State of Public Works: Then & Now

1. State of Public Works: Then & Now League of Arizona Cities & Towns Wednesday, August 31, 2011 – 2:00 PM

2. Agenda • Introductions & Opening Remarks • “The Crumbling of America” Video • Overview of Budgetary Cutbacks • Municipal Perspective: • City of Phoenix Water System • City of Tucson Building Maintenance • City of Tucson Street Transportation • Economic Development Perspective • Factors Affecting Location Decisions • Site Selection Due Diligence Process • Sample Infrastructure Needs and Timeframe for Delivery • How Can Economic Development and Development Services HelpOne Another? • Wrap-Up & Call to Action! • Q & A

3. Introductions & Opening Remarks • Wylie Bearup, City of Phoenix Street Transportation Director/City Engineer • Neil Mann, City of Phoenix Water Services Acting Director • Ron Lewis, City of Tucson General Services Director • Jim Glock, City of Tucson Director of Transportation • Chris Camacho, GPEC Executive Vice President of Business Development

4. “The Crumbling of America” Video

5. Overview of Budgetary Cutbacks THEN: • Rapid population growth • Expanding infrastructure systems • Trying to plan ahead, anticipate growth patterns • Provide infrastructure ahead of people • Investing abundant capital funds wisely, balancing needs • Focus on new construction

6. Overview of Budgetary Cutbacks NOW: • Declining capital budgets • Aging infrastructure • Lack of appreciation for maintenance and rehabilitation • An era of “doing more with less” • Investing scarce resources most effectively • Increased scrutiny of public expenditures • Change in political climate

7. Municipal Perspective • City of Phoenix Water System • City of Tucson Building Maintenance • City of Tucson Street Transportation

8. City of PhoenixWater System • Water Services Background • Service Area of 540 sq miles • About 403,000 accounts • 6 Water Treatment Plants • 3 WW Treatment Plants • 7,000 miles of water mains • 5,000 miles of sewer mains • 45 Water Reservoirs (450 MG)

9. City of PhoenixWater System • Fiscal Considerations • Operate and maintain infrastructure • Meet multiple regulatory requirements • Plan for growth and development • Address new drinking water regulations • Maintain AAA bond rating • Challenging economic conditions

10. City of PhoenixWater System • 2011 Rate Process • Actions to reduce potential increases: • $600 million cut from 5-yr CIP • 25% cut in top management • Reduced operating budgets by 3% • Pursued new revenue sources • Ad-hoc Review Panel • Community Outreach • City Boards and Commissions

11. City of PhoenixWater System • Water Rate Decision • February 2011 Council action • Approved a 7% water rate increase • Independent Efficiency Study • Consultant to review rate model • Identify another 5% budget cuts • Implement a hiring “chill”

12. City of PhoenixWater System • Future Challenges • Efficiency Study Results – Sept 2011 • Impacts to Customer Service • Existing service levels • Asset management • Regulatory compliance • Infrastructure renewal • New water resources

13. City of Tucson Building Maintenance

14. City of Tucson Building Maintenance

15. City of TucsonBuilding Maintenance

16. City of TucsonBuilding Maintenance • Reduction of Services • Reduced fire systems inspections to quarterly • Reduced HVAC filter changes to bi-monthly/quarterly • Reduced custodial frequencies • Trash twice a week • Dusting alternate weeks • Cheaper paper products • Carpet extraction yearly at best • Eliminated window washing • Reduced staffing levels which leads to increased response times

17. City of TucsonStreet Transportation • Maintenance Response Times • Potholes 2007 - 19 days 2010 – 90 days • Shoulder Grading 2007 - 53 days 2010 - 99 days • Drainage Maintenance 2007 - 42 days 2010 - 89 days • Street Lights 2007 - 5 days 2010 - 32 days • Sign Replacement 2007 - 14 days 2010 - 37 days

18. City of Tucson Street Transportation

19. City of Tucson Street Transportation

20. City of Tucson Street Transportation

21. City of Tucson Street Transportation

22. City of Tucson Street Transportation

23. City of Tucson Street Transportation

24. Economic Development Perspective • Factors Affecting Location Decisions • Site Selection Due Diligence Process • Sample Infrastructure Needs and Timeframe for Delivery • How Can Economic Development and Development Services HelpOne Another?

