CITY OF PHOENIX, ARIZONA of Phoenix - Airport Commercial...Commercial Paper Notes: The 2014 CP Notes...
Transcript of CITY OF PHOENIX, ARIZONA of Phoenix - Airport Commercial...Commercial Paper Notes: The 2014 CP Notes...
Page 1 Solicitation Number: RFP - 2017FIN - 001
CITY OF PHOENIX, ARIZONA
AIRPORT LETTERS OF CREDIT AND
REVOLVING CREDIT FACILITIES
Request for Proposals (RFP) RFP-2017FIN-001
Schedule
ACTIVITY (All times are local Phoenix time) DATE
Issue RFP June 8, 2017
Submittal of Written Questions by 1:00 p.m. June 15, 2017
Responses to Written Questions June 20, 2017
Proposal Submittal by 3:00 p.m. June 26,2017
Award LOC/Revolver Early July
Submit proposals and requests for alternate formats to: Jacqueline Garcia, Procurement Liaison
City of Phoenix, Treasury & Debt Management 251 W. Washington St., 9th Floor
Phoenix, Arizona 85003 Telephone: (602) 495-3759 (7-1-1 Friendly)
This RFP does not commit the City to award any agreement. All dates subject to change.
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TABLE OF CONTENTS
1. INSTRUCTIONS ............................................................................................................. 3
2. MINIMUM QUALIFICATIONS: ........................................................................................ 6
3. PREPARATION OF OFFER: .......................................................................................... 6
4. INQUIRIES: .................................................................................................................... 8
5. CERTIFICATION: ........................................................................................................... 9
6. SUBMISSION OF PROPOSAL: ...................................................................................... 9
7. WITHDRAWAL OF PROPOSAL: .................................................................................. 10
8. PROPOSAL RESULTS: ................................................................................................ 10
9. AWARD OF CONTRACT: ............................................................................................. 10
10. CITY’S RIGHT TO DISQUALIFY FOR CONFLICT OF INTEREST: ............................. 11
11. SOLICITATION TRANSPARENCY POLICY: ............................................................... 11
12. PROTEST PROCESS: ................................................................................................. 12
13. PUBLIC RECORD: ....................................................................................................... 12
14. LATE PROPOSALS: ..................................................................................................... 13
15. RIGHT TO DISQUALIFY: ............................................................................................. 13
16. MULTIPLE AWARDS: ................................................................................................... 13
17. DETERMINING RESPONSIVENESS AND RESPONSIBILITY: ................................... 13
SCHEDULES
Schedule A - Irrevocable and Transferable Direct Pay Letter of Credit - Fee Proposal Form
Schedule B - Revolving Direct Funded Loan/Line - Fee Proposal Form
Schedule C - Exceptions to the Reimbursement Agreement - Created By Respondent, If Needed
EXHIBITS
Exhibit A - City of Phoenix Aviation Department Annual Financial Report (FYE June 30, 2016)
Exhibit B - Draft City Purchase Agreement
Exhibit C - Draft Issuing and Paying Agent Agreement
Exhibit D - Draft Letter of Credit Reimbursement Agreement
FORMS
Conflict of Interest and Solicitation Transparency
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1. INSTRUCTIONS Capitalized terms not specifically defined herein shall have the meaning ascribed to such terms in the draft City Purchase Agreement, Letter of Credit Reimbursement Agreement and the Issuing and Paying Agent Agreement, copies of which are included as Exhibits B, C and D, respectively.
A. Summary
The purpose of the current Airport Commercial Paper Program (the “2014 CP Program) of the City of Phoenix, Arizona (the “City”) is to provide interim financing for improvements for the Sky Harbor International Airport (“PHX”) and two general aviation airports, Phoenix-Goodyear Airport and Phoenix-Deer Valley Airport (collectively, the “Airport”). The Airport is more particularly described in Section B below.
There are currently $180 million ($100 million of Series 2014B-1 and $80 million of Series 2014B-2) AMT Subordinate Junior Lien Airport Commercial Paper Notes outstanding (the “2014 CP Notes”) under the 2014 CP Program. The 2014 CP Notes were issued to fund costs associated with the Terminal 3 Modernization project and are supported by two letters of credit (“2014 LOCs”) that will expire on October 4, 2017.
On or before the expiration of the 2014 LOCs, the City intends to establish one or more programs with a combined capacity of $200 million (the “2017 Program”). The 2017 Program may include separate series of commercial paper notes (“2017 CP Notes”), each supported by a separate Irrevocable Direct Pay Letter of Credit (“LOC”), or one or more Revolving Credit Facilities (each a “RCF”). Upon closing of the 2017 Program, the 2014 CP program will be terminated. A portion of the proceeds from the 2017 Program may be issued to redeem the 2014 CP Notes. The City also anticipates issuing airport revenue bonds in late summer or early fall of 2017 to redeem outstanding CP Notes.
The City anticipates utilizing the proceeds from the 2017 Program to provide interim funding of costs associated with additional phases of PHX’s Terminal 3 Modernization project, portions of the SkyTrain Stage 2 extension project and other projects in the Aviation Department’s capital improvement plan.
Any 2017 CP Notes would be issued through the City of Phoenix Civic Improvement Corporation (the “Corporation”). Any 2017 CP Notes and/or any draws under a RCF would be in anticipation of the issuance of future Senior Lien Airport Revenue Bonds and/or Junior Lien Airport Revenue Bonds, which are payable from a pledge of certain Net Airport Revenues. Any 2017 CP Notes and RCF draws would be special, limited obligations of the Corporation and payable solely from payments required to be paid by the City pursuant to a City Purchase Agreement between the City and the Corporation (the “City Purchase Agreement”).
The City will make no pledge of Net Airport Revenues to the 2017 CP Notes, if any. However, the City will pledge Net Airport Revenues to the LOC and/or RCF Provider(s) on a Junior Subordinate Lien basis. This pledge will be subordinate to
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the presently outstanding and future Senior Lien Obligations and Junior Lien Obligations.
Pursuant to this Request for Proposals (“RFP”), the City seeks proposals from financial institutions that satisfy the minimum qualifications described in Part 2 below and are interested in providing one or more of the following:
1. An LOC to support the non-AMT/AMT/Taxable 2017 CP Notes, and/or 2. A RCF for non-AMT/AMT/Taxable 2017 indexed notes with drawdown and
prepayment flexibility
Financial institutions may offer to provide an LOC, a RCF, or both. Based upon the proposals received, the City will evaluate the most attractive facility or mix of facilities to meet its funding requirements. The City will not consider joint proposals or proposals from syndicates.
B. Airport Background
The City owns and operates, through its Aviation Department, the Airport. The City has operated the Airport as a self-supporting enterprise since 1967. PHX, located approximately four miles east of the downtown Phoenix area, was established in 1935. PHX is the only Arizona airport designated as a large hub by the Federal Aviation Administration (FAA) and is the principal commercial service airport serving metropolitan Phoenix and most of the State’s population. There are no other U.S. large-hub commercial service airports within a five-hour driving distance of Phoenix, with the closest being Las Vegas’ McCarran International Airport (290 miles to the northwest). According to the Bureau of Transportation Statistics, PHX, serving 20.9 million enplaned passengers in calendar year 2016, was the 11th busiest airport in the United States. The City also serves the area’s general aviation traffic activity through the two reliever airports that it owns and operates. Phoenix-Deer Valley Airport is located in the northern part of the City and Phoenix-Goodyear Airport is located west of the City.
Information on the Aviation Department and PHX may be found in the Comprehensive Annual Financial Report of the Aviation Department at https://skyharbor.com/About/Information/AnnualFinancialReport. Phoenix-Deer Valley Airport and Phoenix-Goodyear Airport are part of the Airport for the purpose of issuing obligations payable from Net Airport Revenues (as defined herein). Such obligations payable from Net Airport Revenues (“Senior Lien Obligations”), as well as obligations payable from Designated Revenues (“Junior Lien Obligations”), and Junior Subordinate Lien Obligations (as defined herein) can be issued for improvements at Phoenix-Deer Valley Airport and Phoenix-Goodyear Airport. The revenues from these two airports and the revenues from PHX are the Airport Revenues (as defined herein) which are the basis used to calculate Net Airport Revenues. Net Airport Revenues are pledged to secure the payment of principal of and interest on Senior Lien Obligations. Designated Revenues are pledged to secure the payment of principal of and interest on Junior Lien Obligations. Junior Subordinate Lien Revenue, which are
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designated revenues after Junior Lien Obligations, are pledged to secure the payment of Junior Subordinate Lien Obligations.
As of June 1, 2017, the City has outstanding $472,895,000 principal amount of City of Phoenix Civic Improvement Corporation Senior Lien Airport Bonds and $739,900,000 of Junior Lien Airport Revenue Bonds.
All Airport Revenue Bonds are fixed rate and are not subject to any outstanding interest rate swaps.
The City also has $7,865,000 million principal amount of outstanding General Obligation Bonds that are paid from Airport Revenues after the payment of debt service on the Airport Revenue Bonds and commercial paper obligations.
The City has $186,050,000 principal amount of City of Phoenix Civic Improvement Corporation Rental Car Facility Charge Revenue Bonds, Taxable Series 2004 outstanding. Only Customer Facility Charges are pledged to the payment of these bonds.
C. General Information
The City’s disclosure filings, annual reports, official statements, etc. may be found at the City’s investor website http://phoenix.gov/finance/investor/index.html. The draft City Purchase Agreement, Letter of Credit Reimbursement Agreement and the Issuing and Paying Agent Agreement are included as Exhibits B-D in this RFP.
City Financing Team: The City has retained the services of the following firms:
Frasca & Associates, LLC – Financial Advisor
Greenberg Traurig – Bond Counsel
U.S. Bank – Issuing and Paying Agent Commercial Paper Notes: The 2014 CP Notes are currently remarketed by BofA Merrill Lynch and Barclays Capital. Ratings: The City’s Airport credit ratings are among the highest for U.S. airports by both Moody’s and S&P rating agencies.
D. RFP Questions and Proposal Due Dates
The Respondent is accountable for meeting all deadlines. The City will not accept late proposals.
All questions regarding this RFP must be submitted to the City via e-mail to [email protected] no later than 1:00 PM MST on June 15, 2017.
Senior Lien Subordinate Lien
Moody’s Aa3 Stable A1 Stable
S&P AA- Stable A+ Stable
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The City’s responses to the questions received will be posted on the City’s investor website at http://phoenix.gov/finance/investor/index.html by June 20 at 4:00 PM MST.
All proposals must be received by 3:00 PM MST on June 26, 2017. Submission instructions are outlined in Section 6 of this RFP.
2. MINIMUM QUALIFICATIONS:
Each Respondent must demonstrate in its proposal that it meets the minimum qualifications or its proposal will be disqualified as non-responsive.
