CREDIT PRESENTATION April 23, 2015 * Preliminary, subject to change - PowerPoint PPT Presentation

$325,000,000* Riverside County Public Financing Authority Lease Revenue Bonds (Capital Facilities Project) Series 2015 CREDIT PRESENTATION April 23, 2015 * Preliminary, subject to change

County Executive Office County Executive Office • Jay Orr, County Executive Officer • Ed Corser, County Finance Director • Ivan Chand, Deputy County Executive Officer • Stephanie Persi, Senior Management Analyst • Lani Sioson, Management Analyst • Sam Wong, Senior Management Analyst Beacon Economics Beacon Economics • Christopher Thornberg, Founding Partner Financial Advisor Financial Advisor • Fieldman, Rolapp & Associates Riverside University Medical Center Riverside University Medical Center • Zareh Sarrafian, Chief Executive Officer Underwriter’s Underwriter’s • Bank of America Merrill Lynch – Senior Manager • Stifel – Co ‐ Senior Manager • Citigroup Global Markets – Co ‐ Manager • Raymond James – Co ‐ Manager 2

 Proven management team: Experienced CEO and staff Close and continuing scrutiny of the County’s budget issues • Maintain balanced budget as economy recovers • Maintain Reserve for Economic Uncertainties •  Three primary goals for County management Business centric environment – the most business ‐ friendly county in California • – UC Payroll centralized in Riverside – Foreign trade office established to spur economic growth Healthy community • – Establishment of UCR Medical School – becomes first new medical school in 40 years – Restructuring of Riverside University Medical Center and clinic system Technology improvements • – Provide customer ‐ centered public service: better, faster, more fiscally prudent – New Investor Relations website 3

 County finances reflect diverse, rebounding economy • Assessed value increasing, FY 14 ‐ 15 by 7.8%, FY 15 ‐ 16 projected to increase by 5.0% – $37.8 million revenue increase for FY 14 ‐ 15 • Prop 8 AV reductions in value have generally ceased • Growing sales tax revenues  Reform of pension liabilities and limited OPEB liability  Moderate overall debt level • Most debt supported by funds other than General Fund  General fund cash position enhanced • Financial turnaround of hospital enterprise continues to demonstrate positive results 4

 Primary asset financed is East County Detention Center (“ECDC”): Estimated Value $274 million 1,626 beds • 516,000 sq. ft. • Enhanced Technology • Public safety among County’s highest priorities • ECDC project and leased facilities are highly essential •  Project also includes: Indio CAC Campus Demo for ECDC – $8.2 million • New County Parking Structure ‐ $15 million • AEOC – RCIT Hub ‐ $11 million • Indio Larson Justice Center Courtrooms ‐ $1.5 million • Southwest Justice Center Courtrooms ‐ $11 million • Larry D. Smith Correctional Facility Laundry Expansion ‐ $5 million • Parking Lot for Court ‐ $1 million •  Project funded with: Proceeds of 2015 Lease Revenue Bonds • $100 million Grant from the State of California (based on ECDC Lease) • $10 million County cash contribution •  Characteristics of the Series 2015 Lease Revenue Bonds Riverside County Public Financing Authority Lease Revenue Bonds (Capital Facilities Projects), Series 2015 • Standard California General Fund lease • Final Maturity 2045 • Current estimated total par $325 million* • Reserve Fund –funded at 50% of Maximum Annual Debt Service • 5 *Preliminary, subject to change

 Monthly cash flow monitoring and formal quarterly budget updates and reports  Available Liquidity Policy – established in FY 10 ‐ 11 allows any fund controlled by the Board (Auditor) to be borrowed from if the General Fund has a negative balance without further action or approval  Reserve Policy – adopted 2005  Established a Pension Advisory Review Committee (PARC) in 2003 (an independent framework for evaluating long ‐ range costs of both pensions and OPEB); adopted a Pension Management Policy in 2005 (revised in 2006); and established a Pension Reform Advisory Committee (PRAC) in 2010 to study structural changes to retirement benefits Framework has led to significant cost saving benefit reforms • Adopted Tier 2 prior to PEPRA • Three tier employee benefit concept •  Updated long ‐ range CIP approved May 2011; first approved 2002  Investment Policy – most recent adopted December 2, 2014  Debt Management Policy – adopted 2003, updated as needed  Debt Advisory Committee established in 1985 and meets on a monthly basis Reviews all County debt activities • 7

