The Commonwealth of Massachusetts Commonwealth Transportation Fund - - PowerPoint PPT Presentation

The Commonwealth of Massachusetts

Commonwealth Transportation Fund Revenue Bonds Federal Highway Grant Anticipation Notes

Rating Agency Presentation

$350,000,000* Commonwealth Transportation Fund Revenue Bonds (Rail Enhancement & Accelerated Bridge Programs), 2017 Series A $151,255,000* Commonwealth Transportation Fund Revenue Refunding Bonds, 2017 Series A $142,640,000* Federal Highway Grant Anticipation Notes (Accelerated Bridge Program), 2017 Series A

* Preliminary, subject to change

APPENDIX B

Table of Contents

• 1. Introduction

1

• 2. Revenues and Bondholder Security
• 2a. Commonwealth Transportation Revenue Bonds
• 2b. Federal Highway Grant Anticipation Notes

7 15

• 3. Projects to be Financed

19

• 4. Pro Forma Debt Service Coverage

21

• 5. Conclusion and Financing Schedule

28

• 6. Appendix

31

• 1. Introduction

* Preliminary, subject to change

Commonwealth Transportation Fund Revenue Bonds, 2017 Series A  Principal Amount: $350,000,000*  Interest Payment Dates: June 1 and December 1, beginning June 1, 2018  Final Maturity Date: Due June 1, 2047  Security: Amounts credited to the Commonwealth Transportation Fund, the primary sources of which are the Motor Fuels Tax and Registry Fees  Use of Proceeds: Proceeds from the 2017A CTF Bonds will be used to fund costs of certain transportation projects of the Commonwealth under the: − Accelerated Bridge Program ($50,000,000*) − Rail Enhancement Program ($300,000,000*)  Current Ratings on Parity Bonds: ____/_____ (S&P/Moody’s)  Optional Redemption: Maturities from 2026 – 2035 will be subject to optional redemption on any date after June 1, 2024. Maturities on or after June 1, 2036 will be subject to redemption on any date after June 1, 2027.

1

Transaction Summaries*

2017 Series A – Preliminary Amortization by Maturity Year Due (06/01) Amount Due (06/01) Amount 2019 $3,270,000 2036 $14,130,000 2020 3,370,000 2037 13,825,000 2021 3,475,000 2022 3,610,000 2042 Term Bond 2023 7,410,000 2042 $80,740,000 2024 7,780,000 2025 8,125,000 2047 Term Bond 2026 8,490,000 2047 $93,005,000 2027 9,640,000 2028 10,065,000 2029 9,850,000 2030 10,935,000 2031 11,410,000 2032 11,915,000 2033 12,440,000 2034 12,975,000 2035 13,540,000

* Preliminary, subject to change

Commonwealth Transportation Fund Revenue Refunding Bonds, 2017 Series A  Principal Amount: $151,255,000*  Interest Payment Dates: June 1 and December 1, beginning June 1, 2018  Final Maturity Date: Due June 1, 2043  Security: Amounts credited to the Commonwealth Transportation Fund, the primary sources of which are the Motor Fuels Tax and Registry Fees  Use of Proceeds: Proceeds from the 2017A CTF Refunding Bonds will be used to refund certain

• utstanding Prior CTF Bonds

 Current Ratings on Parity Bonds: ___/___ (S&P/Moody’s)  Optional Redemption: The bonds are not subject to

• ptional redemption

2

Transaction Summaries*

2017 Refunding Series A – Preliminary Amortization by Maturity Year Due (06/01) Amount 2027 $12,625,000 2028 12,845,000 2030 6,715,000 2031 7,485,000 2032 8,335,000 2033 6,400,000 2034 10,325,000 2035 11,430,000 2036 12,630,000 2038 15,575,000 2039 7,125,000 2040 8,035,000 2041 9,025,000 2042 11,380,000 2043 11,325,000

Transaction Summaries*

* Preliminary, subject to change 3

Federal Highway Grant Anticipation Notes, 2017 Series A  Principal Amount: $142,640,000*  Interest Payment Dates: June 15 and December 15, beginning June 15, 2018  Final Maturity Date: Due June 15, 2027  Security: Federal Highway Reimbursements and net amount credited to the Commonwealth Transportation Fund  Use of Proceeds: Proceeds from the 2017A Notes will be used to fund additional costs of the Accelerated Bridge Program and to refund certain outstanding Prior GANS  Current Ratings on Parity Notes: ___/___ (S&P/Moody’s)  Optional Redemption: Each maturity will be subject to redemption on any date on and after the June 15 immediately preceding the applicable maturity date at the option of the Commonwealth and as determined at pricing

2017 RefundingSeries A – Preliminary Amortization by Maturity Year Due (06/15) Amount 2021 $9,675,000 2022 9,960,000 2023 10,255,000 2024 37,505,000 2025 24,240,000 2026 25,040,000 2027 25,965,000

Introduction to the GANs and CTF Credits

Massachusetts’ Federal Highway Grant Anticipation Notes (GANs) are issued for the Accelerated Bridge Program (ABP)

− $940 million (which amount includes net premium) issued to date with $1.108 billion authorized

Massachusetts’ Commonwealth Transportation Fund (CTF) Revenue Bonds are issued under two programs:

− Accelerated Bridge Program (ABP) - $1.770 billion (which amount includes net premium) issued to date with $1.876 billion

authorized

− Rail Enhancement Program (REP) - $729 million (which amount includes net premium) issued to date with $6.7 billion authorized

Accelerated Bridge Program

• Pursuant to the Accelerated Bridge Program Act, the Commonwealth commenced a program to finance the accelerated capital

improvement of bridges and related infrastructure.

• Intended to provide financing for the design, construction, reconstruction and repair or improvements to bridges and approaches.
• Since the ABP commenced, 268 structures have been replaced, renovated or preserved. Of the 200 projects that have received

notices to proceed since the program began, 76% of the projects are trending on budget and 68% are on track to be completed by their original contract completion dates. The Program exceeded its primary goal of reducing the number of structurally deficient bridges to below 450 by the program target date of September 30, 2016. Rail Enhancement Program

• Authorized by Chapter 79 of the Acts of 2014 to provide for the issuance of either general obligation or special obligation bonds to

fund capital expenditures of MassDOT for the benefit of the MBTA and for other rail improvements in the Commonwealth

• Intended to provide financing for certain significant rail improvement projects in the Commonwealth outside the MBTA’s regular

capital program

• MassDOT expects to fund portions of the following seven major REP projects with bond proceeds

4

Green Line Extension Silver Line to Chelsea Orange and Red Line Project Casey Overpass South Coast Rail Expansion Fairmount Line Improvements Knowledge Corridor

Key Credit Strengths: Commonwealth Transportation Fund

Key CTF Credit Points Diverse and Stable State-wide Revenue Stream

• Pledged revenues include fuel and non-fuel sources with Motor Fuels Tax and Registry Fees
• Statewide taxes and fees, on large and diverse regional economy
• Revenue collections are strong with diversity in timing
• The Commonwealth increased the annual CTF Pledged Revenues base by over $120 million per year in

conjunction with authorizing the CTF Rail Enhancement Bonds Appropriation

• Payment of CTF Bonds from CTF Pledged Funds requires legislative appropriation annually
• However, if no appropriation is made for debt service, funds in the CTF may not be utilized for any other purpose

Debt Service Coverage After 2017 Series A Issue*

• Strong debt service coverage of approximately 8.1x based on actual FY2017 CTF revenues of $1.349 billion

