Jefferson County New York PowerPoint Presentation

Performance Update for Jefferson County, AlabamaMay 12, 2015

Citi Global Markets Inc. | Public Finance Division

Table of Contents

1. Overview of the County 1

2. Economic Development 4

3. Governance and Management 7

4. Financial Performance 9

5. Debt and Contingent Liabilities 14

6. Environmental Services (Sewer) Update 16

7. Conclusion 21

1. Overview of the County

Jefferson County at a Glance

Advantageously located at the intersection of I-65 and I-20/59 serving

as a regional economic center

Alabamas largest county, both in terms of population (660,793) and

employment (293,235)

Diverse economy with no reliance on any single industry or employer

Strong institutional presence embodied in Alabamas second largest

employer, the University of Alabama at Birmingham (UAB), which is the

fourth largest academic medical center in the U.S. - UAB ranks 21st

nationally in NIH funding and receives more research grant dollars

than all other colleges and universities in Alabama combined

Anchors the Birmingham metro area, whose GDP is greater than the

states next 3 largest metro areas, Mobile, Montgomery, and Huntsville,

combined

Home to the Innovation Depot, the largest technology business

incubator in the Southeast

Countys reported 2014 new residential permits (in dollars) greater than

58 of the states 67 counties combined - Represents 19.2% of the

states new residential permits with only 13.8% of the population

1 Overview of the County

Recent Accomplishments and Recognitions

Birmingham ranked 6th overall and 5th for economic development potential among the Top 10 mid-sized North, Central and South American Cities of the Future - The Financial Times fDi Magazine, April 2015

Birmingham ranked #1 on list of Americas Next Hot Food Cities - Zagat, April 2015

Birminghams Railroad Park named among the Top 10 Parks that Revive Their City - USA Today, April 2015

Americas Most Affordable City - Forbes, March 2015

Top 20 Best Metro areas for Science, Technology, Engineering and Mathematics (STEM) Professionals - WalletHub, January 2015

Birmingham selected as the host city for the 2021 World Games - more than 4,000 athletes from 100 countries and tens of thousands of visitors to Jefferson County, creating a projected $256 million economic impact for the region -January 2015

Top 10 Happiest Places to Work - Forbes, January 2015

Americas Best City for 2014 - Movoto, December 2014

Americas Best Cities for Global Trade - Global Trade, November 2014

Mountain Brook and Vestavia Hills named among the 50 Best Suburbs in the U.S. - Business Insider, October 2014

Hoover named as a Top 30 U.S. City to Live - 24/7 Wall St., September 2014

Birmingham selected as the host city for the 38th Annual Joint Meeting of the Southeast U.S./Japan and the Japan-U.S. Southeast Associations - July 2014