 From FY 08 ‐ 09 to FY 13 ‐ 14 Willingness to make the hard decisions • Budget cuts across the board • Hiring freeze imposed • Multiple offers of early retirement – over 1,340 persons retired • Reserves applied to cover ongoing expenses to provide “soft landing” but never dropped below $110 million (Reserve • for Economic Uncertainties) commitment to maintain Reserve for Economic Uncertainties above minimum threshold of 15% of Expenditures Negotiations with unions generated two ‐ tiered pension plan and increased employee contributions • Maintained modest level of retiree health insurance support •  Active financial management practices Monthly revenue/expenditure monitoring • Formal Quarterly Board updates and actions • Specific CEO instructions to departments with budget shortfalls to provide monthly departmental updates and action • plans Sheriff’s Department – Riverside County Regional Medical Center (RCRMC) –  3 ‐ Pronged Approach Economic Improvement • Increase reserves – up $50 million • Move to structural balance • 8

 Broad ‐ based, gradual recovery manifested in increasing discretionary revenues General Fund Projected Discretionary Revenue (in millions) Current Budgeted Quarter Variance Estimate Estimate Property Taxes $295.8 $299.1 $3.3 Motor Vehicle Lieu 208.6 208.6 0.0 Tax Loss Reserve 27.0 27.0 0.0 Fines and Penalties 22.8 22.8 0.0 Sales & Use Taxes 33.5 33.5 0.0 Tobacco Tax 10.0 10.0 0.0 Documentary Transfer 12.4 12.4 0.0 Franchise Fees 5.0 5.0 0.0 Interest Earnings 2.9 2.9 0.0 Misc. Federal and State 10.7 10.7 0.0 RDA Residual Assets 2.0 5.6 3.6 Other (Prior Year & Misc.) 6.7 12.6 5.9 Total $637.4 $650.2 $12.8 * Does not include public safety sales tax revenue 9 Source: Riverside County FY 14 ‐ 15 Mid ‐ Year Budget Report

5 Year Master Plan (amounts in millions) FY 14/15 FY 15/16 FY 16/17 FY 17/18 FY 18/19 Expenditures Amount Amount Amount Amount Amount Sheriff 10.0 20.0 41.1 47.8 46.5 ECDC OPERATIONS 4.4 8.8 17.2 21.4 22.5 PATROL 1.2 9.9 24.7 29.7 40.7 57.7 LABOR COST INCREASES 5.1 5.4 5.8 6.2 ISF INCREASES 2.4 2.4 2.4 2.4 HELICOPTERS Correction Health 10.0 12.4 15.3 19.7 21.7 Fire Salaries and Benefits 10.1 13.0 13.4 13.8 14.2 LABOR COST INCREASES Other 4.6 6.9 9.3 12.7 12.9 PROBATION 1.2 3.0 3.8 4.0 4.2 TLMA 2.6 15.9 19.9 20.4 20.4 CAPITAL DEBT SERVICE 15.8 6.2 6.2 6.2 6.2 OTHER TOTAL EXPENDITURES $ 68.6 $ 118.4 $ 163.7 $ 194.9 $ 214.9 REVENUES Discretionary Revenues 46.8 74.6 101.9 130.8 160.3 Prop 172 Revenues 21.8 43.9 56.5 56.7 61.9 TOTAL REVENUES $ 68.6 $ 118.4 $ 158.4 $ 187.5 $ 222.2 FUNDING STATUS $0.0 $0.0 ($5.3) ($7.4) $7.3 10 Source: Riverside County Executive Office

County budgeted revenues rely on input from independent professional economic County budgeted revenues rely on input from independent professional economic assessments assessments • Cal State Fullerton • Beacon Economics Overall FY 14-15 general fund expenditures expected to increase to $657.2 million from $618 Overall FY 14-15 general fund expenditures expected to increase to $657.2 million from $618 million in FY 13-14 million in FY 13-14 Assessed Values are projected to increase by 4% and 7.8% in FY 13-14 and FY 14-15, Assessed Values are projected to increase by 4% and 7.8% in FY 13-14 and FY 14-15, respectively – second and third consecutive increase in AV respectively – second and third consecutive increase in AV Property tax revenue budgeted to exceed original forecast (an $18 million increase) by an Property tax revenue budgeted to exceed original forecast (an $18 million increase) by an additional $3.3 million additional $3.3 million Sales tax revenue for the County estimated at $33.5 million for FY 2014-15 Sales tax revenue for the County estimated at $33.5 million for FY 2014-15 11 Source: Riverside County FY 14-15 Mid Year Budget Report, 14-15 Adopted Budget

 State FY 15 ‐ 16 Budget focuses on fiscal discipline and projects a modest surplus • Budget includes payments to local governments, including the County • County would receive $26.6 million for payment of pre ‐ 2004 back ‐ due mandate reimbursements • County would receive $7.7 million for county Medi ‐ Cal administration • County estimates state payment of $2.6 million in payment ‐ in ‐ lieu ‐ of ‐ taxes and one ‐ time and ongoing funding for county fairs  Redevelopment dissolution activities are ongoing • For FY 14 ‐ 15 Auditor ‐ Controller anticipates $5.6 million to County General Fund in one time revenues • Deposited into Budget Stabilization Fund 12