#1Ohio Water Development Authority Overview of OWDA Financing Programs Investor Presentation October and November 2013#2Ohio Water Development Authority Table of Contents Section 1 Section 2 Section 3 Section 4 Overview of the Authority Federally Authorized SRF Programs Fresh Water Program Conclusions 2#3Ohio Water Development Authority Disclaimer These slides were used or will be used as a part of presentations made to certain parties in October and November 2013. The presentation consisted of the following slides and oral discussion of the matters depicted in the slides. No audio recording or written transcript of the presentation was made or is available. 3#4Section 1 Overview of the Authority +#5Ohio Water Development Authority OVERVIEW OF THE AUTHORITY OWDA Attendees Steven J. Grossman Executive Director Mr. Grossman has served as Executive Director for the Authority since December 1, 1988. From 1983 to December 1, 1988, Mr. Grossman served as Assistant Director of the Ohio Environmental Protection Agency and from June 1987 to November 1988, he was an ex officio member of the Authority, designated by the Director of the Ohio EPA. Prior to 1983, he was a program manager for the federal government and previous to that a management analyst. He earned a Bachelor of Arts Degree in Economics from Lehigh University and a Master of Science Degree in Management from the Sloan School of Management at the Massachusetts Institute of Technology. Contact: Ohio Water Development Authority 480 South High Street Columbus, OH 43215 Phone: (614) 466-0152 Fax: (614) 644-9964 E-mail: [email protected] Scott L. Campbell Chief Operating Officer Mr. Campbell became Chief Operating Officer to the Authority in January 2005. Previously, Mr. Campbell had served as the Controller to the Authority since March 1999. Mr. Campbell has been employed by the Authority since 1987. Prior to 1987, he was employed with a national public accounting firm. He received his license as a certified public accountant in 1993. He earned a Bachelor of Arts in accounting from Mount Vernon Nazarene College. Contact: Ohio Water Development Authority 480 South High Street Columbus, OH 43215 Phone: (614) 466-0170 Fax: (614) 644-9964 E-mail: [email protected] LO 5#6• • Ohio Water Development Authority OVERVIEW OF THE AUTHORITY Overview of OWDA OWDA has been providing water and wastewater loans to communities throughout Ohio for 45 years The Authority's board includes public and private sector representatives with strong environmental, business, and labor backgrounds - Five members of the Authority are appointed by the Governor, with advice and consent of the State Senate, for staggered eight- year terms - The Directors of the Departments of Natural Resources and Development Services and the Ohio Environmental Protection Agency are members ex- officio of the Authority • OWDA was created in 1968, initially funded with $100 million of State general obligation bond proceeds • ⚫ OWDA has provided nearly $11.4 billion of financing for numerous essential water and wastewater projects throughout Ohio's 88 counties as of September 30, 2013 • OWDA continues to fund its own revolving loan programs (e.g. Fresh Water and Community Assistance), as well as jointly administering the federally authorized Wastewater and Drinking Water revolving loan programs with Ohio EPA OWDA Revolving Loan Programs Clean Water (1975) Safe Water (1980) Pure Water (1985) Fresh Water (1992) Federally Authorized SRF Programs Jointly Administered by OWDA and Ohio EPA Water Pollution Control Loan Fund (1989) Surplus Funded Programs (e.g. Community Assistance) Drinking Water Assistance Fund (1998) 00 6#7Ohio Water Development Authority OVERVIEW OF THE AUTHORITY Enforcement Process for Revenue Collection • • OWDA staff has focused on loan tracking and collections for all its programs Loan payment dates are generally five months prior to Authority debt service payment dates to further strengthen bondholder security • The Authority has covenants to its bondholders that require it to take all necessary actions to collect all loan payments due to the Authority, including: - Sending invoices 15 days prior to due date • - Making demand for payment within 20 days after any default Giving notice that if the default is not remedied within 2 months the Authority will file suit to collect the moneys due · Filing suit within 3 months of the default date OWDA uses a comprehensive computerized loan tracking system ⚫OWDA has a strong, 45-year record of enforcing its rights to loan payments Only 8 instances of loan payment defaults, and OWDA has fulfilled its Trust Agreement covenants to file suit to collect in each case - Courts have affirmed OWDA's right to enforce borrowers' loan payment obligations 7#8Ohio Water Development Authority OVERVIEW OF THE AUTHORITY OWDA Interest Rates From October 1, 2013 through October 31, 2013 • • The adjacent text highlights current OWDA loan rates Loan rates for each program change each month based upon a formula, but the rate for each loan is fixed at the time of its approval • . . OWDA Fresh Water Market Rate Program: 4.82%¹ Community Assistance: 2.00% WPCLF and DWAF Standard Rate: 3.59% • WPCLF and DWAF Small Systems: 3.09% WPCLF Hardship Loan (Varies): 0% or 1.00% • DWAF Affordability Points Rate: 3.09% Notes 1. Standard rate subject to various programmatic discounts which depend upon the amount and purpose of the borrowing and are capped 8#9Ohio Water Development Authority Since OWDA was created in 