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Home My Public Portal AboutMoodys 2022B Rating Agency Credit PresentationThe Metropolitan St. Louis Sewer District Credit Presentation May 4, 2022 Participants 1 District Participants Tim Snoke, Secretary-Treasurer John Strahlman, Assistant Secretary-Treasurer Finance Team Participants PFM Financial Advisors LLC -Co-Municipal Advisor •Matthew Schnackenberg, Managing Director •Bethany Pugh, Managing Director •Kevin Dowling, Senior Analyst Independent Public Advisors, LLC -Co-Municipal Advisor •Tionna Pooler, President Table of Contents 2 I.Overview and Governance II.Review of Regulatory Compliance and Program III.COVID-19 Response IV.Fiscal Year 2022 Update V.Capital Improvement and Replacement Program (CIRP) Update and Funding Plan VI.Financial Performance Update VII.Summary of Credit Strengths VIII.Financing Schedule and Contact Information 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 ServiceCommission Secretary- Treasurer Internal Auditor RateCommission Executive DirectorGeneral Counsel HumanResources Finance InformationSystems 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 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 In FY21 MSD treated an average daily flow of 301 MGD, operating seven treatment facilities. The average daily flow over the past five years is 333 MGD 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 4.2% of user charges as indicated to the right: FY 2021 Customers User Charges % Total InBev Anheuser-Busch $5,329,515 1.25% The City of St. Louis 2,088,772 0.49% Sigma-Aldrich 1,839,263 0.43% Missouri-American Water Co.1,728,302 0.41% Washington University 1,688,185 0.40% GKN Aeropsace N America Inc.1,064,644 0.25% Jost Real Estate LLC 1,064,622 0.25% The Boeing Company 1,051,546 0.25% BJC Health System 1,034,101 0.24% St. Louis University 948,931 0.22% Total $17,837,881 4.19% MSD Wins Top National Awards In 2021, MSD received several NACWA Peak Performance Awards recognizing public wastewater treatment facilities for outstanding environmental compliance in the 2020 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 13 consecutive years) Missouri River Treatment Plants (perfect compliance for 7 consecutive years) Grand Glaze Treatment Plants (perfect compliance for 6 consecutive years) –The “Gold Performance Award” honors facilities with one year 100% compliance Lemay and Coldwater Creek Treatment plants earned Gold honors –The “Silver Performance Award” honors facilities with five or less violations per year Bissel Treatment Plant earned Silver honors 10 MSD Wins Top National Awards The District has been recognized with the Government Finance Officers Association’s (GFOA) Distinguished Budget Presentation Award every year since 1987, the certificate of Achievement for Excellence in Financial Reporting every year since 1988. The District also received the GFOA’s Award for Outstanding Achievement in Popular Annual Financial Reporting every year since 2012, the first year MSD provided a submittal for review 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 adopted the ordinance approving the rate for fiscal year 2021 on June 11, 2020. Rates were effective as of October 1, 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://msdprojectclear.org/about/rate-commission/ 13 Typical Bill for Single Family Residence using 6ccf/month Rate % Change FY 