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2019B&C Rating Agency Credit Presentation FinalThe Metropolitan St. Louis Sewer District Credit Presentation October 29, 2019 Participants 1 MSD Participants Brian L. Hoelscher, P.E., Executive Director Tim R. Snoke, Secretary-Treasurer Marion M. Gee, Director of Finance Susan M. Myers, General Counsel Richard Unverferth, P.E., Director of Engineering John Strahlman, Assistant Secretary-Treasurer Finance Team Participants Bethany Pugh & Matthew Schnackenberg, PFM Financial Advisors LLC -Co-Municipal Advisor Tionna Pooler, Independent Public Advisors, LLC -Co-Municipal Advisor Robert Mellinger & Samantha Costanzo, Citigroup –Senior Underwriter Table of Contents 2 I.Overview and Governance II.Review of Regulatory Compliance and Program III.Capital Improvement and Replacement Program (CIRP) Update and Funding Plan IV.Financial Performance Update V.Summary of Credit Strengths I. OVERVIEW AND GOVERNANCE 3 Authority and Governance Established and chartered in 1954 pursuant to a special election to provide for wastewater and stormwater services in the City of St. Louis and most of St. Louis County –Governance is vested in a six-member Board of Trustees –The Mayor of St. Louis and the St. Louis County Executive each appoint three trustees –A Rate Commission reviews proposed changes to rates and charges and makes recommendations to Trustees –A Civil Service Commission serves in an advisory position regarding personnel, administrative, and civil service matters and hears appeals of disciplinary actions –Revenue Bonds are issued pursuant to referendum approval of a majority of voters –Charter changes also subject to majority approval of voters 4 Organization 5 Board of Trustees Civil Service Commission Secretary- Treasurer Internal Auditor Rate Commission Executive Director General Counsel Human Resources Finance Information Systems Engineering Operations Management Team Leadership Brian Hoelscher, P.E., Executive Director –Assumed executive leadership position in March 2013 –Twenty years prior experience at MSD, most recently as Director of Engineering –Previous responsibilities included oversight of Capital Improvement and Replacement Program (CIRP) –Part of four-member MSD staff leadership team that negotiated terms of the final EPA Consent Decree Tim R. Snoke, Secretary-Treasurer –Assumed the Secretary-Treasurer position in May 2014 –Twenty-one years prior experience at Ralcorp Holdings, Inc. –Holds a BSc. Business Administration from Valparaiso University and a Masters of Business Administration from St. Louis University Marion Gee, Director of Finance –Assumed the Director of Finance position in September 2015 –Previously served as Assistant Finance Director for the City of San Antonio and before that as Finance Director at Louisville Metropolitan Sewer District for eleven years –Certified Public Accountant with a BSc. in Business Administration and a Masters of Business Administration from University of Louisville 6 Management Team Leadership Susan M. Myers, General Counsel –Assumed the General Counsel role in April 2011 –Started at the District as in-house counsel in 2001 –Served as an environmental engineer for two years with EPA Region VII in RCRA Permitting and for nine years on a billion dollar Department of Energy Superfund Clean-up project –Part of four member MSD staff leadership team that negotiated terms of the final EPA Consent Decree Richard Unverferth, P.E., Director of Engineering –Assumed engineering leadership position in May 2013 –Twenty-nine years prior experience at MSD in engineering, as well as leadership role in long-term planning group –Extensive familiarity with District CIRP and operations –Responsible for developing background data for MSD position in EPA Consent Decree negotiations John Strahlman, Assistant Secretary-Treasurer –Assumed the Assistant Secretary-Treasurer position in January 2015 –Prior experience includes treasury management positions at Metropolitan Pier and Exposition Authority in Chicago and at the Cook County Treasurer’s office –Holds a BSc. Public Finance from Indiana University and a Masters of Business Administration from DePaul University 7 Service Area Includes 520 square miles pursuant to 1977 