Additional Bonds Test

• Pledged Funds for any 12 consecutive months during the last 18 months must be at least 4.0x future MADS,

including all parity bonds Commonwealth Rate Covenants

• Trust Agreement does not allow the Commonwealth to change the rate of the Registry Fees or the Motor Fuels

Tax unless Net Pledged Revenues exceed 4.0x MADS coverage after the changes

• NO Pledged Funds may be applied to “any other use” until appropriation has been made sufficient to pay

principal and interest

• Article 78 – State Constitution requires all revenue from vehicle, fuel and motor vehicle license and registration

fees be used for transportation purposes only Debt Service Fund

• Advance monthly set asides for payment of principal and semi-annual interest on a 1/10th and 1/5th basis,

respectively

*Preliminary, subject to change 5

Key Credit Strengths: Federal Highway Grant Anticipation Notes

Key GANs Credit Points “Double Barrel” Pledge

• The Commonwealth has enjoyed a long history of stable funding from the Federal-Aid Highway Program
• Use of Federal Highway Reimbursements to pay GANs Debt Service does not require a state appropriation
• The Commonwealth received approximately $600 million in federal highway reimbursements in FY2017
• Annual reimbursements are expected to average $653 million through FY2020
• In addition, net CTF Pledged Funds are available for annual debt service. These net revenues have averaged

$1.1 billion annually for the past 5 years Debt Service Coverage After 2017 Series A Issue*

• Strong debt service coverage of 16.2x to 21.0x, incorporating Federal Highway Reimbursements and Net CTF

pledged funds through FY2027. Additional Bonds Test

• Two Pronged Test from a Dual Revenue Pledge – Two Independent Sources Provide Combined 4.0x ABT
• 1. Amount of Federal Highway Reimbursements during any 12 consecutive months out of an 18 month period

(with the last full month proceeding the date of issuance of the Additional Notes) must not be less than 1.5x MADS in the current or any future FY; AND

• 2. Amount of Net CTF Pledged Funds received during same 12 consecutive months must not be less than

2.5x MADS in the current or any future FY CTF’s Rate Covenants

• Trust Agreement does not allow the Commonwealth to change the rate of the Registry Fees or the Motor Fuels

Tax unless Net Pledged Revenues exceed 4.0x MADS coverage after the changes

• NO Pledged Funds may be applied to “any other use” until appropriation has been made sufficient to pay

principal and interest

• Article 78 – State Constitution requires all revenue from vehicle, fuel and motor vehicle license and registration

fees be used for transportation purposes only Debt Service Fund

• Advance annual set aside for payment of principal and semi-annual interest

*Preliminary, subject to change 6

• 2. Revenues and Bondholder Security

• 2a. Commonwealth Transportation Fund

CTF Pledged Funds - $1.378 Billion Available for Debt Service

__________ As of FY ending June 30, 2017 (unaudit ed).

Total Annual CTF Pledged Funds: $1.378 Billion

Ch 64A Gas Tax BABs/RZEDBs Subsidies $670.1 Million (48.6%) $11.5 Million (0.8%) $598.7 Million (43.4%) $97.8 Million (7.1%) Ch 64E Special Fuels Tax Ch 64F Motor Carrier Tax License Registration Registry Information

Motor Fuels Tax Registry Fees Direct Payments

Comprised of approximately 55.7% Motor Fuels Tax and 43.4% Registry Fees

• Motor Fuels Tax was increased to 24 cents per gallon from 21 cents per gallon effective

July 31, 2013

• Registry Fees, specifically the passenger vehicle registration fee, were increased to

$60 from $50 effective July 1, 2014

7

Historic Stability of CTF Pledged Funds

 The table below demonstrates the strength, consistency, and reliability of CTF revenues totaling

• ver $1 billion annually since FY2006.

 Diversity of CTF Pledged Funds mitigates the effect of potential declines in gasoline consumption.

________ SOURCE: Fiscal Years 2006-2016, Office of the Comptroller of the Commonwealth, audited, and fiscal 2017, Department of Revenue (“Pledged Motor Fuels Tax”) and MassDOT (“Registry Fees”), unaudited 1. Includes all Pledged Motor Fuels Tax collected by the Commonwealth pursuant to Chapters 64A, 64E and 64F of the Massachusetts General Laws and credited to various budgeted funds, except Aviation Fuel. 2. Equal to 20.9685¢ per gallon of the 21¢ per gallon Gas Tax imposed under Chapter 64A prior to July 31, 2013, and equal to 23.964¢ per gallon of the 24¢ per gallon Gas Tax imposed under Chapter 64A after July 31, 2013; prior to the Transportation Reform Act and the establishment of the Commonwealth Transportation Fund effective FY2010, the Gas Tax imposed under Chapter 64A was credited to the Highway Fund (84.85%), the General Fund (15.0%) and to the Inland Fisheries and Game Fund (0.15%). 3. Chapter 64E: Special Fuels Tax levied on each of specials fuels (24 cents) and liquefied gas sold or used in the Commonwealth. Chapter 64F: Motor Carrier Tax levied on each gallon of gasoline and special fuels acquired outside and used within the Commonwealth. Chapters 64E and Chapter 64F: 100% of the 24-cent tax is included as CTF Pledged Funds. 4. Certain prior years have been adjusted to reflect reclassification of RMV revenues. Registry Fees received by the Registrar of Motor Vehicles pursuant to Section 33 of Chapter 90 of the General Laws. Does not include amounts allocable to the cost of production of license plates, which in fiscal year 2017 was approximately $4.2 million. 5. FY2011 and FY2012 do not include $1 million and $2 million, respectively, of the Registry Fees which represented civil motor infraction fees collected in such fiscal years and transferred to the Commonwealth Transportation Fund in FY2013. See Commonwealth Registry Fees - Crediting of Receipts in POS. 8

Historic Commonwealth Transportation Fund Pledged Revenues (1) (in thousands) Special Fuels Fiscal Year Tax and Motor Registry Ending June 30 Gas Tax (2) Carrier Tax (3) Fees (4) Total 2017 $670,093 $97,762 $598,683 $1,366,538 2016 666,542 98,595 580,426 1,345,563 2015 656,445 97,947 581,686 1,336,078 2014 640,702 89,938 533,194 1,263,834 2013 570,477 79,302 522,199 1,171,978 2012 581,148 79,028 508,608 (5) 1,168,784 2011 580,031 79,152 496,034 (5) 1,155,217 2010 576,676 76,369 485,789 1,138,834 2009 578,691 73,462 403,780 1,055,687 2008 595,380 75,560 396,904 1,067,844 2007 594,892 79,545 388,496 1,062,934 2006 589,591 80,785 375,670 1,046,046

History of Gasoline Consumption in Massachusetts

 The table below shows the relative inelasticity of gas consumption to price increases  Even during periods of peaks in the price of gasoline, demand has remained relatively stable

_______________ SOURCES: “Average Price of Gasoline”: U.S. Department of Energy, Energy Information Administration; “Non-Farm Employment”: U.S. Bureau of Labor Statistics; “Gasoline Consumed”: Department of Revenue. 1. Reflects the Average Price of Gasoline in all of Massachusetts. 2. Based on Historical Gas Tax Collections pursuant to Chapter 64A, except Aviation Fuel. 3. Seasonally adjusted. Calculated as fiscal year average of monthly employment. 9

