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Key Tenets to the Public Asset Monetization Purchase

Key Tenets to the Public Asset Monetization Purchase. Keep the Public Assets (“System”) in Public Hands Deliver meaningful Upfront Proceeds to the Municipality (“City”) to maximize Sale benefits Capture and pledge all cash flow towards the repayment of debt and the maintenance of the System

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Key Tenets to the Public Asset Monetization Purchase

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  1. Key Tenets to the Public Asset Monetization Purchase • Keep the Public Assets (“System”) in Public Hands • Deliver meaningful Upfront Proceeds to the Municipality (“City”) to maximize Sale benefits • Capture and pledge all cash flow towards the repayment of debt and the maintenance of the System • Professionally manage the System During the Concession Period • Return professionally-maintained System and ALLremaining Capital back to the City after Concession / Lease Term Proprietary and Confidential

  2. Public Ownership Structure • Owner of Public Assets (“System”) would be an independent Special Purpose Entity (“SPE”) • Could be newly-formed or existing • SPE would issue tax-exempt bonds to acquire the System • SPE would not have recourse to or guarantees from the Municipality (“City”) • Acquisition bonds secured solely with System’s revenues • Authority governance (charter or indenture) would require System to be operated and maintained for benefit of the underlying City • System operations would be professionally managed by highly qualified and well-established private sector firms • Private sector contracts would need to be Qualified Management Contracts under IRS rules Proprietary and Confidential

  3. Structural Overview – Maintain Public Ownership Governance Guggenheim Capital and Underwriting Special Purpose Entity Firm A Asset Manager Bond Purchase Agreement Asset Management Agreement1 Operator Agreement1 Concession Agreement Proceeds Senior Lien Bonds City Firm B Operator Subordinate Lien Bonds 1 These agreements are subject to IRS Qualified Management Agreement requirements Proprietary and Confidential

  4. Flow of Funds – Maximizing Value for the Public Good Public benefits from modernization and private sector expertise optimizes revenues Revenues Operating Expenses Private management creates efficiency Senior Lien Debt Service Public ownership minimizes cost with tax-exempt cost of capital and avoids the need to pay equity returns Junior Lien Debt Service Remaining Funds Without a need to pay equity returns, all excess cashflow is reinvested into the System with the ultimate return of the assets and surpluses to the City Capital Reserves Constant Reinvestment in Assets Public Benefits Assets and All Surplus Cash Revert to City Proprietary and Confidential

  5. Illustrative Capital Stack NOI * Preliminary underwriting. Subject to revision upon further review of data. Proprietary and Confidential

  6. Illustrative Debt Structure: Debt Service versus projected System NOI • Debt Service versus projected System NOI

  7. Illustrative Detailed Debt Structure: Principal and Interest • Debt Service Detail: Principal and Interest

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