Any Respondent that submits a proposal in response to this RFP must meet the following minimum qualifications. A. Credit Ratings
If the Respondent is proposing an LOC:
1. The Respondent must have minimum long-term credit ratings of “A2” from Moody’s Investors Services and “A” from Standard & Poor’s.
2. The Respondent must have minimum short-term credit ratings of “P-1”
from Moody’s Investors Services, and “A-1” from Standard & Poor’s. B. Stated Amount Outstanding
If a Respondent is proposing an LOC and/or RCF, the Respondent must demonstrate that it currently provides LOCs and/or RCFs with a minimum stated amount of $50 million that support marketed programs for at least three other municipal issuers.
3. PREPARATION OF OFFER: A. It is permissible to copy Submittal forms if necessary. Erasures, interlineations, or
other modifications of your offer must be initialed in original ink by the authorized person signing the offer. No offer will be altered, amended or withdrawn after the specified offer due date and time. The City is not responsible for Consultant’s errors or omissions.
B. All time periods stated as a number of days will be calendar days. C. It is the responsibility of all Respondents to examine the entire solicitation and
seek clarification of any requirement that may not be clear and to check all responses for accuracy before submitting an offer. Negligence in preparing an offer confers no right of withdrawal after due date and time. Respondents are strongly encouraged to promptly notify the City of all conflicts, errors, ambiguities, or discrepancies which Respondent has discovered in or between the solicitation and such other related documents.
E. The City does not reimburse the cost of developing, presenting or providing any
response to this solicitation. Offers submitted for consideration should be
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prepared simply and economically, providing adequate information in a straightforward and concise manner. The Respondent is responsible for all costs incurred in responding to this solicitation. All materials and documents submitted in response to this solicitation become the property of the City and will not be returned.
F. Content Each proposal must be submitted with the information below. Proposals must be typewritten (minimum font size 12 point) on white 8 ½ x 11 paper, in portrait format. Proposals that are not prepared in accordance with these instructions may be considered non-responsive and disallowed from further consideration. Each section of the proposal shall be organized to correlate with the following sections:
1. Cover Letter. A cover letter, not to exceed two (2) pages, which will be
considered an integral part of the proposal, shall be signed by an individual authorized to bind the Respondent. The cover letter must provide the name, title, address and telephone number of individuals with authority to contractually bind the Respondent and those individuals who may be contacted during the term of any contract resulting from this RFP. The cover letter must also contain the following:
a. Respondent Contact Information: Name, title, telephone, and email
of the personnel responsible for the primary communication with the City regarding Respondent’s proposal and provide a brief description of your institution.
b. Proposal Validity: Provide a brief statement indicating that
Respondent’s proposal shall remain valid through October 4, 2017. c. Actual or Potential Conflicts: Provide a brief statement as to
whether Respondent has any actual or potential conflicts that may arise in the performance of the services requested in this RFP and complete the attached form.
d. Reimbursement Agreement Exception: A brief statement indicating
whether Respondent does or does not take exception to the City’s draft reimbursement agreement. The City has a strong preference to utilize covenants and representations and warranties included in the draft reimbursement agreement attached as Exhibit D. Respondents submitting a proposal must review this draft reimbursement agreement and provide comments on any changes or additional provisions they would require. If Respondent takes exception to the language in the agreement, Respondent must create an additional attachment labeled “Schedule C – Exceptions to Reimbursement Agreement” and submit with proposal.
e. Junior Subordinate Lien Revenues: Provide an acknowledgement
confirming that Respondent understands that any draws on an LOC
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or a RCF will be secured by the Airport’s Junior Subordinate Lien Revenues.
2. Credit Quality. Provide copies of the most recent Moody’s, Standard &
Poor’s and Fitch reviews of your financial institution. Provide the total amount of your current Letter of Credit exposure to municipal issuers. List the transactions (including dates, amounts, issuer and other relevant information) for which you provided a letter of credit for commercial paper programs or revolving direct funded loan/line for airport issuers during the preceding three years.
3. Schedules. Each proposal shall be submitted with the following completed Schedules, as applicable. Blank copies of Schedules A and B are provided in this RFP package.
1. Schedule A: A term sheet identifying the terms and conditions of
any proposed LOC, and all fees and expenses (including fees for early termination, downgrade and under a term out provision).
2. Schedule B: A term sheet identifying the terms and conditions of
any proposed RCF, and all fees and expenses (including fees for early termination, downgrade and under a term out provision).
3. Schedule C: Exceptions to the Reimbursement Agreement, if any.
If needed, Respondent must create this schedule.
4. References. Provide three (3) references and a description of projects you have worked on relative to the services requested in this RFP or similar projects performed within the last five (5) years. Include the following information as to each listed project: business name, contact name, title, address, phone, and email. It is the Respondent’s responsibility to validate the contact information for references. The City may request information from Respondent’s clients, government agencies, or any other available sources.
4. INQUIRIES: All questions that arise relating to this solicitation should be directed to the individual identified on the solicitation cover page. To be considered, written inquiries must be received at the address on the cover page by the submittal time. Written inquiries may be emailed to the address on the cover page. Inquiries received will then be answered. No informal contact initiated by Respondents on the proposed service will be allowed with members of City’s staff from date of distribution of this solicitation until after the closing date and time for the submission of offers. All questions concerning or issues related to this solicitation must be presented in writing.
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5. CERTIFICATION:
By signature and submittal of response, the Respondent certifies:
The submission of the offer did not involve collusion or other anti-competitive practices.
The Respondent must not discriminate against any employee, or applicant for employment in violation of Federal or State Law.
The Respondent has not given, offered to give, nor intends to give at any time hereafter, any economic opportunity, future employment, gift, loan, gratuity, special discount, trip, favor, or service to a public servant in connection with the submitted offer.
6. SUBMISSION OF PROPOSAL: Proposals must be in possession of the Department on or prior to the exact time and date indicated in the Schedule of Events on the cover page. Late proposals will not be considered. The prevailing clock will be the Department clock. Proposals must be submitted in a sealed envelope and the following information should be noted on the outside of the envelope:
Respondent’s Name
Respondent’s Address (as shown on the Certification Page)
Solicitation Number
Solicitation Title All proposals must be typewritten. Include the number of copies that are required as indicated below in both section A and B.
Proposals not submitted in the manner described herein may be considered non-responsive and be subject to rejection. Proposals submitted to the City after the specified due date and time in the RFP shall be rejected as late. No late proposals will be accepted. Please submit completed proposals as follows: A. Original Proposals: Two original hard copies received no later than 3:00 PM
MST on June 26, 2017 addressed to: City of Phoenix Office of the Chief Financial Officer 251 West Washington Street, 9th Floor Phoenix, AZ 85003 Attention: Jacqueline Garcia Telephone: 602 495-3759
B. Electronic Copies: Electronic copies via email received no later than 3:00 PM MST on June 26, 2017 addressed to:
City of Phoenix –Kathleen Gitkin and Jacqueline Garcia [email protected]
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[email protected] Frasca & Associates, LLC – Ken Cushine and Marvin Sun [email protected] [email protected]
7. WITHDRAWAL OF PROPOSAL:
At any time prior to the solicitation due date and time, a Respondent (or designated representative) may withdraw the offer by submitting a request in writing and signed by a duly authorized representative. Facsimiles, telegraphic or mailgram withdrawals will not be considered. Withdrawals may not be made after the proposal due date.
8. PROPOSAL RESULTS:
Proposals will be opened on the proposal submittal date, time and location indicated in the Schedule of Events. Proposals and other information received in response to the solicitation will be shown only to authorized City personnel having a legitimate interest in them or persons assisting the City in the evaluation.
9. AWARD OF CONTRACT:
The purpose of this RFP is to enable the City to identify and recommend one or more Respondents to provide the credit facilities described herein. The City will conduct a preliminary review of each timely submitted proposal to ensure all requirements of the RFP have been met. The City will evaluate the proposals in accordance with the following criteria:
A. SCHEDULES OF FEES AND COSTS Evaluation of the proposed fees and
costs to the City will be based on information provided in Schedules A and B, as applicable.
B. CREDIT QUALITY For LOC providers, the credit quality of and trading value of
securities backed by the Respondent, based upon the information provided in proposal and any other information available to the City.
C. TERM OUT PROVISIONS The length of any term out of the amounts
outstanding and the relative costs to terminate the facility in part or in whole, at the sole option of the City; as described by Respondent in Schedules A and B.
D. CITY’S STANDARD REIMBURSEMENT AGREEMENT The willingness of the
Respondent to execute the City’s reimbursement agreement attached as Exhibit D, and the additional risk or costs to the City of any changes or alternative provisions proposed on Respondent’s Attachment C.
Notwithstanding any other provision of this solicitation, the City reserves the right to:
Waive any immaterial defect or informality; or
Reject any or all proposals or portions thereof; or
Reissue a solicitation; or
Accept a proposal from other than the lowest bidder; or
Waive or modify any irregularities in proposals received; or
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Consider proposals or modifications received at any time before the award(s) is made, if such action, in the sole judgment of the City, is in the best interest of the City; or
The City will negotiate with the successful Respondent(s) in the best interests of the City; and,
The City reserves the right to terminate the negotiations with the successful Respondent(s) and commence negotiations with the next-rated Respondent.
10. CITY’S RIGHT TO DISQUALIFY FOR CONFLICT OF INTEREST:
The City reserves the right to disqualify any Respondent on the basis of any real or apparent conflict of interest that is disclosed by the offer submitted or any other data available to the City. This disqualification is at the sole discretion of the City. Any Respondent submitting an offer herein waives any right to object now or at any future time, before anybody or agency, including but not limited to, the City Council of the City of Phoenix or any court.
11. SOLICITATION TRANSPARENCY POLICY: A. Commencing on the date and time a solicitation is published, potential or actual
proposals or Respondents (including their representatives) shall only discuss matters associated with the solicitation with the Mayor, any members of City Council, the City Manager, any Deputy City Manager, or any department director directly associated with the solicitation (including in each case their assigned staff, except for the designated Procurement Liaison) at a public meeting, posted under Arizona Statutes, until the resulting contract(s) are awarded to all proposals or responses are rejected and the solicitation is cancelled without any announcement by the Procurement Liaison of the City’s intent to reissue the same or similar solicitation. As long as the solicitation is not discussed, Respondents may continue to conduct business with the City and discuss business that is unrelated to the solicitation with the City staff who is not involved in the selection process.
B. Respondents may discuss their proposal or the solicitation with the Mayor or one
or more members of the Phoenix City Council, provided such meetings are scheduled through the Procurement Liaison, and are posted as open meetings with the City Clerk at least 24 hours prior to the scheduled meetings. The City Clerk will be responsible for posting the meetings. The posted notice shall identify the participants and the subject matter, as well as invite the public to participate.
C. With respect to the selection of the successful Respondents, the City Manager
and/or City Manager's Office will continue the past practice of exerting no undue influence on the process. In all solicitations of bids and proposals, any direction on the selection from the City Manager and/or City Manager's Office and Department Head (or representative) to the proposal review panel or selecting authority must be provided in writing to all prospective Respondents.
