1. Metropolitan Council Environmental Services A Clean Water Agency Presented to the Environment Committee July 14, 2009 PFA Loan Negotiations Jason Willett, Finance Director

2. 2 State Revolving Loan Program MCES’s historical involvement — Active in program since 1989 — 18 separate prior loan agreements — $965 million of prior loans to date — Interest rates from 2.54% (2004) to 6.42% (1991)

3. 3 Revolving Loan Program Loan agreements issued to date ($s in millions)

4. 4 Capital Project Expenses Actual and projected source of funding* ($s in thousands) *Excludes capital expenses paid out of the operating budget Key: PFA = Public Facilities Authority Loan; SAC = Sewer Service Availability Charge; CRF = Capital Revolving Fund; PAYG = Pay-as-you-go

5. 5 Conventional PFA Subsidy For the first $50 million, 150 basis points (1.5 percentage points) — Adjusted downward by 1.25 basis points for each additional $1 million borrowed, resulting in a 112.5 basis point discount for $80 million borrowed No underwriter’s discount Limited costs of issuance

6. 6 Conventional Loan Savings $80-million loan Total DebtPresent ServiceValue 4.35% Council bond$121.4$80.0 3.23% (est.) PFA loan109.872.3 Savings to ratepayers$ 11.6$ 7.6 Underwriters discount saved$.5 Cost of issuance saved$.1 Total Present Value Savings$ 8.2 ($ in millions)

7. 7 Tentative Loan 1 with ARRA Grants Five capital projects eligible for partial grants = “principal forgiveness” under the American Reconstruction and Recovery ACT (ARRA) — Three of these projects qualified under the base program and two under the Green Infrastructure program Additional project restrictions: — Federal prevailing wage — Buy American provision — Reporting requirements Remainder of loan will be 150 basis points less than a market interest rate scale

8. 8 Loan 1 (in millions) Principal Loan Project Forgiveness Remainder Blue Lk Int. $2.0$8.0 Blue Lk Plant 2.0 8.0 SSP Forcemain 2.0 8.0 Blue Lk Solids 2.0 (green) 6.0 MWWTP Tunnel Lts 0.2 (green) 0.6 Total $8.2 $30.6 Nominal amount of Loan 1 = $38.8 million

9. 9 Tentative Loan 2: Build America Bonds—ARRA Financing Build America Bonds (BABs) will be used to finance cash flow of the remaining PFA eligible projects; a loan of $49.4 million is projected BABs are taxable but receive federal rebate 35% of the interest cost PFA rules for taxable loan: interest rate based on Aa tax-exempt + 20 basis points

10. 10 Loan 2 Savings Extended savings from BABs compared to conventional PFA loan*: $6.4 million $5.3 million (net present value) Note: Interest rate to be set the week of July 27 (in millions) *Per Springsted Inc.

11. 11 Tentative Total Savings NPV Savings 1.5% discount on $80 million loan $10.1 ARRA Principal Forgiveness Base Program$6.0 Green Infrastructure$2.2 Build America Bonds Increment.$5.3 Total Savings vs. Council Bonding $23.6 (in millions)

12. 12 Questions, Concerns