MINING THROUGH UNCERTAINTY The Importance of Minerals in Our Lives - - PowerPoint PPT Presentation

MINING THROUGH UNCERTAINTY

The Importance of Minerals in Our Lives

MINING THROUGH UNCERTAINTY

The Importance of Minerals in Our Lives

MINING THROUGH UNCERTAINTY

How Stable is Mining Production in Nevada?

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Nevada Mining Operations

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103 103

Active Operations in 2018

Nevada Mining Operations

$7. $7.7B 7B

Gross Proceeds of Minerals in 2018

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Nevada Mining Operations

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• 4.

4.1% 1%

Annual Gross Proceeds Loss from 2017 to 2018

Nevada GDP Growth by Sector

2008-2018 Compound Annual Growth Rate MINING THROUGH UNCERTAINTY

• 2.4%
• 2.3%
• 2.1%

1.4% 1.5% 1.9% 2.0% 2.2% 2.7% 2.9% 3.1% 3.1% 3.4% 4.2% 4.4% 4.4% 4.5% 4.8% 5.3% 5.6% 7.3% Mining Construction Agriculture Utilities Accommodation/Food Prof/Scientific/Tech Services Real Estate/Rental/Leasing Durable Goods Government Wholesale Trade Other Retail Trade Arts/Entertainment/Recreation Finance/Insurance Admin/Waste Management Nondurable Goods Management of Companies Health Care/Social Assistance Education Transportation/Warehousing Information

All Industries Total: +2.5%

Mineral Production

Past 12 Months

Increased 10.0% Remained About the Same 40.0% Decreased 40.0% Refused/NA 10.0% Increased Remained About the Same Decreased Refused/NA

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Nevada GDP Growth by Sector

2017-2018 Compound Annual Growth Rate

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• 18.1%
• 7.3%

0.8% 1.3% 2.6% 4.9% 5.8% 5.9% 6.4% 6.8% 7.3% 7.3% 7.5% 7.7% 8.3% 9.1% 9.6% 9.7% 12.8% 14.1% 23.9% Mining Agriculture Accommodation/Food Government Utilities Retail Trade Other Real Estate/Rental/Leasing Finance/Insurance Prof/Scientific/Tech Services Health Care/Social Assistance Wholesale Trade Information Transportation/Warehousing Arts/Entertainment/Recreation Admin/Waste Management Education Management of Companies Construction Nondurable Goods Durable Goods

All Industries Total: +5.6%

Mining Gross Domestic Product (In Billions)

Nevada

$3.5 $4.1 $3.9 $5.1 $6.3 $5.7 $4.4 $3.4 $2.7 $3.3 $3.9 $3.2

'07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18

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Mining GDP Share of All Industry Total

Nevada

2.6% 3.1% 3.3% 4.2% 5.0% 4.5% 3.4% 2.5% 1.9% 2.2% 2.5% 1.9%

'07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18

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Mineral Production

Next 12 Months

Increase 40.0% Remain About the Same 30.0% Decrease 20.0% Refused/NA 10.0% Increase Remain About the Same Decrease Refused/NA

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Business Revenues or Sales

Past 12 Months

Increased 42.9% Remained About the Same 28.6% Decreased 16.3% Refused/NA 12.2% Increased Remained About the Same Decreased Refused/NA

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Business Revenues or Sales

Next 12 Months

Increase 53.2% Remain About the Same 21.3% Decrease 17.0% Refused/NA 8.5% Increase Remain About the Same Decrease Refused/NA

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Business Profitability

Past 12 Months

Increased 36.7% Remained About the Same 28.6% Decreased 20.4% Refused/NA 14.3% Increased Remained About the Same Decreased Refused/NA

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Are Commodity Prices Going to Increase?

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Commodity Price

Next 12 Months

48.9% 56.5% 63.8% 40.4% 39.1% 31.9% 10.6% 4.3% 4.3% Copper Silver Gold Increase Stay About the Same Decrease

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Price Change Over the Past Year

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OVER THE PAST YEAR (ACTUAL) PROJECTED IN NEXT 12 MONTHS COMMODITY AUGUST 2018 AUGUST 2019 INCREASE DECREASE

Gold (per Troy Oz.) $1,180 $1,515 63.8% 4.3% Silver (per Troy Oz.) $14.61 $16.93 56.5% 4.3% Copper (per Pound) $2.72 $2.59 48.9% 10.6%

Price of Gold

USD per Troy Ounce

$1,515 $0 $200 $400 $600 $800 $1,000 $1,200 $1,400 $1,600 $1,800 $2,000

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Peak to Present:

• $380 (-20.0%)

