy per Parcel $0 $200 $400 $600 $800 $1,000 $1,200 20 1 8 20 1 9 20 2 0 20 2 1 20 2 2 20 2 3 20 2 4 20 2 5 20 2 6 20 2 7 20 2 8 20 2 9 20 3 0 20 3 1 20 3 2 20 3 3 Level Debt Service Savings per Parcel Actual Avg.Tax Levy per Parcel P a g e 1 6 4 o f 1 7 3 PIPER JAFFRAY | 57 Savings Comparison Uniform Savings 1A 9 IA 10A IA 12 IA 14A Proportionate Share of Annual Special Tax 3.25% 10.88% 7.48% 78.40% Proportionate Share of Gross Savings $24,528.86 $82,169.08 $56,535.79 $592,329.27 Number of Parcels in IA 69 146 106 1,255 Number of Years to Maturity 16 16 16 16 Avg. Annual Savings p/IA $1,533.05 $5,135.57 $3,533.49 $37,020.58 Avg. Annual Savings p/Parcel $22.22 $35318 $33.33 $29.50 P a g e 1 6 5 o f 1 7 3 Beaumont Financing Authority Series 2007E (Improvement Area 8C) P a g e 1 6 6 o f 1 7 3 PIPER JAFFRAY | 59 Summary of Series 2007E Local Agency Revenue Bonds Series Series 2007E (Impt. No. 8c) Original Par $6,520,000 Dated Date 12/13/2007 Delivery Date 12/13/2007 1st IPD 3/1/2008 Outstanding $6,295,000 Due Date 1-Sep Ratings (M/SP/F) N/A Original Use of Proceeds New Money Maturity Par Coupon 2017 75,000 5.000% 2018 90,000 5.100% 2019 105,000 5.200% 2020 120,000 5.300% 2021 135,000 6.250% 2022 155,000 6.250% 2023 175,000 6.250% 2024 195,000 6.250% 2025 220,000 6.250% 2026 245,000 6.250% 2027 270,000 6.250% 2028 295,000 6.250% 2029 315,000 6.250% 2030 335,000 6.250% 2031 355,000 6.250% 2032 380,000 6.250% 2033 400,000 6.250% 2034 430,000 6.250% 2035 455,000 6.250% 2036 485,000 6.250% 2037 515,000 6.250% 2038 545,000 6.250% 2039 Redemption Features 9/1/2008 – 8/31/2009 @ 103% 9/1/2009 – 8/31/2010 @102.5% 9/1/2010 – 8/31/2011 @102% 9/1/2011– 8/31/2012@101.5% 9/1/2012 – 8/31/2013 @101% 9/1/2013 – 8/31/2014 @100.5% 9/1/2014– thereafter @100% Last CUSIP 074406LE Matured Refunded Non - Callable Partially Refunded Term Blocks P a g e 1 6 7 o f 1 7 3 PIPER JAFFRAY | 60 Credit Summary and Refunding Assumptions Improvement Area 8C Par Amount Outstanding (as of 2/15/17) $6,295,000 Final Maturity of Bonds 9/1/2038 2016-17 AV $200,892,346 DSRF Balance $582,292.25 Special Taxes from Developed Property (FY 2016-17) $1,613,148 Maximum Special Taxes (FY 2016-17) $1,718,902 Actual Special Tax as % of Maximum Special Tax (FY 2016-17) 93.85% Special Tax Escalator Yes (2%) VTL (excluding Overlapping Debt) 31.91:1 FY 2015-16 Delinquency $2,666 (1 parcel) Current Status of Development 655 Parcels (per budget from FA) Refunding Assumptions: Direct placement with WAM of 14.16 years Direct lender indicative interest rate of 4.16% (70% of the 15 year LIBOR + 3.35 spread) FY 16-17 Special Taxes used to pay 9/1/17 Debt Service (1st coupon 3/1/18) Prior DSRF used in escrow New DSRF funded with cash at 50% of (125% of Avg. Annual Debt Service) Cost of Issuance (estimate) of $150,000 Placement Agent Fee of $30,000 Savings analysis provided based on: Escalating debt service of 2% through 2027 when prior debt service levels out (uniform savings); and Level debt service (back-loaded savings) Premium of 14 bps compared to public offering FY 16-17 Levy composition: Debt Service $786,779 Administration 30,000 Delinquency Reserve 4,955 Future Facilities 791,415 * Partially refunded P a g e 1 6 8 o f 1 7 3 PIPER JAFFRAY | 61 Summary Statistics Savings Comparison Annual Per Parcel Debt Service Savings (Assumes 655 Parcels) Escalating Debt Service (Uniform Savings) Level Debt Service (Back Loaded Savings) Par of Refunding Bonds $6,110,000 $6,105,000 Reserve Fund $281,253 $275,927 NPV Savings ($) $1,098,499 $1,098,506 NPV Savings (%) 17.45% 17.45% Gross Savings ($) $2,116,056 $2,295,369 Average Annual Savings ($) $100,765 $109,303 Average Annual Savings p/Parcel ($) $153.80 $166.90 Series 2017 Bond Debt Service $9,470,097 $9,290,783 TIC 4.16% 4.16% $0 $100 $200 $300 $400 $500 $600 $700 $800 $900 20 1 8 20 1 9 20 2 0 20 2 1 20 2 2 20 2 3 20 2 4 20 2 5 20 2 6 20 2 7 20 2 8 20 2 9 20 3 0 20 3 1 20 3 2 20 3 3 20 3 4 20 3 5 20 3 6 20 3 7 20 3 8 Escalating Debt Service Savings per Parcel Actual Avg.Tax Levy per Parcel $0 $100 $200 $300 $400 $500 $600 $700 $800 20 1 8 20 1 9 20 2 0 20 2 1 20 2 2 20 2 3 20 2 4 20 2 5 20 2 6 20 2 7 20 2 8 20 2 9 20 3 0 20 3 1 20 3 2 20 3 3 20 3 4 20 3 5 20 3 6 20 3 7 20 3 8 Level Debt Service Savings per Parcel Actual Avg.Tax Levy per Parcel P a g e 1 6 9 o f 1 7 3 Beaumont Financing Authority Series 2009B (Improvement Area 8D) P a g e 1 7 0 o f 1 7 3 PIPER JAFFRAY | 63 Summary of Series 2009B Local Agency Revenue Bonds Series Series 2009B (Impt. No. 8D) Original Par $2,640,000 Dated Date 6/18/2009 Delivery Date 6/18/2009 1st IPD 9/1/2009 Outstanding $715,000 Due Date 1-Sep Ratings (M/SP/F) N/A Original Use of Proceeds New Money Maturity Par Coupon 2017 2018 2019 2020 2021 2022 2023 40,000 8.500% 2024 70,000 8.500% 2025 20,000 8.600% 2026 25,000 8.650% 2027 25,000 8.700% 2028 2029 2030 85,000 8.750% 2031 2032 2033 2034 155,000 8.875% 2035 2036 2037 2038 50,000 8.625% 2039 245,000 8.625% Redemption Features Any date after 9/1/2012 @ 100% Last CUSIP 074406MJ5 Matured Refunded Non - Callable Partially Refunded Term Blocks P a g e 1 7 1 o f 1 7 3 PIPER JAFFRAY | 64 Credit Summary and Refunding Assumptions Improvement Area 8D Par Amount Outstanding (as of 2/15/17)* $715,000 Final Maturity of Bonds 9/1/2039 2016-17 AV $63,369,748 DSRF Balance $72,552 Special Taxes from Developed Property (FY 2016-17) $460,312 Maximum Special Taxes (FY 2016-17) $1,078,480 Actual Special Tax as % of Maximum Special Tax (FY 2016-17) 42.68% Special Tax Escalator Yes (2%) VTL (excluding Overlapping Debt) 88.63:1 FY 2015-16 Delinquency $1,583.49 Current Status of Development 187 Parcels (per budget from FA Refunding Assumptions: Direct placement with WAM of 15.18 years Direct lender indicative interest rate of 4.17% (70% of the 15 yr. LIBOR + 3.37 spread) FY 16-17 Special Taxes used to pay 9/1/17 Debt Service (1st coupon 3/1/18) Prior DSRF used in escrow New DSRF funded with cash at 50% of Maximum Annual Debt Service (MADS) Cost of Issuance (estimate) of $150,000 Placement Agent Fee of $30,000 Savings analysis provided based on: Level debt service (uniform savings); prior debt service was choppy Premium of 8 bps compared to public offering FY 16-17 Levy composition: Debt Service $ 67,045 Administration 30,000 Delinquency Reserve 0 Future Facilities 363,267 * Partially refunded P a g e 1 7 2 o f 1 7 3 PIPER JAFFRAY | 65 Summary Statistics Savings Comparison Annual Per Parcel Debt Service Savings (Assumes 187 Parcels) Level Debt Service (Uniform Savings) Par of Refunding Bonds $955,000 Reserve Fund $127,608 NPV Savings ($) $181,071 NPV Savings (%) 25.32% Gross Savings ($) $185,786 Average Annual Savings ($) $8,445 Average Annual Savings p/Parcel ($) $45.20 Series 2017 Bond Debt Service $1,532,230 TIC 4.17% $0 $200 $400 $600 $800 $1,000 $1,200 $1,400 $1,600 20 1 8 20 1 9 20 2 0 20 2 1 20 2 2 20 2 3 20 2 4 20 2 5 20 2 6 20 2 7 20 2 8 20 2 9 20 3 0 20 3 1 20 3 2 20 3 3 20 3 4 20 3 5 20 3 6 20 3 7 20 3 8 20 3 9 Escalating Debt Service Savings per… Actual Avg.Tax Levy per Parcel Zoom In $0 $10 $20 $30 $40 $50 $60 $70 20 1 8 20 2 0 20 2 2 20 2 4 20 2 6 20 2 8 20 3 0 20 3 2 20 3 4 20 3 6 20 3 8 P a g e 1 7 3 o f 1 7 3