Rebirth of the City Center

Uptown Entertainment District

Regions Field - Baseballparks.coms 2013 Ballpark of the Year

2014 attendance increased 10% from the 2013 inaugural year

of the park

Award-winning Railroad Park

Named one of the Top 10 Best Downtowns of 2014 by Livibility.com

More than 1,300 condominium units planned or under construction

$30 million mixed use development in Midtown anchored by

a 34,000 square foot Publix grocery store

New historic building tax credits adopted by state legislature

spurring more than $200 million in local investment

Multiple concert venues with national and international acts

World-class restaurants, including several recognized by the

prestigious James Beard Foundation


2. Economic Development

Well-Positioned for Growth

Geographically located in the Southeastern United States within a days

drive of 50% of the U.S. population - Alabama Department of Commerce

#4 State for Doing Business for 2014 - Area Development magazine

More than $300 million in capital investment already announced in 2015

The University of Alabama at Birmingham (UAB) is the states flagship

research university with more than $450 million in annual external funding

Five interstate highways and construction has begun on a 6th interstate,

the $3.2 billion Birmingham Northern Beltline, which will bring significant

economic development opportunities to Northern Jefferson County

Three tier-one railroads that can reach 78% of the nations population by rail

in two days or less

An international airport that can land a fully-fueled and fully-loaded Boeing

747

Tourism spending in the County increased 7.7% to $1.7 billion in 2014,

which includes visitors from 67 countries at the internationally-acclaimed

Barber Motorsports Park, recently recognized by Guinness World Records

as housing the largest motorcycle museum in the world last months Indy

Car race was televised in more than 100 countries around the world

4 Economic Development

Significant Amount of New Capital Investment

Evonik Corporation, a multi-billion dollar German specialty chemical company that now employs more than 100 people in Birmingham, announced its first U.S. Innovation Center for research and development in Birmingham - May 2014

Steris Corporation completed a $10 million capital investment for a global headquarters for its medical specialty services division - October 2014

Oxford Pharmaceuticals announced a $29 million, 120,000 square-foot manufacturing facility in Birmingham, which will employ a minimum of 200 employees when fully operational - November 2014

Dai-ichi Life entered U.S. insurance market through acquisition of Birminghams Protective Life for $5.7 billion - February 2015

US Steel announced it will invest $277.5 million at its Fairfield Works plant - March 2015

$230 million state-of-the-art electronic arc furnace

$47.5 million plant to produce couplings that link tubing used in the energy industry

Marriott announced two new hotels in downtown Birmingham which will include a restaurant from James Beard Foundation Award winner Chris Hastings - April 2015

Empire Building will redeveloped, at a cost of $27 million, into a 117-room hotel that will be part of Marriott's luxury Autograph Collection brand

Former Alagasco Headquarters will be redeveloped, at a cost of $18 million, into a 120-room Marriott hotel

BBVA Compass completed a $13 million capital investment for a software development center - April 2015

Confidence is evident in the quality and number of private sector investments expanding and locating into Jefferson County.


Significant Improvement in Employment and Labor Market

Jefferson Countys February 2015 unemployment rate of 5.4% is less than state and national rates.

*Source: Alabama Department of Labor

Unemployment Rate


Jefferson

County

Civilian

Labor Force Employment Unemployment

Unemployment

Rate

February 2015 309,856 293,235 16,621 5.4%

February 2014 313,966 291,116 22,850 7.3%

February 2013 316,224 292,946 23,278 7.4%

February 2012 315,902 291,168 24,734 7.8%

February 2011 319,626 286,948 32,678 10.2%

February 2010 310,858 275,168 35,690 11.5%

National,

Seasonally Adj.

Civilian


Unemployment

Rate

February 2015 157,002,000 148,297,000 8,705,000 5.5%

February 2014 155,688,000 145,301,000 10,387,000 6.7%

February 2013 155,396,000 143,429,000 11,967,000 7.7%

February 2012 154,739,000 141,911,000 12,828,000 8.3%

February 2011 153,227,000 139,400,000 13,828,000 9.0%

February 2010 153,694,000 138,581,000 15,113,000 9.8%

Statewide,

Seasonally Adj.

Civilian


Unemployment

Rate

February 2015 2,139,801 2,016,508 123,293 5.8%

February 2014 2,147,787 1,992,854 154,933 7.2%

February 2013 2,156,557 1,997,662 158,895 7.4%

February 2012 2,158,210 1,985,864 172,346 8.0%

February 2011 2,209,834 1,986,137 223,697 10.1%

February 2010 2,143,689 1,895,993 247,696 11.6%

4.0

6.0

8.0

10.0

12.0

14.0

Jan-10 Jan-11 Jan-12 Jan-13 Jan-14

U

n

e

m

p

l

o

y

m

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t

R

a

t

e

(

%

)

Jefferson County, AL United States, Seasonally Adjusted Statewide, Seasonally Adjusted

3. Governance and Management

Key Governance and Management Officials

All Five Commissioners Re-Elected in November 2014 Now exclusively the legislative and policy-making body