D. This policy is intended to create a level playing field for all Respondents, assure
that contracts are awarded in public, and protect the integrity of the selection
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process. RESPONDENTS THAT VIOLATE THIS POLICY SHALL BE DISQUALIFIED. After official Notice is received by the City for disqualification, the Respondent may follow the Protest process, unless the Solicitation is cancelled without notice of intent to re-issue.
E. “To discuss” means any contact by the Respondent, regardless of whether the
City responds to the contact. Respondents that violate this policy shall be disqualified until the resulting contract(s) are awarded, or all proposals or responses are rejected and the solicitation is cancelled without any announcement by the Procurement Liaison of the City’s intent to reissue the same or a similar solicitation. The City interprets the policy as continuing through a cancellation of the solicitation or award of a contract.
12. PROTEST PROCESS:
A. Unless otherwise notified by a formal amendment, the Protester must adhere to all solicitation dates and deadlines, including timely filing of a proposal, regardless of filing a protest.
B. Respondent may protest an adverse determination issued by the City regarding
responsibility and responsiveness, within seven days of the date the Respondent was notified of the adverse determination.
C. All protests will be in writing, filed with the Procurement Liaison identified in the
solicitation, and include the following:
Identification of the solicitation number;
The name, address and telephone number of the protester;
A detailed statement describing the legal and factual grounds for the protest, including copies of relevant documents;
The form of relief requested; and
The signature of the protester or its authorized representative. D. The Procurement Liaison will render a written decision within a reasonable period
after the protest is filed.
13. PUBLIC RECORD: All proposals submitted in response to this invitation will become the property of the City and become a matter of public record available for review pursuant to Arizona State law. If a Respondent believes that a specific section of its proposal response is confidential, the Respondent will isolate the pages marked confidential in a specific and clearly labeled section of its proposal response. A Respondent may request specific information contained within its proposal is treated by the Procurement Liaison as confidential provided the Respondent clearly labels the information “confidential.” To the extent necessary for the evaluation process, information marked as “confidential” will not be treated as confidential. Once the procurement file becomes available for public inspection, the Procurement Liaison will not make any information identified by the Respondent as “confidential” available to the public unless necessary to support the evaluation process or if specifically requested in accordance with applicable public records law. When a public records request for such information is received, the
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Procurement Liaison will notify a Respondent in writing of any request to view any portion of its proposal marked “confidential.” The Respondent will have the time set forth in the notice to obtain a court order enjoining such disclosure. If the Respondent does not provide the Procurement Liaison with a court order enjoining release of the information during the designated time, the Procurement Liaison will make the information requested available for inspection.
14. LATE PROPOSALS:
Late proposals must be rejected, except for good cause. If a late proposal is submitted, the Department will document the date and time of the submittal of the late proposal, keep the proposal and notify the Respondent that its proposal was disqualified for being a late proposal.
15. RIGHT TO DISQUALIFY:
The City reserves the right to disqualify any Respondent who fails to provide information or data requested or who provides materially inaccurate or misleading information or data. The City further reserves the right to disqualify any Respondent on the basis of any real or apparent conflict of interest that is disclosed by the Respondent submitted or any other data or information available to the City. This disqualification is at the sole discretion of the City. By submission of a solicitation response, the Respondent waives any right to object now or at any future time, before any agency or body including, but not limited to, the City Council of the City or any court as to the exercise by the City of such right to disqualify or as to any disqualification by reason of real or apparent conflict of interest determined by the City. The City reserves the right to replace the disqualified Respondent.
16. MULTIPLE AWARDS: The City reserves the right to award to more than one respondent. The City’s decision to utilize multiple respondents will be final and conclusive.
17. DETERMINING RESPONSIVENESS AND RESPONSIBILITY:
A. Proposals will be reviewed for documentation of minimum qualifications, completeness, and compliance with the solicitation requirements. The City reserves sole discretion to determine responsiveness and responsibility.
B. Responsiveness: Nonresponsive proposals will not be considered in the
evaluation process. The solicitation states criteria that determine responsiveness, and the solicitation includes terms and conditions that if included or excluded from proposals (as the case may be) will render a proposal nonresponsive.
C. Exceptions, conditions, reservations, or understandings are presumed to be
unacceptable, and a proposal that includes unacceptable exceptions, conditions, reservations, or understandings may be rejected as nonresponsive. Alternatively, the City in its sole discretion may instruct in writing that any Respondent remove the conditions, exceptions, reservations or understandings. If the Respondent fails to do so in writing, the City may determine the proposal to be nonresponsive.
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D. Responsibility: To obtain true economy, the City must conduct solicitations to minimize the possibility of a subsequent default by the Respondent, late deliveries, or other unsatisfactory performance that may result in additional administrative costs. It is important that the Respondent be responsible. Responsibility includes the Respondent’s integrity, skill, capacity, experience, and facilities for conducting the work to be performed.
E. The Procurement Liaison, in consultation with legal counsel, will review each
proposal to determine if the Respondent is responsible. The City’s determination as to whether a Respondent is responsible will be based on the information furnished by the Respondent, interviews (if any), any information at the City’s request, information in any best and final offer, and information received from Respondent’s references, including information about Respondent’s past history, terminations for convenience or cause, contract breach lawsuits or notices of claim and any other sources the City deems appropriate. Award of the Contract resulting from the solicitation will not be made until any necessary investigation, which each Respondent agrees to permit by submitting its proposal, is made by the City as it deems necessary. A review of responsibility may occur up to contract award.
F. The Respondent’s unreasonable failure to promptly supply information in
connection with an inquiry with respect to responsibility may be grounds for a determination of non-responsibility with respect to such Respondent.
SCHEDULE A
Irrevocable and Transferable Direct Pay Letter of Credit – Fee Proposal Form
Schedule A Solicitation Number: RFP - 2017FIN - 001
GENERAL INFORMATION
__________________________________________________________________________
(Full Legal Name of Provider)
__________________________________________________________________________
(Contact Person) (Phone) (E-mail)
Bank’s Ratings and Outlooks:
Long-Term Short-Term Outlook Last Ratings Action/Date
Moody’s
Standard & Poor’s
Maximum Facility Offered: _____________________ (plus required interest coverage)
Status and Timeframe for Credit Approval: ________________________________________
PRICING Complete the fee table below. Separately, provide a downgrade pricing grid. If your fees would increase due to a downgrade of the City’s underlying Airport credit ratings, please provide a fee matrix.
Expiration Date Utilized Fee Unutilized Commitment Fee
3 Years
4 Years
5 Years
List any and all additional fees for which you would expect reimbursement (e.g., Draw, Amendment, Origination, etc.) and any expenses other than Legal Counsel. List and describe additional fees, if any, for reduction in size or early termination of LOC. Are these fees waived if the City’s action is due to a downgrade of Provider’s long or short term ratings? Provide a description of Term-Out Provisions including interest rates and all conditions
Bank Counsel: Firm: ________________________________________
Primary Contact:______________________________
Legal Fees and Expenses (Estimate):______________
Capped at:__________________________________ If the City selects more than one LOC provider, Respondent must provide a statement in their proposal indicating their willingness to agree/not agree to one law firm as representative of all Providers.
SCHEDULE B
Revolving Credit Facility
Schedule B Solicitation Number: RFP - 2017FIN - 001
GENERAL INFORMATION
__________________________________________________________________________
(Full Legal Name of Provider)
__________________________________________________________________________
(Contact Person) (Phone) (E-mail)
Maximum Facility Offered: _____________________ (plus required interest coverage)
Status and Timeframe for Credit Approval: ________________________________________
PRICING
Term Unutilized
Fee
Proposed Spread & Index for Non-
AMT Notes
Proposed Spread & Index for AMT
Notes
Proposed Spread to 1-month LIBOR for
Taxable Notes
Up-Front Fee, if any
3 Years
4 Years
5 Years
If your fees would increase due to a downgrade of the City’s underlying Airport credit ratings,
please provide a fee matrix.
All fees and information requested below must be provided in order for your submittal to be
deemed “Responsive.”
List any and all additional fees for which you would expect reimbursement (e.g., Draw,
Amendment, Origination, etc.) and any expenses other than Legal Counsel.
List and describe additional fees, if any, for reduction in size or early termination of the Facility.
Provide a description of Term-Out Provisions including interest rates and all conditions.
Bank Counsel: Firm: _________________________________________
Primary Contact:________________________________
Legal Fees and Expenses (Estimate):________________
Capped at :_____________________________________
Approval:______________________________________
Rev 04/2017 (JMK) Solicitation Number: RFP - 2017FIN - 001
This form must be signed and submitted to the City and all questions must be answered or your Proposal may be considered non-responsive.
1. Name of person submitting this disclosure form.
First MI Last Suffix
2. Contract Information
Solicitation # or Name:
3. Name of individual(s) or entity(ies) seeking a contract with the City (i.e. parties to the Contract)
4. List any individuals(s) or entity(ies) that are owners, partners, parent, sublessees, joint venture, or subsidiaries of the individual or entity listed in Question 3. Please include all Board members, executive committee members and officers for each entry. If not applicable, indicate N/A.
5. List any individuals or entities that will be subcontractors on this contract or indicate N/A.
Subcontractors may be retained, but not known as of the time of this submission.
List of subcontracts, including the name of the owner(s) and business name:
6. List any attorney, lobbyist, or consultant retained by any individuals listed in Questions 3, 4, or 5 to assist in the proposal or seeking the resulting contract. If none, indicate N/A.
7. Disclosure of conflict of interest:
Conflict of Interest and Solicitation Transparency
Rev 04/2017 (JMK) Solicitation Number: RFP - 2017FIN - 001
Are you aware of any fact(s) with regard to this solicitation or resulting contract that would
raise a “conflict of interest” issue under City Code Section 43-34?
“An elected City official or a City employee shall not represent any person or business for
compensation before the City regarding any part of a procurement, including any resulting
contract, if during the time the elected official is or was in office or the employee is or was
employed by the City such elected official or employee played a material or significant role in
the development of the solicitation, any other part of the procurement, or the contract award.”
I am not aware of any conflict(s) of interest under City Code Section 43-34.
I am aware of the following potential or actual conflict(s) of interest:
8. Notice Regarding Prohibited Interest in Contracts
State law and the Phoenix City Charter and Code prohibit public officers or employees, their close relatives, and any businesses they, or their relatives, own from (1) representing before the City any person or business for compensation, (2) doing business with the City by any means other than through a formal procurement, and (3) doing business with the City without disclosing that the person has an interest in the contract. This prohibition extends to subcontracts on City contracts and also applies to parent, subsidiary, or partner businesses owned by a public officer or employee. See A.R.S. Sections 38-501 through 38-511, for more information (City Charter, Chapter 11, applies the state conflict-of-interest law to City employees). Please note that any contract in place at the time a person becomes a public officer or employee may remain in effect. But the contract may not be amended, extended, modified, or changed in any manner during the officer’s or employee’s city service without following city administrative regulations.