1968, it has provided $11.4 billion of loans for all of its programs including the federally subsidized SRFs, as of September 30, 2013 • OWDA makes loans all throughout the State, providing environmental and economic benefits to a wide variety of communities OVERVIEW OF THE AUTHORITY OWDA Loan History by County Through December 2012 Lake Ashtabula Lucas Fulton Williams Ottawa Geauga Cuyahoga Erie Wood Sandusky Defiance Henry Lorain Trumbull Portage Huron Paulding Seneca Medina Summit Putnam Hancock Mahoning Ashland Van Wyandot Crawford Wayne Stark Columbiana Wert Allen Richland Hardin Marion Auglaize Holmes Carroll Mercer Morrow Jefferson Кпох Tuscarawas Logan Shelby Coshocton Harrison Union Delaware Darke Champaign Licking Guernsey Miami Belmont Franklin Muskingum Clark Montgomery Madison Fairfield Noble Preble Perry Monroe Greene Pickaway Morgan Key: Fayette Hocking Washington Butler 0 - $25 Million Warren Clinton Ross Athens Vinton Hamilton Clermont Highland Meigs Pike Jackson Brown Adams Scioto Gallia Lawrence $25-$50 Million $50-$75 Million $75-$100 Million $100-$250 Million Greater than $250 Million 9#10• • Ohio Water Development Authority OVERVIEW OF THE AUTHORITY OWDA Debt and Rating Overview As of September 30, 2013 The adjacent text highlights the OWDAS outstanding debt and ratings OWDA's investment policy limits all investments (including for Debt Service Reserve Funds) depending upon the program to Treasuries, Agencies, and highly-rated municipal bonds with a maximum maturity of five years for any investment There are no investments in Guaranteed Investment Contracts OWDA Debt and Rating Overview • • Water Pollution Control Loan Fund Program - Debt Outstanding: $47.2 million of WPCLF State Match Series bonds and notes outstanding and $1.7 billion of WPCLF Water Quality Series (leverage) bonds outstanding Ratings: Aaa/AAA (Moody's/S&P) Drinking Water Assistance Fund Program - Debt Outstanding: $16.1 million of DWAF State Match Series bonds outstanding and $247.0 million of DWAF Leverage Series bonds outstanding Ratings: Aaa/AAA (Moody's/S&P) • Fresh Water Program - Debt Outstanding: $500.3 million of Fresh Water Series bonds outstanding - Ratings: Aaa/AAA (Moody's/S&P) 10#11Section 2 Federally Authorized SRF Programs 11#12• Ohio Water Development Authority FEDERALLY AUTHORIZED SRF PROGRAMS Overview of EPA Programs EPA program subsidized loan rates provide a strong incentive for extensive participation by communities throughout the State • The EPA programs consist of the Water Pollution Control Loan Fund (WPCLF), which is the Clean Water SRF, and the Drinking Water Assistance Fund (DWAF), which is the Drinking Water SRF. The WPCLF was created in 1989, and the DWAF was created in 1998 • The WPCLF and the DWAF are subsidized rate programs • The Standard Long-Term Rate is reset monthly - Average of the previous 8 weeks of the Bond Buyer 20 G.O. Index less 125 basis points - Certain borrowers may qualify for a loan with an interest rate lower than the Standard Rate • Some or all principal may be forgiven on certain loans to disadvantaged communities ⚫ EPA program loans may not be repaid prior to maturity 12#13Section 2A Water Pollution Control Loan Fund 13#14Ohio Water Development Authority FEDERALLY AUTHORIZED SRF PROGRAMS WPCLF Program Overview As of September 30, 2013 • The WPCLF Program currently • has a large, diversified loan portfolio of 363 different borrowers As of September 30, 2013, the Authority had $47.2 million of WPCLF State Match Series bonds and notes outstanding and $1.7 billion of WPCLF Water Quality Series bonds outstanding WPCLF Grant Funding Last Five Years Year Capitalization Grant 20091 $297,239,893 2011 2012 Total State Match $15,323,359 197,831,000 39,566,200 79,564,000 15,912,800 $574,634,893 $70,802,359 The WPCLF was created in 1989 using State appropriation monies to provide the 20% state match of capitalization grants provided by the United States Environmental Protection Agency as authorized under the Clean Water Act Since 1989, the WPCLF has been awarded over $1.0 billion of federal capitalization grants which have been matched with nearly $365 million of State. matching funds • The WPCLF has funded 1,535 projects with $5.9 billion in loan value to 436 different Governmental Agencies² • The portfolio includes over $3.6 billion of loans to 363 different Governmental Agencies for 1,120 projects³ The WPCLF has funded 1,201 construction projects for $5.5 billion and 334 planning and design projects for $0.4 billion. - The WPCLF has funded 10 loans to private entities totaling $7.6 million+ The interest and principal components of WPCLF governmental loans are leveraged with the issuance of State Match Bonds and Leverage Bonds, respectively Notes 1. Includes $220,623,100 of ARRA funding with no state match required and $76,616,793 capitalization gran moneys requiring a 20% state match 2. Represents the principal amount of all loans financed 3. Represents the principal amount of all loans financed, net of principal repayments 4. Not pledged to bonds 14#15• Ohio Water Development Authority FEDERALLY AUTHORIZED SRF PROGRAMS Significant Local Governmental Agency Participants As September 30, 2013 Local Governmental Agency As of September 30, 2013, there were over $3.6 billion estimated principal amount of loans remaining to be repaid under the Water Pollution Control Loan Fund Significant Local Governmental Agency Participants: Water Pollution Control Loan Fund As of September 30, 2013 Estimated Principal Amount