HomeMy Public PortalAboutExhibit MSD 63F - MSD 2018 Rating Agency PresentationThe Metropolitan St. Louis Sewer DistrictCredit PresentationNovember 14, 2018
Participants1MSD ParticipantsTim R. Snoke, Secretary-TreasurerMarion M. Gee, Director of FinanceSusan M. Myers, General CounselRichard Unverferth, P.E., Director of EngineeringJohn Strahlman, Assistant Secretary-TreasurerFinance Team ParticipantsBethany Pugh, Matthew Schnackenberg, PFM Financial Advisors LLC - Co-Municipal AdvisorTionna Pooler, Independent Public Advisors, LLC - Co-Municipal Advisor
Table of Contents2I. Overview and GovernanceII. Review of Regulatory Compliance and ProgramIII. Capital Improvement and Replacement Program (CIRP) Update and Funding PlanIV. Financial Performance UpdateV. Summary of Credit Strengths
I. OVERVIEW AND GOVERNANCE3
Authority and GovernanceEstablished 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 voters4
Organization5Board of TrusteesCivil ServiceCommissionSecretary-TreasurerInternal AuditorRateCommissionExecutiveDirectorGeneral CounselHumanResourcesFinanceInformationSystemsEngineeringOperations
Management Team LeadershipBrian 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 DecreeTim 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 UniversityMarion Gee, Director of Finance–Assumed the Director of Finance position in September 2015–Recently 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 Louisville6
Management Team LeadershipSusan 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 executive leadership position in March 2013Richard 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 negotiationsJohn 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 University7
Service AreaIncludes 520 square miles pursuant to 1977 referendum and subsequent annexationIncludes the City of St. Louis and 90 other cities, including approximately 87% of St. Louis CountyServes a population of 1.3 millionEncompasses five watershed areas8
System ProfileMSD currently treats an average daily flow of 270 MGD, operating seven treatment facilities The System serves approximately 426,000 wastewater accounts, 94% of which are single- and multi-family residential customers9Approximately 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 5.0% of user charges as indicated to the right:CustomersFY 2018 User Charges % TotalInBev Anheuser-Busch $5,246,961 1.45%City of St. Louis 2,840,881 0.79%Washington Unversity 2,047,182 0.57%Sigma-Aldrich 1,398,158 0.39%Jost Real Estate LLC 1,215,907 0.33%Missouri-American Water Co. 1,212,638 0.33%St Louis University 1,186,675 0.33%BJC Health System 1,082,621 0.30%The Boeing Company 1,004,081 0.28%GKN Aerospace N America Inc.871,570 0.24%Total $18,106,674 5.01%
MSD Wins Top National AwardsIn 2018, MSD received several NACWA Peak Performance Awards recognizing public wastewater treatment facilities for outstanding environmental compliance in the 2017 calendar year:–The “Platinum Performance Award” honors member agencies for outstanding 100% compliance over a five-year or more consecutive periodFenton and Lower Meramec plants (perfect compliance for ten consecutive years)–The “Gold Performance Award” honors facilities with one year 100% complianceMissouri River and Grand Glaizeplants earned Gold honors–The “Silver Performance Award” honors facilities with five or less violations per yearBissell, Coldwater and Lemay Treatment Plant earned Silver honors10
