City of Memphis, Tennessee. Annual Disclosure Report for Fiscal Year Ended June 30, 2016

Transcription

1 City of Memphis, Tennessee Annual Disclosure Report for Fiscal Year Ended June 30, 2016 General Improvement Bonds Sanitary Sewerage System Revenue Bonds Special Revenue Debt

2 TABLE OF CONTENTS Page INTRODUCTION... 1 GENERAL IMPROVEMENT BONDS... 2 Outstanding General Improvement Bonds and General Obligation Commercial Paper... 2 Total Direct and Overlapping Debt and the Related Debt Ratios... 3 Long-Term Debt Service Schedule... 4 Debt Ratio Trends... 5 Total Fund Balances and Retained Earnings Trends... 6 Property Tax Rates, Levies and Collections... 7 Values of Taxable Property... 9 Principal Property Taxpayers Summary of General Fund General Fund Revenues, Expenditures and Changes in Fund Balance Other Governmental Funds, Revenues, Expenditures and Changes in Fund Balances Debt Service Fund Revenues, Expenditures and Changes in Fund Balance SANITARY SEWERAGE SYSTEM REVENUE BONDS Outstanding Sanitary Sewerage Bonds Annual Debt Service Requirements Summary of Revenues, Expenses, and Changes in Fund Net Assets Capital Improvement Plan Sewer Development Charges Number of Customers, Residential and Commercial Revenues, Private Billing Revenues and Total Revenues Historic Rates and Charges Fifteen Largest Industrial Customers Historical and Forecasted Operating Revenues and Debt Service Coverage Additional Bonds Test for the Series 2010B Bonds SPECIAL REVENUE DEBT Pyramid and Pinch District Bonds Stadium Project Bonds Port Commission Bonds Sports Authority Senior Bonds LITIGATION PILOT Payments Litigation BellSouth Litigation City Pension Litigation City Employee Other Post-Employment Benefits (OPEB) Plan Litigation Other Litigation (i)

3 INTRODUCTION This Annual Disclosure Report for Fiscal Year Ended June 30, 2016 (this "Report") is prepared and delivered by the City of Memphis, Tennessee (the "City") in connection with its annual continuing disclosure obligations as an "Obligated Person" (as defined in Rule 15c2-12 promulgated by the Securities Exchange Commission under the Securities and Exchange Act of 1934, as amended), relating to the City's outstanding general improvement bonds (the "General Improvement Bonds"), sanitary sewerage system revenue bonds (the "Sanitary Sewerage Bonds"), and Special Revenue Debt (as defined herein). This Report contains the required updates to certain financial information and operating data reported as of June 30, 2016, except where expressly indicated otherwise. The information in this Report has been compiled by the City from sources believed to be reliable, however, no warranty or guarantee is provided as to the accuracy or completeness of such information. Furthermore, the information in this Report is provided as of the dates set forth in this Report and there is no assurance that such information has not changed or will not change after the date provided. The City annually prepares its Comprehensive Annual Financial Report (the "CAFR"). The City will contemporaneously file the CAFR for Fiscal Year ended June 30, 2016 (the "2016 CAFR"), which contains the Audited City Financial Statements (as defined herein), with this Report on the Electronic Municipal Market Access System ("EMMA") at The 2016 CAFR is incorporated herein by reference thereto. The City annually prepares the basic financial statements for the City. The City will contemporaneously file the audited basic financial statements for Fiscal Year Ended June 30, 2016 (the "Audited City Financial Statements") with this Report on EMMA. The Audited City Financial Statements are incorporated herein by reference thereto. The City also annually prepares the financial statements for the Sewer Collection and Treatment Fund (the "Sewer Financial Statements"), however, as of the date of this Report, the audited Sewer Financial Statements for Fiscal Year Ended June 30, 2016 (the "Audited Sewer Financial Statements") are not currently available. The City will contemporaneously file the unaudited Sewer Financial Statements for Fiscal Year Ended June 30, 2016 (the "Unaudited Sewer Financial Statements") with this Report on EMMA. The City presently anticipates that the Audited Sewer Financial Statements will be available by the end of April Once available, the Audited Sewer Financial Statements will be filed on EMMA. The Unaudited Sewer Financial Statements are incorporated herein by reference thereto. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] 1

4 GENERAL IMPROVEMENT BONDS Outstanding General Improvement Bonds and General Obligation Commercial Paper As of June 30, 2016, the following General Improvement Bonds and general obligation commercial paper (the "General Obligation Commercial Paper") were outstanding: Bond Name Outstanding Par Amount Final Maturity Date General Improvement Bonds, Series 2016 $ 69,885,000 May 1, 2041 General Improvement Refunding Bonds, Series 2015C 67,845,000 April 1, 2045 General Improvement Refunding Bonds, Series 2015B (Federally Taxable) 54,390,000 April 1, 2025 General Improvement Refunding Bonds, Series 2015A 76,820,000 April 1, 2026 General Improvement Refunding Bonds, Series 2014B 194,105,000 April 1, 2044 General Improvement Refunding Bonds, Series 2014A 103,955,000 November 1, 2025 General Improvement and Refunding Bonds, Series 2012B 3,005,000 April 1, 2024 General Improvement and Refunding Bonds, Series 2012A 93,595,000 April 1, 2042 General Improvement and Refunding Bonds, Series ,530,000 May 1, 2036 General Improvement Bonds, Series 2010F (Recovery Zone Economic Development Bonds) 11,160,000 July 1, 2034 General Improvement Refunding Bonds, Series 2010E (Taxable) 44,280,000 July 1, 2018 General Improvement and Refunding Bonds, Series 2010D 121,205,000 July 1, 2023 General Improvement Bonds, Series 2010C (Direct Payment Build America Bonds) 62,550,000 July 1, 2032 General Improvement Bonds, Series 2010B (Direct Payment Build America Bonds) 39,950,000 May 1, 2030 General Improvement Bonds, Series 2010A 13,190,000 May 1, 2021 General Improvement Bonds, Series ,920,000 April 1, 2024 General Improvement Bonds, Series ,990,000 April 1, 2018 General Improvement Bonds, Series 2007A 5,850,000 April 1, 2017 General Improvement Refunding Bonds, Series 2005B 68,365,000 October 1, 2018 General Improvement Refunding Bonds, Series ,950,000 October 1, 2019 General Improvement Refunding Bonds, Series ,635,000 October 1, 2017 General Improvement Refunding Bonds, Series ,775,000 November 1, 2016 General Obligation Commercial Paper Total General Improvement Bonds and General Obligation Commercial Paper Outstanding $1,199,950,000 Source: City of Memphis, Tennessee Comprehensive Annual Financial Report Fiscal Year Ended June 30,

