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Public Resources Advisory Group Presentation to: Proposal to Serve Broward County As Financial Advisor February 26, 2019 PRAG The Firm Established in 1985 National Firm, National perspective; lo cal knowledge and experience

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SLIDE 1

Public Resources Advisory Group

Presentation to:

Proposal to Serve Broward County As Financial Advisor

February 26, 2019

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SLIDE 2

PRAG – The Firm

National Firm, Local Knowledge

  • Established

in 1985

  • National perspective; lo

cal knowledge and experience

  • Ranked

among the top 3 national municipal advisory firms in new issue volume for over 20 years; #2 in 2018

Independent

  • Sole business

focus is municipal financial advice

  • Not engaged

in underwriting, trading, marketing, or investment management

  • Unique

market position and access

Full Service Professionals

  • Skilled

and experienced municipal finance professionals

  • Analytical Strength
  • Credit and

Markets Expertise

  • Full service Florida office

Long-standing Relationships

  • Unblemished

integrity

  • Trusted

advisor relationships

  • Major issuers across

Florida and the United States

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SLIDE 3

PRAG – Broward’s Florida Team

Name and Title Experience Professional Roles Education/Certification Marianne Edmonds Senior Managing Director Public Finance 36 years

  • Municipal Advisor
  • Investment Banker
  • Educator
  • MBA, The Wharton School
  • BA, Northwestern University
  • Series 50 (Municipal Advisor Rep.)

Wendell Gaertner Senior Managing Director Public Finance 29 years

  • Municipal Advisor
  • Investment Banker
  • P3 Advisor
  • Commercial Banker
  • MBA, Stetson University
  • BS (General Honors), University of

Miami

  • Series 50 (Municipal Advisor Rep.)

Molly Clark Managing Director Public Finance 17 years

  • Municipal Advisor
  • Investment Banker
  • Corporate Trust

Analyst

  • BA, Carleton College
  • Series 50 (Municipal Advisor Rep.)

Natalie Sidor Managing Director Public Finance 15 years

  • Municipal Advisor
  • Investment Banker
  • Real Estate

Development

  • MBA, The Wharton School
  • BS, University of Tampa
  • Series 50 (Municipal Advisor Rep.)

Mickey Johnston Vice President Public Finance 11 years

  • Municipal Advisor
  • Financial Analyst
  • Private Equity

Analyst

  • BBA, James Madison University
  • Series 50 (Municipal Advisor Rep.)

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SLIDE 4

PRAG – Broward’s National Support Team

Name and Title Experience Professional Roles Education/Certification Steven Peyser President Public Finance 35 years

  • Municipal Advisor
  • MBA, The Wharton School
  • BA with Distinction, Cornell University
  • Series 50 (Municipal Advisor Rep.)
  • Series 65 (Investment Advisor Rep.)

Monika Conley Senior Managing Director Public Finance 26 years

  • Municipal Advisor
  • Ph.D., New York University
  • MBA, Columbia University
  • BS, MS, Central School of Planning &

Statistics, Warsaw, Poland

  • Series 50 (Municipal Advisor Rep.)

Thomas Huestis Senior Managing Director Public Finance 29 years

  • Municipal Advisor
  • Issuer
  • MBA, Carnegie Mellon University
  • BA, Franklin & Marshall College
  • Series 50 (Municipal Advisor Rep.)
  • Series 65 (Investment Adviser Rep.)

Janet Lee Senior Managing Director Public Finance 28 years

  • Municipal Advisor
  • Rating Analyst
  • Issuer
  • MBA, New York University
  • BA, Cornell University
  • Series 50 (Municipal Advisor Rep.)

Daniel Forman Managing Director Public Finance 6 years

  • Municipal Advisor
  • Financial Engineer
  • Research Associate
  • MS, Baruch College
  • BA, Swarthmore College
  • Series 50 (Municipal Advisor Rep.)
  • Series 65 (Investment Advisor Rep.)