MSD Wins Top National AwardsIn 2018, NACWA presented MSD with the Excellence in Management Platinum Award. This award is presented to member utilities in the area of effective utility management. This award honors member agencies on their commitment to sustainable, successful programs that exemplify the many attributes of an effectively managed utility. The award is presented to Utilities that have achieved excellence in at least nine out of ten categories. This level of achievement is only obtained by a handful of agencies each year. MSD also received the Government Finance Officers Association (GFOA) Distinguished Budget Presentation award for the 31stconsecutive year, the Excellence in Financial Reporting for the 29thconsecutive year, and the Popular Annual Financial Report Outstanding Achievement Award for the 5th year in a row11
FY2021-FY2024 Rate Commission and Proposal ProcessThe Rate Commission was established in 2000, by voter-approved amendments to the District’s CharterThe 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 TrusteesThe District will submit a comprehensive Wastewater Rate Proposal to the Commission in early 2019The District will hold community briefings and technical presentations to the Commission. It will then submit a recommendation in Fall 2019 to the District Board of Trustees. 12
Current Rate Proposal CycleThe Board adopted new rates on June 9, 2016Board approved rates for the average household are as follows:For more information and supporting documents: https://www.stlmsd.com/our-organization/organization-overview/rate-commission/fy2017-fy2020-rate-proposal13Typical Bill for Single Family Residence using 7ccf/monthRate % ChangeFY 2017 $44.59 9.50%FY 2018 $49.31 10.59%FY 2019 $54.63 10.79%FY 2020 $60.44 10.64%
II. REVIEW OF REGULATORY COMPLIANCE AND PROGRAM14
Regulatory Compliance—Consent DecreeConsent Decree entered April 27, 2012–Consent Decree drives the majority of the long term investment in the sewer system–Estimated $4.7 Billion (2010 dollars) over 23 years in capital system improvements–Almost $1.4 Billion in capital expenditures from 2013 through 2018–Substantial operational commitment is aimed at reducing overflows and building backups–Consent Decree AmendmentDistrict’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 program15
Regulatory Compliance—Program Notes and the FutureProgram Notes–The 2018 capital program was under budget–The 2017 to 2020 capital program is tracking to be under budget–The capital program for 2019 includes more than 145 projects–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 costsThe 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 five years, the District will complete a majority of planned neighborhood scale projects and begin transitioning to larger regional projects, such as tunnel and tank storage facilities–Continued Wastewater System Asset Renewal16
III. CAPITAL IMPROVEMENT AND REPLACEMENT PROGRAM (CIRP) UPDATE AND FUNDING PLAN17
CIRP Investment Planned: 2017-2020Allocation of 2017-2020 CIRP Projects:–$600 Million for the elimination of Sanitary Sewer Overflows–$371 Million for system renewal and capacity projects–$237 Million for the reduction and control of Combined Sewer Overflows–$54 Million for treatment plant improvements18Fiscal Year Program Level2017 Actual $258,000,0002018 Actual $281,000,0002019 Estimate $348,000,0002020 Estimate $375,000,000Total 4-Year Program $1,262,000,000
