J.P. Morgan Public Finance Transportation & Utility Investor Forum

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1 J.P. Morgan Public Finance Transportation & Utility Investor Forum Amy Potter Chief Financial Officer March 16, 2016

2 TCA History/Background 1

3 Highlights Restructurings in 2013 and 2014 put the Agencies on solid financial footing Traffic and revenue are growing steadily, supported by a strong economy and a congested network of freeways and major arterial roads As you ll see, credit quality is improving; neither agency is a speculative credit 2

Three Roads, Two Agencies, One Staff TCA Structure Governance Joint

Districts The two JPAs are separate legal entities with separate finance

legislature in 1987 Toll revenue for each Agency can only be spent on

Corridor Agencies San Joaquin Hills Toll Road San Joaquin Hills Board of

4 Three Roads, Two Agencies, One Staff TCA Structure Governance Joint Powers Authorities Formed in cities and three County Supervisor Districts The two JPAs are separate legal entities with separate finance structures (one staff) Authority to collect tolls obtained from State legislature in 1987 Toll revenue for each Agency can only be spent on operating costs, debt service and system improvements Transportation Corridor Agencies San Joaquin Hills Toll Road San Joaquin Hills Board of Directors TCA Staff Foothill Toll Road Foothill/Eastern Board of Directors Eastern Toll Road 3

5 TCA Toll Roads provide Vital Links in the OC and Regional Transportation Network The Foothill/Eastern System and San Joaquin Hills System comprise a 51-mile tolled highway network 20 percent of OC highway system 290,000 trips on a typical weekday $300 million annual toll revenue All drivers pay electronically 780,000 accounts 1 million transponders Built parallel to OC s congested I-5, I-405 and SR-55 freeways System provides predictable access to commercial centers and Airport 4

6 California Toll Facilities 1990 Golden Gate Bridge Antioch Bridge Benicia-Martinez Bridge Carquinez Bridge Dumbarton Bridge Richmond-San Rafael Bridge San Francisco-Oakland Bay Bridge San Mateo-Hayward Bridge 17-Mile Drive Coronado Bridge 07_2014_WideScreen_Template 5

7 California Toll Facilities 2016 I-680 Express Lanes (SB) I-580 Express Lanes Golden Gate Bridge Antioch Bridge Benicia-Martinez Bridge Carquinez Bridge Dumbarton Bridge Richmond-San Rafael Bridge San Francisco-Oakland Bay Bridge San Mateo-Hayward Bridge 17-Mile Drive I-10 Express Lanes I-110 Express Lanes SR 73 Toll Road SR 133, SR 241, SR 261 Toll Roads SR-91 Express Lanes I-15 Express Lanes SR-125 SR-237 Express Lanes I-880 Express Lanes Coronado Bridge (now free) 07_2014_WideScreen_Template 6

California Toll Facilities 2016 + Planned I-80 Express Lanes CONTRA COSTA transportation authority I-680 Express Lanes I-680 Express Lanes (SB+NB) I-580 Express Lanes I-880 Express Lanes Extension

8 California Toll Facilities Planned I-80 Express Lanes CONTRA COSTA transportation authority I-680 Express Lanes I-680 Express Lanes (SB+NB) I-580 Express Lanes I-880 Express Lanes Extension SR-156 Toll Road Golden Gate Bridge Antioch Bridge Benicia-Martinez Bridge Carquinez Bridge Dumbarton Bridge Richmond-San Rafael Bridge San Francisco-Oakland Bay Bridge San Mateo-Hayward Bridge SR-237 Express Lanes Extension I-880 Express Lanes Extension SR-85 Express Lanes US 101 Express Lanes 07_2014_WideScreen_Template 17-Mile Drive US 101 Express Lanes I-10 Express Lanes I-110 Express Lanes High Desert Corridor I-5 Express Lanes I-405 Express Lanes SR-710 Bypass US 101 HOT Lanes SR-91 Express Lanes I-15 Express Lanes SR 73 Toll Road SR 133, SR 261 Toll Roads, SR 241 Extension/I-5 Connector, SR 241/91 Connector, Coronado Bridge (now free) I-10 Express Lanes I-15 Express Lanes High Desert Corridor SR-91 Express Lanes I-405 Express Lanes I-15 Express Lanes SR-125 SR-11/Otay Mesa I-805 Managed Lanes I-5 Managed Lanes 7

9 Orange County and Regional Economic Update 8

Orange County Economic Indicators Continue Positive Trends Unemployment Rate as of January