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SLIDE 5

Broward County’s Debt

Existing Credits PRAG’s Relevant Experience

#1 Financial Advisor – General Purpose Bonds (2018)

General Obligation

#1 Financial Advisor – Competitive Sales (2018)

Special Obligation zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA

  • Advisor for sports facility financings for NHL,

MLB, NFL and

(Arena/Courthouse)

Spring Training facilities across the Country

Aviation

  • Advisor to Los Angeles

World Airports for

  • ver two decades

Port Everglades

  • Advisor to Port of Long Beach
  • Prior Experience with PortMiami
  • Advisor

to the Largest Utility in the Southeast (Miami-Dade)

Water and Wastewater

  • Advisor to

the Largest Utility in the Country (LADWAP)

New/Potential Credits PRAG’s Relevant Experience

Convention Center

#1 Financial Advisor – Taxable Issues (2018)

  • Advisor

to Georgia World Congress Center Authority Hotel

Expansion and Headquarters

  • Advisor to Hudson Yards

Development Corporation

Hotel

  • Advisor

to New York Convention Center Development Corp.

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Transportation

#3 Financial Advisor – Transportation (2018)

  • Advisor to Largest Transit Agency in the Country (MTA)
  • Advisor for other Florida transportation surtax programs
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SLIDE 6

PRAG’s Approach

Implementation On-Going Financial Management

  • Alternatives and Options
  • Analysis and Modeling

Strategic Planning

  • Structure and Timing
  • Credit
  • Market Conditions
  • Debt Monitoring
  • Market Updates
  • Special Projects

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SLIDE 7

Broward County Examples

Implementation Strategic Planning On-Going Financial Management

  • Hotel Ownership Model
  • Identified Flow of Funds
  • Hotel Financing

Options

  • Water

and Wastewater Credit Analysis

  • Refunding Opportunities
  • Two

Upgrades / $20 million NPV Savings

  • Transportation Funding Analysis
  • Refunding Analyses
  • Impact
  • f

Tax Law Changes

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SLIDE 8

Proposal Summary

Direct and Applicable Experience Quantitative and Analytical Expertise Senior Level Service with a Team Approach Credit Expertise Market Presence and Information Commitment to Service

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SLIDE 9

Appendix

 Debt and Capital Needs 10  PRAG’s Engagements with Broward County 11  Hotel Ownership Model Input Page Sample 12  Hotel Flow of Funds 13  Water and Wastewater S&P Upgrade 14  Water and Wastewater Moody’s Upgrade 15  Water and Wastewater Refunding Savings 16  Call Option Analysis 17

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SLIDE 10

Credit Ratings Security Outstanding FY19-23 Relevant Type Moody's S&P Fitch Source Debt1 Capital Needs2 Experience Governmental Activities (in $000s) (in $000s) #1 Financial Advisor - General Purpose Bonds (2018) General Obligations Aaa AAA AAA Ad Valorem Taxes $ 155,245 $ 450,231 #1 Financial Advisor - Competitive Sales (2018) Special Obligations - Professional Sports TDT; Sales Tax Advisor for sports facilities financing for NHL,MLB, NFL and Spring Aa2 AA- AA+ $ 93,970 $ 46,472 Franchise Facility Rebate; County funds Training facilities across the Country (Arena) Other Special Obligations Extensive Florida General Government Experience; Aa2 AA+ AA+ Half-Cent Sales Tax $ 187,920 $

  • Courthouse Project

Half Cent Sales Tax projects for Hillsborough and Escambia Counties Convention Center Tourist Development #1 Financial Advisor - Taxable Issues (2018) TBD Expansion Taxes Advisor to Georgia World Congress Center Authority Hotel Advisor to Hudson Yards Development Corporation Headquarters Hotel Hotel Revenues/CBA TBD Advisor to New York Convention Center Development Corp. Local Option Gas #3 Financial Advisor - Transportation (2018) Tax, Constitutional Advisor to Largest Transit Agency in the Country (MTA) Transportation $