5 Total Direct and Overlapping Debt and the Related Debt Ratios This table presents the City's total direct and overlapping debt and the related debt ratios as of June 30, STATEMENT OF DEBT As of June 30, 2016 Total Direct Debt: General Improvement Bonds $1,199,950,000 Appropriation Obligations (2) 68,439,340 General Obligation Commercial Paper - Total Direct Debt: $1,268,389,340 Less: Self Supporting Debt (3) 34,832,680 Net Direct Debt $1,233,556,660 Plus: City's Share of Shelby County Net Overlapping Debt (4) 635,380,568 Net Direct and Overlapping Debt $1,868,937,228 NET DEBT RATIOS Net Direct and Overlapping Debt Net Direct Debt Net Debt Per Capita (5) $1,888 $2,860 Net Debt/Assessed Valuation (6) 10.87% 16.47% Net Debt/Appraised Valuation (7 3.43% 5.20% This Statement of Debt does not include settlement obligations, bond premiums and discount or the following outstanding revenue bonds, as they are payable solely from net revenues derived from the respective systems or projects: (a) the Sanitary Sewerage Bonds, (b) the City's Electric System Revenue Bonds, (c) the City's Water System Revenue Bonds, (d) the City's Gas System Revenue Bonds, (e) the Memphis- Shelby County Airport Authority Revenue Bonds, and (f) the Memphis-Shelby County Airport Authority Special Facility Revenue Bonds. This Statement of Debt also does not include the Pyramid and Pinch District Bonds (as defined herein) or the Sports Authority Senior Bonds (as defined herein). (2) (3) (4) (5) (6) (7) Includes capital leases, including the Memphis Center City Revenue Finance Corporation Qualified Energy Conservation Bonds ($26,349,480), the Memphis Center City Revenue Finance Corporation Revenue Bonds (Memphis Cook Convention Center Project) ($2,829,860), the City's portion of the Port Commission Bonds (as defined herein) ($17,980,000) and the Stadium Project Bonds (as defined herein) ($21,280,000). This Statement of Debt is prepared to reflect that certain capital leases ($16,744,680) and 85% of the Stadium Project Bonds ($18,088,000) are considered to be self-supporting. Net Debt outstanding for Shelby County (the "County") as of June 30, 2016 was $1,005,349,000 of which approximately $635,380,568 or 63.2% is applicable to the City. The City's estimated population was 653,480, as reported in the 2016 CAFR. The City's assessed valuation was approximately $11,345,981,000 for the Fiscal Year ended June 30, 2016, as reported in the 2016 CAFR. The City's appraised valuation was approximately $35,955,987,000 for the Fiscal Year ended June 30, 2016, as reported in the 2016 CAFR. Source: City of Memphis, Tennessee, except as noted above. 3

6 Long-Term Debt Service Schedule This table presents the principal and interest payment requirements with respect to the outstanding General Improvement Bonds. LONG-TERM DEBT SERVICE SCHEDULE (2) As of June 30, 2016 Fiscal Year Ending June 30 Principal Interest Total % of Principal Retired 2017 $ 80,915,000 $ 54,578,526 $ 135,493, ,850,000 51,138, ,988, ,385,000 47,105, ,490, ,520,000 43,469, ,989, ,145,000 40,347, ,492, % ,590,000 36,402, ,992, ,260,000 32,110, ,370, ,585,000 28,285, ,870, ,845,000 25,480, ,325, ,275,000 21,965, ,240, % ,950,000 18,062,661 41,012, ,920,000 16,926,190 40,846, ,900,000 15,740,987 40,640, ,950,000 14,500,021 40,450, ,655,000 13,184,815 34,839, % ,565,000 12,168,715 34,733, ,545,000 11,070,840 34,615, ,215,000 9,963,373 34,178, ,240,000 8,793,254 34,033, ,455,000 7,725,613 28,180, % ,620,000 6,788,081 23,408, ,365,000 6,043,444 23,408, ,140,000 5,264,050 23,404, ,950,000 4,444,719 23,394, ,825,000 3,580,881 23,405, % ,495,000 2,676,713 19,171, ,495,000 1,884,338 18,379, ,290,000 1,086,513 18,376, ,005, ,250 5,255, % $1,199,950,000 $541,039,534 $1,740,989,534 (2) Does not include subsidy payments for the City's General Improvement Bonds, Series 2010B (Direct Payment Build America Bonds), General Improvement Bonds, Series 2010C (Direct Payment Build America Bonds) or General Improvement Bonds, Series 2010F (Recovery Zone Economic Development Bonds). Numbers may not total due to rounding. Does not include debt service on outstanding General Obligation Commercial Paper. Source: City of Memphis, Tennessee. 4

7 Debt Ratio Trends This table presents the City's ratios of general obligation bonded debt to appraised and assessed values and bonded debt per capita for the Fiscal Years ended June 30, 2012 through RATIOS OF GENERAL OBLIGATION BONDED DEBT TO APPRAISED AND ASSESSED VALUES AND BONDED DEBT PER CAPITA Fiscal Years Ended June Estimated population (2) 652, , , , ,480 Appraised property valuation (3)(4) $38,069,899 $37,757,901 $36,455,804 $35,448,458 $35,955,987 Assessed valuation (3)(4) 11,816,478 11,720,563 11,483,484 11,142,251 11,345,981 General obligation debt (3)(5) 1,230,060 1,163,755 1,271,320 1,228,825 1,199,950 Bond premiums (3)(6) 79,464 73,155 Total Debt $ 1,230,060 $ 1,163,755 $ 1,271,320 $ 1,308,289 $ 1,273,105 Bonded debt per capita $1,886 $1,770 $1,946 $1,992 $1,948 Bonded debt to appraised valuation total debt Bonded debt to assessed valuation total debt 3.23% 3.08% 3.49% 3.69% 3.54% 10.41% 9.93% 11.07% 11.74% 11.22% For additional information relating to general bonded debt, see the Notes in the Audited Financial Statements. (2) Source: U.S. Census Bureau; the most current data available is for calendar year (3) In thousands of dollars. (4) Sources: Shelby County Assessor and State of Tennessee Office of State Assessor Property. (5) Debt includes the City's general obligaton bonds, bond anticipation notes and commercial paper. (6) Bond premiums are related to a change in presentation for the Fiscal Year ended June 30, Note: The title of this table has been amended from "Debt Ratio Trends" in previous disclosure filings to "Ratios of General Obligation Bonded Debt to Appraised and Assessed Values and Bonded Debt Per Capita." In addition, certain line items in this table were amended from previous disclosure filings to reflect the presentation of such information in the 2016 CAFR. Source: City of Memphis, Tennessee Comprehensive Annual Financial Report Fiscal Year Ended June 30, [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] 5

