OFFICIAL STATEMENT $85,000,000 CLARK COUNTY, NEVADA HIGHWAY REVENUE BONDS (INDEXED FUEL TAX AND SUBORDINATE MOTOR VEHICLE FUEL TAX) SERIES 2015

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1 OFFICIAL STATEMENT $85,000,000 CLARK COUNTY, NEVADA HIGHWAY REVENUE BONDS (INDEXED FUEL TAX AND SUBORDINATE MOTOR VEHICLE FUEL TAX) SERIES 2015

2 NEW ISSUE BOOK-ENTRY ONLY RATINGS: S&P: AA- Moody s: Aa3 See RATINGS In the opinion of Sherman & Howard L.L.C., Bond Counsel, assuming continuous compliance with certain covenants described herein, interest on the 2015 Bonds is excluded from gross income under federal income tax laws pursuant to Section 103 of the Internal Revenue Code of 1986, as amended to the date of delivery of the 2015 Bonds (the Tax Code ), and interest on the 2015 Bonds is excluded from alternative minimum taxable income as defined in Section 55(b)(2) of the Tax Code, except that such interest is required to be included in calculating the adjusted current earnings adjustment applicable to corporations for purposes of computing the alternative minimum taxable income of corporations. See TAX MATTERS - Federal Tax Matters. $85,000,000 CLARK COUNTY, NEVADA HIGHWAY REVENUE BONDS (INDEXED FUEL TAX AND SUBORDINATE MOTOR VEHICLE FUEL TAX) SERIES 2015 Dated: Date of Delivery Due: July 1, as shown herein The 2015 Bonds are issued as fully registered bonds in denominations of $5,000, or any integral multiple thereof. The 2015 Bonds initially will be registered in the name of Cede & Co., as nominee of The Depository Trust Company, New York, New York ( DTC ), securities depository for the 2015 Bonds. Purchases of the 2015 Bonds are to be made in bookentry form only. Purchasers will not receive certificates representing their beneficial ownership interest in the 2015 Bonds. See THE 2015 BONDS - Book-Entry Only System. The 2015 Bonds bear interest at the rates shown herein, payable on January 1 and July 1 of each year, commencing January 1, 2016, to and including the maturity dates shown herein (unless the 2015 Bonds are redeemed earlier), to the registered owners of the 2015 Bonds (initially Cede & Co.). The principal of the 2015 Bonds will be payable upon presentation and surrender at the principal operations office of The Bank of New York Mellon Trust Company, N.A., Dallas, Texas, or its successor as the paying agent for the 2015 Bonds. See THE 2015 BONDS. The maturity schedule for the 2015 Bonds appears on the inside cover page of this Official Statement. The 2015 Bonds are subject to redemption prior to maturity at the option of Clark County, Nevada (the County ), as described in THE 2015 BONDS - Redemption Provisions. Proceeds of the 2015 Bonds will be used to (i) provide funds to the Regional Transportation Commission of Southern Nevada (the Commission ) to finance the costs of constructing certain major streets and highways in the County; (ii) fund a deposit to the Reserve Account (defined herein); and (iii) pay the costs of issuing the 2015 Bonds. See SOURCES AND USES OF FUNDS. The 2015 Bonds constitute special, limited obligations of the County. The principal of and interest on the 2015 Bonds is payable solely from and secured by an irrevocable pledge of the Net Pledged Revenues (defined herein), which are derived primarily from excise taxes on certain motor vehicle fuels and special fuels described herein. See SECURITY FOR THE 2015 BONDS. The 2015 Bonds have an irrevocable senior lien (but not an exclusive senior lien) on the Indexed Fuel Taxes (defined herein) and an irrevocable subordinate lien (but not an exclusive subordinate lien) on the Motor Vehicle Fuel Taxes (defined herein), as more particularly described herein. The 2015 Bonds do not constitute a debt or indebtedness of the County within the meaning of any constitutional or statutory provision or limitation and shall not be considered or held to be a general obligation of the County or the Commission. Owners of the 2015 Bonds may not look to any other funds or accounts other than those specifically pledged to the payment of the 2015 Bonds. This cover page contains certain information for quick reference only. It is not a summary of the issue. Investors must read the entire Official Statement to obtain information essential to making an informed investment decision, giving particular attention to the section entitled CERTAIN RISK FACTORS. The 2015 Bonds are offered when, as, and if issued by the County and accepted by the Underwriters, subject to the approval of legality of the 2015 Bonds by Sherman & Howard L.L.C., Las Vegas, Nevada, and the satisfaction of certain other conditions. Sherman & Howard L.L.C., also has acted as special counsel to the County in connection with the Official Statement. Stradling Yocca Carlson & Rauth, P.C., Reno, Nevada, has acted as counsel to the Underwriters. Hobbs, Ong & Associates, Inc., Las Vegas, Nevada, and Public Financial Management, Inc., San Francisco, California, have acted as Financial Advisors to the County. Certain legal matters will be passed upon for the County by the District Attorney and for the Commission by its counsel. It is expected that the 2015 Bonds will be available for delivery through the facilities of DTC, on or about November 10, RBC Capital Markets Official Statement dated October 20, 2015 Wells Fargo Securities

3 MATURITY SCHEDULE (6-digit CUSIP Issuer Number: ) $85,000,000 CLARK COUNTY, NEVADA HIGHWAY REVENUE BONDS (INDEXED FUEL TAX AND SUBORDINATE MOTOR VEHICLE FUEL TAX) SERIES 2015 Maturing (July 1) Principal Amount Interest Rate Yield CUSIP Issue Number 2017 $ 2,520, % 0.59% NA ,650, NB ,780, NC ,915, ND ,065, NE ,215, NF ,380, NG ,545, NH ,730, NJ ,915, c NK ,110, c NL ,315, c NM ,530, c NN ,755, c NP ,995, c NQ ,240, c NR ,505, c NS ,775, c NT ,060, c NU0 C Priced to optional redemption date of July 1, 2025 at par. Copyright 2015, American Bankers Association. CUSIP data is provided by Standard & Poor s, CUSIP Services Bureau, a division of The McGraw-Hill Companies, Inc. The CUSIP numbers are provided for convenience only and neither the County nor the Commission takes any responsibility for them.

4 USE OF INFORMATION IN THIS OFFICIAL STATEMENT This Official Statement, which includes the cover page, the inside cover page and the appendices, does not constitute an offer to sell or the solicitation of an offer to buy any of the 2015 Bonds in any jurisdiction in which it is unlawful to make such offer, solicitation, or sale. No dealer, salesperson, or other person has been authorized to give any information or to make any representations other than those contained in this Official Statement in connection with the offering of the 2015 Bonds, and if given or made, such information or representations must not be relied upon as having been authorized by the County or the Commission. The County and the Commission each provide certain information to the public on the internet; however, such information is not a part of this Official Statement and should not be relied upon in making an investment decision with respect to the 2015 Bonds. The information set forth in this Official Statement has been obtained from the County, the Commission and from the other sources referenced throughout this Official Statement, which the County and the Commission believe to be reliable. No guarantee is made by the County or the Commission, however, as to the accuracy or completeness of information provided from sources other than the County or the Commission. This Official Statement contains, in part, estimates and matters of opinion that are not intended as statements of fact, and no representation or warranty is made as to the correctness of such estimates and opinions, or that they will be realized. The Underwriters have provided the following sentence for inclusion in this Official Statement. The Underwriters have reviewed the information in this Official Statement in accordance with, and as part of, their responsibilities to investors under the federal securities laws as applied to the facts and circumstances of this transaction, but the Underwriters do not guarantee the accuracy or completeness of such information. The information, estimates, and expressions of opinion contained in this Official Statement are subject to change without notice, and neither the delivery of this Official Statement nor any sale of the 2015 Bonds shall, under any circumstances, create any implication that there has been no change in the affairs of the County or the Commission, or in the information, estimates, or opinions set forth herein, since the date of this Official Statement. This Official Statement has been prepared only in connection with the original offering of the 2015 Bonds and may not be reproduced or used in whole or in part for any other purpose. The 2015 Bonds have not been registered with the Securities and Exchange Commission due to certain exemptions contained in the Securities Act of 1933, as amended. The 2015 Bonds have not been recommended by any federal or state securities commission or regulatory authority, and the foregoing authorities have neither reviewed nor confirmed the accuracy of this document. THE PRICES AT WHICH THE 2015 BONDS ARE OFFERED TO THE PUBLIC BY THE UNDERWRITERS (AND THE YIELDS RESULTING THEREFROM) MAY VARY FROM THE INITIAL PUBLIC OFFERING PRICES OR YIELDS APPEARING ON THE INSIDE COVER PAGE HEREOF. IN ADDITION, THE UNDERWRITERS MAY ALLOW CONCESSIONS OR DISCOUNTS FROM SUCH INITIAL PUBLIC OFFERING PRICES TO DEALERS AND OTHERS. IN ORDER TO FACILITATE DISTRIBUTION OF THE 2015 BONDS, THE UNDERWRITERS MAY ENGAGE IN TRANSACTIONS INTENDED TO STABILIZE THE PRICE OF THE 2015 BONDS AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.

5 CLARK COUNTY, NEVADA Board of County Commissioners Steve Sisolak, Chair Lawrence L. Brown, III, Vice Chair Susan Brager Marilyn Kirkpatrick Chris Giunchigliani Mary Beth Scow Lawrence Weekly County Officials Donald G. Burnette, County Manager/CEO Yolanda King, Chief Financial Officer Laura B. Fitzpatrick, Treasurer Jessica L. Colvin, Comptroller Lynn Marie Goya, Clerk Steven B. Wolfson, District Attorney REGIONAL TRANSPORTATION COMMISSION OF SOUTHERN NEVADA Board of Commissioners Lawrence L. Brown, III, Chairman Debra March, Vice Chairman Carolyn Goodman Chris Giunchigliani John Lee Alan Litman Lois Tarkanian Rod Woodbury Regional Transportation Commission Officials Tina Quigley, General Manager MJ Maynard, Deputy General Manager Fred Ohene, Deputy General Manager Marc Traasdahl, Director of Finance Holland & Hart LLP, Counsel to the Commission FINANCIAL ADVISORS Hobbs, Ong & Associates, Inc. Public Financial Management, Inc. Las Vegas, Nevada San Francisco, California BOND AND SPECIAL COUNSEL Sherman & Howard L.L.C. Las Vegas, Nevada UNDERWRITERS COUNSEL Stradling Yocca Carlson & Rauth, P.C. Reno, Nevada REGISTRAR AND PAYING AGENT The Bank of New York Mellon Trust Company, N.A. Dallas, Texas

6 TABLE OF CONTENTS Page INTRODUCTION... 1 General... 1 The Issuer... 1 Regional Transportation Commission... 2 Purpose... 2 Authority for Issuance... 2 Security... 2 The 2015 Bonds; Prior Redemption... 6 Tax Matters... 6 Professionals... 6 Continuing Disclosure Undertaking... 7 Additional Information... 7 THE 2015 BONDS... 8 General... 8 Payment Provisions... 8 Redemption Provisions... 9 Tax Covenant Defeasance Book-Entry Only System SOURCES AND USES OF FUNDS Sources and Uses of Funds The Project DEBT SERVICE REQUIREMENTS SECURITY FOR THE 2015 BONDS Special, Limited Obligations Net Pledged Revenues The Reserve Account Flow of Funds Additional Bonds Outstanding Debt REVENUES AVAILABLE FOR DEBT SERVICE Net Pledged Revenues No Repeal of Indexed Fuel Taxes and Motor Vehicle Fuel Taxes Collection and Enforcement of Indexed Fuel Taxes Collection and Enforcement of County Motor Vehicle Fuel Taxes Collection and Enforcement of State Motor Vehicle Fuel Taxes Collection and Enforcement of Special Fuels Historical and Budgeted Net Pledged Revenues Fuel Tax Data CERTAIN RISK FACTORS i-

7 Page Special, Limited Obligations Factors That May Impact Collection of Indexed Fuel Taxes and Subordinate Motor Vehicle Fuel Taxes Effect of Bankruptcy on Collection of Delinquent Taxes Collection Risks Neither the County Nor the Commission Can Increase Rates of Taxes No Pledge of Property Limitations on Remedies Available to Owners of 2015 Bonds Forward-Looking Statements Changes in Law Secondary Market REGIONAL TRANSPORTATION COMMISSION OF SOUTHERN NEVADA General Governing Body and Administration Regional Transportation Plan Employees; Benefits and Pension Matters Budget Process Annual Reports History of Revenues, Expenditures and Changes in Fund Balance - Governmental Funds Risk Management CLARK COUNTY, NEVADA General Board of County Commissioners Administration Financial Statements TAX MATTERS Federal Tax Matters State Tax Exemption LEGAL MATTERS Litigation Sovereign Immunity Approval of Certain Legal Proceedings Police Power FINANCIAL ADVISORS INDEPENDENT AUDITORS RATINGS UNDERWRITING OFFICIAL STATEMENT CERTIFICATION ii-

8 Page APPENDIX A - Audited Basic (Component Unit) Financial Statements of the Regional Transportation Commission of Southern Nevada for the Fiscal Year Ended June 30, A-1 APPENDIX B - Summary of Certain Provisions of the Bond Ordinance...B-1 APPENDIX C - Book-Entry Only System...C-1 APPENDIX D - Form of Continuing Disclosure Certificate... D-1 APPENDIX E - Form of Approving Opinion of Bond Counsel... E-1 APPENDIX F - Economic and Demographic Information... F-1 -iii-

9 INDEX OF TABLES NOTE: Tables marked with an (*) indicate Annual Financial Information to be updated pursuant to SEC Rule 15c2-12, as amended. See Appendix D - Form of Continuing Disclosure Certificate. Sources and Uses of Funds Debt Service Requirements Outstanding Indebtedness Payable from Net Pledged Revenues Outstanding Indebtedness Payable Solely from the Motor Vehicle Fuel Taxes Current Indexed Fuel Tax Rate Calculations Current Indexed Fuel Tax Rate Calculation Motor Vehicle Fuel Current Indexed Fuel Tax Rates Special Fuels *Historical and Budgeted Net Pledged Revenues and Debt Service Coverage *History of Taxable Gallons Sold Motor Vehicle Fuel Comparison of Monthly Motor Vehicle Fuel Tax Revenues *History of Taxable Gallons Sold Diesel Fuel *Combined History of Revenues, Expenditures and Changes in Fund Balance-Governmental Fund Types Population... F-1 Age Distribution... F-2 Median Household Effective Buying Income Estimates... F-2 Percent of Households by Effective Buying Income Groups 2015 Estimates... F-3 Per Capita Personal Income... F-3 Average Annual Labor Force Summary... F-4 Industrial Employment... F-4 Clark County s Ten Largest Employers... F-5 Size Class of Industries... F-5 Taxable Sales... F-6 Residential Building Permits... F-6 Total Building Permits... F-7 Gross Taxable Gaming Revenue and Total Gaming Taxes... F-7 Visitor Volume and Room Occupancy Rate... F-8 Room Tax Revenue... F-9 McCarran International Airport Enplaned & Deplaned Passenger Statistics... F-10 Page -iv-

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11 OFFICIAL STATEMENT $85,000,000 CLARK COUNTY, NEVADA HIGHWAY REVENUE BONDS (INDEXED FUEL TAX AND SUBORDINATE MOTOR VEHICLE FUEL TAX) SERIES 2015 INTRODUCTION General This Official Statement, including the cover page, the inside cover page and the appendices, is furnished by Clark County, Nevada (the County ) and the Regional Transportation Commission of Southern Nevada (the Commission ), to provide information about the County, the Commission, and the County s $85,000,000 Highway Revenue Bonds (Indexed Fuel Tax and Subordinate Motor Vehicle Fuel Tax), Series 2015 (the 2015 Bonds ). The 2015 Bonds will be issued pursuant to an ordinance (the Bond Ordinance ) adopted by the Board of Commissioners of the County (the Board ) on October 6, Capitalized terms used herein that are otherwise not defined have the meanings ascribed to them in the Bond Ordinance. See Appendix B - Summary of Certain Provisions of the Bond Ordinance. The offering of the 2015 Bonds is made only by way of this Official Statement, which supersedes any other information or materials used in connection with the offer or sale of the 2015 Bonds. The following introductory material is only a brief description of and is qualified by the more complete information contained throughout this Official Statement. A full review should be made of the entire Official Statement, including the section entitled CERTAIN RISK FACTORS and the documents summarized or described herein. Detachment or other use of this INTRODUCTION without the entire Official Statement, including the cover page, the inside cover page and the appendices, is unauthorized. The County s participation in the preparation of this Official Statement has been limited to the sections entitled INTRODUCTION - The Issuer, SECURITY FOR THE 2015 BONDS, excluding the caption thereunder entitled Outstanding Debt and Other Obligations, CLARK COUNTY, NEVADA, and LEGAL MATTERS - Litigation - The County. The Issuer The County is a political subdivision of the State of Nevada (the State or Nevada ) organized in The County covers an area of approximately 8,012 square miles in the southern portion of the State. The City of Las Vegas, the County seat, is the most populous city in the State. According to the State Demographer, the County s estimated population as of July 1, 2015 (most recent estimate available), was 2,171,402. See CLARK COUNTY, NEVADA. 1

12 Regional Transportation Commission The Regional Transportation Commission of Southern Nevada (the Commission ) was originally established as the Regional Streets and Highway Commission by ordinance of the Board on June 7, 1965, pursuant to enabling legislation passed by the 1965 Nevada Legislature. The Commission has all of the powers provided for in the Project Act (defined below) and in the Constitution and other laws of the State. Pursuant to the Project Act, the Commission is responsible for the administration of the funds of the County generated from the Indexed Fuel Taxes and the Motor Vehicle Fuel Taxes and for distributing those funds to various governmental subdivisions within the County. The Commission also is responsible for the administration of other funds of the County earmarked for major street and highway projects, including certain sales tax and jet fuel tax revenues. No sales tax or jet fuel tax revenues are available to pay debt service on the 2015 Bonds. See REGIONAL TRANSPORTATION COMMISSION OF SOUTHERN NEVADA. The Commission serves as both the transit authority and the transportation planning agency for Southern Nevada. In 1981, it was designated by the Governor as the Metropolitan Planning Organization ( MPO ) for Southern Nevada. In its role as MPO, the Commission is responsible for the review and approval of a Regional Street and Highway Plan, and also oversees the federally mandated transportation planning process for Southern Nevada, and manages the distribution of federal highway funds. The Commission also manages distribution of funds from the Federal Transit Administration, the Federal Highway Trust Fund and certain sales tax revenues designated for transportation. In its role as the public transit provider, the Commission established a fixed route bus system along with a complementary paratransit bus system to comply with the Americans with Disabilities Act, now known as RTC Transit. The Commission provides mass transit that connects throughout Southern Nevada and administers programs that encourage sustainability. Purpose Proceeds of the 2015 Bonds will be used to: (i) provide funds to the Commission to finance the costs of constructing certain major streets and highways in the County (the Project ); (ii) fund a deposit to the Reserve Account; and (iii) pay the costs of issuing the 2015 Bonds. See SOURCES AND USES OF FUNDS. Authority for Issuance The 2015 Bonds are being issued pursuant to the constitution and laws of the State, including: the County Motor Vehicle Fuel Tax Law, Chapter 373, Nevada Revised Statutes ( NRS ); Chapter 706, NRS (the Project Act ); Chapter 365, NRS, as amended (the Tax Act ); the Local Government Securities Law, NRS Sections through , as amended (the Bond Act ); Chapter 348, NRS; and pursuant to the Bond Ordinance and the Tax Ordinance (as more fully defined herein). Security Special, Limited Obligations. The 2015 Bonds are special, limited obligations of the County. The 2015 Bonds are payable solely from and secured by an irrevocable lien on the 2

13 Net Pledged Revenues, as defined in more detail herein. The 2015 Bonds do not constitute a general obligation debt or indebtedness of the County, the Commission, the State or any other political subdivision of the State and no owner of any 2015 Bond may look to any source of funds other than the Net Pledged Revenues for payment of debt service on the 2015 Bonds. Net Pledged Revenues Generally. The 2015 Bonds are payable solely from and secured by an irrevocable lien on the Net Pledged Revenues derived from certain excise taxes on motor vehicle fuel and special fuels, after the deduction of Administration Expenses and Direct Distributions (each defined in detail in Appendix B and described in more detail below). The pledged taxes consist of two parts: the Indexed Fuel Taxes and the Subordinate Motor Vehicle Fuel Taxes (each defined in detail in Appendix B and described in more detail below). The Indexed Fuel Taxes are imposed by the County, and the Subordinate Motor Vehicle Fuel Taxes are imposed or received by the County, pursuant to the Project Act, the Tax Act, and the County s Tax Ordinance (collectively, Ordinance No. 226, Ordinance No. 838 and Ordinance No. 4126, as amended from time to time, and which ordinances, as amended, are also cited as Sections through and Chapter 4.07 of the Clark County Code). See SECURITY FOR THE 2015 BONDS and REVENUES AVAILABLE FOR DEBT SERVICE. Lien Priority. The 2015 Bonds are secured by an irrevocable lien on the Net Pledged Revenues. The lien of the 2015 Bonds on each component of the Net Pledged Revenues, however, differs as described below. The 2015 Bonds have an irrevocable senior lien (but not an exclusive senior lien) on the Indexed Fuel Taxes, on a parity with the County s Highway Revenue Bonds (Indexed Fuel Tax and Subordinate Motor Vehicle Fuel Tax), Series 2014A (the 2014A Bonds ), currently outstanding in the aggregate principal amount of $96,870,000. See Additional Bonds below for a description of other securities that may be issued in the future with a lien on the Indexed Fuel Taxes. The 2015 Bonds also have an irrevocable lien on the Motor Vehicle Fuel Taxes on a parity with the lien thereon of the 2014A Bonds; however, the lien of the 2015 Bonds and the 2014A Bonds on the Motor Vehicle Fuel Taxes is subordinate to the lien thereon of $394,150,000 aggregate principal amount of outstanding bonds (the Superior Securities ), which consist of: (i) the County s Highway Revenue (Motor Vehicle Fuel Tax) Improvement and Refunding Bonds, Series 2007 (the 2007 Bonds ), currently outstanding in the aggregate principal amount of $213,480,000; (ii) the County s Highway Revenue (Motor Vehicle Fuel Tax) Improvement Bonds, Series 2010A1 (Taxable Direct Pay Build America Bonds) (the 2010A1 Bonds ), currently outstanding in the aggregate principal amount of $32,595,000; (iii) the County s Highway Revenue (Motor Vehicle Fuel Tax) Improvement and Refunding Bonds, Series 2010B (the 2010B Bonds ), currently outstanding in the aggregate principal amount of $51,180,000; and (iv) the County s Highway Revenue (Motor Vehicle Fuel Tax) Refunding Bonds, Series 2011 (the 2011 Bonds ), currently outstanding in the aggregate principal amount of $96,895,000. See Additional Bonds below for a description of other securities that may be issued in the future with a lien on the Motor Vehicle Fuel Taxes. 3

14 Notwithstanding that Net Pledged Revenues include both the Indexed Fuel Taxes and the Subordinate Motor Vehicle Fuel Taxes, the Bond Ordinance provides that amounts in the Transportation Fund allocable to the Indexed Fuel Taxes shall be used for debt service before any other amounts in the Transportation Fund are so used (including the Subordinate Motor Vehicle Fuel Taxes or any other portion of the Net Pledged Revenues). The Indexed Fuel Taxes Generally. Generally, the Indexed Fuel Taxes consist of additional, inflation-based index taxes imposed on the privilege of selling, using or distributing (a) motor vehicle fuel and (b) special fuels in the County, and annual increases in the rate of such taxes imposed pursuant to the Tax Ordinance through December 31, Motor vehicle fuel means, generally, gasoline, and special fuel means, generally, diesel fuel and other types of non-gasoline fuel. The Indexed Fuel Taxes consist of inflation-based index taxes imposed on the current rates of 12 existing base fuel taxes, seven of which are imposed by the State, four of which are imposed by the United States and one of which is imposed by the County. These taxes are imposed on motor vehicle fuel (gasoline), diesel, compressed natural gas ( CNG ), liquefied petroleum gas ( LPG ) and hydrocarbon and other special fuels (collectively referred to herein as A55 ). The Indexed Fuel Taxes on motor vehicle fuel and special fuel are comprised of the amount of taxes derived by applying the PPI Index (defined below) to the existing base of each motor vehicle fuel tax and special fuel tax (or, for indexing occurring on July 1, 2014 through July 1, 2016, an adjusted base that includes the original base tax plus the results of all prior indexing of each such tax), as further explained below. The base taxes themselves do not constitute a portion of the Indexed Fuel Taxes; only the cumulative incremental amounts derived from periodically applying the PPI Index to the underlying base or adjusted base of each such tax. Further, the Indexed Fuel Taxes do not constitute inflationary increases to the underlying base fuel taxes themselves, but rather constitute separate County taxes which are based on the current rates of the underlying State, federal and County fuel taxes. The annual increases in each of the Indexed Fuel Taxes are calculated using a formula based on the lesser of (i) 7.8% or (ii) a rolling 10-year average of the changes in the Producer Price Index for Other Nonresidential Construction, or a similar inflation index. The rate determined by applying the formula in the preceding sentence is referred to herein as the PPI Index. Notwithstanding the formula, the cumulative total of the percentage increases in each of the taxes constituting the Indexed Fuel Taxes cannot cause the base rate of each such tax (i.e., the rate of each such tax before any indexing occurred) to increase by more than 19.2% (beginning with the original rate effective on January 1, 2014, and continuing to and including the rate effective on July 1, 2016). The Indexed Fuel Taxes are imposed under the authority of State Assembly Bill 413, which was adopted in 2013 and authorized the County to adopt an ordinance imposing additional taxes on such fuels for the benefit of the Commission, and to provide for annual increases in such taxes. On September 3, 2013, the County adopted Ordinance No. 4126, which imposed the Indexed Fuel Taxes commencing on January 1, Pursuant to the ordinance, annual increases for each of the Indexed Fuel Taxes were calculated and imposed effective July 1, 2014 and July 1, 2015, and a final annual increase will be calculated and imposed on July 1,

15 Additional information regarding the Subordinate Motor Vehicle Fuel Taxes and the Indexed Fuel Taxes is provided in REVENUES AVAILABLE FOR DEBT SERVICE herein. The Subordinate Motor Vehicle Fuel Taxes Generally. The Subordinate Motor Vehicle Fuel Taxes consist of Motor Vehicle Fuel Taxes less the amount of any such taxes necessary to make payment of the Bond Requirements on any Outstanding Superior Securities on each payment date. Motor Vehicle Fuel Taxes are defined, generally, as excise taxes collected for use by the County in connection with the sale, use or distribution of motor vehicle fuel. The Motor Vehicle Fuel Taxes currently consist of the following: (i) a tax currently levied at the rate of 9.00 cents per gallon by the County (the County Motor Vehicle Fuel Tax ) and (ii) the County s proportional interest in two taxes, equal in the aggregate to 3.00 cents per gallon, levied by the State on certain motor vehicle fuel sold in the County and the State (the State Motor Vehicle Fuel Taxes ). The Motor Vehicle Fuel Taxes do not include certain motor vehicle fuel taxes paid on fuel used in watercraft as described in NRS or proceeds derived from aviation fuel pursuant to NRS See SECURITY FOR THE 2015 BONDS - Net Pledged Revenues and REVENUES AVAILABLE FOR DEBT SERVICE. Additional Bonds. The County may issue additional bonds ( Parity Securities ) with a parity lien on all or a portion of the Net Pledged Revenues, including Parity Indexed Fuel Tax and Subordinate Motor Vehicle Fuel Tax Securities, Parity Indexed Fuel Tax Only Securities and Parity Subordinate Motor Vehicle Fuel Tax Only Securities (each as defined herein), upon the satisfaction of the conditions set forth in the ordinances authorizing the issuance of the Superior Securities and the Bond Ordinance, as applicable. See SECURITY FOR THE 2015 BONDS - Additional Bonds. The County currently expects to issue bonds payable on a parity with all or a portion of the Net Pledged Revenues, including the 2015 Bonds, to fund a total of approximately $528 million of projects. The 2015 Bonds will fund approximately $85 million of projects and the remaining approximately $443 million of projects will be funded by additional bonds that are currently expected to fund approximately $85 million of projects in fiscal year 2016, and approximately $358 million of projects in fiscal years Reserve Account. The 2015 Bonds and the 2014A Bonds are also secured by a Reserve Account equal to the least of: (a) 125% of the combined average annual principal and interest requirements of the 2014A Bonds and the 2015 Bonds; (b) 100% of the Combined Maximum Annual Principal and Interest Requirements of the 2014A Bonds and the 2015 Bonds; or (c) an amount determined by adding the amount of the Minimum Bond Reserve in effect immediately prior to the issuance of the 2015 Bonds to an amount equal to 10% of the proceeds of the 2015 Bonds. See SECURITY FOR THE 2015 BONDS - The Reserve Account. 5

16 The 2015 Bonds; Prior Redemption The 2015 Bonds are issued in denominations of $5,000 or integral multiples thereof and initially will be registered in the name of Cede & Co., as nominee of The Depository Trust Company ( DTC ), the securities depository for the 2015 Bonds. Purchases of the 2015 Bonds are to be made in book-entry form only. Purchasers will not receive certificates evidencing their beneficial ownership interest in the 2015 Bonds. See THE 2015 BONDS - Book-Entry Only System. The 2015 Bonds will be dated as of their date of delivery and will mature and bear interest (calculated based on a 360-day year consisting of twelve 30-day months) as set forth on the inside cover page of this Official Statement. See THE 2015 BONDS. The payment of the principal of and interest on the 2015 Bonds is described in THE 2015 BONDS - Payment Provisions. The 2015 Bonds are subject to redemption prior to maturity at the option of the County as described in THE 2015 BONDS - Redemption Provisions. Tax Matters In the opinion of Sherman & Howard L.L.C., Bond Counsel, assuming continuous compliance with certain covenants described herein, interest on the 2015 Bonds is excluded from gross income under federal income tax laws pursuant to Section 103 of the Internal Revenue Code of 1986, as amended to the date of delivery of the 2015 Bonds (the Tax Code ), and interest on the 2015 Bonds is excluded from alternative minimum taxable income as defined in Section 55(b)(2) of the Tax Code, except that such interest is required to be included in calculating the adjusted current earnings adjustment applicable to corporations for purposes of computing the alternative minimum taxable income of corporations. See TAX MATTERS - Federal Tax Matters. Under the laws of the State in effect as of the date of delivery of the 2015 Bonds, the 2015 Bonds, their transfer, and the income therefrom, are free and exempt from taxation by the State or any subdivision thereof except for the tax on estates imposed pursuant to Chapter 375A of NRS, and the tax on generation-skipping transfers imposed pursuant to Chapter 375B of NRS. See TAX MATTERS - State Tax Exemption. Professionals Sherman & Howard L.L.C., Las Vegas, Nevada, has acted as Bond Counsel and also has acted as Special Counsel to the County in connection with this Official Statement. Stradling Yocca Carlson & Rauth, P.C., Reno, Nevada, has acted as counsel to the Underwriters. The financial advisors to the County in connection with the issuance of the 2015 Bonds are Hobbs, Ong & Associates, Inc., Las Vegas, Nevada, and Public Financial Management, Inc., San Francisco, California (the Financial Advisors ). See FINANCIAL ADVISORS. The fees of the Financial Advisors will be paid only from 2015 Bond proceeds at closing. Holland & Hart LLP, Las Vegas, Nevada, is Counsel to the Commission. The Commission s audited basic component unit financial statements, included as Appendix A to this Official Statement, include the report of Moss Adams LLP, Scottsdale, Arizona, independent certified public accountants. 6

17 See INDEPENDENT AUDITORS. The Bank of New York Mellon Trust Company, N.A., Dallas, Texas, will act as the registrar and paying agent (the Registrar and Paying Agent ) for the 2015 Bonds. RBC Capital Markets, LLC, and Wells Fargo Securities are acting as the underwriters of the 2015 Bonds (collectively, the Underwriters ). See UNDERWRITING. Continuing Disclosure Undertaking The Commission will execute a continuing disclosure certificate (the Disclosure Certificate ) at the time of the closing for the 2015 Bonds. The Disclosure Certificate will be executed for the benefit of the beneficial owners of the 2015 Bonds and the Commission will covenant to comply with its terms. The Disclosure Certificate will provide that so long as the 2015 Bonds remain outstanding, the Commission will provide the following information to the Municipal Securities Rulemaking Board (the MSRB ), through the Electronic Municipal Market Access ( EMMA ) system: (i) annually, certain financial information and operating data; and (ii) notice of the occurrence of certain material events; each as specified in the Disclosure Certificate. The form of the Disclosure Certificate is attached hereto as Appendix D. In the last five years, the Commission has not failed to materially comply with any continuing disclosure undertakings previously entered into pursuant to Rule 15c2-12 promulgated under the Securities Exchange Act of Additional Information This introduction is only a brief summary of the provisions of the 2015 Bonds and the Bond Ordinance; a full review of the entire Official Statement should be made by potential investors. Brief descriptions of the County, the Commission, the Project, the 2015 Bonds, the Bond Ordinance and other documents are included in this Official Statement. All references herein to the 2015 Bonds, the Bond Ordinance and other documents are qualified in their entirety by reference to such documents. This Official Statement speaks only as of its date and the information contained herein is subject to change. Additional information and copies of the documents referred to herein are available from the Commission and the Financial Advisors: Regional Transportation Commission of Southern Nevada Attention: Director of Finance 600 S. Grand Central Parkway, Suite 300 Las Vegas, NV Telephone: (702) Hobbs, Ong & Associates, Inc Paradise Road, Suite 152 Las Vegas, Nevada Telephone: (702) Public Financial Management, Inc. 50 California Street, Suite 2300 San Francisco, CA Telephone: (415)

18 THE 2015 BONDS General The 2015 Bonds will be issued as fully registered bonds in denominations of $5,000 or integral multiples thereof and initially will be registered in the name of Cede & Co., as nominee of DTC, pursuant to DTC s book-entry only system. The 2015 Bonds will be dated as of the date of delivery and will mature on the dates set forth on the inside cover page of this Official Statement. The 2015 Bonds shall bear interest (on the basis of a 360-day year of twelve 30-day months) at the rates set forth on the inside cover page of this Official Statement from their date until their respective maturity dates. Payment Provisions The 2015 Bonds shall bear interest (calculated on the basis of a 360 day year consisting of twelve 30 day months) from their date until their respective maturity dates (or, if redeemed prior to maturity as provided below, their redemption dates) at the respective rates set forth on the inside cover page hereof, and payable semiannually on January 1 and July 1 of each year commencing on January 1, 2016; provided that those 2015 Bonds which are reissued upon transfer, exchange or other replacement shall bear interest at the rates set forth on the inside cover page hereof from the most recent interest payment date to which interest has been paid, or if no interest has been paid, from the date of the 2015 Bonds. The 2015 Bonds shall mature on the designated dates in the amounts of principal, as designated on the inside cover page hereof. The principal of the 2015 Bonds will be payable upon presentation and surrender at the principal office of the Paying Agent. If any 2015 Bond shall not be paid when due (after presentation and surrender at maturity, if applicable), it shall continue to draw interest at the interest rate borne by said 2015 Bond until the principal thereof is paid in full. The payment of interest on any 2015 Bond shall be made to the registered owner thereof by check or draft mailed by the Paying Agent on each interest payment date (or, if such interest payment date is not a business day, on the next succeeding business day), to the registered owner thereof at his address as shown on the registration records kept by the Registrar at the close of business on the 15th day of the calendar month next preceding such interest payment date (the Regular Record Date ); but any such interest not so timely paid or duly provided for shall cease to be payable to the person who is the registered owner thereof at the close of business on the Regular Record Date and shall be payable to the person who is the registered owner thereof at the close of business on a special record date for the payment of any such defaulted interest (a Special Record Date ). The Special Record Date shall be fixed by the Registrar whenever moneys become available for payment of the defaulted interest, and notice of the Special Record Date shall be given to the registered owners of the 2015 Bonds not less than 10 days prior thereto by first-class mail to each such registered owner as shown on the Registrar s registration records on a date selected by the Registrar, stating the date of the Special Record Date and the date fixed for the payment of such defaulted interest. The Paying Agent may make payments of interest on any 2015 Bond by such alternative means as may be mutually agreed to between the owner of the 2015 Bond and the Paying Agent (provided, however, that the County shall not be required to make funds available to the Paying Agent prior to the due 8

19 dates of interest and principal, respectively). All such payments shall be made in lawful money of the United States of America. Notwithstanding the foregoing, payments of the principal and interest on the 2015 Bonds will be made by the Paying Agent directly to DTC or its nominee, Cede & Co., so long as DTC or Cede & Co. is the sole registered owner of the 2015 Bonds. Disbursement of such payments to DTC s Participants is the responsibility of DTC, and disbursements of such payments to the Beneficial Owners is the responsibility of DTC s Participants and the Indirect Participants, as more fully described herein. See Book-Entry Only System below. Redemption Provisions Optional Redemption. The 2015 Bonds, or portions thereof ($5,000 or any integral multiple), maturing on and after July 1, 2026, will be subject to redemption prior to their respective maturities at the option of the County as directed by the Chief Financial Officer on and after July 1, 2025, in whole or in part at any time, from such maturities as are selected by the County as directed by the Chief Financial Officer and by lot within a maturity, at a price equal to the principal amount of each 2015 Bond or portion thereof so redeemed, plus accrued interest thereon to the redemption date. Notice of Redemption. Unless waived by any owner of any 2015 Bond to be redeemed, upon direction by the County, official notice of redemption shall be given by the Registrar electronically, as long as Cede & Co. or a successor nominee of a depository is the registered owner of the 2015 Bonds, and otherwise by first-class postage prepaid mail, at least 30 days and not more than 60 days prior to the date fixed for redemption to the Electronic Municipal Market Access (EMMA) system of the Municipal Securities Rulemaking Board (the MSRB ) and to the registered owner of any 2015 Bond to be redeemed at the address shown on the records of the Registrar. Failure to give such notice to the MSRB or the registered owner of any 2015 Bond, or any defect therein, shall not affect the validity of the proceedings for the redemption of any other 2015 Bonds. All official notices of redemption shall be dated and shall state: (i) the redemption date, (ii) the redemption prices, (iii) if less than all Outstanding 2015 Bonds are to be redeemed, the identification (and, in the case of partial redemption, the respective principal amounts) of the 2015 Bonds to be redeemed, (iv) that on the redemption date the redemption price will become due and payable upon each such 2015 Bond or portion thereof called for redemption, and that interest thereon shall cease to accrue from and after said date, (v) the place where such 2015 Bonds are to be surrendered for payment of the redemption price, and (vi) state any conditions to such redemption, including, if applicable, that the redemption is conditional upon the receipt by the Paying Agent of funds on or before the date fixed for redemption sufficient to pay the redemption price of the 2015 Bonds so called for redemption, and that if such funds are not available, that such redemption shall be cancelled by written notice to the registered owners of the 2015 Bonds called for redemption in the same manner as the original notice of redemption was mailed. Official notice of redemption having been given as described above, and upon satisfaction of any conditions contained in a conditional notice of redemption, the 2015 Bonds or 9