CIRP Investment Planned: 2021-2024Allocation of 2021-2024 CIRP Projects:–$313 Million for the elimination of Sanitary Sewer Overflows–$596 Million for system renewal and capacity projects–$180 Million for the reduction and control of Combined Sewer Overflows–$427 Million for treatment plant and air emissions improvements19Fiscal Year Program Level2021 Estimate $347,000,0002022 Estimate $336,000,0002023 Estimate $424,000,0002024 Estimate $409,000,000Total 4-Year Program $1,516,000,000
CIRP Funding—Debt and PAYGO2018-2020 unrestricted cash–Unrestricted cash is expected to remain steady through 2020–Excess unrestricted cash may be available for PAYGO in later years20CIRP Debt Cash % Debt % Cash2004 - 2018$2,432,567,586 $1,822,086,882 $610,480,704 75% 25%FY 2018Actual FY 2019 FY 2020 SubtotalPAYGO Directly to CIRP $58,000,000 $120,000,000 $120,000,000Asset Management Projects 14,048,473 10,238,454 10,355,314Capitalized Internal Labor 9,615,353 11,756,669 12,226,935Total Planned PAYGO $81,663,826 $141,995,123 $142,582,249$366,241,198CIRP Needs $280,974,504 $348,000,000 $375,000,000$1,003,974,504PAYGO as % CIRP 29% 41% 38%36%Planned PAYGO
WIFIA LoanWIFIA Loan will be issued to fund projects planned to begin in FY2020:–Deer Creek Sanitary Relief Phase III and Phase IV – to alleviate surcharging, basement backups & eliminate five constructed SSOs–Deer Creek Sanitary Tunnel Pump Station to control and eliminate SSOsThe WIFIA Loan is amortized to wrap around expected 20-year SRF LoanThe WIFIA Loan will be on parity with the other District Senior Lien Bonds but will not be secured by the Debt Service Reserve FundProject planning anticipates next Senior Lien new money bond issue in FY202021
Notes(1)Net of BABs subsidy(2) Includes fees associated with the loans; net of DSRF earnings(3) Preliminary and subject to changeExisting and Proposed Debt Service22Debt outstanding Proposed New MoneySubordinate Debt Aggregate AggregateYear EndedEstimatedJune 30Debt Service20182019 22,355,000$ 55,584,848$ 77,939,848$ 35,096,460$ 113,036,307$ 4,108$ 1,603,678$ -$ 114,644,093$ 2020 23,305,000 54,731,298 78,036,298 35,330,527 113,366,824 56,613 1,603,678 3,177,428 118,204,543 2021 24,280,000 53,638,898 77,918,898 35,543,467 113,462,365 321,507 1,603,678 3,177,428 118,564,978 2022 24,500,000 52,582,648 77,082,648 35,971,237 113,053,885 763,786 1,603,678 3,177,428 118,598,776 2023 25,600,000 51,399,898 76,999,898 36,026,977 113,026,874 1,200,773 1,603,678 3,177,428 119,008,753 2024 26,410,000 50,242,873 76,652,873 36,277,002 112,929,875 1,444,416 1,603,678 3,177,428 119,155,396 2025 27,660,000 48,889,765 76,549,765 36,517,632 113,067,397 1,482,059 1,603,678 3,177,428 119,330,562 2026 32,175,000 47,542,815 79,717,815 33,328,185 113,046,000 1,482,059 1,603,678 3,177,428 119,309,165 2027 36,365,000 45,943,065 82,308,065 26,875,155 109,183,220 1,482,059 1,603,678 3,177,428 115,446,385 2028 38,980,000 44,124,815 83,104,815 23,305,173 106,409,988 1,482,059 1,603,678 3,177,428 112,673,153 2029 40,705,000 42,175,815 82,880,815 22,614,841 105,495,656 1,482,059 1,603,678 3,177,428 111,758,821 2030 45,190,000 40,140,565 85,330,565 20,337,097 105,667,662 1,482,059 1,603,678 3,177,428 111,930,827 2031 46,970,000 37,975,415 84,945,415 19,057,701 104,003,116 1,482,059 1,603,678 3,177,428 110,266,281 2032 49,055,000 35,686,015 84,741,015 16,557,357 