Remaining to be Repaid Project Costs Number of Projects Funded With WPCLF Loans¹ Percent of Total City of Columbus 106 $1,218,912,134 $956,035,600 26.03% Northeast Ohio Regional Sewer District 56 800,375,638 518,980,149 14.13% City of Toledo 46 432,479,102 362,309,846 9.86% Metropolitan Sewer District of Greater Cincinnati 35 267,823,832 244,641,150 6.66% City of Lorain 8 109,027,878 95,600,100 2.60% City of Akron 3 59,619,156 58,844,676 1.60% Montgomery County 3 62,598,906 57,812,865 1.57% Greene County 6 66,632,676 57,708,471 1.57% Total 263 $3,017,469,322 $2,351,932,861 64.04% Notes 1. Represents the principal amount of pledged loans financed 15#16Ohio Water Development Authority FEDERALLY AUTHORIZED SRF PROGRAMS WPCLF Program Basic Security Features • Program's basic security features include both cash flow coverage and reserves to achieve Aaa/AAA ratings • State Match Bond Security: • Water Quality Bond Security: - Hybrid leveraging structure • Coverage Pledge: • Additional Coverage: Interest payments on all loans, State moral obligation Principal repayments on all loans and interest payments available after paying State Match Bond debt service Minimum 1.05x coverage from existing loan interest and principal repayments for State Match and Water Quality Bonds, respectively • Payments on additional loans • With respect to Leverage and State Match, interest earnings on: - Debt Service Fund (ten months each year) - Debt Service Reserve Fund • Debt Service Reserve Funds: • Additional Bonds Test - Interest Fund (interest payments in excess of debt service) • With respect to Leverage only: - - Balance of and earnings on Surplus Principal Account Unencumbered Net Bond Proceeds Fund Capitalization Grant Subaccount One-half maximum annual debt service Meet coverage (105%) pledge with payments on loans already made and DSRF requirement 16#17Ohio Water Development Authority FEDERALLY AUTHORIZED SRF PROGRAMS Simplified WPCLF Program Flow of Funds for Governmental Loans WPCLF Loan Repayments Fund Interest (1) Principal Principal Fund Interest Fund State Match Debt Service Fund State Match Bondholders Water Quality Debt Service Fund Surplus Principal Fund (3) Loan Repayments Additional Pledged Loan Repayments Fund Water Quality Bondholders Interest (2) Principal Expected Flow Contingent Flow Available for Cross- Other Projects Fund Water Quality Note Holders Collateralization with DWAF Unpledged Principal Subaccount Surplus Principal Account Notes 1. 2. Available to pay Bond Service Charges on Water Quality Bonds if not required to cure State Match Bond Debt Service Fund of Debt Service Reserve Fund deficiencies Principal on Additional Pledged Loans already pledged; interest becomes pledged as a result of depledging from State Match Bonds 3. Available for any lawful purpose of the Water Pollution Control Loan Fund, including Debt Service Fund or Debt Service Reserve Fund deficiencies 17#18• Ohio Water Development Authority FEDERALLY AUTHORIZED SRF PROGRAMS Cross-Collateralization Provides Additional Security Cross-collateralization between the WPCLF and DWAF Programs provides additional security and greater portfolio diversification for bonds issued under both programs - Allows the WPCLF and DWAF to achieve an enhanced security through access to the other Program's surpluses - Reduces default tolerance concentration penalties associated with larger borrowers for both Programs • Director and Authority have given standing and irrevocable authorization to issue Support Obligations • • . • 30 days prior to an interest payment date the Trustee computes shortfall, if any Any shortfall in debt service triggers a mandatory investment in WPCLF Support Obligations by DWAF (and vice versa) Should money become available to the deficient fund from any other source, the Trustee has the right to cancel issuance request one day prior to interest payment date Support Obligations will continue to be issued until the deficiency is cured (subject to the availability and sufficiency of surplus funds in the other SRF to purchase them) • Repayment of the Support Obligations will be made from surpluses • Additional new money Water Quality Bonds may not be issued so long as WPCLF Support Obligations are outstanding (similar DWAF provisions) 18#19WPCLF Water Quality Debt Service Schedule and Coverage As of 9/30/2013 Repayments (a) 12/1/2013 6/1/2014 12/1/2014 6/1/2015 12/1/2015 6/1/2016 12/1/2016 6/1/2017 12/1/2017 6/1/2018 12/1/2018 6/1/2019 12/1/2019 6/1/2020 12/1/2020 6/1/2021 12/1/2021 6/1/2022 12/1/2022 6/1/2023 12/1/2023 6/1/2024 12/1/2024 6/1/2025 12/1/2025 6/1/2026 12/1/2026 6/1/2027 123,302,734.73 Total Estimated Direct Payments (Build America Bonds Subsidy Payments) (b) 3,402,668.87 126,725,846.79 3,402,668.87 130,212,190.18 3,402,668.87 139,052,676.54 146,670,533.97 147,666,336.82 147,974,138.10 146,301,169.59 145,165,084.17 143,865,023.23 140,999,874.09 3,402,668.87 3,402,668.87 3,402,668.87 3,402,668.87 3,402,668.87 3,402,668.87 3,402,668.87 3,402,668.87 139,505,282.18 3,402,668.87 137,720,749.52 136,827,213.29 134,644,611.29 3,381,124.32 3,357,926.97 3,334,333.75 133,614,859.05 110,094,978.93 142,455,345.41 113,305,000.36 150,073,202.84 113,733,029.16 151,069,005.69 112,010,844.41 151,376,806.97 110,743,443.81 149,703,838.46 109,422,144.41 148,567,753.04 107,210,492.51 147,267,692.10 85,419,244.61 144,402,542.96 79,688,977.26 142,907,951.05 141,101,873.84 140,185, 140.26 137,978,945.04 Total Projected Payments 126,705,403.60 130,128,515.66 Combined Outstanding