Price of Gold

USD per Troy Ounce

$0 $200 $400 $600 $800 $1,000 $1,200 $1,400 $1,600 $1,800 $2,000

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64% 32% 4%

Price of Silver

USD per Troy Ounce

$16.93 $0 $10 $20 $30 $40 $50 $60

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Peak to Present:

• $31.78 (-65.2%)

Price of Silver

USD per Troy Ounce

$0 $10 $20 $30 $40 $50 $60

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57% 4% 39%

Price of Copper

USD per Pound

$2.59 $1.50 $2.00 $2.50 $3.00 $3.50 $4.00 $4.50

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Peak to Present:

• $1.34 (-34.0%)

Price of Copper

Next 12 Months

$1.50 $2.00 $2.50 $3.00 $3.50 $4.00 $4.50

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49% 40% 11%

What is the Outlook for the Mining Industry in Nevada?

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Nevada’s Economy

Right Direction 75.5% Wrong Direction 12.2% Refused/No Answer 12.2%

2019 Annual Survey

92.9% 75.5% 2018 2019

“Right Direction” Prior Year Comparison

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Business Environment in Nevada

Past 12 Months

8.2% 36.7% 40.8% 10.2% 4.1% Much Better Somewhat Better About the Same Somewhat Worse Refused/No Answer

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State Business Tax Climate

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Best Tax Climate Worst Tax Climate

Nevada has the

9th

th

Best Business Tax Climate in the U.S.

Business Environment in Nevada

Next 12 Months

4.1% 36.7% 46.9% 8.2% 4.1% Much Better Somewhat Better About the Same Somewhat Worse Refused/No Answer

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Elements of Nevada Mining that Most Encourage Investment

40.4% 41.2% 42.3% 53.7% 54.9% Quality of Infrastructure Availability of Labor/Skills Political Stability Certainty Concerning the Administration, Interpretation and Enforcement of Existing Regulations Security

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What is the Outlook for Mining Employment in Nevada?

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Nevada Employees

Next 12 Months

Increase 57.1% Stay About the Same 30.6% Decrease 6.1% Refused/NA 6.1% Increase Stay About the Same Decrease Refused/NA

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Nevada Employment

200,000 400,000 600,000 800,000 1,000,000 1,200,000 1,400,000 1,600,000 '01 '03 '05 '07 '09 '11 '13 '15 '17 '19 YTD

Annual Employment

• 10%
• 8%
• 6%
• 4%
• 2%

0% 2% 4% 6% 8% '01 '03 '05 '07 '09 '11 '13 '15 '17 '19 YTD

Year-over-Year Growth

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Employment Growth by State

United States

3.3% 1.5% 0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 3.5% 4.0% Utah Nevada Washington Idaho Florida South Dakota Arizona Texas New Mexico Oregon Wyoming Mississippi Rhode Island Colorado Alaska Tennessee Alabama California Montana North Carolina Georgia New Hampshire New Jersey South Carolina Arkansas Kentucky US New York Kansas Indiana West Virginia Illinois Massachusetts Maine Missouri Iowa Oklahoma Ohio Delaware Hawaii Virginia Pennsylvania Connecticut North Dakota Michigan Nebraska Wisconsin Minnesota Maryland Vermont Louisiana

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Employment Growth by Sector

Nevada | Prior Year vs. Present

• 125

25 792 1,458 2,683 5,092 5,300 5,450 6,583 9,733 12,225 Information Mining & Logging Other Services Government Financial Activities Education & Health Services Trade, Transportation & Utilities Leisure & Hospitality Manufacturing Construction Professional & Business Services

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Net Growth: +49,217

Employment Growth by Sector

Nevada | Prior Year vs. Present

• 0.8%

0.2% 0.9% 1.6% 1.9% 2.1% 3.7% 4.0% 6.6% 11.3% 12.6% Information Mining & Logging Government Leisure & Hospitality Other Services Trade, Transportation & Utilities Education & Health Services Financial Activities Professional & Business Services Construction Manufacturing

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Net Growth Rate: +3.6%

Mining Employees

Next 12 Months

Increase 30.6% Stay About the Same 38.8% Decrease 26.5% Refused/NA 4.1% Increase Stay About the Same Decrease Refused/NA

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Nevada Mining Employment

2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000 18,000 '01 '03 '05 '07 '09 '11 '13 '15 '17 '19 YTD

Annual Employment

• 15%
• 10%
• 5%

0% 5% 10% 15% 20% '01 '03 '05 '07 '09 '11 '13 '15 '17 '19 YTD

Year-over-Year Growth

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Mining Company Employment Growth

Next 12 Months

Increase 46.9% Stay About the Same 38.8% Decrease 4.1% Refused/NA 10.2% Increase Stay About the Same Decrease Refused/NA

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How Much Does the Mining Industry Pay in Taxes to Nevada?