  • $

584, 225 Tax, Penny for Advisor for other Florida transportation surtax programs: Transportation Hillsborough County, HART, Manatee County Business-Type Activities Net Revenues of the Aviation A1 A+ A+ $ 2,027,095 $ 885,659 Advisor to Los Angeles World Airports for over two decades Airport System Net Revenues of Port Advisor to Port of Long Beach Port Everglades A1 A A $ 169,480 $ 817,187 Facilities Prior Experience with PortMiami Net Revenues of the Advisor to Largest Utility in the Southeast (Miami-Dade) Water and Wastewater Aa1 AA+ AA+ $ 440,855 $ 380,831 Water/Sewer Utility Advisor to Largest Utility in the Country (LADWAP) Grand Total $ 3,074,565 $ 3, 164,605

1 Estimated outstanding debt balances as of February 1, 2019 2 Total appropriations per Broward County FY2019 Capital Program

Broward County – Debt and Capital Needs

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SLIDE 11

PRAG’s Engagements with Broward County

Water and Wastewater Utility Revenue Refunding Bonds, Series 2015A&B Convention Center Expansion/Headquarters Hotel

Assignment: PRAG was originally engaged for $50 million current refunding PRAG determined that the rating agencies were not appropriately considering the strength of wholesale Findings: contracts on the system Seek ratings upgrade by illustrating credit positive of wholesale contracts despite lower coverage; Increase Recommendations: refunding authorization to include potential advance refunding bonds The County received upgrades from two rating agencies; upgrades and market improvements allowed the Value Added: County to achieve $20 million in net present value savings Assignments: 1) 2014 – develop interactive model to allow staff to analyze public vs. private ownership 2) 2018 – develop and implement financing structures Findings: Convention Center – single long-term issue; no capitalized interest; competitive sale; TDT security Hotel – one or more long-term issues; capitalized interest through opening plus initial stabilization; secured by Hotel Net Operating Revenues with CBA pledge to replenish draws on debt service reserve (less flexibility) or by direct CBA pledge (more flexibility) Upcoming Tasks: (1) Continue to refine financing models to incorporate expected annual revenues and targeted debt service coverage; (2) Continue to monitor market conditions in light of development milestones and expected project funding requirements; (3) Assist County in underwriter selection process; (4) Refine rating agency strategy (especially in light of S&P’s new Priority Lien Tax Revenue Debt Criteria) 11

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SLIDE 12
  • "

" " " " " -----

  • Hotel Ownership Model Input Page Sample

SCENARIO NAME: Publicly Owned Hotel Scenario Privately Owned Hotel Scenario SCENARIO NAME: <------- Select a name for the scenario you are running if desired PLEDGED REVENUES AND TAX STATUS Project Component - Use the drop down boxes to select the Revenue Source that will be used to secure the debt for the particular project component as well as the tax status of the debt for the component. ---> Publicly Owned Hotel Scenario Privately Owned Hotel Scenario Publicly Owned Hotel Scenario Privately Owned Hotel Scenario ASSOCIATED DEBT AMORTIZATION TERM Code # ASSUMED RATING REQUIRED COVERAGE Convention Center Expansion (Public) TDT TDT Tax-Exempt Tax-Exempt 30 Net Hotel Revenues Hotel_Revenues 1 BBB 2.00x Hotel - Rooms County_Funds County_Funds Tax-Exempt Taxable 20 Net Parking Revenues Parking 2 Hotel - Podium County_Funds County_Funds Tax-Exempt Taxable 20 Entertainment Component Revenues Entertainment 3 Entertainment Component County_Funds County_Funds Taxable Taxable 30 Convention Center Revenues