2020 $55.57 10.6% FY 2021 $56.40 1.5% FY 2022 $58.33 3.4% FY 2023 $60.36 3.5% FY 2024 $62.59 3.7% 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 $6 billion of capital system improvements over an original 23 year period –Five year time extension granted by EPA, lessening financial impacts –Over $2.3 Billion in capital expenditures from 2013 through 2021 –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, and 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, removing 92 Sanitary Sewer Overflow structures –Completed three major Combined Sewer Overflow system milestones with the completion of the Lemay Redundant Force Main and Lemay Treatment Plant Secondary Expansion, and the Maline CSO Tunnel Storage Facility –Rehabilitated, repaired, or replaced over 1,150 miles of the sewer system –Received EPA approval for the 2015 $100 Million CSO Volume Reduction Green Infrastructure Program Plan, and implementation is over 30% complete. Regulatory Compliance— Program Notes and the Future 17 Program Notes –The 2018 to 2021 capital program was under budget –The capital program for 2022 includes 122 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 five 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. COVID-19 RESPONSE 18 COVID-19 Response 19 On April 6, 2021 Proposition Y passed providing The District $500 million in bonding authorization. Vote was originally scheduled for April 7, 2020 but postponed due to COVID. In FY 21, user charge revenue was down $12.2 million , or 2.8% from budget due entirely to commercial accounts and driven by mandated or voluntary shutdowns due to COVID. On September 9, 2021, The District’s Board of Trustees passed Resolution 3702 requiring all District Employees to be vaccinated or provide a weekly negative COVID-19 test. All changes were implemented to improve employee and stakeholder safety and reduce operating costs while continuing to provide high quality customer service. COVID-19 Response (Con’t) 20 The District worked with the State of Missouri to obtain $38,000 in federally funded COVID relief fiscal recovery funds mainly for homeowner’s wastewater bill assistance from the Low-Income Housing Water Assistance Program (LIHAP) The District worked with the State of Missouri to obtain $30,000 in federally funded COVID relief fiscal recovery funds mainly for utility assistance for tenants from the Missouri State Assistance for Housing Relief (SAFHR) program The District also applied for and obligated $886,000 in Federal Emergency Management Association (FEMA) assistance to help reimburse costs associated with COVID-19 mitigation expenses. The District has received approximately $369,000 and in the process of submitting a 2nd reimbursement request for an additional $480,000 by the end of FY 22. On April 14, 2022, The District’s Board of Trustees passed Resolution 3745 suspending MSD’s requirement that all District Employees be vaccinated or provide weekly negative COVID-19 test. IV. FISCAL YEAR 2022 UPDATE 21 Fiscal Year 2022 Update (As of March 31, 2022) 22 YTD User Charge Revenue up $10.9 MM or 2.5% from budget YTD Operating Expenses are down $10.9 MM or 4.6% from budget CIRP Fund Appropriation Tracking at 94% of budget Both Senior and All in Debt Coverage Ratios well above target V. CAPITAL IMPROVEMENT AND REPLACEMENT PROGRAM (CIRP) UPDATE AND FUNDING PLAN 23 CIRP Appropriations: 2018-2021 Wastewater