referendum and subsequent annexation Includes the City of St. Louis and 90 other cities, including approximately 87% of St. Louis County Serves a population of 1.3 million Encompasses five watershed areas 8 System Profile MSD currently treats an average daily flow of 396 MGD, operating seven treatment facilities The System serves approximately 427,000 wastewater accounts, 94% of which are single-and multi-family residential customers 9 Approximately 80% of customer accounts are in St. Louis County, with the balance of 20% in the City of St. Louis Ten largest customers contribute approximately 4.6% of user charges as indicated to the right: FY 2019 Customers User Charges % Total INBEV (Anheuser-Busch Inc.)$5,380,744 1.36% City of St. Louis 2,626,558 0.67% Washington University 2,109,156 0.53% Sigma-Aldrich 1,674,339 0.42% The Boeing Company 1,251,265 0.32% Jost Real Estate, L.L.C.1,085,769 0.27% BJC HealthCare 1,036,583 0.26% Saint Louis University 1,033,565 0.26% Missouri-American Water Co.1,015,558 0.26% GKN Aerospace 891,863 0.23% Total $18,105,400 4.58% MSD Wins Top National Awards In 2019, MSD received several NACWA Peak Performance Awards recognizing public wastewater treatment facilities for outstanding environmental compliance in the 2018 calendar year: –The “Platinum Performance Award” honors member agencies for outstanding 100% compliance over a five-year or more consecutive period ✓Fenton, Lower Meramec (perfect compliance for 11 consecutive years), and Missouri River Treatment plants –The “Gold Performance Award” honors facilities with one year 100% compliance ✓Grand Glaize and Lemay Treatment plants earned Gold honors –The “Silver Performance Award” honors facilities with five or less violations per year ✓Bissel and Coldwater Creek Treatment plants earned Silver honors 10 MSD Wins Top National Awards In 2018, MSD received the Government Finance Officers Association (GFOA) Distinguished Budget Presentation award for the 31st consecutive year, the Excellence in Financial Reporting for the 30th consecutive year, and the Popular Annual Financial Report Outstanding Achievement Award for the sixth year in a row 11 FY2021-FY2024 Rate Commission and Proposal Process The Rate Commission was established in 2000, by voter -approved amendments to the District’s Charter The 15-member Rate Commission is required to review the District’s rate proposal, seek public feedback, and submit recommendations to the District’s Board of Trustees The year-long process included the selection of Rate and other Consultants as well as the development of a comprehensive Rate Proposal submitted by the District to the Commission in March 2019 Other key milestones include: –Rate Proposal presented –March 2019 –Community briefings –March through April 2019 –Technical Conferences (Testimony) –April through June 2019 –Public Hearings-May through July 2019 –Rate Recommendation Report submitted –August 2019 –Recommendation Report accepted by the Board of Trustees -October 2019 –Board of Trustees is expected to introduce and approve an ordinance setting rates consistent with such report in early 2020 12 FY2021-FY2024 Rate Commission and Proposal Process Per charter, rates must be consistent with laws and regulation; provide for adequate systems, facilities and services; be consistent with and not violate any covenant or provision related to indebtedness; impose a fair and reasonable burden on all ratepayers District’s metric targets consistent with highly rated credits Proposal substantively accepted by Rate Commission, including credit Recommended rates (2020 rates from 2015 Rate Commission) For more information and supporting documents: https://www.stlmsd.com/msd-rate-commission 13 Typical Bill for Single Family Residence using 6ccf/month Rate % Change FY 2020 $55.57 10.64% FY 2021 $56.40 1.49% FY 2022 $58.33 3.42% FY 2023 $60.36 3.48% FY 2024 $62.59 3.69% II. REVIEW OF REGULATORY COMPLIANCE AND PROGRAM 14 Regulatory Compliance—Consent Decree 15 Consent Decree entered April 27, 2012 –Consent Decree drives the majority of the long term investment in the sewer system –Estimated more than $5 billion of capital system improvements over an original 23 year period –Five year time extension granted by EPA, lessening financial