101,298,372 1,482,059 1,603,678 3,177,428 107,561,536 2033 48,065,000 33,311,178 81,376,178 16,471,535 97,847,713 1,482,059 1,603,678 3,177,428 104,110,877 2034 50,185,000 30,993,028 81,178,028 16,636,095 97,814,122 1,482,059 1,603,678 3,177,428 104,077,287 2035 49,585,000 28,573,978 78,158,978 12,496,834 90,655,811 1,482,059 1,603,678 3,177,428 96,918,976 2036 51,900,000 26,289,422 78,189,422 5,910,876 84,100,298 1,482,059 1,603,678 3,177,428 90,363,463 2037 55,090,000 23,868,340 78,958,340 5,966,378 84,924,718 1,482,059 1,603,678 3,177,428 91,187,883 2038 57,555,000 21,462,860 79,017,860 2,374,160 81,392,020 1,482,059 1,603,678 3,177,428 87,655,185 2039 62,045,000 18,958,955 81,003,955 - 81,003,955 1,482,059 - 3,177,428 85,663,442 2040 64,140,000 16,321,450 80,461,450 - 80,461,450 4,262,059 - - 84,723,509 2041 67,275,000 13,183,600 80,458,600 - 80,458,600 4,260,879 - - 84,719,479 2042 70,570,000 9,891,750 80,461,750 - 80,461,750 4,262,064 - - 84,723,814 2043 36,235,000 6,363,250 42,598,250 - 42,598,250 4,260,459 - - 46,858,709 2044 28,040,000 4,551,500 32,591,500 - 32,591,500 4,261,064 - - 36,852,564 2045 29,445,000 3,149,500 32,594,500 - 32,594,500 4,258,724 - - 36,853,224 2046 21,020,000 1,677,250 22,697,250 - 22,697,250 4,263,439 - - 26,960,689 2047 12,525,000 626,250 13,151,250 - 13,151,250 4,259,899 - - 17,411,149 2048 - - - - - 4,258,259 - - 4,258,259 2049 - - - - - 4,263,364 - - 4,263,364 2050 - - - - - 4,259,904 - - 4,259,904 2051 - - - - - 4,263,034 - - 4,263,034 2052 - - - - - 4,262,444 - - 4,262,444 2053 - - - - - 4,261,488 - - 4,261,488 Total 1,167,225,000$ 899,881,040$ 2,067,106,040$ 472,694,687$ 2,539,800,727$ 85,679,168$ 32,073,564$ 63,548,551$ 2,721,102,010$ WIFIA Debt Service(3)SRF Debt Service(3)SRF Debt Service (WIFIA)(3)Senior DebtPrinicpalInterest(1)Debt Serivce Debt Service Debt Setvice
Outstanding and Planned BondsUnder Existing Voted Authority23*Par outstanding as of July 1, 2018. Not fully drawn. Date Series TermNew Money Par Issued Par OutstandingOutstanding04/28/04 2004B (SRF) 20 Year, Fixed 161,280,000$ 73,190,000$ 05/06/04 2004A 29 Year, Fixed 175,000,000 - 05/19/05 2005A (SRF) 20 Year, Fixed 6,800,000 3,120,000 04/27/06 2006A (SRF) 20 Year, Fixed 42,715,000 20,965,000 11/28/06 2006B (SRF) 20 Year, Fixed 14,205,000 7,400,000 11/28/06 2006C 30 Year, Fixed 60,000,000 - 10/28/08 2008A 30 Year, Fixed 30,000,000 - 10/28/08 2008B (SRF) 20 Year, Fixed 40,000,000 23,700,000 10/21/09 2009A (SRF) 20 Year, Fixed 23,000,000 14,783,300 12/15/09 2010A (SRF) 21 Year, Fixed 7,980,700 5,659,600 01/28/10 2010B 30 Year, Fixed 85,000,000 85,000,000 12/21/10 2010C (SRF) 20 Year, Fixed 37,000,000 25,787,000 11/17/11 2011A (SRF) 22 Year, Fixed 39,769,300 33,120,300 12/22/11 2011B 30 Year, Fixed 52,250,000 18,055,000 8/23/12 2012A 30 Year, Fixed 225,000,000 159,340,000 11/14/12 2012B 20 Year, Fixed - 131,935,000 10/31/13 2013A (SRF) 20 Year, Fixed 52,000,000 44,480,000 12/18/13 2013B 30 Year, Fixed 150,000,000 116,615,000 8/19/15 2015A (SRF) 20 Year, Fixed 75,000,000 67,584,000 12/15/15 2015B 30 Year, Fixed 150,000,000 192,810,000 12/22/16 2016A (SRF) 20 Year, Fixed 20,000,000 2,674,765*12/22/16 2016B (SRF) 20 Year, Fixed 75,500,000 25,582,916*12/20/16 2016C 30 Year, Fixed 150,000,000 147,295,000 12/19/17 2017A 30 Year, Fixed 200,000,000 316,175,000 PlannedDec. 2018 WIFIA 35 Year, Fixed 47,808,354 47,808,354 Dec. 2018 SRF 25,000,000 25,000,000 2019 SRF (WIFIA-Related) 49,483,900 49,483,900 Total 1,994,792,254$ 1,637,564,135$