Historic Gasoline Sales

Average Price Gasoline Percentage Change Non-Farm Percentage Change Fiscal Year

• f Gasoline

Consumed in Gasoline Employment in Non-Farm Ending June 30 ($/gallon) (1) (millions of gallons) (2) Consumed (thousands) (3) Employment 2017 $2.347 2,796 0.53% 3,592 1.66% 2016 2.282 2,781 1.54 3,533 1.88 2015 2.925 2,739 0.24 3,468 2.12 2014 3.613 2,733 0.45 3,396 1.72 2013 3.684 2,721 (1.84) 3,339 1.56 2012 3.652 2,772 0.19 3,287 1.55 2011 3.204 2,766 0.58 3,237 1.03 2010 2.694 2,750 (0.31) 3,204 (1.93) 2009 2.577 2,759 (2.84) 3,267 (1.60) 2008 3.147 2,839 0.08 3,321 0.99

Gas Tax Collection Procedures

• Gas Tax returns must be filed with the Commonwealth’s Department of Revenue by the 20th day of each

month by each distributor

• Distributors are those who: (i) produce, refine, manufacture or compound gasoline; (ii) operate a port
• r pipeline terminal; and (iii) import or export gasoline
• Simultaneously with the filing of the return, each distributor is required to pay Department of Revenue the

Gas Tax on each taxable gallon of gasoline sold by that distributor during the month covered by the filing

• Purchasers of gasoline pay the Gas Tax to a distributor when they purchase gasoline, resulting in a

very high collection rate

• In FY2017, there were approximately 93 Distributors and 440 special fuels suppliers who filed tax returns

with the Commissioner of Revenue

• In FY2016, approximately 59.1% of the total annual Gas Tax collections came from ten largest payers of

the Gas Tax, and approximately 40.9% of the total annual Special Fuels Tax collections came from ten largest payers of the Special Fuels Tax

• In both FY2017 and 2018, the top ten Gas Tax payers are expected to pay approximately 58% to 63% of

the total annual Gas Tax collections, and the top ten Special Fuels Tax payers are expected to pay approximately 40% to 42% of the total annual Special Fuels Tax collections

10

Registry Fees are a Steady Source of Revenue for the CTF

 Registry Fees are unaffected by gasoline demand, providing a strong measure of diversification of CTF Pledged Funds for bondholders

Registry Fee Collections

S

• urce: Fiscal Years 2008-2016, Office of t he Compt roller and

fiscal year 2017, MassDOT, unaudit ed. (1) Cert ain prior years have been adj ust ed t o reflect reclassificat ion of Regist ry revenues. (2) FY2011 and FY2012 do not include $1 million and $2 million, respect ively, of t he Regist ry Fees which represent ed civil mot or infract ion fees collect ed in such fiscal years and t ransferred t o t he Commonwealt h Transport at ion Fund in FY2013.

Increase in Revenues due to Change in Fee Structure Increase in Revenues due to Increases in certain Registry Fees 11

Fiscal Year 1993 – 2002 Fiscal Year 2003 – 2008 Fiscal Year 2009 - 2017

Passenger Vehicle Regist rat ion New and Renewal 1993-1995: $30 1995-2000: No renewal fee under lifet ime regist rat ion 2000-2002: $30 $36 2009-2014: $50 2015-2017: $60 Commercial Vehicle Regist rat ion New and Renewal1 $15 per 1,000 lbs of gross vehicle weight (“ GVW” ) for a 1-year regist rat ion $15 per 1,000 lbs of GVW for a 1-year regist rat ion $20 per 1,000 lbs of GVW for a 1-year regist rat ion New Cert ificat e of Tit le $50 $50 $75 Class D License Renewal $33.75 $40 $50

S

• urce: MassDOT

1 For vehicles up t o 5,000 lbs

Rate Detail for Key Revenue Sources Pledged Percentage Registry Change in Fiscal Fee Receipts Registry Fee Year (in 000s) (1) Receipts 2017 $598,683 3.15% 2016 580,426 (0.22) 2015 581,686 9.09 2014 533,194 2.11 2013 522,199 (2) 2.67 2012 508,608 2.53 2011 496,034 2.11 2010 485,789 20.31 2009 403,780 1.73 2008 396,904 2.16

Registry Fees Collection Mechanics

 Section 33 of Chapter 90 of the Massachusetts General Laws, as amended, authorizes the Registrar of Motor Vehicles to collect various fees (i.e., Registry Fees)

1) License

— Driver’s license — Identification cards — Professional driving schools — Reinstatement fees

2) Registration

— Motor vehicle registration fees

according to types of license plates

3) Registry Information

— Title fees — Inspection fees — Court records fees — Citation-related fees

Registry Fee Categories

• Collected at Registry branch locations via a telephone center or on-line
• Certain third parties (i.e., Southern New England AAA offices) may

also collect fees on behalf of the Registry and are required to keep such revenues segregated from other sources of revenue

• Methods of payment include cash, checks, electronic checks, money
• rders, credit card and debit card
• Security measures in connection with fee collection are established by

MassDOT

• Internal Audit Department periodically audits branches and

employees for compliance with payment handling policies and procedures

• Administrative sanctions are implemented when appropriate (i.e.,

retraining, termination)

• Registry Fees are swept daily by Massachusetts Treasury, credited

to the appropriate accounts and recorded by the Comptroller of the Commonwealth into the Commonwealth’s accounting system Registry Fee Collection Mechanics

12

CTF Flow of Funds

Motor Fuels Tax = Gas Tax + Special Fuels Tax + Motor Carrier Tax

• Gas Tax (Chapter 64A)

− 99.85% of the 24 cents/gallon tax flows to CTF Pledged Funds − 6.86 cents/gallon is pledged on a senior basis to Existing Gas Tax Bonds

• Special Fuels Tax (Chapter 64E)

− 24 cents/gallon levied on each of special fuels and liquefied gas sold or used in the Commonwealth − 100% is included as CTF Pledged Funds

• Motor Carrier Tax (Chapter 64F)

− 24 cents/gallon levied on each gallon of gasoline and special fuels acquired outside and used within the Commonwealth − 100% is included as CTF Pledged Funds  Registry Fees received by the Registrar of Motor Vehicles pursuant to Section 33 of Chapter 90 of the General Laws  Direct Payments received from U.S. Treasury related to BABs/RZEDBs

CTF Pledged Funds

CTF Flow of Funds

CTF Bonds

6.86 cents/gallon

• f the Gas Tax

Existing Gas Tax Bonds

2010 Trust Agreement 1994 Trust Agreement Excess of 6.86 cents/gallon of Gas Tax



Motor Fuels Tax (monthly)

 Regist ry Fees (daily)  Direct Payment s (semi-annually)

13

CTF Bonds Flow of Funds and Timing of Payments

 On a monthly basis, CTF Pledged Funds will be set aside to cover 1/5th of semi-annual interest and 1/10th

• f annual principal for CTF Bonds

Lighter Grey / Darker Blue Check Payment Dates

CTF Bond Flow of Funds

Monthly Deposits CTF Pledged Funds Debt Service Fund Bond Related Costs Fund Rebate Fund

Trustee Held Fund

• Monthly Transfers for

Debt Service Payments:

§ 1/5th Semi-Annual

Interest

§ 1/10thPrincipal

Detailed Timing of Debt Service Fund Transfers and Payments

August September FY Start FY End December 1: Interest Payment June 1: Principal and Interest Payment Monthly Revenue Deposits to CTF July October November December January February March April May June Monthly Transfers to Debt Service Fund:

§ 1/5th December 1st Interest Payment § 1/10 thJune 1st Principal Payment

Net CTF Pledged Funds Free from Trust Agreement Monthly Transfers to Debt Service Fund:

§ 1/5 thJune 1st Interest Payment § 1/10thJune 1st Principal Payment

Net CTF Pledged Funds Free from Trust Agreement

CTF Pledged Funds cannot be deposited without appropriation, however CTF Pledged Funds cannot be applied to “any other use” until debt service appropriation is made