Water Quality Debt Service 110,108,702.61 108,946,463.61 Hypothetical Water Quality Series Note Debt Service (c) 1,689,716.89 1,689,716.89 Total 1,689,716.89 1,689,716.89 1,689,716.89 113,700,561.29 1,689,716.89 112,433,160.69 1,689,716.89 1,689,716.89 1,689,716.89 Debt Service 110,108,702.61 110,636, 180.49 111,784,695.82 114,994,717.24 115,422,746.04 Estimated Gross Surplus 16,596,700.99 19,492,335.16 Gross Net Coverage (d) Coverage (e) 115.07% 111.98% 117.62% 114.54% 21,830,163.23 119.53% 116.48% 27,460,628.16 123.88% 120.92% 34,650,456.80 130.02% 127.07% 37,368,444.40 132.87% 129.87% 38,943,646.27 134.64% 131.61% 111,111,861.29 108,900,209.39 87,108,961.49 38,591,977.17 134.73% 131.67% 39,667,543.65 136.43% 133.30% 60,158,730.61 169.06% 165.16% 67,941,627.26 75,509,969.61 60,692,292.11 59,804,600.93 1,689,716.89 1,689,716.89 1,689,716.89 1,689,716.89 81,378,694.14 69,631,344.14 63,023,848.82 177.45% 173.26% 73,276,606.91 205.24% 200.35% 77,199,686.50 63,902,187.34 182.78% 178.40% 62,382,009.00 77,803,131.27 224.72% 219.34% 1,689,716.89 61,494,317.82 76,484,627.22 224.38% 218.95% 131,176,806.64 3,308,921.09 134,485,727.73 57,271,653.83 1,689,716.89 58,961,370.72 75,524,357.02 228.09% 222.48% 128,985,598.22 3,281,763.61 132,267,361.83 46,981,303.63 123,561,910.27 121,420,374.11 120,122,102.64 115,761,213.90 111,359,628.09 110,098,352.15 106,430,336.39 103,255,279.56 3,255,134.36 3,248,670.73 3,242,207.09 3,226,532.81 3,210,824.97 2,996,172.08 2,765,809.50 2,541,199.90 100,532,795.83 2,314,605.12 126,817,044.63 124,669,044.84 123,364,309.73 118,987,746.71 114,570,453.06 113,094,524.23 109,196,145.89 105,796,479.46 102,847,400.95 39,042, 106.28 1,689,716.89 1,689,716.89 48,671,020.52 40,731,823.17 83,596,341.31 271.76% 265.02% 86,085,221.46 311.35% 303.35% 38,073,521.28 1,689,716.89 39,763,238.17 84,905,806.67 313.53% 305.36% 32,769,048.78 1,689,716.89 34,458,765.67 88,905,544.07 358.01% 348.60% 32,313,470.93 1,689,716.89 34,003,187.82 84,984,558.89 349.93% 340.44% 54,782,792.03 1,689,716.89 56,472,508.92 58,097,944.15 202.88% 197.19% 54,134,164.15 51,938,239.30 51,186,009.90 52,997,678.73 98,798,269.64 12/1/2027 6/1/2028 12/1/2028 6/1/2029 12/1/2029 6/1/2030 12/1/2030 6/1/2031 12/1/2031 6/1/2032 12/1/2032 92,274,154.66 89,890,449.93 2,067,834.37 1,823,210.86 100,866,104.01 94,097,365.52 51,580,354.00 1,689,716.89 1,689,716.89 1,689,716.89 1,689,716.89 1,689,716.89 55,823,881.04 57,270,643.20 202.59% 197.22% 53,627,956.19 52,875,726.79 55,568,189.71 203.62% 198.46% 52,920,752.67 200.09% 195.28% 54,687,395.62 48,160,005.34 188.06% 183.83% 53,270,070.89 47,596,033.12 189.35% 185.47% 46,516,368.95 1,601,072.62 91,491,522.55 44,805,580.03 79,195,200.04 1,380,960.08 6/1/2033 12/1/2033 6/1/2034 12/1/2034 6/1/2035 12/1/2035 6/1/2036 69,632,048.37 62,863,968.26 60,515,678.62 58,835,819.90 56,973,267.96 53,918,832.63 49,699,210.95 45,724,810.54 42,693,244.94 39,559,505.65 33,486,389.88 30,664,294.65 27,095,872.34 16,661,413.41 6,975,530.65 2,536,371.84 4,377,332,197.14 1,197,431.67 1,067,381.75 958,763.72 857,316.68 761,865.70 624,482.74 499,618.60 398,090.53 315,482.49 234,616.55 158,004.59 106,106.16 54,126.70 98,403,618.55 80,576,160.12 70,829,480.04 63,931,350.01 61,474,442.34 59,693,136.58 57,735,133.66 54,543,315.37 50,198,829.55 46,122,901.07 43,008,727.43 39,794,122.20 33,644,394.47 30,770,400.81 27,149,999.04 16,661,413.41 6,975,530.65 2,536,371.84 4,475,735,815.69 36,643,139.85 29,228,218.10 23,960,303.35 22,557,163.38 20,716,112.98 19,248,739.88 17,290, 122.65 1,689,716.89 1,689,716.89 1,689,716.89 1,689,716.89 1,689,716.89 1,689,716.89 1,689,716.89 1,689,716.89 1,689,716.89 48,206,085.84 45,891,279.68 195.20% 191.42% 46,495,296.92 44,996,225.63 196.78% 193.33% 38,332,856.74 30,917,934.99 25,650,020.24 42,243,303.38 210.20% 206.60% 39,911,545.06 229.09% 225.22% 38,281,329.78 249.24% 245.08% 24,246,880.27 37,227,562.07 253.54% 249.58% 22,405,829.87 20,938,456.77 37,287,306.72 266.42% 262.59% 36,796,676.89 275.74% 272.10% 18,979,839.54 35,563,475.83 287.38% 284.08% 14,034,195.70 1,689,716.89 15,723,912.59 34,474,916.96 319.25% 316.07% 11,393,526.35 1,689,716.89 13,083,243.24 33,039,657.83 352.53% 349.49% 10,929,819.33 10,161,357.23 6,880,702.50 6,734,452.53 6,842,958.60 1,689,716.89 1,689,716.89 1,689,716.89 12,619,536.22 11,851,074.12 30,389,191.21 340.81% 338.31% 27,943,048.08 335.78% 333.81% 8,570,419.39 25,073,975.08 392.56% 390.72% 6,734,452.53 6,842,958.60 24,035,948.28 456.91% 20,307,040.44 16,661,413.41 6,975,530.65 2,536,371.84 396.76% 455.33% 395.97% 2,315,644,915.79 67,588,675.44 2,383,233,591.23 2,092,502,224.46 (a) The amounts shown are the pledged amounts required to be paid by Local Governmental Agencies under the Existing WPCLF Loan Agreements which amounts are to be deposited in the Principal Fund and have been pledged as security for either currently issued or additional Water Quality Bonds. Amounts shown are semi-annual repayment amounts and do not include interest earnings thereon. Payments by the Local Governmental Agencies are due semi-annually. (b) As of December 1, 2011, the definition of Projected Payments include Direct Payments received by the Authority in connection with Water Quality Bonds issued as Build America Bonds (Series 2010B Water Quality Bonds). See THE WATER POLLUTION CONTROL LOAN FUND PROGRAM - Amendment to Trust Agreement. The amount expected to be received from the BAB's subsidy has been reduced by 5.1% for all periods. This reduction reflects BAB's subsidy reductions included in the Budget Control