Civic Improvement Corporation Junior Lien Airport Junior Lien - - PowerPoint PPT Presentation

Investor Presentation

October 2019

City of Phoenix Civic Improvement Corporation

Junior Lien Airport Revenue Bonds, Series 2019A (Non-AMT) $337,000,000* Junior Lien Airport Revenue Bonds, Series 2019B (AMT) $400,295,000*

* Preliminary, Subject to Change.

Junior Lien Airport Revenue Refunding Bonds, Taxable Series 2019C $29,975,000*

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Disclaimer

This electronic Investor Presentation that you are about to view is provided as of October 23, 2019 for a proposed offering by the City of Phoenix Civic Improvement Corporation (the “Issuer”) of $337,000,000* Junior Lien Airport Revenue Bonds, Series 2019A (Non-AMT), $400,295,000* Junior Lien Airport Revenue Bonds, Series 2019B (AMT), $29,975,000* Junior Lien Airport Revenue Refunding Bonds, Series 2019C (Taxable) together the “Bonds.” Market prices, financial data, and other information provided herein are not warranted as to completeness or accuracy and are subject to change without notice. If you are viewing this presentation after October 23, 2019, there may have been subsequent events that could have a material adverse effect on the financial information that is presented herein. Neither the City of Phoenix Civic Improvement Corporation nor Citigroup Global Markets, Inc, Mesirow Financial, Inc, Siebert Cisneros Shank & Co, Cabrera Capital Markets, RBC Capital Markets (the “underwriters”) Underwriters have undertaken any obligation to update this electronic presentation. This Investor Presentation is provided for your information and convenience only. By accessing this presentation, you agree not to duplicate, copy, download, screen capture, electronically store or record this Investor Presentation, or to produce, publish or distribute this Investor Presentation in any form whatsoever. This Investor Presentation does not constitute an offer to sell or the solicitation of an offer to buy any security or other financial instrument, including the Bonds, or to adopt any investment strategy. Any offer or solicitation with respect to the Bonds will be made solely by means of the Preliminary Official Statement or Official Statement, which describe the actual terms of such Bonds. Neither the Issuer nor the Underwriters make any representations as to the legal, tax, credit or accounting treatment of any transactions mentioned herein, or any other effects such transactions may have on you and your affiliates or any other parties to such transactions and their respective affiliates. In no event shall the Underwriters or the Issuer be liable for any use by any party of, for any decision made or action taken by any party in reliance upon, or for any inaccuracies or errors in, or omissions from, the information contained herein and such information may not be relied upon by you in evaluating the merits of participating in any transaction mentioned herein. Nothing in these materials constitutes a commitment by the Issuer or the Underwriters or any of their affiliates to enter into any transaction. No assurance can be given that any transaction mentioned herein could in fact be executed. Information pertaining to LeighFisher in this document, including forecasts, are based on the Report of the Airport Consultant (“Report”), which is included in Appendix A of the POS. As noted in the Report and the POS, the forecasts were prepared using information from the sources indicated, and assumptions listed, and as provided in the accompanying text. Inevitably, some of the assumptions used to develop the forecasts will not be realized and unanticipated events and circumstances could occur. Therefore, there are likely to be differences between the forecasts and actual results, and those differences may be material. The Report of the Airport Consultant and POS should be read in entirety for an understanding of the forecasts and the underlying assumptions. Neither LeighFisher nor any person acting on our behalf makes any warranty, expressed or implied, with respect to the information, assumptions, forecasts, opinions, or conclusions disclosed in our Report. Any investment decision regarding the Bonds should only be made after a careful review of the complete Preliminary Official Statement. You will be responsible for consulting with your own advisors and making your own independent investigation and appraisal of the risks, benefits, appropriateness and suitability of the proposed transaction and any other transactions contemplated by this presentation and neither the Issuer nor the Underwriters are making any recommendation (personal or otherwise) or giving any investment advice and will have no liability with respect thereto. Transactions involving the Bonds may not be suitable for all

• investors. You should consult with your own advisors as to the suitability of the Bonds for your particular circumstances.