impacts –Over $1.4 Billion in capital expenditures from 2013 through 2019 –Substantial operational commitment is aimed at reducing overflows and building backups District’s long-term planning means Consent Decree obligations are well defined –The Combined Sewer Overflow Long Term Control Plan was approved in 2011, and provides parameters for about a third of the capital program –The Sanitary Sewer Overflow Master Plan was approved in 2014, and provides a schedule and milestones for elimination of overflow structures, accounting for about a third of the program –The balance of Consent Decree obligations, wastewater system asset renewal, along with other regulatory requirements, accounts for the rest of the program Consent Decree Amendment June 22, 2018 –Extended to 28 year program –Allows delivery of regulatory-required, non-consent decree work without placing an additional financial burden on ratepayers –Delays the start of some CSO tunnels while expediting the solids handling project –Added $20M in Green Infrastructure Regulatory Compliance—Accomplishments 16 Since entering the Consent Decree in 2012, MSD has successfully delivered the capital program, met milestones, and satisfied all reporting requirements Accomplishments include: –Submitted and received approval on multiple program plans for sewer system operations and maintenance, and implemented the approved Capacity, Management, Operations, and Maintenance (CMOM) program –Completed $1.6 million Supplemental Environmental Projects program obligation –Submitted and received approval of the Sanitary Sewer Overflow Master Plan –Met first five year milestone for SSO removals; removed 92 Sanitary Sewer Overflow structures –Completed two major Combined Sewer Overflow system milestones with the completion of the Lemay Redundant Force Main and Lemay Treatment Plant Secondary Expansion –Rehabilitated, repaired, or replaced over 1,000 miles of the sewer system –Received EPA approval for the 2015 $100 Million CSO Volume Reduction Green Infrastructure Program Plan, and implementation is over 20% complete. Regulatory Compliance— Program Notes and the Future 17 Program Notes –The 2019 capital program was under budget –The 2017 to 2020 capital program is tracking to be under budget –The capital program for 2020 includes more than 100 projects, split about evenly between design and construction efforts –The District has demonstrated the ability to manage large annual capital programs within budget –The District’s focus on budgetary controls and operational efficiencies have successfully contained total Operations and Maintenance costs The Future Program –Continued compliance with the Consent Decree and other regulatory requirements –Continued construction to enable removal of Sanitary Sewer Overflow structures –Over the next four years, the District will complete a majority of planned neighborhood scale projects and transition to larger regional projects, such as tunnel and tank storage facilities –Continued wastewater system asset renewal –Fluidized bed incinerators at Bissell and Lemay treatment facilities III. CAPITAL IMPROVEMENT AND REPLACEMENT PROGRAM (CIRP) UPDATE AND FUNDING PLAN 18 CIRP Investment: 2017-2020 Wastewater CIRP appropriations for the years 2017 through 2020 are estimated to be over $1.1 billion with over $2 billion total CIRP funded through 2020 Allocation of 2017-2020 CIRP Projects: –$561 Million for the elimination of Sanitary Sewer Overflows –$311 Million for system renewal and capacity projects –$230 Million for the reduction and control of Combined Sewer Overflows –$65 Million for treatment plant improvements 19 Fiscal Year Program Level 2017 Actual $263,000,000 2018 Actual $286,000,000 2019 Actual $290,000,000 2020 Estimate $328,000,000 Total 4-Year Program $1,167,000,000 CIRP Investment Planned: 2021-2024 Allocation of 2021-2024 CIRP Projects: –22% of the Total 4-Year Program for the elimination of Sanitary Sewer Overflows –36%of the Total 4-Year Program for system renewal and capacity projects –13% of the Total 4-Year Program for the reduction and control of Combined Sewer Overflows –29% of the Total 4-Year Program for treatment plant improvements 20 Fiscal Year Program Level 2021 Estimate $396,437,645 2022 Estimate $390,963,105 2023 Estimate $450,720,216 2024 Estimate $459,569,736 Total 4-Year Program $1,699,690,702 CIRP Funding—Debt and PAYGO Excess unrestricted cash may be available for PAYGO in later years 21 CIRP Debt Cash % Debt % Cash 2004 - 2019 $2,714,518,389 $1,973,513,610 $741,004,779 73%27% Actual FY 2019 FY 2020 FY 2021 FY 2022 FY 2023 FY 2024 Subtotal PAYGO Directly to CIRP $130,524,075 $121,366,038 $175,000,000 $129,000,000 $111,000,000 $105,000,000 $771,890,113 CIRP Needs $281,950,803 $319,486,152 $385,879,645 $380,266,851 $439,586,432 $448,688,405 $2,255,858,288 PAYGO as % CIRP 46%38%45%34%25%23%34% Planned PAYGO Series 2019B and 2019C Series 2019B New Money Bonds will be issued to fund projects planned for FY2020 through FY2022 to: –Construct collection system improvements to reduce combined sewer overflows, eliminate sanitary sewer overflows, and reduce building backups –Design storage tunnels, storage tanks, and relief sewers to improve system capacity –Continue construction of the Deer Creek Sanitary Tunnel ($151 million, four-year duration project) Series 2019B New Money Bonds are amortized over 30 years with a level debt structure Series 2019C Refunding Bonds will be issued to taxable advance refund certain maturities from Series 2011B, 2012A, 2012B, 2013B, and 2015B Series 2019C Bonds have a level savings structure Series 2019B and Series 2019C Bonds will be on parity with the other District Senior Lien Bonds but will not be secured by the Debt Service Reserve Fund 22 Notes (1)Net of BABs subsidy (2) Includes fees associated with the loans (3) Preliminary and subject to change Existing and Proposed Debt Service – New Money 23 Series 2019B and 2019C 24 *Rates as of October 16, 2019 Year Ended Principal Interest Debt Service Principal Interest Debt Service Prior Debt Service Savings PV Savings 5/1/2020 $ - $ 1,067,383 $ 1,067,383 $ - $ 3,733,706 $ 3,733,706 $ 7,049,500 $ 3,315,794 $ 3,275,282 5/1/2021 840,000 2,614,000 3,454,000 2,465,000 9,143,770 11,608,770 14,099,000 2,490,230 2,422,872 5/1/2022 880,000 2,572,000 3,452,000 2,510,000 9,098,661 11,608,661 14,099,000 2,490,340 2,351,437 5/1/2023 925,000 2,528,000 3,453,000 2,555,000 9,052,728 11,607,728 14,099,000 2,491,273 2,282,856 5/1/2024 970,000 2,481,750 3,451,750 2,605,000 9,003,672 11,608,672 14,099,000 2,490,329 2,214,653 5/1/2025 1,020,000 2,433,250 3,453,250 2,655,000 8,952,353 11,607,353 14,099,000 2,491,647 2,150,424 5/1/2026 1,070,000 2,382,250 3,452,250 2,710,000 8,898,722 11,608,722 14,099,000 2,490,278 2,085,856 5/1/2027 1,125,000 2,328,750 3,453,750 2,770,000 8,840,457 11,610,457 14,099,000 2,488,543 2,022,961 5/1/2028 1,180,000 2,272,500 3,452,500 13,265,000 8,779,517 22,044,517 24,534,000 2,489,483 1,964,055 5/1/2029 1,240,000 2,213,500 3,453,500 13,570,000 8,467,790 22,037,790 24,527,250 2,489,461 1,904,590 5/1/2030 1,300,000 2,151,500 3,451,500 13,905,000 8,135,325 22,040,325 24,529,750 2,489,426 1,846,888 5/1/2031 1,365,000 2,086,500 3,451,500 18,720,000 7,787,700 26,507,700 28,994,750 2,487,051 1,789,207 5/1/2032 1,435,000 2,018,250 3,453,250 20,170,000 7,300,980 27,470,980 29,962,750 2,491,771 1,737,617 5/1/2033 1,505,000 1,946,500 3,451,500 14,745,000 6,766,475 21,511,475 24,001,000 2,489,526 1,682,650 5/1/2034 1,580,000 1,871,250 3,451,250 15,150,000 6,360,987 21,510,987 24,001,500 2,490,513 1,632,114 5/1/2035 1,660,000 1,792,250 3,452,250 920,000 5,936,787 6,856,787 9,348,750 2,491,963 1,583,318 5/1/2036 1,745,000 1,709,250 3,454,250 7,750,000 5,910,567 13,660,567 16,148,750 2,488,183 1,534,177 5/1/2037 1,830,000 1,622,000 3,452,000 7,995,000 5,664,117 13,659,117 16,148,750 2,489,633 1,489,116 5/1/2038 1,925,000 1,530,500 3,455,500 8,250,000 5,409,876 13,659,876 16,151,750 2,491,874 1,445,793 5/1/2039 2,020,000 1,434,250 3,454,250 640,000 5,147,526 5,787,526 8,276,750 2,489,224 1,400,962 5/1/2040 2,120,000 1,333,250 3,453,250 41,600,000 5,127,174 46,727,174 49,216,750 2,489,576 1,359,687 5/1/2041 2,225,000 1,227,250 3,452,250 42,920,000 3,804,294 46,724,294 49,214,750 2,490,456 1,316,943 5/1/2042 2,340,000 1,116,000 3,456,000 44,310,000 2,417,978 46,727,978 49,215,500 2,487,522 1,273,445 5/1/2043 2,455,000 999,000 3,454,000 16,425,000 986,765 17,411,765 19,898,750 2,486,985 1,232,319 5/1/2044 2,575,000 876,250 