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Ten Highest Assessed Taxpayers

2018-2019

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RANK TAXPAYER NAME TOTAL (IN MILLIONS)

1 MGM Resorts International $4,499 2 NV Energy (1,4) $2,425 3 Caesars Entertainment Corporation $2,223 4 Wynn Resorts Limited $1,113 5 Las Vegas Sands Corporation $1,037 6 Station Casinos Incorporated $857 7 NEWMONT MINING $662 8 Station Casinos Incorporated $522 9 BARRICK MINING $504 10 Ruby Pipeline LLC $439 TOTAL $14,281

Other 96.9% Mining-Related 3.1%

Roll Assessed Value by Class

2017-2018

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Net Proceeds of Minerals Taxes Paid By Nevada Mining Industry, Including Royalty Recipients (In Millions)

$62.6 $75.7 $91.8 $97.6 $163.0 $216.7 $255.6 $171.0 $103.2 $101.6 $136.6 $155.1 $125.9

'06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18

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Share of Net Proceeds Tax Generated by Specific Minerals

2018

Gold/Silver 91.9% Copper 2.7% Geothermal 1.3% Gypsum 0.05% Oil 0.3% Other 3.8%

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$12 $126 M 6 M

Total Net Proceeds Tax Generated

Share of Net Proceeds Tax Generated by Specific Minerals

2018

Gold/Silver 91.9% Other 8.1%

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$11 $116 M 6 M

Net Proceeds Tax Generated by Gold/Silver

Net Proceeds Tax Generated by County

2018 | In Millions

$892.9 $367.9 $343.5 $232.7 $218.6 $157.2 $44.9 $35.1 $29.7 $10.2 $8.2 $1.7 $0.8 $0.0 $0.0 $0.0 $0.0

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Net Proceeds Tax Generated by County

2018 | In Millions

$892.9 $367.9 $343.5 $232.7 $218.6 $157.2 $44.9 $35.1 $29.7 $10.2 $8.2 $1.7 $0.8 $0.0 $0.0 $0.0 $0.0

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78. 78.3% 3%

Of Total Net Proceeds Tax Generated by Top 4 Counties

Total Estimated Major Taxes Paid by Nevada Mining

$91.8 $97.6 $163.0 $216.7 $255.6 $171.0 $103.2 $101.6 $136.6 $155.1 $125.9 $223.6 $203.7 $314.0 $388.1 $431.4 $349.5 $245.8 $235.5 $292.3 $312.2 $278.9 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 Net Proceeds Sales/Use Tax Property Tax Modified Business Tax

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What Do Education Funding Formula Changes Mean for Mining?

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Education Funding Under the Nevada Plan

Education Funding Under the Nevada Plan

How Much is Nevada Spending on K12 Education?

▪ Is it the $1.6 billion reported as total Distributive School Account resources in

the executive budget?

▪ Is it the $2.2 billion reported in the Nevada Comprehensive Annual Financial

Report, State Spending Analysis?

▪ Is it the $2.3 billion reported as the legislatively approved total Department of

Education budget in the Fiscal Appropriations Report?

▪ Is it the $2.9 billion reported as total regular support in the Distributive School

Account?

▪ Is it the $3.2 billion reported as total required state support in Distributed School

Account?

▪ Is it the $3.9 billion reported as total operating expenditures in the state’s

Nevada Plan summary?

There are more than 80 state, local and federal revenue resources that have been dedicated to education programs; they are expected to generate approximately $5.0B in FY2020 and $5.1B in FY2021

$5.0 $5.0B

How Much is Nevada Spending on K12 Education?

$6,052 $10,197

Basic Per Pupil Support (Gov Rec FY2020) Total Education Resources Per Pupil (FY2020)

The he differen ferences ces are e significant, gnificant, limiting g transpar parenc ency and nd creat eating confus fusion

• n

How Much is Nevada Spending on K12 Education?

• n

Student Enrollment

Nevada School Districts

Nevada ada is ho home e to one of the nation’s largest school districts (i.e., ., the Clark k County y School

• ol

Distric ict) t) and some e of its smalles lest t school

• l distr

tric icts ts

Transparency

How much is being spent on education, where the funding is coming from and where is it spent

SB 543 Guiding Principles

Student-Centered

Recognize the differences in cost per student, allocate funding accordingly

Geographic Diversity

Recognize the differences in each school district, allocate funding accordingly

Hold Harmless

Focus on allocation of incremental revenue, minimizing reallocation at student expense

Classroom-focused

Support classroom instruction and programming that directly improves student achievement

2

Creat eation ion of the he Nevada vada Educati cation

• n Fun

und

1 3 4

The Core Elements of SB543

5

Creat eation ion of the he Educati ation

• n

Stabili bilization zation Accoun

• unt

Replace lace the he Nevada vada Plan with h the he Pupi upil-Centere entered d Fun undin ing g Plan an Creat eation ion of the he Commis ission sion

• n

n School

• ol

Fun undin ing Enh nhanc anced ed Reporti

• rting

g and nd Acc ccou

• untabili

tability ty at All Lev evels els

STEP 1

State te Admin.