Act of 2011 and the American Taxpayers Relief Act of 2012. (c) Hypothetical equal payment Debt Service of $50,000,000 Water Quality Series 2012A Floating Rate Notes. Coverage is calculated based on pledged payments due on Existing WPCLF Loans as of September 30, 2013 plus the Direct Payments on the Series 2010B Water Quality Bonds. As additional WPCLF Loans are made and the pledged payments become due thereon, coverage will increase, subject to the Authority's exercise of its rights under the Trust Agreement to (d) issue additional Water Quality Bonds and to depledge Pledged Revenues. (e) Coverage is calculated as described in (d) above except that the Direct Payments on the Series 2010B Water Quality Bonds has been deducted from Total Projected Payments 19#20Section 2B Drinking Water Assistance Fund 20 20#21Ohio Water Development Authority FEDERALLY AUTHORIZED SRF PROGRAMS DWAF Program Overview As of September 30, 2013 • The DWAF Program currently has a large, diversified loan portfolio of 204 different borrowers As of September 30, 2013, the Authority had $16.1 million of DWAF State Match Series bonds outstanding and $247.0 million of DWAF Leverage Series bonds outstanding DWAF Grant Funding Last Five Years $4,884,200 Capitalization Year Grant State Match 2008 $24,421,000 20091 2011 82,881,000 73,389,000 14,677,800 4,884,200 2012 30,339,000 6,067,800 Total $211,030,000 $30,514,000 Under legislation effective November 26, 1997, The Drinking Water Assistance Fund (DWAF) Program was established in 1998 with federal capitalization grants from the United States Environmental Protection Agency to provide funds to public water systems for the cost of facility improvements to meet Safe Drinking Water Act standards • Since 1998, the DWAF has been awarded nearly $469 million of federal capitalization grants which have been matched with nearly $94 million of State matching funds • • . The DWAF has funded 443 projects, with $949.7 million in loan value to 217 different Governmental Agencies² - The portfolio includes over $640.2 million of loans to 204 different Governmental Agencies for 376 projects³ The DWAF has funded 373 construction projects for $926.4 million and 70 planning and design projects for $23.3 million The DWAF has funded 37 loans to private entities totaling $32.9 million+ During 2012, the DWAF provided 59 projects with $82,874,549 in funding; a 73% increase over the 2011 funding level of $47,894,998 The interest and principal components of DWAF governmental loans are leveraged with the issuance of State Match Bonds and Leverage Bonds, respectfully Notes 1. Includes $58,460,000 ARRA funding with no state match required and $24,421,000 capitalization grant moneys requiring a 20% state match 2. Represents the principal amount of all loans financed 3. Represents the principal amount of all loans financed, net of principal repayments 4. Not pledged to bonds 21#22• Ohio Water Development Authority FEDERALLY AUTHORIZED SRF PROGRAMS Significant Local Governmental Agency Participants As of September 30, 2013 As of September 30, 2013, there were nearly $629.2 million estimated principal amount of loans remaining to be paid under the Drinking Water Assistance Fund Significant Local Governmental Agency Participants: Drinking Water Assistance Fund As of September 30, 2013 Local Governmental Agency City of Cleveland City of Cincinnati Number of Projects Project Costs Funded With DWAF Loans¹ Estimated Principal Amount Remaining to be Repaid Percent of Total 11 $153,828,126 $120,416,103 19.14% 23 43,929,324 42,306,847 6.72% City of Steubenville 35,301,189 25,756,083 4.09% City of Columbus 7 28,999,442 19,026,253 3.02% Mahoning Valley Sanitary District City of Canton City of Lancaster 5 26,738,779 17,658,188 2.81% 3 23,652,514 15,939,063 2.53% 2 21,883,894 15,816,359 2.51% City of Warren 4 20,501,958 15,095,488 2.40% City of Akron 6 20,039,674 14,997,054 2.38% City of Westerville 1 17,434,036 13,550,088 2.15% City of Bowling Green 4 16,438,318 13,284,827 2.11% City of Delphos 3 16,343,551 12,750,406 2.03% Total 75 $425,090,806 $326,596,758 51.91% 1. Represents the principal amount of pledged loans financed Notes 22 22#23Ohio Water Development Authority FEDERALLY AUTHORIZED SRF PROGRAMS DWAF Program Basic Security Features • Program's basic security features include both cash flow coverage and reserves to achieve Aaa/AAA ratings • State Match Bond Security: • Water Quality Bond Security: - Hybrid leveraging structure • Coverage Pledge: • Additional Coverage: • Debt Service Reserve Funds: • Additional Bonds Test Interest payments on all loans Principal repayments on all loans and interest payments available after paying State Match Bond debt service Minimum 1.05x coverage from existing loan interest and principal repayments Payments on additional loans With respect to Leverage and State Match, interest earnings on: Debt Service Fund (ten months each year) Debt Service Reserve Fund Interest Fund (interest payments in excess of debt service) • With respect to Leverage only: - Balance of and earnings on Surplus Principal Account Unencumbered Net Bond Proceeds Fund Capitalization Grant Subaccount One-half maximum annual debt service Meet coverage pledge (105%) with payments on loans already made and DSRF requirement 23 23#24Ohio Water Development Authority FEDERALLY AUTHORIZED SRF PROGRAMS Simplified DWAF Program Flow of Funds for Governmental Loans Loan Repayments Interest Fund (1) Principal Fund State Match Bondholders State Match Debt Service Fund Leverage Bond Debt Service Fund Available for Cross Collateralization with WPCLF Leverage Bondholders Other Projects Fund Expected Flow (Surplus Interest Account, Surplus Principal Account, Unpledged Principal Subaccount) Contingent Flow Drinking Water Note Holders Notes 1. Available to pay Bond Service Charges on Leverage Bonds if not required to cure State Match Bond Debt Service Fund or Debt Service Reserve Fund deficiencies. 