0% Median Home Price as of January 2016 3 Residential Building Permits (Units) 4 Actuals

in Riverside and San Diego Counties Sources: (1) State of California Employment Development

10 Orange County Economic Indicators Continue Positive Trends Unemployment Rate as of January Population as of January Year Avg. Growth Rate: +0.91% 5.8% 4.0% Median Home Price as of January Residential Building Permits (Units) 4 Actuals through September 2015 Positive trends in each of these four indicators are also observed in Riverside and San Diego Counties Sources: (1) State of California Employment Development Department; (2) US Census Bureau, California DOF; (3) California Association of Realtors; (4) US Census Bureau 9

Orange County Driving Trends A Typical Weekday Commute 1 California Gas Prices are Near Five-Year Lows 2 2 1 3 4 Selected Freeway Segments 3 Freeflow Travel Time Peak Travel Time Average Speed During

11 Orange County Driving Trends A Typical Weekday Commute 1 California Gas Prices are Near Five-Year Lows Selected Freeway Segments 3 Freeflow Travel Time Peak Travel Time Average Speed During Peak Worst Day/Hour 1. I-405 SB From MacArthur to Jeffrey Rd (4.6 mi) 4 minutes 8 minutes 34 mph Wed 17:00 2. I-405 NB From CA-55 to Brookhurst (7.0 mi) 6 minutes 15 minutes 29 mph Fri 17:00 3. CA-55 NB From I-405 to Irvine Blvd (6.4 mi) 6 minutes 13 minutes 30 mph Thu 17:00 4. I-5 NB From CA 133 to 17th St. (8.4 mi) 8 minutes 17 minutes 30 mph Thu 17:00 Sources: (1) accessed 6:00 PM December 3, 2015; (2) U.S. Energy Information Administration, Weekly California All Grades Reformulated Retail Gasoline Prices (March 7, 2016); (3) Inrix 2014 Urban Mobility Scorecard Annual Report 10

12 Foothill/Eastern TCA Financial Update 11

13 Transactions Transactions are on pace for three consecutive years of growth Transactions and Average Toll Rate FY 2016 Budget assumed 1.4% transaction growth; 9.3% growth observed to date One-year transaction growth rate is currently at its highest level since FY 2001 Transactions outpaced the 2013 Traffic Study by 5.2% in FY 2014 and 5.9% in FY % of transactions are processed on the mainline toll plazas Weekend/non-commute and ramp usage is increasing Toll increases in five consecutive years; +2.0% FasTrak rate increase was effective July 1, 2015 (while maintaining the $1.00 increment above the FasTrak rate for non- FasTrak transactions) Foothill/Eastern TCA Fiscal Year Toll Increases: Annual Transactions Transactions (Millions) * 52-week moving average ** Through February; growth rate versus same period in FY 2015 Transactions Growth % % % % % % % % % 2016 ** % 12

14 Toll Revenues Toll revenues for the first eight months of FY 2016 are up 12.5% versus the prior year FY 2016 Budget assumed 3.4% revenue growth (2.0% from toll increase) Compound average annual growth FY 2001 to FY 2015: 4.0% FY 2009 to FY 2015: 5.1% Debt service growth rate through FY 2038: 3.75% Revenue breakdown by transaction type in FY 2015 (excluding violations) FasTrak: 87.9% ExpressAccount (license plate tolling account): 7.3% One-Time-Toll (license plate tolling with no account): 4.9% Foothill/Eastern TCA Fiscal Year Toll Revenue and Average Toll Rate Toll Increases: Annual Toll Revenues Toll Revenues (Millions) * 52-week moving average ** Through February; growth rate versus same period in FY 2015 Toll Revenues Growth 2007 $ % 2008 $ % 2009 $ % 2010 $ % 2011 $ % 2012 $ % 2013 $ % 2014 $ % 2015 $ % 2016 ** $ % 13

15 F/ETCA Performance Relative to Traffic Studies Transactional toll revenues averaged 105.7% of the 1999 Stantec study during the period 2000 through 2007 F/ETCA Transactional Toll Revenue Transactional toll revenues are averaging 108.5% of the 2013 Stantec study in the period FY 2014 through FY 2016 (projected) 2013 Stantec study toll rate increases average 2.5%-3.0%; inflation assumption: 2.5% Average actual toll rate increases have been 2.0% per year since the 2013 refinancing Average annual growth rate over T&R study period: 1999 Stantec Study: 5.4% 2013 Stantec Study: 4.5% Restructured Debt: 3.75% Restructured debt profile was created during the post-recession low point in the revenue cycle Foothill/Eastern TCA * FY 2016 Transactional Toll Revenues as projected by the Agency based on actual results through November 30 th,