• min. and

nd Oversig ersight t Pro rograms rams STEP 2

Base se Fun unding ding

(Inflation + Enrollment Growth)

STEP 3

Weighted ted Fun unding

(Allocation of All Other Funds)

STEP 4

Exc xces ess Allocati

• cation
• n

(Distribution of Funds After Parity)

STEP 5

Pupil-Centered Funding Model

St State te of Nevada da Educati ation

• n Fu

Fund

NDE/APA K12 Base Funding Allocation Recommendation

“Successful Schools” Base Equity Allocation Adjustments

Small School District Adjustment Necessarily Small Schools Adjustment Comparable Wage Index

Weighted Funding Classifications

1 Special Education Students 2 English Language Learners 3 At-Risk Students (those living at or near the poverty level) 4 Gifted and Talented Students

Base Funding

Funds Allocated to Every Student in the State

+

Existing Categorical Funding

All Funds Currently Allocated to Programs Targeting Weighted Students Remain with Weighted Students

+

Incremental Funding

All Funds After Base Funding is Increased by Inflation are Allocated to Weighted Student Programs Until Those Programs are Fully Funded

District-Level Impacts and Hold Harmless/True-Up Approach

Hold Harmless.

All school districts will be frozen at FY2020 funding levels, ensuring that any school district that would receive less funding under the student- centered funding model does not receive any less money that it did in the current school year.

True-Up.

Incremental K12 education funds will be allocated to school districts that are currently receiving less funding than they would under the student-centered funding model before any other allocations are made, allowing them to be made whole as additional K12 education funding is made available.

Impacts for Mining

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▪ Nevada’s Constitutional Conflict ▪ Mining Tax Dollars are the First Education Dollars Distributed Under the New Formula, Must be Returned to the County of Origin ▪ If Mining Tax Dollars are Greater than the Total Amount of Funds that Would Otherwise be Allocated Under the Formula, Those Funds are “Authorized for Expenditure as a Continuing Appropriation for the Purpose of Mitigating the Adverse Effects of the Cyclical Nature of the Industry of Extracting and Processing Minerals on the Ability of the County School District to Offer its Pupils a Reasonably Equal Educational Opportunity.”

Where Do We Go From Here?

▪ Implementation and Execution

▪ July 1, 2019 Effective Date ▪ July 1, 2021 Effective Date

▪ Communication and Messaging

▪ Public Sector ▪ Private Sector

▪ Commission on Education Funding ▪ Funding Adequacy

What are the Impacts

• f Mining in Nevada?

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Employment Impacts for Nevada Mining Industry Operations

2018

11,200 8,081 10,112 Direct Indirect Induced

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29 29,3 ,393 93

Total Jobs Supported by Nevada Mining Industry Operations

Employment Impacts for Nevada Mining Industry Operations

2018

32,234 34,495 32,904 30,162 29,350 29,754 30,462 29,393 2011 2012 2013 2014 2015 2016 2017 2018

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29 29,3 ,393 93

Total Jobs Supported by Nevada Mining Industry Operations

Wage/Salary Impacts for Nevada Mining Industry Operations

2018

$1.3 B $0.7 B $0.5 B Direct Indirect Induced

$2. $2.4 B 4 B

Total Labor Income Supported by Nevada Mining Industry Operations

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Wage/Salary Impacts for Nevada Mining Industry Operations

2018

$2.58 B $2.76 B $2.64 B $2.43 B $2.36 B $2.40 B $2.49 B $2.41 B 2011 2012 2013 2014 2015 2016 2017 2018

$2. $2.4 B 4 B

Total Labor Income Supported by Nevada Mining Industry Operations

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Value-Added Impacts for Nevada Mining Industry Operations

2018

$4.2 B $1.2 B $0.9 B Direct Indirect Induced

$6. $6.3 B 3 B

Total GDP Supported by Nevada Mining Industry Operations

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Value-Added Impacts for Nevada Mining Industry Operations