20 portions thereof to be so redeemed shall, on the redemption date, become due and payable at the redemption price therein specified, and from and after such date (unless the County shall fail to pay the redemption price) such 2015 Bonds or portions thereof shall cease to bear interest. Upon surrender of such 2015 Bonds for redemption in accordance with said notice, such 2015 Bonds shall be paid by the Paying Agent at the redemption price. Installments of interest due prior to the redemption date and, if the redemption date is an interest payment date, on the redemption date shall be payable as described above for payment of interest. Accrued interest due on any 2015 Bond which is called for prior redemption on a date which is not an interest payment date will be paid at the time the principal of such 2015 Bond is paid. Tax Covenant In the Bond Ordinance, the County covenants for the benefit of the owners of the 2015 Bonds that it will not take any action or omit to take any action with respect to the 2015 Bonds, the proceeds thereof, any other funds of the County or any facilities financed or refinanced with the proceeds of the 2015 Bonds if such action or omission (i) would cause the interest on the 2015 Bonds to lose its exclusion from gross income for federal income tax purposes under the Tax Code or (ii) would cause interest on the 2015 Bonds to lose its exclusion from alternative minimum taxable income as defined in Section 55(b)(2) of the Tax Code, except to the extent such interest is required to be included in the adjusted current earnings adjustment applicable to corporations under Section 56 of the Tax Code in calculating corporate alternative minimum taxable income. The foregoing covenant shall remain in full force and effect notwithstanding the payment in full or defeasance of the 2015 Bonds until the date on which all obligations of the County in fulfilling the above covenant under the Tax Code have been met. Defeasance When all Bond Requirements of any 2015 Bond have been duly paid, the pledge and lien and all obligations under the Bond Ordinance as to that 2015 Bond shall thereby be discharged and the 2015 Bond shall no longer be deemed to be Outstanding within the meaning of the Bond Ordinance; provided, however, that if the principal of or interest on the 2015 Bond shall be paid by any Insurer of the 2015 Bond, the pledge of the Net Pledged Revenues and all covenants, agreements, and other obligations of the County to the owners hereunder shall continue to exist and such Insurer shall be subrogated to the rights of the owners. There shall be deemed to be such due payment when the County has placed in escrow or in trust with a trust bank located within or without the State, an amount sufficient (including the known minimum yield available for such purpose from Federal Securities (defined in Appendix B) in which such amount wholly or in part may be initially invested to meet all Bond Requirements of the 2015 Bond, as the same become due to the final maturity of the 2015 Bond or upon any prior redemption date as of which the County shall have exercised or shall have obligated itself to exercise its prior redemption option. The Federal Securities shall become due prior to the respective times on which the proceeds thereof shall be needed, in accordance with a schedule established and agreed upon between the County and such bank at the time of the creation of the escrow or trust, or the Federal Securities shall be subject to redemption at the option of the holders thereof to assure such availability as so needed to meet such schedule. 10

21 Book-Entry Only System The 2015 Bonds will be available in book-entry form only. DTC will act as the initial securities depository for the 2015 Bonds. The ownership of one fully registered 2015 Bond for each maturity as set forth on the inside cover page of this Official Statement, each in the aggregate principal amount of such maturity, will be registered in the name of Cede & Co., as nominee of DTC. See Appendix C - Book-Entry Only System. SO LONG AS CEDE & CO., AS NOMINEE OF DTC, IS THE REGISTERED OWNER OF THE 2015 BONDS, REFERENCES IN THIS OFFICIAL STATEMENT TO THE REGISTERED OWNERS OF THE 2015 BONDS WILL MEAN CEDE & CO. AND WILL NOT MEAN THE BENEFICIAL OWNERS. Neither the County nor the Paying Agent will have any responsibility or obligation to DTC s Participants or Indirect Participants (defined in Appendix C), or the persons for whom they act as nominees, with respect to the payments to or the providing of notice for the DTC Participants, the Indirect Participants or the beneficial owners of the 2015 Bonds as further described in Appendix C to this Official Statement. Sources and Uses of Funds SOURCES AND USES OF FUNDS The proceeds from the sale of the 2015 Bonds are expected to be applied in the following manner: Sources and Uses of Funds Amount SOURCE: Principal amount... $85,000, Plus original issue premium... 14,181, Total... $99,181, USES: The Project... $92,036, Reserve Account... 6,667, Costs of issuance (including Underwriters discount (1) ) , Total... $99,181, (1) See UNDERWRITING. Source: The Financial Advisors. The Project The Commission maintains a list of street and highway projects as part of its Regional Transportation Plan (the RTP ), which is updated at least every four years. The most 11

22 recent RTP was approved by the Commission on December 13, 2012, and approved by the Federal Highway Administration in February See REGIONAL TRANSPORTATION COMMISSION OF SOUTHERN NEVADA - Regional Transportation Plan. The Commission has identified approximately $528 million of public road projects in the RTP to be undertaken over the next 4-6 years, a portion of which will be financed with the 2015 Bonds. 12

23 DEBT SERVICE REQUIREMENTS The following table sets forth the debt service requirements for the 2015 Bonds and the 2014A Bonds, each payable from the Net Pledged Revenues, for each fiscal year ending June 30. Debt Service Requirements for 2015 Bonds (1) Debt Service Requirements for 2014A Bonds (1) Grand Total (1) Fiscal Year Principal Interest Total Principal Interest Total $602,083 $ 602,083 $3,130,000 (2) $4,802,950 (2) $7,932,950 $8,535, ,250,000 4,250,000 3,255,000 4,675,250 7,930,250 12,180, ,520,000 4,187,000 6,707,000 3,385,000 4,525,525 7,910,525 14,617, ,650,000 4,057,750 6,707,750 3,550,000 4,369,900 7,919,900 14,627, ,780,000 3,922,000 6,702,000 3,695,000 4,221,975 7,916,975 14,618, ,915,000 3,779,625 6,694,625 3,850,000 4,048,800 7,898,800 14,593, ,065,000 3,630,125 6,695,125 4,040,000 3,851,550 7,891,550 14,586, ,215,000 3,473,125 6,688,125 4,245,000 3,644,425 7,889,425 14,577, ,380,000 3,308,250 6,688,250 4,455,000 3,429,025 7,884,025 14,572, ,545,000 3,135,125 6,680,125 4,675,000 3,202,875 7,877,875 14,558, ,730,000 2,953,250 6,683,250 4,905,000 2,963,375 7,868,375 14,551, ,915,000 2,762,125 6,677,125 5,150,000 2,712,000 7,862,000 14,539, ,110,000 2,561,500 6,671,500 5,410,000 2,448,000 7,858,000 14,529, ,315,000 2,350,875 6,665,875 5,680,000 2,170,750 7,850,750 14,516, ,530,000 2,129,750 6,659,750 5,965,000 1,879,625 7,844,625 14,504, ,755,000 1,897,625 6,652,625 6,265,000 1,573,875 7,838,875 14,491, ,995,000 1,653,875 6,648,875 6,575,000 1,252,875 7,827,875 14,476, ,240,000 1,398,000 6,638,000 6,905, ,875 7,820,875 14,458, ,505,000 1,129,375 6,634,375 7,250, ,000 7,812,000 14,446, ,775, ,375 6,622,375 7,615, ,375 7,805,375 14,427, ,060, ,500 14,411, ,411,500 Total: $85,000,000 $54,380,333 $139,380,333 $100,000,000 $57,441,025 $157,441,025 $296,821,358 Source: The Financial Advisors. (1) Totals may not add due to rounding. (2) Includes amounts already paid on July 1, 2015 ($3,130,000 of principal and $2,432,775 in interest). 13

24 The following table sets forth the debt service requirements for the Superior Securities payable solely from the Motor Vehicle Fuel Tax Revenues, for each fiscal year ending June 30. Debt Service Requirements for Superior Securities (1) Fiscal Year Principal Interest (2) Total 2016 $22,575,000 (3) $19,415,120 (3) $41,990, ,680,000 18,258,745 41,938, ,850,000 17,045,495 41,895, ,075,000 15,772,370 41,847, ,365,000 14,436,370 41,801, ,720,000 13,034,245 41,754, ,150,000 11,562,495 41,712, ,660,000 10,017,245 41,677, ,240,000 8,394,745 41,634, ,260,000 6,932,245 32,192, ,525,000 5,846,970 32,371, ,430,000 4,923,045 32,353, ,370,000 3,965,695 32,335, ,345,000 2,738,738 32,083, ,480, ,490 32,479,490 Total: $416,725,000 $153,343,013 $570,068,013 (1) Totals may not add due to rounding. (2) The 2010A1 Bonds were issued as Build America Bonds, or BABs. Upon issuance of the 2010A1 Bonds, the 2010A1 Bonds were entitled to receive a federal subsidy (the BAB Credit ) in an amount up to 35% of the interest due on those bonds. However, there is no assurance that the BAB Credit will be received in the future. Accordingly, the amounts shown in the table reflect total interest; the amounts are not net of any BAB Credit. If the BAB Credit is received, the amount of interest on the 2010A1 Bonds to be paid from Net Pledged Revenues will be lower. (3) Includes amounts already paid on July 1, 2015 ($22,575,000 of principal and $9,989,747 in interest). 14

25 Special, Limited Obligations SECURITY FOR THE 2015 BONDS The 2015 Bonds are special, limited obligations of the County payable only from the Net Pledged Revenues. Neither the 2015 Bonds nor the interest thereon constitute a general obligation debt or indebtedness of the County, the Commission, the State, or any political subdivision thereof within the meaning of any constitutional or statutory provision or limitation; and the 2015 Bonds shall not be considered or held to be general obligations of the County or the Commission. The owners of 2015 Bonds do not have the right to require or compel the exercise of the taxing power of the County or of any other taxing entity for payment of the principal of or interest on the 2015 Bonds. The owners of the 2015 Bonds may not look to the County s General Fund (the General Fund ) or any other funds of the County or the Commission (other than those pledged) for payment of the 2015 Bonds. Therefore, the security for the punctual payment of the principal of and interest on the 2015 Bonds is dependent on the generation of Net Pledged Revenues in an amount sufficient to meet debt service requirements on the 2015 Bonds. Net Pledged Revenues General. The 2015 Bonds are payable solely from and secured by an irrevocable lien on the Net Pledged Revenues. The 2015 Bonds have an irrevocable senior lien (but not an exclusive senior lien) on the Indexed Fuel Taxes on a parity with the lien thereon of the 2014A Bonds. The 2015 Bonds also have an irrevocable lien (but not an exclusive lien) on the Motor Vehicle Fuel Taxes on a parity with the lien thereon of the 2014A Bonds but subordinate to the lien thereon of the Superior Securities. See INTRODUCTION - Lien Priority. Net Pledged Revenues. The Net Pledged Revenues are comprised primarily of the gross proceeds of the Indexed Fuel Taxes and the Subordinate Motor Vehicle Fuel Taxes, less certain Administration Expenses and any required Direct Distributions, as more fully described in INTRODUCTION - Security. See Appendix B for detailed definitions of each of the capitalized terms in this paragraph. The Reserve Account General. The 2014A Bonds and the 2015 Bonds are also secured by the Reserve Account. The Reserve Account is required to be maintained as a continuing reserve in an amount equal to the Minimum Bond Reserve. The Bond Ordinance defines Minimum Bond Reserve to mean the least of: (a) 125% of the combined average annual principal and interest requirements of the 2014A Bonds and the 2015 Bonds; (b) 100% of the Combined Maximum Annual Principal and Interest Requirements of the 2014A Bonds and the 2015 Bonds; or (c) an amount determined by adding the amount of the Minimum Bond Reserve in effect immediately prior to the issuance of the 2015 Bonds to an amount equal to 10% of the proceeds of the 2015 Bonds. 15

26 Upon issuance of the 2015 Bonds, the Minimum Bond Reserve will be $14,767,500. Of such amount, $8,100,033 is currently on deposit in the Reserve Account and the balance is expected to be funded with proceeds of the 2015 Bonds. The moneys in the Reserve Account shall continue to be accumulated and maintained as a continuing reserve to be used, except as provided herein, only to prevent deficiencies in the payment of the principal of and the interest on the Outstanding 2014A Bonds and Outstanding 2015 Bonds and, if so elected by the County, any Outstanding Parity Securities (defined below), resulting from the failure to deposit in the Bond Fund sufficient funds to pay such principal and interest as the same accrue. No payment need be made into the Reserve Account at any time so long as the moneys therein are at least equal to the Minimum Bond Reserve. The Minimum Bond Reserve may be funded from cash or Federal Securities, a Reserve Account Surety Bond, or a combination of cash, Federal Securities and a Reserve Account Surety Bond. In addition, a Reserve Account Surety may be substituted for all or any part of the cash or Federal Securities at any time on deposit in the Reserve Account, or cash or Federal Securities can be substituted for all or any part of a Reserve Account Surety Bond; provided that any such Reserve Account Surety Bond that is substituted for cash or Federal Securities may be issued by any entity regardless of the rating of the claims paying ability of such entity as long as the Rating Agencies then rating the 2014A Bonds and 2015 Bonds provide evidence confirming that the rating on the 2014A Bonds and 2015 Bonds will not be lowered or withdrawn as a result of the substitution at the time such Reserve Account Surety Bond is deposited in or credited to the Reserve Account. To the extent the County obtains a Reserve Account Surety Bond in substitution for cash and/or Federal Securities, all or a portion of the money on hand in the Reserve Account shall be transferred to the Bond Fund or another account or fund as permitted by the Tax Code. Any Reserve Account Surety Bond on deposit in the Reserve Account shall be valued at the amount available to be drawn on it. Repayments to the provider of any Reserve Account Surety Bond shall have the same priority as payments into the Reserve Account. Whenever there is a sufficient amount in the Reserve Account to pay the principal of, premium, if any, and interest on all Outstanding 2014A and 2015 Bonds, the money in the Reserve Account in excess of the Minimum Bond Reserve may be used to pay such principal, premium, if any, and interest. Amounts in the Reserve Account may be withdrawn to redeem and retire the Outstanding Bonds and to pay the interest due to such date of redemption or maturity and premium. See Appendix B - Summary of Certain Provisions of the Bond Ordinance - Reserve Account for additional information regarding the Reserve Account. Reserve Account Provisions Applicable to Future Bond Issues. In connection with the issuance of additional securities that have a lien on the Net Pledged Revenues on a parity with the lien thereon of the 2014A Bonds and the 2015 Bonds ( Parity Securities ), the County may elect, but is not required, to provide by ordinance for (i) a reserve account solely for the benefit of such additional Parity Securities in an amount set forth in such ordinance; or (ii) a combined Minimum Bond Reserve, in which case the Minimum Bond Reserve would mean the 16

27 lesser of: (a) 125% of the combined average annual principal and interest requirements of the 2014A Bonds, the 2015 Bonds and any such Parity Securities so designated; or (b) 100% of the Combined Maximum Annual Principal and Interest Requirements of the 2014A Bonds, the 2015 Bonds and any such Parity Securities so designated; or (c) an amount determined by adding the amount of the Minimum Bond Reserve in effect immediately prior to the issuance of the Parity Securities so designated to an amount equal to 10% of the proceeds of the proposed Parity Securities. In connection with the issuance of additional Parity Securities, the County is not required to maintain a reserve account or a combined reserve account for any additional Parity Securities. Flow of Funds So long as any of the 2015 Bonds are Outstanding, as to any Bond Requirements, the entire Gross Pledged Revenues, except for such amounts withheld by dealers, users and the Nevada Department of Taxation (the Department ) to reimburse themselves (excluding the Department) for handling losses occasioned by evaporation, spillage and other similar causes, and to reimburse themselves (including the Department) for the costs of their respective services in the performance by them of all functions incident to the administration of the Subordinate Motor Vehicle Fuel Taxes and the Indexed Fuel Taxes, and constituting Administration Expenses, pursuant to the Project Act, to the Tax Act, to the Tax Ordinance, and to the contract pertaining thereto between the County and the State acting by and through the Department, except for amounts refunded to taxpayers as provided in such statutes, ordinance and contract, and except for the required share of the net proceeds of the taxes levied by the State in NRS and , needed to make the remittances and deposits required of the State by NRS and , shall continue to be set aside upon the receipt of such revenues by the County and credited to the Transportation Fund. Payments shall be made from the Transportation Fund as described below. 1. First Charges. First, as a first charge on the Transportation Fund, there shall from time to time be withdrawn and set aside: A. Administration Expenses. Initially, as a first charge thereon, sufficient moneys to pay any Administration Expenses not defrayed by other than the County as permitted by the Bond Ordinance; and B. Direct Distributions. Thereafter, as the next charge thereon, sufficient moneys to make required Direct Distributions. Nothing herein contained permits the payment of any Administration Expenses incurred by the County with any proceeds of the taxes levied by the State in NRS and , or otherwise, or requires the withdrawal from the Transportation Fund of any moneys allocated for the payment of Administration Expenses or Direct Distributions until obligations pertaining thereto have accrued and become due, and any such moneys so allocated may be retained in the Transportation Fund pending withdrawals for the payment of such obligations. Any such withdrawals becoming surplus and remaining at the end of the Fiscal Year and not needed for Administration Expenses or Direct Distributions shall be transferred back to the 17

28 Transportation Fund and shall be used for the purposes thereof, as described in this Flow of Funds section. 2. Payments for Parity Securities. Second, from any moneys remaining in the Transportation Fund, i.e., from the Net Pledged Revenues, and concurrently with the payments for the 2014A Bonds and any Parity Securities hereafter issued, there shall be credited to the Bond Fund, the following: A. Monthly, commencing on the first day of the month immediately succeeding the delivery of any of the 2015 Bonds and any Parity Securities, an amount in equal monthly installments necessary, together with any other moneys from time to time available therefor from whatever source, including without limitation the moneys, if any, provided in the Acquisition Account, to pay the next maturing installment of interest on the Outstanding 2015 Bonds and any Outstanding Parity Securities, and monthly thereafter, commencing on each interest payment date, one-sixth of the amount necessary to pay the next maturing installment of interest on the Outstanding 2015 Bonds and any Outstanding Parity Securities, except to the extent any other moneys are available therefor. B. Monthly, commencing on the first day of the month immediately succeeding the delivery of any of the 2015 Bonds and any Parity Securities, an amount in equal monthly installments necessary, together with any other moneys from time to time available therefor from whatever source, to pay the next maturing installment of principal of the Outstanding 2015 Bonds and any Outstanding Parity Securities, and monthly thereafter, commencing on each principal payment date, one-twelfth of the amount necessary to pay the next maturing installment of principal of the Outstanding 2015 Bonds and any Outstanding Parity Securities, except to the extent any other moneys are available therefor. The moneys credited to the Bond Fund shall be used to pay the Bond Requirements of the 2015 Bonds and any Outstanding Parity Securities, as the same become due. The Bond Ordinance states that notwithstanding anything therein to the contrary, amounts in the Transportation Fund allocable to the Indexed Fuel Taxes shall be transferred pursuant to the provisions described in this section of the Bond Ordinance before any other amounts in the Transportation Fund are transferred. 3. Reserve Account Payments. Third, but concurrently with the transfers required to be made to the Bond Fund as described above, there shall be credited monthly from the remaining Net Pledged Revenues to the Reserve Account, commencing on the first day of the month next succeeding the date on which the 2015 Bonds are delivered (or the date on which the moneys accounted for in the Reserve Account for any other reason are less than the Minimum Bond Reserve as hereinafter defined) such sums in substantially equal monthly amounts as shall be necessary, together with the moneys credited thereto, to accumulate (and reaccumulate if necessary) in not more than 60 such installments, in the Reserve Account a continuing reserve in an amount not less than the Minimum Bond Reserve. No transfer need be made to the Reserve Account so long as the moneys therein are at least equal to the Minimum Bond Reserve. The moneys in the Reserve Account shall continue to be accumulated and maintained as a continuing 18

29 reserve to be used, except as provided herein, only to prevent deficiencies in the payment of the principal of and the interest on the Outstanding 2015 Bonds and (if the County elects to combine the Reserve Account as previously described), any Outstanding Parity Securities, resulting from the failure to deposit in the Bond Fund sufficient funds to pay such principal and interest as the same accrue. No payment need be made into the Reserve Account at any time so long as the moneys therein are at least equal to the Minimum Bond Reserve. Transfers from the remaining Net Pledged Revenues to reserve accounts for any Outstanding Parity Securities to maintain any reserve accounts for any Outstanding Parity Securities not secured by a combined Reserve Account shall be made concurrently with the transfers described in the previous paragraph. 4. Rebate Account Payments. Fourth, but concurrently with the payments required to be made to rebate accounts for the 2014A Bonds and any Outstanding Parity Securities, the County shall deposit Net Pledged Revenues into the Clark County, Nevada, Highway Revenue Bonds (Indexed Fuel Tax and Subordinate Motor Vehicle Fuel Tax), Series 2015, Rebate Account (the Rebate Account ) as required under Section 148 of the Tax Code and regulations promulgated thereunder, and shall apply such funds to the extent required to comply with the covenant described in THE 2015 BONDS - Tax Covenant to make payments to the United States. Any moneys in such account not needed for such purpose shall be transferred to the Transportation Fund. Termination of Deposits. No payment need be made into the Bond Fund, the Reserve Account, or both, if the amount in the Bond Fund and the amount in the Reserve Account total a sum at least equal to the entire amount of the Outstanding 2015 Bonds and any Outstanding Parity Securities as to all Bond Requirements to their respective maturities or to any redemption date on which the County shall have exercised or shall have obligated itself to exercise its option to redeem prior to their respective maturities the Outstanding 2015 Bonds or any such Outstanding Parity Securities thereafter maturing, and both accrued and not accrued, in which case moneys in those two accounts in an amount, except for any interest or other gain to accrue from any investment of moneys in Federal Securities from the time of any such deposit to the time or respective times the proceeds of any such investment shall be needed for such payment, at least equal to such Bond Requirements, shall be used together with any such gain from investments solely to pay such Bond Requirements as the same become due; and any moneys in excess thereof in those two accounts and any other moneys derived from the Net Pledged Revenues may be used in any lawful manner determined by the Board. Defraying Delinquencies. If in any month the County shall for any reason fail to pay into the Bond Fund the full amount above stipulated from the Net Pledged Revenues, then an amount shall be paid into the Bond Fund in such month from the Reserve Account equal to the difference between that paid from the Net Pledged Revenues and the full amount so stipulated. The money so used shall be replaced in the Reserve Account from the first Net Pledged Revenues thereafter received and not required to be otherwise applied as described in Payments for Superior Securities, Payments for Parity Securities, Reserve Account Payments, and Rebate Account Payments above. The moneys in the Bond Fund and in the Reserve Account shall be used solely and only for the purpose of paying the Bond Requirements of the 2015 Bonds, the 2014 Bonds and any Outstanding Parity Securities (if a combined Reserve Account 19

30 has been elected in connection with the issuance of any Parity Securities); but any moneys at any time in excess of the Minimum Bond Reserve in the Reserve Account, including, without limitation, any such excess resulting from investment gain as provided in the Bond Ordinance, may be withdrawn therefrom, and transferred from time to time to the Bond Fund, and used as herein provided for the redemption of the Outstanding 2015 Bonds, Outstanding 2014A Bonds, and other Outstanding Parity Securities (if a combined Reserve Account has been elected in connection with the issuance of any Parity Securities) as they become due at maturity, on any Redemption Date, or as they otherwise are made available for payment by purchase in the open market or otherwise; and also any moneys in the Bond Fund and in the Reserve Account in excess of the Bond Requirements, both accrued and not accrued, to the respective maturities or designated Redemption Date of the Outstanding 2015 Bonds and any such Outstanding Parity Securities (if a combined Reserve Account has been elected in connection with the issuance of any Parity Securities) may be used as described in Flow of Funds. 5. Payment of Subordinate Securities. Fifth, but subsequent to the payments described above, any Net Pledged Revenues remaining in the Transportation Fund may be used by the County for the payment of Bond Requirements of Subordinate Securities payable from all or a portion of the Pledged Revenues, including reasonable reserves for such securities, as the same accrue; but the lien of such Subordinate Securities on all or a portion of the Pledged Revenues and the pledge of all or a portion thereof for the payment of such Subordinate Securities shall be subordinate to the lien and pledge of the Superior Securities, the 2015 Bonds and any Parity Securities. Any Parity Securities shall be payable from the Bond Fund and the Reserve Account (if a combined Reserve Account has been elected in connection with the issuance of any Parity Securities). 6. Use of Remaining Revenues. After the transfers described above are made, any remaining Net Pledged Revenues in the Transportation Fund may be used at the end of any Fiscal Year or whenever in any Fiscal Year there shall have been credited to the Bond Fund, to the Reserve Account and to each other bond fund and reserve account, if any, for the payment of any Subordinate Securities, all amounts required to be credited to those special accounts for all of that Fiscal Year, both accrued and thereafter becoming due in the balance of the Fiscal Year, for any one or any combination of lawful purposes, as the Board may from time to time determine, including, without limitation: A. State Tax of 1.25 cents. The proceeds received by the County pursuant to NRS (or such part thereof as may remain after there are made the payments hereinabove required to be made in the preceding sections of this article) of the tax of 1.25 cents per gallon levied by the State on motor vehicle fuel by NRS , may be used for any one or combination of purposes (other than the payment of securities issued pursuant to the Project Act or any law supplemental thereto) permitted by NRS , as from time to time amended, and by all laws supplemental thereto; and B. State Tax of 1.75 cents. The apportionment by the County of the proceeds received pursuant to NRS (or such part thereof as may remain after there are made the payments hereinabove required to be made in the preceding sections of this article) between the County and the unincorporated towns and the incorporated cities therein pursuant to NRS from the tax of 1.75 cents per gallon levied by the 20

31 State in NRS , as allocated by the State to the County and received by it, and the use of the part remaining to the County after such allocation for any one or combination of purposes (other than the payment of securities issued pursuant to the Project Act or any law supplemental thereto) permitted by subsection 3 of NRS , as from time to time amended, and by all laws supplemental thereto. For the purpose of accounting for such remaining revenues to meet the requirements of NRS and , there shall be deemed to have been used in any Fiscal Year from the moneys accounted for in the Transportation Fund to meet the requirements provided above as to the use of the Net Pledged Revenues, the proceeds of the taxes levied by the State in NRS and , only to the extent that the proceeds of the Net Pledged Revenues are insufficient for that purpose. If the proceeds of such State taxes are so used in any Fiscal Year, the proceeds of the State tax designated in paragraph (A) above and the proceeds of the State tax designated in paragraph (B) above shall respectively be reduced to the extent of such use for such Fiscal Year on a pro rata basis related to the amount received in the Fiscal Year by the County from each such State tax, prior to the use of any such tax proceeds described in paragraphs (A) and (B) above, as moneys become available therefor. Additional Bonds The County currently expects to issue bonds payable from the Net Pledged Revenues and constituting Parity Securities (as defined in the following paragraph), including the 2015 Bonds, to fund a total of approximately $528 million of projects. The 2015 Bonds are expected to fund approximately $85 million of projects, and the remaining approximately $443 million of projects are expected to be funded by additional bonds currently expected to consist of approximately $85 million of additional bonds in fiscal year 2016, and approximately $358 million of additional bonds in fiscal years The Bond Ordinance permits the issuance of additional bonds or securities payable from all or a portion of the Net Pledged Revenues, as follows: Parity Securities. Parity Securities is defined as bonds or securities payable from all or a portion of the Net Pledged Revenues and with a lien on all or a portion of the Net Pledged Revenues on a parity with the lien thereon of the 2015 Bonds, including three types of Parity Securities: (a) the Parity Indexed Fuel Tax and Subordinate Motor Vehicle Fuel Tax Securities, (b) Parity Indexed Fuel Tax Only Securities and (c) Parity Subordinate Motor Vehicle Fuel Tax Only Securities. Subordinate Securities. Subordinate Securities are defined as bonds or securities payable from all or a portion of the Net Pledged Revenues and junior to the lien thereon of the 2015 Bonds. Nothing in the Bond Ordinance prevents the County from issuing Subordinate Securities. Parity Indexed Fuel Tax and Subordinate Motor Vehicle Fuel Tax Securities. Parity Indexed Fuel Tax and Subordinate Motor Vehicle Fuel Tax Securities are defined as bonds or securities secured by and payable from Indexed Fuel Taxes and Subordinate Motor Vehicle Fuel Taxes, with a lien thereon on parity with the lien thereon of the 2014A 21

32 Bonds and 2015 Bonds. The Bond Ordinance permits the issuance of such additional bonds or securities if the following tests are met: A. Absence of Default. At the time of the adoption of the supplemental instrument authorizing the issuance of the additional securities as provided in the Bond Ordinance, the County shall not be in default in making any payments required by the Bond Ordinance. B. Historical Earnings Test. The following amounts derived in the Fiscal Year immediately preceding the date of issuance of the Parity Indexed Fuel Tax and Subordinate Motor Vehicle Fuel Tax Securities: (a) the Indexed Fuel Taxes less 150% of the Combined Maximum Annual Principal and Interest Requirements of Parity Indexed Fuel Tax Only Securities plus (b) Motor Vehicle Fuel Taxes, less Administration Expenses, Direct Distributions, Combined Maximum Annual Principal and Interest Requirements of Superior Securities and 150% of the Combined Maximum Annual Principal and Interest Requirements of Parity Subordinate Motor Vehicle Fuel Tax Only Securities, shall have been at least sufficient to pay an amount equal to 150% of the Combined Maximum Annual Principal and Interest Requirements of the Outstanding 2015 Bonds and any other Outstanding Parity Indexed Fuel Tax and Subordinate Motor Vehicle Fuel Tax Securities and the Parity Indexed Fuel Tax and Subordinate Motor Vehicle Fuel Tax Securities proposed to be issued (excluding any reserves therefor), except as hereinafter otherwise expressly provided. C. Adjustment of Pledged Revenues. If any Subordinate Fuel Tax or Indexed Fuel Tax constituting supplemental Net Pledged Revenues had not accrued and been payable for the full Fiscal Year immediately preceding the date of the issuance of any such additional Parity Indexed Fuel Tax and Subordinate Motor Vehicle Fuel Tax Securities, any amount of Net Pledged Revenues which was actually collected for the designated Fiscal Year may be increased to an amount which it is estimated would have been collected if such Subordinate Motor Vehicle Fuel Tax and/or Indexed Fuel Tax had accrued and been payable for the full Fiscal Year designated based upon the known collections of Net Pledged Revenues preceding such adjustment, including collections of Net Pledged Revenues payable at the currently effective tax rate as if such currently effective tax rate had been in effect for the entire preceding Fiscal Year. D. Reduction of Annual Requirements. The respective annual Bond Requirements (including as such a requirement for the purposes of this section of the Bond Ordinance the amount of any prior redemption premiums due on any prior redemption date as of which the County shall have exercised or shall have obligated itself to exercise its prior redemption option) shall be reduced to the extent such Bond Requirements are scheduled to be paid in each of the respective Bond Years with moneys held in trust or in escrow for that purpose by any trust bank within or without the State, including the known minimum yield from any investment in Federal Securities. Parity Indexed Fuel Tax Only Securities. Parity Indexed Fuel Tax Only Securities are defined as bonds or securities secured by and payable from Indexed Fuel Taxes, with a lien thereon on parity with the lien thereon of the 2014A Bonds and the 2015 Bonds. The 22

33 Bond Ordinance permits the issuance of such additional bonds or securities if the following tests are met: A. Absence of Default. At the time of the adoption of the supplemental instrument authorizing the issuance of the additional securities as provided in the Bond Ordinance, the County shall not be in default in making any payments required by the Bond Ordinance. B. Historical Earnings Test. The following amounts derived in the Fiscal Year immediately preceding the date of issuance of the Parity Indexed Fuel Tax Only Securities: (a) the Indexed Fuel Taxes less 150% of the Combined Maximum Annual Principal and Interest Requirements of Parity Indexed Fuel Tax Only Securities and the Parity Indexed Fuel Tax Only Securities proposed to be issued plus (b) Motor Vehicle Fuel Taxes, less Administration Expenses, Direct Distributions, Combined Maximum Annual Principal and Interest Requirements of Superior Securities and 150% of the Combined Maximum Annual Principal and Interest Requirements of Parity Subordinate Motor Vehicle Fuel Tax Only Securities, shall have been at least sufficient to pay an amount equal to 150% of the Combined Maximum Annual Principal and Interest Requirements of the Outstanding 2015 Bonds and any other Outstanding Parity Indexed Fuel Tax and Subordinate Motor Vehicle Fuel Tax Securities (excluding any reserves therefor), except as hereinafter otherwise expressly provided. C. Adjustment of Pledged Revenues. If any Subordinate Fuel Tax or Indexed Fuel Tax constituting supplemental Net Pledged Revenues had not accrued and been payable for the full Fiscal Year immediately preceding the date of the issuance of any such additional Superior Securities or Parity Securities, any amount of Net Pledged Revenues which was actually collected for the designated Fiscal Year may be increased to an amount which it is estimated would have been collected if such Subordinate Motor Vehicle Fuel Tax and/or Indexed Fuel Tax had accrued and been payable for the full Fiscal Year designated based upon the known collections of Net Pledged Revenues preceding such adjustment, including collections of Subordinate Motor Vehicle Fuel Tax and/or Indexed Fuel Tax payable at the currently effective tax rate as if such currently effective tax rate had been in effect for the entire preceding Fiscal Year. D. Reduction of Annual Requirements. The respective annual Bond Requirements (including as such a requirement for the purposes of this section of the Bond Ordinance, the amount of any prior redemption premiums due on any prior redemption date as of which the County shall have exercised or shall have obligated itself to exercise its prior redemption option) shall be reduced to the extent such Bond Requirements are scheduled to be paid in each of the respective Bond Years with moneys held in trust or in escrow for that purpose by any trust bank within or without the State, including the known minimum yield from any investment in Federal Securities. Parity Subordinate Motor Vehicle Fuel Tax Only Securities. Parity Subordinate Motor Vehicle Fuel Tax Only Securities are defined as bonds or securities secured by and payable from Subordinate Motor Vehicle Fuel Taxes, with a lien thereon on parity with 23

34 the lien thereon of the 2014A Bonds and the 2015 Bonds. The Bond Ordinance permits the issuance of such additional bonds or securities if the following tests are met: A. Absence of Default. At the time of the adoption of the supplemental instrument authorizing the issuance of the additional securities as provided in the Bond Ordinance, the County shall not be in default in making any payments required by the Bond Ordinance. B. Historical Earnings Test. The following amounts derived in the Fiscal Year immediately preceding the date of issuance of the Parity Subordinate Motor Vehicle Fuel Tax Only Securities: (a) the Indexed Fuel Taxes less 150% of the Combined Maximum Annual Principal and Interest Requirements of Parity Indexed Fuel Tax Only Securities plus (b) Motor Vehicle Fuel Taxes, less Administration Expenses, Direct Distributions, Combined Maximum Annual Principal and Interest Requirements of Superior Securities and 150% of the Combined Maximum Annual Principal and Interest Requirements of Parity Subordinate Motor Vehicle Fuel Tax Only Securities and the Parity Subordinate Motor Vehicle Fuel Tax Only Securities proposed to be issued, shall have been at least sufficient to pay an amount equal to 150% of the Combined Maximum Annual Principal and Interest Requirements of the Outstanding 2015 Bonds and any other Outstanding Parity Indexed Fuel Tax and Subordinate Motor Vehicle Fuel Tax Securities (excluding any reserves therefor), except as hereinafter otherwise expressly provided. C. Adjustment of Pledged Revenues. If any Subordinate Fuel Tax or Indexed Fuel Tax constituting supplemental Net Pledged Revenues had not accrued and been payable for the full Fiscal Year immediately preceding the date of the issuance of any such additional Superior Securities or Parity Securities, any amount of Net Pledged Revenues which was actually collected for the designated Fiscal Year may be increased to an amount which it is estimated would have been collected if such Subordinate Motor Vehicle Fuel Tax and/or Indexed Fuel Tax had accrued and been payable for the full Fiscal Year designated based upon the known collections of Net Pledged Revenues preceding such adjustment, including collections of Subordinate Motor Vehicle Fuel Tax and/or Indexed Fuel Tax payable at the currently effective tax rate as if such currently effective tax rate had been in effect for the entire preceding Fiscal Year. D. Reduction of Annual Requirements. The respective annual Bond Requirements (including as such a requirement for the purposes of this section of the Bond Ordinance, the amount of any prior redemption premiums due on any prior redemption date as of which the County shall have exercised or shall have obligated itself to exercise its prior redemption option) shall be reduced to the extent such Bond Requirements are scheduled to be paid in each of the respective Bond Years with moneys held in trust or in escrow for that purpose by any trust bank within or without the State, including the known minimum yield from any investment in Federal Securities. Superior Securities. Superior Securities are defined as the Outstanding 2011 Bonds, 2010 Bonds, and 2007 Bonds and any additional bonds or securities payable from the Motor Vehicle Fuel Taxes and with the lien thereon superior and prior to the lien on the 24

35 Subordinate Motor Vehicle Fuel Taxes of the 2015 Bonds. The Bond Ordinance permits the issuance of such additional bonds or securities if the following tests are met: A. Absence of Default. At the time of the adoption of the supplemental instrument authorizing the issuance of the additional securities as provided in the Bond Ordinance, the County shall not be in default in making any payments required by the Bond Ordinance. B. Historical Earnings Test. The following amounts derived in the Fiscal Year immediately preceding the date of issuance of the Superior Securities: (a) the Indexed Fuel Taxes less 150% of the Combined Maximum Annual Principal and Interest Requirements of Parity Indexed Fuel Tax Only Securities plus (b) Motor Vehicle Fuel Taxes, less Administration Expenses, Direct Distributions, Combined Maximum Annual Principal and Interest Requirements of Superior Securities, and the Superior Securities proposed to be issued and 150% of the Combined Maximum Annual Principal and Interest Requirements of Parity Subordinate Motor Vehicle Fuel Tax Only Securities, shall have been at least sufficient to pay an amount equal to 150% of the Combined Maximum Annual Principal and Interest Requirements of the Outstanding 2015 Bonds and any other Outstanding Parity Indexed Fuel Tax and Subordinate Motor Vehicle Fuel Tax Securities (excluding any reserves therefor), except as hereinafter otherwise expressly provided. C. Adjustment of Pledged Revenues. If any Subordinate Fuel Tax or Indexed Fuel Tax constituting supplemental Net Pledged Revenues or any Motor Vehicle Fuel Tax, had not accrued and been payable for the full Fiscal Year immediately preceding the date of the issuance of any such additional Superior Securities, any amount of Net Pledged Revenues and Motor Vehicle Fuel Tax which was actually collected for the designated Fiscal Year may be increased to an amount which it is estimated would have been collected if such or Motor Vehicle Fuel Tax, Subordinate Motor Vehicle Fuel Tax and/or Indexed Fuel Tax had accrued and been payable for the full Fiscal Year designated based upon the known collections of Motor Vehicle Fuel Tax, Subordinate Motor Vehicle Fuel Tax and/or Indexed Fuel Tax preceding such adjustment, including collections of Motor Vehicle Fuel Tax, Subordinate Motor Vehicle Fuel Tax and/or Indexed Fuel Tax payable at the currently effective tax rate as if such currently effective tax rate had been in effect for the entire preceding Fiscal Year. D. Reduction of Annual Requirements. The respective annual Bond Requirements (including as such a requirement for the purposes of this section of the Bond Ordinance the amount of any prior redemption premiums due on any prior redemption date as of which the County shall have exercised or shall have obligated itself to exercise its prior redemption option) shall be reduced to the extent such Bond Requirements are scheduled to be paid in each of the respective Bond Years with moneys held in trust or in escrow for that purpose by any trust bank within or without the State, including the known minimum yield from any investment in Federal Securities. 25