Commonwealth Held Fund

14

• 2b. Federal Highway Grant Anticipation Notes

Passage of the FAST Act of 2015

• In December 2015, Congress enacted a five year $305 billion federal transportation bill and extended

the Highway Trust Fund through September 30, 2020

• The bi-partisan FAST (Fixing America’s Surface Transportation) Act is the longest reauthorization of

federal highway transportation authorized by Congress since 2005

− Ends an era of stop-gap bills since the last multi-year bill expired in 2009 − Provides state and local government (and investors) greater certainty about long-term funding

for surface transportation

• Eliminates the uncertainty of future federal highway aid programs
• Lowers the risk of federal highway payment interruption or reduction
• Extends five of the six excise taxes that support the Highway Trust Fund through September 30, 2022

and the heavy vehicle use tax through September 30, 2023

• Replaces interim short-term federal highway funding authorizations
• Increases overall funding through federal fiscal year 2020

15

Credit Strength of the FHWA Funding for GANs

• The Commonwealth has enjoyed a long history of stable funding from the Federal-Aid Highway

Program (the “Program”)

− Even during the 2013 federal government shutdown, Federal Highway Administration (“FHWA”)

reimbursements flowed weekly to Massachusetts without interruption

• The Commonwealth believes that the Program plays a critical role in preserving the national highway

system and the chronic funding shortfalls facing transportation will ensure its continued support and reauthorization

− Since such assistance was established by the Federal-Aid Highway Act of 1956, the Program has

been reauthorized numerous times in various forms at generally increasing funding levels

− Actual payments to states have continued without interruption since 1956

• The current authorization for the Program, as extended by the FAST Act of 2015, provides for funding

through September 30, 2020

− The FAST Act maintains the majority of the previous Act (MAP-21) apportionment process − The FAST Act, over the life of the legislation, increases overall highway funding by 15% and transit

funding by 18%

16

Double-Barrel Pledge for GANs

• As a Special Tax credit, the GANs represent a unique high quality transportation credit

− The debt service set-aside (one-year in advance) provides bondholders with a security feature that

is the equivalent of a fully funded MADS Debt Service Reserve Fund

− Two-pronged ABT requires an aggregate 4.0x MADS coverage − Projected debt service coverage on the 2017A GANs financing ranges from 16.2x to 21.0x through

FY2027 (consisting of Federal Highway Reimbursements and Net CTF Pledged Funds)

• The GANs have two strong and independent revenue streams with an extremely low joint default

probability

− The GANs have a senior lien on federal reimbursements; with projected debt service coverage on

the 2017A GANs of 5.5x to 7.0x

− The GANs are further secured by a pledge of over $1.1 billion in current annual Net CTF Pledged

Funds which are a second independent revenue source fully sufficient to pay the outstanding GANS debt service

17

GANs Flow of Funds and Double Barrel Security

Federal Highway Reimbursements

Credit Structure for GANs

GANs

2010 Trust Agreement

CTF Pledged Funds Existing Gas Tax Bonds CTF Bonds

1994 Trust Agreement 2010 Trust Agreement

Excess Net CTF Pledged Funds of More Than $1.1 Billion Per Year Provide Independent Second Barrel Security for the GANs

6.86 cents/gallon

• f Gas Tax Only

Excess 18

• 3. Projects to be Financed

Accelerated Bridge Program Projects

*Preliminary, subject to change

• Authorized by Chapter 233 of the Acts of 2008 to provide for the issuance of special obligation bonds

to fund repairs to structurally deficient bridges throughout the Commonwealth

• The receipt of pledged revenues is not dependent on completion of any of the projects expected to be

financed by the 2017 Series A CTF Bonds and 2017 Series A GANs or by any additional CTF Bonds and/or GANs

• Since the ABP commenced, 268 structures have been replaced, renovated or preserved. Of the 200

projects that have received notices to proceed since the program began, 76% of the projects are trending on budget and 68% are on track to be completed by their original contract completion dates. The Program exceeded its primary goal of reducing the number of structurally deficient bridges to below 450 by the program target date of September 30, 2016.

• There are 200 ongoing projects in the program, of which 186 are in full beneficial use or substantially
• complete. The four major projects currently under the program which will be funded in part with

proceeds from the 2017A GANs and 2017A CTF Bonds are listed below. These projects are further described in the Appendix.

• Longfellow Bridge
• Fore River Bridge
• John Greenleaf Whittier Memorial Bridge
• Woods Memorial Bridge

19

Rail Enhancement Program Projects

*Preliminary, subject to change

• Authorized by Chapter 79 of the Acts of 2014 to provide for the issuance of either general obligation or

special obligation bonds to fund capital expenditures of MassDOT for the benefit of the MBTA and for

• ther rail improvements in the Commonwealth
• The receipt of CTF Pledged Funds is not dependent on completion of any of the projects expected to

be financed by the 2017 Series A Bonds or by any additional CTF Bonds

• Bond proceeds will provide financing for certain significant rail improvement projects in the

Commonwealth outside the MBTA’s regular capital program. These projects are further described in the Appendix.

• Green Line Extension
• Orange and Red Line Project
• South Coast Rail Extension
• Knowledge Corridor
• Silver Line to Chelsea
• Fairmount Line Improvements
• Casey Overpass

20

• 4. Pro Forma Debt Service Coverage

 No additional CTF issuance is planned for either the Accelerated Bridge Program or the Rail Enhancement Program in FY2017.  No additional GANs issuance is planned for the Accelerated Bridge Program in FY2017.  The Administration is developing a five year capital plan that anticipates the additional issuance, including net premium, of approximately:  Based on the five-year projected issuance, and even assuming no growth in pledged revenues, MADS coverage for the CTF Bonds following the FY2022 issuances will be 6.0x  Based on the five-year projected issuance, and even assuming no growth in pledged revenues, MADS coverage for the GANs following the FY2022 issuances will be 15.1x (using both Federal Highway Reimbursements and Net CTF Pledged Funds)

Projected Issuances

21

• $1.636 billion under the CTF Credit
• $118.7 million under the GANs Credit

$411.2 million in FY2018 * $88.7 million in FY2018* $294.3 million in FY2019 $30.0 million in FY2021 $234.7 million in FY2020 $459.8 million in FY2021 $235.9 million in FY2022

*Includes current bond issuance

Pro Forma CTF Coverage for 2017 Series A Offering

 Assuming no growth, total projected debt service coverage on the 2017 Series A CTF Bonds is approximately 8.1x through FY2046

22

CTF BOND DEBT SERVICE COVERAGE PROJECTION (1) ($000s)

(1) Estimated debt service coverage for FY 2017 and thereafter is based on the Commonwealth’s actual receipts in FY 2016, assuming no growth in such receipts in future years. (2) Consists of (i) 17.04 cents per gallon of Chapter 64A Gasoline Tax, (ii) 100% of the Special Fuels Tax and Motor Carrier Tax, (iii) Registry Fees expected to be credited to the Commonwealth Transportation Fund pursuant to Section 34 (iii) of Chapter 90, (iv) Projected Excess from Prior Pledged Funds (“Projected Excess” represents Prior Pledged Funds of 6.86 cents per gallon of the Chapter 64A Gasoline Tax after payment of debt service on the outstanding 1994 Trust Agreement Bonds) and (v) Direct Payments relating to the 2010 Bonds, reduced for the 6.6% reduction in subsidy payments projected during federal fiscal year 2018 by the Department of Treasury as a result of sequestration. (3) Reflects gross debt service on Prior CTF Bonds less proposed refunded bonds. (4) Preliminary, subject to change.