  • nvention_Cent

4 Parking County_Funds County_Funds Tax-Exempt Taxable 30 Tourist Development Taxes TDT 5 Aa3 1.50x [RESERVED1] County_Funds County_Funds Taxable Taxable 30 Half-Cent Sales Tax Sales_Tax 6 Aa2 1.35x Additional County Bonds County_Funds County_Funds Tax-Exempt Tax-Exempt 30 Other County Funds County_Funds 7 Aa1 1.15x Ground Rent paid to County Ground_Rent 8 (1) Subject to Bond Counsel Review [RESERVED1] [RESERVED1] 9 PAYMENT SOURCES 1st Source Maximum % of Source that may be used for debt service 2nd Source (to the extent 1st Source is not sufficient to pay debt service) Maximum %

  • f Source that

may be used for debt service 3rd Source (to the extent 1st & 2nd Sources are not sufficient to pay debt service) Maximum %

  • f Source that

may be used for debt service 4th Source (to the extent 1st, 2nd & 3rd Sources are not sufficient to pay debt service) Maximum %

  • f Source that

may be used for debt service Convention Center Expansion (Public) Convention_Center 100% TDT 100% Hotel_Revenues 100% County_Funds 100% Hotel - Rooms Hotel_Revenues 100% Convention_Center 100% County_Funds 100% None 100% Hotel - Podium Hotel_Revenues 100% TDT 100% Convention_Center 100% County_Funds 100% Entertainment Component Entertainment 100% Convention_Center 100% TDT 100% County_Funds 100% Parking Parking 100% TDT 100% Convention_Center 100% County_Funds 100% [RESERVED1] [RESERVED1] 100% [RESERVED1] 100% [RESERVED1] 100% County_Funds 100% Additional County Bonds Hotel_Revenues 100% Convention_Center 100% TDT 100% County_Funds 100% 1st Source Maximum % of Source that may be used for debt service 2nd Source (to the extent 1st Source is not sufficient to pay debt service) Maximum %

  • f Source that

may be used for debt service 3rd Source (to the extent 1st & 2nd Sources are not sufficient to pay debt service) Maximum %

  • f Source that

may be used for debt service 4th Source (to the extent 1st, 2nd & 3rd Sources are not sufficient to pay debt service) Maximum %

  • f Source that

may be used for debt service Amortization Term <--- Press here to print all ou Convention Center Expansion (Public) Convention_Center 100% TDT 100% Ground_Rent 100% County_Funds 100% Hotel - Rooms Ground_Rent 100% Convention_Center 100% TDT 100% County_Funds 100% Hotel - Podium TDT 100% Convention_Center 100% Ground_Rent 100% County_Funds 100% Entertainment Component Entertainment 100% Convention_Center 100% TDT 100% County_Funds 100% Parking Parking 100% TDT 100% Convention_Center 100% County_Funds 100% [RESERVED1] [RESERVED1] 100% [RESERVED1] 100% County_Funds 100% County_Funds 100% Additional County Bonds Hotel_Revenues 100% Convention_Center 100% TDT 100% County_Funds 100% Debt Service Paid By - Use the drop down boxes to select the payment source (in order) that will used to pay the debt service on each project component . The lowest priority source used for each must be "County Funds" (i.e. 4th Source can be "None" if 3rd Source is "County Funds").-----> Debt Service Paid By Use the drop down boxes to select the payment source (in order) that will used to pay the debt service on each project component . The lowest priority source used for each must be County Funds (i.e. 4th Source can be None if 3rd Source is County Funds ). > <--- Press here to run to

  • Model. Pressing several

times is recommended. AVAILABLE REVENUES SOURCES - REVENUE CODES FOR BOND PLEDGES AND DEBT SERVICE (FOR REFERENCE ONLY, DO NOT CHANGE) FOR REFERENCE ONLY

In the Model any cell highlighted in beige can be changed as part of the structuring and sensitivity analysis. Any cell highlighted in Green can be changed, but are based on market conditions and should not be changed in most instances.