Past performance is not indicative of future returns, which will vary. This Investor Presentation may contain “forward‐looking” statements that involve risks, uncertainties and assumptions. If the risks or uncertainties ever materialize or the assumptions prove incorrect, the results may differ materially from those expressed or implied by such forward‐looking statements. We caution you not to place undue reliance on these statements. All statements other than the statements of historical fact could be deemed forward‐looking. All opinions, estimates, projections, forecasts and valuations are preliminary, indicative and are subject to change without notice. Prospective investors should contact their salesperson at, and execute transactions through, an underwriter for the Bonds who is qualified in their home jurisdiction unless governing law permits otherwise. *Preliminary, subject to change

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Series 2019 Financing Summary

Series $337,000,000* Junior Lien Airport Revenue Bonds, Series 2019A (Non-AMT) $400,295,000* Junior Lien Airport Revenue Bonds, Series 2019B (AMT) $29,975,000* Junior Lien Airport Revenue Refunding Bonds, Taxable Series 2019C Purpose Series 2019A: To prepay the 2019 Loan, finance additional improvements to the Airport, pay costs of issuance related to the Series 2019A Bonds and to make a deposit to the Junior Lien Parity Reserve Fund. Projects funded by 2019A are PHX SkyTrain Stage 2 and Police Hanger at Phoenix Deer Valley Airport Series 2019B: To finance additional improvements to the Airport including interest with respect to a portion of the Series 2019B Junior Bonds, pay costs of issuance related to the Series 2019B Bonds and to make a deposit to the Junior Lien Parity Reserve Fund. Projects funded by 2019B are Terminal 3 & 4 improvements Series 2019C: To refund the Series 2010C Bonds and pay costs of issuance related to the Series 2019C Bonds Amortization* 2019A: July 1, 2041 – July 1, 2049 2019B: July 1, 2020 – July 1, 2049 2019C: July 1, 2023 – July 1, 2025 Tax Status Series 2019A: Tax-Exempt (Non-AMT); Series 2019B: Tax-Exempt (AMT); Series 2019C: Taxable Optional Redemption* Series 2019A & 2019B: 10 year Par Call; 2019C: Make Whole Call Security The 2019 Junior Bonds are special revenue obligations of the Corporation payable solely from payments received under the City Purchase Agreement. The Series 2019A Bonds are further secured by an irrevocable commitment of PFC Revenues up to 93% of debt service on the Bonds due on or before July 1, 2026 Pricing Date* November 6, 2019 Delivery Date* December 11, 2019 Confirmed Ratings Moody’s: A1; S&P: A+ Senior Manager Citigroup Co-Managers Cabrera Capital Markets, Mesirow Financial, Inc, RBC Capital Markets, Siebert Cisneros Shank & Co

*Preliminary, subject to change

• Please note that the City is also issuing approximately $313.205 million* Rental Car Facility Charge Revenue Bonds, scheduled to price on November 6, 2019*

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PHX’s Key Credit Characteristics

Strengths Description Strong MSA  Airport serves a strong and diversified MSA*  No other large hub airport within a 5-hour driving distance Role of PHX  PHX is important airport for two major carriers: American and Southwest  PHX continues to benefit from a competitive airfare environment and growing O&D market

• FY 2019 O&D ratio increased to 69%
• PHX is the 14th busiest U.S. airport for Originating Passengers

 Serves a large and growing service area CIP  CIP Plan of Finance is demand-driven, affordable and modular  Finances completion of Terminal and PHX Sky Train improvements Strong, Cohesive Management  Experienced and cohesive Aviation and Finance management teams dedicated to continued strong financial performance

Source: Report of the Airport Consultant. City of Phoenix Aviation Department; U.S. DOT, Schedule T100; U.S. DOT, Air Passenger Origin-Destination Survey, reconciled to Schedule T100 *Phoenix-Mesa-Scottsdale Metropolitan Service Area

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PHX Serves a Vibrant Urban Area

• Phoenix is 5th largest city in U.S.

with 1.66 million residents(1)

• Phoenix MSA is the 11th most

populous in U.S. with 2018 population estimate of 4.86 million residents(1)

• Fastest growing among the top 20

MSAs from 2017 to 2018(1)

• The MSA’s employment growth

continues to exceed both the State and Nation

• Per capita personal income in the

MSA was 4.8% higher than the State in 2017(3)

• Top tier tourism and convention

destination

Sources: Preliminary Official Statement. Report of the Airport Consultant. (1) U.S. Census Bureau (2) U.S. Department of Labor, Bureau of Labor Statistics website, Current Employment, Statistics survey, www.bls.gov, accessed May 2019. (3) U.S. Department of Commerce, Bureau of Economic Analysis website, www.bea.gov, accessed May 2019.