1994 Trust Prior CTF Bonds SFY Agreement Prior CTF Bonds and 2017 Bonds Total Total CTF Total Ending Bonds Total Projected CTF Prior CTF Bonds Debt Service on and 2017 Bonds Debt Service Excess Debt Service on Bonds Debt Service Excess June 30 Debt Service Pledged Funds (2) Debt Service (3)(4) 2017 NM Bonds (4) Debt Service (4) Coverage (1) Pledged Funds Future Bonds Debt Service Coverage Pledged Funds 2018 29,825 1,348,214 146,542 10,090 156,632 8.6x 1,191,582 156,632 8.6x 1,191,582 2019 29,818 1,348,221 146,421 20,566 166,987 8.1x 1,181,234 7,263 174,250 7.7x 1,173,971 2020 29,822 1,348,218 146,422 20,568 166,990 8.1x 1,181,228 19,015 186,005 7.3x 1,162,213 2021 29,821 1,348,219 146,419 20,572 166,992 8.1x 1,181,227 34,181 201,173 6.7x 1,147,046 2022 29,821 1,348,218 146,422 20,568 166,990 8.1x 1,181,228 57,173 224,163 6.0x 1,124,056 2023 1,378,039 146,424 24,224 170,647 8.1x 1,207,392 60,840 231,487 6.0x 1,146,552 2024 1,378,039 146,422 24,223 170,646 8.1x 1,207,394 60,839 231,485 6.0x 1,146,554 2025 1,377,687 146,422 24,179 170,601 8.1x 1,207,086 60,826 231,427 6.0x 1,146,260 2026 1,377,306 146,420 24,138 170,558 8.1x 1,206,749 60,807 231,365 6.0x 1,145,942 2027 1,376,873 145,640 24,864 170,504 8.1x 1,206,369 60,788 231,292 6.0x 1,145,581 2028 1,376,415 145,640 24,807 170,447 8.1x 1,205,968 60,767 231,214 6.0x 1,145,202 2029 1,375,932 146,297 24,088 170,385 8.1x 1,205,547 60,748 231,133 6.0x 1,144,799 2030 1,375,422 145,640 24,681 170,321 8.1x 1,205,101 60,724 231,045 6.0x 1,144,377 2031 1,374,884 145,646 24,609 170,255 8.1x 1,204,629 60,705 230,960 6.0x 1,143,924 2032 1,374,305 145,643 24,544 170,186 8.1x 1,204,119 60,673 230,860 6.0x 1,143,446 2033 1,373,694 145,638 24,473 170,110 8.1x 1,203,583 60,648 230,758 6.0x 1,142,935 2034 1,373,048 145,643 24,386 170,028 8.1x 1,203,019 60,622 230,651 6.0x 1,142,397 2035 1,372,365 145,642 24,302 169,944 8.1x 1,202,421 60,589 230,533 6.0x 1,141,832 2036 1,371,644 145,642 24,215 169,857 8.1x 1,201,787 60,558 230,414 6.0x 1,141,229 2037 1,370,881 146,559 23,204 169,763 8.1x 1,201,119 60,525 230,288 6.0x 1,140,594 2038 1,370,011 145,640 24,012 169,652 8.1x 1,200,358 60,485 230,137 6.0x 1,139,873 2039 1,368,916 145,642 23,876 169,518 8.1x 1,199,399 60,440 229,958 6.0x 1,138,959 2040 1,367,760 145,640 23,733 169,373 8.1x 1,198,387 60,389 229,762 6.0x 1,137,998 2041 1,366,538 145,643 23,578 169,221 8.1x 1,197,317 60,334 229,555 6.0x 1,136,983 2042 1,366,538 148,316 20,994 169,310 8.1x 1,197,229 60,244 229,553 6.0x 1,136,985 2043 1,366,538 147,719 21,505 169,224 8.1x 1,197,314 60,332 229,556 6.0x 1,136,982 2044 1,366,538 148,350 20,873 169,222 8.1x 1,197,316 60,332 229,554 6.0x 1,136,984 2045 1,366,538 147,753 21,469 169,223 8.1x 1,197,316 60,335 229,557 6.0x 1,136,981 2046 1,366,538 145,600 23,624 169,224 8.1x 1,197,315 60,333 229,557 6.0x 1,136,982 2047 1,366,538

• 19,924

19,924 68.6x 1,346,614 209,633 229,557 6.0x 1,136,981 2048 1,366,538

• 1,366,538

229,557 229,557 6.0x 1,136,981 2049 1,366,538

• 1,366,538

229,556 229,556 6.0x 1,136,982

Pro Forma CTF Coverage

 Debt service coverage is estimated to be approximately 6.0x for the entire CTF Program (through FY 2049).

23

CTF BOND DEBT SERVICE COVERAGE PROJECTION with Future Financings (1) ($000s)

(1) Estimated debt service coverage for FY 2017 and thereafter is based on the Commonwealth’s actual receipts in FY 2016, assuming no growth in such receipts in future years. Debt service projections for Bonds to be issued in FY 2018 through FY 2022 are estimates based on current program needs and are subject to change. (2) Consists of (i) 17.04 cents per gallon of Chapter 64A Gasoline Tax, (ii) 100% of the Special Fuels Tax and Motor Carrier Tax, (iii) Registry Fees expected to be credited to the Commonwealth Transportation Fund pursuant to Section 34 (iii) of Chapter 90, (iv) Projected Excess from Prior Pledged Funds (“Projected Excess” represents Prior Pledged Funds of 6.86 cents per gallon of the Chapter 64A Gasoline Tax after payment of debt service on the outstanding 1994 Trust Agreement Bonds) and (v) Direct Payments relating to the 2010 Bonds, reduced for the 6.6% reduction in subsidy payments projected during federal fiscal year 2018 by the Department of Treasury as a result of sequestration. (3) Reflects gross debt service on Prior CTF Bonds less proposed refunded bonds. (4) Assumes the aggregate issuance in FY 2018 through FY 2022 of $1.636 billion (which amount includes net premium) of Additional Bonds for the Accelerated Bridge Program and Rail Enhancement Program. Projected Debt Service on future issuance assumes current market rates.

Prior CTF Bonds SFY Prior CTF Bonds and 2017 Bonds Total Total CTF Total Ending Projected CTF Prior CTF Bonds Debt Service on and 2017 Bonds Debt Service Debt Service on Debt Service on Debt Service on Debt Service on Debt Service on Bonds Debt Service Excess June 30 Pledged Funds (2) Debt Service (3) 2017 NM Bonds Debt Service Coverage (1) 2018 Bonds (4 2019 Bonds (4) 2020 Bonds (4) 2021 Bonds (4) Future Bonds Debt Service Coverage Pledged Funds 2018 $1,348,214 $146,542 $10,090 $156,632 8.6x

• $0

$10,090 8.6x $1,192,124 2019 1,348,221 146,421 20,566 166,987 8.1x 7,263

• 7,263

$27,837 7.7x 1,181,776 2020 1,348,218 146,422 20,568 166,990 8.1x 13,181 5,833

• 19,015

$39,602 7.3x 1,181,770 2021 1,348,219 146,419 20,572 166,992 8.1x 13,180 10,000 11,002