24 24#25DWAF Leverage Series Debt Service Schedule and Coverage As of 9/30/2013 Total Estimated Total 12/1/2013 6/1/2014 12/1/2014 6/1/2015 12/1/2015 Principal (a) 16,296,334.53 Debt Service 13,706,901.20 Estimated Surplus 2,589,433.33 Gross Coverage Bab Net Subsidy Coverage 1.19 432,193.55 1.22 6/1/2016 12/1/2016 6/1/2017 12/1/2017 6/1/2018 12/1/2018 6/1/2019 12/1/2019 6/1/2020 12/1/2020 6/1/2021 12/1/2021 6/1/2022 12/1/2022 6/1/2023 12/1/2023 6/1/2024 12/1/2024 6/1/2025 12/1/2025 6/1/2026 12/1/2026 6/1/2027 12/1/2027 6/1/2028 12/1/2028 6/1/2029 12/1/2029 6/1/2030 12/1/2030 6/1/2031 12/1/2031 6/1/2032 12/1/2032 6/1/2033 12/1/2033 17,148,615.35 17,574,579.66 18,305,055.01 14,419,244.95 18,868,176.49 14,644,557.45 18,640,509.11 14,359,907.45 18,911,224.37 14,579,663.70 19,179,739.46 19,459,531.15 19,744,014.62 20,033,271.84 20,151,964.90 15,583,957.45 20,447,557.53 15,828,394.95 20,721,481.60 16,050,601.20 20,028,883.09 15,406,801.20 19,857,661.27 15,232,219.95 19,323,850.77 19,380,695.01 19,114,402.06 19,020,022.45 18,195,479.74 18,029,539.73 17,936,040.99 17,149,855.83 17,221,354.82 16,960,738.80 14,135,543.93 13,636,079.56 13,617,221.86 11,810,722.17 9,810,779.30 13,913,907.45 3,234,707.90 1.23 432,193.55 1.26 13,971,107.45 3,603,472.21 3,885,810.06 1.26 432,193.55 1.29 1.27 432,193.55 1.30 4,223,619.04 1.29 432,193.55 1.32 4,280,601.66 4,331,560.67 1.30 432,193.55 1.33 1.30 432,193.55 1.33 14,805,394.95 4,374,344.51 1.30 432,193.55 1.32 15,032,326.20 4,427,204.95 1.29 432,193.55 1.32 15,264,732.45 4,479,282.17 1.29 432,193.55 1.32 15,501,107.45 4,532,164.39 1.29 432,193.55 1.32 4,568,007.45 1.29 432,193.55 1.32 4,619,162.58 1.29 432,193.55 1.32 4,670,880.40 1.29 432,193.55 1.32 4,622,081.89 1.30 432,193.55 1.33 4,625,441.32 1.30 432,193.55 1.33 6,021,738.50 5,998,087.95 13,085,044.95 9,639,563.70 9,741,131.31 7,436,827.70 11,677,574.36 6,846,555.25 12,173,467.20 6,047,958.85 12,147,520.89 12,007,801.23 11,937,953.04 6,238,805.82 1.48 432,193.55 1.51 2.01 432,193.55 2.06 2.57 411,880.95 2.63 2.78 391,199.03 2.84 3.01 370,147.79 3.07 2.99 348,727.23 3.05 2.99 326,937.35 3.04 3,561,888.45 13,587,967.38 4.81 304,778.15 4.90 3,528, 196.25 13,693,158.57 4.88 282,249.63 4.96 6,178,573.85 10,782,164.95 2.75 259,351.79 2.79 3,238,512.35 10,897,031.58 4.36 233,979.32 4.44 3,214,727.65 3,189,507.45 10,421,351.91 4.24 208,154.68 4.31 10,427,714.41 4.27 181,827.61 4.33 3,162,851.75 8,647,870.42 3.73 154,998.11 3.78 3,134,760.55 6,676,018.75 3.13 127,666.19 3.17 8,666,228.29 8,203,932.57 7,390,144.02 6,556,588.13 5,643,434.43 5,147,485.60 4,349,665.56 4,004,570.76 3,105,233.85 5,560,994.44 2.79 99,831.85 2.82 3,074,271.65 5,129,660.92 2.67 71,495.08 2.69 2,446,873.95 1,975,123.20 4,943,270.07 4,581,464.93 5,643,434.43 3.02 42,655.88 3.04 3.32 19,293.12 3.33 5,147,485.60 4,349,665.56 4,004,570.76 3,569,568.61 3,569,568.61 2,984,444.48 2,984,444.48 6/1/2034 12/1/2034 6/1/2035 12/1/2035 6/1/2036 12/1/2036 2,374,733.42 2,374,733.42 2,053,296.62 2,053,296.62 1,491,040.77 1,491,040.77 1,066,486.80 1,066,486.80 957,520.38 957,520.38 962,200.08 962,200.08 6/1/2037 966,926.27 966,926.27 12/1/2037 6/1/2038 971,699.32 971,699.32 976,519.74 976,519.74 12/1/2038 981,387.96 981,387.96 6/1/2039 986,304.49 986,304.49 12/1/2039 978,559.85 978,559.85 6/1/2040 974,990.71 974,990.71 12/1/2040 961,772.24 961,772.24 6/1/2041 12/1/2041 909,549.15 909,549.15 911,415.63 911,415.63 6/1/2042 810,433.22 810,433.22 12/1/2042 6/1/2043 12/1/2043 714,701.49 714,701.49 633,668.58 633,668.58 572,875.99 572,875.99 6/1/2044 12/1/2044 367,038.54 367,038.54 198,153.14 198,153.14 6/1/2045 62,415.18 62,415.18 629,110,679.02 295,923,555.72 11,614,657.53 25 333,187,123.30 (a) The amounts shown are the pledged amounts required to be paid by Local Governmental Agencies under the Existing DWAF Loan Agreements which amounts are to be deposited in the Principal Fund and have been pledged as security for either currently issued or additional Leverage Series Bonds. Amounts shown are semi-annual repayment amounts and do not include interest earnings thereon. Payments by the Local Governmental Agencies are due semi-annually on January 1 and July 1 of each year. (b) Coverage is calculated based on pledged payments due on Existing DWAF Loans as of September 30, 2013. As additional DWAF loans are made and the pledged payments become due thereon, coverage will increase, subject to the Authorities exercise of its rights under the Trust Agreement to issue additional Leverage Series Bonds and to depledge Pledged Revenues. (c) Coverage is calculated as described in (b) above except that the 35% Federal Subsidy on the Series 2010B Leverage Bonds - BABS has been deducted from debt service on those bonds.