2018

$6.8 B $7.3 B $6.9 B $6.0 B $5.9 B $6.1 B $6.6 B $6.3 B 2011 2012 2013 2014 2015 2016 2017 2018

$6. $6.3 B 3 B

Total GDP Supported by Nevada Mining Industry Operations

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Economic Output for Nevada Mining Industry Operations

2018

$7.9 B $2.0 B $1.5 B Direct Indirect Induced

$11 $11.4 .4 B B

Total Economic Output Generated by Nevada Mining Industry Operations

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Economic Output for Nevada Mining Industry Operations

2018

$13.0 B $14.0 B $13.0 B $11.1 B $10.9 B $11.3 B $12.1 B $11.4 B 2011 2012 2013 2014 2015 2016 2017 2018

$11 $11.4 .4 B B

Total Economic Output Generated by Nevada Mining Industry Operations

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What is the Outlook for the Mining Industry Nationally?

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National Economy

Right Direction 79.6% Wrong Direction 10.2% Refused/No Answer 10.2%

2019 Annual Survey

75.0% 79.6% 2018 2019

“Right Direction” Prior Year Comparison

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Investment Attractiveness Index

United States

52.9 56.6 69.3 70.4 70.7 72.5 74.0 74.5 79.9 83.9 84.3 86.1 93.0

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Median: 74.0

Investment Attractiveness Index Growth

United States

• 6.6%
• 2.9%
• 0.4%

2.2% 3.5% 6.1% 6.6% 7.8% 8.8% 10.0% 11.4% 13.9% 27.6%

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Policy Perception Index

United States

69.6 77.8 81.2 85.2 85.5 90.2 90.3 91.7 93.8 93.9 94.7 96.3 99.3

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Median: 90.3

Policy Perception Index Growth

United States

1.1% 7.2% 7.5% 9.7% 11.0% 11.2% 11.6% 12.1% 13.6% 13.7% 16.8% 17.6% 23.0%

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Best Practices Mineral Potential Index

United States

36.4 47.9 57.1 57.7 58.7 60.7 61.5 66.7 70.0 76.3 78.8 86.5 88.8

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Median: 61.5

Best Practices Mineral Potential Index Growth

United States

• 15.0%
• 13.5%
• 12.9%
• 10.2%
• 0.8%

0.6% 1.3% 3.8% 5.3% 8.2% 9.3% 15.6% 58.2%

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What is the Outlook for the Mining Industry Internationally?

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Investment Attractiveness Index

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2018 Rank Location 2017 Rank 2018 Score Index Score

1 NEVADA (US) 3 93.3 2 Western Australia 5 91.5 3 Saskatchewan (CA) 2 90.0 4 Quebec (CA) 6 88.4 5 Alaska (US) 10 86.1

Policy Perception Index

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2018 Rank Location 2017 Rank 2018 Score Index Score

1 Saskatchewan (CA) 3 100.0 2 NEVADA (US) 5 99.3 3 Finland 2 99.2 4

• Rep. of Ireland

1 97.7 5 Western Australia 17 96.7

Best Practices Mineral Potential Index

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2018 Rank Location 2017 Rank 2018 Score Index Score

1 NEVADA (US) 8 88.8 2 Western Australia 4 88.0 3 Alaska (US) 5 86.5 4 NW Territories (CA) 19 86.0 5 Nunavut (CA) 10 84.6

Regional Median Investment Attractiveness

54.1 56.6 59.8 66.3 68.3 74.0 75.5 81.2

Argentina Africa Latin America and Caribbean Oceania Europe United States Australia Canada

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Regional Median Investment Attractiveness Growth

• 7.6%

0.5% 1.5% 3.8% 5.5% 7.1% 9.3% 16.5%

Argentina Africa Europe Oceania United States Australia Canada Latin America and Caribbean

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Regional Median Policy Perception Index

56.5 60.8 61.1 64.3 84.1 85.4 89.9 90.3

Argentina Oceania Africa Latin America and Caribbean Australia Europe Canada United States

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Regional Median Policy Perception Index Growth

• 7.9%

2.4% 7.5% 8.5% 9.3% 11.2% 15.5% 28.6%

Argentina Europe Africa Canada United States Australia Latin America and Caribbean Oceania

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Trade Wars: What Do They Mean for Us?

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China’s Dominance of the Rare Earth Market

▪ Seventy percent of rare earths are mined in the People’s Republic of China, and processes a greater percentage of the rare earths annually ▪ Eighty percent of U.S. imports of usable rare earths also come from China ▪ Earlier this year, the Chinese government suggested it would lower the amount of rare earths supplied to the U.S. as retaliation for increased tariffs on Chinese goods

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People's Republic of China 70% Others 30%

Rare Earth Extraction in 2018

Revitalizing the Rare Earth Market in the U.S.