• 34,181

$54,788 6.7x 1,181,769 2022 1,348,218 146,422 20,568 166,990 8.1x 13,177 10,000 28,215 5,780 57,173 $77,792 6.0x 1,181,770 2023 1,378,039 146,424 24,224 170,647 8.1x 13,506 10,000 25,964 11,369 60,840 $85,113 6.0x 1,207,934 2024 1,378,039 146,422 24,223 170,646 8.1x 13,506 10,000 25,968 11,366 60,839 $85,112 6.0x 1,207,936 2025 1,377,687 146,422 24,179 170,601 8.1x 13,507 10,000 25,954 11,366 60,826 $85,055 6.0x 1,207,628 2026 1,377,306 146,420 24,138 170,558 8.1x 13,496 10,000 25,953 11,359 60,807 $84,994 6.0x 1,207,291 2027 1,376,873 145,640 24,864 170,504 8.1x 13,491 10,000 25,937 11,360 60,788 $85,701 6.0x 1,206,911 2028 1,376,415 145,640 24,807 170,447 8.1x 13,489 10,000 25,926 11,352 60,767 $85,623 6.0x 1,206,510 2029 1,375,932 146,297 24,088 170,385 8.1x 13,489 10,000 25,910 11,350 60,748 $84,885 6.0x 1,206,089 2030 1,375,422 145,640 24,681 170,321 8.1x 13,485 10,000 25,897 11,343 60,724 $85,454 6.0x 1,205,643 2031 1,374,884 145,646 24,609 170,255 8.1x 13,477 10,000 25,885 11,343 60,705 $85,363 6.0x 1,205,171 2032 1,374,305 145,643 24,544 170,186 8.1x 13,466 10,000 25,870 11,338 60,673 $85,266 6.0x 1,204,661 2033 1,373,694 145,638 24,473 170,110 8.1x 13,462 10,000 25,854 11,333 60,648 $85,170 6.0x 1,204,125 2034 1,373,048 145,643 24,386 170,028 8.1x 13,458 10,000 25,837 11,328 60,622 $85,057 6.0x 1,203,561 2035 1,372,365 145,642 24,302 169,944 8.1x 13,450 10,000 25,822 11,317 60,589 $84,941 6.0x 1,202,963 2036 1,371,644 145,642 24,215 169,857 8.1x 13,443 10,000 25,798 11,317 60,558 $84,822 6.0x 1,202,329 2037 1,370,881 146,559 23,204 169,763 8.1x 13,432 10,000 25,783 11,310 60,525 $83,778 6.0x 1,201,661 2038 1,370,011 145,640 24,012 169,652 8.1x 13,426 10,000 25,761 11,298 60,485 $84,546 6.0x 1,200,900 2039 1,368,916 145,642 23,876 169,518 8.1x 13,415 10,000 25,731 11,294 60,440 $84,365 6.0x 1,199,941 2040 1,367,760 145,640 23,733 169,373 8.1x 13,409 10,000 25,696 11,284 60,389 $84,171 6.0x 1,198,929 2041 1,366,538 145,643 23,578 169,221 8.1x 13,397 10,000 25,665 11,272 60,334 $83,961 6.0x 1,197,859 2042 1,366,538 148,316 20,994 169,310 8.1x 13,305 10,000 25,670 11,268 60,244 $81,286 6.0x 1,197,771 2043 1,366,538 147,719 21,505 169,224 8.1x 13,392 10,000 25,669 11,271 60,332 $81,886 6.0x 1,197,856 2044 1,366,538 148,350 20,873 169,222 8.1x 13,392 10,000 25,669 11,271 60,332 $81,253 6.0x 1,197,858 2045 1,366,538 147,753 21,469 169,223 8.1x 13,396 10,000 25,667 11,272 60,335 $81,853 6.0x 1,197,858 2046 1,366,538 145,600 23,624 169,224 8.1x 13,392 10,000 25,668 11,274 60,333 $84,006 6.0x 1,197,857 2047 1,366,538

• 19,924

19,924 68.6x 97,840 36,090 24,218 51,486 209,633 $229,715 6.0x 1,347,156 2048 1,366,538

• 117,768

36,081 24,217 51,492 229,557 $229,735 6.0x 1,367,080 2049 1,366,538

• 153,851

24,218 51,487 229,556 $229,734 6.0x 1,367,080

Pro Forma GANs Coverage for 2017 Series A Offering*

 Federal Highway Reimbursements and Net CTF Pledged Funds pay debt service on the Notes  Projected debt service coverage on the GANs following issuance of the 2017 Series A offering ranges from 16.2x to 21.0x through FY 2027

24 (1) Annual Federal Highway Reimbursements assumed to equal $600 million in FY2018. Net Federal Highway Reimbursements through FY2023 also include interest subsidy payments received by the Commonwealth from the U.S. Treasury (“Direct Payments”) with respect to the 2010 Notes issued as Build America Bonds, reduced for the 6.6% reduction in subsidy payments projected during federal FY2018 by the Department of Treasury as a result of sequestration. (2) Net CTF Pledged Funds are net of amounts to be used for debt service payments on the 1994 Trust Agreement Bonds and the outstanding CTF Bonds, as well as projected debt service on the 2017 Bonds. Net CTF Pledged Funds consist of monies in the Commonwealth Transportation Fund from the following sources, subject to the prior lien of the CTF Obligations: (i) Chapter 64A Gasoline Tax, (ii) Special Fuels Tax and Motor Carrier Tax, (iii) Registry Fees expected to be credited to the Commonwealth Transportation Fund pursuant to Section 34 (iii) of Chapter 90, (iv) the portion of the Prior Pledged CTF Funds (6.86 cents per gallon of the Chapter 64A Gasoline Tax) in excess of the amounts necessary to pay debt service on the 1994 Trust Agreement Bonds and to satisfy any other requirements under the 1994 Trust Agreement, and (v) Direct Payments relating to the 2010 Bonds, reduced for the 6.6% reduction in subsidy payments projected during federal fiscal year 2018 by the Department of Treasury as a result of sequestration. (3) Represents gross debt service on the 2010 Notes, not including Direct Payments, and debt service on the 2013 Notes, the 2014 Notes and the 2016 Notes, less the Refunded Notes. (4) Preliminary, subject to change.

Outstanding Trust Agreement Notes - Projected Debt Service Coverage after 2017 Financing ($000s)

Pledged Funds Projected Debt Service Coverage (4) FY Ending Net Federal Highway Projected Net CTF Total Projected Existing Debt Service Projected Debt Service Total Projected Net Federal Highway Net CTF Pledged Total Projected 30-Jun Reimbursements (1) Pledged Funds Pledged Revenues

• n Notes (3)
• n 2017 Notes (4)

Debt Service Reimbursements Only Funds Only Debt Service Coverage 2018 601,071 1,191,582 1,792,653 83,108 2,177 85,285 7.0x 14.0x 21.0x 2019 600,909 1,181,234 1,782,143 96,710 3,750 100,460 6.0x 11.8x 17.7x 2020 600,731 1,181,228 1,781,958 96,710 3,750 100,460 6.0x 11.8x 17.7x 2021 600,539 1,181,227 1,781,766 96,714 13,425 110,139 5.5x 10.7x 16.2x 2022 600,333 1,181,228 1,781,562 96,710 13,226 109,937 5.5x 10.7x 16.2x 2023 600,114 1,207,392 1,807,506 96,712 13,023 109,735 5.5x 11.0x 16.5x 2024 600,000 1,207,394 1,807,394 95,825 12,806 108,631 5.5x 11.1x 16.6x 2025 600,000 1,207,086 1,807,086 95,828 12,693 108,521 5.5x 11.1x 16.7x 2026 600,000 1,206,749 1,806,749 95,829 12,690 108,519 5.5x 11.1x 16.6x 2027 600,000 1,206,369 1,806,369 95,828 12,689 108,518 5.5x 11.1x 16.6x

