SIFMA Bond Remarketing Water Series 2011A-1 and 2011A-2. Board of Directors March 25, 2014

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1 SIFMA Bond Remarketing Water Series 2011A-1 and 2011A-2 Board of Directors March 25, 2014

2 Proposed Financings for FY14 Description Issue/Approximate Size Date of Board Action Pricing or Issuance Date 1 Replace Royal Bank of Canada and Barclays Bank as remarketing agents for the District s outstanding Water Series 2008A-1, 2008A-2 and 2008A-3 Bonds W 2008A-1: $61.7 million W 2008A-2: $46.3 million W 2008A-3: $46.3 million 9/24/ /10/ Authorization for Opportunistic Water and Wastewater Restructurings for De-Risking and Fixed Rate Refundings Based on Market Opportunities 9/24/2013 TBD 3 Remarket the Water Series 2009A-1 and Series 2009A-2 Securities Industry and Financial Markets Association (SIFMA) Index Bonds to establish a new interest rate period W 2009A-1: $41.04 million W 2009A-2: $41.04 million 10/22/ /3/ Renew or replace Bank of America (BofA) and JPMorgan Chase Bank (JPM) as liquidity providers for Water Series 2008A-4, Water Series 2008B-3 and Wastewater Series 2008C Bonds and extend term W 2008A-4: $46.3 million W 2008B-3: $15.1 million WW 2008C: $51.7 million 10/22/ /10/ Competitive Sale Refunding of Wastewater Series F (2003) G.O. Bonds WW $18.6 million 1/28/2014 2/27/ Remarket the Water Series 2011A-1 and A-2 SIFMA Index Bonds to establish a new interest rate period or refund with another product W 2011A-1: $74.1 million W 2011A-2: $74.1 million 1 st Q / Renew or replace Wells Fargo Bank (WFB) as liquidity provider for Water Series 2008A-1 Bonds and extend term W 2008A-1: $61.7 million 10/22/ /10/ Issue additional New Money Water Revenue Bonds $170.0 million 4/ /2014 1

3 Wastewater G.O. Bond Sale G.O. Refunding Bonds Competitive Sale Bid Results & Participants Name TIC % Wells Fargo Bank, National Association 0.44 Morgan Stanley & Co, LLC 0.46 Citigroup Global Markets Inc FirstSouthwest 0.48 Fidelity Capital Markets 0.50 J.P. Morgan Securities LLC 0.51 Barclays Capital Inc Hutchinson, Shockey, Erley & Co Mitsubishi UFJ Securities (USA), Inc. Bidder 0.54 Stifel, Nicolaus & Co., Inc RBC Capital Markets 0.55 BMO Capital Markets 0.55 TD Securities 0.56 FTN Financial Capital Markets 0.56 Piper Jaffray & Company 0.57 William Blair & Company, LLC 0.57 Southwest Securities, Inc Janney Montgomery Scott LLC 0.59 Bank of America Merrill Lynch 0.59 US Bancorp Investments, Inc Board approved: January 28, 2014 Bids received: February 20, 2014 Bonds closed: February 27, 2014 PV Savings of $1.4 Million Estimated 7.5% savings on G.O. tax levy for SD1 property owners 2

4 Debt Composition WATER SYSTEM Total Outstanding Revenue Debt $2.6 Billion WASTEWATER SYSTEM Total Outstanding Revenue Debt $445.2 Million State Loans $17.0MM 1% Extendable Commercial Paper $372.9MM 14% Extendable Commercial Paper $15.0MM 4% Fixed Rate Bonds $1,764.9MM 68% Synthetic Fixed Rate Bonds $445.9MM 17% Fixed Rate Bonds $317.6MM 71% Synthetic Fixed Rate Bonds $112.5MM 25% 3

5 Variable Rate Debt Series Outstanding $ MM Type Water System Series 2011 A-1 and A SIFMA Series 2009 A-1 and A SIFMA Series 2008 A-1 thru A VRDO Series 2008 B VRDO TOTAL Wastewater System Series 2011 A 60.8 SIFMA Series 2008 C 51.7 VRDO TOTAL SIFMA = SIFMA Index Note VRDO = Variable Rate Demand Obligation 4

6 Potential De-Risking and Refunding September 24, 2013 Board authorized opportunistic Water and Wastewater restructurings for de-risking and fixed-rate refundings Several transactions possible in current market: Variable Rate De-risking o o Water Series 2011A, 2008A and 2008B estimated total of $126.8 million Wastewater Series 2011A and 2008C estimated total of $70.0 million Fixed Rate Refunding o Water Series 2005A estimated total of $108.0 million with an estimated PV Savings of $8.5 million 5