▪ The Mountain Pass mine, located an hour away from Las Vegas, is a potential part of the answer to a reduced supply of rare earth minerals ▪ From the 1960s to the 1980s, the United States was a leader in extracting these minerals, and Mountain Pass was a big part of that ▪ Despite not being mined since 2015, Mountain Pass is still the largest source of rare earths in the country ▪ MP Materials, based in Las Vegas, is seeking to reestablish rare earth mining and help reduce dependency on imported rare earths

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People's Republic of China 70% Others 30%

Rare Earth Extraction in 2018

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What About Electric Vehicles and Batteries?

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Electric Vehicle Sales Rise Dramatically

▪ 64% increase in EV sales 2017 to 2018 ▪ 79% in the U.S. ▪ 78% in China ▪ 34% in Europe ▪ More than 1.27 million EVs are on the road in the U.S. as

• f June 30, 2019

▪ In Q2 2019, approximately 85,000 EVs were sold in the U.S. ▪ Q2 2019 sales increased 23% over Q2 2018 sales

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56,000 52,000 200,000 306,000 663,000 53,000 97,000 358,000 409,000 1,182,000 Japan Others United States Europe China

Global EV Sales

2018 2017

Electrifying Global Transportation

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Copper and Electric Vehicles

49 85 132 183 196 814 Conventional Cars Hybrid EVs Plug-in Hybrid EVs Battery Electric Vehicles (EVs) Hybrid Electric Bus Battery Electric Bus

Pounds of Copper Required

▪ Demand for copper in vehicles expected to increase by 1,700 kilotons by 2027 ▪ 56% of all light commercial vehicles and 31%

• f all medium commercial vehicles will be

electric by 2040

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Exponential Energy Storage Growth

Lithium, Cobalt, Nickel and other minerals needed

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Purchasing Managers Index

10 20 30 40 50 60 70 '01 '03 '05 '07 '09 '11 '13 '15 '17 '19

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How Might the State Budget Be Impacted by a Recession?

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Nevada General Fund Revenue Trends

In Billions

$1.7 $1.8 $1.8 $2.4 $2.7 $3.1 $3.1 $3.1 $2.7 $3.0 $3.2 $3.1 $3.1 $3.1 $3.3 $3.7 $4.0 $4.2 FY '01 FY '02 FY '03 FY '04 FY '05 FY '06 FY '07 FY '08 FY '09 FY '10 FY '11 FY '12 FY '13 FY '14 FY '15 FY '16 FY '17 FY '18 Sales Tax Gaming Taxes

• Mod. Business Tax

Other

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Public School Enrollment

Nevada

467,527 498,616 '16 '17 '18 '19

31, 31,089 089

Increase in enrollment in Nevada public schools between the 2015-2016 and the 2018-2019 school years

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Medicaid Eligible Recipients

100,000 200,000 300,000 400,000 500,000 600,000 700,000 '05 '07 '09 '11 '13 '15 '17 '19 LTM

Eligible Recipients

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• 10%

0% 10% 20% 30% 40% 50% 60% 70% '05 '07 '09 '11 '13 '15 '17 '19 LTM

Annual Growth

Nevada Modified Business Tax

In Millions

$0 $100 $200 $300 $400 $500 $600 $700 FY '09 FY '10 FY '11 FY '12 FY '13 FY '14 FY '15 FY '16 FY '17 FY '18

▪ Modified Business Tax rate was scheduled to decrease this year ▪ Rate decrease eliminated in 2019 Nevada Legislature ▪ Estimated that this extension will generate $98 million of additional revenue over the biennia ▪ Pending lawsuit alleges that taxes were raised without the two-thirds majority as required by the Nevada Constitution

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Nevada Modified Business Tax

In Millions

$0 $100 $200 $300 $400 $500 $600 $700 FY '09 FY '10 FY '11 FY '12 FY '13 FY '14 FY '15 FY '16 FY '17 FY '18

Share of General Fund Revenue

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14.5% .5%

Mod. Business Tax

Nevada General Fund Revenue

Actual vs Forecasted -In Millions

$0 $500 $1,000 $1,500 $2,000 $2,500 $3,000 $3,500 $4,000 $4,500 FY '01 FY '02 FY '03 FY '04 FY '05 FY '06 FY '07 FY '08 FY '09 FY '10 FY '11 FY '12 FY '13 FY '14 FY '15 FY '16 FY '17 FY '18 Actual Forecasted

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How is Nevada’s Economy Different Today than During the Last Recession?