IV. FINANCIAL PERFORMANCE UPDATE24
Historical Coverage25Notes: 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 2016 have been adjusted to also exclude the GASB 68 non-cash pension expense.Fiscal YearNet Available Revenues Principal Interest TotalTotal Senior Debt ServiceTotal Coverage RatioSenior Coverage Ratio2008 79,538,110 8,640,000 17,694,791 26,334,791 12,577,634 3.0 6.32009 81,283,885 12,110,000 17,503,892 29,613,892 13,197,272 2.7 6.22010 64,007,720 13,022,500 20,187,151 33,209,651 14,991,341 1.9 4.32011 59,641,434 14,576,800 20,140,021 34,716,821 17,247,269 1.7 3.52012 91,708,084 16,540,200 22,517,473 39,057,673 18,448,587 2.3 5.02013 95,181,961 18,749,700 31,191,190 49,940,890 28,256,656 1.9 3.42014 113,870,820 10,037,200 34,399,261 44,436,461 34,221,408 2.6 3.32015 128,080,337 20,252,200 41,596,192 61,848,392 38,352,415 2.1 3.32016 154,099,469 29,588,000 44,171,592 73,759,592 44,381,319 2.1 3.32017 167,090,678 38,026,700 51,333,869 89,360,569 58,182,077 1.9 2.92018 211,622,478 42,716,800 57,682,698 100,399,498 67,923,285 2.1 3.1Total Debt Service
Projected Coverage26*Reflects GASB 68 pension expense adjustmentActual Actual Projected Projected2017 2018 2019 2020Net Revenue* 167,090,679$ 208,226,653$ 229,040,900$ 261,968,136$ Debt ServiceBecoming Due in Each Fiscal YearSenior Lien Bonds58,182,077 67,923,285 77,943,955 78,092,911Total Debt89,360,569 100,399,498114,644,093 118,204,543CoverageSenior Bonds2.87x 3.07x 2.94x 3.35xTotal Debt1.87x 2.07x 2.00x 2.22x2017 Projected Coverage 2018 2019 2020Senior Bonds 2.84x 2.76x 2.63xTotal Debt 1.91x 1.90x 1.90xFiscal Year Ending June 30
Trend LiquidityLiquidity (with long-term investments) is expected to remain well in excess of 365 days through 2020 planning period. CIRP appropriations for the years 2013 through 2018 were close to $1.4 billion27*Unrestricted Cash & Investments reflect reclassifications per the District’s 2013 CAFR**Unrestricted Cash & Investments reflect reclassifications per the District’s 2014 CAFR***Reflects GASB 68 pension expense adjustmentKey Liquidity Ratios2013* 2014** 2015 2016*** 2017*** 2018***Cash and Investments (No Long-Term Unrestricted) $149,343,613 $188,544,191 $132,950,967 $182,927,020 $286,332,159 $300,591,076Days Cash on Hand/Liquidity Ratio 372 449 297 397 619 673Cash and Investments (Adds Long Term Unrestricted) $238,236,371 $257,118,093 $298,732,325 $339,921,143 $347,607,159 $367,855,784Days Cash on Hand/Liquidity Ratio 594 612 668 737 751 824Net Working Capital (No Long-Term Unrestricted) $144,815,216 $195,153,196 $141,906,809 $199,480,611 $300,033,117 $324,914,813Working Capital Ratio/Days Working Capital 361 465 317 433 649 727Net Working Capital (Adds Long-Term Unrestricted) $233,707,974 $263,727,098 $307,688,167 $356,474,734 $361,308,117 $392,179,521Working Capital Ratio/Days Working Capital 583 628 688 773 781 878
