HomeMy Public PortalAboutExhibit MSD 51- 2013 Rating Agency PresentationMetropolitan St. Louis Sewer District
Credit Presentation
November 7, 2013
Exhibit MSD 51
2
Participants
MSD Participants
Brian L. Hoelscher, P.E., Executive Director
Brenda A. Schaefer, Secretary-Treasurer
Susan M. Myers, General Counsel
Janice M. Zimmerman, Director of Finance
Richard Unverferth, P.E., Director of Engineering
Finance Team Participants
Bethany Pugh, Jeanne Vanda, Public Financial Management - Co-Financial Advisor
Tionna Pooler, Independent Public Advisors - Co-Financial Advisor
Don Wilbon, JP Morgan, Lead Underwriter
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Table of Contents
Overview & Governance
Review of Regulatory & Litigation Issues
CIRP Update and 2013 Funding Plan
Financial Performance Update
Summary of Credit Strengths
4
Overview & Governance
5
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.
•Revenue Bonds are issued pursuant to referendum approval of a majority of voters.
•Charter changes also subject to majority approval of voters.
Authority & Governance
Organization
6
Board of Trustees Rate Commission
Civil Service Commission
Internal Auditor
Secretary- Treasurer
Executive Director
Finance Information Systems Engineering Human
Resources
General Counsel
Operations
= New Management
Management Team Leadership Changes
7
Brian Hoelscher, P.E., Executive Director
•Assumed executive leadership position in March, 2013
•Eighteen 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
Brenda A. Schaefer, CTP, Secretary-Treasurer
•Assumed financial leadership position in November, 2012
•Licensed as a Certified Treasury Professional (CTP)
•Prior experience as Corporate Director-Treasury of major St. Louis based healthcare provider
•20 years in corporate leadership roles focusing on cash management, investment and debt functions
Richard Unverferth, P.E., Director of Engineering
•Assumed engineering leadership position in May, 2013
•Twenty-six 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
Service Area
8
Treatment Plants
Includes 525 square miles
pursuant to 1977 referendum
and subsequent annexation.
Includes the City of St. Louis
and 91 other cities, including
approximately 90% of St.
Louis County.
Serves a population of 1.3
million.
Encompasses 5 watershed
areas.
9
MSD currently provides secondary treatment for an average daily flow of
356 MGD, operating seven treatment facilities.
The System serves approximately 425,000 wastewater customers, most of
which (94%) are single- and multi-family residential customers.
System Profile
Approximately 64% of customer
billings are in St. Louis County, with
the balance of 36% in the City of St.
Louis.
Ten largest customers contribute
approximately 6% of user charges as
indicated to the right:
FY 2013
Customers User Charges % Total
InBev (Anheuser-Busch Inc.)5,715,199 2.42%
Washington University 1,475,706 0.62%
Mallinckrodt, Inc.1,405,103 0.59%
City of St. Louis 1,030,029 0.44%
St. Louis University Hospital 1,028,812 0.44%
Sigma-Aldrich 735,691 0.31%
Boeing 720,564 0.30%
Sensient Colors Inc.702,801 0.30%
Saint Louis Zoo 663,673 0.28%
Prairie Farms Dairy 590,349 0.25%
Total 14,067,927 5.95%
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In 2012, MSD received the NACWA Excellence in Management Gold Award.
The program acknowledges the significant achievements of NACWA member
agencies in the utility management arena. Honorees have implemented and
sustained, for a continuous three-year period, successful programs that
address the range of management challenges faced by public clean water
utilities in today’s competitive environment.
In 2013, MSD received several NACWA Peak Performance Awards recognizing
public wastewater treatment facilities for outstanding environmental
compliance in the 2012 calendar year:
•The top “Platinum Performance Award” honors member agency facilities for outstanding
100% compliance over a five-year or more consecutive period.
–Missouri River treatment plant (six consecutive years)
–Fenton and Lower Meramec plants (five consecutive years)
•The “Gold Performance Award” honors facilities with one year 100% compliance.