3,451,250 6,950,000 456,238 7,406,238 9,895,000 2,488,763 1,195,267 5/1/2045 2,705,000 747,500 3,452,500 7,175,000 231,753 7,406,753 9,896,250 2,489,498 1,159,370 5/1/2046 2,840,000 612,250 3,452,250 - - - - - - 5/1/2047 2,985,000 470,250 3,455,250 - - - - - - 5/1/2048 3,130,000 321,000 3,451,000 - - - - - - 5/1/2049 3,290,000 164,500 3,454,500 - - - - - - Total 52,280,000$ 48,922,883$ 101,202,883$ 312,730,000$ 161,415,913$ 474,145,913$ 539,705,250$ 65,559,337$ 46,353,856$ Series 2019C (Refunding)2019B (New Money) Series 2019B and 2019C Bonds* Outstanding and Planned Bonds Under Existing Voted Authority 25*Drawn down amount as of October 29, 2019 ** Preliminary, Subject to change Date Series Term New Money Par Issued Par Outstanding Outstanding 04/28/04 2004B (SRF)20 Year, Fixed 161,280,000$ 64,590,000$ 05/19/05 2005A (SRF)20 Year, Fixed 6,800,000 2,765,000 04/27/06 2006A (SRF)20 Year, Fixed 42,715,000 18,550,000 11/28/06 2006B (SRF)20 Year, Fixed 14,205,000 6,650,000 10/28/08 2008B (SRF)20 Year, Fixed 40,000,000 21,765,000 10/21/09 2009A (SRF)20 Year, Fixed 23,000,000 13,646,400 12/15/09 2010A (SRF)21 Year, Fixed 7,980,700 5,274,800 01/28/10 2010B 30 Year, Fixed 85,000,000 85,000,000 12/21/10 2010C (SRF)20 Year, Fixed 37,000,000 24,014,000 11/17/11 2011A (SRF)22 Year, Fixed 39,769,300 31,351,300 12/22/11 2011B 30 Year, Fixed 52,250,000 15,945,000 8/23/12 2012A 30 Year, Fixed 225,000,000 154,040,000 11/14/12 2012B 20 Year, Fixed 141,730,000 128,840,000 10/31/13 2013A (SRF)20 Year, Fixed 52,000,000 42,204,000 12/18/13 2013B 30 Year, Fixed 150,000,000 113,615,000 8/19/15 2015A (SRF)20 Year, Fixed 75,000,000 64,200,000 12/15/15 2015B 30 Year, Fixed 150,000,000 190,135,000 12/22/16 2016A (SRF)20 Year, Fixed 20,000,000 12,815,412* 12/22/16 2016B (SRF)20 Year, Fixed 75,500,000 51,180,449* 12/20/16 2016C 30 Year, Fixed 150,000,000 144,535,000 12/14/17 2017A 30 Year, Fixed 200,000,000 312,760,000 12/19/18 2018A (WIFIA)35 Year, Fixed 47,722,204 261,480* 12/28/18 2018B (SRF)22 Year, Fixed 25,267,000 6,175,517* 9/24/19 2019A (SRF)22 Year, Fixed 23,952,000 -* Planned Dec 2019 2019B**30 Year, Fixed 52,280,000 52,280,000 Dec 2019 2019C**26 Year, Fixed 312,730,000 312,730,000 Total 2,211,181,204$ 1,875,323,358$ IV. FINANCIAL PERFORMANCE UPDATE 26 Adopted Rate Adjustments and Average Monthly Bill The Board has accepted the Rate Commissions Rate Proposal for FY2021 -FY2024 and rate adjustments are projected to increase wastewater revenues as follows: 27Residential Monthly Bill: See Table 12 of the Feasibility Study *Based on 8 Ccf City Under Consent Decree Residential Monthly Bill ($)* Memphis, TN 13.57 San Antonio, TX 36.44 Los Angeles, CA 40.88 Washington, DC 49.93 Boston, MA 59.71 Indianapolis, IN 59.93 Cleveland, OH 62.72 St. Louis, MO 65.31 Baltimore, MD 76.59 Kansas City, MO 82.02 Atlanta, GA 108.08 Seattle, WA 115.84 Fiscal Year 2020 2021 2022 2023 2024 % Wastewater Revenues Increase 10.3%2.4%3.6%3.7%3.9% Historical Coverage 28 Notes: 1. District covenants to set rates that ensure that Net Operating Revenues will equal at least 125% of Debt Service Requirement on all Senior Bonds and 115% of the Debt Service Requirement on all outstanding debt for the year of computation 2. The methodology used to calculate the net available revenues and the coverage ratio was adjusted during fiscal year 2013 and all previous years were restated for comparative purposes. The 2013 change in methodology consisted of removing agency fees, previously reflected as a deduction from net available revenues, and now combining them with interest in the debt service section. Additionally, in fiscal years 2010 and 2011, the change in methodology consisted of removing the Build America Bond Tax Credit from the pledged revenue section and reapplying the credit to interest expense in the debt service section. This was made to ensure consistency with fiscal years 2012 and 2013. In fiscal 2017 the methodology was changed to exclude GASB non-cash transactions from the debt service calculation. Fiscal years 2015 and after have been adjusted to also exclude the GASB 68 non-cash pension expense and fiscal year 2018 and after have been adjusted to exclude GASB 75 non-cash OPEB expense. Fiscal Year Net Available Revenues Principal Interest