Long-Term Investment Portfolio(as of June 30, 2018)28Approximately 20% of Long-Term investment Portfolio allocated to Restricted Long-Term InvestmentsAvg. Days to MaturityAvg. Years to Duration534.76 1.44Product Type Callable Bond Face Value Market Value Coupon Rate Rating Maturity Date DurationFHLMC Non-Callable Bond 1,325,000.00 1,304,038.50 0.875% Aaa 7/19/2019 1.05FFCB Non-Callable Bond 5,000,000.00 4,957,810.00 1.750% Aaa 9/5/2019 1.17FHLB Non-Callable Bond 8,550,000.00 8,501,555.70 2.000% Aaa 9/13/2019 1.19TNOTES Non-Callable Bond 1,520,000.00 1,492,093.75 0.875% AA+ 9/15/2019 1.20TNOTES Non-Callable Bond 2,840,000.00 2,787,859.38 0.875% AA+ 9/15/2019 1.20TNOTES Non-Callable Bond 725,000.00 711,689.45 0.875% AA+ 9/15/2019 1.20FHLMC Callable Bond 7,000,000.00 6,909,560.00 1.500% Aaa 9/27/2019 1.23FHLMC Callable Bond 15,000,000.00 14,806,200.00 1.500% Aaa 9/27/2019 1.23FHLB Callable Bond 4,000,000.00 3,971,000.00 2.150% Aaa 2/14/2020 1.59FHLB Non-Callable Bond 4,000,000.00 4,104,008.00 4.125% Aaa 3/13/2020 1.65FHLB Non-Callable Bond 5,000,000.00 4,913,440.00 1.500% Aaa 3/13/2020 1.68FHLB Non-Callable Bond 3,000,000.00 3,078,006.00 4.125% Aaa 3/13/2020 1.65FHLB Non-Callable Bond 3,000,000.00 2,966,628.00 1.875% Aaa 3/13/2020 1.68TVA Non-Callable Bond 3,500,000.00 3,479,227.50 2.250% Aaa 3/15/2020 1.68TVA Non-Callable Bond 5,000,000.00 4,970,325.00 2.250% Aaa 3/15/2020 1.68TVA Non-Callable Bond 7,000,000.00 6,958,455.00 2.250% Aaa 3/15/2020 1.68TVA Non-Callable Bond 4,000,000.00 3,976,260.00 2.250% Aaa 3/15/2020 1.68FFCB Non-Callable Bond 5,000,000.00 4,913,750.00 1.500% Aaa 3/23/2020 1.71FNMA Non-Callable Bond 2,000.00 1,955.00 1.500% Aaa 6/22/2020 1.9585,462,000.00 84,803,861.28
Pension Fund UpdateMSD 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, 2017, MSD’s assumed rate of return is 6.90% with key statistics as follows:–595 active plan members–$277.98 million Actuarial Value of Assets –$48.4 million in unfunded liability, down from $67.0 million as of December 31, 2016 –Actuarial Value of Assets/Actuarial Accrued Liability increased slightly to 83.1% as of December 31, 2017, versus 82.0% as of December 31, 2016Effective 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 October 31, 2018, the plan has 433 participants and $8.6 million in assets29
OPEB ConsiderationsMSD’s total OPEB unfunded accrued liability as of December 31, 2017, the latest actuarial valuation, was approximately $24.2 Million, assuming a 3.44% return on investment –The initial projected liability of $76 million (based on a 2006 study) has been significantly reduced to $24 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 126 individuals in this group (as of 6/30/2017) –MSD has continued to elect a Pay-Go approach to assure flexibility in future benefits. 30
V. SUMMARY OF CREDIT STRENGTHS31
MSD Credit StrengthsConsistently Strong Financial Performance–The District has maintained healthy liquidity levels–Actual coverage levels have exceeded 2017 projections–Proactive management of pension and OPEB obligations mitigate future liabilitiesSuccessful Rate Proposal and Rate Commission Process–The District Board of Trustees accepted the Rate Commission’s recommendations for FY2017-FY2020–Consistent with the District’s prior referendums, the voters overwhelmingly approved $900 Million bond authorization–Voters also approved District-wide levy for stormwater servicesOn 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 Regulators32
Contact Phone/EmailTim R. Snoke, Secretary-Treasurer(314) 768 6222tsnoke@stlmsd.comJohn Strahlman, Assistant Secretary-Treasurer(314) 768 6225jstrahlman@stlmsd.comBethany Pugh, Managing Director – PFM(440) 239 7070pughb@pfm.comMatthew Schnackenberg, Director - PFM(612) 371 3771schnackenbergm@pfm.comTionna Pooler, President - IPA(515) 259 8193tpooler@independentpublicadvisors.comContact Information33