PFM Asset Management LLC

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PFM Asset Management LLC Sacramento Transportation Authority Floating Index Amendment Presentation April 9, 2009 PFM Asset Management LLC Two Logan Square, Suite 1600 18th & Arch Streets Philadelphia, PA 19103 (215) 567-6100 Public Financial Management, Inc. 50 California Street Suite 2300 San Francisco, CA 94111 (415) 982-5544

Tax-Exempt Rates High Relative to Taxable Rates The ratio of tax-exempt to taxable yields remains extremely elevated due to illiquidity in the market for municipal swaps and bonds e.g. the mid-market 20-yr SIFMA swap rate currently exceeds 96% of 20-year LIBOR

67% of 3-Mo LIBOR vs. SIFMA Index The historical average difference between 67%*3-month LIBOR and SIFMA Index equals 7 bps PFM recommends structuring the swap using 3ML rather than 1ML given depressed level of 1ML (1-month LIBOR is anchored to current Fed Funds target rate of 0.0 – 0.25%)

Amend Existing Fixed Payer Swap Issuers who hedged variable-rate debt using a SIFMA fixed-payer swap can convert the SIFMA floating index received on their swap to a percentage of 3-month LIBOR In order for the swap to be integrated with the underlying bonds for tax purposes as a “Qualified Hedge,” the floating rate received on the swap must “closely correspond” to the floating rate paid on STA’s tax-exempt bonds (e.g. 67% of LIBOR) Tax counsel advises that it expects the swap would still be a Qualified Hedge if amended in this fashion Fair-market adjustment to STA’s fixed swap rate is approximately -95 bps (shown below) Existing Swap Amended Swap JPM Variable - Rate Bonds 3.43% SACTRANS 67%* LIBOR

SIFMA Index versus % of LIBOR Basis Swap Significant expected savings based on historical BMA/LIBOR yield relationship(actual, realized savings may be lower depending on performance) Immediate positive yield margin if structured using 3-month LIBOR Significant decrease to the Swap’s fixed rate Exposes STA to basis and/or limited tax risk and potential reduced, or even negative, savings due to future change in BMA/LIBOR relationship (high % of LIBOR currently available mitigates tax risk) STA remains exposed to standard swap-related risks (termination risk, counterparty credit risk, etc.) Benefits Risks