Total Total Senior Debt Service Total Coverage Ratio Senior Coverage Ratio 2010 64,007,720 13,022,500 20,187,151 33,209,651 14,991,341 1.9 4.3 2011 59,641,434 14,576,800 20,140,021 34,716,821 17,247,269 1.7 3.5 2012 91,708,084 16,540,200 22,517,473 39,057,673 18,448,587 2.3 5.0 2013 95,181,961 18,749,700 31,191,190 49,940,890 28,256,656 1.9 3.4 2014 113,870,820 10,037,200 34,399,261 44,436,461 34,221,408 2.6 3.3 2015 128,080,337 20,252,200 41,596,192 61,848,392 38,352,415 2.1 3.3 2016 154,099,469 29,588,000 44,171,592 73,759,592 46,381,319 2.1 3.3 2017 167,090,678 38,026,700 51,333,869 89,360,569 58,182,077 1.9 2.9 2018 211,622,478 42,716,800 57,682,698 100,399,498 67,923,285 2.1 3.1 2019 244,962,650 50,907,800 63,224,915 114,132,715 77,941,363 2.1 3.1 Total Debt Service Projected Coverage 29 *Reflects GASB 68 and GASB 75 expense adjustment Actual Projected Projected Projected Projected Projected 2019 2020 2021 2022 2023 2024 Net Revenue*244,962,649$ 272,924,980$ 265,057,211$ 281,524,669$ 291,626,511$ 306,247,703$ Debt Service Becoming Due in Each Fiscal Year Senior Lien Bonds77,941,363 79,152,369 84,017,776 91,356,552 98,470,396 110,111,512 Total Debt 114,132,715 110,074,483 125,151,283 136,227,564 150,358,905 170,271,373 Coverage without Refunding Senior Bonds 3.1x 3.4x 3.2x 3.1x 3.0x 2.8x Total Debt 2.1x 2.5x 2.1x 2.1x 1.9x 1.8x Coverage with Refunding Senior Bonds 3.1x 4.0x 3.2x 3.1x 3.0x 2.8x Total Debt 2.1x 2.6x 2.2x 2.1x 2.0x 1.8x Fiscal Year Ending June 30 Projected Coverage from 2018 2019 2020 Senior Bonds 2.9x 3.4x Total Debt 2.0x 2.3x Trend Liquidity Liquidity (with long-term investments) is expected to remain well in excess of 365 days through 2020 planning period. CIRP appropriations for the years 2015 through 2019 were above $1 billion 30 *Reflects GASB 68 pension expense adjustment Key Liquidity Ratios 2015*2016*2017*2018*2019* Cash and Investments (No Long-Term Unrestricted)$132,950,967 $182,927,020 $286,332,159 $300,591,076 $241,181,876 Days Cash on Hand/Liquidity Ratio 297 397 619 673 516 Cash and Investments (Adds Long Term Unrestricted)$298,732,325 $339,921,143 $347,607,159 $367,855,784 $409,831,492 Days Cash on Hand/Liquidity Ratio 668 737 751 824 877 Net Working Capital (No Long-Term Unrestricted)$141,906,809 $199,480,611 $300,033,117 $324,914,813 $267,032,645 Working Capital Ratio/Days Working Capital 317 433 649 727 571 Net Working Capital (Adds Long-Term Unrestricted)$307,688,167 $356,474,734 $361,308,117 $392,179,521 $435,682,261 Working Capital Ratio/Days Working Capital 688 773 781 878 932 Long-Term Investment Portfolio (as of June 30, 2019) 31 Product Type Callable Bond Face Value Market Value Coupon Rate Moody's Days To Maturity Maturity Date Duration TNOTES Non-Callable Bond $ 2,500,000 $ 2,488,477 1.500%AA+381 ‭15-JUL-2020‭1.03 TNOTES Non-Callable Bond 1,200,000 1,194,422 1.500%AA+412 ‭15-AUG-2020‭1.12 TNOTES Non-Callable Bond 5,000,000 4,969,727 1.375%AA+443 ‭15-SEP-2020‭1.20 FHLB Non-Callable Bond 1,200,000 1,192,308 1.375%Aaa 456 ‭28-SEP-2020‭1.24 FHLB Non-Callable Bond 15,000,000 14,903,850 1.375%Aaa 456 ‭28-SEP-2020‭1.24 FHLB Non-Callable Bond 25,000,000 24,839,750 1.375%Aaa 456 ‭28-SEP-2020‭1.24 TNOTES Non-Callable Bond 1,080,000 1,076,498 1.625%AA+473 ‭15-OCT-2020‭1.28 TNOTES Non-Callable Bond 312,000 310,988 1.625%AA+473 ‭15-OCT-2020‭1.28 FFCB Callable Bond 2,000,000 1,983,232 1.330%Aaa 484 ‭26-OCT-2020‭1.31 FNMA Callable Bond 4,263,000 4,252,475 1.875%Aaa 488 ‭30-OCT-2020‭1.32 TNOTES Non-Callable Bond 2,600,000 2,596,039 1.750%AA+504 ‭15-NOV-2020‭1.36 FNMA Non-Callable Bond 617,000 613,940 1.500%Aaa 519 ‭30-NOV-2020‭1.40 FNMA Non-Callable Bond 438,000 435,828 1.500%AAA 519 ‭30-NOV-2020‭1.40 FNMA Non-Callable Bond 108,000 107,464 1.500%Aaa 519 ‭30-NOV-2020‭1.40 FNMA Non-Callable Bond 5,400,000 5,373,216 1.500%AA+519 ‭30-NOV-2020‭1.40 FNMA Non-Callable Bond 687,000 683,592 1.500%AAA 519 ‭30-NOV-2020‭1.40 FNMA Non-Callable Bond 124,000 123,385 1.500%Aaa 519 ‭30-NOV-2020‭1.40 FNMA Non-Callable Bond 612,000 608,964 1.500%AAA 519 ‭30-NOV-2020‭1.40 FNMA Non-Callable Bond 39,000 38,807 1.500%AAA 519 ‭30-NOV-2020‭1.40 FHLB Non-Callable Bond 90,000 90,048 1.875%Aaa 530 ‭11-DEC-2020‭1.43 FHLB Non-Callable Bond 1,005,000 1,005,538 1.875%Aaa 530 ‭11-DEC-2020‭1.43 FHLB