8 Total Fund Balances and Retained Earnings Trends This table presents the City's total fund balances/retained earnings trends for the Fiscal Years ended June 30, 2012 through TOTAL FUND BALANCES/RETAINED EARNINGS TRENDS (2) Fiscal Years Ended June 30 (In Thousands of Dollars) General Fund Restricted $ 1,907 $ 2,088 $ 5,724 $ 6,246 $ 7,210 Committed 19,572 12, Assigned 12,924-20,384 34,030 43,489 Unassigned 61,667 56,149 82,230 91,990 96,674 Total General Fund $ 96,070 $ 70,371 $ 108,338 $ 132,266 $ 145,373 All other Governmental Funds Restricted $ 54,308 $ 63,228 $ 59,035 $ 56,130 $ 62,616 Committed 92,482 80,109 72,943 53,346 43,083 Unassigned (4,138) Total All Other Governmental Funds $ 142,651 $ 143,337 $ 131,978 $ 109,476 $ 106,493 Total Governmental Funds $ 238,721 $ 213,708 $ 240,316 $ 241,742 $ 251,866 Enterprise $ 316,421 $ 378,361 $ 434,813 $ 457,941 $ 484,357 Internal Service Funds (12,018) (7,698) 4,754 9,421 20,254 Total Proprietary Funds $ 304,403 $ 370,663 $ 439,567 $ 467,362 $ 504,611 Total Funds $ 543,125 $ 584,371 $ 679,883 $ 709,104 $ 756,477 Enterprise does not include the Memphis Light, Gas and Water Division ("MLGW"). (2) Numbers may not add due to rounding. Source: City of Memphis, Tennessee. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] 6

9 Property Tax Rates, Levies and Collections This table presents a summary of property tax rates, levies and collections of the City for the Fiscal Years ended June 30, 2012 through PROPERTY TAX RATES Fiscal Years Ended June 30 Tax Year Fiscal Year 2012 (2) (2) General Fund $ $ $ $ $ Education Capital Improvement Program Debt Service Fund Total City Tax Rate $ $ $ $ $ Taxes are assessed as of January 1 and are due on June 1 for the City and October 1 for the County. No tax rate limits exist and taxes must be assessed sufficiently to pay debt service. Tax rates are per $100 of assessed value. The City's tax levy includes payments in lieu of taxes. (2) The rate presentation presented in the City of Memphis Comprehensive Annual Financial Report for Fiscal Year Ended June 30, 2014 was corrected. Additionally, the City's tax levy was restated to include payments in lieu of taxes to ensure consistency of presentation. Source: City of Memphis, Tennessee Comprehensive Annual Financial Report Fiscal Year Ended June 30, [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] 7

10 This table presents a summary of the City's property tax levies and collections for Fiscal Years ended June 30, 2007 through Adjusted Tax Levy PROPERTY TAX LEVIES AND COLLECTIONS Current Tax Collections Delinquent Tax Collections Total Tax Collections Total Collections as Percent of Current Levy Prior Years Outstanding Delinquent Taxes Outstanding Delinquent Taxes as Percent of Current Levy Tax Year Fiscal Year Percent Collected $384,877,389 $361,358, % $16,264,065 $377,622, % $30,620, % ,477, ,298, ,852, ,151, ,281, ,803, ,497, ,750, ,247, ,538, ,347, ,573, ,566, ,140, ,682, (2) 380,186, ,918, ,476, ,394, ,327, (3) 378,505,905 * 357,439, * 7,157, ,597,903 * * 38,518,840 * * (4) 369,997, ,568, ,609, ,177, ,920, (5) 386,414,817 * 373,811,552* * 4,475,138 * 378,286,690 * * 40,240,356 * * (6) 390,901, ,601,741* * 9,154,932 * 381,756,673 * * 37,980,066 * 9.72 * 2015 * 2016 (7) 389,694, ,180, ,372, ,553, ,934, * Prior year's reported activity was revised to ensure consistent reporting across reported fiscal years. (2) (3) (4) (5) (6) (7) Taxes are normally due on June 1 and become delinquent on September 1 each year. A penalty of 1/2 of 1% accrues the first of each month taxes remain delinquent and interest is charged at 12% per annum until paid. Discounts are not allowed. Delinquent taxes may be collected by foreclosure proceedings through court ordered tax sales. Fiscal Year 2011 was corrected to include collections of current receivables (tax year 2010 that funds Fiscal Year 2011) and collections of delinquent receivables (tax years 2008 and 2009) resulting from a sale of real property tax receivables to an outside party in May The sale generated property tax revenue and a reduction of the property tax receivable balance of $6,717,420 for the 2010 tax year, which is reflected in current tax amount collections, and $3,507,581 for the 2008 and 2009 tax years, which is reflected in delinquent collections. In November 2011, the City sold the majority of the 2011 tax year (which funds Fiscal Year 2012) real property taxes outstanding to an outside party. The sale generated property tax revenue and a reduction of the property tax receivable balance of $17,737,009 for Fiscal Year 2012, which is reflected in current tax collections. In November 2012, the City sold the majority of the 2012 tax year (which funds Fiscal Year 2013) real property taxes outstanding to an outside party. The sale generated property tax revenue and a reduction of the property tax receivable balance of $17,353,001 for Fiscal Year 2013, which is reflected in current tax collections. In November 2013, the City sold the majority of the 2013 tax year (which funds Fiscal Year 2014) real property taxes outstanding to an outside party. The sale generated property tax revenue and a reduction of the property tax receivable balance of $21,413,447 for Fiscal Year 2014, which is reflected in current tax collections. In December 2014, the City sold the majority of the 2014 tax year (which funds Fiscal Year 2015) real property taxes outstanding to an outside party. The sale generated property tax revenue and a reduction of the property tax receivable balance of $14,917,354 for Fiscal Year 2015, which is reflected in current tax collections. In April 2016, the City sold some of the 2015 tax year (which funds Fiscal Year 2016) real property taxes outstanding to an outside party. The sale generated property tax revenue and a reduction of the property tax receivable balance of $8,622,852 for Fiscal Year 2016, which is reflected in current tax collections. Additionally, the City swapped previously sold receivables that had not yet been paid, with different delinquent receivables. The total balance of the swap was $2,431,705 which is reflected in "Prior Years Outstanding Delinquent Taxes." Source: City of Memphis, Tennessee Comprehensive Annual Financial Report Fiscal Year Ended June 30, [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] 8