Pro Forma GANs Coverage

 The following table sets forth projected debt service on the 2017 Notes as well as projected debt service

• n future Notes to be issued under the Accelerated Bridge Program (through FY 2021)

 Total debt service coverage on all future GANs is estimated to be 15.1x to 21.0x (through FY 2027). This assumes $1.225 billion of additional CTF issuance (including net premium) and $30.0 million of additional GANs issuance (including net premium) in FY 2018 – FY 2021

25

Outstanding Trust Agreement Notes - Projected Debt Service Coverage after Future Financings ($000s)

(1) Annual Federal Highway Reimbursements assumed to equal $600 million in FY2018. Net Federal Highway Reimbursements through FY2023 also include interest subsidy payments received by the Commonwealth from the U.S. Treasury (“Direct Payments”) with respect to the 2010 Notes issued as Build America Bonds, reduced for the 6.6% reduction in subsidy payments projected during federal FY2018 by the Department of Treasury as a result of sequestration. (2) Net CTF Pledged Funds are net of amounts to be used for debt service payments on the 1994 Trust Agreement Bonds and the outstanding CTF Bonds, as well as projected debt service on the 2017 Bonds. Net CTF Pledged Funds consist of monies in the Commonwealth Transportation Fund from the following sources, subject to the prior lien of the CTF Obligations: (i) Chapter 64A Gasoline Tax, (ii) Special Fuels Tax and Motor Carrier Tax, (iii) Registry Fees expected to be credited to the Commonwealth Transportation Fund pursuant to Section 34 (iii) of Chapter 90, (iv) the portion of the Prior Pledged CTF Funds (6.86 cents per gallon of the Chapter 64A Gasoline Tax) in excess of the amounts necessary to pay debt service on the 1994 Trust Agreement Bonds and to satisfy any other requirements under the 1994 Trust Agreement, and (v) Direct Payments relating to the 2010 Bonds, reduced for the 6.6% reduction in subsidy payments projected during federal fiscal year 2018 by the Department of Treasury as a result of sequestration. (3) Represents gross debt service on the 2010 Notes, not including Direct Payments, and debt service on the 2013 Notes, the 2014 Notes and the 2016 Notes, less the Refunded Notes. (4) Assumes the aggregate issuance in fiscal year 2021 of $30 million of Additional Notes. (5) Preliminary, subject to change.

Pledged Funds Debt Service CTF Bond Debt Service Coverage - Proforma Projected Debt Service Coverage FY Ending Net Federal Highway Projected Net CTF Total Projected Existing Debt Service Projected Debt Service Projected Debt Service Total Projected Net Federal Highway Net CTF Pledged Total Projected 30-Jun Reimbursements (1) Pledged Funds (2) Pledged Revenues

• n Notes (3)
• n 2017 Notes (4)
• n Future Notes (5)

Debt Service (5) Reimbursements Only Funds Only Debt Service Coverage 2018 601,071 1,191,582 1,792,653 83,108 2,177

• 85,285

7.0x 14.0x 21.0x 2019 600,909 1,173,971 1,774,880 96,710 3,750

• 100,460

6.0x 11.7x 17.7x 2020 600,731 1,162,213 1,762,943 96,710 3,750

• 100,460

6.0x 11.6x 17.5x 2021 600,539 1,147,046 1,747,585 96,714 13,425 4,220 114,359 5.3x 10.0x 15.3x 2022 600,333 1,124,056 1,724,389 96,710 13,226 4,383 114,319 5.3x 9.8x 15.1x 2023 600,114 1,146,552 1,746,666 96,712 13,023 4,545 114,281 5.3x 10.0x 15.3x 2024 600,000 1,146,554 1,746,554 95,825 12,806 5,627 114,258 5.3x 10.0x 15.3x 2025 600,000 1,146,260 1,746,260 95,828 12,693 5,736 114,258 5.3x 10.0x 15.3x 2026 600,000 1,145,942 1,745,942 95,829 12,690 5,739 114,258 5.3x 10.0x 15.3x 2027 600,000 1,145,581 1,745,581 95,828 12,689 5,738 114,256 5.3x 10.0x 15.3x

Aggregate CTF Projected Offerings through Full Program*

*Preliminary, subject to change

 The Commonwealth plans to issue approximately $1.225 billion (which amount includes net premium) in additional CTF bonds through FY2022 of ABP and REP obligations  Projected debt service coverage on the entire CTF program is estimated to be approximately 6.0x

26

200 400 600 800 1,000 1,200 1,400 1,600 2018 2020 2022 2024 2026 2028 2030 2032 2034 2036 2038 2040 2042 2044 2046 2048

($ Million) FISCAL YEAR (6/30)

CTF Bonds through FY2016

2017 Series A DS Outstanding DS Less Refunding Total Projected Pledged Revenues

200,000 400,000 600,000 800,000 1,000,000 1,200,000 1,400,000 1,600,000

($ Million) FISCAL YEAR (6/30)

CTF Bonds through FY2021

DS on 2021 Bonds DS on 2020 Bonds DS on 2019 Bonds DS on 2018 Bonds

Aggregate GANs Projected Offerings through Full Program*

*Preliminary, subject to change

 The Commonwealth plans to issue approximately $30.0 million (which amount includes net premium) of additional Federal Highway Grant Anticipation Notes from FY2019 through FY2021  Projected debt service coverage on the entire GANs program is estimated to be approximately 15.1x (assuming both Federal Highway Reimbursements and Net CTF Pledged Funds)

27

200 400 600 800 1,000 1,200 1,400 1,600 1,800 2,000 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027

($ Million)

FISCAL YEAR (6/30)

GANs through FY2016

Projected Debt Service

• n 2017 Notes

Existing DS on Notes Total Projected Pledged Revenues

200 400 600 800 1,000 1,200 1,400 1,600 1,800 2,000 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027

($ Million)

FISCAL YEAR (6/30)

GANs through FY2020

Projected DS on Future Notes Projected DS on 2017 Notes Existing DS on Notes Total Projected Pledged Revenues

• 5. Conclusion and Financing Schedule

CTF Revenue Refunding Bonds, 2017 Series A*

28 *Preliminary, subject to change

 The Commonwealth expects to refund approximately $164.4 million of its outstanding CTF 2012 Series A and 2013 Series A Bonds for economic savings  The refunding is expected to generate approximately $16.1 million in net present value savings or 9.79%

• f refunded par

Refunding Results* ($ in millions) Refunding Par Amount $151.255 Refunded Par Amount 164.375 Gross Savings 23.348 Net Present Value Savings 16.091 Net Present Value Savings (%) 9.79%

2017 Refunding Series A – Preliminary Amortization by Maturity Year Due (06/01) Amount 2027 $12,625,000 2028 12,845,000 2030 6,715,000 2031 7,485,000 2032 8,335,000 2033 6,400,000 2034 10,325,000 2035 11,430,000 2036 12,630,000 2038 15,575,000 2039 7,125,000 2040 8,035,000 2041 9,025,000 2042 11,380,000 2043 11,325,000

2017 CTF and GANs Structuring and Credit Summary*

 Debt service coverage including expected future issuances of CTF Bonds is estimated to be approximately 6.0x  ABT of 4.0x  Large, diverse revenue stream with over $1.378 billion annually for debt service  History of strong CTF Pledged Fund performance  Revenue covenant to restrict ability to alter Motor Fuel Taxes and Registry Fees  Constitutional provision requires that transportation revenues be spent only on transportation purposes  Monthly funding of debt service on a 1/5th and 1/10th basis for semi-annual interest and principal, respectively