–Coldwater Creek, Bissell Point, Lemay, and Grand Glaize plants earned Gold Honors
MSD Wins Top National Association of Clean
Water Agency (NACWA) Awards
11
Review of Regulatory & Litigation
Issues
12
Clean Water Act & Stormwater Litigation
The U.S. District Court for the Eastern District of Missouri (the “Court”)
resolved outstanding Clean Water Act litigation.
•On April 27, 2012, the Court entered the Consent Decree which had been lodged on
August 4, 2011, with no substantive changes after the public comment period.
•The Court realigned the State of Missouri as a defendant and reaffirmed the August 3,
2009 decision by the Eighth Circuit Court of Appeals that the State had waived its
sovereign immunity.
Update on Stormwater Litigation due to 2012 actions
•A ruling March 27, 2012 by the Court of Appeals affirmed the Trial Court’s decision that
the stormwater fee is a tax, that no refund was due, and reversed the application of a
multiplier on attorney’s fees, significantly reducing MSD’s financial liability to an estimated
$2.5 million for attorney’s fees.
•The Missouri Supreme Court accepted the case on transfer in October 2012. Oral
arguments were heard on May 21, 2013. We are awaiting the decision.
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Scope of Consent Decree
Consent Decree substantially aligns with the direction and plan initiated by MSD.
•Projects implemented over 23 years estimated at $4.7 Billion in 2010 dollars, with approximately
$1 Billion in expenditures from 2012 through 2016;
•Operating funds committed to a substantial Capacity, Management, Operations and
Maintenance (“CMOM”) Program is aimed at preventing overflows and building backups;
•MSD has demonstrated ability to manage large annual capital projects on budget and on time.
MSD’s long term planning means costs are better defined than other programs
•MSD’s CSO Long Term Control Plan was approved June 1, 2011, and provides solid cost
parameters for about 40% of the capital program;
•The April 27, 2012 Consent Decree defines another 20% of costs; and
•The SSO Master Plan, to be completed by December 2013, will provide a road map for the
remaining 40% of program costs.
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Consent Decree Implementation –
Accomplishments
Since the entry of the Consent Decree in April 2012, MSD has successfully
completed numerous milestones and reporting requirements for the Consent
Decree.
•Submitted and received approval on multiple program plans for sewer system
operations and maintenance.
•Successful completion of major capital projects and sewer system improvements.
•Completed approximately $37.6 million of sewer system rehabilitation.
•Implemented approved CMOM program for sewer system maintenance.
Consent Decree Implementation - Future
As MSD moves forward with its consent decree implementation several key factors will impact
the overall program:
The mandated non-capital portion of the program paid by operating funds has grown in
scope, with strong potential for substantial long-term savings in reducing and preventing
system overflows & building backups.
•Projects included in this category are future project planning, sewer system inspection (CCTV), sewer rehabilitation
and lining, and Combined Sewer Overflow volume reduction projects (Green Infrastructure Solutions)
•The 2014 thru 2016 annual costs grew from $11.3 million $18.5 million due to strong community response to Green
Infrastructure Solutions Program.
•Early sewer inspection results indicate a system in relatively better condition than anticipated thus reducing future
rehabilitation costs
•MSD’s focus on budgetary controls and operational efficiencies have successfully contained Total Operations and
Maintenance costs, allowing additional funds to flow to PAYGO financing of the CIRP
The favorable construction bid environment has enabled MSD to accommodate added
regulatory scope while staying within CIRP budget.
•$46 million in 13 projects were added in 2012 and 2013, with total projects yet delivered within original budget
•District remains confident that 2012-2016 CIRP will be delivered on time and within budget
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16
CIRP Update and 2013
Funding Plan
17
CIRP Investment Planned: 2012 – 2016
Total CIRP Appropriations for years 2012 through 2016 is estimated at
approximately $1.1 Billion.