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Foreclosure Inventory

Nevada

56,028 10,000 20,000 30,000 40,000 50,000 60,000 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19

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Foreclosure Inventory

Nevada

56,028 3,781 10,000 20,000 30,000 40,000 50,000 60,000 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19

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Negative Equity

Nevada

Q1 2010 Q1 2019

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72.7% 7%

Negative Equity

4.2%

Negative Equity

Building Permits

Nevada

5,000 10,000 15,000 20,000 25,000 30,000 '07 '09 '11 '13 '15 '17 '19 LTM

Building Permits

Single-Unit Multi-Unit

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• 60%
• 40%
• 20%

0% 20% 40% 60% '07 '09 '11 '13 '15 '17 '19 LTM

Total Permits Annual Growth

Building Permits

Nevada

5,000 10,000 15,000 20,000 25,000 30,000 '07 '09 '11 '13 '15 '17 '19 LTM

Building Permits

Single-Unit Multi-Unit

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• 60%
• 40%
• 20%

0% 20% 40% 60% '07 '09 '11 '13 '15 '17 '19 LTM

Total Permits Annual Growth

Median Housing Prices

Washoe County

$467,191 $0 $50,000 $100,000 $150,000 $200,000 $250,000 $300,000 $350,000 $400,000 $450,000 $500,000 '07 '09 '11 '13 '15 '17 '19

New Homes

$374,500 $0 $50,000 $100,000 $150,000 $200,000 $250,000 $300,000 $350,000 $400,000 '07 '09 '11 '13 '15 '17 '19

Existing Homes

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Home Closings

Washoe County

500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500 5,000 '05 '07 '09 '11 '13 '15 '17 '19 LTM

New Homes

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1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 10,000 '05 '07 '09 '11 '13 '15 '17 '19 LTM

Existing Homes

Home Closings

Washoe County

500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500 5,000 '05 '07 '09 '11 '13 '15 '17 '19 LTM

New Homes

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1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 10,000 '05 '07 '09 '11 '13 '15 '17 '19 LTM

Existing Homes

Median Housing Prices

Las Vegas Area

$395,664 $0 $50,000 $100,000 $150,000 $200,000 $250,000 $300,000 $350,000 $400,000 $450,000 '07 '09 '11 '13 '15 '17 '19

New Homes

$272,000 $0 $50,000 $100,000 $150,000 $200,000 $250,000 $300,000 $350,000 '06 '08 '10 '12 '14 '16 '18

Existing Homes

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Home Closings

Las Vegas Area

5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 45,000 '05 '07 '09 '11 '13 '15 '17 '19 LTM

New Homes

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10,000 20,000 30,000 40,000 50,000 60,000 70,000 '05 '07 '09 '11 '13 '15 '17 '19 LTM

Existing Homes

Home Closings

Las Vegas Area

5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 45,000 '05 '07 '09 '11 '13 '15 '17 '19 LTM

New Homes

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10,000 20,000 30,000 40,000 50,000 60,000 70,000 '05 '07 '09 '11 '13 '15 '17 '19 LTM

Existing Homes

Peak-to-Trough Employment Movement

Nevada

• 84,200
• 27,900
• 23,800
• 16,200
• 12,300
• 11,800
• 2,300
• 2,000

600 7,800 12,800 Construction Leisure & Hospitality Professional & Business Services Trade, Transportation & Utilities Financial Activities Manufacturing Information Other Services Mining & Logging Government Education & Health Services

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Net Job Loss:

• 159,300 (-12.6%)

Trough-to-Present Employment Movement

Nevada

• 2,400

2,800 3,100 10,100 18,800 22,900 40,900 42,800 51,900 60,100 66,600 Government Mining & Logging Information Other Services Financial Activities Manufacturing Construction Education & Health Services Trade, Transportation & Utilities Leisure & Hospitality Professional & Business Services

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Net Job Gain: +317,600 (28.6%)

Las Vegas Strip Trends

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$0 $1 $2 $3 $4 $5 $6 $7 $8 '07 '09 '11 '13 '15 '17 '19 LTM Billions

Gross Gaming Revenue

$105 $110 $115 $120 $125 $130 $135 $140 $145 '13 '14 '15 '16 '17 '18 '19 LTM

Average Daily Room Rate

84% 85% 86% 87% 88% 89% 90% 91% '13 '14 '15 '16 '17 '18 '19 LTM

Hotel Occupancy Rate

Las Vegas Strip Trends

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• 12%
• 10%
• 8%
• 6%
• 4%
• 2%