11 Values of Taxable Property This table presents the City's assessed and estimated actual values of taxable property for Fiscal Years ended June 30, 2007 through ASSESSED AND ESTIMATED ACTUAL VALUES OF TAXABLE PROPERTY Fiscal Year Ended June 30 Tax Year Fiscal Year Assessed Value Farm and Residential (25%) Estimated Actual Value Real Property Assessed Value Commercial and Industrial (40%) (2) Estimated Actual Value Personal Property Utilities and Carriers (5%) Real and Personal Commercial and Industrial (30%) (3) Privately Owned Total Assessed Value Estimated Actual Value Assessed Value Estimated Actual Value Assessed Value Estimated Actual Value $4,911,984,475 $19,647,937,900 $4,279,098,355 $10,884,205,500 $1,043,440,480 $3,475,008,700 $ 921,568,343 $1,675,578,805 $11,156,091,653 $35,682,730, % $ ,135,189,100 20,540,756,400 4,291,102,795 10,921,043,300 1,031,524,225 3,434,824, ,976,305 1,658,138,736 11,369,792,425 36,554,762, ,199,303,925 20,797,215,700 4,320,668,495 11,005,511,900 1,037,557,855 3,455,649, ,038,281 1,518,251,420 11,392,568,556 36,776,628, ,476,099,925 21,904,399,700 4,893,771,265 12,450,961,410 1,196,861,700 3,986,490, ,027,935 1,409,141,700 12,341,760,825 39,750,992, ,359,781,600 21,439,126,400 4,743,781,550 12,089,810,000 1,133,365,185 3,774,783, ,425,195 1,484,409,445 12,053,353,530 38,788,129, ,301,771,500 21,207,086,000 4,507,983,385 11,506,347,200 1,128,790,635 3,760,225, ,932,058 1,596,240,105 11,816,477,578 38,069,898, ,248,101,650 20,992,406,600 4,371,602,915 11,161,458,700 1,178,853,370 3,927,663, ,004,864 1,676,372,480 11,720,562,799 37,757,900, ,731,533,025 18,926,132,100 4,532,007,925 11,566,004,400 1,273,218,610 4,242,350, ,724,202 1,721,316,731 11,483,483,762 36,455,804, ,680,381,500 18,721,526,000 4,285,184,728 10,949,013,700 1,202,709,365 4,007,052, ,975,835 1,770,865,155 11,142,251,428 35,448,457, ,747,920,725 18,991,682,900 4,346,281,513 11,109,511,700 1,163,790,125 3,876,630,900 1,087,988,613 1,978,161,115 11,345,980,976 35,955,986, Does not include City-owned utilities (Electric and Gas Divisions) which are assessed a separate in-lieu-of-tax. Beginning with Fiscal Year 1988, the Electric and Gas Divisions are taxed under the provisions of state statutes, "The Municipal Electric System Tax Equivalent Law of 1987" and "The Municipal Gas System Tax Equivalent Law of 1987," respectively. Under these laws, the annual tax equivalent is the sum of: (a) the equalized tax rate applied to the net plant value and book value of materials and supplies, and (b) four percent (4%) of the average of revenue less power cost for the preceding three (3) fiscal years. The law also provides that no payment shall be less than the amount paid in Fiscal Year Net proceeds from this source go only to the City's General Fund and are not allocated by the tax rate ordinance. The City contributes a portion of the proceeds to the County based on a tax rate formula. (2) Includes multiple real estate assessed at 0-40% as well as greenbelt commercial real estate assessed at 25%, greenbelt industrial real estate assessed at 25% and greenbelt multiple real estate assessed at 0-40%. For real estate where parcel classification is multiple, the assessments will not equal the percentage multiple of the market appraisal or greenbelt. (3) Includes intangible personal property which is assessed at 40%. Note: The title of this table has been amended from "Values of Taxable Property" in previous disclosure filings to "Assessed and Estimated Actual Values of Taxable Property." Source: City of Memphis, Tennessee Comprehensive Annual Financial Report Fiscal Year Ended June 30, Total Assessed to Total Market Value Total Direct Tax Rate [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] 9

12 Principal Property Taxpayers This table presents the principal property taxpayers for Fiscal Year ended June 30, PRINCIPAL PROPERTY TAXPAYERS OF THE CITY Fiscal Year Ended June 30, 2016 Taxable Assessed Value Fiscal Year 2016 Percentage of Total Taxable Assessed Value Name of Taxpayer Federal Express $ 721,951, % Bell South Telecommunications 74,831, Wolfchase Galleria, LTD 52,923, Smith & Nephew Inc. 45,867, AMISUB (St. Francis Hospital) 44,015, BNSF Railway Company 40,341, Illinois Central Railroad 39,463, Union Pacific Railroad Company 27,617, SOLAE LLC 26,740, AT & T Mobility LLC 25,588, Total Assessed Valuation of Top 10 Taxpayers $ 1,099,340, Balance of Assessed Valuation 10,246,640, $11,345,980, Source: City of Memphis, Tennessee Comprehensive Annual Financial Report Fiscal Year Ended June 30, Summary of General Fund This table presents a summary of the City s General Fund for the Fiscal Years ended June 30, 2012 through SUMMARY OF GENERAL FUND Fiscal Years Ended June 30 (In Thousands of Dollars) Beginning Fund Balance $ 91,061 $ 96,070 $ 70,371 $108,338 $ 132,266 Revenues and Other Sources 648, , , , ,341 Expenditures and Other Uses (643,782) (641,272) (601,595) (616,716) 639,234 Ending Fund Balance $ 96,070 $ 70, , , ,373 Ending Unassigned Fund Balance $ 61,667 $ 56,149 $ 82,230 $ 91,990 $94,674 Numbers include the Life Insurance Fund and the Park Special Services Fund. Source: City of Memphis, Tennessee. 10