36 Refunding Securities. The County may issue bonds or other securities to refund the 2015 Bonds upon meeting the requirements of the Bond Ordinance. See APPENDIX B Summary of Certain Provisions of the Bond Ordinance Additional Bonds. Outstanding Debt Outstanding Bonds. The following tables illustrate the outstanding bonds of the Commission payable from the Net Pledged Revenues as of October 1, 2015, and the outstanding bonds of the Commission payable solely from the Motor Vehicle Fuel Taxes as of October 1, 2015: Outstanding Indebtedness Payable from Net Pledged Revenues (1) * Dated Date Final Maturity Date Original Amount Amount Outstanding 2014A Bonds 04/01/14 07/01/34 100,000,000 $96,870, Bonds (this issue) 11/10/15 07/01/35 $85,000,000 85,000,000 Total $181,870,000 (1) After taking the issuance of the 2015 Bonds into account. Source: The Commission. Outstanding Indebtedness Payable Solely from the Motor Vehicle Fuel Taxes (1) Dated Date Final Maturity Date Original Amount Amount Outstanding 2007 Bonds 06/12/07 07/01/27 $300,000,000 $213,480, A1 Bonds 02/25/10 07/01/29 32,595,000 32,595, B Bonds 02/25/10 07/01/28 51,180,000 51,180, Bonds 11/29/11 07/01/23 118,105,000 96,895,000 Total $394,150,000 (1) These obligations are payable solely from the Motor Vehicle Fuel Taxes and have a lien on the Motor Vehicle Fuel Taxes that is superior to the lien thereon of the 2014A Bonds and the 2015 Bonds. Source: The Commission. Obligations Payable from Sources Other than Net Pledged Revenues. In addition to the bonds shown in the table above, the County also has outstanding $247,005,000 aggregate principal amount of bonds payable from certain sales tax and jet aviation fuel tax revenues received by the Commission (which revenues are not part of the Net Pledged Revenues). Those bonds consist of: (i) the County s Sales and Excise Tax Revenue Bonds, Series 2010, currently outstanding in the aggregate principal amount of $54,225,000; (ii) the County s Sales and Excise Tax Revenue Bonds, Series 2010B, currently outstanding in the aggregate principal amount of * Preliminary; subject to change. 26

37 $52,220,000; and (iii) the County s Sales and Excise Tax Revenue Bonds, Series 2010C (Taxable BABs), currently outstanding in the aggregate principal amount of $140,560,000. Other Obligations. The Commission has several other types of outstanding obligations, including liabilities for compensated absences (described in Notes 1 and 7 to the audited financial statements). In 2007, the Commission entered into a 40-year land lease with LiveWork, LLC, related to a transit center which has now been constructed. The base rent under this lease is $1.25 million per year, with a 3% escalation in the 5 th year and every five years thereafter, as well as annual cost of living increases. This lease is cancelable by the Commission if funds become unavailable. The Commission uses funds in its proprietary fund (not its governmental funds) to pay this lease. As a condition of this lease, the Commission provided the lessor with a letter of credit as a security deposit, which is currently outstanding in the amount of $1,582,119. The letter of credit has not been drawn upon. See Note 8 in the audited financial statements attached hereto as Appendix A for further information. Net Pledged Revenues REVENUES AVAILABLE FOR DEBT SERVICE General. In general, Net Pledged Revenues consist of the Gross Pledged Revenues after deduction of the Administration Expenses and any Direct Distributions. Administration Expenses include (but are not limited to) the expenses of the State, the County and the Commission incurred in fixing and collecting the Motor Vehicle Fuel Taxes and the Indexed Fuel Taxes, and the costs of administering and enforcing laws, rules and regulations pertaining thereto. Administration Expenses also include deductions allowed by law to any dealer or user to cover his costs of collection of the taxes and compliance with any law, statute or ordinance pertaining thereto, and handling costs occasioned by evaporation, spillage or other causes, not exceeding 2% of the amount collected. Direct Distributions include the proportionate shares of the proceeds of the Motor Vehicle Fuel Taxes and the Indexed Fuel Taxes allocated to the cities and towns within the County whose respective territories are not included wholly or in part in the Commission s Regional Transportation Plan. Direct Distributions also include refunds for Motor Vehicle Fuel Taxes and Indexed Fuel Taxes used as aviation fuel, which are allocated to the local governments which own or control any airports, landing areas and air navigation facilities within the County. The Gross Pledged Revenues include the Indexed Fuel Taxes and the Subordinate Motor Vehicle Fuel Taxes, which are described in more detail below. Indexed Fuel Taxes. The Indexed Fuel Taxes consist of excise taxes imposed on motor vehicle fuel and special fuel. Such taxes are not necessarily limited to any type or types of motor vehicle fuel in use when the 2015 Bonds are issued, and subject to exempt sales and to other exempt transactions, such taxes currently consist of taxes levied by the County by the Tax Ordinance pursuant to paragraphs (a), (b), (d) through (m), inclusive, of subsection 1 of NRS 27

38 and annual increases in such taxes through December 31, 2016, on certain motor vehicle fuel and special fuels sold, distributed or used in the County as provided by the Tax Ordinance. Currently, the Indexed Fuel Taxes consist of the inflation-based index taxes imposed on the current rates of 12 existing base fuel taxes, seven of which are imposed by the State, four of which are imposed by the United States and one of which is imposed by the County. The Indexed Fuel Taxes do not constitute inflationary increases to the underlying base fuel taxes themselves, but rather constitute separate County taxes which are based on the current rates of the underlying State, federal and County fuel taxes. The Tax Ordinance defines motor vehicle fuel to mean gasoline, natural gasoline, casinghead gasoline and any other inflammable or combustible liquid, by whatever name such liquid may be known or sold, the chief use of which in this state is for the propulsion of motor vehicles, motorboats or airplanes. Kerosene, gas oil, fuel oil, jet aircraft fuel, diesel fuel and liquefied petroleum gas are not considered motor vehicle fuel for the purposes of the Tax Ordinance. The Tax Ordinance defines special fuel to mean all combustible gases and liquids used for the generation of power for propulsion of motor vehicles, except that it does not include motor vehicle fuel as defined above. Special fuel includes (i) diesel fuel, (ii) liquefied petroleum gas ( LPG ), (iii) compressed natural gas ( CNG ), and (iv), collectively, emulsion of water-based hydrocarbon fuel and any other special fuel other than those described in clauses (i), (ii), and (iii) of this paragraph (collectively referred to herein as A55 ). Rates of the Indexed Fuel Taxes. The Indexed Fuel Taxes are imposed under the authority of State Assembly Bill 413, which was adopted in 2013 and authorized the County to adopt an ordinance imposing additional taxes on such fuels for the benefit of the Commission, and to provide for annual increases in such taxes. On September 3, 2013, the County adopted Ordinance No. 4126, which imposed the Indexed Fuel Taxes commencing on January 1, Pursuant to the ordinance, an annual increase for each of the Indexed Fuel Taxes was imposed on July 1, 2014 and July 1, 2015 and a final increase will be imposed on July 1, The annual increases in each of the taxes constituting the Indexed Fuel Taxes is calculated using a formula based on the lesser of (i) 7.8% or (ii) a rolling 10-year average of the change in the Producer Price Index for Other Nonresidential Construction, or a similar inflation index if that index ceases to be published (the PPI Index ). The following table shows the 10- year average PPI Index for the most recent five year period available. Source: The Commission. 10-Year Average Year PPI Index

39 Notwithstanding the formula described above, the cumulative total of the percentage increases in each of the taxes constituting the Indexed Fuel Taxes cannot cause the base rate of each such tax (i.e., the rate of each such tax before any indexing occurred) to increase by more than 19.2% (beginning with the original rate that went into effect on January 1, 2014, and continuing through to the rate that will go into effect on July 1, 2016). Pursuant to such limitation, the July 1, 2016 indexing of the motor vehicle fuels will only cause the aggregate motor vehicle fuel tax rate to increase by Similarly, pursuant to such limitation, the July 1, 2016 indexing of diesel fuel, CNG, LPG, and A55 will only cause the tax rates of such special fuels to increase by 0.334, 0.251, 0.258, and 0.122, respectively. The following table sets forth the base amount of each of the Indexed Fuel Taxes, the cumulative increases to those base taxes that resulted due to the indexing that occurred on January 1, 2014 and July 1, 2014, the additional increase to those base taxes that resulted due to the indexing that occurred on July 1, 2015, and the cumulative Indexed Fuel Taxes currently in effect (resulting from the indexing that occurred on all of January 1, 2014, July 1, 2014, and July 1, 2015). As described in the preceding paragraph, minimal additional indexing will also occur on July 1, 2016, thereby further increasing the Cumulative Indexed Fuel Tax Rates shown below. Current Indexed Fuel Tax Rate Calculations (1) Original Base Fuel Tax Rates Cumulative Adjustment from Indexing in Prior Years Adjusted Base Fuel Tax Rates (5) PPI Index Effective 7/1/15 to 6/30/ Indexed Fuel Tax Rates (6) Cumulative Indexed Fuel Tax Rates (7) Total Fuel Tax Rates Type of Fuel Motor vehicle fuel (2) : Gasoline % Special fuels (3) : Diesel (4) % CNG % LPG % A % (1) All fuel tax rates are shown in cents per taxable gallon. Certain totals may not add due to rounding. (2) Consists of five components as described in the table Current Indexed Fuel Tax Rate Calculation Motor Vehicle Fuel below. (3) Consists of seven components as described in the table Current Indexed Fuel Tax Rates Special Fuels below. (4) The Indexed Fuel Tax calculated on the rate of the base diesel fuel tax is subject to a statutory provision pursuant to which up to 20% of the Indexed Fuel Tax from this category is subject to rebate to the taxpayers. See CERTAIN RISK FACTORS Factors That May Impact Collection of Indexed Fuel Taxes and Subordinate Motor Vehicle Fuel Taxes. (5) The adjusted base fuel tax rate for each fuel type is calculated by adding the original base tax rate for such fuel type to the cumulative effect of all indexing of such tax in all prior years. For example, for gasoline, the adjusted base is determined by adding the original tax rate of cents per taxable gallon to the cents per taxable gallon of cumulative additional taxes added to the original tax rate due to the indexing that occurred on January 1, 2014 and July 1, (6) Additional indexed taxes imposed beginning July 1, (7) Only the Indexed Fuel Taxes (the current cumulative rates of which are shown in this column) are part of the Net Pledged Revenues. Source: The Commission. 29

40 Indexed Fuel Taxes on Motor Vehicle Fuel (Gasoline). The initial Indexed Fuel Taxes on motor vehicle fuel were derived by applying the PPI Index in effect on January 1, 2014, to the current rates of five existing base motor vehicle fuel taxes. Annual increases of each such Indexed Fuel Tax were calculated and imposed on July 1, 2014 and July 1, 2015, and will be calculated and imposed again on July 1, 2016, by (i) adding the cumulative effect of all previous indexing of each such motor vehicle fuel tax to the base rate of each such motor vehicle fuel tax and then (ii) multiplying that sum by the PPI Index in effect on the date of such calculation. The following table shows the base rate of the five motor vehicle fuel taxes, the cumulative annual increases to those base taxes that resulted from the indexing that occurred on January 1, 2014 and July 1, 2014, the additional increase to those base taxes that resulted from the indexing that occurred on July 1, 2015, and the cumulative Indexed Fuel Tax rates currently in effect (resulting from the indexing that occurred on all of January 1, 2014, July 1, 2014, and July 1, 2015). Subject to the 19.2% overall cap described in the preceding paragraph, additional Indexed Fuel Taxes on motor vehicle fuel will be imposed on July 1, 2016, thereby further increasing the Cumulative Indexed Fuel Tax Rates shown below. Current Indexed Fuel Tax Rate Calculation Motor Vehicle Fuel (1) Original Base Motor Vehicle Fuel Tax Rates Cumulative Adjustment from Indexing in Prior Years Adjusted Base Motor Vehicle Fuel Tax Rates PPI Index Effective 7/1/15 to 6/30/ Indexed Motor Vehicle Fuel Tax Rates Cumulative Current Indexed Motor Vehicle Fuel Tax Rates (2) Resulting Indexed Motor Vehicle Fuel Tax Rates Base Taxing Jurisdiction State % State % County % State % Federal % (1) All fuel tax rates are shown in cents per taxable gallon. Certain totals may not add due to rounding. (2) Only the Indexed Fuel Taxes (the current cumulative rates of which are shown in this column) are part of the Net Pledged Revenues. Source: The Commission. An election will be held in the County on November 8, 2016 to determine whether the indexed increases of the motor vehicle fuel taxes may continue to occur. However, even if additional indexing is approved at such election, any indexed increases effective after November 8, 2016 will not constitute Net Pledged Revenues unless the County specifically determines to include them. Furthermore, any indexed increases of the State motor vehicle fuel tax described in the table above occurring after November 8, 2016 must be deposited into the State Highway Fund and cannot constitute Net Pledged Revenues. Notwithstanding the foregoing, all indexed increases of the motor vehicle fuel taxes imposed before November 8, 2016, will not be impacted by the election and must be continued for any period during which bonds are outstanding that are secured by such taxes (including the 2014A Bonds and the 2015 Bonds). 30

41 Indexed Fuel Taxes on Special Fuel. The initial Indexed Fuel Taxes on certain special fuels were derived by applying the PPI Index in effect on January 1, 2014, to the current rates of seven existing base special fuel taxes. Annual increases of each such Indexed Fuel Tax were calculated and imposed on July 1, 2014 and July 1, 2015, and will be calculated and imposed again on July 1, 2016, by (i) adding the cumulative effect of all previous indexing of each such special fuel tax to the base rate of each such special fuel tax and then (ii) multiplying that sum by the PPI Index in effect on the date of such calculation. The following table shows the base rate of the seven special fuel taxes, the cumulative annual increases to those base taxes that resulted from the indexing that occurred on January 1, 2014 and July 1, 2014, the additional increase to those base taxes that resulted from the indexing that occurred on July 1, 2015, and the cumulative Indexed Fuel Tax rates currently in effect (resulting from the indexing that occurred on all of January 1, 2014, July 1, 2014, and July 1, 2015). Subject to the 19.2% overall cap described in the preceding paragraph, additional Indexed Fuel Taxes on special fuels will be imposed on July 1, 2016, thereby further increasing the Cumulative Indexed Fuel Tax Rates shown below. Current Indexed Fuel Tax Rates Special Fuels (1) Original Base Special Fuel Tax Rates Base Taxing Jurisdiction Type of Special Fuel Cumulative Adjustment from Indexing in Prior Years Adjusted Base Special Fuel Tax Rates PPI Index Effective 7/1/15 to 6/30/ Indexed Special Fuel Tax Rates Cumulative Current Indexed Special Fuel Tax Rates (2) Resulting Indexed Special Fuel Tax Rates State Diesel % Federal Diesel % State LPG % Federal LPG % State CNG % Federal CNG % State A % (1) All fuel tax rates are shown in cents per taxable gallon. Certain totals may not add due to rounding. (2) Only the Indexed Fuel Taxes (the current cumulative rates of which are shown in this column) are part of the Net Pledged Revenues. Source: The Commission. An election will be held in the County on November 8, 2016 to determine whether the indexed increases of the special fuel taxes may continue to occur. However, even if additional indexing is approved at such election, any indexed increases effective after November 8, 2016 will not constitute Net Pledged Revenues unless the County specifically determines to include them. Furthermore, any indexed increases of the State special fuel taxes described in the table above must be deposited into the State Highway Fund and cannot constitute Net Pledged 31

42 Revenues. Notwithstanding the foregoing, all indexed increases of the special fuel taxes imposed before November 8, 2016, will not be impacted by the election and must be continued for any period during which bonds are outstanding that are secured by such taxes (including the 2014A Bonds and the 2015 Bonds). Subordinate Motor Vehicle Fuel Taxes. The Subordinate Motor Vehicle Fuel Taxes are defined, generally, as excise taxes on motor vehicle fuel pledged for the payment of the 2015 Bonds, whether levied by the County, the State, or otherwise; however, such taxes specifically exclude amounts necessary to make payment of the Bond Requirements on any Outstanding Superior Securities, as described in greater detail in the Bond Ordinance. Currently, the Subordinate Motor Vehicle Fuel Taxes consist of the following: (i) a tax currently levied at the rate of 9.00 cents per gallon by the County (the County Motor Vehicle Fuel Tax ) and (ii) the County s proportional interest in two taxes, equal in the aggregate to 3.00 cents per gallon, levied by the State on certain motor vehicle fuel sold in the County and the State (the State Motor Vehicle Fuel Taxes ). The Subordinate Motor Vehicle Fuel Taxes do not include certain motor vehicle fuel taxes paid on fuel used in watercraft as described in NRS or proceeds derived from aviation fuel pursuant to NRS See SECURITY FOR THE 2015 BONDS - Net Pledged Revenues. Special Provisions Relating to County Motor Vehicle Tax and State Motor Vehicle Fuel Tax. If the County Motor Vehicle Fuel Tax deposited in the Transportation Fund is sufficient to meet the debt service requirements on all bonds including the Superior Securities and the 2014A Bonds and 2015 Bonds, if necessary), then the portion of the Net Pledged Revenues derived from the 1.25 cent per gallon State Motor Vehicle Fuel Tax is deposited in the County Road Fund and the portion derived from the 1.75 cent per gallon State Motor Vehicle Fuel Tax is allocated among the respective road funds of the County and its unincorporated towns and incorporated cities on the basis of relative assessed valuation, all such deposits and allocations to be used for road construction and maintenance. See SECURITY FOR THE 2015 BONDS Flow of Funds Use of Remaining Revenues. Therefore, as the revenue derived from the County Motor Vehicle Fuel Tax historically has been sufficient to meet the debt service requirements on all previously issued Superior Securities, the Commission s audited financial statements appearing in Appendix A do not account for the revenue derived from the County s share of the State Motor Vehicle Fuel Taxes. No Repeal of Indexed Fuel Taxes and Motor Vehicle Fuel Taxes Pursuant to Section NRS , the State has pledged that the State statutes imposing the Indexed Fuel Taxes and the Motor Vehicle Fuel Taxes shall not be repealed or modified in such a manner as to impair adversely the 2015 Bonds. NRS also prohibits the County from repealing or modifying the Tax Ordinance in such a manner as to impair adversely the 2015 Bonds. The County has covenanted in the Bond Ordinance to cause the County Motor Vehicle Fuel Taxes to be levied and collected in amounts of at least 9.00 cents per gallon as long as any 2015 Bonds remain Outstanding and to cause the Indexed Fuel Taxes to be levied and collected in amounts not less than the amounts required by the Tax Act and the Tax Ordinance 32

43 (which include the initial amounts and increases described in INTRODUCTION - Security ); except as otherwise provide by law, including provisions for any deductions and any refunds not constituting Administration Expenses or Direct Distributions, and provisions of law pertaining to exempt sales and other exempt transactions, or to amounts derived from any other excise taxes pertaining to motor vehicle fuel of at least an equivalent value and pledged in lieu of such present taxes, regardless of whether now or hereafter fixed and imposed. Further, although the County is permitted to decline to accept its proportional share of one of the State Motor Vehicle Fuel Taxes (equal to 1.75 cents per gallon), the County has covenanted in the Bond Ordinance not to exercise such right as long as any 2015 Bonds remain Outstanding. Collection and Enforcement of Indexed Fuel Taxes Pursuant to the Project Act and the Tax Ordinance, the Nevada Department of Motor Vehicles (the DMV ) has contracted with the County to perform all functions incident to the administration and operation of the Tax Ordinance, including the collection of the Indexed Fuel Taxes. Indexed Fuel Taxes derived from the County Motor Vehicle Fuel Taxes and the State Motor Vehicle Fuel Taxes are generally collected and enforced in the same manner as the County Motor Vehicle Fuel Taxes and the State Motor Vehicle Fuel Taxes, respectively. Additional information regarding collection and enforcement of the Indexed Fuel Taxes (including those derived from special fuels) is included in the following three sections. Collection and Enforcement of County Motor Vehicle Fuel Taxes Authority for Imposition of County Motor Vehicle Fuel Taxes. The County is authorized by the Project Act and the Tax Ordinance to impose motor vehicle fuel taxes on the motor vehicle fuel sold in the County (subject to certain exceptions and refunds), in the amounts (including annual increases) described in Net Pledged Revenues-Subordinate Motor Vehicle Fuel Taxes, above, and to pay the costs of any approved street or highway construction project by direct use of tax proceeds or by borrowing money therefor by the issuance of revenue bonds and other revenue securities payable from the net proceeds of the such motor vehicle fuel taxes. Proceeds of the motor vehicle fuel taxes levied as described above are included in Subordinate Motor Vehicle Fuel Taxes and are pledged to the 2015 Bonds. Pursuant to its statutory authority, the County has adopted the Tax Ordinance imposing the Subordinate Motor Vehicle Fuel Taxes and providing for the annual increases previously described on the rates of the motor vehicle fuel taxes included in the Indexed Fuel Taxes. The motor vehicle fuel tax is applied per gallon of motor vehicle fuel sold, distributed or used. The motor vehicle fuel tax does not apply to kerosene, gas oil, fuel oil, fuel for jet or turbine-powered aircraft, diesel fuel or liquefied petroleum gas. The Tax Ordinance has been amended from time to time in compliance with the provisions of the Project Act. Pursuant to statute, any amendments to the Tax Act automatically become a part of the County Tax Ordinance. Notwithstanding the foregoing, no increases in the statutorily-specified base rates of the various taxes used to calculate the Net Pledged Revenues (as previously described) 33

44 become part of the Net Pledged Revenues unless authorized by State law in the future and specifically pledged by the County. Manner of Collection of County Motor Vehicle Fuel Tax. Pursuant to the Project Act and the Tax Ordinance, the DMV has contracted with the County to perform all functions incident to the administration and operation of the Tax Ordinance. The DMV currently remits monthly to the County, on behalf of the Commission, the revenues collected from the Motor Vehicle Fuel Taxes for the applicable month less a deduction for the cost of collecting such taxes and enforcing the laws, regulations and rules pertaining thereto and less any refunds or reimbursements. The fee charged by the DMV for collecting the Subordinate Motor Vehicle Fuel Taxes is currently 0.5% of the revenues collected and the fee for collecting the Indexed Fuel Taxes is currently 1.0% of the revenues collected. All net proceeds of the Motor Vehicle Fuel Tax are eventually paid by the DMV to the County, on behalf of the Commission. However, any city or town whose territory is not included wholly or in part in the Plan is entitled to receive an allocation in aid of an approved construction project before the County or the Commission can use the moneys in such fund. The allocation to these subdivisions is made based on two times the ratio of their population and assessed valuation to the total County population and assessed valuation. Imposition of Motor Vehicle Fuel Taxes. The Motor Vehicle Fuel Taxes are imposed on suppliers in the State. A supplier is every person who is licensed under the Tax Act and who (a) imports motor vehicle fuel into the State; (b) otherwise acquires in the State for sale, use or distribution in the State motor vehicle fuel with respect to which there has been no prior taxable sale, use or distribution; or (c) produces, manufactures or refines motor vehicle fuel in the State. Pursuant to the Tax Act, motor vehicle means every self-propelled motor vehicle, including tractors, operated on a surface highway, and motor vehicle fuel means gasoline, natural gasoline, ethanol, methanol, casing-head gasoline, and any other inflammable or combustible liquid, by whatever name such liquid may be known or sold, the chief use of which in the State is for the propulsion of motor vehicles, motorboats or aircraft other than jet or turbine-powered aircraft. Kerosene, gas oil, fuel oil, fuel for jet or turbine-powered aircraft, diesel fuel, biodiesel, biodiesel blend, liquefied petroleum gas and an emulsion of water-phased hydrocarbon fuel, as that term is defined in NRS , are not considered motor vehicle fuel; rather, such fuels are considered special fuels. Exemptions from Motor Vehicle Fuel Taxes; Refunds. The Tax Act provides that various transactions and sales are exempt from the Motor Vehicle Fuel Tax and entitles certain dealers to refunds. The State exempts from the Motor Vehicle Fuel Taxes: (1) motor vehicle fuel so long as it remains in interstate or foreign commerce; (2) motor vehicle fuel, except aviation fuel, exported from the State by a dealer; (3) aviation fuel or fuel for turbine-powered or jet aircraft exported from the State by a dealer; (4) motor vehicle fuel or fuel for jet or turbinepowered aircraft sold to the United States Government for official use of the United States Armed Forces; (5) motor vehicle fuel other than aviation fuel distributed, or delivered on the order of the owner to a supplier, or aviation fuel for jet or turbine-powered aircraft distributed or delivered on the order of the owner, to a dealer who has furnished bond and security in the amount prescribed in NRS , and who has established to the satisfaction of the DMV that the bond is sufficient security to ensure payment of all excise taxes as they may become due to 34

45 the State from such dealer under the State Fuel Tax Act; (6) leaded racing fuel (which contains lead and is produced for motor vehicles designed and built for racing and not for operation on a public highway); and (7) motor vehicle fuel sold by a supplier, or aviation fuel or fuel for jet or turbine-powered aircraft sold by a dealer in individual quantities of 500 gallons or less for export to another state or country by the purchaser other than in the supply tank of a motor vehicle or an aircraft, provided such dealer is licensed in the state of destination to collect and remit the applicable destination state taxes thereon. Any person who had paid the motor vehicle fuel tax and (1) who exports any motor vehicle fuel from the State, or (2) who sells any such fuel to the United States Government for official use of the United States Armed Forces, or (3) who buys and uses any such fuel for purposes other than for the propulsion of motor vehicles, is entitled to a refund or credit, for the amount of such tax so paid by such person upon filing a claim therefore and complying with certain procedural requirements. The minimum claim for refund shall be based on at least 200 gallons purchased and used in a six-month period. No refund of motor vehicle fuel taxes shall be made for off-highway use of motor vehicle fuel consumed in water craft in the State for recreational purposes or for off-highway use when the consumption of such fuel takes place on highways constructed and maintained by public funds, on federal proprietary lands or reservations where the claimant has no ownership or control over such lands or highways, except where such person is under contractual relationship with the Federal Government or one of its agencies and is engaged in the performance of duties pursuant to such relationship. In addition, any farmer or rancher, not engaged in other activities which would distort such person s highway usage, may claim a refund only on the basis of 80 percent of such person s bulk purchases (in excess of 50 gallons of motor vehicle fuel which is not placed directly into the tank of motor vehicles), without maintaining records of use. Any refund of motor vehicle fuel taxes is deducted from the amount of future payments to the county or counties in which the taxes were collected. Payment of Motor Vehicle Fuel Taxes. Suppliers must pay the motor vehicle fuel taxes and send a statement of motor vehicle fuel sold, distributed or used to the DMV on or before the last day of first month following the month to which they relate. The DMV, for good cause, may grant a 30 day extension to dealers for making their monthly report and return. A supplier has 90 days after the last day prescribed for payment of the motor vehicle fuel taxes to bring an action against the State Treasurer for recovery of an alleged overpayment of such taxes. Failure to bring suit within the 90 days constitutes a waiver of all demands against the State for alleged overpayment of excise taxes. The supplier is allowed to deduct 2% of the taxes so paid to the DMV to cover costs of collection and compliance with the Tax Act. The DMV deposits all motor vehicle fuel taxes collected with the State Treasurer. Remedies for Delinquent Taxes. If the motor vehicle fuel taxes are not paid on or before the 25 th day of the month due, they become delinquent and a penalty of 1% of the excise tax will be added; but the penalty shall not be less than $25 or more than $500. If the tax is not received before the close of business on the last day of the month in which payment is due, a penalty of 10% is added (in addition to the prior penalty). Proceeds from any penalty assessments are allocated to the State Highway Fund. 35

46 In addition, anyone violating the Tax Ordinance is guilty of a misdemeanor and may be subject to a fine of not less than $100 and not more than $500 or imprisonment of not less than 30 days nor more than six months, or both. Collection and Enforcement of State Motor Vehicle Fuel Taxes Authority for Imposition of State Motor Vehicle Fuel Taxes and Manner of Distribution. Pursuant to the Tax Act, the State imposes a series of levies upon the sale of motor vehicle and other fuels (subject to certain exceptions and refunds). The tax is applied per gallon of motor vehicle fuel sold, distributed or used. The tax does not apply to kerosene, gas oil, fuel oil, fuel for jet or turbine-powered aircraft, diesel fuel or liquefied petroleum gas. Exemptions from the tax include fuel used in interstate or foreign commerce, fuel exported from the State and fuel sold to the U.S. Armed Forces. The State-mandated components of the motor vehicle fuel tax are summarized below. Each of the current rates of the components listed below (among others) is subject to the application of the PPI Index and the resulting revenues are included in the Indexed Fuel Taxes. In addition to the taxes described below, the State also imposes various other taxes and fees related to motor vehicles and other petroleum products and on special fuels, as defined in State law. The Subordinate Motor Vehicle Fuel Taxes pledged to the 2015 Bonds includes the proceeds of the State taxes described below which are imposed by NRS and NRS No proceeds of any other State taxes and fees are pledged to the payment of the 2015 Bonds. NRS Proceeds of the cent per gallon levy imposed by NRS are deposited to the credit of the State Highway Fund. The State also imposes additional taxes of 0.75 cents per gallon and cents per gallon to be deposited to a special State fund created for cleaning up of petroleum discharges and to the State general fund for use by the State Department of Agriculture, respectively. Proceeds of these levies are not included in the Subordinate Motor Vehicle Fuel Taxes and are not pledged to the 2015 Bonds. NRS and NRS NRS contains the formula by which the proceeds of the fuel tax levies imposed pursuant to NRS are distributed. Pursuant to NRS , there are two components of the 3.6 cent per gallon tax imposed pursuant to NRS A 1.25 cents per gallon component is distributed only to the counties (which amount is part of the Subordinate Motor Vehicle Fuel Taxes), and a 2.35 cent per gallon component is distributed to both the counties and the cities within each county (which amount is not part of the Subordinate Motor Vehicle Fuel Taxes). If there is no city within the boundaries of the county, the entire distribution is to the county. The fuel taxes of NRS are pooled Statewide and then distributed (less Administration Expenses retained by the State) using a two-tiered allocation process implemented by the Legislature in The first-tier distribution allocates the funds among the counties (inter-county) and the second-tier distribution allocates the funds among receiving entities within the counties (intra-county). 36

47 The formula applies to the entire 3.6 cents per gallon levy in the first-tier distribution, and in calculating the distribution of these fuel tax dollars, weighs each county s population by 2/3 and total mileage of improved roads or streets maintained by the county or an incorporated city within the county by 1/3. This distribution process includes a hold harmless or base distribution for each county that is the amount the county received during the fiscal year ending June 30, For each monthly distribution except June (the last month of the fiscal year) a comparison is made of the distribution pursuant to the formula to the average monthly amount all counties received for the fiscal year ending June 30, If the current month s amount is greater than the fiscal year 2003 monthly average, the distributions are made 2/3 by population and 1/3 by road mileage. If the current month s amount is lower, each county receives a pro-rata share based on their fiscal year 2003 distribution. To balance the distribution on a fiscal-year basis, the June distribution is made by comparing the fiscal year 2003 base distributions to the total amount available for distribution in the current year. It is the intention of the distribution formula to flow the fuel taxes to areas of growth, while ensuring that the counties are protected by that amount they received as their 2003 distributions. Monies received by the County from its share of the 1.25 cents per gallon tax must be used exclusively for the service and redemption of revenue bonds issued pursuant to the Project Act (including the 2015 Bonds), for the construction, maintenance and repair of County roads, and for the purchase of equipment for that work, and may not be used to defray expenses of administration. Proceeds of the 1.25 cents per gallon levy are included in the Subordinate Motor Vehicle Fuel Taxes and are pledged to the 2015 Bonds. The second-tier formula for intra-county distribution of the revenues derived from the 2.35 cents per gallon component of the fuel tax gives equal weight to (i) area within each county; (ii) population within each county; (iii) road mileage within each county; and (iv) vehicle miles of travel on roads within each county. The remaining 2.35 cents per gallon of the 3.6 cents per gallon levy is allocated to a county if there are no incorporated cities within it; if there is one or more incorporated cities in the county, then the 2.35 cents per gallon levy is split between the county and any incorporated cities in the county using the second tier formula described above. Proceeds of the 2.35 cents per gallon levy are not included in the Subordinate Motor Vehicle Fuel Taxes and are not pledged to the 2015 Bonds. NRS The proceeds of the 1.75 cents per gallon levy imposed by NRS (less the Administration Expenses retained by the State) are allocated among the counties on a point-of-origin basis. Pursuant to this statute, the proceeds are then apportioned between the County and its towns and cities on the basis of proportional assessed valuation. The proceeds of the 1.75 cents per gallon levy are to be used for the service and redemption of revenue bonds issued pursuant to the Project Act, for the construction, maintenance and repair of roads within the County, and for the purchase of equipment for such work. The proceeds cannot be used to defray the costs of administration. Proceeds of this levy are included in the Subordinate Motor Vehicle Fuel Taxes and are pledged to the 2015 Bonds. During any period any securities payable from the State Motor Vehicle Fuel Taxes are outstanding, the State Motor Vehicle Fuel Taxes must not be used directly for the 37

48 construction, maintenance and repair of any streets, roads or other highways nor for any purchase of equipment therefor, and the receipts of the 1.75 cent per gallon tax must not be apportioned by the County to the towns and cities within the County unless, at any time the 1.75 cent per gallon tax receipts are so apportioned, provision has been made in a timely manner for the payment of such outstanding securities. NRS The 1.0 cent per gallon levy imposed by NRS is a State mandated levy. Originally, this component of the fuel tax was a county option tax that required voter approval. The requirement for voter approval was subsequently removed and, in 1991, the tax was made mandatory in all counties. Proceeds of this tax may only be used to repair or restore existing paved roads, streets and alleys, other than those maintained by the Federal Government and the State, by resurfacing, overlaying, resealing or other such customary methods. The same exemptions that apply to the other components of the State-mandated fuel taxes also apply to this component. Proceeds of this levy are not included in the Subordinate Motor Vehicle Fuel Taxes and are not pledged to the 2015 Bonds. Imposition of State Motor Vehicle Fuel Taxes. The State Motor Vehicle Fuel Taxes are imposed on suppliers in the State. A supplier is every person who is licensed under the State Fuel Tax Act and who (a) imports motor vehicle fuel into the State; (b) otherwise acquires in the State for sale, use or distribution in the State motor vehicle fuel with respect to which there has been no prior taxable sale, use or distribution; or (c) produces, manufactures or refines motor vehicle fuel in the State. Pursuant to the Tax Act, motor vehicle means every self-propelled motor vehicle, including tractors, operated on a surface highway, and motor vehicle fuel means gasoline, natural gasoline, ethanol, methanol, casing-head gasoline, and any other inflammable or combustible liquid, by whatever name such liquid may be known or sold, the chief use of which in the State is for the propulsion of motor vehicles, motorboats or aircraft other than jet or turbine-powered aircraft. Kerosene, gas oil, fuel oil, fuel for jet or turbine-powered aircraft, diesel fuel, biodiesel, biodiesel blend, liquefied petroleum gas and an emulsion of water-phased hydrocarbon fuel, as that term is defined in NRS , are not considered motor vehicle fuel. Exemptions from State Motor Vehicle Fuel Taxes. The State Fuel Tax Act provides that various transactions and sales are exempt from the State Motor Vehicle Fuel Tax and entitles certain dealers to refunds. The State exempts from the State Motor Vehicle Fuel Taxes: (1) motor vehicle fuel so long as it remains in interstate or foreign commerce; (2) motor vehicle fuel, except aviation fuel, exported from the State by a dealer; (3) aviation fuel or fuel for turbine-powered or jet aircraft exported from the State by a dealer; (4) motor vehicle fuel or fuel for jet or turbine-powered aircraft sold to the United States Government for official use of the United States Armed Forces; (5) motor vehicle fuel other than aviation fuel distributed, or delivered on the order of the owner to a supplier, or aviation fuel for jet or turbine-powered aircraft distributed or delivered on the order of the owner, to a dealer who has furnished bond and security in the amount prescribed in Section , NRS, and who has established to the satisfaction of the DMV that the bond is sufficient security to ensure payment of all excise taxes as they may become due to the State from such dealer under the State Fuel Tax Act; and (6) motor vehicle fuel sold by a supplier, or aviation fuel or fuel for jet or turbine-powered aircraft sold by a dealer in individual quantities of 500 gallons or less for export to another state or country by the purchaser other than in the supply tank of a motor vehicle or an aircraft, provided 38

49 such dealer is licensed in the state of destination to collect and remit the applicable destination state taxes thereon. Any person who had paid the State Motor Vehicle Fuel Tax and (1) who exports any motor vehicle fuel from the State, or (2) who sells any such fuel to the United States Government for official use of the United States Armed Forces, or (3) who buys and uses any such fuel for purposes other than for the propulsion of motor vehicles, is entitled to a refund or credit, for the amount of such tax so paid by such person upon filing a claim therefore and complying with certain procedural requirements. The minimum claim for refund shall be based on at least 200 gallons purchased and used in a six-month period. No refund of State Motor Vehicle Fuel Taxes shall be made for off-highway use of motor vehicle fuel consumed in water craft in the State for recreational purposes or for off-highway use when the consumption of such fuel takes place on highways constructed and maintained by public funds, on federal proprietary lands or reservations where the claimant has no ownership or control over such lands or highways, except where such person is under contractual relationship with the Federal Government or one of its agencies and is engaged in the performance of duties pursuant to such relationship. In addition, any farmer or rancher, not engaged in other activities which would distort such person s highway usage, may claim a refund only on the basis of 80 percent of such person s bulk purchases (in excess of 50 gallons of motor vehicle fuel which is not placed directly into the tank of motor vehicles), without maintaining records of use. Any refund of State Motor Vehicle Fuel Taxes is deducted from the amount of future payments to the county or counties in which the taxes were collected. Payment of State Motor Vehicle Fuel Taxes. Dealers must pay the State Motor Vehicle Fuel Taxes and send a statement of motor vehicle fuel sold, distributed or used to the DMV on or before the last day of the first month following the month to which they relate. The DMV, for good cause, may grant a 30 day extension to dealers for making their monthly report and return. A dealer has 90 days after the last day prescribed for payment of the State Motor Vehicle Fuel Taxes to bring an action against the State Treasurer for recovery of an alleged overpayment of such taxes. Failure to bring suit within the 90 days constitutes a waiver of all demands against the State for alleged overpayment of excise taxes. The dealer is allowed to deduct two percent of the taxes so paid to the DMV to cover costs of collection and compliance with the State Fuel Tax Act. The DMV deposits with the State Treasurer all State Motor Vehicle Fuel Taxes collected. Remedies for Delinquent Taxes. If the State Motor Vehicle Fuel Taxes are not paid on or before the due date, they become delinquent. A dealer is permitted up to 15 additional days to make such payment if he makes an application to the DMV and the DMV finds good cause for extension. Proceeds from any penalty assessments are allocated proportionately to the State highway fund, the county gas tax funds, the account for taxes on aviation fuel and the account for taxes on fuel for jet or turbine-powered aircraft by the DMV.Collection and Enforcement of Special Taxes. Collection and Enforcement of Special Fuel Taxes Authority for Imposition of Special Fuel Taxes. The County is authorized by the Tax Act and the Tax Ordinance to impose the Indexed Fuel Taxes on the current rates of special 39