Are you aware of any fact(s) with regard to this contract that would raise a “conflict of
interest” issue under A.R.S. Sections 38-501 through 38-511 (See Arizona Revised
Statutes regarding conflict of interest at www.azleg.gov).
I am not aware of any conflict(s) of interest under Arizona Revised Statutes Sections
38-501 through 38-511.
I am aware of the following conflict(s) of interest:
9. Acknowledgements
Solicitation Transparency Policy – No Contact with City Officials or Staff During Evaluation
I understand that a person or entity who seeks or applies for a city contract, or any other person acting on behalf of that person or entity, is prohibited from contacting city officials and employees regarding the contract after a solicitation has been posted.
This “no-contact” provision only concludes when the contract is awarded at a City Council
meeting. If contact is required with City official or employees, the contact will take place in accordance with procedures by the City. Violation of this prohibited contacts provision, set out in City Code Sections 2-190.4 and 43-36, by respondents, or their agents, will lead to disqualification.
Rev 04/2017 (JMK) Solicitation Number: RFP - 2017FIN - 001
10. Fraud Prevention and Reporting Policy
I acknowledge that the City has a fraud prevention and reporting policy and takes fraud seriously. I will report fraud, suspicion of fraud, or any other inappropriate action to: telephone no. 602-261-8999 or 602-534-5500 (TDD); or [email protected].
The purpose of the fraud policy is to maintain the City's high ethical standards. The policy includes a way for our business partners to report wrongdoing or bad behavior. Suspected fraud should be reported immediately to the Phoenix Integrity Line. The City has adopted a zero-tolerance policy regarding fraud.
OATH
I affirm that the statements contained in this form, including any attachments, to the best of my knowledge and belief are true, correct, and complete. Should any of the answers to the above questions change during the course of the contract, particularly as it relates to any changes in ownership, applicant agrees to update this form with the new information within 30 days of such changes. Failure to do so may be deemed a breach of contract.
PRINT NAME TITLE
SIGNATURE DATE
COMPANY (CORPORATION, LLC, ETC.) NAME and DBA
An Enterprise Fund of the City of Phoenix, Arizona
COMPREHENSIVE ANNUAL FINANCIAL REPORT
FOR THE FISCAL YEAR ENDED
JUNE 30, 2016
Comprehensive Annual Financial ReportFor the Fiscal Year Ended June 30, 2016
An Enterprise Fund of the City of Phoenix, Arizona
Prepared by:Aviation Department
andFinance Department
IV
TABLE OF CONTENTSPAGE
INTRODUCTORY SECTIONLetter of Transmittal ......................................................................................................................................... 1
Organizational Chart ........................................................................................................................................8
List of Officials ...................................................................................................................................................9
FINANCIAL SECTION Report of Independent Certified Public Accountants .................................................................................12
Management’s Discussion and Analysis (required supplementary information) ........................................15
Basic Financial Statements:
Comparative Statements of Net Position .................................................................................................24
Comparative Statements of Revenues, Expenses and Changes in Net Position .................................... 27
Comparative Statements of Cash Flows ...................................................................................................28
Notes to the Financial Statements ............................................................................................................ 31
Required Supplementary Information ......................................................................................................62
STATISTICAL SECTION FINANCIAL SCHEDULESSchedule 1: Comparative Schedules of Revenues, Expenditures
and Changes in Fund Balances (non-GAAP) .............................................................................70
Schedule 2: Reconciliation of Airport Cash on Hand to Available Fund Balance per Budgetary Presentation ...............................................................................72
Schedule 3: Reconciliation of GAAP Operating Revenues and Expenses to Revenues and Expenditures per Budgetary Presentation ...................................................73
Schedule 4: Changes in Net Position ..............................................................................................................74
Schedule 5: Principal Revenue Sources ..........................................................................................................76
Schedule 6: Rates and Charges ...................................................................................................................... 77
DEBT SCHEDULESSchedule 7: Outstanding Debt Payable from General Airport Revenue, per Enplaned Passenger ...........80
Schedule 8: Debt Service Paid from General Airport Revenue, per Enplaned Passenger .......................... 81
Schedule 9: Bond Ratings ...............................................................................................................................83
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PAGE
STATISTICAL SECTION (continued)DEBT SCHEDULES (continued)
City of Phoenix Civic Improvement Corporation Bonds:
Schedule 10: Senior Lien Airport Revenue Bonds – Schedule of Outstanding Debt ..............................84
Schedule 11: Senior Lien Airport Revenue Bonds – Schedule of Debt Service Requirements ...............85
Schedule 12: Junior Lien Airport Revenue Bonds – Schedule of Outstanding Debt...............................86
Schedule 13: Junior Lien Airport Revenue Bonds – Schedule of Debt Service Requirements ................ 87
Schedule 14: Rental Car Facility Charge Revenue Bonds – Schedule of Outstanding Debt ..................88
Schedule 15: Rental Car Facility Charge Revenue Bonds – Schedule of Debt Service Requirements ...89
City of Phoenix Airport General Obligation Bonds:
Schedule 16: Schedule of Outstanding Debt ...........................................................................................90
Schedule 17: Schedule of Debt Service Requirements .............................................................................. 91
ECONOMIC AND DEMOGRAPHIC SCHEDULESSchedule 18: Demographic Statistics for the Airport Service Area ..............................................................94
Schedule 19: Principal Employers ...................................................................................................................95
Schedule 20: Airport Employee Trends .......................................................................................................... 97
Schedule 21: Capital Assets and other Airport Information ........................................................................98
Schedule 22: Schedule of Annual Passenger Enplanements – By Type of Passenger ............................... 100
Schedule 23: Schedule of Annual Passenger Enplanements – By Flight Destination ................................101
Schedule 24: Schedule of Enplaned Passengers by Airline ........................................................................ 102
Schedule 25: Schedule of Annual Average Cost per Enplanement ........................................................... 105
Schedule 26: Schedule of PFC Approvals and Revenues ............................................................................ 106
Schedule 27: Schedule of Annual PFC Collections ...................................................................................... 107
Schedule 28: Rental Car Facility Charge Revenue Bonds – Schedule of Annual Receipts, Net Annual CFC Revenues, and Debt Service Coverage ......................108
Schedule 29: Schedule of Rental Car Gross Sales by Company ................................................................. 110
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December 19, 2016
Honorable Mayor, City Council and City Manager:
We are pleased to submit the Comprehensive Annual Financial Report of the Aviation Department (an enterprise fund of the City of Phoenix, Arizona) for the fiscal year ended June 30, 2016. These financial statements are prepared and presented in conformity with accounting principles generally accepted in the United States of America (GAAP) as prescribed in pronouncements of the Governmental Accounting Standards Board (GASB) and the Government Finance Officers Association (GFOA).
To the best of our knowledge and belief, this report is accurate in all material respects and is reported in a manner designed to present fairly the financial position and results of operations of the City of Phoenix, Aviation Department. Management assumes full responsibility for both the accuracy of the data and the completeness and fairness of the presentation, including all disclosures.
Management’s Discussion and Analysis (MD&A) provides a narrative introduction, overview, and analysis of the basic financial statements. This transmittal letter is designed to complement the MD&A and should be read in conjunction with it.
PROFILE OF THE REPORTING ENTITY The City of Phoenix, Arizona (the City) owns and operates the following three airports (collectively, the Airport System) through the Aviation Department (the Department):
Phoenix Sky Harbor International Airport (PHX) Phoenix Deer Valley Airport (DVT) Phoenix Goodyear Airport (GYR)
Phoenix Sky Harbor International Airport (the Airport) has been owned and operated by the City since 1935. The Airport occupies approximately 3,000 acres of land located about four miles east of the downtown Phoenix area. It is the only Arizona airport designated as a large hub by the Federal Aviation Administration (FAA) and is the principal commercial service airport serving metropolitan Phoenix and most of the State’s population. There are no other U.S. large-hub commercial service airports within a 5-hour drive of Phoenix, with the closest being Las Vegas’ McCarran International Airport (approximately 290 miles to the northwest). The Airport served over 22 million enplaned passengers and 22 million deplaned passengers in fiscal year 2016.
The City serves the area’s general aviation traffic activity through two reliever airports. Phoenix Deer Valley Airport is located in the northern part of the City and Phoenix Goodyear Airport is located to the west. Together these two facilities handled 482,994 general aviation operations in fiscal year 2016.
The City was incorporated in 1881 and operates under a City Council-Manager form of government as provided by its Charter. The Mayor and City Council set policy direction and the City Manager implements those policies. The Mayor is elected at-large, while city council members are elected by voters in each of eight separate districts they represent. The Mayor and city council members each have equal voting power.
The Airport System financial operations are accounted for as a separate Aviation Enterprise Fund according to GAAP for governmental entities. The City has operated the Airport System through the Department as a self-supporting enterprise since 1967.
The City Council establishes the major policies relating to the development and operation of the Airport. The City Council appoints the City Manager to act as the chief operating officer. The City Manager appoints the Director of Aviation Services (the Director), who reports to the Deputy City Manager. The City Council
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adopts ordinances establishing fee structures for use of the Airport facilities, including airline rates and charges.
The Phoenix Aviation Advisory Board (PAAB) provides non-binding advisory recommendations regarding the Airport System, including concession agreements, leases, master plans, studies and development plans.
The Director of Aviation Services is responsible for executing the City Council’s aviation policies and administering the operations of the Airport System. Reporting to the Director are two Assistant Directors. The Director and Assistant Directors lead the Department staff.
Certain accounting, bond financing, treasury, and related financial functions are performed by the City’s Finance Department.
The City is also a member government in the Phoenix-Mesa Gateway Airport Authority, which owns and operates Phoenix-Mesa Gateway Airport, located approximately 30 miles east of the Airport. Phoenix-Mesa Gateway Airport serves as a commercial reliever to the Airport.
AIRPORT PASSENGERSThe ten largest U.S. passenger airlines provide regular service at the Airport, providing nonstop passenger service to over 100 airports. The table below lists the passenger and cargo airlines with service at the Airport:
AIRLINES REPORTING ENPLANED PASSENGERS AND AIR CARGOPhoenix Sky Harbor International Airport
MAJOR/NATIONAL REGIONAL/COMMUTER FOREIGN-FLAG ALL-CARGO AIRLINES
Alaska Boutique Air Air Canada AirNet Systems
American Compass Airlines British Airways Ameriflight
Delta (Delta Connection) Volaris Atlas Air (DHL)
Frontier Envoy Air WestJet Empire
Hawaiian (American Eagle) Federal Express
JetBlue ExpressJet Gulf & Caribbean Cargo
Southwest (United Express) UPS
Spirit Great Lakes Airlines
Sun Country Mesa Airlines
United (American Eagle, United Express)
Skywest
(American Eagle, Delta Connection, United Express)
The composition of enplaned passengers by segment has not materially changed over the past several years, as the Airport remained primarily a domestic origin and destination (O&D) market. For more detailed information on enplaned passengers, please refer to Schedules 22, 23, and 24 in the Airport Statistics schedules of the Supplementary Information.