CIRP appropriations for the years 2018 through 2021 were just under $1.2B with over $2.3B total CIRP funded 2013 through 2021 Allocation of 2018-2021 CIRP Projects: –$523 Million for the elimination of Sanitary Sewer Overflows –$404 Million for system renewal, capacity, and other projects –$169 Million for the reduction and control of Combined Sewer Overflows –$77 Million for treatment plant improvements 24 Fiscal Year Program Level (Millions) 2018 Actual $286.0 2019 Actual $290.0 2020 Actual $255.0 2021 Actual $342.0 2022 YTD Actual $246.5 5-Year Program Total $1,419.5 CIRP Appropriations Planned: 2021-2024 Allocation of 2021-2024 CIRP Projects: –21% of the Total 4-Year Program for the elimination of Sanitary Sewer Overflows –37% of the Total 4-Year Program for system renewal, capacity, and other projects –10% of the Total 4-Year Program for the reduction and control of Combined Sewer Overflows –32% of the Total 4-Year Program for treatment plant improvements 25 Fiscal Year Program Level (Millions) 2021 Actual $342.0 2022 Estimate $328.0 2023 Estimate $392.0 2024 Estimate $525.0 Total 4-Year Program $1,587.0 * 2022 YTD Actual $246.5M * CIRP Funding—Debt and Cash Excess unrestricted cash may be available for PAYGO in later years 26 Fiscal Years CIRP Debt Cash % Debt % Cash 2004 - 2021 $3,241,955,255 $2,264,501,025 $977,454,230 70%30% Fiscal Years Actual 2020 - 2024 FY 2021 FY 2022 FY 2023 FY 2024 Subtotal Cash to CIRP $112,328,662 $116,500,000 $111,000,000 $109,000,000 $448,828,662 CIRP Needs $290,256,122 $277,337,200 $392,161,361 $496,856,909 $1,456,611,592 Cash as % CIRP 39%42%28%22%31% Planned PAYGO Plan of Financing –Series 2022B New Money Bonds $100M in par to produce approximately $113M in funds for CIRP Level annual debt service through 2052 Refunding Bonds Small current refunding for level savings of remaining maturities of the Series 2012A and 2012B Level annual savings with final maturity in 2036 27 Fiscal Year New Money Debt Service Refunding Debt Service Total Debt Service 2023 6,471,111$ 4,910,633$ 11,381,744$ 2024 6,475,750 5,114,000 11,589,750 2025 6,472,000 184,250 6,656,250 2026 6,474,500 184,250 6,658,750 2027 6,472,750 184,250 6,657,000 2028 6,471,750 184,250 6,656,000 2029 6,471,250 184,250 6,655,500 2030 6,476,000 264,250 6,740,250 2031 6,475,500 950,250 7,425,750 2032 6,474,750 141,750 6,616,500 2033 6,473,500 511,750 6,985,250 2034 6,471,500 868,250 7,339,750 2035 6,473,500 941,000 7,414,500 2036 6,474,000 908,250 7,382,250 2037 6,472,750 - 6,472,750 2038 6,474,500 - 6,474,500 2039 6,473,750 - 6,473,750 2040 6,475,250 - 6,475,250 2041 6,473,500 - 6,473,500 2042 6,473,250 - 6,473,250 2043 6,474,000 - 6,474,000 2044 6,475,250 - 6,475,250 2045 6,471,500 - 6,471,500 2046 6,472,500 - 6,472,500 2047 6,472,500 - 6,472,500 2048 6,471,000 - 6,471,000 2049 6,472,500 - 6,472,500 2050 6,471,250 - 6,471,250 2051 6,471,750 - 6,471,750 2052 6,473,250 - 6,473,250 Total 194,196,361$ 15,531,383$ 209,727,744$ 0.0 2.0 4.0 6.0 8.0 10.0 12.0 Mi l l i o n s New Money Debt Service Refunding Debt Service Outstanding and Planned Bonds Under Existing Voted Authority 28 * Drawn down amount as of April 1, 2022 (1)The $39,845,000 Series 2022A Bonds, along with funds on hand, will have refunded $31,345,000 of the Series 2012A Bonds and $23,500,000 of the Series 2012B Bonds on May 3, 2022, prior to the delivery of the 2022B Bonds. (2)The $23,040,000 