50 fuels sold in the County (subject to certain exceptions and refunds), in the amounts (including annual increases) described above in - The Fuel Taxes, and to pay the costs of any approved street or highway construction project by direct use of tax proceeds or by borrowing money therefor by the issuance of revenue bonds and other revenue securities payable from the net proceeds of the Fuel Tax. Proceeds of the Indexed Fuel Taxes related to special fuel taxes levied as described above are pledged to the 2015 Bonds; however, the special fuel taxes themselves are not pledged to the 2015 Bonds. Pursuant to such statutory authority and pursuant to NRS Chapter 366 (the Special Fuel Tax Act ), the County has adopted the Tax Ordinance imposing the Indexed Fuel Taxes, including those related to existing taxes on special fuel, and providing for the annual increases previously described. The special fuel tax is applied per gallon of the special fuel sold, distributed or used. Any amendments to the Special Fuel Tax Act automatically become a part of the Tax Ordinance. Manner of Collection of Special Fuel Taxes. Pursuant to the Project Act and the Tax Ordinance, the DMV has contracted with the County to perform all functions incident to the administration and operation of the Tax Ordinance. The DMV remits monthly to the Commission, on behalf of the County, the revenues collected from the Special Fuel Tax for the applicable month less a deduction for the cost of collecting such taxes and enforcing the laws, regulations and rules pertaining thereto and less any refunds or reimbursements. The fee charged by the State for collecting the Indexed Fuel Taxes related to special fuel is currently 1% of the revenues collected. Imposition of Special Fuel Taxes. The special fuel taxes are imposed on special fuel dealers, special fuel suppliers and special fuel manufacturers in the State. A special fuel dealer is a person who is licensed under the Special Fuel Tax Act and who sells CNG or LPG and delivers any part thereof into the tank for the supply of fuel of a motor vehicle that is not owned or controlled by him. A special fuel supplier is a person who is licensed under the Special Fuel Tax Act and who (a) imports special fuel into the State; (b) produces, manufactures or refines special fuel in the State; or (c) otherwise acquires in the State for sale, use or distribution in the State motor vehicle fuel with respect to which there has been no prior taxable sale or use. A special fuel manufacturer is a person who is licensed under the Special Fuel Tax Act and who manufactures, blends, produces, refines, prepares, distills or compounds only special fuel containing biodiesel or biodiesel blend in the State for his personal use in the State or for sale or delivery in or outside the State. Pursuant to the Special Fuel Tax Act, motor vehicle means every self-propelled motor vehicle operated on a surface highway, and special fuel means any combustible gas or liquid used for the generation of power for the propulsion of motor vehicles, including, without limitation, biodiesel, biodiesel blend and an emulsion of water-phased hydrocarbon fuel. The term does not include motor vehicle fuel as defined by the Tax Act. Exemptions from Special Fuel Taxes; Refunds. The Special Fuel Tax Act provides that various transactions and sales are exempt from the special fuel tax and entitles certain parties to refunds. The sale or use of special fuels for any purpose other than to propel a motor vehicle upon the public highways of the State is exempt from taxation; however, purchasers or the users of special fuel establish to the satisfaction of the DMV that the special fuel purchased or used was used for purposes other than to propel a motor vehicle upon the 40

51 public highways of the State. The State also exempts the following sales from the special fuel taxes: sales made to the United States Government or any instrumentality thereof; sales made to any state, county, municipality, district or other political subdivision thereof; sales made to any person to be used to propel a motor vehicle which is dedicated for exclusive use as part of a system which: (a) operates motor vehicles for public transportation in an urban area, (b) transports persons who pay the established fare; and (c) uses public money to operate the system or acquire new equipment; and sales made to any person for use in operating special mobile equipment (as defined in the Special Fuel Tax Act). Special fuel, other than CNG, LPG or kerosene, which is exempt from the special fuel tax must be dyed before it is removed for distribution from a rack. Any person who had paid the special fuel tax and who buys and uses any such fuel for purposes other than for the propulsion of motor vehicles, is entitled to a refund or credit, for the amount of such tax so paid by such person upon filing a claim therefore and complying with certain procedural requirements. The minimum claim for refund shall be based on at least 200 gallons purchased and used in a six-month period. No refund of special fuel taxes shall be made for off-highway use of motor vehicle fuel consumed in water craft in the State. Any refund of special fuel taxes is deducted from the amount of future payments to the county or counties in which the taxes were collected. Payment of Special Fuel Taxes. Special fuel suppliers must pay the special fuel taxes and send the DMV a statement of special fuel received, sold, distributed or used to the DMV on or before the last day of each calendar month. Special fuel dealers and manufacturers must pay the special fuel taxes and send the DMV a statement of special fuel tax sold. Generally, the reporting period for special fuel dealers and manufacturers is one month; however, the DMV may assign different reporting periods (three months, six months or one year) for dealers or manufacturers reporting small amounts of special fuel sold. The DMV, for good cause, may grant a 30 day extension to dealers for making their monthly report and return. A supplier has 90 days after the last day prescribed for payment of the special fuel taxes to bring an action against the State Treasurer for recovery of an alleged overpayment of such taxes. Failure to bring suit within the 90 days constitutes a waiver of all demands against the State for alleged overpayment of excise taxes. The supplier is allowed to deduct 2% of the taxes so paid to the DMV to cover costs of collection and compliance with the Special Fuel Tax Act. The DMV deposits all special fuel taxes collected with the State Treasurer. Remedies for Delinquent Taxes. If the Special Fuel Taxes are not paid on or before the last day of the month after due, they become delinquent and a penalty of 10%, plus interest at the statutory rate is added. Proceeds from any penalty assessments are allocated to the State Highway Fund. In addition, anyone violating the Special Fuel Tax Act is guilty of gross misdemeanor. Historical and Budgeted Net Pledged Revenues The following table contains audited information for the Commission s fiscal years ending June 30, 2010 through 2014, estimated information for the Commission s fiscal year ending June 30, 2015, and budgeted information for the Commission s fiscal year ending June 30,

52 Historical and Budgeted Net Pledged Revenues and Debt Service Coverage Fiscal Year Ended June 30, (1) 2015 (2) 2016 (3) Indexed Fuel Tax Component: Motor Vehicle Fuel Tax Portion n/a n/a n/a n/a $11,970,200 $45,505,483 $70,654,295 Diesel and Other Special Fuel Tax Portion (4)(5) n/a n/a n/a n/a 2,007,861 9,438,840 13,710,268 Less Administration Expenses n/a n/a n/a n/a (416,546) (1,687,632) (2,514,064) Less Direct Distributions n/a n/a n/a n/a (346,019) (1,606,296) (2,033,186) Equals Indexed Fuel Tax collections n/a n/a n/a n/a 13,215,496 51,650,395 79,817,314 Subordinate Motor Vehicle Fuel Tax Component: Motor Vehicle Fuel Tax $86,194,601 $87,329,644 $85,488,950 $86,080,691 $87,263,116 $88,293,508 $89,333,000 Less Administration Expenses (2,154,865) (2,183,241) (2,137,224) (2,152,017) (2,172,852) (2,198,508) (2,224,392) Less Direct Distributions (1,302,850) (2,148,177) (2,069,823) (1,932,027) (2,125,548) (2,150,700) (2,176,078) Less Debt Service on Superior Securities (6) (43,693,826) (43,693,826) (43,176,470) (43,176,470) (42,580,745) (42,554,495) (42,530,745) Equals Subordinate Motor Vehicle Tax collections 39,043,060 39,304,400 38,105,433 38,820,177 40,383,971 41,389,805 42,401,785 Total Net Pledged Revenues $39,043,060 $39,304,400 $38,105,433 $38,820,177 $53,599,467 $93,040,200 $122,219,098 Combined MADS on 2014A Bonds and 2015 Bonds (7) n/a n/a n/a n/a $7,995,750 $7,995,750 $14,767,500 Debt Service Coverage on 2014A Bonds and 2015 Bonds n/a n/a n/a n/a 6.70x 11.64x 8.28x (1) The Indexed Fuel Taxes were not imposed until January 1, Therefore, the Indexed Fuel Tax collections for fiscal year 2014 represent collections for only one-half of fiscal year (2) Estimated fiscal year 2015 results contained in the Commission s fiscal year 2016 budget. (3) Budgeted information included in the Commission s fiscal year 2016 budget. (4) Net of rebate amounts. See CERTAIN RISK FACTORS Factors That May Impact Collections of Fuel Taxes. (5) The Commission reserved $383, for special fuel refunds in fiscal year In fiscal year 2015, the DMV paid special fuel refunds in the amount of $38,386 for calendar year 2014 refunds requested. In fiscal year 2015, the DMV began reserving 20% of special fuel revenue for the maximum amount of refunds that can be paid. The Commission has reversed the fiscal year reserves and consequently recognized that revenue ($383,963.73) in fiscal year (6) Represents Combined Maximum Annual Principal and Interest Requirements of Superior Securities as of June 30 of each respective fiscal year. Combined Maximum Annual Principal and Interest Requirements are calculated on a Bond Year basis (defined in the Bond Ordinance as the twelve (12) months commencing on the second day of July of any calendar year and ending on the first day of July of the next succeeding calendar year). (7) Represents the Combined Maximum Annual Principal and Interest Requirements of the 2014Bonds and the 2015 Bonds, calculated on a Bond Year basis (defined in the Bond Ordinance as the twelve (12) months commencing on the second day of July of any calendar year and ending on the first day of July of the next succeeding calendar year). See DEBT SERVICE REQUIREMENTS. These figures do not include debt service on any additional Parity Securities. The County expects to issue additional Parity Securities during these years. See SECURITY FOR THE 2015 BONDS Additional Bonds. Sources: Derived from the Commission s Comprehensive Annual Financial Reports ( CAFR ) for the fiscal years ended June 30, 2010, through 2014, and the Commission s fiscal year 2016 budget for the estimated fiscal year 2015 figures and budgeted fiscal year 2016 figures. 42

53 Fuel Tax Data General. It is not currently expected that the Subordinate Motor Vehicle Fuel Taxes will be needed to pay debt service on the 2015 Bonds. In addition, the Commission currently expects that over 99% of the Indexed Fuel Taxes will be derived from the motor vehicle fuel taxes and the diesel fuel taxes; it is not currently anticipated that the other special fuel taxes will provide significant sources of revenue to the Commission. Accordingly, selected information with respect to the motor vehicle fuel taxes and the diesel fuel taxes is provided below. History of Taxable Motor Vehicle Fuel Gallons Sold. The following table sets forth a history of taxable gallons of motor vehicle fuel sold. History of Taxable Gallons Sold Motor Vehicle Fuel (1) Fiscal Year State Percent Change County Percent Change County as a Percentage of State Total ,111,427, ,133, % ,094,117,214 (1.6)% 749,071,524 (2.2)% ,090,029,360 (0.4) 744,293,225 (0.6) ,084,095,571 (0.5) 739,742,305 (0.6) ,086,699, ,473, ,098,650, ,761, ,130,404, ,202, (1) Total taxable motor vehicle fuel gallons sold. Source: The Commission, from data provided by the State Department of Transportation. Monthly Comparison of Fuel Tax Collections. The following table presents a comparison of monthly County Motor Vehicle Fuel Tax revenues for the twelve-month periods ending June 30, 2015, and June 30, This table is presented on an accrual basis; accordingly, revenues are accounted for in the month of the original taxable sale rather than the month of actual receipt by the Commission. For example, revenues recorded for May 2015 in the following table represent sales made by retailers in May 2015 and are recorded in that month even though retailers remitted those revenues to the State in June 2015 and such revenues were received by the Commission in July As of June 30, 2015, the County Motor Fuel Tax revenues had increased by 2.7% as compared to the same twelve-month period for the previous year. 43

54 Comparison of Monthly Motor Vehicle Fuel Tax Revenues (1) Twelve-Month Period Ending June 30, 2015 Twelve-Month Period Ending June 30, 2014 Percent Change Current Current Current Month Month Cumulative Month Cumulative Month Cumulative July $5,830,453 $ 5,830,453 $5,763,687 $5,763, % 1.2% August 5,850,281 11,680,734 5,743,506 11,507, % 1.5% September 5,492,134 17,172,868 5,395,915 16,903, % 1.6% October 5,759,769 22,932,637 5,540,417 22,443, % 2.2% November 5,411,011 28,343,648 5,278,770 27,722, % 2.2% December 5,668,958 34,012,606 5,476,110 33,198, % 2.5% January 5,616,983 39,629,589 5,374,838 38,573, % 2.7% February 5,146,673 44,776,262 5,016,644 43,589, % 2.7% March 5,948,057 50,724,319 5,697,175 49,287, % 2.9% April 5,737,546 56,461,865 5,593,942 54,881, % 2.9% May 5,932,927 62,394,792 5,721,315 60,602, % 3.0% June 5,896,426 68,291,217 5,644,385 66,246, % 3.1% (1) Represents collections of the 9.0 cent County Motor Vehicle Fuel Tax. Source: Commission Finance Department. Diesel Fuel Tax Collection Information. Information with respect to collections of the Diesel Fuel Taxes is set forth below. History of Taxable Gallons Sold Diesel Fuel (1) Fiscal Year State Percent Change County Percent Change County as a Percentage of State Total 2010 (2) 166,447, ,003, ,805, ,851, ,161,471 (2.4)% 144,119,158 (2.5)% ,110,568 (1.2) 143,201,574 (0.6) ,776, ,247, ,327,085 (1.3) 146,527,974 (0.5) 42.1 (1) Total taxable motor vehicle fuel gallons sold. Note that the Indexed Fuel Tax calculated on the rate of the base diesel fuel tax is subject to a statutory provision pursuant to which up to 20% of the Indexed Fuel Tax from this category is subject to rebate to the taxpayers. See CERTAIN RISK FACTORS Factors That May Impact Collection of Fuel Taxes. (2) Represents the period January 1, 2010, through June 30, Data prior to January 1, 2010, is unavailable. Source: The Commission, from data provided by the State Department of Transportation. 44

55 CERTAIN RISK FACTORS The purchase of the 2015 Bonds involves special risks and the 2015 Bonds may not be appropriate investments for all types of investors. Each prospective investor should read this Official Statement in its entirety and give particular attention to the factors described below, which, among others discussed herein, could affect the payment of the 2015 Bonds and could affect the market price of the 2015 Bonds to an extent that cannot be determined at this time. The following does not purport to be an exhaustive listing of risks and other considerations which may be relevant to investing in the 2015 Bonds. In addition, the order in which the following information is presented is not intended to reflect the relative importance of such risks. Special, Limited Obligations The 2015 Bonds are special, limited obligations of the County. The 2015 Bonds do not constitute a general obligation debt or indebtedness of the County, the Commission, the State or any other political subdivision of the State, and no owner of any 2015 Bond may look to any source of funds other than the Net Pledged Revenues for payment of debt service on the 2015 Bonds. The 2015 Bonds are payable solely from the Net Pledged Revenues and moneys on deposit in the Reserve Account. Therefore, the security for the punctual payment of the principal of and interest on the 2015 Bonds is dependent on the generation of Net Pledged Revenues in an amount sufficient to meet the debt service requirements on the 2015 Bonds. Factors That May Impact Collection of Indexed Fuel Taxes and Subordinate Motor Vehicle Fuel Taxes Certain factors beyond the control of the Commission and the County may adversely affect the level of Indexed Fuel Tax and Subordinate Motor Vehicle Fuel Tax receipts in the future. Certain of those factors are discussed below. Particular Factors Impacting Indexed Fuel Tax Revenues. The Tax Act provides that persons who use diesel fuel operated or intended to operate interstate are entitled to a refund of the Indexed Fuel Taxes from the sale of diesel fuel. The primary persons benefited by this provision are long-distance truckers. The Tax Act also states, however, that no more than 20% of the taxes on diesel fuel may be used to provide such refunds. Accordingly, although the amount of refunds in any year is unknown, such refunds cannot exceed 20% of the taxes on diesel fuel. Pursuant to DMV regulations, the DMV has established an interest bearing trust account and deposits therein an amount equal to 20% of the Indexed Fuel Taxes on special fuels collected by the County each month. If in any year the total amount of requests for reimbursement exceeds the amount of money on deposit in the trust account, the DMV pays approved requests on a pro rata basis. At the end of each fiscal year and after payment of all approved requests for reimbursement, the DMV distributes any remaining funds in the trust account back to the County plus accrued interest. In calendar year 2014, the DMV paid $38,386 in refunds pursuant to the Tax Act. General Factors Impacting Indexed Fuel Tax and Subordinate Motor Vehicle Fuel Tax Revenues. Each of the following factors, among others, may adversely affect the level of Indexed Fuel Tax and Subordinate Motor Vehicle Fuel Tax receipts in the future: the possibility of reduction in supplies of motor vehicle fuel or special fuel; imposed or recommended 45

56 governmental restrictions on the sale and use of such fuels; other governmental activity which indirectly or directly affects the consumption of fuels subject to the Indexed Fuel Tax and Subordinate Motor Vehicle Fuel Tax, such as increased fuel efficiency standards; voluntary conservation; increases in the cost of motor vehicle fuel and/or special fuel which may result in less usage; reduced fuel consumption by more modern, fuel-efficient vehicles; increased usage of vehicles employing alternate technologies (such as electric cars) which do not consume fuels subject to the Indexed Fuel Taxes and Subordinate Motor Vehicle Fuel Taxes; or any other activities or innovations that result in less use of the fuel subject to taxation in the future. In addition, consumers may be inclined to purchase motor vehicle fuel in locations outside the County if the relative price is perceived as being significantly higher in the County. Gaming, Tourism and Other Factors. The economy of the County is heavily dependent on the tourism industry, which is based in large part on legalized gaming. Any decrease in the level of tourist activity in the County is likely to result in a reduction in Indexed Fuel Tax and Subordinate Motor Vehicle Fuel Tax receipts. Numerous circumstances (over which the County has no control) may adversely affect tourist activity. Such circumstances may include, among others, unwillingness to travel to the County due to terrorist attacks or other hostile acts occurring in the United States or other parts of the world, adverse changes in national and local economic and financial conditions generally, reductions in the rates of employment and economic growth in the County, the State, the region or the country and various other factors. It is not possible to quantify the impact these activities may have on future Indexed Fuel Tax and Subordinate Motor Vehicle Fuel Tax receipts. Reductions in Gallons of Motor Vehicle Fuel Sold; Fluctuation in Collections. The number of taxable gallons of motor vehicle fuel sold in the County declined in each fiscal year from 2009 through 2012, and increased slightly in fiscal year 2013 through See data for 2009 and subsequent years in REVENUES AVAILABLE FOR DEBT SERVICE - Fuel Tax Data. It is possible that general economic conditions, changes in business needs, changes in personal travel needs or various other factors will result in future declines of gallons of motor vehicle fuel sold in the County. Although the per-gallon rate at which the Indexed Fuel Tax is imposed is expected to continue to increase through fiscal year 2017 as a result of application of the PPI Index formula described herein, it is possible that in future years, increases in the rates of the Indexed Fuel Taxes may not be sufficient to offset declines in taxable gallons sold. Should that occur, Net Pledged Revenues would decline. Further, Subordinate Motor Vehicle Fuel Tax and Indexed Fuel Tax collections are vulnerable to adverse economic conditions, inflation and reduced spending and may decrease as a result. Periods of adverse economic conditions could occur while the 2015 Bonds remain outstanding. Effect of Bankruptcy on Collection of Delinquent Taxes The ability and willingness of a business owner or operator to remit Indexed Fuel Tax and Subordinate Motor Vehicle Fuel Tax revenues collected may be adversely affected by the filing of a bankruptcy proceeding by the owner or operator. The ability to collect delinquent Indexed Fuel Taxes and Subordinate Motor Vehicle Fuel Taxes using State law remedies for non-payment of taxes may be forestalled or delayed by bankruptcy, reorganization, insolvency, or other similar proceedings of the owner or operator of a motor vehicle fuel tax business, or by the holder of any liens on the business. The federal bankruptcy laws provide for an automatic stay of foreclosure and sale proceedings, thereby delaying such proceedings, perhaps for an 46

57 extended period. Delays in the exercise of remedies could result in decreases in Indexed Fuel Tax and Subordinate Motor Vehicle Fuel Tax collections. Collection Risks Pursuant to the Project Act, the Indexed Fuel Taxes and Subordinate Motor Vehicle Fuel Taxes are collected by the State and then remitted to the Commission, through the County. The DMV performs all collection and administrative functions with respect to the Indexed Fuel Taxes and Subordinate Motor Vehicle Fuel Taxes. Neither the County nor the Commission has statutory authority to collect the Indexed Fuel Taxes and Subordinate Motor Vehicle Fuel Taxes themselves and also has no control over the collection processes in place at the State. Receipt of the Indexed Fuel Taxes and Subordinate Motor Vehicle Fuel Taxes is dependent upon the ability and willingness of the State to collect the taxes and forward them to the County in a timely manner. There generally is a two-month lag between the sale of motor vehicle fuel or special fuel and the receipt of the Indexed Fuel Taxes and Subordinate Motor Vehicle Fuel Taxes by the County. If the State fails to perform its collection duties in a timely fashion or fails to remit the revenues to the County within a reasonable time, the County may not receive Indexed Fuel Tax and Subordinate Motor Vehicle Fuel Tax revenues in time to meet scheduled debt service payments. If the State fails to collect, remit or transfer the Indexed Fuel Taxes and Subordinate Motor Vehicle Fuel Taxes, the County s only remedy is to file suit against the State, including an action in mandamus to compel performance. Further, the County has no control over the auditing procedures in place at the State. The County must depend upon the State to ensure that vendors are collecting and remitting the required Indexed Fuel Taxes and Subordinate Motor Vehicle Fuel Taxes. If the State fails to do so, the County may not receive all of the moneys to which it is entitled. Neither the County Nor the Commission Can Increase Rates of Taxes The rates at which the Indexed Fuel Taxes and the Subordinate Motor Vehicle Fuel Taxes are imposed were established by the Legislature and, except for increases to the Indexed Fuel Taxes related to the PPI Index allowed by law, the rates can be increased only by action of the Legislature. Even if the Legislature were to raise the rate of one or more of the Indexed Fuel Taxes or Subordinate Motor Vehicle Fuel Taxes in the future or extend the indexing provisions into the future, there is no guarantee that the County or the Commission would be authorized by the Legislature to use the increased revenues to pay debt service on the 2015 Bonds. In addition, even if the Legislature authorizes an increase in the rate of any of the Indexed Fuel Taxes or the Subordinate Motor Vehicle Fuel Taxes, the County is not obligated to adopt an ordinance implementing the increase or pledging any increase to the repayment of the 2015 Bonds. No Pledge of Property The payment of the 2015 Bonds is not secured by any encumbrance, mortgage or other pledge of property of the County or the Commission, except for the Net Pledged Revenues and other security specifically pledged in the Bond Ordinance for the payment of the 2015 Bonds. No property of the County or the Commission (except as described in the preceding sentence) shall be liable to be forfeited or taken in payment of the 2015 Bonds. 47

58 Limitations on Remedies Available to Owners of 2015 Bonds No Acceleration. There is no provision for acceleration of maturity of the principal of the 2015 Bonds in the event of a default in the payment of principal of or interest on the 2015 Bonds. Consequently, remedies available to the owners of the 2015 Bonds may have to be enforced from year to year. Judicial Remedies. Upon the occurrence of an Event of Default under the 2015 Bond Ordinance, each owner of the 2015 Bonds is entitled to enforce the covenants and agreements of the County by mandamus, suit or other proceeding at law or in equity. Any judgment will, however, only be enforceable against the Net Pledged Revenues and other moneys held under the Bond Ordinance and not against any other County or Commission fund or properties. Due to the delays in obtaining judicial remedies, it should not be assumed that these remedies could be accomplished rapidly. Any delays in obtaining judicial remedies to enforce the covenants and agreements of the County under the Bond Ordinance, to the extent enforceable, could result in delays in any payment of principal of and interest on the 2015 Bonds. Bankruptcy; Federal Lien Power and Police Power. The enforceability of the rights and remedies of the owners of the 2015 Bonds and the obligations incurred by the County in issuing the 2015 Bonds are subject to the federal bankruptcy code and applicable bankruptcy, insolvency, reorganization, moratorium, or similar laws relating to or affecting the enforcement of creditors rights generally, now or hereafter in effect; usual equity principles which may limit the specific enforcement under State law of certain remedies; the exercise by the United States of America of the powers delegated to it by the federal Constitution; the power of the federal government to impose liens in certain situations; and the reasonable and necessary exercise, in certain exceptional situations, of the police power inherent in the sovereignty of the State and its governmental bodies in the interest of serving a significant and legitimate public purpose. Bankruptcy proceedings or the exercise of powers by the federal or State government, if initiated, could subject the owners of the 2015 Bonds to judicial discretion and interpretation of their rights in bankruptcy or otherwise, and consequently may entail risks of delay, limitation or modification of their rights. Forward-Looking Statements This Official Statement, particularly (but not limited to) the information contained under the headings CERTAIN RISK FACTORS, REVENUES AVAILABLE FOR DEBT SERVICE, and any other statements referring to unaudited, interim or budgeted amounts for fiscal year 2014 or later years, or to projections or estimates of future revenues and expenses, contains statements relating to future results that are forward-looking statements as defined in the Private Securities Litigation Reform Act of When used in this Official Statement, the words estimate, forecast, intend, expect and similar expressions identify forwardlooking statements. Any forward-looking statement is subject to uncertainty. Accordingly, such statements are subject to risks that could cause actual results to differ, possibly materially, from those contemplated in such forward-looking statements. Inevitably, some assumptions used to develop forward-looking statements will not be realized or unanticipated events and circumstances may occur. Therefore, investors should be aware that there are likely to be differences between forward looking statements and actual results. Those differences could be 48

59 material and could impact the availability of Net Pledged Revenues to pay debt service on the 2015 Bonds. Changes in Law Various State laws apply to the imposition, collection, and expenditure of the Fuel Taxes as well as the operation and finances of the County and the Commission. For example, from time to time, proposals are made (or adopted) by the Legislature to add or remove certain types of transactions from the Fuel Tax. The Legislature also has increased the administrative fee retained by the State for collecting various taxes from time to time, and any such increase would likely result in a decrease in Net Pledged Revenues. There is no assurance that there will not be any change in, interpretation of, or addition to the applicable laws, provisions, and regulations which would have a material effect, directly or indirectly, on the affairs of the County or the Commission and the imposition, collection, and expenditure of revenues, including Fuel Taxes. Secondary Market No guarantee can be made that a secondary market for the 2015 Bonds will develop or be maintained by the Underwriters or others. Thus, prospective investors should be prepared to hold their 2015 Bonds to maturity. 49

60 General REGIONAL TRANSPORTATION COMMISSION OF SOUTHERN NEVADA The Regional Transportation Commission of Southern Nevada, formerly the Regional Streets and Highway Commission, was established by ordinance of the Board on June 7, 1965 pursuant to enabling legislation passed by the 1965 Nevada Legislature. The Commission has all of the powers provided for in the Project Act and in the Constitution and other laws of the State of Nevada. Pursuant to the Project Act, the Commission is responsible for the administration of the funds of the County generated from Motor Vehicle Fuel Taxes and for distributing those funds to various governmental subdivisions within the County. The Commission also is responsible for the administration of other funds of the County earmarked for major street and highway projects, including certain sales tax and jet fuel tax revenues. Pursuant to the Project Act, the Commission is also empowered to: (i) receive and disburse federal funds; (ii) enter into formal agreements concerning projects with federal agencies; (iii) acquire and own both real and personal property; (iv) exercise the power of eminent domain, if the city or county which has jurisdiction over the property approves, for the acquisition, construction, repair or maintenance of public roads, or for any other purpose related to public mass transportation; (v) sell, lease, convey or otherwise dispose of rights, interests or properties; (vi) sue or be sued; (vii) prepare and approve budgets for the regional street and highway fund, the public transit fund and money it receives from any source; and (viii) enter into contracts, leases and agreements with and accept grants and loans from federal and state agencies, counties, cities, towns, other political subdivisions, public or private corporations and other persons, and may perform all acts necessary for the full exercise of the powers vested in the Commission. In addition, the Commission has been designated by the Governor as the Metropolitan Planning Organization ( MPO ) pursuant to Title 23 of the United States Code and also is the designated public transit provider for the County. In its role as MPO, the Commission is responsible for the review and approval of a Regional Street and Highway Plan. In its role as the public transit provider, the Commission established the Citizens Area Transit ( CAT ) fixed route bus system, which began operations on December 5, In 2009, the Commission renamed the fixed route bus system RTC Transit. Under provisions of the Americans with Disabilities Act of 1990, the Commission is also responsible for providing a complementary Paratransit system for the disabled community. The CAT Paratransit Service began operations on December 5, The Paratransit Service has also been renamed the RTC Paratransit Service. The Commission does not enter into road (streets and highways) construction projects for its own account on a regular basis (except for street modifications related to bus rapid transit routes); rather, construction projects are entered into by the governmental entities which are members of the Commission. The Commission is under no obligation to expend funds in excess of its receipts from the Motor Vehicle Fuel Taxes and the Indexed Fuel Taxes. However, the policy of the Commission has been to expend all Motor Vehicle Fuel Tax receipts after payment of debt service on its bonds to finance road construction projects for political subdivisions within the County, and on occasion, if directed by the Legislature, will enter into road construction contracts and manage the construction for Commission or State-owned road improvements. The Commission maintains the same policy with respect to its Indexed Fuel Tax receipts. 50

61 Governing Body and Administration Governing Body. The board of commissioners of the Commission (the Commission Board ) is composed of two members of the Board who are selected by the Board, two councilmembers selected by the City of Las Vegas, and one member each selected by the cities of Henderson, North Las Vegas, Boulder City and Mesquite, who must be members of each city s respective board or council. Any new incorporated municipality in the County is entitled to appoint a member. The Commission Board members serve for terms of two years, ending on December 31 of even-numbered years and any vacancies are filled for the unexpired terms. The current members of the Commission Board are: Name and Position Lawrence L. Brown, III, Chairman Debra March, Vice Chairman Carolyn Goodman Chris Giunchigliani John Lee Alan Litman Lois Tarkanian Rod Woodbury Entity Represented Clark County Henderson Las Vegas Clark County North Las Vegas Mesquite Las Vegas Boulder City Administration. Tina Quigley has been the General Manager of the Commission since April 2012, after serving as the Deputy General Manager since Prior to that time, she was an Assistant Director of Aviation for the County s Department of Aviation beginning in Ms. Quigley holds a Bachelor of Science degree in Aviation Business and Planning from Embry Riddle Aeronautical University. She has a private pilot license. Ms. Quigley serves as a board member for Nevada Child Seekers. She is a member of the United Way Women s Leadership Council and the Clark County Credit Union Audit Committee. She is a former member of the Nevada Women s Philanthropy. Marc L. Traasdahl, C.P.A., has been the Director of Finance of the Commission since March 2009, after serving as the Manager of Finance since November Prior to that time he was a Financial Analyst II for the City of North Las Vegas beginning in February 2006, the Fiscal Services Manager for the County s Department of Aviation beginning in August 1996, the Director of Finance for St. Rose Dominican Hospital beginning in August 1995, the Chief Financial Officer for Boulder City Hospital, Inc. beginning in October 1990, and a junior and senior staff accountant in the audit department with Deloitte, Haskins and Sells San Diego and Las Vegas offices beginning in January Mr. Traasdahl holds a Bachelor of Science degree in Accountancy from Brigham Young University in Provo, Utah. He is a member of the American Institute of Certified Public Accountants, the Nevada State Society of Certified Public Accountants, the Governmental Financial Officers Association, and the Las Vegas Chapter of the Association of Certified Fraud Examiners. Regional Transportation Plan The tremendous growth that occurred during the past two decades in the Las Vegas Valley (defined generally as the Las Vegas metropolitan area, including but not limited to unincorporated Clark County and the cities of Las Vegas, Boulder City, North Las Vegas and 51

62 Henderson) resulted in dramatically increased demands on the transportation system in the County. In order to address these increasing demands and to provide for the County s continued growth, the Commission endeavors to be proactive in its planning to address demands upon the infrastructure. The Regional Transportation Plan (the RTP ) is a long-range transportation plan covering a 20+ year timespan (2013 through 2035). The RTP is updated at least every four years in accordance with federal law. The most recent RTP was approved by the Commission on December 13, 2012, and approved by the Federal Highway Administration in February The RTP is comprised of a number of transportation elements. The highway and transit elements include descriptions of proposed improvements and costs. The Travel Demand Measures ( TDM ) element includes information on the activities to support the Commission s TDM strategies, such as carpooling support activities. TDM strategies help reduce demand on the existing roadway infrastructure by reducing single occupant vehicle ( SOV ) use. Reducing SOV use is accomplished by encouraging commuters to use transit, carpool, vanpool, biking or walking. The Bicycle and Pedestrian Element ( BPE ) includes plans for bicycle and pedestrian facilities. The BPE addresses a broad range of improvements to encourage bicycling and walking as viable alternatives to the automobile. Improved air quality is possible by reducing vehicle miles traveled and traffic congestion. The regional bicycle plan includes those bicycle facilities within urbanized areas of the County and the cities of Las Vegas, Henderson, Boulder City and North Las Vegas and in the outlying area for the city of Mesquite. There are approximately 260 miles of adopted bicycle facilities (routes and lanes) included in the regional bicycle plan. The highway element considers the activities related to infrastructure development in the Las Vegas Valley. The highway element includes the construction and improvement of roads, highways and bridges located within the County. The transit element of the RTP relates to the provision of public transportation in the County. The Commission is developing a full multimodal transit system. The RTP incorporates fixed route bus service, multiple bus rapid transit routes, the Las Vegas Monorail (including both the public and private elements), and other transit support facilities and improvements. (Although the Las Vegas Monorail is included in the transit element of the RTP for planning purposes, the Las Vegas Monorail is not owned or operated by the Commission and the Commission has no control over its operations or finances.) It is projected that local funding sources will adequately sustain the 2016 system for the remainder of the plan period. This includes system operations, the scheduled replacement of buses and all aspects of ongoing maintenance. During the recessionary years of 2010 to 2012, the Commission instituted service cuts in each of those years due to budgetary constraints; the last service cut of approximately 64,000 service hours was effective in September Service hour cuts totaled approximately 217,000 over the three year period. As sales tax revenue recovered in 2012 and 2013, the Commission added back almost 10,000 hours of service to the system and plans to add back service hours as the economy improves. Employees; Benefits and Pension Matters Employees. The Commission budgeted full-time equivalent employees for fiscal year The General Manager states that employee relations are satisfactory. 52

63 The Commission contracts with three private companies to provide fixed route bus service and the core paratransit service (including, in each case, bus drivers and maintenance). The fixed route service contracts expire in July 2023 and July 2025, including all renewal options. The paratransit contract expires in August Each contractor provides salaries and benefits to its own employees. The Commission also utilizes several small nonprofit paratransit service providers for unique programs such as group homes and work programs for the disabled. Benefits. The Commission participates in the County s employee health insurance plan. In addition, the Commission provides a benefits package for employees that includes a deferred compensation plan, as well as long term disability and life insurance, paid vacation, sick leave and holidays, and reimbursement for certain educational expenses. Pension Matters. All of the Commission s full-time employees participate in the State s Public Employee Retirement System ( PERS ). PERS, established by the Legislature effective July 1, 1948, is governed by the Public Employees Retirement Board whose seven members are appointed by the Governor for four-year terms. Except for certain Commission specific information set forth below, the information in this section has been obtained from publicly-available documents provided by PERS. The Commission has not independently verified the information obtained from the publicly available documents provided by PERS and is not responsible for its accuracy. All public employees who meet certain eligibility requirements participate in PERS, which is a cost sharing multiple-employer defined benefit plan. Benefits, as established by statute, are determined by the number of years of accredited service at the time of retirement. For a member who has an effective date of membership before January 1, 2010, a monthly service retirement allowance must be determined by multiplying a member s average compensation by 2.5 percent for each year of service earned before July 1, 2001, and 2.67 percent for each year of service earned on or after July 1, For a member who is a police officer or firefighter and who has an effective date of membership on or after January 1, 2010, a monthly service retirement allowance must be determined by multiplying the member s average compensation by 2.5 percent for each year of service earned. For a member who is not a police officer or firefighter and who has an effective date of membership on or after January 1, 2010, and before July 1, 2015, a monthly service retirement allowance must be determined by multiplying the member s average compensation by 2.5 percent for each year of service earned. For a member who is not a police officer or firefighter and who has an effective date of membership on or after July 1, 2015, a monthly service retirement allowance must be determined by multiplying the member s average compensation by 2.25 percent for each year of service earned. For purposes of the foregoing, and with certain limits described in NRS (4) and (5) for members with an effective date on or after January 1, 2010, average compensation means the average of a member s 36 consecutive months of highest compensation as certified by the public employer. Regular members of PERS enrolled prior to January 1, 2010 are eligible for retirement benefits at age 65 with five years of service, at age 60 with 10 years of service, or at any age with 30 years of service. Regular members entering the PERS system on or after January 1, 2010 but before July 1, 2015, are eligible for retirement at age 65 if the member has at least 5 years of service, at age 62 if the member has at least 10 years of service and at any age if the 53