0% 2% 4% 6% 8% 10% 12% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Calendar Year United States Arizona MSA 95 100 105 110 115 120 125 130 135

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Index Calendar Year United States Arizona MSA

Unemployment Rate (2)

(average annual rate, not seasonally adjusted)

Comparative Index of Total Non-Agricultural Employment(2)

(2000=100)

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The Employment Base in Phoenix is Large and Diverse

Major Employers in Arizona

• Banner Health – Health Care
• Walmart – Retail
• Wells Fargo – Financial
• Raytheon – Aerospace
• Honor Health – Health Care
• Dignity Health – Health Care
• J.P. Morgan – Financial
• Bank of America – Financial
• Intel – Technology
• Freeport-McMonRan - Mining
• American Airlines - Aviation
• American Express – Financial
• Honeywell – Aerospace
• Mayo Clinic – Health Care

Sources: Report of the Airport Consultant. (1) Phoenix Business Journal, 2018-19 Book of Lists.

• The MSA is the headquarters location for six Fortune 500 companies(1)
• Broad base of employers with many corporate and regional headquarters
• Abundant educational, community, recreational, arts and cultural amenities

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• Geographic location of Phoenix results in a high reliance on airline travel
• Tucson – a small hub airport located 117 miles to the southeast
• Phoenix-Mesa Gateway Airport is the only other commercial service airport in the MSA

and is located 30 miles SE with only 16 average daily departures(1)

Road miles from the Airport to(2): Las Vegas 292 Los Angeles 371 San Diego 354 San Francisco 752 Salt Lake City 656 Denver 809 Dallas / Fort Worth 1,056

PHX is of Unique Importance to the Phoenix MSA

Sources: Report of the Airport Consultant. (1) OAG Aviation Worldwide Ltd, OAG Analyser database, accessed August 2019. (2) 2010 U.S. Census data.

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Overview of PHX Sky Harbor Airport

• Three terminals – 81 gates

in Terminal 4, 100 gates overall

• Three parallel runways:
• 8/26 – 11,490 feet
• 7L/25R – 10,300 feet
• 7R/25L – 7,800 feet
• PHX Sky Train connects regional light rail system to the Airport’s largest parking areas

and Terminals 3 & 4, with a walkway to Terminal 2

• 21,376 public parking spaces
• Consolidated Rental Car Center near the Airport

Sources: Report of the Airport Consultant. City of Phoenix Aviation Department.

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O&D Driven Traffic Growth

Sources: Report of the Airport Consultant. City of Phoenix Aviation Department; U.S. DOT, Air Passenger Origin-Destination Survey, reconciled to Schedules T100 and 298C T1 Notes: FY 2019 total enplanement reflects actual results, originating and connecting values are estimated on the basis of 3 quarters of U.S. DOT O&D Survey data. Percentages reflect

• riginating passengers as a percent of total enplaned passengers.
• Growing O&D traffic has been key to

passenger growth at PHX

FY 2015-2019 CAGR Total Enplanements 1.5% O&D 5.4% Connecting (5.1%)

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Domestic and International Roundtrip Passenger Flights

Sources: Report of the Airport Consultant Report. Destinations shown are for July 2019. (1) OAG Aviation Worldwide Ltd, OAG Analyser database, accessed August 2019. (2) Some cities are served by more than one airport.