Development Impact Fee Program The Development Impact Fee (DIF) Program collects fees at the time of building permit approval in proportion to projected traffic demand attributable to the new

16 Development Impact Fee Program The Development Impact Fee (DIF) Program collects fees at the time of building permit approval in proportion to projected traffic demand attributable to the new residential and commercial development Development Impact Fees Accrued Development Impact Fees in excess of $2.5 million for each six month period are pledged under the 2013 Master Indenture Over the life of the DIF program, Foothill/Eastern TCA has collected $462.7 million of DIFs In 2013, PB Consult forecasted F/ETCA DIF revenues through 2035; F/ETCA has significantly outperformed these forecasts for each the past three fiscal years DIF revenue is not included in coverage in annual TCA Budgets or TCA s long-term financial projections Fiscal Year Forecast DIF Revenues Actual DIF Revenues Difference ($000) ($000) (As % of Forecast) 2013 $9,271 $11, % ,885 19, % ,407 24, % ,836 14, FY 2016 actual receipts as of January 31, 2016 Foothill/Eastern TCA 15

commercial use Baker Ranch development commenced sales in early 2015 Los Patrones Parkway (Under Construction) Rancho Mission Viejo:

17 Near-Corridor Development Update Tustin Legacy: 3,200 homes & apartments built to date; 3,600 planned in next decade with new sales resumed in mid-2015 Great Park: 1,000 homes sold out; 10,700 total homes planned The 2,379-home & 50,000 sq. ft. commercial use Baker Ranch development commenced sales in early 2015 Los Patrones Parkway (Under Construction) Rancho Mission Viejo: 1,200-home Phase 1 sold out in ; 2,800-home Phase-2 for sale Q3 2015; total planned community: 14,000 homes Sources: City of Lake Forest Orange County Register 16

18 Net Toll Revenues Detail Category FY 2014 Actual FY 2015 Actual FY 2016 Budget Revenues ($ Millions) Transactional Toll Revenues $119.4 $126.5 $129.2 Violations / Non Revenue 1 ($5.1) ($9.1) ($9.8) Violation Penalty Revenue - $4.8 $4.3 (Toll Component) 2 Net Collectible Tolls $114.3 $122.2 $123.7 Violation Penalty Revenue $13.2 $14.9 $14.3 (Violation Component) 2 Acct. Maintenance Fees $9.8 $11.1 $11.5 Other Revenue $1.6 $1.7 $1.5 Interest Earnings $2.2 $1.5 $1.6 Total Revenues $141.1 $151.4 $152.6 Current Expenses ($23.3) ($22.3) ($26.3) Adj. Net Toll Revenues $117.8 $129.1 $126.2 Development Impact Fees $19.8 $24.9 $15.0 Senior Net Debt Service ($48.2) 3 ($85.2) ($88.9) Aggregate Net Debt Service ($55.1) 3 ($98.0) ($101.6) Surplus Revenue $ $51.1 $30.8 Coverage Ratios Enhanced Senior (Incl. DIFs) x x - Enhanced Aggregate (Incl. DIFs) x x - Senior 1.43x x 1.42x Aggregate 1.25x x 1.24x Increasing debt service coverage and DIFs are producing increased margin and Surplus Revenues Unlike most toll roads, TCA does not pay O&M for the system FY 2016 Current Expenses reflect variable costs associated with increasing transactions 1. Includes violations, non-revenue users, unprocessable images and account accruals 2. Through FY 2014 the Agency included in Violation Penalty Revenue toll revenue associated with violations, as it was not material; as a result of the conversion to AET and the resulting shift in payment patterns, this violation toll revenue portion is more significant and it has been recorded as a component of Net Collectible Tolls for FY 2015 and later 3. Based on partial year due to FY 2014 restructuring transaction 4. Based on partial year due to FY 2014 restructuring transaction, and includes $19.8 in Development Impact Fees 5. Enhanced coverage includes pledged DIFs, which are equal to total DIF collections less $5.0 million 17

19 Foothill/Eastern TCA Capital Improvement Plan 18

Capital Improvement Program Update 1 2 3 241/91 Connector: Additional connection between tolled OCTA 91 Express Lanes and SR 241 (SR 91 general purpose lane connector exists); completion in 2019