District 1: George Bowman

District 2: Sandra Little Brown

District 3: Jimmie Stephens

District 4: Joe Knight

District 5: David Carrington

Stable Management Team Now operating under the county manager form of government

Tony Petelos, County Manager

Carol Sue Nelson, County Attorney

George Tablack, Chief Financial Officer

Walter Jackson, Deputy County Manager for Human and Community Services

Dan Biles, Deputy County Manager for Infrastructure

7 Governance and Management

Management Activities

Commissions ongoing dedication and commitment to exit the Countys federal consent decrees on environmental and

employment practices, as well as to execute the Countys Bankruptcy Plan of Adjustment

Unified Commission emphasis on economic development and job creation

Commission implementing a formalized strategic planning process and department heads reviewing and refining

business processes

Human Resources Receiver putting systems in place for the County to exit the 32-year old consent decree on

employment practices

Possible 1-cent sales tax bill before the Alabama Legislature would provide the County the flexibility to refinance the Countys school construction debt in order to address the Countys General Fund needs

First Fruits are earmarked for refinancing of the school construction debt, then:

$36.3 million to the Countys General Fund

$18.0 million divided pro rata among the Countys school systems

$3.6 million for community projects

$2.0 million for transit (reduced to $1.0 million after 10 years)

$500,000 to the Birmingham Zoo

Remainder to the Countys General Fund

As a side note, if the County does not receive a General Fund fix from the Alabama Legislature, the restoration of needed public services and land acquisitions for economic development will be delayed

8 Governance and Management

4. Financial Performance

Ongoing Financial Improvements

Bankruptcy Exit, December 3, 2013

Structurally balanced budgets adopted and achieved since the Commission took office in 2010

FY14 Audit published ahead of schedule, less than six months after the year-end

Targeted 2015 Munis ERP software implementation date

Enhanced financial accounting and internal controls

Strengthened management and planning

Improved reporting of human resources hiring and promotion results

9 Financial Performance

Annual Assessed Valuation and Ad Valorem TaxesAnnual Assessed Valuation

Principal Ad Valorem Taxpayers Tax Year 2014 County Ad Valorem Tax Revenue(1)

# Company

Assessed

Value

County

Tax

1 Alabama Power Company 588,920 7,950

2 United States Steel Corporation 98,761 1,333

3 BellSouth Telecommunications LLC 96,674 1,305

4 Norfolk Southern Combined Rail 42,765 577

5 Affinity Hospital LLC 37,755 510

6 Alabama Gas Corporation 35,282 476

7 American Cast Iron Pipe Company 30,944 418

8 Hoover Mall Limited LP 27,790 375

9 Regions Bank 26,481 358

10 AT&T Services 23,798 321

Ad Valorem Tax Collections

-

2,000

4,000

6,000

8,000

10,000

2005 2007 2009 2011 2013

(

$

m

i

l

l

i

o

n

s

)

Property and Public Utility Property Motor Vehicles

(1) Figures do not include (i) ad valorem tax revenues from Motor Vehicles or (ii) ad valoremtax revenues resulting from delinquent ad valorem collections.

(2) Approximately one half of the ad valorem tax revenue resulting from the Rural Roads taxis returned to municipalities via a "Road Tax Distribution.

(3) Net of Amounts required to be deducted from the 5.6 mill tax proceeds for certain purposes.

Tax Year Current Total

Ending Levy Levy

Sept. 30 Collected Collected*

2005 98.2% 99.2%

2006 99.3% 100.0%

2007 98.4% 98.9%

2008 99.1% 99.5%

2009 96.5% 97.3%

2010 97.5% 98.3%

2011 95.7% 96.9%

2012 97.7% 98.8%

2013 98.1% 99.5%

2014 98.1% 99.5%

*Includes delinquent collections

Assessed Value and County Tax in $thousands


-

20

40

60

80

100

120

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

(

$

m

i

l

l

i

o

n

s

)

Rural Roads (2.1 mills) Public Buildings, Bridges and Roads (5.1 mills)

Sewer Tax (0.7 mills) General Tax (5.6 mills)

(2)

(3)

Trend in Sales and Use TaxesGeneral Sales and Use Tax Revenues have rebounded since the economic crisis and have grown by an average of 3% annually since 2009.