13 General Fund Revenues, Expenditures and Changes in Fund Balance This table presents the City's General Fund Revenues, Expenditures and changes in Fund Balances for the Fiscal Years ended June 30, 2012 through GENERAL FUND (2) REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE Fiscal Years Ended June 30 (In Thousands of Dollars) Revenues and Other Sources Local Taxes $ 443,745 $ 421,677 $ 435,819 $ 432,705 $ 439,805 State Taxes 55,828 61,030 60,303 65,057 69,328 Licenses and Permits 10,517 11,054 12,039 12,253 13,171 Fines and Forfeitures 12,728 15,293 17,522 16,163 16,570 Charges for Services 31,537 30,912 30,877 31,090 34,757 Investment Income Federal Grants and Entitlements 1,540 2,040 1, State Grants 1,622 2,090 1,763 1,433 1,283 Intergovernmental Revenues 4,083 4,136 3,928 3,411 5,996 Other 11,233 8,044 8,820 7,668 10,549 Total Revenues and Other Sources $ 573,294 $ 556,606 $ 573,143 $ 570,303 $ 592,980 Expenditures and Other Uses General Government $ 121,200 $ 116,580 $ 135,779 $ 134,201 $ 139,897 Public Safety 370, , , , ,704 Community Services 63,674 46,900 49,712 54,541 53,996 Transportation & Environment 10,145 19,068 17,386 11,847 14,612 Lease Payment Total Expenditures and Other Sources $ 565,675 $ 562,540 $ 587,382 $ 597,711 $ 614,209 Revenues Over (Under) Expenditures $ 7,619 $ (5,934) $ (14,239) $ (27,408) $ (21,229) Other Financing Sources (Uses) Sale of capital assets $ 8,947 $ 1,481 $ 431 $ Transfers In 66,550 57,486 65,988 66,350 $ 59,358 Transfers Out (78,107) (78,732) (22,464) (19,005) (18,775) Capital Leases ,300 3 Special Items (6,250) Total other Financing Sources (Uses) $ (2,610) $ (19,765) $ 43,955 $ 51,336 $ 34,336 Net Change in Fund Balance $ 5,009 $ (25,699) $ 37,967 $ 23,928 $ 13,107 Fund Balance Beginning of Year 91,061 96,070 70, , ,266 Fund Balance - End of Year $ 96,070 $ 70,371 $ 108,338 $ 132,266 $ 145,373 Numbers include the Life Insurance Fund and the Park Special Services Fund. (2) Totals may not add due to rounding. Note: Certain line items in this table were amended from previous disclosure filings to reflect the presentation of such information in the 2016 CAFR. Source: City of Memphis, Tennessee Comprehensive Annual Financial Report Fiscal Year Ended June 30,

14 Other Governmental Funds, Revenues, Expenditures and Changes in Fund Balances This table presents the City's Other Governmental Funds, Revenues, Expenditures and changes in Fund Balances for the Fiscal Years ended June 30, 2012 through OTHER GOVERNMENTAL FUNDS REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES Fiscal Years Ended June 30 (In Thousands of Dollars) Revenues and Other Sources Local Taxes $ 4,697 $ 21,262 $ 7,140 $ 6,042 $ 7,218 State Taxes 16,770 16,650 16,736 16,927 17,841 Hotel/Motel Tax 3,720 4,189 4,223 4,612 10,726 Licenses and Permits Fines and Forfeitures 4,138 3,826 3,074 3,383 3,293 Charges for Services 59,884 60,319 56,395 55,968 56,318 Investment Income Federal Grants and Entitlements 22,859 23,475 20,501 14,779 15,642 State Grants 2,744 4, ,594 3,722 Operating Revenues ,506 Other 2,268 4,582 2,041 3, Total Revenue and Other Sources $ 117,577 $ 139,386 $ 111,291 $ 108,081 $ 120,134 Expenditures and Other Uses General Government $ 29,162 $ 49,155 $ 42,059 $ 41,972 $ 44,098 Public Safety 2,934 3,632 3,123 3,510 3,105 Community Services 8,028 7,361 7,859 6,666 7,909 Transportation and Environment 76,265 51,607 55,033 67,342 53,669 Education 72,526 63, Operating Expenditures ,259 Interest Total Expenditures $ 188,915 $ 175,475 $ 108,350 $ 119,490 $ 115,196 Revenues Over (Under) Expenditures $ (71,338) $ (36,089) $ 2,941 $ (11,409) $ 4,938 Other Financing Sources (Uses) Transfers In $ 78,926 $ 62,133 $ 8,180 $ 6,873 $ 14,453 Transfers Out (10,836) (15,013) (13,625) (10,361) (18,212) Capital Leases 8, ,416 2,000 Total Other Financing Sources (Uses) $ 77,053 $ 47,120 $ (5,445) $ 11,928 $ (1,759) Net Change in Fund Balance $ 5,715 $ 11,031 $ (2,504) $ 519 $ 3,179 Fund Balance Beginning of Year 15,808 21,523 32,554 30,050 30,569 Prior Period Adjustment ,101 Fund Balance End of Year $ 21,523 $ 32,554 $ 30,050 $ 30,569 $ 35,849 Includes Non-Major Funds. Note: Certain line items in this table were amended from previous disclosure filings to reflect the presentation of such information in the 2016 CAFR. Source: City of Memphis, Tennessee Comprehensive Annual Financial Report Fiscal Year Ended June 30,

15 Debt Service Fund Revenues, Expenditures and Changes in Fund Balance This table presents the City's Debt Service Fund Revenues, Expenditures and changes in Fund Balances for the Fiscal Years ended June 30, 2012 through DEBT SERVICE FUND REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE Fiscal Years Ended June 30 (In Thousands of Dollars) Revenues and Other Sources Property Taxes $ 91,961 $ 89,607 $ 107,337 $ 129,500 $ 128,624 State Taxes (Local Share) 13,014 12,118 12,728 12,074 16,818 Hotel-Motel Tax Investment Income Federal Grants and Entitlements - - 2,092 2,108 2,354 State Grants 2,273 2, Intergovernmental Revenues 2, Other 3, ,213 3,924 2,804 Total Revenues $ 113,241 $ 104,965 $ 123,540 $ 147,776 $ 150,948 Expenditures and Other Uses Redemption of Serial Bonds & Notes $ 36,874 $ 66,812 $ 74,099 $ 86,421 $ 86,733 Lease Payments - 3,356 1,778 3,294 7,037 Interest 64,709 66,390 61,595 67,465 65,401 Bond Issuance Cost ,303 2, Service Charge , Total Expenditures and Other Uses $ 102,179 $ 136,803 $ 141,099 $ 160,928 $ 160,815 Revenues Over (Under) Expenditures $ 11,062 $ (31,838) $ (17,559) $ (13,152) $ (9,867) Other Financing Sources (Uses) Transfers In $ 16,929 $ 24,546 $ 18,311 $ 13,319 $ 17,919 Transfers Out (5,500) - (12,000) - - Issuance of Refunding Debt 85, ,575 Related Party Loan 26, Retirement of General Obligation Bonds (98,096) - (343,259) (222,171) (75,000) Premium on Debt Issue 12, ,084 5,805 Issuance of Debt , ,055 - Total Other Financing Sources (Uses) $ 38,487 $ 24,546 $ 8,704 $ 15,372 $ 18,299 Net Change in Fund Balance $ 49,549 $ (7,292) $ (8,855) $ 2,220 $ 8,432 Fund Balance Beginning of Year 17,201 66,750 59,458 50,603 52,823 Fund Balance End of Year $ 66,750 $ 59,458 $ 50,603 $ 52,823 $ 61,255 Totals may not add due to rounding. Note: Certain line items in this table were amended from previous disclosure filings to reflect the presentation of such information in the 2016 CAFR. Source: City of Memphis, Tennessee Comprehensive Annual Financial Report Fiscal Year Ended June 30,