In fiscal year 2016, 95.1% of passengers were enplaned on domestic flights, while the remaining 4.9% boarded international flights. Domestic passengers grew by 3.1%, while international passengers declined by 6.0% from fiscal year 2015. Overall, enplaned passengers increased by 2.6% in fiscal year 2016.
In fiscal year 2016, 61.4% of enplaned passengers traveled directly from or to the Airport as O&D passengers. Of the total O&D passengers, 45.4% were residents initiating their trips at the Airport and 54.6% were visitors who initiated their trips at other airports and were making their return journey from the Airport. The remaining 38.6% of enplaned passengers connected through the Airport.
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INITIATIVES AND DEVELOPMENTSTerminal 3 ModernizationThe Airport is preparing for the future through an incremental development plan for its second busiest terminal. Terminal 3 opened in 1979 when seven million passengers per year traveled through the Airport. Now, with over 40 million passengers every year, the Airport has launched a Terminal 3 modernization project, designed to provide consistent and enhanced customer service and more efficient operations for airlines and concessionaires. Upon completion of the Terminal 3 modernization project, the Airport’s oldest terminal, Terminal 2, will be closed.
International Arrival FacilitiesThe Airport is improving its international arrival facilities in Terminal 4. This effort began with the installation of passport kiosks in the Customs and Border Protection processing area that resulted in significant decreases in passenger wait times. The project will further allow the Airport to accommodate additional visitors much more efficiently by enhancing elevators and escalators, in addition to expanding waiting areas and baggage carousels.
Terminal 4 North Apron ReconstructionThe Airport is making necessary modification and updates to its runway and apron areas to ensure the safety and security of all passengers. One of these projects is the reconstruction of the Terminal 4 north apron and ramps. The project includes reconstruction of 1.7 million square feet of paving on the north side of Terminal 4. This will be accomplished in phases to minimize disruption to airline operations.
PHX Sky Train®
The PHX Sky Train® provides a quick, convenient connection among all three terminals, East Economy Parking and Valley Metro Light Rail. The Department recently received approval from the City Council to begin design and construction of the next phase of the PHX Sky Train® which will connect travelers from the terminals to the Rental Car Center.
Terminal 4 New ConcourseThe Airport received approval from the City Council to commence design and construction of the Terminal 4 Concourse South 1, the eighth and final concourse at Terminal 4. The new concourse would add up to eight new gates and allow for additional and newer facilities to enhance customer service, more easily serve passengers, and support long-term airline activity.
ECONOMIC CONDITION AND OUTLOOKThe City of Phoenix has grown steadily in the past six decades. In 1950, Phoenix occupied 17 square miles with a population of almost 107,000, ranking 99th among American cities. The 1990 census recorded Phoenix’s population at 983,403 and the 2010 census recorded population at 1,447,128. As of July 1, 2016, Phoenix encompassed 519.4 square miles, with the City of Phoenix Planning and Development Department estimating population at 1,565,896 making Phoenix the sixth most populous city in the United States.
The Airport serves the entire Phoenix metropolitan area including the major cities of Glendale, Mesa, Scottsdale, and Tempe, plus all of Maricopa and Pinal counties. The area is widely known for its mild winters, warm summers, and low annual rainfall averaging 8.3 inches per year.
Phoenix is a popular tourist destination with attractions including resorts, spas, professional sports, shopping, golf, restaurants, and nightlife, all set amidst the Sonoran Desert. The area also offers museums and galleries, a variety of sporting events, Old West and Native American history, and outdoor recreation facilitated by more than 300 days of sunshine each year. In addition to the attractions within the Phoenix area, northern Arizona is home to the Grand Canyon National Park, the Red Rock Country of Sedona, the Painted Desert, the Petrified Forest, the Meteor Crater, ancient Native American ruins, and the Navajo and Hopi reservations.
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Major sporting events also draw tourists. The Phoenix area is the location of the annual Fiesta Bowl and Cactus Bowl college football games and the annual Phoenix Open PGA golf tournament. The favorable Arizona climate brings 15 Major League Baseball teams, known as the Cactus League, to the Phoenix area each February and March for spring training and preseason play.
FINANCIAL POLICIESManagement is focused on maintaining sound financial performance which is evident in the strong financial metrics and high bond ratings achieved. In fiscal year 2016, the Airport’s bond ratings remain among the highest airport ratings in the United States. Standard and Poor’s Ratings Services (S&P) and Moody’s Investors Service (Moody’s) affirmed the Airport’s double-A category ratings (AA- and Aa3 respectively) on the outstanding senior-lien revenue bonds. S&P and Moody’s also affirmed the Airport’s single-A category ratings (A+ and A1 respectively) on the Airport’s outstanding junior-lien revenue bonds. In affirming their ratings, these organizations noted the Airport’s strong financial performance, maintenance of a low-cost, low-debt facility, vibrant O&D market, experienced and effective administrative team, and excellent integration of Airport and City decision-making.
The Department has adopted specific financial targets and debt management policies to ensure the Airport’s continued solid financial performance. These financial policies include:
Debt Service Coverage: Management seeks to maintain Senior Lien Revenue Bond debt service coverage of at least 1.75x-2.00x. Management also seeks to maintain aggregate debt service coverage (coverage of Senior Lien Revenue Bond debt service and Junior Lien Revenue Bond debt service) of at least 1.50x.
Passenger Facility Charge (PFC) Leveraging: Management has established a PFC leverage target of no greater than 75% of annual collections to preserve adequate PFC pay-as-you-go capacity and provide bondholder protection should unexpected volatility occur in operations and revenue.
Cash and Liquidity: Management has established a target of at least 475 Days Cash on Hand. Days cash on hand is defined as unrestricted cash and investments available for operations, divided by the annual operating expenses, times 365 days. Furthermore, management has an active Commercial Paper program supported by two Letters of Credit to provide additional liquidity and support short-term capital needs.
Cost per Enplanement (CPE): The Airport maintains one of the industry’s lowest CPE figures for similarly sized U.S. airports. Management has the flexibility to increase rates and charges by ordinance to maintain financial metrics and develop facilities.
FINANCIAL TARGETS AND MANAGEMENT POLICIESThree Year Results
2016 2015 2014
Debt Service Coverage
Senior Lien Bond Debt Service Coverage 2.66x 2.63x 2.38x
Aggregate Debt Service Coverage 2.46x 2.54x 2.30x
PFC Leveraging 52% 52% 55%
Cash and Liquidity – Days Cash on Hand 595 528 508
Cost Per Enplanement $5.79 $5.98 $5.79
ACCOUNTING AND BUDGETING CONTROLS Internal ControlsManagement assumes full responsibility for both the accuracy of the data and the completeness and fairness of the presentation, including all disclosures. To provide a reasonable basis for making these
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representations, the City has established a comprehensive framework of internal controls that is designed to protect the City’s assets from loss, theft or misuse and to compile sufficient reliable information for the preparation of the basic financial statements in conformity with GAAP. Because the cost of internal controls should not outweigh their benefit, the City’s comprehensive framework of internal controls has been designed to provide reasonable, rather than absolute, assurance that the financial statements are free of any material misstatements.
Budgetary ControlsThe City maintains budgetary controls, which are designed to ensure compliance with legal provisions of the annual budget adopted by the City Council. An operating budget is legally adopted by ordinance each fiscal year for the Aviation Enterprise Fund on a modified accrual basis plus encumbrances. Legal budget control is maintained at the fund level.
After tentative adoption of the budget, the City Council may make changes, but may not increase the budget totals except in those areas exempted by State budget law. The exemptions apply to Federal funds, debt service, and bond funds. After final adoption, transfers between budget appropriations for non-exempt areas may be made by the City Council. Throughout the budget year, the City Council may also appropriate additional general purpose funds by use of a contingency appropriation reserved to cover emergencies or other necessary expenditures as determined by the City Council. Supplemental appropriations may be adopted for expenditures exempt from the State expenditure limitation, such as federally funded programs, provided funds are available. State law requires the City to re-budget (re-
appropriate) funds for the completion of contracts which were originally budgeted for and encumbered in a previous fiscal year. This law necessitates an additional appropriation ordinance to re-budget funds for contracts not completed by June 30.
Cash ManagementAs noted, the Department operates as a separate enterprise fund of the City; however cash resources are pooled with other City departments and invested by the City Treasurer. Interest earned by the pool is distributed monthly to individual funds based on daily equity in the pool.
Cash and cash equivalents are considered to be cash in bank, cash on hand, and short term investments with original maturities of 90 days or less from the date of acquisition. The City’s investments are stated at fair value. Fair value is based on quoted market prices as of the valuation date.
Airline Rates and Charges In 1981, the Mayor and City Council formally adopted a compensatory (cost of services) rate-setting policy which provides (1) that charges to aviation users be established on the basis of the costs to provide, maintain and operate the Airport facilities and services, and (2) that these costs be recovered from aviation users on a basis not to exceed their proportional use thereof. Under this compensatory rate-setting methodology, the City bears the risk of any revenue shortfall and retains any surplus revenue for its own discretionary expenditures. Rates and charges are typically set at the beginning of each fiscal year after the City has reviewed proposed rate changes and capital expenditures with airline representatives. However, the City retains its proprietary right to adjust fees and to determine its capital expenditures without airline approval. The City also has the ability to adjust terminal rates and landing fees at any time to reflect changes in cost. Any such adjustment is subject to federal law and regulations.
The City uses short-term (month-to-month) Letters of Authorization (each, a LOA) for airline space within its terminal facilities. These LOA can be terminated by either party upon 30-days’ notice, providing the City with the flexibility to maximize the use of its terminal facilities.
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INDEPENDENT AUDITSThe City Charter requires an annual audit by independent certified public accountants. The independent audit firm of Grant Thornton LLP was selected to perform the audit of the City’s Comprehensive Annual Financial Report (City CAFR) as well as this separately issued Comprehensive Annual Financial Report for the Aviation Enterprise Fund, for fiscal year 2016. Included in the financial section of this report is the Independent Auditor’s Report on the financial statements of the Aviation Enterprise Fund.
The City is also required to undergo an annual single audit in conformity with the provisions of the Single Audit Act of 1996 and U.S. Office of Management and Budget's (OMB) Uniform Administrative Requirements, Cost of Principals, and Audit Requirements for Federal Awards, which superseded OMB Circular A-133 and other related documents. Grant Thornton LLP was also contracted to perform the single audit of the City’s major grant programs. This audit was designed to meet the requirements of the Single Audit Act of 1996 and related OMB Uniform Administrative Requirements, Cost of Principals, and Audit Requirements for Federal Awards. Due to the size and complexity of the City’s financial systems, the single audit report is issued separately from the City’s CAFR and other financial reports.