75,000

80,000

85,000

90,000

95,000

100,000

105,000

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

(

$

t

h

o

u

s

a

n

d

s

)

Tax Amount Collected


General Fund Financial ResultsAudited 2013 Audited 2014

Revenues:

Taxes 84,848 91,327

Licenses & Permits 9,309 10,213

Intergovernmental 26,986 17,582

Charges For Services, Net 28,168 29,254

Miscellaneous 3,941 6,462

Interest and Investment Income 231 156

Total Revenues 153,483 154,994

Expenditures:

Current Expenditures 162,859 152,257

Capital Outlay 1,934 40

Indirect Expenses (7,829) (6,696)

Debt Service:

Principal Retirement 217 228

Interest and Fiscal Charges 38 27

Total Expenditures 157,219 145,856

Net Transfers 37,237 (798)

Other Financing Sources (Uses) 343 120

Surplus/(Deficit) 33,844 8,460

Fund Balances Beginning of Year 85,691 119,535

Fund Balances End of Year 119,535 127,995

Values are in $thousands


Sewer Financial Results


Audited 2013 Audited 2014

Revenues:

Service Revenues 148,340 174,127

Taxes 5,712 5,996

Intergovernmental 105 105

Other Operating Revenue 4,191 584

Total Revenues 158,348 180,812

Expenditures:

Operating Expenses* 57,835 53,029

Total Expenditures 57,835 53,029

Net Revenue Available for Debt Service 100,513 127,783

Values are in $thousands

*Includes direct and indirect expense but excludes depreciation

5. Debt and Contingent Liabilities

Debt Outstanding

Type Insurer

As of

9/30/14

As of

4/1/151

Sewer Warrants

Senior Series 2013-A

Senior Series 2013-B2

Senior Series 2013-C2

Subordinate Series 2013-D

Subordinate Series 2013-E2

Subordinate Series 2013-F2

Current Interest

CAB

Convertible CAB

Current Interest

CAB

Convertible CAB

Assured

Assured

Assured

N/A

N/A

N/A

$ 395,005

57,906

158,380

810,915

53,569

345,435

$ 395,005

59,735

163,668

810,915

55,665

358,863

Total Sewer Warrants $1,821,210 $1,843,851

General Obligation Warrants Series 2003-A Series 2004-ASeries 2013-ASeries 2013-BSeries 2013-CSeries 2013-D

Fixed

Fixed

Fixed

Fixed

Fixed

Fixed

National

National

N/A

N/A

N/A

N/A

$ 43,89045,67542,2504,225

41,6504,165

$ 41,57041,84536,9702,815

36,4452,775

Total General Obligation Warrants $181,855 $162,420

School WarrantsSeries 2004-ASeries 2005-A3

Series 2005-B

FixedAuctionVRDO

N/AAmbacAmbac

$449,820105,500110,790

$418,615105,50071,360

Total School Warrants $666,110 $595,475

Bessemer Lease WarrantsSeries 20064 Fixed Ambac $69,425 $64,585

1. Unaudited.2. Outstanding principal amounts include accreted interest accrued on Capital Appreciation and Convertible Capital Appreciation Warrants.3. Pursuant to the School Warrant Indenture, the County applied a credit for previous principal payments to the 1/1/15 scheduled mandatory redemption.4. The County entered into a new Lease Agreement dated as of 1/1/13 whereby the Countys obligations under an original Lease Agreement were modified. Under the new Lease Agreement, the Countys outstanding obligation was $106,564,690 as of 4/1/15.