16 SANITARY SEWERAGE SYSTEM REVENUE BONDS The City owns and operates properties for the collection, treatment, and disposal of sewage, including but not limited to plants, buildings, lands, rights and easements in land, contract and franchise rights, machinery, pipes, fixtures and equipment (the "Sanitary Sewerage System" or the "System"). The "Sewer Collection and Treatment Fund" is an enterprise fund of the City into which all funds received from sewer service charges on users of the System are deposited. Outstanding Sanitary Sewerage Bonds As of June 30, 2016, the City had the following Sanitary Sewerage Bonds outstanding (the "Outstanding Sanitary Sewerage Bonds"): TABLE I OUTSTANDING SANITARY SEWERAGE BONDS Bond Name Outstanding Par Amount Final Maturity Date Sanitary Sewerage System Revenue Refunding Bonds, Series 2014 $ 18,930,000 July 1, 2025 Sanitary Sewerage System Revenue Refunding Bonds, Series ,565,000 October 1, 2024 Sanitary Sewerage System Revenue Refunding Bonds, Series ,985,000 October 1, 2021 Sanitary Sewerage System Revenue Bonds, Series 2010B (Recovery Zone Economic Development Bonds) 13,155,000 October 1, 2030 Sanitary Sewerage System Revenue Bonds, Series 2009B (Direct Payment Build America Bonds) 12,360,000 October 1, 2029 Sanitary Sewerage System Revenue Bonds, Series 2009A 3,700,000 October 1, 2019 Sanitary Sewerage System Revenue Bonds, Series ,030,000 October 1, 2027 Sanitary Sewerage System Revenue Refunding Bonds, Series ,855,000 May 1, 2020 Total Sanitary Sewerage System Revenue Bonds Outstanding $100,580,000 Source: City of Memphis, Tennessee. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] 14

17 Annual Debt Service Requirements This table presents for each Fiscal Year the principal and interest requirements with respect to the Outstanding Sanitary Sewerage Bonds. TABLE II SANITARY SEWERAGE SYSTEM REVENUE BONDS Annual Debt Service Requirements (In Thousands of Dollars) Fiscal Years Ending June 30 Principal Interest Total Debt Service 2017 $ 11,390 $ 4,532 $ 15, ,230 4,051 15, ,930 3,573 12, ,885 3,181 13, ,745 2,721 11, ,140 2,291 11, ,055 1,896 8, ,350 1,555 8, ,630 1,216 8, , , , , , , , , , , , ,118 $100,580 $27,578 $128,158 Source: City of Memphis, Tennessee. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] 15

18 Summary of Revenues, Expenses, and Changes in Fund Net Assets This table presents a historical, comparative summary of the revenues, expenses and changes in fund net assets for the Fiscal Years ended June 30, 2012 through TABLE III SEWER COLLECTION AND TREATMENT FUND Summary of Revenues, Expenses, and Changes in Fund Net Position Fiscal Years Ended June 30 (In Thousands of Dollars) Operating Revenues - Charges for Services $104,031 $106,007 $103,900 $103,299 $ 96,845 Operating Expenses Other than Depreciation and Amortization : Personnel services 18,080 18,429 16,525 17,680 20,514 Materials, supplies and services 24,164 26,117 27,404 29,531 34,379 Capital outlay (2) 3, Total Operating Expenses Other Than Depreciation and Amortization $42,244 $44,546 $43,929 $50,944 $55,031 Depreciation and Amortization 13,756 14,037 12,415 12,105 12,405 Total Depreciation and Amortization 13,756 14,037 12,415 12,105 12,405 Operating Income $ 48,031 $ 47,424 $ 47,556 $ 40,251 $ 29,409 Non-Operating Revenues: Investment income $ 241 $ 133 $ 176 $ 246 $ 378 State/federal grants 2, Other (762) 1,525 Total Non-Operating Revenues $ 2,879 $ 986 $ 1,358 $ 47 $ 2,458 Non-Operating Expenses: Interest on state loan Death benefits $ 101 $ 103 $ 93 $ 102 $ Pension expense (151) 1,142 Interest on bonded indebtedness 6,814 6,223 5,829 4,746 3,239 Bond sale expense Total Non-Operating Expenses $ 6,915 $ 7,181 $ 6,212 $ 5,106 $ 4,536 Income before Capital Contributions and Transfers $ 43,995 $ 41,229 $ 42,702 $ 35,192 $ 27,331 Transfer out to general fund (5,945) (6,046) (6,545) (6,706) (6,889) Capital contributions ,252 1,293 1,009 Change in Fund Net Position $ 38,502 $ 35,817 $ 37,409 $ 29,779 $ 21,451 Fund Net Position - Beginning of Year, as Adjusted $234,548 $273,050 $308,867 $346,276 $366,526 Prior Period Adjustment (9,528) Total Fund Net Position - End of Year $273,050 $308,867 $346,276 $366,527 $387,977 Totals may not add due to rounding. (2) Prior to Fiscal Year 2015, capital outlay was included in Materials, Supplies, Services, and Other. Note: Certain line items in this table were amended from previous disclosure filings to reflect the presentation of such information in the 2016 CAFR. Source: City of Memphis, Tennessee. 16