For All Payment Sources For County Payment Sources and Subsidies Only Developer will use their funding for the privatized project components <------ You can change the names of the two comparison to the left and they will change throughout the model. Sample Version Pledged Sources Privately Owned Hotel Scenario Publicly Owned Hotel Scenario Assumed Tax Status (1)

Debt Sizing Macro - Press Several Times PRINT ALL

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SLIDE 13

Hotel Flow of Funds

Covenant to Budget and Appropriate Secured Hotel Gross Operating Revenues to Lockbox Fund and swept monthly From Lockbox Fund: Hotel Operating Expenses - Balance above minimum balance requirement to Available Revenues Fund From Available Revenues Fund: Rebate Fund; Taxes and Insurance Fund; Asset Manager’s Fee Fund; Senior Hotel Management Fee Fund; Renewal and Replacement Fund; (could be placed below debt service) Debt Service Fund; First Tier Debt Service Account (including repayment of County Covenant Obligations issued on behalf of the Hotel); First Tier Debt Service Reserve Account; Second Tier Debt Service Account; Second Tier Debt Service Reserve Account; Operating Reserve Fund; Supplemental Renewal and Replacement Fund; Subordinated Hotel Management Fee Fund; Cash Trap Fund; To the Issuer for payment of any advances or special obligations; Redemption Fund; Excess Revenues Fund. Hotel Net Operating Revenue Secured Hotel Gross Operating Revenues to Lockbox Fund and swept monthly From Lockbox Fund: Hotel Operating Expenses - Balance above minimum balance requirement to Available Revenues Fund From Available Revenues Fund: Rebate Fund; Taxes and Insurance Fund; Asset Manager’s Fee Fund; Senior Hotel Management Fee Fund; Renewal and Replacement Fund; (could be placed below debt service) Debt Service Fund; First Tier Debt Service Account; First Tier Debt Service Reserve Account (with a County pledge to covenant and budget to replace any draws on the First Tier Debt Service Reserve Account); Second Tier Debt Service Account; Second Tier Debt Service Reserve Account; Operating Reserve Fund; Supplemental Renewal and Replacement Fund; Subordinated Hotel Management Fee Fund; Cash Trap Fund; To the Issuer for payment of any advances or special obligations; Redemption Fund; Excess Revenues Fund. Direct Pledge of County’s CBA with Hotel Net Operating Revenues Pledge of Hotel Net Operating Revenues with a CBA pledge to used to pay, but not secure, debt service allows greater flexibility to replenish draws on the debt service reserve allows greater budgeting change underlying hotel development and operating agreements. precision but makes bondholders a party to underlying hotel development and operating agreements.

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SLIDE 14

Water and Wastewater S&P Upgrade

14

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SLIDE 15

Water and Wastewater Moody’s Upgrade

15

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SLIDE 16

Water and Wastewater Refunding Savings

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SLIDE 17
  • Call Option Analysis

Broward County, FL Water and Sewer Utility Revenue Bonds Call Option Analysis 20% Volatility Delivery Date: 4/1/2019 AAA Stated Approx. Option MMD Yield Yield Bond Bond Option Adjusted Type Maturity Call Date Coupon 1/22/2019 Spread (to Call) Spread Price YTM Value Yield Coupon 5% Coupon 10/1/2039 4/1/2029 5.000% 2.920% 0.300% 3.220% 115.115% 3.920% 0.468% 3.452% 4% Coupon 10/1/2039 4/1/2029 4.000% 2.920% 0.650% 3.570% 0.350% 103.589% 3.748% 0.276% 3.472%

  • 0.020%

10-Year Call 10/1/2039 4/1/2029 5.000% 2.920% 0.300% 3.220% 115.115% 3.920% 0.468% 3.452% 8-Year Call 10/1/2039 4/1/2027 5.000% 2.920% 0.270% 3.190%

  • 0.030%

112.691% 4.080% 0.601% 3.480%

  • 0.028%

7-Year Call 10/1/2039 4/1/2026 5.000% 2.920% 0.230% 3.150%

  • 0.070%

111.540% 4.158% 0.675% 3.483%

  • 0.031%

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