Series 2023A Bonds, along with funds on hand, will refund $31,775,000 of the Series 2013B Bonds on May 1, 2023. (3)The $133,560,000 Series 2025A Bonds will refund $152,805,000 of the Series 2015B Bonds on May 1, 2025. (4)The $106,930,000 Series 2026A Bonds will refund $122,100,000 of the Series 2016C Bonds on May 1, 2026. Date Series Term New Money Par Issued Refunding Par Issued Par Outstanding Outstanding 04/28/04 2004B (SRF)20 Year, Fixed 161,280,000 - 37,085,000 05/19/05 2005A (SRF)20 Year, Fixed 6,800,000 - 2,025,000 04/27/06 2006A (SRF)20 Year, Fixed 42,715,000 - 13,545,000 11/28/06 2006B (SRF)20 Year, Fixed 14,205,000 - 5,110,000 10/28/08 2008B (SRF)20 Year, Fixed 40,000,000 - 15,740,000 10/21/09 2009A (SRF)20 Year, Fixed 23,000,000 - 10,688,000 12/15/09 2010A (SRF)21 Year, Fixed 7,980,700 - 4,278,300 01/28/10 2010B 30 Year, Fixed 85,000,000 - 85,000,000 12/21/10 2010C (SRF)20 Year, Fixed 37,000,000 - 19,379,000 11/17/11 2011A (SRF)22 Year, Fixed 39,769,300 - 26,727,300 08/23/12 2012A 30 Year, Fixed 225,000,000 - 3,675,000 11/14/12 2012B 20 Year, Fixed - 141,730,000 940,000 10/31/13 2013A (SRF)20 Year, Fixed 52,000,000 - 36,252,000 12/18/13 2013B 30 Year, Fixed 150,000,000 - 35,470,000 08/19/15 2015A (SRF)20 Year, Fixed 75,000,000 - 55,384,000 12/15/15 2015B 30 Year, Fixed 150,000,000 73,855,000 162,960,000 12/22/16 2016A (SRF)20 Year, Fixed 20,000,000 - 16,102,000 12/22/16 2016B (SRF)20 Year, Fixed 75,500,000 - 62,492,000 12/20/16 2016C 30 Year, Fixed 150,000,000 - 135,670,000 12/14/17 2017A 30 Year, Fixed 200,000,000 116,175,000 300,090,000 12/19/18 2018A (WIFIA)35 Year, Fixed 47,722,204 - 261,480* 12/28/18 2018B (SRF)22 Year, Fixed 25,267,000 - 24,391,696* 09/24/19 2019A (SRF)22 Year, Fixed 23,952,000 - 23,952,000 12/04/19 2019B 29 Year, Fixed 52,130,000 - 50,415,000 12/04/19 2019C 18 Year, Fixed - 276,260,000 273,200,000 09/16/20 2020A (SRF)22 Year, Fixed 22,000,000 - 19,003,477* 12/17/20 2020B 29 Year, Fixed 120,000,000 - 116,160,000 01/22/21 2021A (SRF)20 Year, Fixed 63,101,000 - 19,331,692* 01/22/21 2021B (SRF)20 Year, Fixed 40,201,000 - 21,447,334* 05/03/21 2021C 11 Year, Fixed - 5,620,000 5,620,000 05/03/22 2022A(1)17 Year, Fixed - 39,845,000 39,845,000 06/06/22 2022B 30 Year, Fixed 100,000,000 9,090,000 109,090,000 Forward Refundings 05/01/23 2023A(2)16 Year, Fixed - - - 05/01/25 2025A(3)18 Year, Fixed - - - 05/01/26 2026A(4)20 Year, Fixed - - - Total 2,049,623,204$ 662,575,000$ 1,731,330,279$ Existing Debt Service and Savings 29 Notes (1)Net of BABs subsidy (2) Includes fees associated with the loans (Includes the 2022B bonds, excludes the refunded debt service, and assumes the full draw on all outstanding loans; as of May 5, 2022) Subordinate Aggregate Year Ended Principal Interest(1)Debt Service Debt Service(2)Debt Service 6/30/2023 $ 31,965,000 $ 58,960,037 $ 90,925,037 $ 41,792,693 $ 132,717,730 6/30/2024 32,490,000 58,646,224 91,136,224 44,155,085 135,291,309 6/30/2025 32,215,000 57,259,760 89,474,760 44,284,780 133,759,539 6/30/2026 36,920,000 55,730,987 92,650,987 44,100,128 136,751,115 6/30/2027 41,295,000 53,939,363 95,234,363 37,562,595 132,796,957 6/30/2028 46,355,000 51,918,833 98,273,833 33,952,624 132,226,458 6/30/2029 48,145,000 49,904,002 98,049,002 33,230,012 131,279,014 6/30/2030 50,715,000 47,800,887 98,515,887 30,916,667 129,432,554 6/30/2031 52,475,000 45,526,022 98,001,022 29,588,759 127,589,781 6/30/2032 