U.S. Airports Served by Daily Scheduled Nonstop Roundtrip Passenger Flights(1)

2010 2015 2019 Number Of Cities Served Nonstop (2) 71 66 85 Change from previous year shown

• 5

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International Destinations Served by Scheduled Roundtrip Passenger Flights(1)

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A Stronger Airport: Two Primary Carriers Provide Competition

• As of July 2019 airlines at Sky Harbor provided nonstop passenger service to 115 airports
• All top 15 domestic markets have competition from 2 or more carriers
• PHX is 6th largest hub in both American and Southwest systems
• These two airlines together accounted for 80% of enplaned passengers in FY 2019

Sources: Report of the Airport Consultant Report. OAG Aviation Worldwide Ltd, OAG Analyser database, accessed August 2019. (1) City of Phoenix Aviation Department. Passengers reported by regional affiliates are grouped with their respective code-sharing partners. (2) City of Phoenix Aviation Department. Totals for FY 2019 reflect actual results; originating and connecting subtotals are estimated on the basis of 3 quarters of U.S. DOT O&D Survey data. U.S. DOT, Air Passenger Origin-Destination Survey, reconciled to Schedules T100 and 298C T1. American 46.0% Southwest 34.0% Delta 6.7% United 5.4% Alaska 2.1% Frontier

1.6% WestJet 1.0% All Other 3.2%

Airline Market Share (FY 2019)(1)

Resident 31.2% Visitor 37.7% Connecting 31.1%

Enplanements (FY 2019)(1)(2)

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Changes in Connecting Passenger Composition at American Airlines’ Hubs

• The decreases in connecting traffic at PHX are primarily attributable to American Airlines
• Between 2015 and March 2019, five other American Airlines’ hubs recorded decreases

approximately equal to or greater than the 25.0% decline in connecting passengers at PHX

• During this period, American’s originating passengers at PHX increased 19.7% at PHX

Sources: Report of the Airport Consultant. U.S. DOT Air Passenger Origin-Destination Survey reconciled to Schedule T-100

CONNECTING PASSENGERS ON AMERICAN AIRLINES

American's U.S. Hub Airports for calendar years 2013-2019 2 4 6 8 10 12 14 16 18 20 2013 2016 2019 2013 2016 2019 2013 2016 2019 2013 2016 2019 2013 2016 2019 2013 2016 2019 2013 2016 2019 2013 2016 2019 2013 2016 2019 2013 2016 2019 Rolling 12-Month Totals (millions) MIA CLT DFW ORD PHX PHL LAX DCA LGA JFK

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PHX’s Consistent and Solid Financial Performance

• Solid Financial Metrics:
• Debt service coverage remains above 2.00x for Senior lien and 1.80x aggregate throughout

forecast period, assuming PFC offset

• Exceeded 2017 feasibility forecast for FY 2018 net revenues and coverage
• Forecasted CPE below the current U.S. large hub median(1)
• Modest debt levels, even after funding of the FY 2020-2026 CIP
• Strong Business Framework:
• Month-to-month permits and a compensatory airline rate-setting methodology allow

management to capitalize on strong O&D market (69%) while maintaining reasonable debt levels

• Airport-wide blended terminal rates provide flexibility
• Non-airline revenues fund significant Pay-Go capital development
• Conservative forecast with modest traffic growth and diligent stress testing
• Management is committed to sound Financial Policies

Sources: Report of the Airport Consultant. City of Phoenix Aviation Department. U.S. DOT, Air Passenger Origin-Destination Survey, reconciled to Schedule T100. (1) FAA Compliance Activity Tracking System (CATS) Operating and Financial Summary Report 127 for each airport reported FY2018

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Historical Coverage

Financial Operations

($000s) FY 2015 FY 2016 FY 2017 FY 2018 FY 2019(1) Total Revenues $354,221 $360,163 $370,841 $401,197 $410,375 . Total Expenditures(2) $226,165 $230,236 $245,116 $249,613 $257,345 Net Revenues Available for Debt Service $128,056 $129,927 $125,725 $151,584 $153,030 Total Senior Lien Debt Service $48,732 $48,775 $48,797 $55,180 $55,957 Senior Lien Bond Coverage 2.63x 2.66x 2.58x 2.75x 2.73x Total Junior Lien Debt Service (3) $1,604 $3,962 $5,933 $5,935 $5,935 Junior Lien Bond Coverage 49.45x 20.48x 12.97x 16.24x 16.36x Aggregate Debt Service Coverage Ratios Senior and Junior Lien Obligations (4) 2.54x 2.46x 2.30x 2.48x 2.47x