ACKNOWLEDGMENTSThe preparation of the Comprehensive Annual Financial Report was made possible by the combined efforts of the Aviation and Finance departments.
Respectfully submitted,
Denise M. Olson James E. Bennett, A.A.E.
Chief Financial Officer Director of Aviation Services
Finance Department Aviation Department
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WEST ECONOMYPARK & WALK
CONVENIENT TO TERMINAL 2 Terminal Modernization
Project Underway
WalkwayPHX Sky Train® RouteRoad to East Cell Phone Lot
Terminal Modernization Project Underway
Air CanadaAmericanBritish AirwaysSouthwestVolarisWestJet
DeltaFrontierHawaiianJetBlue
OVERSIZEVEHICLES
EAST ECONOMY
PARKING UNCOVERED
Sky
Har
bor C
ircle
Washington StPHX
Sky TrainTM
Station
Exit toSR-143
44th
St
24th
St
24th
St
Buckeye Rd
Exit 148
Sky Harbor Blvd
AlaskaGreat LakesSpirit AirlinesSun CountryUnited
VALLEY METRORAIL STATION
09/08/15R
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Director ofAviation Services
Law Business & Properties
Administrative Assistant IIFinancial Management
Human Resources
Assistant Aviation Director
Technology
Planning, Environmental
Air Service Development
Public Relations
Contracts & Services Operations
General AviationDVT/GYR
Phoenix Mesa GatewayAirport Coordination
T3 Modernization
Facilities & Services
Public Safety Services
Design & Construction
Assistant Aviation Director
Mayor & City Council
City Manager
Assistant City Manager
Deputy City ManagerDeputy City Manager Deputy City Manager
9
MAYOR AND CITY COUNCIL Greg Stanton, Mayor
Thelda Williams, District 1 Jim Waring, District 2 Debra Stark, District 3 Laura Pastor, District 4
Daniel Valenzuela, District 5 Sal DiCiccio, District 6
Michael Nowakowski, District 7 Kate Gallego, Vice-Mayor, District 8
CITY MANAGER’S OFFICE Ed Zuercher, City Manager
AVIATION DEPARTMENT James E. Bennett, Director of Aviation Services
FINANCE DEPARTMENT Denise M. Olson, Chief Financial Officer
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THE FINANCIAL SECTION INCLUDES AN INDEPENDENT AUDITOR'S REPORT BY GRANT THORNTON LLP, THE MANAGEMENT'S DISCUSSION AND ANALYSIS, THE AUDITED FINANCIAL STATEMENTS, AND THE NOTES TO THE
FINANCIAL STATEMENTS.
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Grant Thornton LLP2398 E Camelback Road, Suite 600Phoenix, AZ 85016-9004T 602.474.3400F 602.474.3421www.GrantThornton.com
Grant Thornton LLPU.S. member firm of Grant Thornton International Ltd
Honorable Mayor and Members of the City CouncilCity of Phoenix, Arizona
Report on the financial statements
We have audited the accompanying statements of net position of the Aviation Enterprise Fund(a major fund of the City of Phoenix, Arizona) (the “Entity”) as of and for the years ended June30, 2016 and 2015, and the related statements of revenues, expenses and changes in net position,and cash flows for the years then ended and notes to the financial statements, which collectivelycomprise the Entity’s basic financial statements.
Management’s responsibility for the financial statements Management is responsible for the preparation and fair presentation of these financial statementsin accordance with accounting principles generally accepted in the United States of America; thisincludes the design, implementation, and maintenance of internal control relevant to thepreparation and fair presentation of financial statements that are free from material misstatement,whether due to fraud or error.
Auditor’s responsibility Our responsibility is to express an opinion on these financial statements based on our audit. Weconducted our audit in accordance with auditing standards generally accepted in the United Statesof America. Those standards require that we plan and perform the audit to obtain reasonableassurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts anddisclosures in the financial statements. The procedures selected depend on the auditor’sjudgment, including the assessment of the risks of material misstatement of the financialstatements, whether due to fraud or error. In making those risk assessments, the auditor considersinternal control relevant to the Entity’s preparation and fair presentation of the financialstatements in order to design audit procedures that are appropriate in the circumstances, but notfor the purpose of expressing an opinion on the effectiveness of the Entity’s internal control.Accordingly, we express no such opinion. An audit also includes evaluating the appropriatenessof accounting policies used and the reasonableness of significant accounting estimates made bymanagement, as well as evaluating the overall presentation of the financial statements.
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
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Grant Thornton LLPU.S. member firm of Grant Thornton International Ltd
We believe that the audit evidence we have obtained is sufficient and appropriate to provide abasis for our audit opinion.
Opinion In our opinion, the financial statements referred to above present fairly, in all material respects,the respective financial position of the Aviation Enterprise Fund of the City of Phoenix, Arizonaas of June 30, 2016 and 2015, and the respective changes in financial position and cash flowsthereof for the years then ended in accordance with accounting principles generally accepted inthe United States of America.
Emphasis of matter
As discussed in Note 1, the financial statements present only the Entity, a major fund of the Cityof Phoenix, and do not purport to, and do not, present fairly the financial position of the City ofPhoenix as of June 30, 2016 and 2015, the changes in its financial position, or where applicableits cash flows, for the years then ended, in accordance with accounting principles generallyaccepted in the United States of America. Our opinion is not modified with respect to this matter.
Other matters
Required supplementary information Accounting principles generally accepted in the United States of America require that themanagement’s discussion and analysis and the schedules of changes in net pension liability andrelated ratios, the schedules of contributions, and schedules of funding progress on pages 15through 23 and 62 through 64 be presented to supplement the basic financial statements. Suchinformation, although not a required part of the basic financial statements, is required by theGovernmental Accounting Standards Board who considers it to be an essential part of financialreporting for placing the basic financial statements in an appropriate operational, economic, orhistorical context. This required supplementary information is the responsibility of management.We have applied certain limited procedures to the required supplementary information inaccordance with auditing standards generally accepted in the United States of America. Theselimited procedures consisted of inquiries of management about the methods of preparing theinformation and comparing the information for consistency with management’s responses to ourinquiries, the basic financial statements, and other knowledge we obtained during our audit ofthe basic financial statements. We do not express an opinion or provide any assurance on theinformation because the limited procedures do not provide us with sufficient evidence to expressan opinion or provide any assurance.
Other information The introductory section and the statistical section are presented for purposes of additionalanalysis and are not a required part of the basic financial statements. Such information has notbeen subjected to the auditing procedures applied in the audit of the basic financial statements,and accordingly, we do not express an opinion or provide any assurance on it.
Phoenix, ArizonaDecember 19, 2016
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MANAGEMENT’S DISCUSSION AND ANALYSIS (MD&A)(unaudited)
The following Management’s Discussion and Analysis (MD&A) is a narrative overview and analysis of the financial activities of the City of Phoenix (the City) Aviation Enterprise Fund. It provides an introduction and discussion of the financial statements of Phoenix Sky Harbor International Airport (the Airport) and two general aviation airports, Phoenix Goodyear Airport and Phoenix Deer Valley Airport (collectively, the Airport System) as of and for the fiscal years ended June 30, 2016 and 2015, with selected comparable data for the fiscal year ended June 30, 2014. This discussion has been prepared by management and should be read in conjunction with the financial statements and the notes which follow this section.
OVERVIEW OF THE FINANCIAL STATEMENTSThe Aviation Enterprise Fund is an enterprise fund of the City. This fund is used to account for the Airport System’s ongoing operations and activities, which are similar to those often found in the private sector where cost recovery and the determination of net income is useful or necessary for sound fiscal management. It uses the accrual basis of accounting, where revenues are recognized when earned and expenses are recognized as incurred. Following the MD&A are the financial statements, notes to the financial statements, required supplementary information, and required supplemental schedules of the Aviation Enterprise Fund. These statements, notes, and required schedules, together with the MD&A, are designed to provide an understanding of the Aviation Enterprise Fund’s financial position, results of operations, and cash flows.
The Comparative Statements of Net Position present information on all of the Aviation Enterprise Fund’s assets, liabilities, deferred inflows and outflows of resources, and net position as of June 30, 2016 and 2015. The difference between (a) assets and deferred outflows of resources and (b) liabilities and deferred inflows of resources is reported as net position. Over time, increases and decreases in net position may serve as a useful indicator about whether the Aviation Enterprise Fund’s financial condition is improving or deteriorating.
The Comparative Statements of Revenues, Expenses, and Changes in Net Position present financial information showing how the Aviation Enterprise Fund’s net position changed during the two fiscal years. All changes in net position are reported as soon as the underlying events occurred, regardless of the timing of the related cash flows. Thus, revenues and expenses were recorded and reported in these statements for some items that will result in cash flows in future fiscal years.
The Comparative Statements of Cash Flows present information showing how the Aviation Enterprise Fund’s cash and cash equivalents changed during the fiscal years. Consequently, only transactions that affect the cash and cash equivalent balances of the Aviation Enterprise Fund are recorded in these statements. A reconciliation follows these statements to assist in understanding the difference between operating income and cash flows from operating activities.
FINANCIAL HIGHLIGHTS Fiscal Year 2016
• Total net position for the Aviation Enterprise Fund at June 30, 2016 was $1.6 billion. This is a decrease of $6.3 million from total net position at June 30, 2015, due primarily to an $8.2 million increase in the net pension liability.
• Total operating revenues decreased by $7.6 million to $333.4 million in fiscal year 2016. The decrease is due in part to lower terminal fees resulting from lower costs used to compute the airline rates and charges. The lower revenues are also attributable to decreased rental car daily rates and lower concessions due to construction related closures.
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• Total operating expenses increased $18.6 million to $436.4 million in fiscal year 2016. The increase is due to higher contractual costs and minor equipment purchases.
• Total non-operating revenue increased $4.6 million in fiscal year 2016 to $137.2 million, primarily due to increases in interest income.
• Total non-operating expense increased $2.8 million in fiscal year 2016 to $67.9 million. The increase is from additional interest on capital debt.
Fiscal Year 2015
• Total net position for the Aviation Enterprise Fund at June 30, 2015 was $1.7 billion. This is an increase of $11.3 million from total net position at June 30, 2014.
• Total operating revenues increased by $14.9 million to $341.0 million in fiscal year 2015. This increase is primarily due to increased non-aeronautical revenue as a result of visitors during the NFL Super Bowl and Pro Bowl.
• Total operating expenses increased by $19.9 million to $417.8 million in fiscal year 2015, an increase of $20.3 million from fiscal year 2014. This increase is primarily due to increases in the Department’s pension costs.
• Total non-operating revenue increased $6.0 million to $132.6 million in fiscal year 2015. This increase is due to increases in PFC and CFC revenue relatively consistent with the increase in enplaned passengers.
• Total non-operating expenses increased $0.2 million to $65.1 million in fiscal year 2015 . This increase is due to slightly higher interest cost.
