1. Parker-Stonegate Regionalization Compark Business Metro District, E-470 Potomac Metro District, Lincoln Park Metro District, Parker Water and Sanitation Sanitation District, Stonegate Village Metro District “financial solutions that make a difference” StepWise Utility Advisors, LLC. | 58 Inverness Drive East, Suite 260 Englewood, CO 80112 | (866) 935-3101 www.StepWiseAdvisors.com 1

2. BACKGROUND Overview of the Regionalization Study 2

3. How Did This Process Begin? Inclusion (or regionalization) has been discussed a few times before –Each discussion ended for various reasons before a recommendation could be presented at Board levels –The last discussion (around 2006-07) ended when the issue was tabled by the Stonegate Board of Directors Stonegate renewed its interest in 2009 –Signed MOU with PWSD in Feb. 2009 Stonegate Engaged StepWise to conduct a 1 st phase analysis of the cost/benefit of an inclusion (regionalization) 3

4. Review the Timeline to Now Feb-2010 Stonegate retained StepWise Mar-2010 Phase 1 Prelim. Findings presented to Stonegate Board Feb-2011 Stonegate task force receives preliminary results May-2010 Phase 2 Findings presented to Stonegate Board Jul 10 – Feb 11 PWSD and Stonegate analysis Mar-11Feb-11May-11Jun-11 Mar-10Feb-10May-10Jun-10 Jul-11 Nov-11 Jun-2010 Stonegate & PWSD begin discussions for a regional utility Mar-2011 Joint Task Force & Parker Board receives findings May-2011 PWSD Board Workshop Nov-11 Stonegate Inclusion Issue on Nov. Ballot Jul-11 PWSD considers Resolution for Inclusion 4

5. Overall Approach – Find Scale TOTAL GALLONS PRODUCED AVERAGE COST / GALLON Economies of Scale. The cost per unit decreases with more units produced How it Works Total Fixed Cost= $1,000 Variable Costs = $2.00 / gallon If we produce 20 gallons: Total Cost = $1,040 Avg. Fixed Cost = $50 / gallon ($1,000/20) Variable Cost = $2.00 / gallon ($40/20) Avg. Total Cost = $52 / gallon If we produce 100 gallons: Total Cost = $1,200 Avg. Fixed Cost = $10 / gallon ($1,000/100) Variable Cost = $2.00 / gallon ($200/100) Avg. Total Cost = $12 / gallon 1 1 2 2 3 3 4 4 5

6. Regionalization Changes Cost Structure TOTAL GALLONS PRODUCED AVERAGE COST / GALLON All Else Being Equal. Increased total costs mean increased avg. cost for the SAME amount of water produced 1 1 3 2 2 New Economies. Benefits occur when we can increase units of usage without undue increase to costs 2 2 3 = Fail = Win 6

7. Basic Regionalization Model Stonegate Assessed Value The new district has a new balance sheet with increased assets and no increase in debt. It can now operate at lower cost per unit than either of the 2 separate districts Stonegate is transferring 100% of its assets, including 3,300 accounts generating instant cash flow for the regionalized district. PWSD Assets PWSD Debt Stonegate CASH FLOW Stonegate ASSETS Regionalized Utility District Stonegate Debt 7

8. Searching for Economies of Scale PWSD Baseline Projection Stonegate Baseline Projection 1 2 Regional Model Combined Operations 3 Compare to Baselines 4 During this process we identify: Changes in cost structure Increases in units produced Change in avg. cost per unit Whether economies of scale exist or not During this process we identify: Changes in cost structure Increases in units produced Change in avg. cost per unit Whether economies of scale exist or not 8

9. PWSD Status Quo Projection 1 9

10. Stonegate Status Quo Projection 2 10

11. Regional Model 3 11

12. Other Issues: Rueter-Hess Stonegate Mill Levy Parker Water Mill Levy Credit is necessary to avoid double charging Stonegate residents for Rueter-Hess They will be paying 2 taxes for Rueter-Hess while everyone else pays just one 12

13. Property Tax Impacts: Change in PWSD Assessed Valuation & Mill Levy * Assumes a 1% average increase in property valuations from the 2010 recorded valuation levels. 13