14 Debt and Contingent Liabilities

Pension Update

The Countys Defined Benefit Plan currently has a funded ratio of 105.55% (FY2014 Audit, p. 74).

Defined Benefit Pension Plan

For the year ended September 30, 2014, the Commissions annual pension contribution of $6.588 million was equal to the Commissions required and actual contribution

.

Fiscal

Year Ending

Annual Pension

Cost (APC)

Percentage of APC

Contributed

Net

Pension Obligation

9/30/14 6,588 100% -

9/30/13 6,893 100% -

9/30/12 7,744 100% -

15 Debt and Contingent Liabilities

Actuarial

Valuation Date

Actuarial Value

of Assets

Actuarial Accrued

Liability (AAL)

Entry Age

Unfunded AAL

(UAAL)

Funded

Ratio

Covered

Payroll

UAAL as a

Percentage of

Covered Payroll

10/1/2014 1,005,020 952,158 (52,862) 105.55% 109,723 -48.2%

*Values in $thousands

6. Environmental Services (Sewer) Update

Overview

The System serves twenty-three municipalities, unincorporated Jefferson County and small portions of Shelby and St. Clair Counties

The 440 square mile service area is characterized by gently rolling topography and, due to the nature of the topography, the infrastructure needed to collect and transmit sewage is handled by a large gravity sewer network

The Countys wastewater collection and treatment system consists of approximately 3,151 miles of sanitary sewer lines, 187 pump/lift stations, a septage receiving station, 80,991 manholes and 9 wastewater treatment plants (WWTPs)

Update

Rate increases in accordance with Plan of Adjustment; post-bankruptcy sewer revenue ahead of projections

Proactively working with builders and other stakeholders to establish revised policies, such as a low pressure system policy, that will encourage growth of the sewer system

Non-residential accounts generate approximately 60% of total sewer revenue

Even though ESDs Asset Management Program has reduced dry-weather Sanitary Sewer Overflows (SSOs) by 40% over five years, problems remain, but are being addressed

Environmental Services Department Overview and Update

16 Environmental Services (Sewer) Update

The County uses extensive data from its Asset Management Program to prioritize and evaluate capital project requirements

All expenditures that meet the following criteria are considered capital expenditures:

Costs related to the addition or replacement of a component of a fixed asset

The asset has a value greater than $5,000

The asset has an estimated useful life greater than one year

The asset can be tracked and accounted for independently in the fixed asset records

Shifted sewer inspections from capital to operating expenses

Fleet, information technology and process expenditures are included in capital needs

Key short-term goals of the CIP are to fund projects and other capital expenditures needed to achieve complete termination of the EPA Consent Decree

This includes projects and capital expenditures needed to further reduce Sewer System Overflows

CIP incorporates enhanced system O&M and prioritized capital project spending to reduce risks of regulatory non-compliance and enforcement actions

Overview of Environmental Services Department Capital Needs

Capital needs benefit from improved information systems.

A primary benefit anticipated from the Asset Management Program is the transition from mostly corrective maintenance when a critical asset fails to mostly preventive maintenance. This is anticipated to result in better, more

cost effective asset performance and higher levels of customer service by avoiding operational interruptions or failures.


The Sewer Systems CIP is designed to:

Meet specific utility needs

Provide operational reliability

Achieve Consent Decree compliance and termination

Provide a platform for long-term sustainability, and help ensure compliance with the Clean Water Act, the Alabama Water Pollution Control Act, the Countys NPDES permits and other regulatory and customer service requirements

Under the Consent Decree, approximately 85% of the pipeline work involved rehabilitation rather than replacement

Significant and sustained investment in replacement equipment and infrastructure will be required over the 10-year forecast period

Operating expenses have been less than previously forecast primarily due to unfilled staff positions

Ten Year CIP (2014-2023)At present, the CIP contemplates annual average capital investments of $76.5 million over the 10-year planning horizon.