20 Capital Improvement Program Update /91 Connector: Additional connection between tolled OCTA 91 Express Lanes and SR 241 (SR 91 general purpose lane connector exists); completion in 2019 Project approval and Environmental Documents over next two years; $180 million cost to be shared with OCTA Connector is likely to include a new tolling facility with potential to generate toll revenues Tesoro Extension: provides a 5.5-mile extension south of Oso Parkway F/ETCA and Rancho Mission Viejo (developer) have been working on parallel paths RMV is moving forward with arterial project as a requirement of their environmental document under terms defined in the Major Thoroughfare and Bridge Fee Ordinance Project increases traffic and revenue to the 241 system Ultimate disposition of the segment is dependent on the on-going stakeholder process to define the connection of the 241 Toll Road to the I-5 freeway SR 241 Long Range Planning: Regional planning efforts to date demonstrate the need for additional transportation improvements to relieve existing and future congestion on I-5 and local arterials in south Orange County F/ETCA is evaluating regional mobility needs to identify an acceptable solution Long Range Planning efforts are currently in the community outreach stage, which is expected to continue through FY Foothill/Eastern TCA 19

systems Provides relief for existing freeways by improving mobility and traffic flow Reduces emissions by increasing movement

21 241/91 Express Lanes Connector Median-to-median connector Structure over 241/SR-91 north-west direct connector and the SR-91 Gypsum Canyon I/C Provides direct access into the SR-91 Express Lanes ~$180M project cost Enhances regional connectivity between toll systems Provides relief for existing freeways by improving mobility and traffic flow Reduces emissions by increasing movement through corridor Enhances safety by reducing weaving across general purpose lanes Maintains SR 91 Express Lanes operational performance levels 20

241 Connection to I-5 TCA is engaging key stakeholders in the region on the broader longterm regional mobility challenges Completed community

22 241 Connection to I-5 TCA is engaging key stakeholders in the region on the broader longterm regional mobility challenges Completed community ascertainment study Jan Deliberative multi-step stakeholder outreach leading to new federal and state environmental documents and permits 21

23 San Joaquin Hills TCA Financial Update 22

SJHTCA Continues to Provide Access to Key Regional Economic Drivers, Job Centers and Residential Areas South Coast Plaza Retail District Irvine Company Spectrum Business and Residential Centers John

24 SJHTCA Continues to Provide Access to Key Regional Economic Drivers, Job Centers and Residential Areas South Coast Plaza Retail District Irvine Company Spectrum Business and Residential Centers John Wayne Airport / Irvine Business Complex Costa Mesa Residential Center Newport Center Commercial District San Joaquin Hills TCA Fashion Island Retail District Newport Beach Residential Center Vantis Housing Development Laguna Niguel Gateway Commercial Complex Laguna Niguel Residential Center 23

25 Transactions Transactions and Average Toll Rate Transactions are on pace for three consecutive years of growth in excess of 5% per year FY 2016 Budget assumed 1.3% transaction growth; 10.7% growth observed to date In FY 2015, transactions exceeded the 2014 Traffic Study projection by 9.1% 70.1% of transactions are processed on the mainline Catalina View toll plaza Weekend/non-commute and ramp usage is increasing Toll increases in five consecutive years; +2.0% FasTrak rate increase was effective July 1, 2015 (while maintaining the $1.00 increment above the FasTrak rate for non- FasTrak transactions) San Joaquin Hills TCA Fiscal Year Toll Increases: Annual Transactions Transactions (Millions) * 52-week moving average ** Through February; growth rate versus same period in FY 2015 Transactions Growth % % % % % % % % % 2016 ** % 24

26 Toll Revenues Toll revenues for the first eight months of FY 2016 are up 13.6% versus the prior year FY 2016 Budget assumed 3.1% revenue growth Compound average growth rates FY 2001 to FY 2015: 7.0% FY 2009 to FY 2015: 7.3% Debt service growth rate through FY 2040: 2.3% Revenue breakdown by transaction type in FY 2015 (excluding violations) FasTrak: 87.3% ExpressAccount (license plate tolling account): 6.4% One-Time-Toll (license plate tolling with no account): 6.3% San Joaquin Hills TCA Fiscal Year Toll Revenue and Average Toll Rate Toll Increases: Annual Toll Revenues Toll Revenues (Millions) * 52-week moving average ** Through February; growth rate versus same period in FY 2015 Toll Revenues Growth 2007 $ % 2008 $ % 2009 $ % 2010 $ % 2011 $ % 2012 $ % 2013 $ % 2014 $ % 2015 $ % 2016 ** $ % 25