25. Highway accessibility Labor costs Tax exemptions Occupancy or construction costs State and local incentives Corporate tax rate Availability of skilled labor Inbound/outbound shipping costs Energy availability and costs Availability of buildings Factors Affecting Location Decisions FACTOR Top 10 U.S. Site-Selection Factors by Rank and Factor Source: Area Development Consultant Survey 2010

26. 9 Months Company performs initial due diligence: facility needs, logistical flow of goods, develops internal capital expenditure forecasts Site Selection DueDiligence Process 5-6 Months Consulting firm analyzes 10-20 states/region that meet company criterion (begin state/region elimination process) 6-9 Months Hire independent consulting firm to perform market due diligence based upon project scope

27. 4-5 Months Consulting firm engages GPEC to perform deeper market due diligence based upon transportation, infrastructure, labor, taxation (meanwhile states/regions have already been screened as “friendly or unfriendly” to industry) Site Selection DueDiligence Process 1-3 Month Consulting firm and company engage cities and real estate brokers on capital improvement plans and discuss ability to support infrastructure needs 2-4 Months GPEC and consulting firm work through the aforementioned items and begin evaluating physical land/building sites

28. 0-2 Months Consulting team works with ACA, GPEC and city on a draft development agreement Site Selection DueDiligence Process 0-1 Months Consulting firm makes recommendation to company Company makes final decision

29. Sample Infrastructure Needs and Timeframe for Delivery PROJECT SANTA PROJECT BILLION/COOKIE Operation Acreage Power Natural Gas Water useage (k/g/day) Wastewater Usage (k/g/day Infrastructure Timeframe Construction Timeframe Standard Manufacturing 80 acres (40 acres for phase 1) 2,500 kva to 3,500 kva at full capacity 12,500 dekatherms per annually (consistent load 24x7 250,000 to 500,000 gallons per day at 900 gallons per minute 20,000 gallons per day discharge to double at full capacity Must be ready before final decision; Within 8 months 10-16 months High-Tech Manufacturing 235 acres (100 acres for phase 1 & 2) 35MW dual service load for each phase (135MW total); 90% load factor. insignificant 2,853,058 gallons per day; 105,668 per hour 20,000 gallons per day discharge to double at full capacity Prerequisite for site evaluation. Power, water and wastewater capacities needed to be met by Q1 – 2012. Pre-construction to begin in Mar 2011 and operational date April 2012. 10-16 months 14 months

30. Sample Infrastructure Needs and Timeframe for Delivery PROJECT GAIUS Operation Acreage Power Natural Gas Water Useage (k/g/day) Wastewater Usage (k/g/day Fiber Infrastructure Timeframe Construction Timeframe Data Center Campus 70 - 90 10MW – 60MW (Full Build-Out, Phase 5) N/A 7,200 Gallons per hour – 13,500 Peak Gallons per hour; 324,000 gallons per day peak N/A Dark fiber must be to site and at least 2 fiber providers must be in ground less than 1 mile from site August 2011 begin construction on Phase 1 12 months (phase 1)

31. Economic Developers Gather accurate flow/usage information – allows development services to provide amore accurate assessment of cost and timing Attempt to give DS more time to analyze and respond with accurate information and less frustration Prioritize those projects that need full blown analysis, rather than those that are in exploratory phase – DA won’t be inundated with speculative requests Development Services React quickly to requests – timely response to client Recognize that your information can make or break a deal – consultants are always looking for ways to eliminate sites/communities Keep a positive attitude when working with these clients – their specs often grow and/or contract and we must remain flexible How Can Economic Developmentand Development Services HelpOne Another?

32. Wrap-Up & Call to Action U.S. investment in infrastructure is significantly less than other countries • One of every seven miles of U.S. roads is rated “not acceptable” • Congestion costs 2.9 billion gallons of wasted fuel annually • 84% of Americans support greater infrastructure investment

33. Wrap-Up & Call to Action • Contact your Legislators http://www.azleg.gov/alisStaticPages/HowToContactMember.asp • APWA is resource for public works & infrastructure http://arizona.apwa.net/ • GPEC advocates and champions improvements for our region’s competitiveness http://www.gpec.org/ • AZ League is resource for political process http://www.azleague.org/

34. Q & A