Non-Callable Bond 3,305,000 3,306,768 1.875%Aaa 530 ‭11-DEC-2020‭1.43 FHLB Non-Callable Bond 600,000 600,321 1.875%Aaa 530 ‭11-DEC-2020‭1.43 FFCB Non-Callable Bond 5,000,000 5,053,450 2.550%Aaa 561 ‭11-JAN-2021‭1.50 FFCB Non-Callable Bond 5,255,000 5,311,176 2.550%Aaa 561 ‭11-JAN-2021‭1.50 TNOTES Non-Callable Bond 125,000 125,313 2.000%AA+565 ‭15-JAN-2021‭1.52 TNOTES Non-Callable Bond 50,000 50,125 2.000%AA+565 ‭15-JAN-2021‭1.52 TNOTES Non-Callable Bond 149,000 149,373 2.000%AA+565 ‭15-JAN-2021‭1.52 TNOTES Non-Callable Bond 79,000 79,198 2.000%AA+565 ‭15-JAN-2021‭1.52 TNOTES Non-Callable Bond 155,000 155,388 2.000%AA+565 ‭15-JAN-2021‭1.52 TNOTES Non-Callable Bond 254,000 252,204 1.375%AA+581 ‭31-JAN-2021‭1.57 TNOTES Non-Callable Bond 255,000 253,197 1.375%AA+581 ‭31-JAN-2021‭1.57 FFCB Non-Callable Bond 3,000,000 3,024,336 2.350%Aaa 593 ‭12-FEB-2021‭1.59 TVA Non-Callable Bond 7,500,000 7,740,675 3.875%Aaa 596 ‭15-FEB-2021‭1.58 TVA Non-Callable Bond 20,000,000 20,641,800 3.875%Aaa 596 ‭15-FEB-2021‭1.58 TVA Non-Callable Bond 2,000,000 2,064,180 3.875%Aaa 596 ‭15-FEB-2021‭1.58 TVA Non-Callable Bond 3,000,000 3,096,270 3.875%Aaa 596 ‭15-FEB-2021‭1.58 TVA Non-Callable Bond 2,990,000 3,085,949 3.875%Aaa 596 ‭15-FEB-2021‭1.58 FHLB Non-Callable Bond 20,000 19,852 1.375%Aaa 599 ‭18-FEB-2021‭1.62 FHLB Non-Callable Bond 10,000 9,926 1.375%Aaa 599 ‭18-FEB-2021‭1.62 FHLB Non-Callable Bond 90,000 89,335 1.375%Aaa 599 ‭18-FEB-2021‭1.62 FHLB Non-Callable Bond 10,000 9,926 1.375%Aaa 599 ‭18-FEB-2021‭1.62 FHLB Non-Callable Bond 2,475,000 2,456,710 1.375%Aaa 599 ‭18-FEB-2021‭1.62 FHLB Non-Callable Bond 40,000 39,704 1.375%Aaa 599 ‭18-FEB-2021‭1.62 FAMCA Non-Callable Bond 1,905,000 1,977,247 1.416%AA+618 ‭09-MAR -2021‭1.67 FHLB Non-Callable Bond 12,000,000 12,111,264 2.375%AA+621 ‭12-MAR -2021‭1.67 FHLB Non-Callable Bond 5,000,000 5,046,360 2.375%Aaa 621 ‭12-MAR -2021‭1.67 Long-Term Investment Portfolio (as of June 30, 2019) 32 Approximately 20% of Long-Term investment Portfolio allocated to Restricted Long-Term Investments Product Type Callable Bond Face Value Market Value Coupon Rate Moody's Days To Maturity Maturity Date Duration FFCB Non-Callable Bond $ 5,000,000 $ 5,079,210 2.700%Aaa 621 ‭12-MAR -2021‭1.67 FHLB Non-Callable Bond 8,000,000 8,240,512 3.625%Aaa 621 ‭12-MAR -2021‭1.65 FAMCA Non-Callable Bond 12,000,000 12,114,360 2.410%AA+645 ‭05-APR-2021‭1.72 FAMCA Non-Callable Bond 12,000,000 12,114,360 2.410%AA+645 ‭05-APR-2021‭1.72 FAMCA Non-Callable Bond 4,534,000 4,577,209 2.410%AA+645 ‭05-APR-2021‭1.72 FNMA Non-Callable Bond 85,000 84,174 1.250%Aaa 676 ‭06-MAY-2021‭1.83 FNMA Non-Callable Bond 35,000 34,660 1.250%Aaa 676 ‭06-MAY-2021‭1.83 FNMA Non-Callable Bond 4,600,000 4,555,288 1.250%Aaa 676 ‭06-MAY-2021‭1.83 FNMA Non-Callable Bond 95,000 94,077 1.250%Aaa 676 ‭06-MAY-2021‭1.83 FHLMC Non-Callable Bond 25,000 24,658 1.125%Aaa 774 ‭12-AUG-2021‭2.09 FHLMC Non-Callable Bond 1,005,000 991,252 1.125%Aaa 774 ‭12-AUG-2021‭2.09 FHLMC Non-Callable Bond 35,000 34,521 1.125%AAA 774 ‭12-AUG-2021‭2.09 FHLMC Non-Callable Bond 20,000 19,726 1.125%Aaa 774 ‭12-AUG-2021‭2.09 FHLMC Non-Callable Bond 20,000 19,726 1.125%Aaa 774 ‭12-AUG-2021‭2.09 FAMCA Callable Bond 1,750,000 1,756,734 2.690%N/R 796 ‭03-SEP-2021‭2.12 FFCB Non-Callable Bond 4,475,000 4,427,220 1.280%Aaa 822 ‭29-SEP-2021‭2.22 FNMA Non-Callable Bond 6,000,000 5,945,160 1.375%Aaa 830 ‭07-OCT-2021‭2.23 FNMA Non-Callable Bond 2,090,000 2,070,897 1.375%Aaa 830 ‭07-OCT-2021‭2.23 FNMA Non-Callable Bond 65,000 64,406 1.375%AAA 830 ‭07-OCT-2021‭2.23 FHLMC Callable Bond 2,000,000 2,006,010 3.100%Aaa 852 ‭29-OCT-2021‭2.25 FNMA Non-Callable Bond 63,000 63,342 2.000%Aaa 920 ‭05-JAN-2022‭2.45 FNMA Non-Callable Bond 41,000 41,223 2.000%Aaa 920 ‭05-JAN-2022‭2.45 FNMA Non-Callable Bond 21,000 21,114 2.000%Aaa 920 ‭05-JAN-2022‭2.45 FNMA Non-Callable Bond 98,000 98,532 2.000%Aaa 920 ‭05-JAN-2022‭2.45 FNMA Non-Callable Bond 57,000 57,310 2.000%Aaa 920 ‭05-JAN-2022‭2.45 FNMA Non-Callable Bond 49,000 49,266 2.000%Aaa 920 ‭05-JAN-2022‭2.45 FNMA Non-Callable Bond 46,000 46,250 2.000%Aaa 920 ‭05-JAN-2022‭2.45 FNMA Non-Callable Bond 18,000 18,098 2.000%Aaa 920 ‭05-JAN-2022‭2.45 FNMA Non-Callable Bond 15,000 15,081 2.000%Aaa 920 ‭05-JAN-2022‭2.45 FHLB Non-Callable Bond 3,000,000 3,055,905 