2017A CTF Credit Highlights

*Preliminary, subject to change

 Commonwealth’s CTF and GANs credits are among the strongest transportation credits in the US  Both credits were created to provide investors with significant debt service coverage and legal protections  The strong credit features inherent in both bond programs, justify the Aa1/AAA and Aa2/AAA category ratings (from Moodys/S&P) for the CTF bonds and GANs, respectively, reflecting the low risk to investors

29

 Two-pronged ABT providing 4.0x MADS coverage  History of success in obligating Federal funds  No appropriation of Federal Highway Reimbursements is necessary  Debt service deposited with trustee one year in advance of payment  Double barreled security provided by Federal Highway Reimbursements and Net CTF Pledged Funds  Projected debt service coverage on all future issuance of GANs (assuming all future issuances of CTF Bonds) is

estimated to be no less than 15.1x (assuming both Federal Highway Reimbursements and Net CTF Pledged Funds)

2017A GANs Credit Highlights

Transaction Timeline*

 The financing schedule calls for the transactions to price in October/November and close in November  The Commonwealth is seeking assignment of the Aa1/AAA (M/S&P) ratings to the 2017A CTF Bonds being issued and Aa2/AAA (M/S&P) ratings to the 2017A GANs being issued

*Preliminary, subject to change 30

October November

Financing Schedule*

Date Event October 20th Receive Ratings October 23rd Mail Preliminary Official Statements October 31st GANS Competitive Sale November 7th CTF Retail Order Period November 8th CTF Pricing November 16th CTF & GANS Closing

S M T W T F S 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 S M T W T F S 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

• 6. Appendix

Accelerated Bridge Program

Fore River Bridge

• The project includes the replacement of the temporary Fore River Bridge with a permanent bridge

(State Route 3A) over the Fore River in Quincy and Weymouth

• The bridge supports 32,000 vehicles daily
• Substantial Completion Forecast: June 2018

32

Longfellow Bridge

• Longfellow Bridge is a major transportation link between the City of Cambridge and the City of

Boston and serves 28,600 vehicles , as well as bicycle and pedestrian traffic

• The bridge accommodates 28,600 vehicles daily as well as the MBTA Red Line with an estimated

daily passenger load of 90,000

• Substantial Completion Forecast: Late 2018

John Greenleaf Whittier Memorial Bridge

• The existing 6-lane bridge will be replaced with a new 8 lane structure matching the existing 8-lane

roadway cross section to the south

• The bridge currently accommodates 70,000 vehicles daily
• Widening of the bridge will provide for a consistent 8-lane cross section throughout the I-95 corridor
• Substantial Completion Forecast: Late 2017

Woods Memorial Bridge

• Replacement of existing non-operating drawbridge with a new fixed bridge between the City of

Everett and the City of Medford and the Revere Beach Parkway (State Route 16)

• Substantial Completion Forecast: April 2020

Massachusetts DOT Rail Enhancement Program

Green Line Extension

*Preliminary, subject to change

Green Line Extension

 Extend the existing MBTA Green Line by utilizing two distinct branches: a “mainline” branch which will operate along the existing Lowell commuter rail line, beginning at a relocated Lechmere Station in Cambridge and traveling through Somerville to College Avenue in Medford; and a branch line operating within the existing Fitchburg commuter rail line leading to Union Square in Somerville  The Green Line Extension project includes the following elements: − 4.5 miles of new Green Line track and relocation of 4 miles of existing commuter rail track − Relocated Lechmere Station anchoring transit-oriented development in Cambridge − Five additional new stations in Somerville and one new station in Medford − Roadway and traffic improvements − Reconstruction of bridges and construction of viaduct structures − Catenary, signals, communications and power to support the extension − Extension of the existing Somerville Community Path − 24 new Green Line vehicles − A new Green Line vehicle storage and maintenance facility  In May 2016, MassDOT and the MBTA completed a comprehensive review of the Green Line Extension project to analyze projected cost estimates, consider a redesign of the project, and seek additional funding sources. Following this review, the project scope was revised with a new cost estimate of $2.3 billion, and pledged contributions for the project totaling approximately $227 million from corridor municipalities and the metropolitan planning organization, the Fiscal and Management Control Board voted to approve resubmission of the project to the Federal Transit Authority (FTA). MassDOT and MBTA will only issue final approval of the project once a revised finance plan is approved by the FTA and certified bids come in within the revised cost estimate  Proceeds of 2017A CTF Bonds will be applied to costs of the Green Line Extension project related to certain contracts already underway

38

Orange and Red Line Vehicles

*Preliminary, subject to change

Orange and Red Line Project  Project includes procurement and replacement of new Orange Line and Red Line vehicles to improve reliability accessibility and energy efficiency as well as associated improvements to facilities, track and signal infrastructure to address the state of good repair needs of the MBTA’s Orange and Red Lines  New cars will feature increased capacity and additional seating, wider and electrically operated doors, accessible areas in each car, LED lighting, updated HVAC systems and improved communication systems  The Orange and Red Line Vehicles project includes the following elements: − New Vehicles:

• 152 new Orange Line vehicles
• 132 new Red Line vehicles

− Orange Line infrastructure improvements:

• Improvements to Wellington Carhouse
• Renovation of tracks 33-38 at Wellington Yard
• Wellington Yard renewal

− Red Line infrastructure improvements:

• Track improvements at Cabot Carhouse, Cabot test track, and Cabot Yard

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South Coast Rail Extension

*Preliminary, subject to change

South Coast Rail Extension  This project involves early action items for the eventual expansion of commuter rail service approximately 50 miles from Boston to Taunton, New Bedford, and Fall River. South Coast Rail Extension early action items include: − Fully upgraded and completed one grade crossing in Taunton, one grade crossing in New Bedford, and three grade crossings in Freetown − Track work in Freetown and New Bedford has been fully completed − Four bridge replacements in New Bedford and Fall River are fully funded − South Coast Rail Expansion project design − Evaluation of an alternative route

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Knowledge Corridor

*Preliminary, subject to change

Knowledge Corridor  This will improve intercity service between Springfield, Holyoke, Northampton, Greenfield, and Vermont and further link the Pioneer River Valley economies. Knowledge Corridor project elements include: − Cross-tie and track replacement along the Connecticut River Main Line − Construction of an underpass in Northampton − Improvements to bridges and platforms − Switch and signal upgrades

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Silver Line to Chelsea

Silver Line to Chelsea  The Silver Line Gateway Project will provide new, dedicated bus rapid transit (BRT) service connecting Chelsea and East Boston (via the Blue Line’s Airport Station) with the Red Line’s South Station and Seaport District in Boston  Four new BRT Stations will be located at Eastern Avenue, Box District, Bellingham Square and Chelsea  The project involves 3 phases  New Busway, BRT Stations, Replacement of Washington Avenue Bridge  New Commuter Rail Station  Completion of Chelsea Greenway shared use path (City of Chelsea)

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Fairmount Line Improvements

Fairmount Line Improvements  Will provide various improvements to the Fairmount commuter rail line  The Fairmount Line runs from South Station to Hyde Park  Fairmount Line Improvements include the following: − Upgrades to two Fairmount Line stations and the addition of four new stations − Reconstruction of six bridges − Construction of a new track interlocking switching system − Signal system upgrades

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Casey Overpass

Casey Overpass  Construction of a new fully accessible Orange Line Headhouse  Bicycle and pedestrian accommodations  Design and construction of a new Upper Busway Canopy for the Forest Hills Station

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