#26Section 3 Fresh Water Program 26 26#27• Ohio Water Development Authority FRESH WATER PROGRAM Fresh Water Program Overview As of September 30, 2013 The Fresh Water Program has a large, diversified loan portfolio of 261 different borrowers As of September 30, 2013, the Authority had $500.3 million of Fresh Water Series bonds outstanding ⚫ The Fresh Water Program was created in August 1992 to provide a continuing financing source for Local Governmental Agencies for costs of planning, designing, acquiring or constructing wastewater treatment facilities, interceptor sewer facilities, sewage collection facilities, and water supply and water distribution facilities • ⚫ There are 261 Local Governmental Agencies with 755 projects being financed pursuant to Existing Cooperative Agreements • ⚫. Of the $1.6 billion in principal amount of loans made, a principal balance of $1.0 billion remains outstanding 27 27#28Ohio Water Development Authority FRESH WATER PROGRAM Significant Local Governmental Agency Participants As of September 30, 2013 • As of September 30, 2013, there were over $1.0 billion of loans outstanding under the Fresh Water Program Fund Significant Local Governmental Agency Participants: Fresh Water Program As of September 30, 2013 Local Governmental Agency City of Columbus Erie County City of Lima City of Avon Lake Number of Projects Project Costs Funded with Fresh Water Loans Estimated Principal Amount Remaining to be Repaid Percent of Total 27 $92,805,285 $82,171,701 8.02% 26 73,499,240 57,182,486 5.58% 6 57,147,599 56,014,907 5.46% 9 51,469,002 48,240,501 4.71% City of Sandusky 12 62,863,004 47,310,450 4.62% Medina County 37 69,347,107 46,641,184 4.55% Southwest Licking Community Water and Sewer District 45 66,555,353 37,449,031 3.65% City of Delaware 3 35,171,462 35,002,229 3.41% City of Lorain 11 35,970,300 32,814,733 3.20% City of Elyria 6 27,407,871 26,118,443 2.55% City of Zanesville 12 31,933,286 24,790,114 2.42% Northern Area Water Authority 1 24,000,000 Total 195 $628,169,508 21,173,585 $514,909,363 50.24% 2.07% 28 28#29• Ohio Water Development Authority FRESH WATER PROGRAM Fresh Water Program Loan Interest Rates As of May 31, 2013 OWDA provides market interest • rates on Fresh Water Program loans with discounts provided for certain types of projects or frequent borrowers • . The monthly interest rate for all loans in the Fresh Water Program is calculated based on the previous eight-week average of the Bond Buyer GO 20 Bond Index OWDA offers the following discounts to the current interest rate: - 0.5% discount for communities under Ohio EPA findings and orders, under enforcement action of or having documented health risks 0.5% discount for communities that are connecting to existing treatment system where the community does not own a system 0.5% discount for communities that are acquiring water or wastewater facilities from a Chapter 6119 district 0.5% discount for communities that have borrowed from OWDA previously 0.5% discount for communities that are purchasing another system 0.5% discount for communities that are in compliance with a balanced growth plan certified by the State of Ohio The maximum discount available is 1% for up to $15 million in borrowing by any one community during a calendar year and 0.50% from $15 million to $25 million. No discounts are available for borrowing greater the $25 million during a calendar year 29 29#30Ohio Water Development Authority FRESH WATER PROGRAM The Fresh Water Program Flow of Funds . The Fresh Water Program's basic security features include both cash flow coverage and reserves to achieve Aaa/AAA ratings - Hybrid leveraging structure Cashflow Loan Repayments OWDA Fresh Water Debt Service Fund Debt Service Reserve Fund Bondholder Payments Excess After Debt Service Commercial Paper Debt Service Fund Fresh Water Surplus Fund After Two-Year Hold Cross Collateralization Fund Community Assistance Other Subordinate Obligations Any Lawful Purpose 30 30#31Fresh Water Debt Service Schedule and Coverage As of 9/30/2013 Total Revenue 12/1/2013 6/1/2014 12/1/2014 Available for Debt Service (a) 40,674,650.11 Combined Fresh Water Debt Service 34,014,523.08 Estimated Gross Surplus 6,660,127.04 Unadjusted Coverage (b) Build America Bond Subsidy Adjusted Payments Coverage (c) 1.20 1,159,051.22 1.23 Revenue Available from from Prior Program Loans (d) 9,534,047.25 Coverage with Bab's subsidy and Prior Program Revenue 1.51 41,611,265.71 34,699,370.30 6,911,895.41 1.20 1,159,051.22 1.23 8,457,102.14 1.48 6/1/2015 12/1/2015 6/1/2016 12/1/2016 6/1/2017 12/1/2017 6/1/2018 12/1/2018 6/1/2019 12/1/2019 6/1/2020 12/1/2020 6/1/2021 12/1/2021 6/1/2022 12/1/2022 6/1/2023 12/1/2023 6/1/2024 12/1/2024 6/1/2025 12/1/2025 6/1/2026 12/1/2026 6/1/2027 12/1/2027 6/1/2028 12/1/2028 6/1/2029 12/1/2029 6/1/2030 12/1/2030 6/1/2031 12/1/2031 42,596,547.25 33,094,757.80 44,833,882.60 32,751,804.05 44,781,591.48 32,597,235.30 43,514,713.51 31,522,510.30 43,412,703.83 31,145,860.30 42,903,055.86 22,077,697.80 42,747,975.56 21,947,166.55 42,106,476.83 21,539,154.05 41,868,938.79 30,280,622.80 41,495,706.38 30,578,572.80 41,309,951.92 31,936,016.55 40,572,682.73 31,395,960.30 39,599,690.00 30,510,050.55 38,737,853.06 30,322,268.13 38,107,923.81 29,836,043.30 36,891,559.86 28,874,385.80 35,920,357.70 28,007,846.85 35,361,188.01 27,589,964.15 34,669,032.04 14,832,995.78 34,172,527.40 32,626,763.24 32,203,574.17 31,221,387.88 30,271,103.03 12,400,435.48 29,159,521.76 11,890,012.03 27,760,851.77 11,222,009.00 27,001,759.73 10,561,481.58 26,224,941.18 10,317,729.15 25,985,253.01 10,193,796.75 25,462,155.56 9,808,289.35 24,883,510.23 9,532,631.43 9,501,789.45 1.29 1,159,051.22 1.32 5,998,315.14 1.50 12,082,078.55 1.37 1,159,051.22 1.40 4,941,238.49 1.56 12,184,356.18 1.37 1,159,051.22 1.41 4,782,591.87 1.56 11,992,203.21 1.38 1,159,051.22 1.42 4,239,543.57 1.55 12,266,843.53 1.39 1,159,051.22 1.43 3,879,239.85 