2.500%Aaa 985 ‭11-MAR -2022‭2.61 FFCB Non-Callable Bond 10,000,000 10,016,360 1.850%Aaa 988 ‭14-MAR -2022‭2.64 FFCB Non-Callable Bond 10,000,000 10,016,360 1.850%Aaa 988 ‭14-MAR -2022‭2.64 FFCB Non-Callable Bond 3,815,000 3,821,241 1.850%Aaa 988 ‭14-MAR -2022‭2.64 FNMA Non-Callable Bond 2,320,000 2,325,382 1.875%Aaa 1010 ‭05-APR-2022‭2.69 FNMA Non-Callable Bond 85,000 85,197 1.875%Aaa 1010 ‭05-APR-2022‭2.69 FNMA Non-Callable Bond 1,020,000 1,022,366 1.875%Aaa 1010 ‭05-APR-2022‭2.69 FNMA Non-Callable Bond 515,000 516,195 1.875%Aaa 1010 ‭05-APR-2022‭2.69 FNMA Non-Callable Bond 3,725,000 3,733,642 1.875%Aaa 1010 ‭05-APR-2022‭2.69 FNMA Non-Callable Bond 110,000 110,255 1.875%Aaa 1010 ‭05-APR-2022‭2.69 TNOTES Non-Callable Bond 4,400,000 4,419,250 1.875%AA+1158 ‭31-AUG-2022‭3.08 TNOTES Non-Callable Bond 730,000 733,194 1.875%AA+1158 ‭31-AUG-2022‭3.08 TNOTES Non-Callable Bond 94,300 95,575 1.250%AA+1280 ‭31-DEC-2022‭3.43 TNOTES Non-Callable Bond 17,300 17,534 1.250%AA+1280 ‭31-DEC-2022‭3.43 TNOTES Non-Callable Bond 1,200 1,216 1.250%AA+1280 ‭31-DEC-2022‭3.43 TNOTES Non-Callable Bond 124,500 126,183 1.250%AA+1280 ‭31-DEC-2022‭3.43 TNOTES Non-Callable Bond 26,600 26,960 1.250%AA+1280 ‭31-DEC-2022‭3.43 248,767,900$ 250,425,784$ Average Days To Maturity Average Years To Duration 651 1.74 Pension Fund Update MSD offers a defined benefit plan providing retirement, death and disability benefits to full-time employees commencing service prior to December 31, 2010 (plan is not accepting new entrants) As of December 31, 2018, MSD’s assumed rate of return is 6.90% with key statistics as follows: –545 active plan members –$276.8 million Actuarial Value of Assets –$58.2 million in unfunded liability, up from $55.3 million as of December 31, 2017 –Actuarial Value of Assets/Actuarial Accrued Liability decreased slightly to 82.6% as of December 31, 2018, versus 83.1% as of December 31, 2017 Effective January 1, 2011, MSD offers a defined contribution plan for current employees with less than 10 years of service as of December 31, 2010, and all new employees commencing service on or after January 1, 2011 –As of December 2018, the plan has 438 participants and $8.6 million in assets 33 OPEB Considerations MSD’s total OPEB unfunded accrued liability as of December 31, 2018, the latest actuarial valuation, was $24.2 million, assuming a 4.10% return on investment (Report by Milliman, Inc. dated July 2019) –The initial projected liability of $76 million (based on a 2006 study) has been significantly reduced to under $25 million by a change in benefits offered to existing and future retirees age 65 and over –MSD is partially funding the OPEB liability through the payment of the monthly health claims on an ongoing basis for pre-age 65 retirees. There are 120 individuals in this group (as of 12/31/2018) –MSD has continued to elect a Pay-Go approach to assure flexibility in future benefits. 34 V. SUMMARY OF CREDIT STRENGTHS 35 MSD Credit Strengths Consistently Strong Financial Performance –The District has maintained healthy liquidity levels –Actual coverage levels have exceeded 2019 projections –Proactive management of pension and OPEB obligations mitigate future liabilities Successful Rate Proposal and Rate Commission Process –The District Board of Trustees accepted the Rate Commission’s recommendations for FY2021-FY2024 –The District has strong historical success approving bond referendums On Time and On Budget Implementation of Consent Decree –All related litigation settled –Over $2 billion in projects to be funded through 2020 –Strong relationship with Regulators 36 Tentative Financing Schedule 37 Date Activity October 29 Rating Agency Meetings Week of November 4 Release of Ratings Week of November 4 Electronic Distribution of POS November 18-19 Pricing of the Bonds Week of December 1 Close and Deliver Funds Contact Phone/Email Tim R. Snoke, Secretary-Treasurer (314) 768 6222 tsnoke@stlmsd.com John Strahlman, Assistant Secretary-Treasurer (314) 768 6225 jstrahlman@stlmsd.com Bethany Pugh, Managing Director –PFM (440) 239 7070 pughb@pfm.com Matthew Schnackenberg, Director -PFM (612) 371 3771 schnackenbergm@pfm.com Tionna Pooler, President -IPA (515) 259 8193 tpooler@independentpublicadvisors.com Contact Information 38