Fiscal Year Program Level
2012 Actual $ 119,184,000
2013 Actual $ 184,451,000
2014 $ 245,223,000
2015 $ 313,621,000
2016 $ 266,632,000
Total 5 Year Program $ 1,129,111,000
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Allocation of 2012 – 2016 CIRP Projects
$159.6 Million for the reduction and control of CSOs
$596.8 Million for the elimination of SSOs
$212.2 Million for system projects
$160.5 Million for treatment plant improvements
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Series 2013B Bonds will fund approximately $150 million in projects
planned for Fiscal Year 2014.
•Construct collection system improvements to reduce combined sewer overflows
eliminate sanitary sewer overflows, and reduce building backups.
•Initial design work on storage tunnels, storage tanks, and relief sewers to improve
system capacity.
•Construct further improvements to the Lemay plant’s secondary treatment system.
Project planning anticipates next new money bond issue in Fall, 2014
$150 Million Series 2013B Bond Projects
CIRP Funding – Debt and PAYGO
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CIRP Debt Cash % Debt % Cash
2004-2012 1,263,851,800$ 753,278,387$ 510,373,413$ 60%40%
FY 2013 FY 2014 FY 2015 FY 2016 Subtotal
PAYGO Directly to CIRP 24,200,001$ 25,000,000$ 26,208,000$ 40,000,000$
Asset Management Projects 10,372,081$ 16,275,000$ 16,598,000$ 18,999,000$
Capitalized Internal Labor 10,989,822$ 11,595,087$ 11,916,927$ 12,131,603$
Total Planned PAYGO 45,561,904$ 52,870,087$ 54,722,927$ 71,130,603$ 224,285,521$
CIRP Appropriations 184,451,000$ 245,223,000$ 313,621,000$ 266,632,000$ 1,009,927,000$
PAYGO as % CIRP 25%22%17%27%22%
Planned PAYGO
2013 - 2016 Unrestricted cash grows
•Unrestricted cash is expected to grow from FY 2013 levels.
•Excess Unrestricted Cash may be available for PAYGO in later years.
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Series 2013B Projected Debt Service
Series 2013B is amortized
over 30 years, level debt
structure with a weighted
average life of 19.1 years.
Fiscal
Year End Principal Interest Debt Service
5/1/2014 - 2,812,500 2,812,500
5/1/2015 - 7,500,000 7,500,000
5/1/2016 1,000,000 7,500,000 8,500,000
5/1/2017 3,000,000 7,450,000 10,450,000
5/1/2018 3,000,000 7,300,000 10,300,000
5/1/2019 3,000,000 7,150,000 10,150,000
5/1/2020 3,145,000 7,000,000 10,145,000
5/1/2021 3,305,000 6,842,750 10,147,750
5/1/2022 3,470,000 6,677,500 10,147,500
5/1/2023 3,640,000 6,504,000 10,144,000
5/1/2024 3,825,000 6,322,000 10,147,000
5/1/2025 4,015,000 6,130,750 10,145,750
5/1/2026 4,215,000 5,930,000 10,145,000
5/1/2027 4,425,000 5,719,250 10,144,250
5/1/2028 4,650,000 5,498,000 10,148,000
5/1/2029 4,880,000 5,265,500 10,145,500
5/1/2030 5,125,000 5,021,500 10,146,500
5/1/2031 5,380,000 4,765,250 10,145,250
5/1/2032 5,650,000 4,496,250 10,146,250
5/1/2033 5,930,000 4,213,750 10,143,750
5/1/2034 6,230,000 3,917,250 10,147,250
5/1/2035 6,540,000 3,605,750 10,145,750
5/1/2036 6,865,000 3,278,750 10,143,750
5/1/2037 7,210,000 2,935,500 10,145,500
5/1/2038 7,570,000 2,575,000 10,145,000
5/1/2039 7,950,000 2,196,500 10,146,500
5/1/2040 8,345,000 1,799,000 10,144,000
5/1/2041 8,765,000 1,381,750 10,146,750