0% 2% 4% 6% '07 '09 '11 '13 '15 '17 '19 LTM

Gross Gaming Revenue

0% 1% 2% 3% 4% 5% 6% '13 '14 '15 '16 '17 '18 '19 LTM

Average Daily Room Rate

• 1.0%
• 0.5%

0.0% 0.5% 1.0% 1.5% 2.0% 2.5% '13 '14 '15 '16 '17 '18 '19 LTM

Hotel Occupancy Rate

Annual GDP Growth and Financial Events

10 20 30 40 50 60 70 80 90 100

• 4%
• 2%

0% 2% 4% 6% 8% 10% 12% 14% 16% '71 '74 '77 '80 '83 '86 '89 '92 '95 '98 '01 '04 '07 '10 '13 '16 '19 Recession Annual GDP Growth

’74 Franklin Nat’l BK ’82 LatAm Debt ’87 Stock Market Crash ’90 S&L Crisis ’00 Tech Bubble ’07 Subprime Crisis

Comparative Analysis of Periods of Expansion and Real GDP Growth

Recent expansion has been the

se secon

• nd

d lon

• nge

gest st

period of economic growth in history

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Trough Peak Duration (Qtrs.) Real GDP Compound Annual Growth Rate Q1 1991 Q1 2001 41 3.6% Q2 2009 To Date 40 2.3% Q1 1961 Q4 1969 36 4.9% Q4 1982 Q3 1990 32 4.3% Q4 2001 Q4 2007 25 2.9% Q1 1975 Q1 1980 21 4.3% Q4 1949 Q2 1953 15 7.6% Q2 1954 Q3 1957 14 4.0% Q4 1970 Q4 1973 13 5.1% Q2 1958 Q2 1960 9 5.5% Q3 1980 Q3 1981 5 4.3% AVERAGE 22 4.4%

In-Migration by State

California to Nevada

10,000 20,000 30,000 40,000 50,000 60,000 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16

Total In-Migration

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• 20%
• 10%

0% 10% 20% 30% 40% '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16

Annual Change

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Ho How C w Califo liforn rnians ians mov

• ving

ng to to Ne Neva vada da are e changing the state’s politics

“But the net flow from the Golden State has swelled in recent years, as sky-high housing prices in the Bay Area and Southern California sent residents searching for drastically cheaper deals a few hours drive away in the expanding Reno or Las Vegas metropolitan areas…”

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As Ca Califor ifornia nia los

• ses

es peo eopl ple, e, a las ve vegas as su suburb urb gr grow

• ws

“For Karina Nasir, leaving California for this booming Las Vegas suburb was the chance to escape commutes up to three hours. For Bill Clune, it is saving $5,000 a year on his water bill…”

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Ne Neva vada da amon

• ng to

top sta tates tes for

• r inb

nbou

• und

nd mov

• ves,

es, st stud udy y find nds

“A large share of mostly younger, middle-aged people are looking to move to Nevada from California to escape the high housing costs…”

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U-Haul Prices in Northern Nevada

$1, $1,187 187

Price for a Truck and Tow from San Francisco to Reno

$241 $241

Price for a Truck and Tow from Reno to San Francisco

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U-Haul Prices in Southern Nevada

$1, $1,063 063

Price for a Truck and Tow from Los Angeles to Las Vegas

$203 $203

Price for a Truck and Tow from Las Vegas to Los Angeles

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Hachman Diversity Index

Nevada

50 55 60 65 70 75 80 85 90 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19

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More Diverse

Hachman Diversity Index

Nevada

50 55 60 65 70 75 80 85 90 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19

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More Diverse

Investments in Nevada

$41 $41.2 .2 B B

Total Planned and Under Construction Investments in Nevada

$15 $15.2 .2 B B

Northern Nevada

$26 $26.0 .0 B B

Southern Nevada

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Reno-Tahoe International Airport Expansion

▪ Planned, $1.6 billion expansion of Reno-Tahoe International Airport ▪ The expansion will include a new concourse, new rental car facility and renovations to the existing baggage claim and concourses

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Park Lane

▪ Under Construction, $500 million mixed-use development ▪ Phase one will add in a large apartment complex, phase two will add retail/hotel space, and phase three will add more residential space

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Resorts World Las Vegas

▪ $4.2 billion casino resort to be owned and operated by the Genting Group ▪ Under Construction and expected to complete in 2021

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Allegiant Stadium

▪ $1.9 billion, 65,000-seat stadium located near the Las Vegas Strip to be home of the Las Vegas Raiders ▪ Under Construction and expected to complete in 2020

Consumer Confidence Index

United States

112.2 170.9 20 40 60 80 100 120 140 160 180 200 '80 '83 '86 '89 '92 '95 '98 '01 '04 '07 '10 '13 '16 '19 Recession Future Expectations Present Situation

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Consumer Sentiment Index

20 40 60 80 100 120 '01 '03 '05 '07 '09 '11 '13 '15 '17 '19

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