19 Capital Improvement Plan This table presents the budgeted capital projects approved by the Memphis City Council (the "City Council") and included in the capital budget of the System for Fiscal Year 2016 and the Capital Improvement Program for the System for Fiscal Years ended June 30, 2017 through TABLE IV CITY OF MEMPHIS SANITARY SEWERAGE SYSTEM CAPITAL IMPROVEMENT PLAN Fiscal Years Ended June 30 (In Thousands of Dollars) Description Rehabilitation of Existing Sewers $10,000 $ 8,000 $ 8,000 $10,000 $10,000 Sewer Assessment and Rehabilitation (2) 50,000 50,000 50,000 40,000 40,000 Service to Unsewered Areas Miscellaneous Subdivision Outfalls (3) South Plant Expansion (2) 35,000 50,000 40,000 2,000 2,000 Stiles Plant Modification 2,500 1,000 1,000 1,000 1,000 Covered Anaerobic Lagoon (2) - 2,500 1,500 1,000 1,000 Total (4) $97,750 $112,250 $101,250 $55,000 $55,000 All locally funded. (2) Includes certain operational and capital improvements to the City s wastewater collections and treatment systems the City is required to undertake as the result of a consent decree among the City, the U.S. Department of Justice, the Environmental Protection Agency, the Tennessee Department of Environment and Conservation and the Tennessee Clean Water Network (the "Consent Decree"), which the City expects to finance from available funds of the System and proceeds from future SRF Loans. (3) Fifty percent of these costs will be financed by sewer extension fees charged by developers of the related sites. Available funds of the System, primarily sewer development charges, will be used to pay the other 50% of the project costs. (4) The amounts shown will be capitalized in the Sewer Fund. Note: The title of this table has been amended from "Table IV City of Memphis Sanitary and Sewerage System Capital Projects Budget" in previous disclosure filings to "Table IV City of Memphis Sanitary Sewerage System Capital Improvement Plan." Source: City of Memphis, Tennessee, Division of Public Works. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] 17

20 Sewer Development Charges Set forth below is information concerning the sewer development charges pertaining to the System in effect as of June 30, TABLE V CITY OF MEMPHIS SANITARY SEWERAGE SYSTEM SEWER DEVELOPMENT CHARGES As of June 30, 2016 Residential subdivision costs including churches and schools Multi-dwelling buildings and public owned facilities $240 per lot $840 per acre or $100 per unit, whichever is greater Commercial and industrial multiple unit buildings $12 per front foot on the longer abutting street or $840 per acre, whichever is greater Source: City of Memphis, Tennessee, Division of Public Works, pursuant to City Code. Number of Customers, Residential and Commercial Revenues, Private Billing Revenues and Total Revenues Set forth below is information concerning the number of customers, residential and commercial revenues, private billing revenues and total revenues of the System. TABLE VI CITY OF MEMPHIS SANITARY SEWERAGE SYSTEM REVENUES Residential Commercial Revenues Fiscal Year Number of Customers (2) Private Billing Revenues (3) Total Revenues (3)(4) ,133 $71,781 $32,250 $104, ,192 70,169 35, , ,763 67,364 36, , ,476 64,842 38, , ,668 61,620 35,225 96,845 Amounts rounded to thousands except for number of customers. (2) (3) (4) Does not include Germantown, Bartlett, or Horn Lake municipal contract customers. Private billing charges include municipal revenue from Bartlett, Germantown, and Horn Lake municipal contracts, all industrial volumetric and surcharge revenues and liquid waste revenue. The City enacted increases in the volumetric charge portion of the sewer service fee of 115% in Fiscal Year In addition, the City enacted an increase in the additional treatment surcharge portion of the sewer service fee of approximately 108.3% in Fiscal Year Source: City of Memphis, Tennessee, Division of Public Works. 18

21 Historic Rates and Charges This table presents the historic rates and charges of the System. TABLE VII CITY OF MEMPHIS SANITARY SEWERAGE SYSTEM SEWER SERVICE FEES As of June 30, 2016 Volumetric Charge Per 100 Cubic Feet (Monthly) Additional Treatment Surcharge (Monthly) Fiscal Years Minimum Monthly Charge Dollars per 100 Cu. Ft. Maximum Residential Charge Dollars per Pound of BOD (2) Dollars per Pound of Suspended Solids 1981 $1.50 $ $ 6.00 $ $ (3) (4) Effective as of July 1 of each Fiscal Year. (2) "BOD" means biochemical oxygen demand. (3) The volumetric rate increase for industrial customers was phased in over a two year period. (4) Pursuant to the 2013 Seasonal Sewer Fee Adjustment Program, the maximum residential volumetric charge is $50.00 per month from October through May and $35.00 per month from June through September. Source: City of Memphis, Tennessee, Division of Public Works. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] 19

22 Fifteen Largest Industrial Customers This table presents the 15 largest industrial customers of the System for the Fiscal Year ended June 30, TABLE VIII * CITY OF MEMPHIS SANITARY SEWERAGE SYSTEM FIFTEEN LARGEST INDUSTRIAL CUSTOMERS FOR FISCAL YEAR 2016 (2) Name Total Sewer Fee (3) (4) (Millions of Gallons) Annual Flow Solae (Protein Technologies) $ 7,514 1,322 Memphis Cellulose (Buckeye) 3,802 1,414 KTG USA 3,431 1,332 Chemours (DuPont) 3,275 1,527 Valero (Premcor) Refining 1, American Yeast 1, PMC Biogenix (Chemtura Corp) 1, Fleischmann's Yeast Inc. 1, Riviana Foods 1, Kellogg Company Con Agra/Wesson Penn A Kem Runyon Cascade Tissue Blues City Brewery Total of 15 Largest Industrial Customers $27,667 8,390 Percent of Overall System Total 28.6% 13.8% System Total $96,845 60,872 Totals may not add due to rounding (2) Ranked by total sewer fees. (3) Total Sewer Fee includes charges for biochemical oxygen demand, suspended solids and flow. (4) Amounts rounded to thousands. Note: The reference to "Flow (Millions of Gallons)" in this table was amended from previous disclosure filings to "Annual Flow (Millions of Gallons)." Source: City of Memphis, Tennessee, Division of Public Works. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] 20

