1. Sale of the Wastewater Utility, Water Utility and Related Assets P3 CONNECT CONFERENCE Denver, Colorado July 29, 2014

2. Westfield: Outline ► Motivation behind Sale of Water and Wastewater Utilities ► Solution ► Outcome ► Lessons Learned 2 2

3. Westfield: A Success Story ► – “Best Places to Live” 2013 ► #1 in Indiana ► #18 in the Nation ► Westfield Washington Schools – 6 th best high school in the state; highest graduation rate in Central Indiana ► - “10 Best Towns for Families” 2014 3 3

4. Westfield is Growing ► 32,000 residents; about 10,000 utility customers ► Improvements to US 31, Grand Junction, Grand Park ► Growth over next 5-10 years ► New housing permits up 20% from last year ► Population growth expected to double by 2030 ► Needed infrastructure improvements 4 4

5. Economic Benefits to Westfield ► Approximately $91 million transaction ► Elimination of 100% of City’s utility infrastructure debt; more than 50% of the City’s total debt portfolio ► Rate mitigation ► Trusted stewards – Customer service, reliability, quality ► All employees keep their jobs ► Funds for aggressive infrastructure improvements 5 5

6. Regional Water Strategy ► Not solely economic benefits; long-term water management White River Aquifer Shared Resource 6 6

7. Timeline/Highlights ► Fall 2011 – Initial internal discussions ► Feb. 14, 2012 – Issue Request for Expressions of Interest ► Apr. 17, 2012 – RFP published ► May 25, 2012 – Proposals due ► Jun. 22, 2012 – Notify finalist and begin negotiations ► Nov. 16, 2012 – Execute purchase agreements ► Nov. 20, 2012 – File Joint Petition with IURC ► Jan. 31, 2013 – APA Amendment No. 1 ► Nov. 25, 2013 – IURC issues Order approving transactions ► Mar. 21, 2014 – Close transactions; APA Amend No. 2 7 7

8. Solution = Test the Market (REIQ) ► City issued Request for Expressions of Interest on February 14, 2012 ► Meetings with Respondents (March 5 and 12): ► Concepts gleaned from the REI ► Efficiencies of combined operations ► Potential rate mitigation ► Benefits from economies of scale 8 8

9. Request for Proposals ► Up-to-date, well-run system ► Request for Proposals issued April 17, 2012 ► Respondents registered to bid by April 20, 2012 ► Mandatory tour of selected Utility facilities and meetings for all Proposers on May 2nd - May 3rd ► Questions and Answers ► May 7: Q&A #1 – (not required/scheduled) Emailed responses to oral questions asked by Proposers during tour of Utility facilities ► May 21: Q&A #2 –Emailed responses to all written questions submitted via email by the Proposers 9 9

10. Request for Proposals ► Established due diligence portal and gave password protected access upon request to all Proposers who registered ► continued to update during process ► City established open webpage for the transaction, posted the RFP, Exhibits, Appraisal and other important documentation ► also continued to update during process ► transparency/public access to information 10

11. Evaluation Process for Proposals ► May 25, 2012 – Proposal Due Date ► May 25-June 22: Evaluation Committee review Proposals ► To maintain confidentiality, Evaluation Committee members spent multiple hours at Faegre Baker Daniels office to review Proposals ► June 14-15: Evaluation Committee, plus technical consultant, interviewed the three finalists ► June 20: Evaluation Committee met with two respondents to clarify regional water supply strategy 11

12. Negotiation of Transaction Documents ► Six Primary Deal Points Emphasized: ► Targeted net proceeds of $50 million from transaction ► City needed to cover $1.7 million (decreasing amount) gap created by sale of utilities via replacement PILOT ► City needed some rate mitigation ► Quality Customer Service/Community Support ► Access to water ► Retained rights of City ► Restraint on transfer of assets ► Periodic reports to City ► Coordination with City on water conservation measures and communications 12

13. Side-by-Side Asset Purchase Agreements ► Sliding purchase price based upon net asset value ► Excluded assets: ► Aquifer ► Lagoon (option) ► Public works building ► Cell tower antenna agreements ► Billing for trash ► Public Safety Training Academy Property ► No sale of Utilities, subject to buyer’s lender’s rights ► 10 years ► City right of first refusal after 10 years 13

14. Statutory Approval Process ► August 30, 2012: ► File ordinance providing for the sale of the Water Utility and Wastewater Utility with the Council ► Publication of notice of public hearing on the proposed sale of the Water Utility and the Wastewater Utility ► October 8, 2012 – Council meeting to: ► hold public hearing on the ordinance providing for the sale of the Utilities ► adopt ordinance authorizing the sale of the Utilities ► November 16, 2012 ► Execute utility purchase agreements (subject to IURC approval) ► November 20, 2012: File petition for IURC approvals 14

15. IURC Process ► Each buyer would be regulated utility ► IURC Issues: ► Public convenience and necessity ► Reasonableness of purchase price (appraisal $74 million; purchase price $91 million) ► Historical accounting treatment of contributions in aid of construction (CIAC) from prior acquisition ► March 21, 2014 – closing; amendments to purchase agreements necessary to incorporate IURC Order and other changes in deal 15

16. Outcome: Infrastructure Improvements ► Online survey via Facebook and the City’s website to gather citizen feedback on infrastructure improvements 34% 26% 15% 10% 5% 3% 4% 3% 16

17. Assurances ► Quarterly reports to Westfield Council; regular updates to WeCAN ► Service Advisory Board ► Indiana Utilities Regulatory Commission oversight ► Indiana Office of Utility Consumer Counselor ► Results: ► Accountability ► Quality ► Reliability 17

18. Community Benefits Investments Supporting Westfield’s Growth ► Commitment to Westfield utility system investments ► Capital investment synergies provide supply security and efficiencies to support Westfield growth ► Rate of return allows new owner to invest in system and community 18

19. Community Benefits Mitigating Rate Increases ► Affordable rates based on Westfield’s needs, not needs of Indianapolis ► 16 percent smaller rate increases by year 2020 compared to City ownership ► State oversight of rates 19

20. Lessons Learned ► Start political process/public meetings as early as possible (we did; it helped) ► Know your potential partner’s needs ► Don’t plan schedule around regulatory approval; it could take longer than you think ► Be prepared for partner’s failure to meet high expectations after close; its normal, work together 20

21. Questions? 21