5/1/2042 9,205,000 943,500 10,148,500
5/1/2043 9,665,000 483,250 10,148,250
Total 150,000,000 143,215,250 293,215,250
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Outstanding & Planned Bonds
Under Existing Voted Authority
Date Series Term Par Issued Par Outstanding
Outstanding
05/06/04 2004A 30 Year, Fixed $175,000,000 $2,375,000
04/28/04 2004B (EIERA)20 Year, Fixed 161,280,000 112,405,000
05/19/05 2005A (EIERA)20 Year, Fixed 6,800,000 4,750,000
04/27/06 2006A (EIERA)20 Year, Fixed 42,715,000 32,085,000
11/28/06 2006B (EIERA)20 Year, Fixed 14,205,000 10,945,000
11/28/06 2006C 30 Year, Fixed 60,000,000 60,000,000
10/28/08 2008A 30 Year, Fixed 30,000,000 30,000,000
10/28/08 2008B (EIERA)20 Year, Fixed 40,000,000 32,940,000
10/21/09 2009A (EIERA)20 Year, Fixed 23,000,000 20,093,400
12/15/09 2010A Direct Loan 21 Year, Fixed 7,980,700 7,471,600
01/28/10 2010B 30 Year, Fixed 85,000,000 85,000,000
12/21/10 2010C Direct Loan 20 Year, Fixed 37,000,000 33,999,000
11/17/11 2011A Direct Loan 22 Year, Fixed 39,769,300 39,769,300
12/22/11 2011B 30 Year, Fixed 52,250,000 50,610,000
08/23/12 2012A 30 Year, Fixed 225,000,000 225,000,000
11/14/12 2012B 20 Year, Fixed 141,730,000 141,730,000
10/31/13 2013A Direct Loan 20 Year, Fixed 52,000,000 52,000,000
Planned
Dec. 2013 2013B 30 Year, Fixed 150,000,000 150,000,000
Total:$1,343,730,000 $1,091,173,300
Projected Debt Service through 2016 Rate Period
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Notes:
(1) Includes BABs subsidy.
(2) Through FY2016.
(3) Maximum senior debt
service (including Series
2013B and projected future
debt service through 2016
rate period) of $81.6 million
in Fiscal Year 2030.
(4) Include fees associated
with the loans.
(5) Maximum total debt
service (including Series
2013B and projected future
debt service through 2016
rate period) of $102.6
million in Fiscal Year 2022.
Year Ended Outstanding Net Series 2013B Future Senior Total Senior Total Future Sub.Total Sub.Total Projected
June 30 Debt Service(1)Debt Service Debt Service(2)Net Debt (3)Sub. Debt (4)Debt Service(2)Debt Service Debt Service(5)
2014 31,566,761 2,812,500 34,379,261 21,138,514 21,138,514 55,517,775
2015 31,104,863 7,500,000 4,750,000 43,354,863 23,187,926 23,187,926 66,542,789
2016 36,243,363 8,500,000 14,125,000 58,868,363 26,377,931 424,000 26,801,931 85,670,293
2017 36,473,113 10,450,000 19,750,000 66,673,113 26,719,641 1,765,030 28,484,671 95,157,783
2018 36,363,738 10,300,000 20,700,000 67,363,738 26,608,113 3,251,220 29,859,333 97,223,071
2019 36,458,550 10,150,000 23,210,000 69,818,550 26,603,740 3,790,220 30,393,960 100,212,510
2020 36,422,250 10,145,000 25,679,500 72,246,750 26,591,661 3,790,154 30,381,815 102,628,565
2021 36,308,500 10,147,750 25,689,000 72,145,250 26,555,792 3,790,124 30,345,915 102,491,165
2022 36,271,000 10,147,500 25,699,750 72,118,250 26,726,042 3,791,074 30,517,116 102,635,366
2023 36,206,250 10,144,000 25,710,750 72,061,000 26,517,528 3,790,955 30,308,483 102,369,483
2024 35,850,950 10,147,000 25,716,000 71,713,950 26,497,468 3,790,699 30,288,167 102,002,117
2025 35,871,750 10,145,750 25,734,750 71,752,250 26,462,203 3,790,274 30,252,477 102,004,727