Source: Preliminary Official Statement. (1) Fiscal Year 2018-19 data is preliminary and unaudited. (2) Rental Car Center Transportation O&M Expenses as defined in the documents relating to the 2004 CFC Bonds are included as a Cost of Maintenance and Operation. Amounts reimbursed to the City by the CFC trustee to pay the rental car busing service expenses (included as a Cost of Maintenance and Operation) are included as revenues. The CAFR Exhibit E-5 provides a presentation of expenditures that are subsequently reimbursed as revenues.(3)Debt service is net of the 2010/2017 Junior Lien Passenger Facility Charge Credits and 2010 RZEDB Subsidy Payments. (4) Aggregate debt service coverage ratio calculations assume net revenues available for debt service divided by total Senior and Junior Lien debt service

2.63x 2.66x 2.58x 2.75x 2.73x 49.45x 20.48x 12.97x 16.24x 16.36x

• 10.00x

20.00x 30.00x 40.00x 50.00x FY 2015 FY 2016 FY 2017 FY 2018 FY 2019(1)

Bond Coverage

Senior Lien Bond Coverage Junior Lien Bond Coverage

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• Airline revenues on average have been 38.6% of total operating revenue since FY 2017
• Historical and future forecasted CPE’s are expected to remain well below median large hub CPE of

$10.52(1)

Airline Revenue and Cost per Enplanement

Breakdown of Operating Revenues ($000s) FY 2017 FY 2018 FY 2019 Airline $134,052 $147,091 $149,013 Non-Airline 182,258 191,259 199,607 Other 34,163 40,520 37,372 Total Operating Revenue $350,474 $378,869 $385,992

Source: City of Phoenix Aviation Department and LeighFisher.

$6.12 $6.26 $6.45 $0.00 $2.00 $4.00 $6.00 $8.00 FY 2017 FY 2018 FY 2019

Cost per Enplanement ($)

Cost per Enplanement ($)

Source: Report of the Airport Consultant. Preliminary Official Statement. City of Phoenix Aviation Department. (1) FAA Compliance Activity Tracking System (CATS) Operating and Financial Summary Report 127 for each airport reported FY2018

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THE PHOENIX WAY – Management Maintains Strong Financial Targets

• FY 2019 – Management continues to exceed all financial targets

Financial Targets & Management Policies Debt Service Coverage Targets: Senior Lien: 1.75-2.00x Aggregate (PFC Offset): 1.50x PFC Leveraging 65%-75% of Annual Collections Utilize Junior Lien for PFC Leveraging Days Cash on Hand: 475 Days* Maintain Competitive CPE, with Increases Targeted to Maintain Metrics and Develop Facilities

Source: Preliminary Official Statement, Airport Financial Information Section

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Capital Improvement Program

• Terminal 3
• $580 million project
• Series 2019 Bonds to complete financing needs
• Multifaceted project expected to be complete in Fall 2020
• Terminal 4 S-1 Concourse
• $310 million project
• Series 2019 Bonds will finance project
• Project will increase Terminal by 8 gates providing additional gates for Southwest Airline
• PHX Sky Train Completion
• $745 million project
• Financed with Series 2019 Bonds, Series 2019 CFC Bonds1 and CFC Pay-Go
• Project will complete final 5 mile stage – connecting Terminals, parking, rental cars and mass

transit

• 1. Series 2019 CFC Bonds scheduled to price November 6, 2019

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Capital Improvement Program through FY 2026

• Majority of CIP is related to the modular, demand-driven terminal improvements

Sources: Report of the Airport Consultant. City of Phoenix Aviation Department. (1) The Comprehensive Asset Management Plan (CAMP) is a multiyear development plan that extends beyond the forecast period; therefore, a partial list of projects is included as described in the accompanying text. Certain "Major Capital Projects" are separately identified and are also included in the CAMP.

