Refunding bond discussion South Whidbey Parks & Recreation District Refunding bond discussion July 20, 2016 6:00 PM Jim Nelson Senior Vice President Phone: (206) 389-4062 Email: jnelson@dadco.com Columbia Center, 701 Fifth Ave., Suite 4050 Seattle, WA 98104 Website: www.davidsoncompanies.com/ficm

Overview The bond market interest rates are at the lowest point in the last 46 years. (During the month of June, interest rates decreased by 0.41%.) The District may want to consider refinancing the 2008 Voted Bonds to achieve interest cost savings for the tax payers. The District issued a voted bond on June 3, 2008 for $1,600,000 to finance improvements to Community Park, Trustland Trails and the Sports Complex, including Castle Park renovations, as well as improvements to sports fields, the skate park and construction of picnic shelters and a new playground. The 2008 Bond interest rates are 4.50% to 4.70% for maturities 2018 to 2027. The original maturity date is December 1, 2027. This refinancing will NOT extend the final maturity date. The estimated Total Net Savings already have all the financing costs sized into the Refunding Bond. (There are no out of pocket costs to the District.)

Bond Market

Estimated Net Savings

How Has Brexit Affected The Bond Market? Answer: This is a very good time for the municipal bond market (from an issuer’s perspective). During June 2016, the Bond Buyer 20-General Obligation Index dropped 0.41%. Long-term interest rates are at the lowest point in the last 46 years. With the British electorate voting to leave the European Union, the demand for U.S. Treasuries and municipal bonds increased, thereby, driving down the Treasury yields and bond yields. There is a decreased expectation for the Federal Reserve to raise the short-term interest rates in September or December 2016. With the historic low in interest rates, this is an ideal time to issue bonds or to refinance bonds.

Davidson’s Public Finance Team Jim Nelson Senior Vice President (206) 389-4062 28 Years in Public Finance Main Office: Seattle, WA Specializes in general municipal finance with park districts, cities, counties, as well as other special districts. Jim is very experienced in assisting Washington municipalities with voter education strategies and bond rating presentations. Experience working with Island County municipalities. He has completed over 400 financings with a par amount greater than $4 billion. FINRA Series 53 and Series 63 Licenses . B.A. in Economic Geography from the University of Washington. Mark Froio (Senior Vice President) – Full time bond underwriter, located in Seattle. Extensive market knowledge and experience to achieve lower interest rates. Maura Lentini (Vice President) – former Moody’s rating analyst, located in Seattle, assists with rating agency presentations. Crystal Vogl (Vice President) – Disclosure Expert preparing Official Statements and assisting with Continuing Disclosure requirements and deadlines. Suzanne Eide (Vice President) – Bond Structuring/Quantitative Expert for non-voted bonds, voted bonds and refunding bonds.

Neither this material nor any of its contents may be disclosed, sold, or redistributed, electronically or otherwise, without prior written consent of Davidson Companies. The information presented herein is based on public information we believe to be reliable, prevailing market conditions, as well as our views at this point in time. We make no representation or warranty with respect to the accuracy or completeness of this material. Past performance is not necessarily indicative of future results. Davidson Companies does not assume any liability for any loss which may result from the reliance by any person upon such material. We make no representations regarding the legal, tax, regulatory, or accounting implications of entering into a Transaction. Required Disclosure Pursuant to MSRB Rule G-23: An underwriter’s primary role will be to purchase as principal, or arrange for the placement of the securities in a commercial arm’s length transaction with the issuer, and may have financial and other interests that differ from those of the issuer. In its capacity as underwriter and not as financial advisor, an underwriter may provide incidental financial advisory services at the issuer’s request, including advice regarding the structure, timing, terms and other similar matters concerning the issuance. However, an underwriter does not assume any financial advisory or fiduciary responsibilities with respect to the issuer.