NET POSITION The following is a summary of assets, liabilities, deferred inflows and outflows of resources, and net position as of June 30 (in thousands):
2016 2015 2014
Assets
Unrestricted Current Assets $ 388,532 $ 341,251 $ 321,390
Restricted Current Assets 459,745 407,330 361,170
Capital Assets, net 2,728,933 2,745,938 2,801,798
OPEB Asset 69 59 58
Total Assets 3,577,279 3,494,578 3,484,416
Deferred Outflows of Resources 35,288 30,419 1,641
Liabilities
Current Liabilities Payable from Current Assets 52,082 38,677 26,954
Current Liabilities Payable from Restricted Assets 296,887 286,896 256,076
Noncurrent Liabilities 1,604,051 1,545,211 1,562,369
Total Liabilities 1,953,020 1,870,784 1,845,399
Deferred Inflows of Resources 14,142 2,552 256
Net Position
Net Investment in Capital Assets 1,104,662 1,170,752 1,241,513
Restricted 350,755 343,472 272,624
Unrestricted 189,988 137,437 126,265
Total Net Position $ 1,645,405 $ 1,651,661 $ 1,640,402
Fiscal Year 2016 Compared to Fiscal Year 2015Total assets have remained relatively steady, with a change to $3.6 billion in fiscal year 2016 from $3.5 billion in fiscal year 2015. Capital assets decreased $17.0 million due to a decrease in the net book value of assets because depreciation expense was higher than capital additions. Cash and investments increased by
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$82.7 million in fiscal year 2016. The increased balance will be used to fund current and future construction projects, including the Terminal 3 Modernization and the PHX Sky Train® extension.
Total liabilities have increased slightly to $2.0 billion in fiscal year 2016 from $1.9 billion in fiscal year 2015. The noncurrent liabilities, which make up over 80% of the total liabilities are comprised of long-term bonds payable and net pension liability. During fiscal year 2016, the City issued new revenue bonds of $95.8 million and refunding revenue bonds of $18.7 million. The net pension liability increased $8.2 million in fiscal year 2016. This increase is due to changes in actuarial assumptions combined with lower returns on plan assets. For more detail on these liabilities, see notes 5 and 13 in the Notes to the Financial Statements.
Total net position decreased by $6.3 million, or 0.4%, in fiscal year 2016. As of June 30, 2016, $1.1 billion was an investment in capital assets and $190.0 million was unrestricted and available for short term operations and ongoing obligations. The amount restricted for debt service increased by $7.1 million in fiscal year 2016, due to a new bond issue. The amounts restricted for Passenger Facility Charges and Rental Car Customer Facility Charges totaled $218.7 million for fiscal year 2016, an increase of $0.2 million.
Fiscal Year 2015 Compared to Fiscal Year 2014
Total assets increased by $10.2 million, or 0.3%, in fiscal year 2015, compared to fiscal year 2014. The total assets have remained relatively steady at $3.5 billion.
Total liabilities increased by $25.4 million, or 1.4% in fiscal year 2015, compared to fiscal year 2014. Bond principal payments of $44.3 million, combined with the issuance of an additional $20 million in commercial paper to fund the Terminal 3 modernization project, accounted for the change in debt liability. The net pension liability increased $39.4 million due to changes in actuarial assumptions.
Total net position increased by $11.3 million, or 0.7%, in fiscal year 2015. As of June 30, 2015, $1.2 billion was an investment in capital assets and $137.4 million was unrestricted and available for short term operations and ongoing obligations. The amount restricted for debt service remained the same at $125.0 million for fiscal year 2015. The amounts restricted for Passenger Facility Charges and Rental Car Customer Facility Charges totaled $218.5 million for fiscal year 2015.
The following is a summary of changes in net position as of June 30 (in thousands):
2016 2015 2014
Operating Revenues $ 333,415 $ 340,967 $ 326,044
Operating Expenses (436,404) (417,817) (397,879)
Operating Loss (102,989) (76,850) (71,835)
Non-Operating Revenues 137,158 132,601 126,616
Non-Operating Expenses (67,900) (65,098) (64,892)
Capital Contributions 27,803 20,970 27,184
Transfers (328) (364) (166)
Change in Net Position (6,256) 11,259 16,907
Net Position, July 1 1,651,661 1,640,402 1,765,618
Restatement of Beginning Net Position — — (142,123)
Net Position, July 1, as restated 1,651,661 1,640,402 1,623,495
Net Position, June 30 $ 1,645,405 $ 1,651,661 $ 1,640,402
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REVENUEThe following is a schedule of total revenue for the fiscal years ending June 30 (in thousands):
2016 2015 2014
Operating Revenue
Aeronautical Revenue $ 144,093 $ 145,046 $ 141,633
Non-Aeronautical Revenue 189,322 195,921 184,411
Passenger Facility Charges 83,449 84,774 79,672
Customer Facility Charges 47,118 44,839 43,113
Capital Contributions 27,803 20,970 27,184
Other 6,593 2,989 3,831
Total Revenue $ 498,378 $ 494,539 $ 479,844
Phoenix Sky Harbor Airport is the largest of the three airports in the Airport System and thus comprises a majority of all Aviation Enterprise Fund revenue. In fiscal year 2016, Sky Harbor accounted for 97% of total revenue, while Phoenix Deer Valley Airport and Phoenix Goodyear Airport together accounted for the remaining 3%.
Fiscal Year 2016 Compared to Fiscal Year 2015 Total revenue increased to $498.4 million in 2016 from $494.5 million in fiscal year 2015, an increase of $3.8 million, or 0.8%.
Aeronautical revenue had a slight decrease in fiscal year 2016, with a total change of $0.9 million, or 0.7%. The majority of the aeronautical revenue is comprised of terminal and landing fees paid by the commercial airlines at Phoenix Sky Harbor Airport. These fees are established each year to recover the cost of operations, maintenance and debt service related to the airfield and terminal space. The terminal fee decreased to $106.68 per square foot in fiscal year 2016 from $118.26 per square foot in fiscal year 2015. The decrease was due to lower maintenance and construction costs as a large restroom renovation project was winding down. The increase in landing fees is due to slightly higher operation and maintenance costs.
Non-aeronautical revenue decreased $6.6 million, or 3.37%. These revenues are the combination of several lines of business, with the largest being parking, rental cars, and terminal concessions. The parking revenue
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increase is relatively consistent with the increase in enplaned passengers. The rental car revenue decrease relates to the lower gross sales for the rental car companies in fiscal year 2016 compared to the inflated sales in fiscal year 2015 when the Super Bowl and Pro Bowl were played in Arizona. Terminal concessions, which consists of the food, beverage, and retail locations, decrease in total due to portions of Terminal 3 being closed for the modernization project.
Passenger facility charges decreased $1.3 million, or 1.6% in fiscal year 2016, due to an increase in non-
revenue passengers reported by the airlines. PFC are collected by the airlines at the time the customer books the flight, then remitted to the Airport. Most enplaned passengers are assessed this fee. However, based on the enabling federal legislation, PFC are not paid by non-revenue passengers.
Customer facility charges increased $2.3 million, or 5.1% in fiscal year 2016, consistent with the increase in passengers. CFC are assessed to rental car customers at the rate of $6 per transaction day. These fees are collected by the rental car companies and then remitted to the Airport. The increase is relatively consistent with the increase in enplaned passengers.
Federal and state grant revenue, reported as capital contributions, increased $6.8 million, or 32.6% in fiscal year 2016. The amount of the grant receipts varies from year to year based on the amount of funds allocated to our airports, along with the amount of construction that is completed during the year.
Fiscal Year 2015 Compared to Fiscal Year 2014 Total operating revenues had an overall increase of $14.9 million, or 4.6%, to $341.0 million in fiscal year 2015. This overall increase is consistent with the 4.7% increase in enplaned passengers for FY 2015.
Aeronautical operating revenue increased by $3.4 million, or 2.4% to $145.0 million, resulting from an increase in airline terminal fees offset by a slight decrease in landing fee revenue. The airline terminal and landing fees are charged on a cost recovery basis, where revenues are based on operation and maintenance expenses for the terminal and airfield.
Non-Aeronautical operating revenue increased by $11.5 million or 6.2%, to $195.9 million. Parking, Rental Cars, Food and Beverage, and Retail revenues accounted for $8.0 million of this increase. Each of these revenues increased at rates similar to the 4.7% increase in enplaned passengers.
Passenger facility charges increased $5.1 million, or 6.4% in fiscal year 2015. PFC are collected by the airlines at the time the customer books the flight, then remitted to the Airport in the following month. The increase is due to higher enplaned passengers along with the timing of collection by the airlines compared to flight dates.
Customer facility charges increased $1.7 million, or 4.0% in fiscal year 2015, consistent with the increase in passengers. CFC are assessed to rental car customers at the rate of $6 per transaction day. These fees are collected by the rental car companies and then remitted to the Airport. The increase is relatively consistent with the increase in enplaned passengers.
Federal and state grant revenue, reported as capital contributions, decreased $6.2 million, or 22.9% in fiscal year 2015. The amount of the grant receipts varies from year to year based on the amount of funds allocated to our airports, along with the amount of construction that is completed during the year.
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EXPENSES The following is a summary of expenses for the fiscal years ending June 30 (in thousands):
2016 2015 2014
Operating Expenses
Operation and Maintenance $ 259,903 $ 243,557 $ 226,758
Environmental, Studies and Noise Program 1,956 2,600 5,099
Depreciation Expense 166,829 163,691 158,760
City Staff and Administrative 7,716 7,969 7,262
Interest on Capital Debt 67,141 65,051 64,863
Other 1,089 412 195
Total Expenses $ 504,634 $ 483,280 $ 462,937
Fiscal Year 2016 Compared to Fiscal Year 2015 Total expenses increased $21.4 million, or 4.4%, in fiscal year 2016. Operation and maintenance, depreciation, and interest on capital debt make up approximately 98% of total expenses.
Operation and maintenance expenses increased $16.3 million, or 6.7% in fiscal year 2016. The contractual services increase is due to additional consulting costs associated with the most recent bond issue, increased costs of the vertical circulation and custodial contracts. The equipment and minor improvements increase is the result of additional minor equipment that does not meet the capitalization threshold. The operation and maintenance expenses in fiscal year 2015 includes a $5.6 million decrease relating to an adjustment to the Airport’s pollution remediation liability.
Depreciation expense increased 3.1% in fiscal year 2015 and 1.9% in fiscal year 2016, as new construction projects were completed. The most recent extension of the PHX Sky Train was the largest of the projects and was completed in January of 2015. The related assets had one half year depreciation in fiscal year 2015 and a full year depreciation in fiscal year 2016.
Interest on Capital Debt increased by 0.3% in fiscal year 2015 and by 3.2% in fiscal year 2016. The interest due each year is based on payment schedules set by the related bond documents. The Aviation Enterprise
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Fund issued new debt in January of 2016, which added $2.6 million of interest for fiscal year 2016.