• Well balanced funding sources mitigate

cost structure impact

• Future GARBs need to fund only $227

million of the CIP

• Compensatory rate setting

methodology results in strong cash funding of CIP

Group/Category Subtotal FY 2020- 2026 ($ Millions) Terminal 3 Modernization $92.28 Terminal 4 S-1 Concourse 292.02 PHX Sky Train Stage 2 518.37 CAMP: UPRR Trench – Phase 1 220.00 CAMP: Terminal 3 Second North Concourse 180.00 CAMP: Other 193.22 Other Terminal & Airfield Improvements 358.91 Additional Contingency 85.90 TOTAL $1,940.70

Grants 12% PFC PayGo 14% CFC PayGo and 2019 CFC Bonds 10% Prior Bonds 16% Series 2019 Junior / Improvement Bonds 28% Future Bonds 9% Private Funding 1% AIF 10%

Capital Improvement Programs Funding Sources

(Including Prior Funding Sources)

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Steady Passenger Growth Forecasted

Sources: Report of the Airport Consultant. City of Phoenix Aviation Department; U.S. DOT, Air Passenger Origin-Destination Survey, reconciled to Schedule T100. Forecast— LeighFisher, August 2019

5 10 15 20 25 30 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026

Enplaned passengers (in millions)

Connecting Originating

ACTUAL FORECAST

% Change CAGR

2015-2018 2018-2019 2019-2026 O&D 5.7% 4.5% 1.6% Connecting (6.4%) (0.9%) 0.9%

Total 1.1% 2.8% 1.4% Average Annual Percent Increase (Decrease)

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Reasonable Financial Forecast

• Airport consultant report forecasts enplanement annual growth of 2.2% in FY 2020, 1.3% from 2021-

2023, and 1.2% between FY 2024 and FY 2026

• Consultant report assumes future bond issuances of:
• Aggregate coverage is no lower than 1.80x during projected period
• Upon completion of the CIP, PHX’s CPE will remain well below the current large hub median of $10.52

Series 2022 $128.3 million Senior Lien Bonds(1) Series 2024 $141.4 million Senior Lien Bonds(1)

FY 2020 FY 2021 FY 2022 FY 2023 FY 2024 FY 2025 FY 2026 ENPLANED PASSENGERS (‘000s) 23,325 23,625 23,925 24,225 24,525 24,825 25,125 Cost Per Enplaned Passenger (CPE) $6.77 $6.62 $6.81 $7.56 $7.77 $7.94 $8.28 Debt Service Coverage Ratios Per Bond Documents Senior Lien Obligations 2.12x 2.88x 3.04x 3.41x 3.00x 2.97x 2.59x Junior Lien Obligations 8.71x 10.04x 10.90x 3.25x 3.14x 3.08x 3.80x Aggregate Debt Service Coverage Ratios Senior and Junior Lien Obligations 1.88x 2.43x 2.56x 1.96x 1.83x 1.81x 1.83x

Source: Report of the Airport Consultant Report. City of Phoenix Aviation Department. Forecast-LeighFisher. (1) City of Phoenix Aviation Department: Plan of Finance, Future Senior Bonds, Exhibit B

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Downside Scenario Stress Test – Contingency Planning Financial Forecast

• American Airlines downsizes hub and accommodates fewer connections; offset by large O&D base

and favorable geography

• In FY 2026, relative to the base forecast, enplanements are 16% lower (10% lower for O&D and

30% for connections)

• CPE still remains well below similarly situated airports (industry medians for large hubs)
• Senior lien and aggregate debt service coverage remain within management’s financial targets
• No management actions are included in this downside scenario

FY 2020 FY 2021 FY 2022 FY 2023 FY 2024 FY 2025 FY 2026 ENPLANED PASSENGERS (‘000s) 21,355 19,880 19,880 20,180 20,480 20,780 21,080 Cost Per Enplaned Passenger (CPE) $7.36 $7.79 $8.11 $8.98 $9.21 $9.38 $9.77 Debt Service Coverage Ratios Per Bond Documents Senior Lien Obligations 1.95x 2.50x 2.62x 2.95x 2.60x 2.56x 2.23x Junior Lien Obligations 7.39x 8.04x 8.66x 2.63x 2.51x 2.44x 2.95x Aggregate Debt Service Coverage Ratios Senior and Junior Lien Obligations 1.73x 2.11x 2.21x 1.70x 1.59x 1.56x 1.57x

