HomeMy Public PortalAbout2019B&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