54,625,000 43,304,837 97,929,837 27,047,755 124,977,592 6/30/2033 53,775,000 41,028,192 94,803,192 26,929,755 121,732,947 6/30/2034 55,940,000 38,660,379 94,600,379 27,062,410 121,662,788 6/30/2035 57,385,000 36,186,986 93,571,986 22,894,070 116,466,056 6/30/2036 59,885,000 33,493,680 93,378,680 16,288,048 109,666,728 6/30/2037 61,695,000 30,775,644 92,470,644 16,340,978 108,811,622 6/30/2038 64,415,000 28,115,884 92,530,884 12,747,279 105,278,163 6/30/2039 69,755,000 25,339,049 95,094,049 10,394,255 105,488,304 6/30/2040 76,381,670 22,195,894 98,577,564 10,421,949 108,999,513 6/30/2041 79,361,789 19,201,374 98,563,163 10,451,270 109,014,433 6/30/2042 82,484,513 16,084,969 98,569,482 6,490,512 105,059,994 6/30/2043 47,934,921 12,765,907 60,700,828 5,117,278 65,818,107 6/30/2044 40,158,095 10,541,137 50,699,232 3,734,117 54,433,349 6/30/2045 42,014,121 8,692,826 50,706,947 1,870,898 52,577,844 6/30/2046 37,893,085 6,756,884 44,649,969 - 44,649,969 6/30/2047 30,180,078 4,926,892 35,106,969 - 35,106,969 6/30/2048 18,470,191 3,484,528 21,954,719 - 21,954,719 6/30/2049 19,323,521 2,629,698 21,953,219 - 21,953,219 6/30/2050 16,775,166 1,734,304 18,509,469 - 18,509,469 6/30/2051 9,745,227 968,493 10,713,719 - 10,713,719 6/30/2052 10,158,809 556,411 10,715,219 - 10,715,219 6/30/2053 4,116,019 125,950 4,241,969 - 4,241,969 Total 1,365,047,204$ 867,256,031$ 2,232,303,236$ 537,373,917$ 2,769,677,153$ Senior Outstanding Debt VI. FINANCIAL PERFORMANCE UPDATE 30 User Charge Revenue Adjustments The FY2021 -FY2024 rate adjustments are projected to impact wastewater revenues as follows: 31 (1) Based on 6ccf/month Fiscal Year 2020 2021 2022 2023 2024 User Charge Revenues 10.3%-2.5%6.4%2.9%3.4% Rate Increase (1)10.6%1.5%3.4%3.5%3.7% Historical Coverage 32 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 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 2020 276,344,219 52,587,600 59,932,607 112,520,207 75,660,403 2.5 3.7 2021 252,042,015 58,574,100 60,727,474 119,301,574 81,685,268 2.1 3.1 Total Debt Service Projected Coverage 33*Reflects GASB 68 and GASB 75 expense adjustment Actual Projected Projected Projected 2021 2022 2023 2024 Net Revenue*252,042,015$ 290,805,928$ 285,777,692$ 297,954,797$ Debt Service Due in Each Fiscal Year Senior Lien Bonds 81,685,268 81,529,638 102,382,421 103,775,186 Total Debt 119,301,574 121,989,263 144,175,114 154,297,771 Coverage Senior Bonds 3.1x 3.6x 2.8x 2.9x Total Debt 2.1x 2.4x 2.0x 1.9x Projected Coverage from Rate Proposal Senior Bonds 3.2x 3.1x 2.9x 2.6x Total Debt 2.1x 2.1x 1.9x 1.8x Fiscal Year Ending June 30 Trend Liquidity Liquidity is expected to remain well in excess of 365 days through the 2021 planning period, both with and without the inclusion of long-term investments. CIRP appropriations for the years 2018 through 2021 exceed $1.1 billion. 34Note: Reflects GASB 68 and 75 adjustments to operating expense. Key Liquidity Ratios 2016 2017 2018 2019 2020 2021 Cash and Investments (No Long-Term Unrestricted)$182,927,020 $286,332,159 $300,591,076 $241,181,876 $317,158,516 $289,978,406 Days Cash on Hand/Liquidity Ratio 397 619 673 516 658 585 Cash and Investments (Adds Long Term Unrestricted)$339,921,143 $347,607,159 $367,855,784 $409,831,492 $467,823,163 $479,939,604 Days Cash on Hand/Liquidity Ratio 737 751 824 877 971 969 Net Working Capital (No Long-Term Unrestricted)$199,480,611 $300,033,117 $324,914,813 $267,032,645 $347,713,632 $308,438,132 Working Capital Ratio/Days Working Capital 433 649 727 571 722 623 Net Working Capital (Adds Long-Term Unrestricted)$356,474,734 $361,308,117 $392,179,521 $435,682,261 $498,378,279 $498,399,330 Working Capital Ratio/Days Working Capital 773 781 878 932 1034 1006 Fiscal Year Ending June 30 Long-Term Investment Portfolio Summary 35 (1) As of March 31, 2022 Description No. of Securities Total Face Value Avg Face Value Total Market Value Weighted Avg Coupon Rate Rating Avg Final Maturity Weighted Avg Years to Final Maturity (1) United States Treasury 47 262,915,000$ 5,593,936$ 257,338,327$ 1.45 AA+05/28/2024 2.03 Federal Home Loan Mortgage Corp 7 25,175,000$ 3,596,429$ 24,577,767$ 0.49 AA+05/16/2024 1.49 Federal Home Loan Banks 4 30,000,000 7,500,000 28,731,560 0.44 AA+06/12/2024 2.16 Federal Agricultural Mortgage Corp 2 30,000,000 15,000,000 29,500,800 1.68 AA+08/01/2024 2.25 Federal National Mortgage Association 2 1,050,000 525,000 1,033,277 1.98 AA+03/01/2025 2.63 Tennessee Valley Authority 1 15,000,000 15,000,000 15,102,405 2.88 AA+09/15/2024 2.38 Federal Farm Credit Banks Funding Corp 1 5,000,000 5,000,000 4,914,510 0.13 AA+04/27/2023 0.99 Total Porfolio 64 369,140,000$ 5,767,813$ 361,198,646$ 1.36 06/03/2024 2.02 United States Treasury 71% Federal Home Loan Mortgage Corp 7% Federal Home Loan Banks 8% Federal Agricultural Mortgage Corp 8%Federal National Mortgage Association 0%Tennessee Valley Authority 4% Federal Farm Credit Banks Funding Corp 2% Total Market Value by Security Agency 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, 2020, MSD’s key statistics are as follows: –450 active plan members –$307.2 million Actuarial Value of Assets –$49.3 million in unfunded liability, down from $63.1 million as of December 31, 2019 –Actuarial Value of Assets/Actuarial Accrued Liability increased to 86.2% at December 31, 2020 from 82.2% as of December 31, 2019 As of December 31, 2021 –MSD lowered its assumed rate of return from 6.75% to 6.25% –The Market Value of Assets –$350.1MM –Defined Contribution –$23.0MM –Deferred Compensation –$107.8M 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 2021, the plan has 599 participants and $23.0 million in assets 36 OPEB Considerations MSD’s total OPEB unfunded accrued liability as of December 31, 2020 was $24.9 million, assuming a 2.12% return on investment –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 117 individuals in this group (as of 12/31/2020) –MSD continues to elect a Pay-Go approach to assure flexibility in future benefits. 37 VII. SUMMARY OF CREDIT STRENGTHS 38 MSD Credit Strengths Consistently Strong Financial Performance –Large and diverse user base creates resilient revenue generation –The District has maintained very healthy liquidity levels and consistently strong coverage ratios –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 funded through 2021 –Strong relationship with Regulators 39 VIII. FINANCIING SCHEDULE AND CONTACT INFORMATION 40 Financing Schedule 41 Date Activity Week of May 2, 2022 Rating Calls May 16, 2022 Ratings Released May 17, 2022 POS Posted Week of May 23 Bond Pricing Week of June 6 Bond Closing Contact Phone/Email Tim 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, Managing Director -PFM (612) 371 3771 schnackenbergm@pfm.com Tionna Pooler, President -IPA (816) 521 6844 tionna@ipamuni.com Contact Information 42