23 Historical and Forecasted Operating Revenues and Debt Service Coverage Tables IX and X set forth historical operating results and debt service coverage data for the System for Fiscal Years 2012 through and including 2016, including the contribution to total operating revenues by type of revenue (base rate, volumetric charge, industrial surcharge, or sewer development charge). Estimates of operating results and debt service coverage data for the System for Fiscal Years 2017 through and including 2021 are also included in Tables IX and X solely to comply with the City's continuing disclosure obligations; however, such estimates involve projected operating results and debt service coverage data which are dependent upon a number of significant assumptions (see footnotes to Tables IX and X) which may or may not reflect actual future results. Management of the System does not generally publish its business plans and strategies or make external forecasts of its anticipated financial position or results of operations. The estimates of operating results and debt service coverage data for the System for Fiscal Years 2017 through and including 2021 were not prepared by management of the System with a view towards complying with the guidelines established by the American Institute of Certified Public Accountants with respect to prospective financial information but, rather were prepared on a reasonable basis and reflects the best currently available estimates and judgments and present, to the best of management's knowledge and belief, the anticipated course of action and the expected future financial performance of the System. This information is not fact and should not be relied upon as necessarily indicative of future results. Neither the City's independent auditors, nor any other independent accountants, have compiled, examined, or performed any procedures with respect to the forecasted financial information contained herein, nor have they expressed any opinion or any form of assurance on such information or its achievability, and assume no responsibility for, and disclaim any association with, the forecasted financial information. Management of the System does not intend to update or otherwise revise the prospective financial information to reflect circumstances existing since their preparation or to reflect the occurrence of unanticipated events, even in the event that any or all of the underlying assumptions are shown to be in error. Furthermore, management of the System does not intend to update or revise the prospective financial information to reflect changes in general economic or industry conditions. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] 21

24 TABLE IX CITY OF MEMPHIS SANITARY SEWERAGE SYSTEM OPERATING REVENUE HISTORY AND FORECASTS Fiscal Years ended June Number of Customers (Average) 261, , , , , , , , , ,000 Residential and Commercial Volume (MG) $ 32,149 $ 30,728 $ 30,556 $ 29,456 $ 29,054 $ 29,100 $ 29,100 $ 29,250 $ 29,250 $ 29,250 Industrial Volume (MG) 13,154 16,671 15,914 16,122 15,959 16,000 16,000 16,100 16,200 16,200 Total Volume (MG) (2) $ 45,303 $ 47,399 $ 46,470 $ 45,578 $ 45,013 $ 45,100 $ 45,100 $ 45,350 $ 45,450 $ 45,450 Residential and Commercial Volumetric Revenue (3) $ 71,781 $ 70,169 $ 67,364 64,842 $61,620 $ 62,000 $ 62,000 $ 63,300 $ 63,300 $ 63,300 Industrial Volumetric Revenue (3) 17,502 23,045 22,700 24,111 22,160 23,000 23,000 23,150 23,150 23,150 Total Volumetric Revenue $ 89,283 $ 93,214 $ 90,064 $ 88,953 $ 89,250 $ 85,000 $ 85,000 $ 86,450 $ 86,450 $ 86,450 Total Industrial Surcharge Revenue (4) $ 10,159 $ 8,997 $ 9,446 $ 9,525 $ 9,017 $ 9,250 $ 9,250 $ 9,250 $ 9,500 $ 9,500 Liquid Waste Revenue 1, ,097 1, ,000 1,000 1,100 1,100 1,100 Municipal Revenue (5) 3,159 3,054 3,293 3,584 3,253 3,400 3,400 3,500 3,500 3,500 Total Operating Revenues $104,031 $106,007 $103,900 $103,299 $ 96,845 $98,650 $98,650 $100,300 $100,550 $100,550 Amounts rounded to thousands except for the numbers of customers (average). (2) Total Volume varies from wastewater treated due to rainfall and Mississippi River levels, which cause extraneous water to enter the System. (3) Residential, Commercial and Industrial Volumetric Revenue reflects stable growth at the current rate structure with no projected increase. (4) Industrial Surcharge Revenue reflects current rate structure with no projected increase. (5) Includes municipal revenue from municipal contracts with Germantown, Bartlett, Horn Lake and Collierville. Source: City of Memphis, Tennessee. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] 22

25 TABLE X * SANITARY SEWERAGE SYSTEM HISTORICAL AND FORECASTED DEBT SERVICE COVERAGE Fiscal Years Ended June 30 (In Thousands of Dollars) Operating Revenues $104,031 $106,007 $103,900 $103,299 $ 96,845 $ 98,650 $ 98,650 $ 100,300 $ 100,550 $ 100,550 Other Revenue (2) 2, ,358 1,090 5,207 2,000 2,000 2,000 2,000 2,000 Undesignated, Unreserved Surplus (3) 55,307 72,222 93,619 95,490 64,472 60,000 60,000 65,000 65,000 65,000 Total Revenue $162,217 $179,215 $198,877 $199,879 $166,524 $160,650 $160,650 $167,300 $167,550 $167,550 Operating Expenses (4) (42,244) (44,546) (43,929) (50,944) (55,031) (58,883) (63,005) (67,415) (69,438) (71,521) Net Revenues $119,973 $134,669 $154,948 $148,935 $111,492 $101,767 $97,645 $99,885 $98,112 $96,029 (Total Revenue minus Operating Expenses) Debt Service on Revenue Bonds $16,467 $15,859 $16,941 $15,922 $15,841 $15,922 $15,281 $12,503 $13,066 $11,466 Debt Service on Other Sewer Debt (5) ,586 11,580 14,013 17,469 Total Debt Service $16,608 $16,172 $17,184 $16,181 $16,216 $16,559 $19,867 $24,083 $27,079 $28,935 Total Revenue Bond Debt Service to Net Revenues (6) Total All Sewer Debt Service to Net Revenues (6) Forecast reflects current rate structure with no projected increase for the forecasted period, as previously shown in "Table IX - Operating Revenue History and Forecasts." Additionally, forecasted expenses reflect anticipated costs resulting from the Consent Decree. See the Material Event Notice, dated December 28, 2012, filed by the City discussing the nature and impact of the Consent Decree, which is available on EMMA at (2) Excludes capital contributions. (3) Pursuant to the bond resolution authorizing the issuance of the Sanitary Sewerage Bonds (the "Bond Resolution"), prior year surplus moneys in the Revenue Fund may be treated as revenues. (4) Pursuant to the Bond Resolution, excludes in lieu of tax payments and depreciation. (5) Projected principal and interest on State of Tennessee Revolving Fund Loan Program. (6) Includes Operating Revenues, developer fees and Other Revenue. Note: The references to "Existing Bond Debt Service" and "Total Bond Debt Service to Net Revenues" in this table were amended from previous disclosure filings to "Debt Service on Revenue Bonds" and "Total Revenue Bond Debt Service to Net Revenues," respectively. Source: City of Memphis, Tennessee. 23