64 member has at least 30 years of service. Regular members entering the PERS system on or after July 1, 2015, are eligible for retirement at age 65 if the member has at least 5 years of service, at age 62 if the member has at least 10 years of service, at age 55 if the member has at least 30 years of service and at any age if the member has at least 33 1/3 years of service. A police officer or firefighter who has an effective date of membership before January 1, 2010, is eligible to retire at age 65 if the police officer or firefighter has at least 5 years of service, at age 55 if the police officer or firefighter has at least 10 years of service, at age 50 if the police officer or firefighter has at least 20 years of service and at any age if the police officer or firefighter has at least 25 years of service. A police officer or firefighter that has an effective date of membership on or after January 1, 2010, and before July 1, 2015, is eligible to retire at age 65 if the police officer or firefighter has at least 5 years of service, at age 60 if the police officer or firefighter has at least 10 years of service and at age 50 if the police officer or firefighter has at least 20 years of service. A police officer or firefighter that has an effective date of membership on or after July 1, 2015, is eligible to retire at age 65 if the police officer or firefighter has at least 5 years of service, at age 60 if the police officer or firefighter has at least 10 years of service and at age 50 if the police officer or firefighter has at least 20 years of service. PERS has an annual actuarial valuation showing unfunded liability and the contribution rates required to fund PERS on an actuarial reserve basis; however, actual contribution rates are established by the Legislature. The most recent independent actuarial valuation report of PERS was completed as of June 30, As of June 30, 2012, PERS reported an unfunded actuarial accrued liability (UAAL) of approximately $11.21 billion, the funded ratio for all members was 71.0%, and the market value of total net assets was approximately $25.90 billion. As of June 30, 2013, PERS reported a UAAL of approximately $12.88 billion, the funded ratio for all members was 69.3%, and the market value of total net assets was approximately $28.83 billion. As of June 30, 2014, PERS reported a UAAL of approximately $12.53 billion, the funded ratio for all members was 71.5%, and the market value of total net assets was approximately $33 billion. For funding purposes, the UAAL is amortized under the level percentage-ofpayroll amortization method. The UAAL as of June 30, 2011 shall continue to be amortized over separate 30-year period amortization layers based on the valuations during which each separate layer was previously established. Any new UAAL as a result of actuarial gains or losses identified in the annual valuation or change in actuarial assumptions or methods will be amortized over a period equal to the truncated average remaining amortization period of all prior UAAL layers. This will occur until the average remaining amortization period is less than 20 years. At that point, amortization periods of 20 years will be used. The assumed investment rate of return on the actuarial value of PERS assets, 8% per year, is based in part upon an assumed, long-term inflation rate of 3.5% per year. For the year ended June 30, 2014, PERS adopted Governmental Accounting Standards Board (GASB) Statement No. 67, Financial Reporting for Pension Plans-an amendment of GASB Statement No. 25. This GASB replaces the requirements of GASB statements 25 and 50 as they relate to pension plans that are administered through trusts or equivalent arrangements that meet certain criteria. The objective of GASB Statement No. 67 is to improve financial reporting by state and local governmental pension plans. It requires enhancement to footnote disclosure and required supplementary information for pension plans. 54

65 Prior to these new standards, the accounting and reporting requirements of the pension related liabilities followed a long-term funding policy perspective. The new standards separate the accounting and reporting requirements from the funding decisions and require the unfunded portion of the pension liability to be apportioned among the participating employers. These standards apply for financial reporting purposes only and do not apply to contribution amounts for pension funding purposes. With the implementation of GASB 67, PERS reported its total pension liability, fiduciary net position, and net pension liability in its Comprehensive Annual Financial Report for the fiscal year ended June 30, The total pension liability for financial reporting was determined on the same basis as the Actuarial Accrued Liability measure for funding. The fiduciary net position is equal to the market value of assets. The net pension liability is equal to the difference between the total pension liability and the fiduciary net position. PERS net pension liability as of June 30, 2014 was $10.42 billion as compared to $13.15 billion as of June 30, 2013, when measured in accordance with GASB 67. PERS fiduciary net position as a percentage of the total pension liability is 76.31% as of June 30, 2014, as compared to 68.68% as of June 30, Effective with fiscal year 2015, the Commission will be required to apply the GASB Statement No. 68, Accounting and Financial Reporting for Pensions-an amendment of GASB Statement No. 27 ( GASB 68 ), to its audited financial statements. Among other requirements, the Commission will be required to report its proportionate share of the total PERS net pension liability in its financial statements. According to a PERS report entitled Schedule of Employer Allocations, Schedule of Pension Amounts by Employer, and Related Notes, released for the fiscal year ending June 30, 2014, the Commission s proportionate share of PERS net pension liability is $31,745,509 or % Contribution rates to PERS are established in accordance with State statute. The statute allows for biennial increases or decreases of the actuarially determined rate. The Legislature can increase the contribution rate for members by any amount it determines necessary. Pursuant to statute, there is no obligation on the part of the employers to pay for their proportionate share of the unfunded liability. Plan members benefits are funded under one of two methods. Under the employer pay contribution plan, the Commission is required to contribute all amounts due under the plan. Under the employer/employee paid contribution plan, employees are required to contribute a percentage of their compensation to the plan and the Commission is required to match that contribution. As of August 1, 2015, the Commission had 263 employees participating in the employer pay plan and 21 employees participating in the employer/employee pay plan. A history of contribution rates for each funding method, as a percentage of payroll, is shown below. 55

66 Fiscal Years 2008 and 2009 Fiscal Years 2010 and 2011 Fiscal Years 2012 and 2013 Fiscal Years 2014 and 2015 Fiscal Years 2016 and 2017 Regular members Employer-pay plan 20.50% 21.50% 23.75% 25.75% 28.00% Employee/Employer Rate Plan 10.50% 11.25% 12.25% 13.25% 14.50% Police/Fire employees Employer-pay plan 33.50% 37.00% 39.75% 40.50% 40.50% Employee/Employer Rate Plan 17.25% 19.00% 20.25% 20.75% 20.75% The Commission s contributions to PERS for its fiscal years ended June 30, 2012, 2013, and 2014 were $3,971,166, $4,053,405, and $4,558,722, respectively. The Commission estimates its PERS contribution for its fiscal year ended June 30, 2015, will be $4,717,271 (unaudited). The Commission has budgeted a PERS contribution of approximately $6,034,719 for fiscal year See Note 10 in the audited financial statements attached hereto as Appendix A for additional information on PERS. In addition, copies of PERS most recent annual financial report, including audited financial statements and required supplemental information, are available from the Public Employees Retirement System of Nevada, 693 West Nye Lane, Carson City, Nevada , telephone: (775) Other Post-Employment Benefits. The Commission contributes to the County s Clark County Retiree Health Program (the County Plan ) and the Public Employee Benefit Program ( PEBP ). Each plan provides medical, dental, and vision benefits to eligible active and retired employees and beneficiaries. County Plan benefit provisions are established and amended through negotiations between the applicable unions and the County. PEBP benefit provisions are established by the Legislature. For a discussion of the plans benefits and costs, valuation of the OPEB Program, its UAAL, annual required contributions ( ARC ) and funding status as of June 30, 2014, see Note 11 and the Required Supplementary Information in the audited financial statements attached hereto as Appendix A. The Commission funds its OPEB liability on a pay-as-you-go basis. The amounts funded historically have been less than the ARC. Budget Process Prior to April 15 of each year, the General Manager is required to submit to Taxation the tentative budget for the next fiscal year which commences on July 1. The tentative budget contains the proposed expenditures and means of financing them. After reviewing the tentative budget, Taxation is required to notify the Commission upon its acceptance of the budget. Following acceptance of the proposed budget by Taxation, the Commission is required to conduct public hearings on the third Monday in May. The Commission normally is required to adopt the final budget on or before June 1. During the year, it may become necessary to modify the adopted budget. Formal adjustments to the budget during the year are accomplished through an augmentation process prescribed by State statute. The augmentation process requires the Commission to adopt a 56

67 resolution of augmentation to increase appropriations above the levels originally approved. It is then filed with Taxation. This process is revenue driven; therefore, total appropriations cannot be exceeded without additional resources being clearly identified. In the absence of a resolution of augmentation, the total appropriations may not be increased. Annual Reports The Commission is a component unit of the County for accounting purposes. The Commission prepares separate component unit audited financial statements setting forth the financial condition of the Commission as of June 30 of each fiscal year. The latest audited report is for the year ended June 30, The audited basic financial statements (including the management discussion and notes), which are attached hereto as Appendix A, are excerpted from the component unit financial statements. The Commission s basic financial statements were prepared following generally accepted accounting principles. See Note 1 in the audited basic financial statements attached hereto as Appendix A for a summary of the Commission s significant accounting policies. History of Revenues, Expenditures and Changes in Fund Balance - Governmental Funds The following table presents a five-year history of combined revenues, expenditures and changes in fund balance in the Commission s governmental funds for the fiscal years ended June 30, 2010 through The table also presents estimated year end information for the Commission s fiscal year ended June 30, 2015, and final budget information for the Commission s fiscal year ended June 30, The information for fiscal years 2010 through 2014 was derived from the Commission s audited financial statements for those years. The estimated fiscal year 2015 information and the fiscal year 2016 budget information was derived from the Commission s Final Budget. The information in this table should be read together with the Commission s audited basic financial statements for the year ended June 30, 2014, and the accompanying notes, which are included as Appendix A hereto. Financial statements for prior years can be obtained from the sources listed in INTRODUCTION - Additional Information. 57

68 Combined History of Revenues, Expenditures and Changes in Fund Balance-Governmental Fund Types (1) Estimated 2016 Budgeted Fiscal Year Ended June 30, Revenues Intergovernmental Revenues Motor Vehicle Fuel Tax (2) $65,408,709 $65,409,657 $64,868,301 $65,339,861 $78,542,958 $117,040,367 $141,728,665 Sales and Use Tax 33,934,033 35,444,544 37,606,331 39,752,304 42,574,499 44,703,224 46,044,321 Jet Aviation Fuel Tax 3,899,442 3,658,928 3,712,620 3,756,040 3,462,893 3,462,893 3,462,893 Federal and State Grants (3) 14,343,127 37,699,695 26,468,760 8,776,583 10,388,671 22,618,584 95,654,450 Interest 4,249,436 3,812,219 2,234, ,530 2,836,427 1,311, (5) IRS Rebate for BABs -- 1,713,769 3,780,233 3,394,648 3,293,500 3,229,617 3,293,502 Other 3,521,316 2,426,948 2,701,672 2,699,927 1,959,589 1,918,000 1,918,000 Total Revenues 125,356, ,165, ,372, ,658, ,058, ,283, ,101,831 Expenditures Current: Salaries and Wages 10,373,951 10,660,033 10,910,777 11,079,678 11,872,485 12,870,050 13,833,113 Employee Benefits 3,649,833 3,858,474 4,083,042 4,220,482 4,578,556 5,019,319 5,633,068 Services and Supplies 20,689,621 14,151,481 14,719,280 15,308,260 17,422,956 20,287,901 20,622,703 Bond issuance costs 1,444,586 2,820, , , ,000 Debt Service: Principal 17,355,000 31,860,000 37,290,000 40,845,000 32,080,000 32,080,000 37,675,000 Interest 22,020,445 31,734,073 35,845,399 37,622,361 35,579,300 35,579,301 42,366,263 Capital Outlay/intergovernmental capital grants 115,849, ,807,187 97,704,177 46,400,798 42,915, ,340, ,947,924 (6) Total Expenditures 191,382, ,891, ,279, ,476, ,011, ,177, ,038,071 Excess (deficiency) of revenues over (under) expenditures (66,026,671) (71,725,727) (59,906,903) (30,817,686) (1,952,966) (41,893,855) (332,936,240) Other Financing Sources (Uses) Proceeds from bonds/loans/commercial paper 153,370, ,395, ,105, ,000, ,060,000 Net premium/(discount) on bonds issued 5,880,561 8,987,349 17,384, ,635, ,940,000 Payment to refunded bond escrow agent (120,400,000) (32,600,000) (136,194,653) Transfers in (4) 91,426, ,864, ,527, ,790, ,056, ,339, ,394,046 Transfers out (4) (82,857,957) (107,070,109) (105,667,445) (105,310,956) (111,410,153) (120,789,647) (132,194,046) Total other financing sources (uses) 47,419, ,577,136 2,155,192 7,480, ,281,515 9,550, ,200,000 Net Changes in Fund Balances (18,607,360) 142,851,409 (57,751,711) (23,337,686) 118,328,549 (32,343,855) (152,736,240) Fund Balances-beginning of year 214,574, ,967, ,818, ,067, ,729, ,058, ,714,277 (7) Fund Balances-End of Year $195,967,571 $338,818,980 $281,067,270 $257,729,584 $376,058,133 $343,714,278 $190,978,037 Footnotes on following page.

69 (1) Combined activity for the Commission s governmental funds including: the Commission s General Fund, the Regional Transportation Fund (a special revenue fund); two debt service funds (RTC Bonds Fund and RTC Reserve Fund); and two capital projects funds (the Highway Improvement Acquisition Fund, into which fuel taxes are deposited, and the RTC Highway Improvement Fund, into which sales taxes are deposited). (2) Includes the Indexed Fuel Taxes for the second half of fiscal year 2014 and fiscal years 2015 and 2016 only. (3) Grants are generally based on reimbursements for capital. Therefore, grant levels fluctuate with the amount of capital spending in any given year. (4) Includes transfers between the governmental funds. (5) The Commission does not budget the receipt of any interest revenue. (6) The significant increase in budgeted capital outlay for fiscal year 2016 is due primarily to the commencement or continuation of several projects being financed with Indexed Fuel Tax revenues, some of which were originally anticipated to begin in fiscal year 2015 but were delayed until fiscal year Budgeted capital outlay expenditures are also estimated high by the Commission to provide flexibility as the initiation and progression of projects financed with Indexed Fuel Taxes and other revenues is sometimes uncertain. (7) The fiscal year 2016 beginning fund balance is derived from the ending fiscal year 2015 fund balance rather than the budgeted fiscal year 2016 beginning fund balance. Source: Derived from the Commission s audited component unit financial statements for the years ended June 30, 2010 through 2014, and the Commission s final 2016 budget for the estimated fiscal year 2015 results and the 2016 budgeted information. Risk Management The Commission is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors and omissions; and natural disasters for which the government carries commercial insurance. See Note 12 in the audited financial statements attached hereto as Appendix A for further information as to the Commission s risk management activities as of June 30, In the opinion of the Chief Financial Officer, such coverage is adequate and customary for similar entities insuring similar operations and assets. 59

70 CLARK COUNTY, NEVADA General Clark County, a political subdivision of the State, was organized in The County has been and is now operating under the provisions of the general laws of the State. The County covers an area of 8,012 square miles in the southern portion of the State. Approximately 92% of the land in the County is owned by the United States or agencies thereof. The County is the most populous of the State s 17 counties and holds approximately 76% of the State s total population. The County seat and most populous city in the State is the City of Las Vegas. The economy of the County is dependent largely on tourism (which is based on legalized gaming and related forms of entertainment), federal government activities, industry, finance and retail merchandising. The County provides a variety of governmental services, such as those of the County recorder, assessor and treasurer, and a criminal justice system, which includes the courts, district attorney, and public defender. In addition, the County provides local social and welfare services and local institutional youth services. The County also operates local public airports and hospitals from revenues provided from operations. The County supervises water and sewage systems through the Las Vegas Valley Water District, the Clark County Water Reclamation District, the Big Bend Water District, the Kyle Canyon Water District and the Coyote Springs Water Resources General Improvement District. The County provides road maintenance and construction, animal control, parks and recreation, fire protection, building inspection, and other local services to its unincorporated areas. Board of County Commissioners The Board of County Commissioners is the governing body of the County. The seven members are elected from County commission election districts for four-year staggered terms. The Board members also serve as the directors of the Las Vegas Valley Water District, as trustees of the University Medical Center of Southern Nevada, the Clark County Water Reclamation District, the Big Bend Water District, the Kyle Canyon Water District, the Coyote Springs Water Resources General Improvement District, and as members of the Clark County Redevelopment Agency, the Clark County Liquor and Gaming Licensing Board, and the Mount Charleston Fire Protection District. The Board is also represented on: the Regional Transportation Commission of Southern Nevada, Clark County Regional Flood Control District, Debt Management Commission, Las Vegas Metropolitan Police Committee on Fiscal Affairs, Nevada Development Authority, Family and Juvenile Justice Services Policy and Fiscal Affairs Board, Nevada Association of Counties Executive Committee, National Association of Counties Board of Directors, Southern Nevada District Board of Health, Criminal Justice Advisory Commission (formerly known as the Regional Jail Commission), Southern Nevada Regional Planning Coalition (formerly known as the Government Efficiency Committee), Las Vegas Convention and Visitors Authority, Clark County School District Oversight Panel, Southern Nevada Workforce Investment Board, Southern Nevada Water Authority, Airport Hazard Areas Board of Adjustments, Air Pollution Control Hearing Board, Boulder City Library District Board of 60

71 Trustees, Clark County Advisory Board to Manage Wildlife, Clark County Animal Advisory Committee, Clark County Board of Equalization, Clark County Boat Facilities and Safety Committee, Clark County Business Development Advisory Council, Southern Nevada Regional Planning Commission A-95 Clearinghouse Subcommittee (formerly known as the Clark County Clearinghouse Council), Clark County Parks and Recreation Advisory Council, Clark County Planning Commission, Clark County Senior Advisory Council, Clark County Shooting Park, Combined Board of Building Appeals, Community Development Advisory Committee, Family Services Citizens Advisory Committee, Henderson Library District Board of Trustees, Jaycee Mobile Home Park Committee, Juvenile Justice/Family Services Citizens Advisory Committee, Las Vegas-Clark County Library District Board of Trustees, Local Emergency Planning Committee, Local Law Enforcement Advisory Board (Justice Assistance Grant), Moapa Valley TV Maintenance District, Nuclear Waste (Yucca Mountain) Advisory Committee, Southern Nevada Enterprise Committee, Southern Nevada Area Communications Council, Ryan White Title I Planning Council, Nevada Test Site Development Corporation, Economic Opportunity Board and Nevada Business Service. The current members of the Board and their terms of office are as follows: Commission Member District Years of Service Current Term Expires (Jan.) Steve Sisolak, Chair A 5 years 2017 Lawrence L. Brown, III, Vice Chair C 5 years 2017 Susan Brager F 7 years 2019 Marilyn Kirkpatrick (1) B 9 years 2017 Chris Giunchigliani E 7 years 2019 Mary Beth Scow G 3 years 2019 Lawrence Weekly D 7 years 2017 (1) Appointed by the Governor of the State on August 18, 2015 to replace Tom Collins who resigned. County Commissioners are subject to term limitations (12 years) pursuant to the State constitution. Administration County Manager. The County Manager is the County s chief executive officer and serves at the pleasure of the Board. Donald G. Burnette is the County Manager. A brief biography for Mr. Burnette follows. Don Burnette was appointed as County Manager on January 3, He previously served as the County s Chief Administrative Officer starting July 1, Prior to becoming Chief Administrative Officer, Mr. Burnette served as Director of the County s Administrative Services Department from 1999 to 2002, and as Assistant Director of Administrative Services from 1995 to He began his employment with Clark County in Mr. Burnette has a Bachelor s of Science in Public Administration from Northern Arizona University and a Master s of Public Administration from New Mexico State University. 61

72 Financial Statements The Net Pledged Revenues are accounted for by the Commission. Accordingly, no financial information is provided for the County. The County s CAFR for the fiscal year ended June 30, 2014, currently can be found at the following internet address: Finance Department, Comptroller Division. Federal Tax Matters TAX MATTERS In the opinion of Bond Counsel, assuming continuous compliance with certain covenants described below, interest on the 2015 Bonds is excluded from gross income under federal income tax laws pursuant to Section 103 of the Tax Code, and interest on the 2015 Bonds is excluded from alternative minimum taxable income as defined in Section 55(b)(2) of the Tax Code except that such interest is required to be included in calculating the adjusted current earnings adjustment applicable to corporations for purposes of computing the alternative minimum taxable income of corporations as described below. The Tax Code imposes several requirements which must be met with respect to the 2015 Bonds in order for the interest thereon to be excluded from gross income and alternative minimum taxable income (except to the extent of the aforementioned adjustment applicable to corporations). Certain of these requirements must be met on a continuous basis throughout the term of the 2015 Bonds. These requirements include: (a) limitations as to the use of proceeds of the 2015 Bonds; (b) limitations on the extent to which proceeds of the 2015 Bonds may be invested in higher yielding investments; and (c) a provision, subject to certain limited exceptions, that requires all investment earnings on the proceeds of the 2015 Bonds above the yield on the 2015 Bonds to be paid to the United States Treasury. The County will covenant and represent in the Bond Ordinance that it will take all steps to comply with the requirements of the Tax Code to the extent necessary to maintain the exclusion of interest on the 2015 Bonds from gross income and alternative minimum taxable income (except to the extent of the aforementioned adjustment applicable to corporations) under federal income tax laws in effect when the 2015 Bonds are delivered. Bond Counsel s opinion as to the exclusion of interest on the 2015 Bonds from gross income and alternative minimum taxable income (to the extent described above) is rendered in reliance on these covenants, and assumes continuous compliance therewith. The failure or inability of the County to comply with these requirements could cause the interest on the 2015 Bonds to be included in gross income, alternative minimum taxable income or both from the date of issuance. Bond Counsel s opinion also is rendered in reliance upon certifications of the County and other certifications furnished to Bond Counsel. Bond Counsel has not undertaken to verify such certifications by independent investigation. Section 55 of the Tax Code contains a 20% alternative minimum tax on the alternative minimum taxable income of corporations. Under the Tax Code, 75% of the excess of a corporation s adjusted current earnings over the corporation s alternative minimum taxable income (determined without regard to this adjustment and the alternative minimum tax net operating loss deduction) is included in the corporation s alternative minimum taxable income 62

73 for purposes of the alternative minimum tax applicable to the corporation. Adjusted current earnings includes interest on the 2015 Bonds. The Tax Code contains numerous provisions which may affect an investor s decision to purchase the 2015 Bonds. Owners of the 2015 Bonds should be aware that the ownership of tax-exempt obligations by particular persons and entities, including, without limitation, financial institutions, insurance companies, recipients of Social Security or Railroad Retirement benefits, taxpayers who may be deemed to have incurred or continued indebtedness to purchase or carry tax-exempt obligations, foreign corporations doing business in the United States and certain subchapter S corporations may result in adverse federal and state tax consequences. Under Section 3406 of the Tax Code, backup withholding may be imposed on payments on the 2015 Bonds made to any owner who fails to provide certain required information, including an accurate taxpayer identification number, to certain persons required to collect such information pursuant to the Tax Code. Backup withholding may also be applied if the owner underreports reportable payments (including interest and dividends) as defined in Section 3406, or fails to provide a certificate that the owner is not subject to backup withholding in circumstances where such a certificate is required by the Tax Code. All of the 2015 Bonds were sold at a premium, representing a difference between the original offering price of those 2015 Bonds and the principal amount thereof payable at maturity. Under certain circumstances, an initial owner of such bonds (if any) may realize a taxable gain upon their disposition, even though such bonds are sold or redeemed for an amount equal to the owner s acquisition cost. Bond Counsel s opinion relates only to the exclusion of interest on the 2015 Bonds from gross income and alternative minimum taxable income as described above and will state that no opinion is expressed regarding other federal tax consequences arising from the receipt or accrual of interest on or ownership of the 2015 Bonds. Owners of the 2015 Bonds should consult their own tax advisors as to the applicability of these consequences. The opinions expressed by Bond Counsel are based on existing law as of the delivery date of the 2015 Bonds. No opinion is expressed as of any subsequent date nor is any opinion expressed with respect to pending or proposed legislation. Amendments to the federal or state tax laws may be pending now or could be proposed in the future that, if enacted into law, could adversely affect the value of the 2015 Bonds, the exclusion of interest on the 2015 Bonds from gross income or alternative minimum taxable income or both from the date of issuance of the 2015 Bonds or any other date, the tax value of that exclusion for different classes of taxpayers from time to time, or that could result in other adverse tax consequences. In addition, future court actions or regulatory decisions could affect the tax treatment or market value of the 2015 Bonds. Owners of the 2015 Bonds are advised to consult with their own tax advisors with respect to such matters. The Internal Revenue Service (the Service ) has an ongoing program of auditing tax-exempt obligations to determine whether, in the view of the Service, interest on such taxexempt obligations is includable in the gross income of the owners thereof for federal income tax purposes. No assurances can be given as to whether or not the Service will commence an audit of the 2015 Bonds. If an audit is commenced, the market value of the 2015 Bonds may be adversely affected. Under current audit procedures the Service will treat the County as the taxpayer and the 2015 Bond owners may have no right to participate in such procedures. The County has covenanted in the Bond Ordinance not to take any action that would cause the interest on the 63

74 2015 Bonds to lose its exclusion from gross income for federal income tax purposes or lose its exclusion from alternative minimum taxable income for the owners thereof for federal income tax purposes. None of the County, the Financial Advisors, the Underwriters, Bond Counsel, Special Counsel or Underwriter s Counsel is responsible for paying or reimbursing any 2015 Bond holder with respect to any audit or litigation costs relating to the 2015 Bonds. State Tax Exemption Under the laws of the State in effect as of the date of delivery of the 2015 Bonds, the 2015 Bonds, their transfer, and the income therefrom, are free and exempt from taxation by the State or any subdivision thereof except for the tax on estates imposed pursuant to Chapter 375A of NRS and the tax on generation-skipping transfers imposed pursuant to Chapter 375B of NRS. Litigation LEGAL MATTERS The County. Based on its review and search of the court dockets for the Eighth Judicial District Court for the State, Clark County, and the United States District Court of Nevada in the County, the District Attorney s office is of the opinion that there is no action, suit, proceeding, inquiry or investigation at law or in equity pending before any court, regulatory agency, public board or body, nor, to their knowledge, is any such action threatened, seeking to (i) restrain or enjoin the issuance, sale, execution or delivery of the 2015 Bonds or (ii) in any way contest or affect the validity of the 2015 Bonds or any proceedings of the County taken with respect to the issuance or sale thereof or the pledge, collection or application of any moneys or security provided for the payment of the 2015 Bonds, or the corporate existence or the powers of the County. The County s participation in the preparation of this Official Statement has been limited to the sections entitled INTRODUCTION - The Issuer, SECURITY FOR THE 2015 BONDS, excluding the caption thereunder entitled Outstanding Debt and Other Obligations, CLARK COUNTY, NEVADA, and LEGAL MATTERS - Litigation - The County. The Commission. The Commission is subject to certain pending and threatened litigation regarding various matters arising in the ordinary course of the Commission s operations. However, it is the opinion of Counsel to the Commission that the known pending or threatened lawsuits are not likely to result in final judgments against the Commission which would, individually or in the aggregate, adversely affect the Commission s financial position or its ability to apply the Net Pledged Revenues to pay debt service on the 2015 Bonds. Sovereign Immunity Pursuant to State statute (NRS ), an award for damages in an action sounding in tort against the County may not include any amount as exemplary or punitive damages and is limited to $100,000 per cause of action. The limitation does not apply to federal actions brought under federal law such as civil rights actions under 42 U.S.C. Section 1983 and actions under The Americans with Disabilities Act of 1990, or to actions in other states. 64

75 Approval of Certain Legal Proceedings The approving opinion of Sherman & Howard L.L.C., as Bond Counsel, will be delivered with the 2015 Bonds. A form of the bond counsel opinion is attached to this Official Statement as Appendix E. The opinion will include a statement that the obligations of the County are subject to the reasonable exercise in the future by the State and its governmental bodies of the police power inherent in the sovereignty of the State and to the exercise by the United States of the powers delegated to it by the federal constitution, including bankruptcy. Sherman & Howard L.L.C. has also acted as Special Counsel to the County in connection with this Official Statement. Certain matters will be passed upon for the County by the District Attorney and for the Commission by Holland & Hart LLP, counsel to the Commission, and for the Underwriters by Stradling Yocca Carlson & Rauth, P.C., Reno, Nevada, counsel to the Underwriters. Police Power The obligations of the County are subject to the reasonable exercise in the future by the State and its governmental bodies of the police power and powers of taxation inherent in the sovereignty of the State, and to the exercise by the United States of the powers delegated to it by the federal constitution (including bankruptcy). FINANCIAL ADVISORS Hobbs, Ong & Associates, Inc. and Public Financial Management, Inc. are serving as Financial Advisors to the County in connection with the 2015 Bonds. See INTRODUCTION - Additional Information for contact information for the Financial Advisors. The Financial Advisors have not audited, authenticated or otherwise verified the information set forth in the Official Statement, or any other related information available to the County or the Commission, with respect to the accuracy and completeness of disclosure of such information, and no guaranty, warranty or other representation is made by the Financial Advisors respecting accuracy and completeness of the Official Statement or any other matter related to the Official Statement. INDEPENDENT AUDITORS The Commission s audited basic component unit financial statements as of and for the year ended June 30, 2014, and the report rendered thereon by Moss Adams LLP, independent certified public accountants, Scottsdale, Arizona, have been included in this Official Statement as Appendix A. The audited basic financial statements of the Commission, including the auditor s report thereon, are public documents and pursuant to State law, no consent from the auditors is required to be obtained prior to inclusion of the audited basic financial statements in this Official Statement. The Commission has not requested that its auditors provide consent for inclusion of its audited financial statements in this Official Statement and Moss Adams LLP has not participated in any way in the preparation of this Official Statement. Further, since the date of its report, Moss Adams LLP has not been engaged to perform and has not performed any procedures on the basic financial statements addressed in that report and also has not performed any procedures relating to this Official Statement. 65

76 RATINGS Moody s Investors Service, Inc. ( Moody s ) and Standard & Poor s Ratings Services, a Division of The McGraw-Hill Companies ( S&P ) have assigned the 2015 Bonds the ratings shown on the cover page of this Official Statement. An explanation of the significance of any ratings given by S&P may be obtained from S&P at 55 Water Street, New York, New York An explanation of the significance of any ratings given by Moody s may be obtained from Moody s at 7 World Trade Center at 250 Greenwich Street, New York, NY There is no assurance that such ratings will continue for any given period of time after they are received or that they will not be lowered or withdrawn entirely if, in the judgment of the rating agencies, circumstances so warrant. Other than the Commission s obligations under the Disclosure Certificate, none of the Commission, the County, the Underwriters, or the Financial Advisors has undertaken any responsibility either to bring to the attention of the owners of the 2015 Bonds any proposed change in or withdrawal of such ratings or to oppose any such proposed revision. Any such change in or withdrawal of the ratings could have an adverse effect on the market price of the 2015 Bonds. UNDERWRITING The Underwriters have agreed pursuant to a Bond Purchase Agreement to purchase the 2015 Bonds from the County at a price of $98,990, (equal to the par amount of the 2015 Bonds, plus original issue premium of $14,181,542.40, less Underwriters discount of $190,689.01). The Underwriters are committed to take and pay for all of the 2015 Bonds if any are taken. The Underwriters intend to offer the 2015 Bonds to the public at the offering prices appearing on the inside cover page of this Official Statement. After the initial public offering, the public offering price may be varied from time to time by the Underwriters. The Underwriters and their respective affiliates are full-service financial institutions engaged in various activities that may include securities trading, commercial and investment banking, municipal advisory, brokerage, and asset management. In the ordinary course of business, the Underwriters and their respective affiliates may actively trade debt and, if applicable, equity securities (or related derivative securities) and provide financial instruments (which may include bank loans, credit support or interest rate swaps). The Underwriters and their respective affiliates may engage in transactions for their own accounts involving the securities and instruments made the subject of this securities offering or other offering of the County and/or Commission. The Underwriters and their respective affiliates may make a market in credit default swaps with respect to municipal securities in the future. The Underwriters and their respective affiliates may also communicate independent investment recommendations, market color or trading ideas and publish independent research views in respect of this securities offering or other offerings of the County and/or Commission. Wells Fargo Securities is the trade name for certain securities-related capital markets and investment banking services of Wells Fargo & Company and its subsidiaries, including Wells Fargo Bank, National Association ( WFBNA ). WFBNA, one of the Underwriters of the 2015 Bonds, has entered into an agreement (the Distribution Agreement ) 66

77 with its affiliate, Wells Fargo Advisors, LLC ( WFA ), for the distribution of certain municipal securities offerings, including the 2015 Bonds. Pursuant to the Distribution Agreement, WFBNA will share a portion of its underwriting or remarketing agent compensation, as applicable, with respect to the 2015 Bonds with WFA. WFBNA also utilizes the distribution capabilities of its affiliate Wells Fargo Securities, LLC ( WFSLLC ), for the distribution of municipal securities offerings, including the 2015 Bonds. In connection with utilizing the distribution capabilities of WFSLLC, WFBNA pays a portion of WFSLLC s expenses based on its municipal securities transactions. WFBNA, WFSLLC, and WFA are each wholly-owned subsidiaries of Wells Fargo & Company. OFFICIAL STATEMENT CERTIFICATION The undersigned official hereby confirms and certifies that the execution and delivery of this Official Statement and its use in connection with the offering and sale of the 2015 Bonds has been duly authorized by the Board and the Commission Board. CLARK COUNTY, NEVADA By: /s/ Yolanda King Chief Financial Officer REGIONAL TRANSPORTATION COMMISSION OF SOUTHERN NEVADA By: /s/ Marc Traasdahl Director of Finance 67

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79 APPENDIX A AUDITED BASIC (COMPONENT UNIT) FINANCIAL STATEMENTS OF THE REGIONAL TRANSPORTATION COMMISSION OF SOUTHERN NEVADA FOR THE FISCAL YEAR ENDED JUNE 30, 2014 NOTE: The audited basic financial statements of the Commission included in this Appendix A have been excerpted from the Commission s component unit audited financial statements for the fiscal year ended June 30, The supplementary information contained in the component unit financial statements for the fiscal year ended June 30, 2014, were purposely excluded from this Appendix A. Such statements provide supporting details and are not necessary for a fair presentation of the audited basic financial statement of the Commission. Prospective investors are cautioned that the 2015 Bonds are payable solely from Net Pledged Revenues and moneys on deposit in the Reserve Account. Inclusion of the basic financial statements of the Commission is for informational purposes only and does not imply that the 2015 Bonds constitute a general obligation of the Commission or a lien on any revenues other than the Net Pledged Revenues.

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83 REGIONAL TRANSPORTATION COMMISSION OF SOUTHERN NEVADA A COMPONENT UNIT OF CLARK COUNTY, NEVADA COMPONENT UNIT FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30,2014 RTCSNV.COM Prepared by the Department of Finance Las Vegas, Nevada

84 REGIONAL TRANSPORTATION COMMISSION OF SOUTHERN NEVADA JUNE 30,2014 Table of Gontents Paqe No. Officials Financial Section Report of lndependent Auditors Management's Discussion and Analysis Basic Financial Statements: Government-Wide Financial Statements: Statement of Net Position Statement of Activities Fund Financial Statements: Governmental Funds - Balance Sheet Reconciliation of the Balance Sheet to the Statement of Net Position Governmental Funds - Statement of Revenues, Expenditures and Changes in Fund Balance Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balance to the Statement of Activities Proprietary Fund - Statement of Net Position Proprietary Fund - Statement of Revenues, Expenses and Changes in Net Position Proprietary Fund - Statement of Cash Flows Notes to Financial Statements ',1 Required Supplementary I nformation Schedule of Funding Progress, Other Postemployment Benefits Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual: Regional Transportation General Fund Regional Transportation Fund RTC Bonds Fund RTC Reserve Fund Highway lmprovement Acquisition Fund RTC Highway lmprovement Fund

85 Paqe No. Schedule of Revenues, Expenses and Changes in Net Position - Budget and Actual - Public Transit Fund 59 Schedule of Cash Flows - Budget and Actual - Notes to Required Supplementary lnformation Other lnformation Public Transit Fund Report of lndependent Auditors on lnternal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Sfandards 63-64

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87 REGIONAL TRANSPORTATION COMMISSION OF SOUTHERN NEVADA A COMPONENT UNIT OF CLARK COUNTY, NEVADA RTC BOARD OFCOMMISSIONERS GENERAL MANAGER Laffy Brown, Chairnan Clark County Debra March, Vice Chairnan C ty of Henderson Tina Quîgley, General Manager Reg o na I h a ns po ftat on Co mm ssio n of Southem Nevada \ Mayor RogerTobler C ty of Boulder City Chr s Giunch gliani Clark County COUNTY commrssroners Steve Srso/ak, Chat Laty Brown, Vice-Chair Tom Collins Lawrence Weekly Chr s G unchiglian Susan Brager Mary Beth Scow Steve Ross C ty of LasVegas Lo starkan an C ty of Lasvegas Mayor Allan Uttnan C ty of Mesquite Mayor John Lee City of Notth Las Yegas

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89 FINANCIAT SECTION

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91 www,m055adams,c0m MOSSADAMS,,,, Cprtrf ecj P!b. A.(orntant: I Bu3rn.ss Crnsulr nt5 REPORT OF INDEPENDENT AUDITORS Board of Commissioners Regional Transportation Commission of Southern Nevada Report on the Financial Statements We have audited the accompanying financial statements of the governmental activities, business-type activities, and each major fund of the Regional Transportation Commission of Southern Nevada [RTC] as of and for the year ended fune 30, 20L4 and the related notes to the financial statements, which collectively comprise the RTC's basic financial statements as listed in the table of contents. Manag ement's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in conformity with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor's Resp o nsib ility Our responsibility is to express opinions on these financial statements based on our audil We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Audíting Standards, issued by the Comptroìler General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audìt procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the District's internal control. Accordingl we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as welì as evaluating the overall presentation of the financial statements. 2 Praxitv.,: iltltlbfíl " GI OBAL ÂLi IÄICË O; II.1 DTPEI,IDFI T FIRI.lS

92 MOSSADAMS'-'-'' We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Opinions In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, and each major fund of the Regional Transportation Commission of Southern Nevada as of fune 30, 20'1,4 and the respective changes in fïnancial position, and, where applicable, cash flows thereof for the year then ended in conformity with accounting principles generally accepted in the United States of America. Other Matters Req ui red S u p p lementary I nfo rmatio n Accounting principles generally accepted in the United States of America require that the Management's Drscussion and Analysis on pages 4 through 13, the Schedule of Funding Progress-Other Postemployment Benefits on page 54, and the Budgetary Comparison Information on pages 55 and 64, be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Other Rep o rting Re quired by G ov e rnm e nt Auditing Stand ørds In accordance with Government Auditing Standards, we have also issued our report dated November L3,2074 on our consideration of the RTC's internal control over financial reporting, and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters, The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the RTC's internal control over financial reporting and compliance. ilrç l**ç tp Scottsdale, Arizona November L3,2074 3

93 MANAGEMENT'S DISCUSSION AND ANALYSIS June 30, 2014 The Management's Discussion and Analysis (MD&A) of the Regional Transportation Commission of Southern Nevada's (RTC) financial performance provides an introduction and overview to the financial statements of the RTC for the fiscalyear ended June 30, lhe information contained in this MD&A should be considered in conjunction with the information contained in the financial statements and accompanying notes in this report. FINANCIAL STATEMENTS The RTC's fìnancial statements are prepared in accordance with accounting principles generally accepted in the United States as promulgated by the GovernmentalAccounting Standards Board (GASB). The RTC is structured with several governmental funds for administration, debt service and street and highway construction, and one proprietary fund for public transit operations. ln the proprietary fund and government-wide financial statements, revenues are recognized when earned, not when received and expenses are recognized when incurred, not when paid. Capital assets, except land, are depreciated over their estimated useful lives. A portion of net position is restricted for debt service and for street and highway projects. See the financial statement notes for a summary of the RTC's significant accounting policies. The following is a brief discussion of the structure of the basic financial statements: Government-wide Financial Statements The governmentwide financialstatements are designed to provide a broad overview of the RTC's finances. These statements are structured around the primary government. They are further divided into governmental activities and business-type activities. Governmental activities are those generally supported through taxes and intergovernmental revenues, while business-type activities are those for which a fee is charged for goods or services received, and can be subsidized with taxes. The statement of net position presents information on all of the RTC's assets, deferred outflows of resources, liabilities and deferred inflows of resources, with the difference between assets plus deferred outflows of resources and liabilities plus deferred inflows of resources, as net position. Net position is segregated into three components: net investment in capital assets, restricted, and unrestricted net position. The statement of activities presents information showing how the RTC's net position changed during the fiscal year. All changes in net position are reported when the underlying event giving rise to the change occurs, regardless of the timing of the related cash flows. Thus, there are some revenues and expenses reported in this statement that will result in cash flows in future flscal periods. Fund Financial Statements Fund financial statements provide detailed information about the RTC's funds. The RTC has two categories of funds. Governmental Funds - Governmental funds are used to account for essentially the same functions reported as governmental actlvities in the governmentwide financial statements described above. However, unlike the government-wide financial statements, governmentalfund financial statements use the modified accrual basis of accounting, which focuses on near-term inflows and outflows of available resources, as well as on balances of available resources at the end of the fìscal year. To provide a better understanding of the relationship between the governmental fund financial statements and 4