27 Net Toll Revenues Detail Aggregate x x 1. Includes violations, non-revenue users, unprocessable images and account accruals 2. Through FY 2014 the Agency included in Violation Penalty Revenue toll revenue associated with violations, as it was not material; as a result of the conversion to AET and the resulting shift in payment patterns, this violation toll revenue portion is more significant and it has been recorded as a component of Net Collectible Tolls for FY 2015 and later 3. Based on partial year due to FY 2015 restructuring transaction; includes $3.5 million of DIFs and $16.8 million deposited to the Supplemental Reserve Fund 4. Enhanced coverage includes pledged DIFs, which are equal to total DIF collections less $5.0 million 5. Does not include Toll Stabilization Funds utilized to pay debt service 6. Based on partial year due to FY 2015 restructuring transaction 26 Category FY 2014 Actual FY 2015 Actual FY 2016 Budget Revenues ($ Millions) Transactional Toll Revenues $117.1 $131.6 $134.1 Violations / Non Revenue 1 ($6.4) ($15.5) ($15.9) Violation Penalty Revenue Note 3 $8.3 $7.7 (Toll Component) 2 Net Collectible Tolls $110.7 $124.4 $125.9 Violation Penalty Revenue $14.5 $19.3 $18.8 (Violation Component) 2 Acct. Maintenance Fees $3.0 $3.2 $3.3 Other Revenue $0.9 $0.8 $0.8 Interest Earnings $2.2 $1.1 $0.2 Total Revenues $131.3 $148.8 $149.0 Current Expenses ($12.1) ($12.9) ($14.0) Adj. Net Toll Revenues $119.2 $135.9 $135.0 Development Impact Fees $3.8 $3.5 $3.5 Senior Net Debt Service ($94.8) ($38.0) ($91.4) Aggregate Net Debt Service - ($48.7) ($106.9) Surplus Revenue $2.5 $ $32.5 Coverage Ratios Enhanced Senior (Incl. DIFs) Enhanced Aggregate (Incl. DIFs) Senior 1.26x x x FY 2016 revenues through November are ahead of Budget and Stantec forecast Increasing debt service coverage is producing increased margin and Surplus Revenues Unlike most toll roads, TCA does not pay O&M for the system FY 2016 Current Expenses reflect variable costs associated with increasing transactions

28 Debt Portfolio Information 27

29 Current F/ETCA Debt Structure 2013 Bond Refinance greatly improved debt service coverage margins and ability to withstand future economic downturns $ mm $500 $400 Series 2013 Senior Debt Service Series 2013 Junior Debt Service Series 2015A Senior Debt Service Adjusted Net Toll Revenues Refinance resulted in decreased debt service growth rate, substantially lower MADS and is now based on average inflation assumptions $300 $200 Series 2015A Bonds refunded the 1995 Bonds, creating over $33 million in PV savings/ upfront proceeds 1995 Bond refunding in February 2015 resulted in savings of $33.5 million which was deposited into a project fund $100 These refinancing transactions enhance the Agency s credit rating upgrade strategy $

30 SJHTCA 2014 Restructuring Establishes Strong Financial Foundation for the Agency Refunded all callable bonds with Series 2014 bonds. Low interest rates, the successful tender of $914 million in maturity value of the non-callable Series 1997A CABs and the successful exchange of all the Series 1997A CCABs created PV savings and further reduced debt service growth rate and peak payment Restructured Debt Profile Untendered Non-Callable Series 1997A Bonds Series 2014A (Sr.) $ Millions Series 2014B (Jr.) Lower Debt Service Growth Produces Greater Excess Cash Flow & Increased Cushion Prior Debt Service Significantly Lower Peak Debt Payment $186 million (vs $269 million prior peak) Projected Net Toll Revenues > 1.3x Senior Lien Debt * Projection based on Stantec s base case toll revenue forecast All Series 2014 Bonds Can Be Called On or After 2025 Without Penalty Debt Service Growth Ends in

31 For More Information Amy Potter

FOOTHILL/EASTERN TRANSPORTATION CORRIDOR AGENCY. Financial Statements. June 30, (With Independent Auditors Report Thereon)

FOOTHILL/EASTERN TRANSPORTATION CORRIDOR AGENCY. Financial Statements. June 30, (With Independent Auditors Report Thereon) Financial Statements (With Independent Auditors Report Thereon) Table of Contents Page Independent Auditors Report 1 3 Financial Statements: Statement of Net Position 9 Statement of Revenue, Expenses,