7 Potential De-Risking and Refunding Potential to de-risk a portion of Series 2011A-1 and A-2 (currently estimated at $92.6 Million) Refund into fixed rate Terminate related swap Cost-neutral In compliance with Board Resolution Amount not de-risked will be remarketed as SIFMA Index Bonds (currently estimated at $55.6 Million) 6

8 Requested Board Action Approve previously anticipated transaction: Remarket Water Series 2011A-1 and A-2 SIFMA Index Bonds 7

9 Questions 8

10 Estimated Costs of Issuance 2011A-1 and 2011A-2 SIFMA Indexed Bonds Remarketing Estimated Cost of Issuance Item Name of Payee and Purpose COI 1 Financial Advisor (Montague DeRose) $50,000 2 Co-Bond Counsel Fees (Fulbright) 53,500 3 Co-Bond Counsel Fees (Curls Bartling) 25,300 4 Underwriter's Counsel (Orrick) 45,000 5 S&P Rating Fee 5,000 6 Fitch Rating Fee 65,000 7 Moody's Rating Fee 62,113 8 Trustee (BONY Mellon) 3,000 9 Trustee's Counsel (Sam Waldman) Printer (CLS Printing) 10, Contingency 20,000 Total $339,663 9

11 PCWA/EBMUD Long-term Water Transfer: Coordination with Remand Process Board of Directors Meeting March 25, 2014

12 PCWA/EBMUD Long Term Water Transfer Partnership Partnership formed in August 2013 Implement PCWA s long-standing Water Forum Agreement commitment EBMUD purchases 10,000-47,000 acre-feet of environmental releases in dry years 2

13 State & Federal Requirements for Long-Term Water Transfer 3

14 Remand Process Decade of ongoing litigation over biological opinions (BOs) for coordinated long-term operation of state and federal water projects - Delta smelt BO from U.S. Fish & Wildlife Service (FWS) - Salmon BO from National Marine Fisheries Service (NMFS) District Court found BOs legally deficient and remanded (referred) them back to federal agencies - New BOs by early 2017 (FWS & NMFS) - Complete NEPA on BO recommendations (Reclamation) Federal resource agencies are not likely to provide ESA consultation on long-term projects until the remand process is completed 4

15 Coordination Efforts to Date Since 2012, PCWA and EBMUD have worked cooperatively with Reclamation - Joint management and technical meetings with Reclamation - Data and information exchanges PCWA Middle Fork Project Long-term water transfer not currently included in remand process due to schedule concerns Freeport Regional Water Project 5

16 Recent Court Decisions March 5, 2014: District Court granted a 1-year extension to complete new Delta smelt BO March 13, 2014: Appeals Court Decision - Upheld Delta smelt BO, reversing District Court decision that triggered remand process (no need for new smelt BO) - NEPA reviews still required September 2014: Appeals Court scheduled to hear appeal on 2009 salmon BO 6

17 Next Steps Federal Agencies reviewing latest court decision PCWA and EBMUD scheduled to meet with Reclamation s Regional Director on March 28, 2014 Determine most expeditious path forward for ESA compliance and approval of a long-term Warren Act contract Senator Francis E. Warren 7

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19 Water Supply Briefing and Dry Year Planning March 25, 2014

20 Water Supply Briefing Statewide Water Supply Precipitation & Snow Reservoir Storage Water Supply Forecast Dry Year Planning Next Steps 2

21 Statewide Water Supply Status (Storage in Thousand Acre-Feet) Reservoir Capacity WY 2013 WY 2014 Percent of Capacity Percent of Average Supply Condition Trinity 2,448 2,046 1, Poor Shasta 4,552 3,732 2, Poor Oroville 3,538 2,926 1, Poor Folsom Poor New Melones 2,420 1,564 1, Poor Fed. San Luis Poor Millerton Critical EBMUD System Fair As of March 23,

22 Statewide Snow Water Content Updated March 24th Snow Water Equivalents Statewide Total 24% of April 1 Avg 24% of normal for this date 4

23 Summary of Bay Area Water Agencies Response Agency Marin Municipal Water District Alameda County Water Agency Santa Clara Valley Water District Zone 7 Drought Response Voluntary 25% reduction Mandatory 20% reduction Mandatory 20% reduction Voluntary 20% reduction Contra Costa Water District Voluntary 15% reduction San Francisco Public Utilities Commission EBMUD Voluntary 10% reduction Voluntary 10% reduction 5

24 Where s the Snow? 6

25 Current Precipitation & Snow As of 03/23/14 Cumulative Precipitation % of Average East Bay East Bay Watershed % Mokelumne Basin 4-Station Average % Caples Lake Snow Depth Caples Lake Snow Water Content 27 39% 11 42% 7

26 Current Mokelumne Precipitation 8

27 Current East Bay Precipitation 9

28 Rainfall Year 2014 Projection Mokelumne Precipitation Wettest of Record 87.3 (RY83) RY 2014 To-Date Average % Exceedence Median 90% Exceedence Driest of Record 23.0 (RY77) 10