94 government-wide fìnancial statements, reconciliations are provided detailing the differences between the two financial statements' balances and results. Proprietary Funds - Funds that focus on the determination of operating income, changes in net position (or cost recovery), flnancial position, and cash flows are reported for proprietary funds. The RTC has one type of proprietary fund, an enterprise fund. Enterprise funds are used to report an activity where fees are charged to external users. The RTC's sole enterprise fund, the Public Transit Fund, is used to account for transit operations. FINANCIAL HIGHLIGHTS The governmental activities of the RTC consist of two highway improvement funds, two debt service funds, and two funds utilized to account for administration of the RTC and distribution of a portion of the sales and excise tax revenue. The RTC funds a portion of street and highway projects for Clark County, the City of Las Vegas, City of Henderson, City of North Las Vegas, City of Boulder City, City of Mesquite, Bunkerville, lndian springs, Laughlin, Moapa, Moapa Valley, Mt. charleston, and Searchlight, (collectively referred to as the Jurisdictions) through the nine cent motor vehicle fuel tax and a portion of the sales and excise tax revenue allocated to the RTC Highway lmprovement Fund. The business-type activities consist solely of the RTC Public Transit System, accounted for in an enterprise fund. The continued construction of street and highway, public transit facilities, and the acquisition of public transit equipment account for the majority of the changes in the balances reported in the statement of net position. ln fiscal year 2014 the RTC enjoyed a 7.1o/o increase in sales tax revenue, and a significant increase in public transit fare revenue, due to a new Medicaid agreement with the State of Nevada, while maintaining operating expenses to a minimal increase. These positive events on the statement of activities contributed to a healthy increase in unrestricted net position that will be beneficial for funding the RTC's fleet replacement program. The new indexed fuel tax started on January 1,2014, and bonds were issued against this new revenue source on April 1,2014 enhancing the cash position for the streets and highways program, and providing future revenue and bonding capacity for road construction projects and maintenance in future years. lncreases in revenue while maintaining expenses has been very beneficialto the RTC's overallfìnancial health. ASSETS AND DEFERRED OUTFLOWS OF RESOURCES Condensed Statements of Net Pos t on June 30, 2014 and 20'13 Governmental Activ t es Business Type Act vities Tota ',t Current and otherassets $ 398,751,841 $ ,220 $ '152,441,17A $ '15'l,419,841 $ 551,193,01 9 $ 442,559,061 't 8,583, ô2, , n7 3 n 51ô î7?añ Añ4 417,335,541 3l I,OO1, ,1 98, ,837, ,533, ,839,466 6,21't.737-6,2' Net cap tal assets Total assets DefeÍed outflows of resources Total assets and defered outflows of resources LIABILITIES AND DEFERRED INFLOWS OF RESOURCES Long-term l abilit es Other l ab l t es Total liãb l tiês Defered inflows of resources 1,774,515 Total l abil t es and defered NET POSITION Net nvestment in cap tal assets Restrictèd Unrestricted (deficit) _423,54?,n g gl_1_,oo1,ggg_ 541,.193,OO8 538,837,598 96'4,745,2A6 849,839, ,511, ,354,'t44 5,O37,O74 4,633,744 39,552,326 46,241,'ls6 28,355,837 36,342J ,064,255 8'15,595,340 33,392,91.l 40,975,9'17 357,5 t9,o03 67, ,457,1 66 '1,774, ,987,888 82,583, ,,571, ,838,770 I I 5, ,392,911 40,975, ,231,6A'l.257 I 8,583,700 '19,862, ,773, , ) 1 oe) 388,756,830 1't9,O4A,267 3A7,417, , ,340, ,773,42'l (721,600,346) -gß9,29j.!94 _$_rq-þgg Z.U $_991,999Æ.2 $_39ZJ9J- gl 9_9LEl_9g'9_ 407,240, 't,990 (648,544,1 8s) TOTAL NET POSITION s ) 5

95 Govern menta I Activities ln June of 2013 the Nevada State Legislature passed Assembly Bill No. 413, authorizing Clark County to impose additional taxes on fuels for motor vehicles referred to as lndexed Fuel Tax. Under lndexed Fuel Tax, Motor Vehicle Fuel Taxes are increased annually by the ten year average of a Producer Price lndex not to exceed 7.8%. On September 3, 2013, the Clark County Commission adopted Ordinance No. 4126, which imposed the lndexed Fuel Taxes commencing on January 1,2014 and further increases will be calculated and imposed on July 1,2014, July 1,2015, and July 1,2016 to a maximum 10 cent per gallon additional fuel tax. On April 1, 2014, Clark County for the benefit of RTC issued lndexed Fuel Tax highway revenue bonds, Series 2014A, and received approximately $1 10,600,000 in proceeds to be used for roadway projects which was the primary cause of the increase in current and other assets. The increase in current and other assets is also due to the receipt of additional fuel tax revenue amounting to approximately $12,300,000 from Fuel Tax lndexing. lnternal balances decreased by approximately $1 1,400,000 and offsetting this decrease was an increase in accounts receivable and amounts due from other governmental agencies of approximately $1 1,900,000. The approximate $1,200,000 decrease in net investment in capital assets is primarily due to depreciation of capital assets. lssuance of $100,000,000 in lndexed FuelTax highway revenue bonds, additional premium of approximately $10,600,000, off-set by principal payments for Bonds and notes payable of $32,080,000 and the accretion of bond issuance premiums of approximately $3,300,000 and the reclassification of deferred charges to deferred outflows of resources of approximately $6,200,000 are the primary reasons long-term liabilities increased by approximately $83,000,000. The decrease in other liabilities was primarily due to the elimination of internal balances in Statement of Net Position. Restricted net position is comprised of net resources for the Jurisdictions' street and highway projects and debt service. Available resources for the Jurisdictions' street and highway projects increased as described above for current and other assets. The RTC reimburses the Jurisdictions for approved expenditures on street and highway projects, and the Jurisdictions retain and maintain the improved assets. The RTC's borrowing to help fund jurisdictional street and highway improvement projects contributes to the accumulated deficit in the RTC governmental funds as the resulting debt is retained and serviced by the RTC. Business Tvpe Activities On October 10,2013 the RTC approved an agreement with the State of Nevada Department of Health and Human Services, Division of Health Care Financing and Policy for the partial reimbursement of Medicaid eligible medical Para Transit rides based on a calculated cost per ride effective January 1, 2012 through December 31,2016. The amount paid to RTC under this agreement may not exceed $20,993,056. Current and other assets increased primarily due an increase in due from other governments of approximately $1 1,900,000 mainly related to amounts owed to RTC from the State for eligible Medicaid medical Para Transit rides, an increase in accounts receivable of approximately $5,300,000 and a decrease in cash balances in the custody of the County Treasurer and in the bank of approximately $16,400,000. Cash balances decreased due to more capital projects procured and timely payment of bills as they come due during the fiscal year that resulted in a decrease in the liability section. 6

96 Capital assets, net, increased by approximately $1,300,000. The increase was due to capital expenditures of approximately $42,300,000 for paratransit and fixed route vehicles, UNLV transit center construction, bus shelters and other transit improvements. The reduction on the increase was primarily due to approximately $40,400,000 in depreciation expense. Other liabilities decreased by approximately 97,600,000 mainly due to earlier payment made to the fixed route public transit provider compared to the prior year. Condensed Stalements of Aclivities For the years ended June 30, 2014 and 2013 PROGRAM REVENUES Charges for services Operating grants end contributions Capital grants and contributions $ Govemmental Ac{ivities Bus ness Type Activities Total 20't t.3 4,903,1 08 5,485,563 4,391,723 4,384,860 $ 87,827,263 $ 7't,702,356 $ 1,385,020 4,'t21, ,890, ,596,066 87,827,263 $ 6,288, ,376,073 71, I,513,251 36,980,926 GENERAL REVENUES Motor vehicle fuel tax Jet-aviation fuel tax Sales and excise tax lnterest income Other 78,542,958 3,462,893 42,574,499 2,836,427 5,253, ,058,537 65,339,861 3,75ô,040 39,752, ,530 6,094, ,723,497 1,011, ,256, , ,000 64, ,988, ,994,763 78,542,958 3,462, ,297,996 3,848,272 65,339,861 3,756,040 '159,009,2't 6 'l,193,429 5,403, , ,046,672 EXPENSES Public works lnterest on long{erm debt Public transit 79,737,084 38,685,858 74,925,747 34,478, ,422, ,404, ,398, ,050,341 79,737,O84 38,685, ,398,335 74,925,747 u,479, , ,398, ,050,34't 328,821,277 3't 8,454,772 Changes in net position before lransfers 24,635,594 15,254, ,589,800 18,944,422 44,225,394 34,1 98,885 Net transfers 9,64ô,384 7,480,000 (9,646,384) (7.480,000) Change in net position Net position - beginning 34,281,978 22,734,462 9,943,416 (504,573,471 ) ( ) 497,861,681 11,464, ,397,259 44,225,394 (6,71 1,789) 34, I 98,885 ( ô74) Net position - ending 6 ê70, \ $ ( ) $ $ ,681 $ 37, $ (6, ) Fluctuations in revenues and expenses for fiscal year 2014 compared to fiscal year 2013 are explained below. Þ Charges for services increased by approximately 916,100,000 or 22o/o which was mainly due to the Medicaid ride reimbursement received by the agency from the State of Nevada retroactive from January 1,2012 peragreement executed on December 3, Þ Operating grants for governmental activities increased mainly due to more reimbursement received from the State of Nevada for the Unified Planning Work Program. Þ Operating grants for business type activities decreased due to reclassification of remaining Congestion Mitigation/Air Quality grant funded express routes for future cap tal projects. Þ Capital grants for governmental activities increased mainly due to the Nevada Department of Transportation Agreement for the Clark County Bike Lanes Project. Þ Capital grants for business type activities decreased by approximately $2O,7OO,0OO due to several FTA Section 5309 Bus and Bus Facilities and State of Good Repair grant awards reimbursed in FY

97 Þ Motor vehicle fuel tax revenue increased by 20.2%, which is mainly due to the additional revenue from lndexed FuelTax. Þ Sales and excise tax increased by approximately $11,300,000 or 7.1Yo due to increased taxable sales in Clark County. This is the fourth year of increased sales and excise tax revenue which is contributing to a recovering Southern Nevada economy. Þ lnterest income increased in governmental activities by approximately $1,900,000 and by approximately $800,000 in business type activities in fiscal year 2014 due to more cash balances maintained in custody of the County Treasurer. ln addition, the balance in the cash in custody of the fiscal agent increased by approximately $82,000,000 mainly due to the proceeds from Fuel Tax lndexing Revenue Bonds. Average interest rate is relatively the same Íor FY2014 in comparison to FY2013. Þ The increase in spending on public works projects is due to the increase in the amount of funds available from the lndexed FuelTax revenue bond proceeds, Series The RTC has maximized opportunities to issue debt to fund public works projects in an attempt to help the local economy in boosting construction jobs and assist the Jurisdictions in providing improved streets and roads for their citizens. Þ lnterest on long-term debt increased by approximately $4,200,000 mainly due to the adoption of GASB 65 and added bond issuance costs of approximately $5,300,000 in interest expense. On April 1,2014, the RTC issued lndexed FuelTax Revenue Bonds, Series 2014A amounting to $100,000,000. The interest on the new issuance offset the increase by approximately $1,200,000 Þ Public transit expenses increased approximately $1,300,000 primarily due to the following: a onetime expense of approximately $550,000 related to the transition of the paratransit provider for FY14 and an increase in security cost of approximately $450,000. REVENUES The following chart shows the components of revenues for the year ended June 30, 2014 Grants f/o 1% lrferest ncome 1o/o Mobrwlide fuel tax 21To Clarçs for seruices 24% Jef-aviationfuel tax 1o/o Sales and exc se tax 4fP/o I

98 EXPENDITURES The following chart shows the components of expenditures for the year ended June 30, 2014 Employee benefits 2o/" Salaries and wages 60/o Debt service 19o/o Capital outlay 24o/o Services and supplies 49o/o CAPITAL ACQUISITIONS AND CONSTRUCTION ACTIVITIES During fiscal year 2014, the RTC expended $85 million on street and highway improvement projects for the Jurisdictions, and RTC capital asset projects, such as vehicle procurements and facilities construction. The following identifies the street and highway capital improvement paid to the Jurisdictions and RTC capital expenditures: Street and highway capital improvement paid RTC equipment, buildings, land, and improvements $42,855,690 42,399,356 All RTC capitalasset acquisitions and improvements exceeding $5,000 are capitalized at cost. Acquisitions are funded from a variety of sources, including federal grants, state grants, debt issuance and local funds. Expenditures for the funding of street and highway capital improvement projects are not reported as assets on the RTC's financial statements, but on the financial statements of the Jurisdictions that own and are responsible for maintenance and repa r of the assets. Additional information on the RTC's capital assets and commitments can be found within the notes to the financial statements. I

99 LONG.TERM DEBT ADMINISTRATION A comprehensive debt management policy is an important foundation of sound financial management. This policy sets forth the parameters for issuing debt, managing outstanding debt, defining RTC responsibilities, delineating the purposes forwhich debt may be issued, defining debt objectives, identifying the type and amount of permissible debt, defining the method of sale that may be used, and defining other structural features. The policy also includes a debt capacity analysis. On July 10, 2014, an updated Debt Management Policy was adopted by the RTC. Nevada Revised Statutes requires the Debt Management Policy be updated on an annual basis and transmitted to the State of Nevada, Department of Taxation and the Clark County Debt Management Commission. The following is a summary of bond transactions and balances for the year ended June 30, 2014: Beginning Balance $ 770,480,956 Additions and Premiums Deletions and Discounts Ending Balance Revenue bonds $ 110,635,131 $ 35,42r,409 $ 845,694,678 Bonds payable at June 30, 2O14, are comprised of the following individual issues Highway lmprovement and Refunding Revenue Bonds Motor Vehicle Fuel Tax Revenue: Series 2003 Ser es 2007 Series Series Series 2011 Series Sales and Excise Tax Revenue: Series 2010 Series Series 2O1OC Original Amount $ 200,000, ,000,000 32,595,000 51,I 80,000 't 18,105, ,000,000 69,595,000 94,835, ,560,O00 lnterest Rate OO% 3.O0-5.00% 6.r % 5.00% oo% % % % % Balance June 30, 2014 $ 238,570,000 32,595,000 51,180,000 'l 15,905,O00 r 00,000,000 59,590,000 70,330, ,560,000 Plus unamortized premium Less unamortized discount Total 36,994,445 (29,767) $ 845,694,678 lssuing highway improvement bonds allows the RTC to fund the construction of street and highway projects for the benefit of the Jurisdictions. Clark County has issued all outstanding bonds for the RTC in the County's name. Repayment of the highway improvement bonds is pledged from twelve cents of motor vehicle fuel tax per gallon of fuel sold within Clark County, all lndexed Fuel Taxes collected in Clark County, and 0.25o/o sales and excise tax collected in Clark County. The RTC debt management policy stipulates that the debt service coverage ratio must be greater than or equal to 150%, which is calculated by dividing net pledged revenue by the maximum annual debt service, with which we believe that the RTC is in compliance. 10

100 PUBLIC TRANSIT STATISTICS The RTC coordinates transportation programs and services for the safe, convenient, and effective movement of people and goods within southern Nevada. As part of this mission, the RTC operates a fixed route bus service and a paratransit service in southern Nevada. The Americans with Disabilities Act of 1990 requires allfixed route bus service operators to provide a comparable paratransit service for the elderly and disabled Ridership - fixed route 7o increase (decrease) 59,728,168 (1.0o/o) 60,336, o/o 59,699, /o 55,476,967 (1.0%) 56,056,979 (11.6%) Ridership - paratransit 7o increase 1,400,025 1,363,699 1,319,901 1,214, % 3.3o/o 8.7% 18.2o/o 1,027, o/o The relatively low decrease in the fixed route ridership for fiscal year 2014 may be attributed to the elimination of barrier free services on selected RTC routes and implementation of front door boarding on those routes. The increase in Para transit ridership in fiscal year 2014 is less than the annual average of 60/o due to the September 30, 2012increased rates for single ride from $2.75 to $3.00. BUDGET The Regional Transportation Commission Fund (1) is the general operating fund of the RTC. Total expenditures for this fund were 16% under budget due to delaying expenditures related to the bike share program to FY15, and not spending the entire consulting budget for the Unified Planning Work Program (UPWP) and salaries and benefits. The Regional Transportation Fund (2) is a special revenue fund for the purpose of accounting for half of the additional sales tax approved by voters in Total expenditures for this fund were 2.4o/o under the final budget, and transfers out were 2.11% under the final budgeted amount. The RTC Bonds Fund (3) is utilized to account for the accumulation and payment of semi-annual debt service payments. Total expenditures for this fund were substantially the same as the budgeted amounts. The RTC Reserve Fund (4) is utilized to account for the debt service reserve funds required by all Clark County debt issued for the RTC. The Highway lmprovement Acquisition Fund (5) is a special revenue fund used to account for the nine cent Clark County Motor Vehicle Fuel Tax revenue and lndexed Fuel Tax revenue. Expenditures in this fund were significantly under budget due to the Jurisdictions concentrating their efforts on spending bond proceeds from the Sales and Excise Tax Revenue Bonds Series and 2010C. 11

101 The Highway lmprovement Fund (6) is a special revenue fund used to account for half of the additional sales tax approved by voters in 2001 after transfers to Fund 1 for FAST AMS operations and payments to the Clark County Department of Air Quality (CCDOAO). Remaining bond proceeds from the Sales and Excise Tax Revenue Bonds Series and 2010C were budgeted and not entirely spent by the Jurisdictions. The Public Transit Fund (50) is an enterprise fund that contains all financial activity for all aspects of the RTC Transit System. Sales and excise tax and transit revenue have increased for the past three years; however, management remains vigilant in controlling expenses to maintain adequate reserves for future unknown revenue declines especially related to future availability of federal grants for funding capital replacement as the federal government works through the balancing of their budget. Operating expenses for this fund were 5% less than budgeted. ln December 2013, the RTC approved a budget augmentation. The capital expenditure for improving existing CNG fueling infrastructure and new CNG powered vehicles was made from the Public Transit Fund (50) in fiscal year A combination of federal grant revenue and availability of unspent balance in Fund 50 for fiscal year 2013 was considered adequate to cover the augmented amount. ln June 2014, the RTC approved several budget augmentations. Transfers amounting to $900,000 from the Regional Transportation Commission Fund (1) to the RTC Highway lmprovement Acquisition Fund (5) were made as these projects will be owned by other governmental entities. Transfers amounting to $1,500,000 from the RTC Highway lmprovement Acquisition Fund (5) to the RTC Bonds Fund (3) were made to cover additional debt payment from the new lndexed Fuel Tax Revenue Bonds. Transfers amounting to $400,000 from the RTC Highway lmprovement Fund (6) to the RTC Bonds Fund (3) were made to cover additlonal debt payments. Proceeds from lndexed Fuel Tax revenue were considered adequate to cover the augmented amount. The Regional Transportation Fund (2) was augmented by $2,500,000 as the increase in sales tax caused increases in transfers out and an increase in payments to the CCDOAQ. The payment to CCDOAQ is based on 16%o of one quarter percent of sales tax. Management continues its effort to manage resources in order to enhance efficiency in providing transit services and fund streets and highways projects. CREDIT RATINGS Through June 30,2014,C\ark County has issued all revenue bondson behalf of the RTC. The bond rating at June 30, 2014, for the Clark County, Nevada Highway Revenue (Motor Vehicle Fuel Tax) lmprovement and Refunding Bonds from Moody's lnvestors Service, lnc. was Aa3, and the rating from Standard & Poor's Rating Service was AA-. The bond rating at June 30, 2014,for the Clark County, Nevada Highway Revenue Bonds (lndexed Fuel Tax and Subordinate Motor Vehicle Fuel Tax) from Moody's lnvestors Service, lnc. was 41, and the rating from Standard & Poor's Rating Service was A+. The bond rating at June 30, 2014, for the Clark County, Nevada Sales and Excise Tax Revenue (Street and Highway Projects) Refunding Bonds from Moody's lnvestors Service, lnc. was Aa2, and the rating from Standard & Poor's Rating Service was AA. 12

102 ECONOMIC FACTORS AND FUTURE BUDGETS ln preparing revenue forecasts and future budgets the RTC mainly monitors Sales Tax and Fuel Tax Revenues. ln addition to tax revenues, localeconomic indicators are monitored. These economic indicators are considered in preparing revenue forecasts and future budgets for tax revenue and transit fare revenue. The unemployment rate for Clark County, Nevada in August of 2014 wast.7o/o, which was down from 9.6% in August a year ago, and down from 11.4o/o a year before that. The hotel/motel occupancy rate for the Las Vegas metropolitan area in August of 2014 was 87.7o/o, which was up from 84.3% in August a year ago. These indicators show some improvement in the local economy; however, other indicators, such as the foreclosure rate on mortgages in Clark County still add some uncertainty in a fragile recovery. REQUESTS FOR INFORMATION This financial report is designed to provide a general overview of the RTC's finances for all those interested. Questions concerning any of the information provided in this report or requests for additional information should be addressed in writing to Marc Traasdahl, Director of Finance, Regional Transportation Commission of Southern Nevada, 600 South Grand Central Parkway, Suite 350, Las Vegas, NV or by to 13

103 BASIC FINANCIAL STATEMENTS

104 REGIONAL TRANSPORTATION COMMISSION OF SOUTHERN NEVADA STATEMENT OF NET POSITION JUNE 30, 2014 Governmental Activities ASSETS AND DEFERRED OUTFLOWS OF RESOURCES ASSETS: Cash and investments: ln custody of the County Treasurer Unrestricted $ 976,077 Restricted 21 1,097,883 Cash in bank Unrestricted 1,1 18,030 Restricted 2,750,799 Cash on hand 500 ln custody of the fiscal agent 137,701,004 Accounts receivable, net 4,214,981 lnterest receivable 621,311 Due from other governmental units 37,673,478 Prepaid expenses 2,597,778 Capital assets, not being depreciated 1,931,440 Capital assets, net of accumulated depreciation 16,652,260 Business-type Activities $ 84,786,136 7,811,168 14,500 14,756, ,508 44,639, ,423 57,642, ,114,299 Total $ 85,762, ,097,883 8,929,198 2,750,799 15, ,701,004 18,971, ,819 82,313,215 2,740,201 59,573, ,766,559 Total Assets 417,335, ,197, ,533,369 DEFERRED OUTFLOWS OF RESOURCES: Deferred loss on bond refunding 6,211, TOTAL ASSETS AND DEFERRED OUTFLOWS OF RESOURCES 423,547, ,197, ,745,1 06 LIABILITIES AND DEFERRED INFLOWS OF RESOURCES LIABILITIES: Accounts payable 20,484,044 Accrued payroll 346,960 Accrued interest 18,633,133 Other current liabilities 88,189 Long-term liabilities: Portion due or payable within one year: Bonds and notes payable 33,030,000 Compensated absences 1,035,259 Portion due or payable after one year: Bonds and notes payable 812,664,677 Compensated absences 1,425,085 Other post employment benefìts 4,356,908 Total Liabilities DEFERRED INFLOWS OF RESOURCES: Unearned revenue from Build America Bonds Rebate TOTAL LIABILITIES AND DEFERRED INFLOWS OF RESOURCES 892,064,255 'l,774, ,838,770 28,074, , , ,685 3,769,806 48,559, ,841 18,633, , ,030,000 1,661, ,664,677 2,065,770 8,126,714 33,392, ,457,166 I,t t4,ctc 33,392, ,231,681 NET POSITION Net investment in capital assets Restricted for: capital grants Debt service Unrestricted (defìcit) '18,583, ,756, ,340, ,235, ,537,695 (840,648,613) 243,235, ,537, ,048,267 (721,600,346) TOTAL NET POSITION $ (470,291,492) $ 507,804,917 See accompanying notes 14 $37,513,425

105 REGIONAL TRANSPORTATION COMMISSION OF SOUTHERN NEVADA STATEMENT OF ACTIVITIES FOR THE YEAR ENDED JUNE 30, 2014 Program Revenue Net (Expense) Revenues and Chanqes in Net Position Functions/Proqrams Expenses Charges for Services Operating G ants and Contributions Gapital Grants and Gontributions Governmental Activities Business-type Activities Total GOVERNMENTAL ACTIVITIES: Public works lnterest on long{erm debt $ 79,737,084 38,685,858 $ 4,903,108 $ 5,485,563 $ (69,348,413) ) $ (69,348,413) t TOTAL GOVERNMENTAL ACTIVITI ES BUSIN ESS-TYPE ACTIVITIES: Public transit TOTAL BUSINESS-TYPE ACTIVITIES Total ,485, S ,385,020 10,505, ,5' $ $ U $ S ( ) ( \ $ (109,295,722) n \ nog \ nog \ (108,034,271) (109,295,722) (217,329,993) General Revenues: Fuel taxes Sales and excise tax lnterest income Other Transfers Total general revenues and transfers 82,005,851 42,574,499 2,836,427 5,253, , ,723,497 1,011, ,000 ( ) s8 82,005, ,297,996 3,848,272 5,403, Changes in net posit on 34,281,979 9,943,236 44,225,215 Net position - beginning Net position - ending ( \ (6, ) s ø \ $ $ s See accompanying notes 15

106 REGIONAL TRANSPORTATION COMMISSION OF SOUTHERN NEVADA BALANCE SHEET GOVERNMENTAL FUNDS JUNE 30, 2OI4 ASSETS Cash and investments: ln custody of the County Treasurer Unrestricted Restricted Cash n bank Unrestricted Restricted Cash on hand ln custody of the f scal agent Accounts rece vable, net lnterest receivable Due from other funds Due from other governmental units Prepaid expenses TOTAL ASSETS General Fund Reg onal Transportation Commision 976,077 $ 1,1 18, ,214,981 1, , , ,374 $ 6,990,058 $ Special Revenue Fund Reg onal Transportation RTC Bonds Debt Service Funds RTC Reserve $ $ $ $ $ 976,O77 639,950 51,775,466 31,323,482 77,1 98,938 50,1 60, ,O97, ,589 1,846 't1,o79, , ,593, ,018 12,232,5't7 $ S 77,004,696 $ Highway lmprovement Acquis tion Capital Project Funds 807,033 92,1 07, ,932 25,081,3s S RTC H ghway lmorovement 1,432, ,483 8,602,108 I,165,1 09 Total Governmental Funds 1,1 1 8,030 2,750, ,70't,OO4 4,214,981 62't,311 8,806,471 37,673, S LIABILITIES, DEFERRED INFLOWS OF RESOURCES, AND FUND BALANCES LIABILITIES: Accounts payable Accrued payroll Due to other funds Unearned revenues Total liabilities DEFERRED INFLOWS OF RESOURCES: Unearned revenue from Build America Bonds Rebate Total liabilities and deferred inflows of resou rces 2,004j34 $ $ 2,413,432 $ $ $ 346,960 8,806,471 2,351,O94 1 1,219,903 'l ,351,094 I 1.2't , ,107,273 $ 11 j07, 'lo ,959,20s $ 20,444,O44 346,960 8,806, t ,047,394 29,725,664 1,774, ' FUND BALANCES: Nonspendable fund balance Restricted fund balance Unass gned fund balance Total fund balances 126, ô ,O12,614 50,1 66,1 32 1,O12,614 50,1 66, ,004, ,764,197 77,004, ' ,378 56,471, ,419,169 4,512,586 56, ,058,1 33 TOTAL LIABILITIES, DEFERRED INFLOWS OF RESOURCES, AND FUND BALANCES ti 6,990,058 $ S $ S $ 61,518,924 $ See acæompenying notes 't6

107 REGIONAL TRANSPORTATION COMMISS]ON OF SOUTHERN NEVADA RECONCILIATION OF THE BALANCE SHEET TO THE STATEMENT OF NET POSITION JUNE 30, 2OI4 Amounts reported for governmental activities in the statement of net position are different because: Fund balance - governmental funds $ 376,058,133 Capital assets used in governmental activities are not current financial resources; and therefore, are not reported in the fund financial statements, but are reported in the statement of net position. Capital assets Less accumulated depreciation $ 27,949,512 (9,365,812) 18,583,700 Long{erm liabilities, including bonds and loans payable, are not due and payable n the current period; and therefore, are not reported in the fund financial statements. Bonds and notes payable Unamortized issuance premiums Unamortized issuance discounts Unamortized deferred outflows of resources Accrued interest payable Compensated absences Other post employment benefits (882,659,355) 36,994,445 (29,767) 6,211,737 (1 8,633,1 33) (2,460,344) (4,356,908) (864,933,326) Total net position - governmental activities $ (470,291,492) See accompanying notes 17

108 REGIONAL TRANSPORTATION COMMISSION OF SOUTHERN NEVADA STATEMENT OF REVENUE, EXPENDITURES AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS FOR THE YEAR ENDED JUNE 30,2014 General Fund Regional Transportation Commis on Spec al Revenue Fund Regional Transportation RTC Bonds Debt Service Funds RTC Reserve Capital Project Funds H ghway RTC Highway lmprovement lmprovement Acqu sition Governmental Funds REVENUES lntergovermental revenue: Federal and state grants Fuel taxes Sales and excise tax lnterest Other Total revenues $ 4,9A6,771 $ 1 85, ,574,499 26, $ 359, ,652,504 $ 1,036,800 1,036,800 $ $ 5,401,900 78,542,958 3,462, , ,357 79,229,290 9,407,1 50 $ 10,388,671 82,005,851 42,574,499 2,436, ,058,537 EXPENDITURES Current: Salar es and wages Employee benefits Serv ces and supplies Debt serv ce: Pr ncipal lnterest Bond issuance costs Cap tal outlay and ntergovernmental cap tal grants Total expenditures Excess (defic ency) of revenues over (under) expenditures 11,872,485 4,578,556 '1o,248, ,759,362 (19 6)7 7s1\ 6,81 1,920 6,81 1,920 35,789,262 5,524 32,080,000 35,579,300 67,664,A24 (64 ll12 32o\ 1,036, , , ,610,788 I 4, ,610, ì 11,872,485 4,578,556 17,422,956 32,080,000 35,579, , s ) other FINANC NG SOURCES (USES) Transfers in Transfers out Revenue bond issued Premium on bond ssued Total other financing sources (uses) 21,054,073 (836,46s) A (35,762,579) ( \ 65,574, ,995,750 7,995,750 (46,306,439) 92,004,250 10,635,131 56,332,942 34,427,975 (28,s04,670) I 21,056,537 (111,410,153) I 00,000,000 10,635, ,2A1,515 CHANGES IN FUND BALANCES 589,857 26,683 1,562,1 69 9,032, ,397,623 (14,280,333) 1 18,328,549 Fund balences - beginning 4,049, ,603, , A4 Fund balances - ending s $ $ S $.r $ $ See accompanying notes 18

109 REGIONAL TRANSPORTATION COMMISSION OF SOUTHERN NEVADA RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES TO THE STATEMENT OF ACTIVITIES FOR THE YEAR ENDED JUNE 30, 2OI4 Amounts reported for governmental activities in the statement of activities are different because: Ghanges ín fund balances - governmental funds $ 118,328,549 Governmental funds report outlays for capital assets as expenditures because such outlays use current financial resources. ln contrast such outlays are allocated over the assets' estimated useful lives as depreciation expense for the period in the statement of activities. Capital outlay and intergovernmental capital grants Less intergovernmental capital grants Capitalized expenditures Less current year depreciation $ 42,915,650 (42,855,690) 59,960 (1,338,908) (1,278,948) The issuance of long{erm debt (e.9. bonds and notes) provides current financial resources to governmental funds, while the repayment of the principal of long{erm debt consumes the current financial resources of governmental funds. Also, governmental funds report the effect of issuance costs, premiums, discounts, and similar items when debt is first issued, whereas these amounts are deferred and amortized over the life of the related debt in the statement of activities. Revenue bond issued Premium on bond issued Principal payments Elimination of deferred bond issuance costs Amortization of deferred outflows of resources Amortization of bond premiums Amortization of bond discounts (100,000,000) (1 0,635,I 31) 32,080,000 (5,350,996) (626,394) 3,343,213 (1,804) (81,191,112) Some expenses reported in the statement of activities do not require the use of current financial resources and are not reported as expenditures in governmental fund financial statements. Change in accrued interest payable Change in compensated absences Change in other post employment benefits Ghange in net position - governmental activities (470,577) (200,816) (905, I I 7) (1,576,510) $ 34,281,979 See accompanying notes 19

110 REGIONAL TRANSPORTATION COMMISSION OF SOUTHERN NEVADA STATEMENT OF NET POSITION PROPRIETARY FUND JUNE 30, 2014 ASSETS Current assets; Cash and cash equivalents: ln custody of the County Treasurer Cash in bank Cash on hand Accounts receivable,lnterest receivable Due from other governmental units Prepaid expenses Total current assets Non-current assets: Capital assets: Land and construction in progress Buildings and improvements Equipment Accumulated depreciation Total non-current assets Total assets LIABILITIES Current liabilities: Accounts payable Accrued payroll Other current liabilities Total current liabilities Non-current liabilities: Portion due or payable within one year Compensated absences Portion due or payable after one year: Compensated absences Other post employment benefits Total non-current liabilities Total liabilities NET POSITION Net investment in capital assets Unrestricted Total net position Public Transit $ 84,786,136 7,811,168 14,500 14,756, ,508 44,639,737 '142, ,441,',t78 57,642, ,759, ,912,378 (215,557,893) 388,756, ,197,828 28,074, ,881 50,000 28,355, , ,685 3,769,806 5,037,074 33,392, ,756, ,048,267 $ soz,804,917 See accompanying notes 20

111 REGIONAL TRANSPORTATION COMMISSION OF SOUTHERN NEVADA STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION PROPRIETARY FUND FOR THE YEAR ENDED JUNE 30,2014 OPERATING REVENUES Charges for services: Transit fees Transit Advertising Federal and state grants and contributions Other Total operating revenues OPERATING EXPENSES Salaries and wages Employee benefits Services and supplies Depreciation Total operating expenses Operating loss NON-OPERATING REVENUES lntergovernmental revenue: Sales and excise tax Federal and state grants and contributions lnterest income Gain on sale of capital assets Total non-operating revenues Transfers out lncome before transfers CHANGE IN NET POSITION Net position - beginning Net position - ending Public Transit $ 85,062,071 2,470,981 1,385, ,211 89,212,284 7,787,127 3,340, ,868,251 40,402, ,398,515 (121J86232) 127,723,497 I 1,890,510 1,01',t, ,775,852 19,589,620 (9,646,384) 9,943, ,861,681 $ soz,804,917 See accompanying notes 21

112 REGIONAL TRANSPORTATION COMMISSION OF SOUTHERN NEVADA STATEMENT OF CASH FLOWS PROPRIETARY FUND FOR THE YEAR ENDED JUNE 30,2014 Cash flows from operating activities: Cash received from customers Cash paid for employees and beneflts Cash paid for services and supplies Other operating receipts Net cash used in operating activities Gash flows from non-capital financing activities: Cash provided by sales and excise tax Federal and state grants Transfers to other funds Net cash provided by non-capital financing activities Gash flows from capital and related financing activities: Acquisition, construction, or improvements of capital assets Proceeds from sale of capital assets Net cash used by capital and related financing activities Gash flows from investing activities: lnterest received Decrease in cash and cash equivalents Cash and cash equivalents - beginning of year Cash and cash equivalents - end of year Reconciliation of operating loss to net cash flows used in operating activities: Operating loss Adjustments to reconcile operating loss to net cash used in operating activities: Depreciation lncrease in accounts receivable lncrease in prepaid expenses Decrease in accounts payable lncrease in accrued payroll Decrease in due to other funds lncrease in compensated absences lncrease in other post employment benefits Net cash used in operating activities Public Transit $ 74,618,239 (10,671,s1s) (166,930,737) 294,211 (102,690,206) 125,241,995 11,339,947 (9,646,384) 126,935,558 (41,741,317) 150,000 (41,591,317) 876,651 (16,469,314) 109,081,118 $ s2,611,804 $ (121,186,232) 40,402,245 (14,299,835) (23,558) (6,41 e,1 07) 52,771 (1,ô20,000) 61, ,821 $ (102,6e0,206) See accompanying notes 22

113 REGIONAL TRANSPORTATION COMMISSION OF SOUTHERN NEVADA NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30,2014 NOTE I - Summary of Significant Accounting Policies The Reportinq Entitv ln accordance with Nevada Revised Statutes (NRS) 373, ordinance 226 was adopted by the Clark County Board of Commissioners on June 7, 1965, creating the Regional Streets and Highway Commission. On December 4, 1979, its name was changed to the Regional Transportation Commission. On September 21,2000, the name was changed to the RegionalTransportation Commission of Southern Nevada (the "RTC"). The RTC is governed by an 8 member Board of Commissioners (the "Board"), comprised of elected officials, as follows: 1. Two representatives appointed from the Clark County Board of Commissioners 2. Two representatives appointed from the governing board of the City of Las Vegas 3. One representative appointed from each of the governing boards of the Cities of Boulder City, Henderson, North Las Vegas and Mesquite When initially adopted, the creating ordinance provided for a one cent per gallon tax on all motor vehicle fuel sold in Clark County (the "County"). On September 1, 1969, the tax was increased to two cents per gallon and remained in effect until April 1, 1983, at which time the tax was increased to four cents per gallon and remained at that rate until January 1, On November 6, 1990, Clark County voters approved an advisory ballot question increasing the motor vehicle fuel tax levy along with five other taxes. ln 1991, the State of Nevada Legislature responded to this voter mandate and passed Senate Bill I 12 in March I 991. On April 16, 1991, the County passed an ordinance increasing the tax on motor vehicle fuel. The effective dates for increases to this tax were: January 1,1992,flvecents; January 1,1993, seven cents; January 1, 1994, eightcents, and January 1,1995, nine cents. ln June of 2013 the Nevada State Legislature passed Assembly Bill No. 413, authorizing Clark County to impose additional taxes on fuels for motor vehicles referred to as lndexed Fuel Tax. Under lndexed Fuel Tax, Motor Vehicle Fuel Taxes are increased annually by the ten year average of a Producer Price lndex not to exceed 7.8o/o. On September 3, 2013, the Clark County Commission adopted Ordinance No. 4126, which imposed the lndexed Fuel Taxes commencing on January 1, 2014 and further increaseswill be calculated and imposed on July 1,2014, July 1,2015, and July 1, 2016 to a maximum 10 cent per gallon additional fuel tax. ln accordance with NRS 377A, an ordinance was also adopted by the County on April 16, 1991, levying a one quarter of one percent sales tax for public mass transportation. ln November 2002, Clark County voters approved an advisory ballot question providing for a variety of new taxes to fund transit infrastructure. The 2003 Nevada Legislature passed enabling legislation allowing the County to increase aviation fuel tax, sales tax, and residential development tax for this purpose. These increases were enacted by the Board of County Commissioners on July 1, 2003, with the increases taking effect on October 1, ln accordance with the provisions of Governmental Accounting Standards Board (GASB) Statement No. 14 as amended, the RTC is a discretely presented component unit of the Clark County, Nevada financial reporting entity because the County issues debt on behalf of the RTC. The accounting policies of the RTC conform to accounting principles generally accepted in the United States as applicable to governmental entities. 23