2026 39,033,550 10,145,000 25,745,250 74,923,800 22,989,956 3,790,578 26,780,534 101,704,334
2027 42,667,250 10,144,250 25,751,750 78,563,250 16,264,285 3,790,564 20,054,849 98,618,099
2028 43,466,325 10,148,000 25,773,250 79,387,575 12,451,259 3,790,163 16,241,422 95,628,997
2029 43,241,325 10,145,500 25,782,750 79,169,575 11,512,228 3,790,298 15,302,526 94,472,101
2030 45,682,975 10,146,500 25,799,500 81,628,975 7,545,152 3,789,898 11,335,050 92,964,025
2031 45,308,625 10,145,250 25,811,750 81,265,625 7,512,453 3,789,918 11,302,371 92,567,996
2032 45,100,588 10,146,250 25,828,250 81,075,088 6,012,032 3,790,226 9,802,259 90,877,346
2033 40,711,118 10,143,750 25,847,250 76,702,118 6,009,301 3,790,750 9,800,051 86,502,168
2034 40,518,893 10,147,250 25,867,000 76,533,143 6,009,620 3,789,430 9,799,050 86,332,193
2035 37,500,030 10,145,750 25,880,750 73,526,530 1,709,860 3,789,221 5,499,081 79,025,611
2036 37,535,822 10,143,750 25,907,000 73,586,572 - 3,255,950 3,255,950 76,842,522
2037 38,302,803 10,145,500 25,923,250 74,371,553 - 1,697,410 1,697,410 76,068,963
2038 38,355,648 10,145,000 25,948,000 74,448,648 - - - 74,448,648
2039 38,412,880 10,146,500 25,968,750 74,528,130 - - - 74,528,130
2040 37,866,000 10,144,000 25,993,500 74,003,500 - - - 74,003,500
2041 37,865,500 10,146,750 26,019,750 74,032,000 - - - 74,032,000
2042 37,868,250 10,148,500 26,045,000 74,061,750 - - - 74,061,750
2043 - 10,148,250 26,071,750 36,220,000 - - - 36,220,000
2044 - - 26,102,250 26,102,250 - - - 26,102,250
2045 - - 12,883,500 12,883,500 - - - 12,883,500
Senior Debt Subordinate Debt
24
Financial Performance
Update
25
13.97 13.97 13.97 13.97 16.87 20.58 22.38 22.38
25.74 25.74 26.26 27.56 28.73 31.39 34.85
38.81
43.93
0
10
20
30
40
50
2000 2002 2004 2006 2008 2010 2012 2014 2016Residential Bill -$/Mo. Fiscal Year
Historic and Projected Residential Bills
Adopted Rate Adjustments, Historic & Projected Average Monthly Bill
Relative to NACWA National Average
Source: National Association of Clean Water Agencies (NACWA)
NACWA National Average MSD Projected Average Monthly Bill
Rate adjustments adopted June 14, 2012 are projected to increases revenues
as follows:
Fiscal Year 2012 2013 2014 2015 2016
Percentage Increase 1.53%6.77%8.89%10.30%12.13%
26
Historical Coverage
TOTAL NET TOTAL SENIOR
FISCAL SENIOR PLEDGED COVERAGE COVERAGE
YEAR PRINCIPAL INTEREST TOTAL DEBT SERVICE REVENUES RATIO RATIO
2004 N/A 924,164 924,164 - 50,485,005 54.6 54.6
2005 6,800,000 14,799,402 21,599,402 8,052,321 74,184,923 3.4 9.2
2006 5,407,500 13,835,332 19,242,832 9,665,734 79,780,090 4.1 8.3
2007 7,817,500 16,512,429 24,329,929 10,874,084 76,375,307 3.1 7.0
2008 8,640,000 17,694,791 26,334,791 12,577,634 79,538,110 3.0 6.3
2009 12,110,000 17,503,892 29,613,892 13,197,272 81,283,885 2.7 6.2
2010 13,022,500 20,187,151 33,209,651 14,991,341 64,007,720 1.9 4.3
2011 14,576,800 20,140,021 34,716,821 17,247,269 59,641,434 1.7 3.5
2012 16,540,200 22,956,366 39,496,566 18,449,572 91,708,084 2.3 5.0
2013 18,749,700 31,436,995 50,186,695 28,238,846 95,181,961 1.9 3.4
PLEDGED REVENUE COVERAGE
TOTAL DEBT SERVICE
Note: 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.