29 Current Reservoir Storage As of 03/23/14 Current Storage Percent of Capacity Percent of Average Supply Condition Pardee 161,830 AF 82% 89% Good Camanche 193,780 AF 46% 66% Poor East Bay 119,730 AF 79% 86% Fair Total System 475,880 AF 62% 77% Fair 11

30 Water Supply Runoff Forecast (Projections as of March 25, 2014) Forecast 90% Exceedence (9 of 10 years are wetter) 50% Exceedence (5 of 10 years are wetter) 10% Exceedence (1 of 10 years is wetter) Annual Runoff Total System Storage (on Sept 30, 2014) 150 TAF 360 TAF 230 TAF 420 TAF 360 TAF 490 TAF Average Year 745 TAF 630 TAF 12

31 Water Year 2014 Rainfall Year 2014 is the 2 nd driest year in the Mokelumne watershed 18% of the precipitation accumulation season remains Received about 80,000 acre-feet of runoff to date Projected end of September storage with median precipitation is 420,000 acre-feet 13

32 Current Gross Water Production 14

33 15

34 Historic Metered Consumption % drop % drop % drop 16

35 Supplemental Supply FRWA INTAKE Scheduled to conduct Freeport biological testing in April Requested and paid for CVP water for April and May Planning to take 5,000 acre-feet of Placer County water when approved Submitted preliminary request for 65,000 acre-feet of water to U.S. Bureau of Reclamation assuming continuing dry conditions 17

36 Next Steps Continue to monitor and report on the District s water supply Continue to update the Bureau of Reclamation Continue public outreach 18

37 Schedule Date April 8 April 22 Activity Water Supply forecast Fish Monitoring Testing begins Continue public outreach Water Supply forecast Consider Water Supply Availability and Deficiency Report Consider adoption of Water Shortage Response Plan Consider declaring a water shortage Consider approval of the use of Freeport 19

38 Hoping April Showers Bring May Flowers! 20

39 Hoping for Late Season Snow! 21

40 WATER SURFACE STORAGE MAXIMUM CAPACITY Elevation +Gain +Gain Elevation Storage Release Spill MOKELUMNE Feet -Loss Ac-Ft -Loss Feet Ac-Ft Cfs Cfs Pardee , , Camanche , , EAST BAY Briones , , Chabot , , Lafayette , , San Pablo , , Upper San Leandro , , Total East Bay Res. 119, ,670 TOTAL SYSTEM STORAGE 474, ,740 DISTRIBUTION SYSTEM MOKELUMNE SYSTEM DISTRIBUTION RESERVOIRS AQUEDUCT DELIVERIES Today Total Previous Day Total Change WATER PRODUCTION AND DEMAND Lafayette WTP Orinda WTP San Pablo WTP Sobrante WTP Upper San Leandro WTP Walnut Creek WTP Storage Operating MG Flow Conditions MG Capacity Line GRAVITY Line 2 48 GRAVITY 394 Line GRAVITY -11 TOTAL Cfs FSCC TO MOK AQUEDUCTS 0 MGD Million Capacity Gallons MGD RIVER FLOWS AND RELEASES Cfs Mokelumne River Natural Flow Pardee Reservoir Inflow Pardee Release to Camanche Res Pardee Release to JVID Camanche Release to Mokel. River PG&E CO. STORAGE (Acre-feet) Maximum 0.4 Storage Change Capacity , , Salt Springs Res. 34, , Lower Bear Res. 18, , Total 64, , TOTAL SURFACE PRODUCTION Miscellaneous(Estimated) TOTAL WATER PRODUCTION Old Reservoirs Change in Distribution System Wash Water from Distribution Sys. SYSTEM DEMAND East-of-Hills Demand West-of-Hills Demand WATER SUPPLY ENGINEERING DAILY REPORT RESERVOIR STORAGE AND ELEVATION RAW WATER TRANSMISSION Ac-ft PRECIPITATION (Inches) INPUT DRAFT THIS YEAR AVERAGE YEAR Briones Res San Pablo Res. 0 0 STATION This Season Season Season U. San Leandro Res Today Month to-date to-date Total USL WTP TOTAL Orinda WTP REMARKS Lafayette Reservoir WID Canal Diversion = 3 cfs Walnut Creek WTP Mokelumne River below WID = 101 cfs Camp Pardee Salt Springs P.H CAPLES LAKE (7,830 FT) DATA PG&E data as of 4:00 pm previous date. All other data as of midnight. Snow Depth WTP capacities are sustainable rates. Water Content Today 27 Inches 11.4 Inches EAST BAY MUNICIPAL UTILITY DISTRICT Average 70 Inches 27.8 Inches Monday, March 24, 2014