114 REGIONAL TRANSPORTATION COMMISSION OF SOUTHERN NEVADA NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30,2014 (conttnued) NOTE 1 - Summary of Significant Accounting Policies (continued) Government-\Mde and Fund Financial Statements The government-wide financial statements (r.e., the statement of net position and the statement of activities) report information on all of the activities of the RTC. For the most part, the effect of interfund activity has been removed from these statements. Governmental activities, which normally are supported by taxes and intergovernmental activities, are reported separately from business{ype activities that rely to a significant extent on user fees and charges for support. The statement of activities demonstrates the degree to which the direct expenses of a given function are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. Program revenues include: 1) charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function, or segment, and 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or segment. Taxes and other items not properly included among program revenues are reported as general revenues. Separate financial statements are provided for governmental and proprietary funds. All governmental funds are considered to be major funds and they are reported in separate columns in the governmental fund financial statements. Measurement Focus, Basis of Accountinq and Financial Statement Presentation Govern ment-vúide Financial Statements The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting, as are the proprietary fund financial statements. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met. Governmental Fund Financial Statements Governmental fund financial statements are reported using the current financial resources measurement focus and the modifìed accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collectible within the current year or soon enough thereafter to pay liabilities of the current year. For this purpose, the RTC considers revenues to be available if they are collected within 90 days after the end of the current fìscalyear. Expenditures generally are recorded when a liability is incurred, as under accrual accounting; however, debt service, compensated absences and other post employment benefits expenditures are recorded only when payment is due. Fueltaxes, sales and excise taxes, interest revenue, and charges for services associated with the current fiscal year are considered subject to accrual and have been recognized as revenues in the current year. 24

115 REGIONAL TRANSPORTATION COMMISSION OF SOUTHERN NEVADA NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30,2014 (conttnued) NOTE 1 - Summary of Significant Accounting Policies (continued) The RTC reports the following major governmental funds: Regional Transportation Commission Fund (fl - this is the general operating fund of the RTC. It is used to account for all resources and cost of operations traditionally associated with governments, which are not required to be accounted for in other funds. Regional Transportation Fund (2) - lhis fund serves as a pass-through account for revenues received from the November 2002, voter-approved Question 10 tax, which are used to pay for tran sportatio n e n ha nce me nts infrastructu re. RTC Bonds Fund l3l - this fund is used to account for the payment of principal and interest, and the cost of operations associated with the debt service for the RTC's outstanding debt. RfC Reserve Fund (4) -this prevent deficiencies in the payment of principal and interest associated with the RTC's outstanding debt. fund is used to accumulate a continuing reserve only to be used to Highway lmprovement Acquisition Fund l5l - this fund is used to account for the funding of construction of roads and streets paid for from both motor vehicle fuel taxes and proceeds of revenue bonds. RTC Highway lmprovement Fund (6) - this fund is used to account for the funding of construction of roads and streets paid for from the November 2002, Question 10 voter approved Jet-Aviation fuel tax and sales tax increase in The RTC reports the following major proprietary fund: Public Transit (50) - this fund is used to account for the operations of the RTC transit system Amounts reported as program revenues include: 1) charges to customers or applicants for goods, services or privileges provided, 2) operating grants and contributions, and 3) capital grants and contributions. lnternally dedicated resources are reported as general revenues rather than as program revenues. Likewise, general revenues include alltaxes. 25

116 REGIONAL TRANSPORTATION COMMISSION OF SOUTHERN NEVADA NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30,2014 (conttnued) NOTE I - Summary of Significant Accounting Policies (continued) Proprietary funds distinguish operating revenues and expenses from non-operating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund's principal ongoing operations. The principal operating revenues of the RTC's enterprise fund are charges to customers for transit and services. Operating expenses for the enterprise fund include the cost of transit services, administrative expenses, and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as non-operating revenues and expenses. \Men both restricted and unrestricted/unassigned resources are available for use, it is the RTC's policy to use restricted resources first, then to use unrestricted/unassigned resources as they are needed. Assets. Liabilities and Net Position or Fund Balance Cash and lnvestments The majority of all cash and investment transactions of the RTC are handled by the County Treasurer's office. Cash balances are combined and invested as permitted by law in combination with County funds. lnvestments are reported at fair value on the balance sheet and statement of net position. Fair value is the amount at which a financial instrument could be exchanged in a current transaction between willing parties other than in a forced or liquidation sale. Changes in the fair value of investments are part of interest earnings of the individual funds. Cash and cash equivalents include cash in bank, cash on hand, cash in custody of Clark County Treasurer or fiscal agent, demand deposits, and short{erm investments with original maturities of three months or less from the date of acquisition. At June 30,2014, a significant portion of the RTC's cash and cash equivalentswere deposited in the custody of the County Treasurer or a fiscal agent, in a manner similar to an external investment pool. These amounts are sufficiently liquid to permit withdrawals in the form of cash at any time without prior notice or penalty; and therefore, they are deemed to be cash equivalents. Receivables and Pavables Activities between funds that are representative of lending/borrowing arrangements outstanding or transfers to be recorded upon receipt of revenue at the end of the fiscal year are reported to as due to/from other funds. CaoitalAssets Capitalassets, which include land, buildings, equipment, and furniture, are reported in the applicable governmental or business-type activities columns in the government-wide financial statements. 26

117 REGIONAL TRANSPORTATION COMMISSION OF SOUTHERN NEVADA NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30,2014 (conttnued) NOTE I - Summary of Significant Accounting Policies (continued) Assets. Liabilities and Net Position or Equitv (continued) Capital assets are defined by the RTC as assets with an initial individual cost of more than $5,000 and an estimated useful life in excess of one year. Such assets are recorded at historical cost. Donated capital assets are recorded at estimated fair value on the date of donation. The costs of normal maintenance and repairs that do not significantly add to the functionality of the asset or materially extend the asset life are not capitalized. Major outlays for capital assets and improvements that are part of a construction project are capitalized and depreciated once the projects are placed in service. Prior to that time, they are reported as construction in progress. Capital assets are depreciated using the straight line method over the following estimated useful lives: CaoitalAssets Buildings and improvements Equipment Years For federally funded assets, the RTC follows the federal guidelines in depreciating the assets. Prepaid expenses Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid expenses in both governmentwide and fund financial statements and are reported as expenditures in the governmental fund financial statements when incurred Comoensated Absences It is the RTC's policy to permit employees to accumulate earned, but unused vacation and sick leave benefits. Such benefits are accrued when incurred in the government-wide and proprietary fund financial statements. A liability for these amounts is reported in governmental funds only if they have matured, for example, as a result of accrued benefits for employees that resign or retire prior to year end, but are paid for these benefits subsequent to year end. Lono-Term Obliqations ln the government-wide financial statements and proprietary fund financial statements, long-term debt and other long{erm obligations are reported as liabilities in the applicable governmental activities, business-type activities or proprietary fund type statements of net position. Bond premiums, discounts, and deferred refunding charges are amortized overthe life of the bonds using the straight line method, which approximates the effective interest method. Bonds payable are reported net of applicable bond premiums, discounts and deferred refunding charges. 27

118 REGIONAL TRANSPORTATION COMMISSION OF SOUTHERN NEVADA NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2014 (conttnued) NOTE I - Summary of Significant Accounting Policies (continued) Assets. Liabilities and Net Position or Equity (continued) Lono-Term Oblioations (continued) ln the governmental fund financial statements bond premiums and discounts, as well as issuance costs, are recognized during the current period. The face amount of debt issued is reported as other financing sources. Premiums received on debt issuances are reported as other financing sources whereas discounts on debt issuances are reported as other financing uses. lssuance costs, whether or not withheld from the actual debt proceeds received, are reported as expenditures. Other Postemplovment Benefits (OPEB) Effective July 1, 2007, the RTC implemented the provisions of GASB Statement No. 45, Accounting and Financial Reporting by Employers for Postemployment Benefits Other Than Pensions. ln accordance with the transition rules of the statement, the RTC elected to apply its measurement and recognition requirements on a prospective basis and set its beginning net OPEB at zero for the year ended June 30, The annual OPEB cost reported in the accompanying financial statements is equalto the annual required contribution (ARC) of the RTC, calculated by using an actuarialvaluation based upon the same methods and assumptions applied in determining the plan's funding requirements. The net OPEB obligation at June 30,2014, was determined by adding the annual OPEB cost to the net OPEB obligation at the beginning of the year and deducting any contributions to the plan during the year. Fund Balance Governmental funds for the RTC report nonspendable fund balance, restricted fund balance and unassigned fund balance. Nonspendable fund balance is for assets that never will be converted to cash. All RTC nonspendable fund balance pertains to prepaid expenses. Restricted fund balance is legally restricted by outside parties or enabling legislation for a specific purpose. Restricted fund balance for the RTC Transportation fund is restricted for transportation enhancements infrastructure. Restricted fund balances for the RTC Bonds fund and the RTC Reserve fund are restricted for servicing the RTC's debt. Restricted fund balances for the Highway lmprovement Acquisition fund and the RTC Highway lmprovement fund are restricted for the funding of roads and streets constructions. Unassigned fund balance in the Regional Transportation Commission fund is the excess of nonspendable fund balance. When both restricted resources and other resources (r.e., committed, assigned and unassigned) can be used for the same purposes, it is the RTC's policy to use restricted resources first. Furthermore, when committed, assigned and unassigned resources can be used for the same purpose, it is the RTC's policy to use committed resources first, assigned second, and unassigned last. 28

119 REGIONAL TRANSPORTATION COMMISSION OF SOUTHERN NEVADA NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30,20'14 (conttnued) NOTE I - Summary of Significant Accounting Policies (continued) Assets. Liabilities and Net Position or Eouitv (continued) Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from these estimates. Estimates particularly sensitive to change during the upcoming year include market value estimates for loaned securities. GASB 65 During fiscal year 2014, RTC adopted GASB 65, "ltems Previously Repoñed as Assefs and Liabilities", which modified the accounting for bond issuance costs. Previously reported amounts for the bond issuance costs were reflected on the statement of net position as an asset. The implementation of this statement resulted in the write off of bond issuance costs on the statement of revenues, expenses, and changes in net position. Additionally, as a result of RTC's adoption of GASB 65, the deferred loss on bond refunding is now reported as a deferred outflow of resources on the statement of net position. For advance refunding resulting in defeasance of debt reported by RTC, the difference between the reacquisition price and the net carrying amount of the old debt is reported as a deferred outflow of resources and recognized as a component of interest expense on a straight line basis over the remaining life of the new debt. GASB 65 requires reporting unearned revenue from Build America Bonds as deferred inflows of resources in the statement of net position. NOTE 2 - Stewardship, Compliance and Accountability The RTC adopts annual budgets for the general fund and all special revenue, debt service, and capital project funds. All budgets are adopted on a basis consistent with applicable accounting principles generally accepted in the United States and used by the RTC for fìnancial reporting. The RTC uses the following procedures to establish, modifo, and controlthe budgetary data presented in the financial statements: a. Prior to April 15, the RTC submits to the Nevada State Department of Taxation the tentative budget for the next fiscal year, commencing on July 1. The tentative budget as submitted contains the proposed expenditures and means of financing them. b. The Nevada State Department of Taxation notifies the RTC of its acceptance of the tentative budget. c. Public hearings are conducted on the third Thursday in May. d. After allthe changes have been noted and hearings closed, the RTC Board of Commissioners adopts the final budget on or before June 1. e. The NRS require budget controls to be exercised at the function level. The General Manager or designee is authorized to transfer budgeted amounts within functions or funds, but the RTC Board of Commissioners must approve any transfers between funds or increases to a fund's original appropriated level. 29

120 REGIONAL TRANSPORTATION COMMISSION OF SOUTHERN NEVADA NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30,2014 (conttnued) NOTE 2 - Stewardship, Compliance and Accountability (continued) f. lncreases to a fund's budget (augmentations) other than by transfers are accomplished through formal RTC Board of Commissioners action. g. All appropriations lapse at the end of the fiscal year. Encumbrances are re-appropriated in the ensuing fiscalyear. Compliance with Nevada Revised Statutes Per NRS , the RTC is required to report and explain expenditures that exceeded budgeted appropriations at the legal level for each of its funds. For the year ended June 30, 2014, the RTC had no funds or functions with expenditures in excess of appropriations. New Accountinq Pronouncements ln March 2012, the GASB issued Statement No. 66, Technical Corrections-2Ì12-an amendment of GASB Sfafemenfs No. 10 and No.62. The objective of this Statement is to improve accounting and financial reporting for a governmentalfinancial reporting entity by resolving conflicting guidance that resulted from the issuance of two pronouncements, Statements No. 54, Fund Balance Reporting and Governmental Fund Type Definitions, and No. 62, Codification of Accounting and Financial Repofting Guidance Contained in Pre-November 30, 1989 FASB and AICPA Pronouncemenfs. This Statement amends Statement No. 10, Accounting and Financial Repofting for Risk Financing and Related lnsurance /ssues, by removing the provision that limits fundbased reporting of an entity's risk financing activities to the general fund and the internal service fund type. As a result, governments should base their decisions about fund gpe classification on the nature of the activity to be reported, as required in Statement 54 and Statement No. 34, Basic Financiat Sfaúemenfs-and Management's Drscussion and Analysis-for State and LocalGovernmenfs. This Statement also amends Statement 62 by modifying the specific guidance on accounting for (1) operating lease payments that vary from a straight-line basis, (2) the difference between the initial investment (purchase price) and the principal amount of a purchased loan or group of loans, and (3) servicing fees related to mortgage loans that are sold when the stated service fee rate differs significantly from a current (normal) servicing fee rate. These changes clarify how to apply Statement No. 13, Accounting for Operating Leases with Scheduled Rent /ncreases, and result in guidance that is consistent with the requirements in Statement No. 48, Sa/es and Pledges of Receivabtes and Future Reyenues and lntra-entity Transfers of Assefs and Future Reyenues. The provisions of this Statement are effective for financial statements for periods beginning after December 15,2012. The requirements of this resolve conflicting accounting and financial reporting guidance that could diminish the consistency of financial reporting and thereby enhance the usefulness of the financial reports. Management has not yet completed its assessment of this statement; and therefore, the effect of adopting this statement, if any, is not subject to estimation at this time. ln June 2012,[he GASB issued Statement No. 67, Financial Repofting for Pension Plans-an amendment of GASB Statement No. 25. The objective of this Statement is to improve financial reporting by state and local governmental pension plans. This Statement replaces the requirements of Statements No. 25, Financial Repofting for Defined Benefit Pension Plans and Note Drsc/osures for Defined Contribution Plans, and No. 50, Pension Drsc/osureg as they relate to pension plans that 30

121 REGIONAL TRANSPORTATION COMMISSION OF SOUTHERN NEVADA NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30,2014 (conttnued) NOTE 2 - Stewardship, Compliance and Accountability (continued) are administered through trusts or equivalent arrangements (hereafter jointly referred to as trusts) that meet certain criteria. The requirements of Statements 25 and 50 remain applicable to pension plans that are not administered through trusts covered by the scope of this Statement and to defined contribution plans that provide postemployment benefits other than pensions. This Statement and Statement 68 establish a definition of a pension plan that reflects the primary activities associated with the pension arrangement-determining pensions, accumulating and managing assets dedicated for pensions, and paying benefits to plan members as they come due. This Statement requires that notes to financial statements of defined benefit pension plans include descriptive information, such as the types of benefits provided, the classes of plan members covered, and the composition of the pension plan's board. This Statement requires single-employer and cost-sharing pension plans to present in required supplementary information the following information for each of the 10 most recent fiscal years about employer and nonemployer contributing entity obligations for pensions provided through the pension plan. This Statement requires the net pension liability to be measured as the total pension liability, less the amount of the pension plan's fìduciary net position. Actuarial valuations of the total pension liability are required to be performed at least every two years, with more frequent valuations encouraged. This Statement is effective for financial statements for fiscal years beginning after June 15,2013. The requirements of this Statement will improve fìnancial reporting primarily through enhanced note disclosures and schedules of required supplementary information that will be presented by the pension plans that are within its scope. Management has not yet completed its assessment of this statement; and therefore, the effect of adopting this statement, if any, is not subject to estimation at this time. ln June 2012, the GASB issued Statement No. 68, Accounting and Financial Repofting for Pensions-an amendment of GASB Statement No. 27. The primary objective of this Statement is to improve accounting and financial reporting by state and local governments for pensions. lt also improves information provided by state and local governmental employers about financial support for pensions that is provided by other entities. This Statement replaces the requirements of Statement No. 27, Accounting for Pensions by Sfafe and Local Governmental Employers, as well as the requirements of Statement No. 50, Pension Drsc/osures, as they relate to pensions that are provided through pension plans administered as trusts or equivalent arrangements (hereafter jointly referred to as trusts) that meet certain criteria. The requirements of Statements 27 and 50 remain applicable for pensions that are not covered by the scope of this Statement. This Statement establishes standards for measuring and recognizing liabilities, deferred outflows of resources, and deferred inflows of resources, and expense/expenditures. For defined benefit pensions, this Statement identifles the methods and assumptions that should be used to project benefìt payments, discount projected benefit payments to their actuarial present value, and attribute that present value to periods of employee service. Note disclosure and required supplementary information requirements about pensions also are addressed. Distinctions are made regarding the particular requirements for employers based on the number of employers whose employees are provided with pensions through the pension plan and whether pension obligations and pension plan assets are shared. This Statement is effective for fiscal years beginning after June 15, The requirements of this Statement will improve the decision-usefulness of information in employer and governmental nonemployer contributing entity financial reports and will enhance its value for assessing accountability and interperiod equity by requiring recognition of the entire net pension liability and a more comprehensive measure of pension expense. Management has not yet completed its assessment of this statement; and therefore, the effect of adopting this statement, if any, is not subject to estimation at this time. 31

122 REGIONAL TRANSPORTATION GOMMISSION OF SOUTHERN NEVADA NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30,2014 (conttnued) NOTE 2 - Stewardship, Gompliance and Accountability (continued) ln January 2013, the GASB issued Statement No. 69, Government Combinations and Disposa/s of Government Operations. This Statement establishes accounting and financial reporting standards related to government combinations and disposals of government operations. As used in this Statement, the term government combinations include a variety of transactions referred to as mergers, acquisitions, and transfers of operations. This Statement requires disclosures to be made about government combinations and disposals of government operations to enable fìnancial statement users to evaluate the nature and financial effects of those transactions. The requirements of this Statement are effective for government combinations and disposals of government operations occurring in financial reporting periods beginning after December 15, 2013, and should be applied on a prospective basis. Management has not yet completed its assessment of this statement; and therefore, the effect of adopting this statement, if any, is not subject to estimation at this time. ln April 2013, the GASB issued Statement No. 70, Accounting and Financiat Repofting for Nonexchange Financial Guarantees. The objective of this Statement is to improve accounting and financial reporting by state and local governments that extend and receive nonexchange fìnancial guarantees. This Statement requires a government that extends a nonexchange financial guarantee to recognize a liability when qualitative factors and historical data, if any, indicate that it is more likely than not that the government will be required to make a payment on the guarantee. The amount of the liability to be recognized should be the discounted present value of the best estimate of the future outflows related to the guarantee expected to be incurred. When there is no best estimate but a range of the estimated future outflows can be established, the amount of the liability to be recognized should be the discounted present value of the minimum amount within the range. This Statement specifies the information required to be disclosed by governments that extend nonexchange financial guarantees. ln addition, this Statement requires new information to be disclosed by governments that receive nonexchange financial guarantees. The provisions of this Statement are effective for reporting periods beginning after June 15,2013. Management has not yet completed its assessment of this statement; and therefore, the effect of adopting this statement, if any, is not subject to estimation at this time. ln November 2013, the GASB issued Statement No. 71, Pension Transition for Contributions Made Subsequent to the Measurement Date-an amendment of GASB Statement No. 68. The objective of this Statement is to address an issue regarding application of the transition provisions of Statement No. 68, Accounting and Financial Reporting for Pensions. The issue relates to amounts associated with contributions, if any, made by a state or local government employer or nonemployer contributing entity to a defined benefit pension plan after the measurement date of the government's beginning net pension liability. This Statement amends paragraph 137 of Statement 68 to require that, at transition, a government recognize a beginning deferred outflow of resources for its pension contributions, if any, made subsequent to the measurement date of the beginning net pension liability. Statement 68, as amended, continues to require that beginning balances for other deferred outflows of resources and deferred inflows of resources related to pensions be reported at transition only if it is practical to determine all such amounts. The provisions of this Statement are required to be applied simultaneously with the provisions of Statement 68. Management has not yet completed its assessment of this statement; and therefore, the effect of adopting this statement, if any, is not subject to estimation at this time. 32

123 REGIONAL TRANSPORTATION COMMISSION OF SOUTHERN NEVADA NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30,2014 (conttnued) NOTE 3 - Cash and lnvestments The majority of all cash and investments of RTC are included in the investment pool of the County Treasurer or are in the custody of a fiscal agent. As of June 30, 2014, these amounts are summarized as follows: Clark County lnvestment Pool Cash and lnvestments with fiscal agent Cash in bank Cash on hand $ 296,860, ,701,004 11,679,997 15,000 Total cash and investments $ 446,256,097 The RTC's cash and cash equivalents on deposit with financial institutions, including cash and cash equivalents in the custody of the County Treasurer or a fiscal agent, are often in excess of federallyinsured limits, and the risk of losses related to such concentrations may be increasing as a result of current economic conditions including, but not limited to, weakness in the commercial and investment banking systems. The extent of a future loss, if any, to be sustained as a result of uninsured deposits in the event of a future failure of a financial institution; however, is not subject to estimation at this time. According to the NRS, County monies must be deposited with federally insured banks, credit unions, or savings and loan associations within the County. The County is authorized to use demand accounts, time accounts, and certificates of deposit. The County's deposits are fully covered by federal depository insurance or securities collateralized in the State of Nevada Collateral Pool. Securities used as such collateral must total 102 percent of the deposits with each financial institution. The NRS specifically require collateral for demand deposits and specifo that collateralfor time deposits may be of the same type as those described for permissible investments. Permissible investments are similar to allowable County investments described below, except the NRS permit a longer term and include securities issued by municipalities within Nevada. The County's, and therefore, the RTC's deposits are fully covered by federal depository insurance or collateral held by the County's agent in the County's name. The County monitors the Nevada Collateral Poolto ensure full collateralization Due to the nature of the investment pool, it is not possible to separately identifo any specific investment as being that of the RTC. lnstead, the RTC owns a proportionate share of each investment, based on the RTC's participation percentage in the investment pool. Custodial Gredit Risk Custodial credit risk is the risk that, in the event of the failure of the counterparty to a transaction, the County will not be able to recover the value of its investments or collateral securities that are in the possession of an outside party. As the County ceased participating in securities lending activities through its custodial bank as of June 30,2014, no securities were held by the counterparty that was acting as the County's agent in securities lending transaction. 33

124 REGIONAL TRANSPORTATION COMMISSION OF SOUTHERN NEVADA NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30,2014 (GONTTNUED) NOTE 3 - Gash and lnvestments (continued) As of June 30,2014, the $296,860,096 of RTC monies held in the investment pool are categorized as follows: lnvestment Tvpe Debt Securities: U.S. Treasuries U.S. Agencies Corporate Obligations Money Market Funds Commercial Paper Negotiable Certificates of Deposit NV Local Government lnvestment Pool Collateralized Mortgage Obligations Collateralized lnvestment Agreements* Asset Backed Securities Derivative I nstruments lnvestment Maturities (in vears) Fair Value I ess Than 1 1to3 3to5 Morethan /o 49.8o/o 11.9o/o 5.9o/o 8.2% 0j% 0.0% O.60/o 0.3% 1.9% 0.7o/o 7.9o/o 25.3o/o 11.3o/o 100.0% 100.0% 100.0% 100.0% 0.0o/o 0.0o/o 38.9% 39.9% 48.4% 53.2o/o 31.9% 4O.3o/o 2.9% 12.2% 31.7% 56.1% 22.9o/o 59.4% 17.7o/o 100.0% 10O.0o/o * These are fully collateralized guaranteed investment contracts and forward delivery agreements related to bond proceeds. Credit Risk Credit risk is defined as the risk that an issuer or other counterparty to an investment will not fulfill its obligations. The County's investment policy applies the prudent-person rule: "ln investing the County's monies, there shall be exercised the judgment and care under the circumstances then prevailing which persons of prudence, discretion, and intelligence exercise in the management of their own affairs, not for speculation, but for investment, considering the probable safety of their capital as well as the probable income to be derived." The County is exposed to credit risk in the amount of the hedging derivatives' positive fair values. Since none of the hedging derivatives had a positive fair value as of June 30,2014, the County was exposed to no credit risk for these derivatives. The counterparty credit ratings for hedging derivative instruments were Baa or higher. The County is exposed to credit risk on interest rate swaps with positive fair values totaling $34.7 million. The County is not exposed to credit risk on interest rate swaps with negative fair values. Exposure is mitigated through the use of an lnternational Swaps and Derivatives Association credit support annex, which provides collateral to protect the value of the swaps under specifìc circumstances. The counterparty credit ratings for investment derivative swaps were Baa or higher. 34

125 REGIONAL TRANSPORTATION COMMISSION OF SOUTHERN NEVADA NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30,2014 (conttnued) NOTE 3 - Gash and lnvestments fcontinued) At June 30,2014, the fair value of County investments and derivative instruments were categorized by quality rating as follows: lnvestment Tvpe Debt Securities: U.S. Treasuries U.S: Agencies Corporate Obligations Money Market Funds Commercial Paper Negotiable Certificates of Deposit NV Local Government lnvestment Pool Collateralized Mortgage Obligations Collateralized lnvestment Agreements * Asset Backed Securities Derivative I nstruments Quality Ratings by Moody's Aaa Aa A Baa P-1 Unrated 100o/o 83o/o 1Yo 100o/o 100o/o 89% 31o/o 68% 100o/o 2o/o 2Yo 960/o 17o/o 100o/o 100o/o 100o/o 11o/o ** * These are fully collateralized guaranteed investment contracts and forward delivery agreements related to bond proceeds. ** Securities rated AA by Standard & Poor's Concentrations of Credit Risk Concentration of credit risk is defined as the risk of loss attributed to the magnitude of a government's investment in a single issuer. The County's investment policy limits the amount that may be invested in obligations of any one issuer, except direct obligations of the U.S. government or federal agencies, to no more than five percent of the investment pool. GASB Statement No. 40 requires disclosure of all investments in any one issuer that represent five percent or more of total investments. At June 30,2014, the following investments exceeded five percent of the investment pool: Federal Farm Credit Banks (FFCB) Federal Home Loan Banks (FHLB) Federal Home Loan Mortgage Corporation (FHLMC) Federal National Mortgage Association (FNMA) 6.46% 12.60% 17.89o/o 15.52o/o 35

126 REGIONAL TRANSPORTATION COMMISSION OF SOUTHERN NEVADA NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30,2014 (conttnued) NOTE 3 - Cash and lnvestments (continued) I nterest Rate Sensitivity At June 30,2014, the County invested in the following types of securities that have a higher sensitivity to interest rates: Callable Securffres are directly affected by the movement of interest rates. Callable securities allow the issuer to redeem or call a security before maturity, one time, generally on coupon dates. Fixedlo-floating rate nofes have fixed rate coupons for a specified period of time then a variable rate coupon for the remaining life of the security. The variable rate is generally based on the prime rate or the London lnterbank Offered Rate (LIBOR), plus or minus a specifìed number of basis points. lnterest Rate Risk lnterest rate risk is defined as the risk that changes in interest rates will adversely affect the fair value of an investment. Through its investment policy, the County manages its exposure to fair value losses arising from increasing interest rates by limiting the average weighted duration of its investment pool portfolio to less than 2.5 years. Duration is a measure of the present value of a fixed income's cash flows and is used to estimate the sensitivity of a security's price to interest rate changes. GASB 31 GASB Statement No. 31 requires the County to adjust the carrying amount of its investment portfolio to reflect the change in fair value. lnterest revenue is increased or decreased in relation to this adjustment of unrealized gain or loss. Net interest income in the funds reflects this positive or negative fair value adjustment. NOTE 4 - Accounts Receivable and Due from other Governmental Accounts receivable and due from other governmental units as of June 30,2014, were as follows General Fund Regional Transportation Governmental Act vities Spec al Revenue Fund Capitål Projcct Funds Regional Highway lmprovement RTC Highway Commiss on Transportation Acqu s tion lmprovement $4,214,981 $-$436,380$- Accounts receivable Less allowance for uncollectible receivables Accounts rece vables, net $ 4,214,981 S 436,380 Total 436,380 Business-type Act v t es $ 4,65'1,360 $ 14,756,706 $ 14,756,706 Due from other governmental units $ 347,878 $1 132 _9_2 5, 0 I É99 9_!9!!g 9_l7, 6?9, 479 $_{4, e, 13 r_ 36

127 REGIONAL TRANSPORTATION COMMISSION OF SOUTHERN NEVADA NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30,2014 (conttnued) NOTE 5 - CapitalAssets Capital asset activity for the year ended June 30, 2014, consisted of the following Balance June 30,2013 lncreases Govern mental activities: Capital assets not being depreciated: Construction in progress $ 2,410,046 $ 59,960 $ Balance Decreases June Capital assets being depreciated: Buildings Equipment Total capital assets being depreciated Less accumulated depreciation for: Buildings Equipment Total accum ulated depreciation 18,515,505 6,964, ,566 25,479, ,566 5,256, ,998 2,770, ,026,904 1,338,908 18,5'15, ,018,072 5,611,462 3,754,350 9,365,812 Total capital assets being depreciated, net (800,342) 16,652,260 Governmental activities capital assets, net $ 19,862,648 $ (740,382) $ 538,566 $ 18,583,700 Business-type activíties : Capital assets not being depreciated: Land Construction in progress Total capital assets not being depreciated $ , 082 $ $ , ,339,356 54,631,917 $ 32,038,082 25,604,269 69,934,912 42,339,356 54,631,917 57,642,351 Capital assets being depreciated: Buildings and improvements Equipment Total capital assets being depreciated 184,553, ,764,746 51r,318,032 3,206,528 51,425, ,759, ,912,378 54,631, ,672,192 Less accumulated depreciation for: Buildings and improvements Equipment Total accumulated depreciation 39,611, ,223,279 6,181,155 34,221,090 18,679,539 45,793, ,764, ,835,187 40,402,245 18,679, ,557,893 Total capital assets being depreciated, net 317,482,845 14,229, ,114,299 Business-type activities capital assets, net $ 387,417,757 $ 56,569,028 $ 55,230,136 $ 388,756,650 FY 2014 depreciation expense Governmental activities $1,338,908 Busi activities 37

128 REGIONAL TRANSPORTATION COMMISSION OF SOUTHERN NEVADA NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30,2014 (conttnued) NOTE 6 - lnterfund Balances and Transfers lnterfund balances as of June 30, 2014, consisted of the following Payable Fund Receivable Fund Regional Transportation Commission RTC Highway lmprovement Totals Regional Transportation $ 204,363 8,602,108 $ 8,806,471 These balances result from the time lag between the dates that: (1) revenue is recognized, (2) receipt from the other fund, and (3) payments between funds are made. lnterfund transfers for the year ended June 30, 2014, consisted of the following: Transfers Out Reg ional Transportation Commission Reg ional Transportation Highway lmprovement Acquisition RTC Highway lmprovement Public Transit Regional Transportation Commission $ 2,817,453 $ Transfers ln RTC Highway RTC Bonds lmprovement $ 836,465 $ 32,945,126 9,000, ,620 $ 37,306,439 28,268, , ,384 Total 836,465 35,762,579 46,306,439 28,504,670 9,646,384 Total $ 21,054,073 $ 65,574,499 $ 34,427,975 $ 121,056,537 Transfers are used to: (1) move revenues from the fund that statute or budget requires collecting them to the fund that statute or budget requires to expend them, and (2) move receipts restricted for debt service from the funds collecting the receipts to the debt service fund to provide adequate cash when debt service payments become due. 38

129 REGIONAL TRANSPORTATION COMMISSION OF SOUTHERN NEVADA NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30,2014 (conttnued) NOTET-Long-TermDebt Revenue Bonds Clark County on behalf of the RTC issues revenue bonds and pledges revenue derived from fuel tax and the sales and excise tax to pay debt service. Revenue bonds outstanding at June 30,2014, were as follows: Balance Hiqhway lmprovement Revënue Bonds OriginalAmount lnterest Rate June Motor vehicle fuel tax revenue bonds Series 2003 Series 2007 Series Series Series 2011 Series Sales tax revenue bonds: Series 2010 Series Series 2010C $ 200,000, ,000,000 32,595,000 51,180, ,105, ,000,000 69,595,000 94,835, ,560, % % % 5.00% % % % % % $ 59,590,000 70,330, Total revenue bonds $ 808,730,000 At June 30,2014, revenue bond debt service requirements to maturity was as follows Year endinq June 30 Principal lnterest Total 238,570,000 32,595,000 51,180, ,905, ,000, ,030,000 37,675,000 39,425,000 41,265,000 43,150, ,380, ,080, ,110,000 7,615,000 37,683,201 37,266,263 35,463,038 33,562, ,637, ,761,592 62,757,528 9,324, ,375 70,713,201 74,941,263 74,888,038 74,827,113 74,787J63 372,141, ,837, ,434,879 7,805,375 $ 808,730,000 $ 371,64 6,151 $ 1,180,376,151 39

130 REGIONAL TRANSPORTATION COMMISSION OF SOUTHERN NEVADA NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30,2014 (conttnued) NOTE 7 - Long-Term Debt (continued) Chanoes in Lono-Term Liabilities Long{erm liability activity for the year ended June 30, 2014, was as follows: Gove rnm e ntal act vit es : Bonds payable: :Revenue bonds Unamortized issuance premium r Unarnortized issuance discount Total bonds payable Beginning Balance l Additions $ 740,810,000 $ 100,000,000 29,702,527 10,635,131 (31,571) l, 770,480,956 r 1 0,635,1 31 Reductions Ending Balance $ 32,080,000 $_808,730,000 3,343,214r 36,994,444 (1,804) I (29,767) 845,694,677 Due Within One Year $ 33,030,000 Compensated absences Other post employrnent benef its Governmental activities : long-term liabilities 2,259,528, 1,236,075', 1,035,259 3, ,1 1 7, I 776,192,275, $ 112,776,323 : $ 3ô ,460,344 1,035,259 4,356,908 : $ 34,065,259 Bus iness -type activities : Compensated absences Other posl employrnent benefits Bus iness-type activities I long-term liabilities :: ll $ I,205,759 ; ,427,985, 341,821 $ 4,633,744,,$ 029 I 3 $ $ $ 1,267,268 3,769, Arbitraoe Rebate and Debt Covenant Requirements The federal Tax Reform Act of 1986 imposes a rebate requirement with respect to some bonds issued bythe Countyforthe RTC. UnderthisAct, an amount may be required to be rebated tothe United States Treasury (called "arbitrage") for interest on the bonds to qualify for exclusion from gross income for federal income tax purposes. Rebatable arbitrage is computed as of each installment computation date and as of the most recent such date the RTC's management believes that there is no rebatable arbitrage amount due. Future calculations might result in adjustments to this determination. Long{erm debt obligations are subject to restrictive debt covenants, including certain revenue levels and revenue/expense ratios, for which management believes the RTC is in compliance. Pledqed Revenues Motor vehicle fuel tax revenue bonds issued for RTC purposes are collateralized by a maximum of twelve cents per gallon of motor vehicle fuel tax and all lndexed Fuel Tax levied by the County, except that portion required to be allocated as direct distributions for those political subdivisions not included in the "Las Vegas Valley Area Major Street and Highway Plan." The collateralized twelve cents includes the County's share of three cents per gallon tax levied by the State pursuant to NRS and and accounted for in other County funds, and the County's share of the lndexed Fuel Taxes. 40

131 REGIONAL TRANSPORTATION COMMISSION OF SOUTHERN NEVADA NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30,2014 (conttnued) NOTE 7 - Long-Term Debt (continued) lndexed Fuel Tax includes taxes calculated and imposed on motor vehicle fuel tax, and special fuels taxes that consist of taxes on diesel fuel, taxes on compressed natural gas, and taxes on liquefied petroleum gas. The net pledged revenues related to fuel taxes for the year ended June 30, 2014, were as follows: Pledged revenues (net of administnative expenditures): County share motorvehicle fuel tax ($.03) RTC share motor vehicle fuel tax ($.0S County share lndexed Fuel Taxes RTC share lndexed Fuel Taxes Direct distributions allocated for certain political subdivisions not included in the Las Vegas ValleyArea Major Street and Highway Plan $ 18,895,421 65,810,879 1,213,400 12,732,079 98,651,779 Q,471,567) l\et pledged revenues $ 96j80,212 Series 2010 sales and excise tax revenue bonds issued for RTC purposes are collateralized by 1l8o/o sales and excise tax and a 1 cent jet aviation fuel tax in Clark County. Series and 2010C sales and excise tax revenue bonds issued for RTC purposes are collateralized by 1l4o/o sales and excise tax and a I cent jet aviation fuel tax in Clark County. The net pledged revenues related to sales and excise tax and jet aviation fuel tax for the year ended June 30, 2014, were as follows: Pledged revenues: Sales and excise tax Jet aviation fueltax $ 85,148,998 3,462,893 Total pledged revenues $ 88,611,891 The debt coverage ratio for net pledged revenues for the year ended June 30, 2014, were as follows: Net pledged revenues Total principal and interest payment Debt coverage ratio Motor Vehicle Fuel Taxes $ 96j80,212 42,638, Sales and Excise Tax and Jet Aviation Fuel Tax $ 88,61 1,891 25,020,