1.56 20,825,358.06 1.94 1,159,051.22 2.00 2,642,594.09 2.12 20,800,809.01 20,567,322.78 1.95 1,159,051.22 2.00 1,799,827.46 2.08 1.95 1,159,051.22 2.01 1,352,872.83 2.07 11,588,315.99 1.38 1,159,051.22 1.42 1,152,005.67 1.46 10,917,133.58 1.36 1,159,051.22 1.39 376,766.32 1.41 9,373,935.37 1.29 1,159,051.22 1.33 216,565.45 1.34 9,176,722.43 1.29 1,159,051.22 1.33 16,536.65 1.33 9,089,639.45 1.30 1,152,189.09 1.34 1.34 8,415,584.93 1.28 1,145,356.79 1.32 1.32 8,271,880.51 1.28 1,134,593.11 1.32 1.32 8,017,174.06 1.28 1,123,860.10 1.32 1.32 7,912,510.85 1.28 1,107,712.98 1.32 1.32 7,771,223.86 1.28 1,091,565.85 1.32 1.32 19,836,036.26 2.34 1,070,179.67 2.41 2.41 15,117,427.40 19,055,100.00 2.26 1,048,793.49 2.33 2.33 13,360,686.10 19,266,077.14 2.44 1,020,789.90 2.52 2.52 13,757,958.20 18,445,615.97 2.34 992,855.12 2.41 2.41 12,810,015.05 18,411,372.83 2.44 957,848.79 2.51 2.51 17,870,667.55 2.44 922,878.10 2.52 2.52 17,269,509.73 2.45 882,318.95 2.53 2.53 16,538,842.77 2.47 841,799.80 2.55 2.55 16,440,278.15 2.56 798,160.71 2.63 2.63 15,907,212.03 2.54 754,521.62 2.61 2.61 15,791,456.26 2.55 713,002.49 2.62 2.62 15,653,866.21 15,350,878.80 2.60 671,483.36 2.66 2.66 2.61 631,444.20 2.68 2.68 23,000,970.55 8,144,467.25 14,856,503.30 2.82 591,405.03 2.90 2.90 22,385,280.37 8,031,615.03 14,353,665.34 2.79 556,725.76 2.86 2.86 21,002,491.83 19,720,922.78 6,742,844.05 6,655,323.75 14,259,647.78 13,065,599.03 3.11 522,046.48 3.19 3.19 2.96 494,037.42 3.04 3.04 6/1/2032 12/1/2032 19,155,508.26 5,971,876.38 13,183,631.88 3.21 466,069.19 3.29 3.29 6/1/2033 12/1/2033 6/1/2034 12/1/2034 6/1/2035 18,479,045.26 17,894,096.05 16,822,994.28 15,870,298.80 15,169,244.77 13,991,861.92 5,897,138.33 12,581,906.93 3.13 442,959.67 3.21 3.21 5,781,464.88 12,112,631.17 3.10 419,931.81 3.17 3.17 5,700,897.70 11,122,096.58 2.95 397,026.44 3.02 3.02 5,404,534.70 10,465,764.10 2.94 374,161.90 3.01 3.01 5,038,835.48 10,130,409.29 3.01 347,336.88 3.08 3.08 4,839,961.25 9,151,900.67 2.89 320,511.88 2.96 2.96 12/1/2035 13,506,898.00 4,739,694.38 8,767,203.62 2.85 288,868.99 2.91 2.91 6/1/2036 12/1/2036 6/1/2037 12/1/2037 6/1/2038 12/1/2038 13,327,114.27 4,529,550.43 8,797,563.84 2.94 257,266.92 3.00 3.00 12,404,899.11 4,437,233.75 7,967,665.36 2.80 226,603.94 2.85 2.85 12,216,740.53 11,442,450.91 4,079,917.08 8,136,823.45 2.99 195,940.96 3.04 3.04 3,989,115.43 7,453,335.48 2.87 167,441.94 2.91 2.91 10,108,755.96 2,973,436.70 7,135,319.26 3.40 138,983.75 3.45 3.45 6/1/2039 12/1/2039 6/1/2040 12/1/2040 6/1/2041 12/1/2041 6/1/2042 12/1/2042 6/1/2043 12/1/2043 9,787,215.43 9,557,895.17 9,095,191.22 7,352,600.89 6,397,698.08 6,033,471.26 5,478,147.60 4,435,098.10 2,464,219.60 1,845,790.48 1,035,406.45 2,905,622.03 6,881,593.40 3.37 118,119.86 3.41 3.41 2,667,930.28 2,604,540.90 6,889,964.89 3.58 97,296.79 3.62 3.62 6,490,650.32 3.49 77,902.76 3.52 3.52 2,176,274.45 2,122,104.45 1,418,057.38 1,380,113.48 512,292.50 5,176,326.44 3.38 58,549.56 3.41 3.41 4,275,593.63 3.01 42,217.75 3.03 3.03 4,615,413.88 4.25 25,926.76 4.27 4.27 4,098,034.12 3.97 14,984.44 3.98 3.98 3,922,805.60 2,464,219.60 8.66 4,082.96 8.67 8.67 1,845,790.48 1,035,406.45 6/1/2044 12/1/2044 886,180.09 497,705.74 1,542,057,289.76 886, 180.09 859,272,120.10 497,705.74 682,785, 169.66 40,934,471.04 49,389,246.78 31 (a) The amounts show are the aggregate of the amounts required to be paid by Local Governmental Agencies under the Existing Cooperative Agreements, which amounts have been assigned by the Authority i the Trust Agreement for deposit in the revenue fund. Amounts shown are semi-annual amounts and do not include any interest earnings thereon. Payments by the Local Governmental Agencies are due semiannually on January 1 and July 1. (b) Coverage is calculated based on loan payments due on Existing Fresh Water Loans as of September 30, 2013. As additional Fresh Water loans are made and the loan payments become due thereon, coverage will increase, subject to the Authority's exercise of its rights under the Trust Agreement to issue additional Fresh Water Bond and to depledge Pledged Revenues. (c) Coverage is calculated as described in (b) above except that the 35% Federal Subsidy on the Series 2010 A Fresh Water Bonds - BABS has been added as an addition to Pledged Revenues. The amount expected to be received from the BAB's subsidy has been reduced by 5.1% for all periods. This reduction reflects BAB's subsidy reductions included in the Budget Control Act of 2011 and the American Taxpayers Relief Act of 2012. (d) Prior Program revenues are the loan repayments to be deposited into the Cross-Collateralization Fund from the Clean Water, Safe Water, and Pure Water loans.#32Section 4 Conclusions 32#33• Ohio Water Development Authority CONCLUSIONS Conclusions OWDA's announced issuance for 2014 includes a WPCLF new money issue • The Authority has a 45-year track record of managing loan programs for a communities throughout the State of Ohio • The Authority constitutes the single largest financing source of essential water and wastewater infrastructure projects in the State • • Strong record of enforcing revenue collection and legal enforcement The WPCLF and DWAF Programs' diversified pledged subsidized loan portfolios, significant debt service coverage reserves, and default tolerance provide Aaa/AAA credit quality ⚫ The Fresh Water Program's diversified pledged market rate loan portfolio, debt service coverage, reserves and default tolerance provide Aaa/AAA credit quality For more information, visit www.owda.org 33 33