27
Projected Coverage
Actual Actual Projected Projected Projected
2012 2013 2014 2015 2016
Net Revenue 91,708,084 95,181,961 100,392,916 117,190,194 141,743,819
Debt Service
Becoming Due in Each Fiscal Year
Senior Lien Bonds 18,449,572 28,238,846 34,379,261 43,354,863 58,868,363
Total Debt 39,496,566 50,186,694 55,517,775 66,542,789 85,670,293
Coverage
Senior Bonds 4.97x 3.37x 2.92x 2.70x 2.41x
Total Debt 2.32x 1.90x 1.81x 1.76x 1.65x
2012 Projected Coverage
Senior Bonds 4.40x 2.99x 2.84x 2.55x 2.39x
Total Debt 2.15x 1.73x 1.77x 1.67x 1.68x
Fiscal Year Ending June 30
28
Trend of Liquidity
2010 2011 2012 2013
Key Liquidity Ratios
Cash and Investments (No Long-Term Unrestricted)N/A N/A $114,403,797 $149,343,613
Days Cash on Hand / Liquidity Ratio N/A N/A 309 372
Cash and Investments (Adds Long-Term Unrestricted)$180,468,976 $190,716,229 $165,246,915 $238,236,371
Days Cash on Hand / Liquidity Ratio 452 434 446 594
Net Working Capital (No Long-Term Unrestricted)N/A N/A $117,289,942 $145,165,055
Working Capital Ratio /Days Working Capital N/A N/A 317 362
Net Working Capital (Adds Long-Term Unrestricted)$191,974,679 $216,350,301 $168,133,060 $234,057,813
Working Capital Ratio /Days Working Capital 481 492 454 584
Fiscal Year Ending June 30
Liquidity (with long-term investments) is expected to remain well in excess of 365
days through 2016 planning period.
29
Long-Term Investment Portfolio (as of June 30, 2013)
Product Type Callability Face Value Market Value Coupon Moody's Maturity Date Duration
TNOTES Non-Callable Bond 9,500,000$ 9,541,969.86$ 0.62515-Jul-14 1.05
FNMA Non-Callable Bond 4,000,000 4,059,276.00 1.500Aaa 8-Sep-14 1.20
TNOTES Non-Callable Bond 10,000,000 10,004,687.50 0.250Aaa 15-Sep-14 1.22
FNMA Non-Callable Bond 10,000,000 10,143,520.00 1.500Aaa 14-Oct-14 1.30
TNOTES Non-Callable Bond 1,000,000 1,000,312.50 0.250Aaa 15-Dec-14 1.47
TNOTES Non-Callable Bond 5,000,000 5,001,562.50 0.250Aaa 15-Dec-14 1.47
FFCB Callable Bond 10,000,000 9,990,757.00 0.480Aaa 23-Jul-15 2.07
FNMA Callable Bond 2,000,000 1,994,637.80 0.500Aaa 22-Oct-15 2.32
FHLB Callable Bond 11,000,000 10,958,468.40 0.400Aaa 23-Oct-15 2.32
FHLMC Callable Bond 5,000,000 4,971,137.00 0.450Aaa 15-Jan-16 2.55
FNMA Callable Bond 12,000,000 11,942,415.60 0.550Aaa 26-Feb-16 2.67
FNMA Callable Bond 6,429,000 6,387,630.03 0.500Aaa 28-Mar-16 2.75
FHLB Callable Bond 5,000,000 4,963,717.50 0.700Aaa 27-Dec-16 3.50
90,929,000$ 90,960,091.69$
FNMA Callable Bond 8,050,000$ 8,010,687.83$ 0.625Aaa 29-Apr-16 2.84
CD Non-Callable Bond 100,000 100,000.00 1.440Aaa 19-Mar-17 3.73
FHLMC Callable Bond 12,000,000 11,793,242.40 1.000Aaa 27-Sep-17 4.25
FHLMC Callable Bond 6,605,000$ 6,486,757.29$ 1.250Aaa 27-Jun-18 5.00
Long Term (+365)117,684,000 117,350,779.21
Long-term Inv.