132 REGIONAL TRANSPORTATION COMMISSION OF SOUTHERN NEVADA NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30,2014 (conttnued) NOTE 8 - Operating Lease Commitments The RTC was party to one operating lease at June 30, 2014, as follows: Lessor FY14 Average Date Lease Mont Rental Commenced Date Lease Terminates LiveWork, LLC $ t 26,139 January5, 2008 January 4,2048 Total rent expense for fiscal year 2014 was $1,513,669. The following is a schedule of future minimum lease payments for the operating lease as of June 30,2014: Year ending June 30: æ-20u /4 20/ 5-20ß $ 1,559, , /, , ,866 1 o 966,2æ 11,890,104 14,185,æ2 16,923,695 20,190,634 16,æ7,762 Total future mi nimu m lease paynrents $ 97,877,433 The RTC entered into a 40-year land lease with LiveWork, LLC on April 2, 2007, as amended by First Amendment of Lease dated September 17, The base rent is $1,250,000 per annum with a 3% annualescalation beginning in January 2009, and an additional 3% escalation in the Sth, 1Oth, 1sth, 20th, 30th, and 35th years. This operating lease is cancelable if funds become unavailable. As a condition of the lease agreement, the RTC provided the lessorwith a $5,000,000 etter of credit as a security deposit. The security deposit shall be reduced by an amount equal to $1,250,000 until the balance reaches the base security amount. Base security amount shall mean an amount equal to 1 year's then base rent. The reduction starts on the first day of the lease year immediately following the lease year in which the RTC commences operation of the terminal and on the first day of each subsequent lease year until the security deposit reaches the base security amount. As of June 30, 2014, a $1,536,038 letter of credit was issued and unused. 42

133 REGIONAL TRANSPORTATION COMMISSION OF SOUTHERN NEVADA NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30,2014 (conttnued) NOTE 9 - Net Position and Fund Balances Net Position At June 30,2014, the RTC's government-wide statement of net position accumulated deficit is mainly attributable to borrowings to fund jurisdictional street and highway improvement projects. The resultant debt is retained and serviced by the RTC while the improved assets are owned and maintained by the Jurisdictions. Net position restricted for debt service totaled $108,537,695. This amount is made up of restricted funds exclusively for debt service of $127,170,828 ess accrued interest payable of $18,633,133. Fund Balances lncluded in the amounts restricted for capital projects and intergovernmental capital grants on the Governmental Funds Balance Sheet are direct distributions representing that portion of the County motor vehicle fuel tax and lndexed Fuel Tax required to be allocated for use by those political entities not included wholly or in part in the "Las Vegas Valley Area Major Street and Highway Plan." The allocation to these entities is made based on the ratio of their assessed valuation to the total CounÇ assessed valuation. The following is a schedule of changes in the reserve for direct distributions for the year ended June 30,2014: Balance Current Year Current Year Balance June lncreases Decreases June City of Boulder City Bunkerville lndian Springs Laughlin City of Mesquite Moapa Town Moapa Valley Mt. Charleston Searchlight $ 1,713,106 $ 703,885 39, ,955 1,436, , , , ,731 $ 37,371 16,958 1,290, , , ,266 55, (420,000) (820,000) $ 2,044, ,256 56,418 1,923,245 1,383, ,749 1,489, , ,244 Total $ 6,033,293 $ 3,962,805 $ (1,240,000) $ 8,756,098 NOTE 10 - Defined Benefit Pension Plan RTC employees are covered by the State of Nevada Public Employees' Retirement System (the "System"). The System was established on July 1, 1948, by the State Legislature and is governed by the Public Employees' Retirement Board whose seven members are appointed by the Governor. All public employees who meet certain eligibility requirements participate in the System, which is a costsharing multiple-employer defi ned benefit plan. 43

134 REGIONAL TRANSPORTATION COMMISSION OF SOUTHERN NEVADA NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30,2014 (conttnued) NOTE l0 - Defined Benefit Pension Plan (continued) The RTC does not exercise any control over the System. Nevada Revised Statute 286J10 states that: "Respective participating public employers are not liable for any obligation of the System." Benefits, as required by the NRS, are determined by the number of years of accredited service at the time of retirement and the member's highest average compensation in any 36 consecutive months. Benefit payments to which participants may be entitled under the System include pension, disability, and death benefits. Benefits may only be amended through legislation. Monthly benefit allowances for regular members are computed at25% for service credits earned prior to July 1, 2001, and 2.670/o for service credits earned after July 1, 2001, of average compensation (36 consecutive months of highest compensation) for each accredited year of service prior to retirement up to a maximum of g0% of the average compensation for employees who entered the system prior to July 1, 1985, and 75o/o for those entering after that date. The System offers several alternatives to the unmodified service retirement allowance which, in general, allows the retired employee to accept a reduced service retirement allowance, payable monthly during the employee's life and various optional monthly payments to a named benefìciary after the employee's death. Eligible employees are eligible for retirement benefits at age 65 with 5 years of service, at age 60 with 10 years of service and at any age with 30 years of service. The 2009 Legislation made changes to the system. The benefit allowances for members enrolled on or after January 1,2010, are computed at2.5% for service credits of average compensation (36 consecutive months of highest compensation, however; salary subject to 10% cap if it has increased more than 10% from the prior year) for each accredited year of service prior to retirement up to a maximum of 75o/o of the average compensation. Early retirement benefit reduction based on years, months and days increased from 4o/o to 6% for each full year. Eligible employees are eligible for retirement benefits at age 65 with 5 years of service, at age 62 with 10 years of service and at any age with 30 years of service. Contribution rates are established by NRS , which provides for yearly increases until such time as the actuarially determined unfunded liability of the System is reduced to zero. The RTC is obligated to contribute all amounts due under the System. The contribution rate for eligible employees and the RTC's required contributions are as follows: FISCAL YEAR ENDING JUNE Contribution rates 25.75o/o 23.75o/o /o RTC's contribution $ 4,588,722 $ 4,053,405 $ 3,971,166 An annual report containing financial statements and required information for the System may be obtained by writing to PERS, 693 W. Nye Lane, Carson City, Nevada , or by calling (775)

135 REGIONAL TRANSPORTATION COMMISSION OF SOUTHERN NEVADA NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30,2014 (conttnued) NOTE 1l - Other Post-Employment Benefits (OPEB) The RTC participates in Clark County's other postemployment benefits plan, a cost sharing, multiple employer defined benefit plan, as well as the State of Nevada's Public Employee Benefit Plan (PEBP), a cost-sharing multiple employer define benefit plan. Plan Descriptions ln accordance with the NRS, retirees of RTC may continue insurance through existing plans of insurance, if enrolled as an active employee at the time of retirement. Retirees are offered medical, dental, prescription drugs, and life insurance benefits for themselves and their dependents. Retirees may choose between the Clark County Self-Funded Group Medicaland Dental Benefits Plan (Self- Funded Plan) and an HMO Plan. The RTC also provides other postemployment benefits to retirees by participating in the State of Nevada's Public Employee Benefit Plan (PEBP), cost sharing, multiple-employer, defined benefit plan administered by a nine member governing board. PEBP provides medical, prescription, dental and vision benefìts to retirees. Eligibility and subsidy requirements are governed by NRS and can only be amended through legislation. ln 2008, NRS was amended. As a result of this amendment, the number of retirees for whom the RTC is obligated to provide postemployment benefits is limited to eligible employees who retired from RTC service prior to September 1, Self-Funded/HMO Plan benefit provisions are established and amended through negotiations between Clark County and the SEIU employee union. The RTC has an interlocal agreement with Clark County which allows Clark County to negotiate with the SEIU on RTC's behalf. PEBP benefìt provisions are established and amended by the State Legislature. The Self-Funded/HMO Plan are included in the financial statements of Clark County as an internal service fund (the Self-Funded Group lnsurance fund). The Self-Funded/HMO Plan are not administered as a qualifying trust or equivalent arrangement. The PEBP issues a publicly available financial report that includes financial statements and required supplementary information. The Self- Funded and PEBP reports may be obtained by writing or calling the plans at the following addresses or numbers: Clark County, Nevada PO Box S. Grand Central Parkway Las Vegas, NV (702) Public Employee Benefit Plan 901 South Stewart Street, Suite 1001 Carson City, NV (800) Fundinq Policv and AnnualOPEB Cost The RTC pays 90% of premiums for active employee coverage, a monthly average of approximately $786 per active employee for the year ended June 30, Retirees in the Self-Funded/HMO Plan receive no direct subsidy from the RTC. Under State law, retiree loss experience is pooled with active loss experience for the purpose of setting rates. The difference between the true claims cost and the blended premium is an implicit rate subsidy that creates an OPEB cost for the RTC. 45

136 REGIONAL TRANSPORTATION COMMISSION OF SOUTHERN NEVADA NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30,2014 (conttnued) NOTE 1l - Other Post-Employment Benefits (OPEB) (continued) The RTC is required to pay the PEBP an explicit subsidy, based on years of service, for retirees who are enrolled in this plan. ln 2014, retirees were eligible for a $1 14 per month subsidy after flve years of service with a Nevada state or local government entity. The maximum subsidy of $627 is earned after 20 years of combined service with any eligible entity. The subsidy is set by the State Legislature. The annual other postemployment benefit (OPEB) cost for each plan is calculated based on the annual required contribution (ARC) of the employer, an amount actuarially determined in accordance with the parameters of GASB Statement No. 45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and to amortize any unfunded actuarial liabilities (or funding excess) over a period not to exceed thirty years. RTC's annual OPEB cost for the current year and the related information for each plan are as follows: Self-Funded Plan/HMO Plan PEBP Total Contribution rates Actuarially determined, premium sharing determined by union contracts Set by State Legislature RTC lmplicit subsidy through blending of active and retiree loss experience $114 per month after 5 years of service up to $627 per month after 20 years Plan members From $161 per From $672 to month for single $2,674, depending coverage to $1,449 on level of coverage per month for family and subsidy earned coverage, depending on plan Annual required contribution (ARC) lnterest on net OPEB obligation Adjustment to annual required contribution Annual OPEB cost Employer contributions made lncrease in net OPEB obligation Net OPEB obligation, beginning of year Net OPEB obligation, end of year $ 1,659,124 $ 213,041 (308,004) 95,583 $ 12,273 (17,744) 1,564,161 90,112 (332,615) (74,719\ 1,231,546 15,393 6,793,906 85,870 $ 8,025,452 1,754, ,314 (325,748\ $ $ 8,126,714 46

137 REGIONAL TRANSPORTATION COMMISSION OF SOUTHERN NEVADA NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30,2014 (continued) NOTE l1 - Other Post-Employment Benefits (OPEB) (continued) Fundinq Policv and Annual OPEB Cost (continued) RTC's annual OPEB cost, the percentage of annual cost contributed to the plan, and the net OPEB obligation for 2012,2013 and 2014 were as follows: Self-funded/HMO Plan Self-funded/HMO Plan Self-funded/HMO Plan Annual OPEB % of OPEB Net OPEB Year ended Cost cost obligation June 30,2012 June 30,2013 June 30, 2014 $ 1,761,450 I,564,159 I,564, o/o 21.30/o 21.3% $ 5,562,362 6,793,906 8,025,450 PEBP Plan PEBP Plan PEBP Plan June 30,2012 June 30,2013 June 30, ,806 90,112 90, % 82.9% 82.9% 70,477 85, ,263 Funded status and fundinq proqress The funded status of the plans as of June 30, 2014,201 3 and 2012, were as follows: Actuarial accrued liability (a) Actuarial value of plan assets (b) Unfunded actuarial accrued liabilíty (funding excess) (a) - (b) Funded ratio (b)/ (a) Covered payroll ( c) Unfunded actuarial accru ed liability (funding excess) as a percentage of covered payroll t(a) - (b)l / ( c) Actuarial accrued liabilrty (a) Actuarial value of plan assets (b) Un funded actu arial a ccru ed liability (funding excess) (a) - (b) Funded ratio (b)/ (a) Covered payroll ( c) Unfunded actuarial accru ed liability (funding excess) as a percentage of covered payroll t(a) - (b)l / ( c) Self-funded / HMO Plan ÏTF6æ8n-5-imT7s-n-S-î310-x78-5- $ 11,562,585 0% $ 17,646,945 $ 13,301,785 0% $ 17,963, % 74.0o/o PEBP * $ 13,301,785 0% $ 19,659, % $ 2,444,380 $ 1,718,943 $ 1,718,943 s 2,444,380 $ 0% N/A N/A 1,718,943 0o/o N/A N/A $ 1,71 8,943 ÙYo N/A N/A * PEBP is a closed plan; and therefore, there are no current employees covered by the PEBP 47

138 REGIONAL TRANSPORTATION COMMISSION OF SOUTHERN NEVADA NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30,2014 (conttnued) NOTE l1 - Other Post-Employment Benefits (OPEB) (continued) Funded status and funding prooress (continuedl Actuarial valuations involve estimates of the value of reported amounts and assumptions about the probability of events in the future. Amounts determined regarding the funded status of the plans and the annual required contributions of the employer are subject to continual revision as actual results are compared to past expectations and new estimates are made about the future. The required schedule of funding progress, presented as required supplementary information, provides multi-year trend information that shows, whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liability for benefits. Projections of benefits are based on the substantive plans (the plans as understood by the employer and plan members) and include the types of benefits provided at the valuation date and the historical pattern of sharing benefit costs between RTC and the plan members at that point. Actuarial calculations reflect a long-term perspective and employ methods and assumptions that are designed to reduce the effects of short-term volatility in actuarial accrued liabilities and the actuarial value of assets. Significant methods and assumptions are as follows: Actuarial methods and assumotions Actuarial valuation date Actuarial cost method Amortization method Remaining amortization period Asset valuation method Actuarial assumptions: Discount rate Projected salary increases Healthcare inflation rate RTC assets in internal service fund Self-funded / HPN July 1,2012 Entry age normal Level dollar amount 30 years, open No assets in trust 4.O% N/A 8.5% initial/ 5% ultimate PEBP Plan July 1, 2012 Entry age normal Level dollar amount 30 years, open No assets in trust 4.0% N/A 8.5% initial/ 5% ultimate Clark County utilizes the Other Employment Benefit Reserve internal service fund to allocate OPEB costs to each fund, based on employee count. Each fund incurs a charge for service from the Other Postemployment Benefit Reserve fund for their portion of the annual OPEB cost. As of June 30, 2013, the Other Postemployment Benefit Reserve fund has $224,571 in cash, investments, and interest receivable held on behalf of the RTC. The RTC intends to use these assets for future OPEB funding. These assets cannot be included in the plan assets considered in the OPEB funding schedules because they are not held in a qualifying trust or equivalent arrangement as defined by GASB Statement No

139 REGIONAL TRANSPORTATION COMMISSION OF SOUTHERN NEVADA NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30,2014 (conttnued) NOTE 12 - Risk Management The RTC's operating activities are comprised primarily of providing both transit authority services and transportation-planning agency services in southern Nevada; and therefore, realization of the RTC's receivables and its future operations could be affected by an adverse change in the economic conditions in the area. The United States is slowly recovering from a widespread recession that included declines in residential real estate sales and values, mortgage lending and related construction activity, and weakness in the commercial and investment banking systems, and is engaged in an ongoing war on terror, allof which are likely to continue to have far-reaching effects on the economic activity in the country for an indeterminate period. The near and long-term impact of these factors on the southern Nevada economy and the RTC's operating activities cannot be predicted at this time but may be substantial. ln the ordinary course of its operations, claims are filed against the RTC. lt is the opinion of management that these claims will not have a material adverse effect on the RTC's financial position, results of operation, or cash flows. The RTC does not accrue for estimated future legal and defense costs, if any, to be incurred in connection with outstanding or threatened litigation and other disputed matters but rather, records such as period costs when services are rendered. The RTC is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors and omissions; injuries to employees; and natural disasters. Effective January 1,2010, the RTC acquired its own insurance with Travelers' lnsurance for Commercial Property, Workers' Compensation, CommercialAuto Liability, Excess Liability, Employee Benefit Liability and Employment Practices Liability. Under the interlocal agreement with the County, the RTC was solely responsible to pay all claim costs which come within its retained limit as set forth in the agreement. Under the insurance policies with Travelers', the RTC is only responsible to pay the deductibles and co-insurance amounts stipulated in the policies. Under the interlocal agreement with the County, the RTC's designated representative shall notify the County's designated representative and the designated adjusting firm of any occurrence for which it is believed liability will exceed RTC's retention. RTC was solely responsible for the costs of the services rendered it by the claims adjusting firm. The interlocal agreement with the County for the provision of employee health insurance has not been terminated. 49

140 REGIONAL TRANSPORTATION COMMISSION OF SOUTHERN NEVADA NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30,2014 (conttnued) NOTE 12 - Risk Management (continued) Workers' Compensation The RTC has placed insurance coverage with a licensed and rated carrier which includes Coverage A - Workers' Compensation Benefits with Statutory Limits and Coverage B Employer's Liability - Bodily lnjury Each Accident $1,000,000, Bodily lnjury by Disease (Policy Limit) 91,OOO,OOO, and Bodily lnjury by Disease (Each Employee) $1,000,000. No deductible applies to this coverage. Claims are reported by the RTC directly to the insurance carrier. Commercial Prooertv The RTC has placed insurance coverage with a licensed and rated carrier for all RTC owned facilities. Building and Business Personal Property/Contents (including Mechanical Breakdown) are insured for Replacement Cost on a Blanket basis with a $50,000 deductible. Equipment lnsurance is also maintained for the RTC's computerized equipment, ticket vending machines, electronic data processing, efc. A $10,000 deductible applies for this coverage. This equipment is insured on an Actual Cash Value basis (which is common for this type of insurance). Builder's Risk/Course of Construction policies are purchased by the RTC for any project constructed on RTC property with limits and deductible levels varying by project size and type. (For projects not constructed on RTC property the General Contractor or Construction Manager is responsible for placement of Builder's RisUCourse of Construction policies). Claims are reported to the RTC's insurance carrier by the RTC's insurance broker. Commercial General Liabilitv The RTC has placed insurance coverage with a licensed and rated carrier which includes $1,OOO,OOO limits for Bodily lnjury/property Damage (Each Occurrence) and Personal and Advertising lnjury, $2,000,000 limit for Products/Completed Operates Aggregate, and $2,000,000 limit for General Aggregate. No deductible applies to this coverage. Employee Benefits Liability is also included on a Claims Made Basis (which is common for this type of insurance) with a $1,O0O,OOO limit for Each Employee and a $2,000,000 Aggregate Limit. No deductible applies to this coverage. Claims are reported to the RTC's insurance carrier by the RTC's insurance broker. Commercial Auto Liabilitv The RTe has placed insurance coverage with a licensed and rated carrier which includes $1,OOO,OOO limits for Owned Automobile Bodily lnjury and Property Damage and Uninsured/Underinsured Motorist. Comprehensive and Collision Physical Damage Coverage is maintained on most vehicles but is not maintained on older vehicles with low value. Also included is Hired and Non Owned Auto Liability with limits of $1,000,000 for Bodily lnjury and Property Damage. No deductible applies to this coverage. Hired Auto Physical Damage coverage is also in place with 950,000 Maximum Limit per Vehicle. A $1,000 deductible applies to this coverage. Claims are reported to the RTC's insurance carrier by the RTC's insurance broker. 50

141 REGIONAL TRANSPORTATION COMMISSION OF SOUTHERN NEVADA NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30,2014 (continued) NOTE 12 - Risk Management (continued) Excess Liability The RTC has placed insurance coverage with a licensed and rated carrier which includes $10,000,000 in limits for Combined Bodily lnjury and Property Damage Each Occurrence and General Aggregate. The Excess Liability policy provides additional liability limits over and above the Commercial General Liability, Auto Liability, Employers Liability and Employee Benefit Liability. Claims are reported to the RTC's insurance carrier by the RTC's insurance broker. Employment Practices Liabilitv The RTC has placed insurance coverage with Hiscox lnsurance, a licensed and rated insurance carrier, which includes $2,000,000 in coverage for each claim and in the Aggregate. A $50,000 retention/deductible applies for each claim. Coverage is written on a Claims Made basis (which is common for this type of insurance). Claims are reported to the RTC's insurance carrier by the RTC's insurance broker. Over the past three years, no settlements have exceeded any of the above insurance coverages. NOTE 13 - Commitments Construction commitments include roadway projects with various local entities of $231,050,613 51

142 REQUIRED SUPPLEMENTARY INFORMATION

143 REGIONAL TRANSPORTATION COMMISSION OF SOUTHERN NEVADA REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF FUNDING PROGRESS, OTHER POSTEMPLOYMENT BENEFITS FOR THE YEAR ENDED JUNE 30,2014 Actuarial Actuarial UAAL as a Value of Accrued percentage of Actuarial Assets Liability (AAL)- Unfunded AAL Funded Covered covered payroll Valuation Date (a) Entry Age (b) (UAAL) (b-a) Ratio (a/b) Payroll (c) ((b-a)/c) County Plan Juyl Juyl Juyl ,633,463 11,562,585 13,301,785 6,633,463 11,562,585 13,301, o/o 0.0o/o O.0o/o 17,076,022 17,646,945 17,963, % 65.5% 74 ÙYo PEBP July 1, 2008 July 1,2010 July 1, , ,895 2,444, ,380 't,718,943 1,718,943 O.Oo/o N/A* 0.0% N/A- O.Oo/" N/4" N/A* N/A* N/4" * PEBP is a closed plan; and therefore, there are no current employees covered by the PEBP 52

144 REGIONAL TRANSPORTATION COMMISSION OF SOUTHERN NEVADA REGIONAL TRANSPORTATION COMMISSION FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE. BUDGET AND ACTUAL FOR THE FISCAL YEAR ENDED JUNE 30, 2014 (WITH COMPARATIVE ACTUAL AMOUNTS FOR THE FISCAL YEAR ENDED JUNE 30,2013) REVENUES lntergovernmental revenue: Federal and state grants lnterest Other Total revenues EXPENDITURES Current: Salaries and wages Employee benefits Services and supplies Capital outlay and intergovernmental capital grants Total expenditures OTHER FINANCING SOURCES Transfers in Transfers out Total other financing sources (uses) 2014 OriginalBudget Final Budoet al Variance $ 6,717,900 10,000 2,608,017 9,335,917 12,587,165 4,857,531 13,035,842 I, ,848,746 21,309,796 21,309,796 $ 6,717,900 10,000 2,608,017 9, ,587,165 4,857,531 13,035,842 1,368,208 31,848,746 21,309,796 (900,000) 20,409,796 $ 4,986, , ,872,485 4,578,556 10,248,361 59,960 26,759,362 21,054,073 ( ) 20,217,608 $ (1,731,129) 175,251 (648,428) (2,204,306) (714,680) (278,s75) (2,787,481) (1,308,248) (5,089,384) 2013 al $ 4,966,844 14,839 2,459,547 7,441,230 11,079,678 4,220,482 8,880,573 3,435, (255,723) 18,513,326 63,535 (192,188) 18, CHANGES IN FUND BALANCE (1,203,033) (2,103,033) 589,857 2,692,890 (1,661,967) Fund balance - beginning Fund balance - ending ,121 4,049J07 ( ) 5,711,074 3, $ 2,491,088 $ $ 4,ô38,964 $ 2,147,876 $ 4,049,107 53

145 REGIONAL TRANSPORTATION COMMISSION OF SOUTHERN NEVADA REGIONAL TRANSPORTATION FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL FOR THE FISCAL YEAR ENDED JUNE 30,2OI4 (wlth GoMPARATTVE ACTUAL AMOUNTS FOR THE FTSCAL YEAR ENDED JUNE 30, 2013) REVENUES I ntergovernmental revenue: Sales and excise tax lnterest Total revenues 2014 Original Budqet Final Budqet Actual Variance $ 40,516,309 $ 43,016,309 10, ,309 43,026,309 $ 42,574, ,601,182 $ (441,810) $ (425,126\ 2013 Actual 39,7s2, ,761,126 EXPENDITURES Current: Services and supplies 6,682,609 6,982,609 6,811,920 ( ) OTHER FINANCING USES Transfers out (34,333,699) (36.533,699) ( ) 771 't20 ( ) CHANGES IN FUND BALANCE (48e,9e9) (48e,see) 26, , ,324 Fund balance - beginning Fund balance - ending , , , ,607 $ s0.608 $ 50,608 $ r,012,614 $ 962,006 $ 985,931 54

146 REGIONAL TRANSPORTATION COMMISSION OF SOUTHERN NEVADA RTC BONDS FUND SCHEDULE OF REVENUES, EXPENDITURES AND GHANGES IN FUND BALANCE. BUDGET AND ACTUAL FOR THE FISCAL YEAR ENDED JUNE 30, 2OI4 (WITH COMPARATIVE ACTUAL AMOUNTS FOR THE FISCAL YEAR ENDED JUNE 30, 2OI3) REVENUES lnterest IRS Rebate - Build America Bonds Total revenues EXPENDITURES Current: Services and supplies Debt Service: Principal lnterest Total expenditures OTHER FINANCING SOURCES Transfers in Total other financing sources 2014 Oriqinal Budqet Final Budqet Actual Variance $ 3,229,617 3,229,617 10,000 32,080,000 35,579,301 67,669,301 64,066,543 64,066,543 $ 3,229, ,617 $ 359,004 $ 3,293,500 3,652,504 10,000 5,524 32,080,000 35,579,301 67,669,301 32,080,000 35, ,066,543 65,574,489 64,066,543 65,574, ,004 63, (4,476) 1,507, Actual $ (120,598) 3,394,648 3,274,050 13,617 32,845,000 37, ,480,978 64,310,521 64,310,521 CHANGES IN FUND BALANCE (373,141) (373,141) 1,562,169 1,935,310 (2,8s6,407) Fund balance - beginning Fund balance - ending 51,032,868 $ 50,659, ,603,963 ( ) 51,500,370 $ 50,659,727 $ 50,1 66, 1 32 $ (493,5e5) $ 48,603,e63 55

147 REGIONAL TRANSPORTATION COMMISSION OF SOUTHERN NEVADA RTC RESERVE FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE. BUDGET AND ACTUAL FOR THE FISCAL YEAR ENDED JUNE 30, 2014 (wlth GoMPARATIVE ACTUAL AMOUNTS FOR THE FTSCAL YEAR ENDED JUNE 30, 2013) REVENUES lnterest EXPENDITURES Current: Services and supplies OTHER FINANCING SOURCES Proceeds from revenue bond issued 2014 Original Budget Final Budqet Actual Variance 2013 Actual $ 950,000 $ 950,000 $ 1,036,800 $ 86,800 $ Aoo,osz ,750 7,430 CHANGES IN FUND BALANCE 950, ,000 9,032,550 8,082, ,222 Fund balance - beginning Fund balance - ending 66,503,697 66,503,697 67,972,146 1,468,449 67,112,924 $ 67,453,697 $ 67,453,697 $ 77,004,696 $ 9,550,999 $

148 REGIONAL TRANSPORTATION COMMISSION OF SOUTHERN NEVADA HIGHWAY IMPROVEMENT ACQUISITION FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL FOR THE FISCAL YEAR ENDED JUNE 30, 2014 (WITH COMPARATIVE ACTUAL AMOUNTS FOR THE FISCAL YEAR ENDED JUNE 30, 2013) REVENUES Fuel taxes lnterest Other Total revenues EXPENDITURES Current: Services and supplies Debt Service: Principal Bond issuance costs Capital outlay and intergovernmental capital grants Total expenditures other F NANC NG SOURCES (USES) Transfers out Transfers in Proceeds from revenue bond issued Premium on bond issued Total other financing sources (uses) 2014 OriginalBudget FinalBudget Variance $ 64,868, ,603 65,223, ,598 60,296,586 60,537,184 (44,974,282) (44,974,282\ $ 76,636,301 $ 78,542,958 $ 1,906,657 $ 355, , ,729 76,991, ,598 60,296, (46,474,282) 900,000 (45,574,282\ , , , ,164,609 (46,306,439) 92,004, s, ,237, , ,556 (47,051,684) ( \ 167,843 (e00,000) 92,004,250 10,635, ,907, Actual 6s,339,861 43, , ,140 8,000, ,903,541 (42,872,586) (42,872,5861 CHANGES IN FUND BALANCE (40,287,562) (29,119,562) 121,397, ,517,184 7,847,594 Fund balance - beginning Fund balance - ending 59, $ 18,979,553 59,267,115 65,366,574 6,099,459 57,518,980 $ 30,147,553 $ $ 156,616,643 $ 65,366,s74 57

149 REGIONAL TRANSPORTATION COMMISSION OF SOUTHERN NEVADA RTC HIGHWAY IMPROVEMENT FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL FOR THE FISCAL YEAR ENDED JUNE 30, 2014 (wlth GoMPARAT VE ACTUAL AMOUNTS FOR THE FTSCAL YEAR ENDED JUNE 30, 2013) REVENUES lntergovernmental revenue Federal and state grants Fuel taxes lnterest Total revenues 2014 Oriqinal Budqet FinalBudqet Actual Variance $ 5,756,575 4,015, ,665 10,065,439 $ 5,756,575 4,015, , $ 5,401,900 3,462, , $ (3s4,675) (552,306) 248,692 ( ) $ 2013 Actual 3,809,739 3,756, EXPENDITURES Current: Services and supplies Capital outlay and intergovernmental capital grants Total expenditures 20, ,034,679 20,076 55,014,603 55,034,679 29,610,788 29,610,788 (20,076) (25,403,815) e \ 16,633 36,090, other FTNANCTNG SOURCES (USES) Transfers in Transfers out Total other financing sources (uses) 33,274j69 (28.s84.604) 4,689,565 35,474J69 ( ) 6,489,565 34,427,975 ( ) 5,923,305 (1,046,194) 479,934 (566,260) 29,967,109 (29,496,435) 470,674 CHANGES IN FUND BALANCE (40,279,675) (38,479,675) (14,280,333) 24,199,341 (27,944,452) Fund balance - beginning Fund balance - ending 58,418,099 58,418,099 70,751, ,696,315 $ 18,138,424 $ 19,938,424 $ 56,471,530 $ 36,533,105 $ 70,751,863 58

150 REGIONAL TRANSPORTATION COMMISSION OF SOUTHERN NEVADA PUBLIC TRANSIT FUND SCHEDULE OF REVENUES, EXPENSES AND CHANGES IN NET POSITION - BUDGET AND ACTUAL FOR THE FISCAL YEAR ENDED JUNE 30, 2OI4 (WITH COMPARATIVE ACTUAL AMOUNTS FOR THE FISCAL YEAR ENDED JUNE 30, 2013) OPERATING REVENUES Charges for services: Transit fees Transit Advertising Federal and state grants and contributions Other Total operating revenues 2014 Oriqinal Budoet FinalBudget Actual Variance $ 70,408,447 2,500, $ 70,408,447 2,500, , ,447 $ 85,062,071 2,470,981 1,385, ,211 89, $ 14,6s3,624 (29,01s) 1,385,020 94,21'l 16,103, Actual $ 69,297,909 2,058, , OPERATING EXPENSES Salaries and wages Employee benefits Services and supplies Depreciation Total operating expenses Operating loss 8,135,050 4,099, ,188,269 42,000, ,421,361 ( \ 8,'135,050 4,099, ,188,269 42, ,421,361 (148,3'12.914) 7,787,127 3,340, ,868,251 40,402, ,398,515 (121J86.232\ (347,923) (757,150) (8,320,018) ( ) (11,022,845\ ,884,241 3,675,551 '162,611,723 35,878, ,050,340 (137,347,985) NONOPERATTNG REVENUES (EXPENSES) lntergovernmental revenue: Sales and excise tax Federal and state grants lnterest income Gain on sale of capital assets Total nonoperating revenues (expenses) lncome before capital contributions and transfers 121,548,928 23,830, , ,958,999 (2,353,915) 121,548,928 37,270, , ,398,999 11,086, ,723, ,890,510 1,011, ,775,852 19,589,620 6,174,569 (25,379,561) 431, ,000 (18,623,146) 8,503, ,256,912 36,7't7, ,898 64, ,292,407 18,944,422 Transfers out (10,757,9231 ( \ (9,646,384) (7,480,000) CHANGES IN NET POSITION $ (13,1r 1,838) $ 328,162 $ 9,943,236 $ 9,615,073 $

151 REGIONAL TRANSPORTATION COMMISSION OF SOUTHERN NEVADA PUBLIC TRANSIT FUND SCHEDULE OF CASH FLOWS - BUDGET AND ACTUAL FOR THE FISCAL YEAR ENDED JUNE 30,2014 (wlth GoMPARATIVE ACTUAL AMOUNTS FOR THE FTSCAL YEAR ENDED JUNE 30, 2013) Cash flows from operating activities: Cash received from customers Cash paid for employees and benefits Cash paid for services and supplies Other operating receipts Net cash used in operating activities OriginalBudget FinalBudqet g 72,908,447 (12,233,092) (167,188,269) 000 $ 72,908,447 (12,233,092) (167,188,269) 200, Actual $ 74,618,23s $ (10,671,919) (166,930,737) Variance 1,709,792 1,561, , Actual $ 65,357,943 (e,5e5,s43) (145,258,671) (106,312,914) (102, ) ( ) Cash flows from noncapital financing activities: Cash provided by sales and excise tax Transfers to other funds Net cash provided by non-capital financing activities 121,548,928 (9,000,000) 112,548,928 't21,548,928 (9.000,000) ,241,995 ( ) ,693, ,708,199 (646,384) (7,480,000) 3,046, ,228,199 Gash flows from capital and related financing activities: Federal and state grants Acquisition, construction, or improvement of capital assets Proceeds from the sale of capital assets Net cash provided by (used in) capital and related financing activities Cash flows from investing activities lnterest received 23,830,071 (33,270,738) 37,270,071 (60,070,738) 1l,339,947 (41,741,317) 150,000 (9,440,667) (22,800,667) ( ) , ,651 (25,930,124) 't8,329, ,400,410 (38,773,168) í ) (3,308,755) 296,651 (173,582) Net change in cash and cash equivalents (2,624,653) (15,984,653) (16,46e,314) (484,661) 17,595,630 Cash and cash equivalents - beginning of year Cash and cash equivalents - end of year 90,155,709 $ 87,531,056 90,155,709 $ 74,171, ,081,1 1 8 $ 92,611,804 18,925,409 $ 18,440,748 91,485,488 $ 109,081,

152 REGIONAL TRANSPORTATION COMMISSION OF SOUTHERN NEVADA NOTES TO REQUIRED SUPPLEMENTARY INFORMATION FOR THE YEAR ENDED JUNE 30,2014 NOTE I - Other Postemolovment Benefits For the year ended June 30, 2014, no significant events occurred that would have affected or changed the benefits provision, síze or composition of those covered by the other postemployment benefit plans, or actuarial methods and assumptions used in the actuarial valuation reports dated July 1,2008, July 1,2010 and July 1,2012. The actuarial accrued liability and unfunded actuarial accrued liability involved estimates of the value of reported amounts and assumptions about the probability of occurrence of events far into the future. These estimates are subject to continual revisions. Additional information related to postemployment benefits other than pensions can be found in Note 11 to the RTC's financial statements on pages 45 through 48 of this report. NOTE 2 - Budqetary lnformation The accompanying required supplementary general fund schedule of revenues, expenditures and changes in fund balances presents the original adopted budget, the flnal amended budget and actualfund data. The original budget was adopted on a basis consistent with the RTC's financial accounting policies and with accounting principles generally accepted in the United States. All amendments made to the original budget were as prescribed by law and similarly consistent. The RTC uses the following procedures to establish, modify and control the budgetary data presented in the fi nancial statements: a' Prior to April 15, the RTC General Manager submits to the Nevada State Department of Taxation the tentative budget for the next fiscal year, commencing on July 1. The budget as submitted contains the proposed expenditures and means of financing them. b. The Nevada State Department of Taxation notifies the RTC of its acceptance of the budget. c. Public hearings are conducted on the third Thursday in May. d. After all changes have been noted and hearings closed, the RTC governing board adopts the budget on or before June 1. e. The RTC's General Manager is authorized to transfer budgeted amounts within functions or funds, but any other transfers must be approved by the RTC governing board. f. lncreases to a fund's budget (augmentations) other than by transfers are accomplished through formal board action. g Formal budgetary control is employed for all RTC funds 61

153 REGIONAL TRANSPORTATION COMMISSION OF SOUTHERN NEVADA NOTES TO REQUIRED SUPPLEMENTARY INFORMATION FOR THE YEAR ENDED JUNE 30,20'14 (conttnued) NOTE 2 - Budqetarv lnformation (Continued) h' Statutory regulations require budget control to be exercised at the function level within the Regional Transportation commission fund, which serves as the RTC's general fund. Budget control is exercised at the fund levelfor all funds. The board administratively exercises control at the budgeted item levelwithin a department. l. All unemcumbered appropriations lapse at the end of the fiscal year. Encumbrances are reappropriated in the ensuing fiscalyear. J. Budgets are adopted on a basis consistent with the method used to report on governmental funds, which are prepared in accordance with accounting principles generally accepted in the United States of America. Comparative data for the prior year have been presented for the individual fund statements in order to provide an understanding of the changes in these funds. Additional budgetary information can be found in Note 2 to the RTC's financial statements on page 29 of this report. 62

154 [THIS PAGE INTENTIONALLY LEFT BLANK]

155 OTHER INFORMATION

156

157 IYWIY. HO55ADAM5, COM MOSSâDAVÍ S,,, r-, rtll r;l:-,jbtr /\, t, Ê _,,. r -_ti rll )' I REPORT OF INDEPENDENT AUDITORS ON INTERNAT CONTROT OVER FINANCIAT REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAT STATEMENTS PERFORMED IN ACCORDANCE WITH G OVE RN T}TE NT AA D IT I N G STA N DARD S Board of Commissioners Regional Transportation Commission of Southern Nevada We have audited, in accordance with the auditing standards generally accepted in the United States of Arnerica and the standards applicable to ñnancial audits contained in Government Audlting Scandards issued by the Compüoller General of the United States, the financiaì statements of tlre governmental activities, business-type activities, and each major fund of the Regional Transportation Commission of Southern Nevada (RTCJ, as ofand for the year ended June 30,2Ot4, and the related notes to the financial statements, which collectively comprise the RTC's basic financial statements, and have issued our report thereon dated November 13, Internal Control Over Financial Reporting ln planning and performing our audit of the financial statements, we considered the RTC's internal control over financial reporting (internaì controll to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the RTC's Ínternal control. Accordingly, we do not express an opinion on the effectiveness of the RTC's internal control. A deficienqr in ínternal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiencyt, or a combination of deficiencies, in internal confol such that tlere is a reasonable possibility that a material misstatement of the entity's financial statements will not be prevented, or detected and corrected, on a timely basis. A significant dejiciency is a deficienry, or a combination of deficiencies, in internal conhol that is less severe than a material weakness, yet important enough to merit attention by those charged with governance.

158 www. M 0 s5âdå Hs. c0 t{ MOSSADAMS,* Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identiflr all deficiencies in internal control that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identi$r any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. Compliance and Other Matters As part of obtaining reasonable assurance about whether the RTC's financial statements are free of material misstatement we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audig and accordingl we do not express such an opinion. The results of our tesls disclosed no instances of noncompliance or other matters that are required to be reported under GovernmentAuditing Standards, Purpose of tùis Report The purpose of this report is solely to describe the scope of our testing of internal confrol and compliance and the result of that testing, and not to provide an opinion on the effectiveness of the RTC's internal control or on compliance. This report is an integral part of an audit performed in accordance wtlh Government Auditing Standards in considering the entity's internal control and compìiance. Accordingly, this communication is not suitable for any otìer purpose. ru jil',"s L LP Scottsdalg Arizona November 13, t,

159 .r.fl

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