Projected Capital Improvement ProgramFigures are in nominal $millions

The 10-year CIP is fully funded by existing funds and pay-as-you-go funding from sewer system revenues


Project Category

Collection System Rehabilitation 0.2 6.4 11.8 5.2 5.3 5.5 5.6 5.8 6.0 6.1

Hydraulic Model & Capacity Assurance Support - 0.9 1.4 1.4 0.8 0.2 0.2 0.2 0.2 0.2

Capital Equipment 0.9 4.3 3.5 2.6 2.7 2.7 2.8 2.9 3.0 3.1

Manhole Rehabilitation - - - 1.8 1.8 1.9 1.9 2.0 2.0 2.1

IT Infrastructure & Services - - 2.0 1.8 - - 0.1 0.7 1.1 1.0

Professional Engineering Services 1.1 1.1 7.3 4.6 3.2 3.3 3.4 3.5 3.6 3.7

Pump Station Upgrades 0.3 2.7 7.2 4.5 3.7 3.8 3.9 4.1 4.2 4.3

ROW Acquisition and Participation/Expansion Program - 0.1 0.1 0.5 0.5 0.5 0.6 0.6 0.6 0.6

Sanitary Sewer & MH Repair and Replacement 4.3 13.0 12.6 10.7 17.7 14.4 15.1 15.2 15.9 16.1

SSO Abatement & Capacity Improvement Projects 0.2 3.8 8.6 14.9 8.1 8.0 5.7 8.3 6.0 6.1

WWTP Regulatory Compliance Projects 1.7 3.6 19.2 24.0 5.4 13.5 90.0 52.9 17.9 18.4

WWTP Repair, Replacement, & Renewal Projects 4.0 2.3 11.6 42.7 5.6 10.9 11.3 11.6 11.9 12.3

Total 12.6 38.2 85.3 114.7 54.8 64.8 140.7 107.7 72.4 74.2

2020 2021 2022 20232014 2015 2016 2017 2018 2019

Detailed Ten Year CIP (2014-2023)


1. All numbers in $millions.2. Dollars inflated at 3% per year beginning in FY 17.3. Slight calculation discrepancies may exist due to rounding.

Project Capital Expenditures, FY 2014-FY 2023 (Nominal Dollars)1,2

Monthly Sewer Rate ComparisonA national rate survey of water and sewer bills across major metropolitan areas is published biannually, with the most recent data available for calendar year 2014.

Source: 2014 AWWA/RFC Water and Wastewater Rate Survey


Residential

(5 CCF)

Atlanta, GA $63.06

Seattle, WA $50.97

Knoxville, TN $47.50

Charleston, SC $46.33

Akron, OH $45.72

Portland, OR $43.75

Richmond, VA $43.65

Detroit, MI $42.86

Jefferson County, AL $42.50

Austin, TX $34.20

Jacksonville, FL $33.96

Cleveland, OH (NEORSD) $33.88

Fort Wright, KY $33.45

San Diego, CA $33.32

Lawrenceville, GA $31.59

New Orleans, LA $29.55

New York City, NY $28.46

Mobile, AL $26.61

Pensacola, FL $23.70

Washington, DC $22.05

Nashville, TN $21.84

San Juan, PR $19.85

Philadelphia, PA $19.46

Augusta, GA $19.01

Jefferson Countys average residential sewer use is 6 CCFs (5.1 CCFs with the 15% watering credit) and the median sewer use is 4 CCFs

7. Conclusion

Conclusion and Summary of Key Points

County manager form of government

Birmingham metro areas GDP is greater than the states next 3 largest metro areas, Mobile, Montgomery, and Huntsville, combined

Strong economic growth and renewed community optimism

Employment indicators exceeding state and national comparables

Improved financial results

Defined benefit plan at 105.55% (with assumed 7% return rate)

Audits back on schedule

Possible legislative fix for General Fund

21 Conclusion

Documents

Jefferson County New York PowerPoint Presentation