Unrestricted Callability
Avg. Days to
Maturity
Avg. Yrs.
Duration
Mod.
Duration to
1st Call
59,636,092.52 Callable 947.71 2.60 1.86
Callable 78,084,000 77,499,450.85 30,665,733.48 Non-Callable 467.67 1.28 1.28
Non Callable 39,600,000 39,851,328.36 90,301,826.00 Total
Total Long Term 117,684,000 117,350,779.21
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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, 2011 MSD lowered its actuarial assumed rate of return from
7.50% to 7.25% with key statistics as of January 1, 2013 as follows:
•803 active plan members
•$221.1 million actuarial value of assets
•$45.2 million in unfunded liability, down from $49.2 million as of January 1, 2012
•Funded ratio of 83.0% as of January 1, 2013, up from 80.7% January 1, 2012
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, 2012 the plan has 134 participants and $650 thousand in assets
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OPEB Considerations
MSD’s total OPEB unfunded accrued liability as of June 30, 2014 has been
estimated at approximately $26.0 million, assuming a 3.25% return on
investment (Report by Milliman, Inc. dated November 2013).
•The initial projected liability of $76 million (based on a 2006 study) has been
significantly reduced to $26.0 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 136 individuals in this
group.
•MSD has continued to elect a Pay-Go approach to assure flexibility in future benefits.
The current recognized liability is $4,018,709.
32
Summary of Credit
Strengths
33
MSD Credit Strengths
The EPA Consent Decree brings definition to the scope and timeframe for future
investment and is consistent with MSD’s long term planning efforts.
•Proactive leadership has MSD well positioned to successfully implement the capital
program mandated by the Consent Decree.
•Proven ability to effectively manage large annual capital plans.
Strong stakeholder support again affirmed by 2011 Rate Commission recommendations
and June 5, 2012 Bond Referendum that provide funding for initial Consent Decree
projects
•$1.0 billion in projects funded through 2016 with affordable rate structure.
Experienced management further enhances bondholder security.
•Close monitoring of financial performance contribute to strong budget performance.
•Shift to a defined contributions plan moderates future pension obligation while changes to
benefits reduces OPEB obligations.
•Actual debt coverage is strong and has exceeded 2012 projections while liquidity is
anticipated to remain well in excess of 365 days, metrics consistent with premium credit.
34
Tentative Financing Schedule
Date Activity
November 7 Rating Agency Meetings
Week of November 11/18 Release of Ratings
Week of November 13/20 Electronic Distribution of POS
Week of December 2 Pricing of the Bonds
Week of December 16 Close and Deliver Funds
35
MSD Contact Information
Phone/Email
Brian L. Hoelscher, P.E., Executive Director 314-768-6245
blhoel@stlmsd.com
Brenda A. Schaefer, CPA, Secretary-Treasurer 314-768-6222
bshaefer@stlmsd.com
Susan Myers, General Counsel 314-768-6366
smyers@stlmsd.com
Janice M. Zimmerman, Director of Finance 314-768-6299
jzimmer@stlmsd.com
Richard Unverferth, Director of Engineering 314-768-6204
rlunve@stlmsd.com
MSD Staff