Sources: Report of the Airport Consultant. City of Phoenix Aviation Department. Forecast—LeighFisher, August 2019

Downside Stress Test Assumptions

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Series 2019 Bonds – Plan of Finance*

*Preliminary, subject to change

2019A 2019B 2019C

Size ($ M) $337.0 $400.3 $30.0 Tax Status Non-AMT AMT Taxable Purpose $342M SkyTrain Stage 2 & $25M Phoenix-Deer Valley Police Hangar $310M T4S1 & $80M T3 Refunding of Series 2010C Bonds Capitalized Interest none Funded to DBO for T4S1 none Structure Wrapped to achieve aggregate level PFC debt service Level annual debt service after Cap Int period Level savings starting in FY 2023 Final Maturity 7/1/2049 7/1/2049 7/1/2025 Update to the 2018 Plan of Finance Addition of Police Hangar T4S1: Accelerated from mid-2020 T3: Increased by $80M

• Utilizes conservative interest rate assumptions and level overall debt amortization
• No savings from refunding opportunities have been included in the feasibility forecast

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Junior Lien Bond Legal Structure

• Security: Pledge of Designated Revenues, equal to Airport Revenues less Costs of

Maintenance and Operation and less payments required on Senior Lien Obligations

• The City has made the following irrevocable commitments:
• Through June 30, 2026, PFC Revenues fund 100% of Series 2010AB and 2015B

debt service; 30% of the Series 2015A debt service and 93% of 2019A debt service

• RZEDB Subsidy Payment is pledged to 2010B debt service
• Rate Covenant: Designated Revenues must exceed 1.10x Junior Lien Debt Service,

net of debt service payable from PFCs

• ABT: Historical 1.10x MADS or prospective rate covenant compliance
• Debt Service Reserve Fund Requirement: Lesser of three-prong test without

consideration of PFC Credits

• To be funded with bond proceeds and refunded bonds’ reserve funds released

Source: Preliminary Official Statement.

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Aggregate Debt Service Schedule

• $1.41 billion in Airport Revenue Bonds outstanding, including bonds being refunded with the

Taxable 2010C Bonds and not including Series 2019 Bonds

• $757.58 million of Senior Lien Obligations
• $652.96 million of Junior Lien Obligations
• New Money Principal Amortization: Approximately 27% payout in 10 years and 44% in 15 years

*Preliminary, subject to change. Excludes impacts of advance refunding of the Series 2010C Bonds with the 2019C Bonds. Debt service shown net of capitalized interest

Aggregate Annual Debt Service (including estimated 2019AB Bonds)

$- $20 $40 $60 $80 $100 $120 $140 $160 $180 $200 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 2043 2044 2045 2046 2047 2048 2049 Axis Title$ Millions Axis Title Existing Senior Lien Existing Junior Lien Estimated Series 2019 Junior Lien

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2019 Preliminary Schedule*

*Preliminary, subject to change

October 2019 Su M Tu W Th F Sa 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 November 2019 Su M Tu W Th F Sa 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 26 25 26 27 28 29 30 December 2019 Su M Tu W Th F Sa 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31

Senior Managing Underwriter

Citigroup Neal Attermann Director neal.attermann@citi.com

Preliminary Financing Schedule Date Series 2019 Bonds

October 23, 2019 Post POS and Internet Roadshow November 6, 2019 Series 2019 Pricing December 11, 2019 Closing and Delivery

Issuer

City of Phoenix Civic Improvement Corporation Denise Olson Chief Financial Officer denise.olson@phoenix.gov Kathleen Gitkin City Treasurer kathleen.gitkin@phoenix.gov Scot Obal Investment & Debt Manager scot.obal@phoenix.gov

Financial Advisor

Frasca & Associates Ken Cushine Principal kcushine@frascallc.com

The City is available for one-on-one calls upon request – please contact your sales representative to arrange a call