Fiscal Year 2015 Compared to Fiscal Year 2014 Total expenses increased by $20.3 million or 4.4%, to $483.3 million in fiscal year 2015 from $462.9 million in fiscal year 2014.
Operation and maintenance expenses showed an overall increase of $16.8 million, or 7.4% in fiscal year 2015. Expenses relating to the net pension liability increased personal services by $21.7 million. Contractual services decreased by approximately $8.9 million while equipment and minor improvement expenses increased by $5.1 million. The increase in equipment and minor improvements is the result of additional repair and maintenance projects being expensed in fiscal year 2015.
Environmental, studies and noise program expenses decreased $2.5 million, or 49.0% in fiscal year 2015. This is primarily the result of the decrease in costs for the Community Noise Reduction Program as the Airport is nearing the end of this program.
Depreciation expense increased 3.1% in fiscal year 2015 as new construction projects have been completed.
City staff and administrative expenses increased by $0.7 million, or 9.7%, in fiscal year 2015. This is due to an overall increase in the Aviation Enterprise Fund’s share of the City-wide overhead.
LONG-TERM DEBT City of Phoenix Civic Improvement Corporation Airport Revenue Bonds The Aviation Enterprise Fund, through the City, has entered into certain agreements with the City of Phoenix Civic Improvement Corporation (the CIC) for the purchase of certain improvements and expansion projects at the City’s airports. The CIC issued bonds for the improvements and expansion projects, and the Aviation Enterprise Fund made a pledge of revenues to make payments sufficient to pay principal and interest on the bonds.
The debt service requirements on senior lien airport revenue bonds are secured by a first lien pledge of Net Airport Revenues. The term Net Airport Revenues is defined in the Airport Revenue Bond Ordinance to mean Airport Revenues, after provisions for payment of the Cost of Maintenance and Operation.
The debt service requirements on junior lien airport revenue bonds are junior to the senior lien airport revenue bonds and are secured by a pledge of the Designated Revenues. The term Designated Revenues is defined in the Airport Revenue Bond Ordinance to mean Net Airport Revenues, after payments required on any senior lien airport revenue bonds.
The Rental Car Facility Charge Revenue Bonds are special revenue obligations of the CIC, payable solely from certain payments required to be made by the Aviation Enterprise Fund, through the City, to the CIC pursuant to the City Purchase Agreement dated June 1, 2004. Pledged revenues consist primarily of Customer Facility Charge (CFC) revenues and amounts on deposit in various reserve funds. Pledged revenues do not include amounts required to be paid by the rental car companies as ground rents or concession fees, amounts on deposit or required to be deposited to the Administrative Costs Fund, amounts on deposit in the Transportation Operations and Maintenance (O&M) fund or the Transportation reserve fund, the Aviation Enterprise Fund transportation O&M fund, or CFC’s that exceed the pledged rate.
The total bond principal outstanding for the Civic Improvement Corporation Airport Revenue Bonds as of June 30 are as follows (in thousands):
2016 2015 2014
Senior Lien Bonds $ 472,895 $ 496,905 $ 519,775
Junior Lien Bonds 739,900 659,585 672,290
Rental Car Facility Charge Bonds 186,050 195,305 204,055
Total Revenue Bond Principal Outstanding $ 1,398,845 $ 1,351,795 $ 1,396,120
The CIC issued $114,440,000 in Junior Lien Airport Revenue Bonds during fiscal year 2016. The 2015A (Non-AMT)bonds, in the amount of $95,785,000, refunded $100,000,000 aggregate outstanding principal of Airport Commercial Paper Program Notes, Series 2014A-1 and 2014A-2. The commercial paper financed a portion of the construction for the PHX Sky Train. The 2015B (Non-AMT) bonds, in the amount of $18,655,000, refunded a portion of the Junior Lien Airport Revenue Bonds, Series 2010A (Non-AMT).
The debt service reserve requirements for the Airport Revenue Bonds for the fiscal years ending June 30 (in thousands):
2016 2015 2014
Senior Lien Bonds $ 47,038 $ 47,038 $ 47,038
Junior Lien Bonds 63,698 56,645 56,645
Rental Car Facility Charge Bonds 21,278 21,278 21,278
Total Debt Service Reserve Requirements $ 132,014 $ 124,961 $ 124,961
Airport General Obligation Bonds As of June 30, 2016 and 2015, the Aviation Enterprise Fund had $7.9 million principal of general obligation bonds payable in both years. The debt service requirements of Airport General Obligation Bonds have been paid from Net Airport Revenues remaining after payment of senior lien and junior lien airport revenue bonded debt service requirements. In the event such Net Airport Revenues should prove insufficient to pay airport general obligation debt service requirements or should the Aviation Enterprise Fund, through the City, decide not to pay the debt service from Net Airport Revenues, this indebtedness would then be paid from ad valorem taxes (secondary property taxes) or other available sources.
For more information regarding long-term debt, please refer to Note 5 in the Notes to the Financial Statements and Schedules 7 through 17 in the Debt Section of the Statistical Section.
SHORT-TERM DEBT The Aviation Enterprise Fund, through the City, maintains an active commercial paper program for ongoing capital needs and additional liquidity to fund projects such as the PHX Sky Train® and Terminal 3 modernization. The total outstanding was $130.0 million as of June 30, 2016 and $140.0 million as of June 30, 2015. During fiscal year 2016, the Aviation Enterprise Fund issued Junior Lien Bonds to refund $100 million of commercial paper used for the PHX Sky Train® and issued $90 million of commercial paper for the Terminal 3 modernization.
CAPITAL ASSETSThe Aviation Enterprise Fund’s capital assets, net of accumulated depreciation, was $2.7 billion in fiscal years 2016 and 2015, and $2.8 billion in fiscal year 2014.
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Additions to capital assets included the following (in thousands):
2016 2015 2014
Major construction projects:
Terminal 3 Modernization $ 87,533 $ 42,900 $ —
PHX Sky Train 4,699 9,980 65,129
Other construction projects:
Airfield and runway projects 24,298 16,712 25,731
Terminal projects 16,488 11,281 10,797
Land acquisition 707 4,261 9,428
Other 2,970 7,940 2,758
Additional information on the Aviation Enterprise Fund’s capital assets can be found in Note 4 in the Notes to the Financial Statements.
REQUESTS FOR FINANCIAL INFORMATION This financial report is designed to provide a general overview of the Aviation Enterprise Fund’s finances. Questions concerning any of the information provided in this report or requests for additional financial information should be addressed to the City of Phoenix Finance Department, 251 West Washington Street, 9th Floor, Phoenix, Arizona 85003.
For prior annual reports, airport statistics, and other City financial information please visit our investor website at: http://phoenix.gov/finance/investor.
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2016 2015
ASSETS
Current Assets
Cash and Cash Equivalents $ 76,667 $ 56,355
Investments 298,945 270,506
Receivables
Accounts Receivable, Net of Allowance for
Doubtful Accounts (2016, $1,320 and 2015, $98) 10,703 12,122
Intergovernmental 180 173
Deposits in Escrow 326 346
Inventories 1,711 1,749
Total Unrestricted Current Assets 388,532 341,251
Restricted Assets
Debt Service
Cash and Securities with Fiscal Agents/Trustees 217,215 205,492
Accrued Interest Receivable 4 7
Customer Facility Charge
Cash and Securities with Fiscal Agents/Trustees 65,615 55,573
Investments 21,865 21,742
Accounts Receivable 3,144 3,060
Capital Projects
Cash and Cash Equivalents 47,371 31,978
Investments 90,456 72,009
Receivables
Intergovernmental 6,426 9,714
Passenger Facility Charge 7,649 7,755
Total Restricted Current Assets 459,745 407,330
Total Current Assets 848,277 748,581
Noncurrent Assets
Capital Assets
Land 574,195 573,007
Buildings 1,623,818 1,619,698
Improvements Other Than Buildings 1,636,664 1,626,816
Equipment and Artwork 631,930 614,154
Intangibles 23,705 23,521
Construction in Progress 186,299 90,984
Less: Accumulated Depreciation (1,947,678) (1,802,242)
Total Capital Assets, Net of Accumulated Depreciation 2,728,933 2,745,938
OPEB Asset 69 59
Total Noncurrent Assets 2,729,002 2,745,997
Total Assets 3,577,279 3,494,578
DEFERRED OUTFLOWS OF RESOURCES
Deferred Loss on Refunding Bonds 1,101 1,329
Pension Related 34,187 29,090
Total Deferred Outflows of Resources 35,288 30,419
The accompanying notes are an integral part of these financial statements
City of Phoenix, Arizona Aviation Enterprise Fund COMPARATIVE STATEMENTS OF NET POSITION June 30, 2016 and 2015 (in thousands)
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2016 2015
LIABILITIES
Current Liabilities Payable from Current Assets
Accounts Payable $ 28,878 $ 18,922
Trust Liabilities and Deposits 3,259 1,817
Advance Payments 19,045 16,294
Current Portion of Pollution Remediation 75 850
Current Portion of Accrued Compensated Absences 825 794
Total Current Liabilities Payable from Current Assets 52,082 38,677
Current Liabilities Payable from Restricted Assets
Debt Service
Commercial Paper Notes Payable 130,000 140,000
Matured Bonds Payable 47,390 44,330
Interest Payable 37,679 36,187
Current Portion of Municipal Corporation Obligations:
Current Portion of Rental Car Facility Revenue Bonds 9,795 9,255
Current Portion of Aviation Revenue Bonds 40,730 37,320
Capital Projects
Accounts Payable 31,293 19,804
Total Current Liabilities Payable from Restricted Assets 296,887 286,896
Total Current Liabilities 348,969 325,573
Noncurrent Liabilities
General Obligation Bonds 7,865 7,865
Municipal Corporation Obligations:
Rental Car Facility Revenue Bonds 176,255 186,050
Aviation Revenue Bonds 1,172,065 1,119,170
Unamortized Premium (Discount), Net 59,184 51,069
Pollution Remediation 2,300 3,050
Accrued Compensated Absences 5,595 5,430
Net Pension Liability 180,787 172,577
Total Noncurrent Liabilities 1,604,051 1,545,211
Total Liabilities 1,953,020 1,870,784
DEFERRED INFLOWS OF RESOURCES
Deferred Gain on Refunding Bonds 760 128
Pension Related 13,382 2,424
Total Deferred Inflows of Resources 14,142 2,552
NET POSITION
Net Investment in Capital Assets 1,104,662 1,170,752
Restricted for:
Debt Service 132,014 124,961
Passenger Facility Charges 128,117 138,136
Rental Car Customer Facility Charges 90,624 80,375
Unrestricted 189,988 137,437
Total Net Position $ 1,645,405 $ 1,651,661
The accompanying notes are an integral part of these financial statements
City of Phoenix, Arizona Aviation Enterprise Fund COMPARATIVE STATEMENTS OF NET POSITION (CONTINUED) June 30, 2016 and 2015 (in thousands)
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2016 2015
Operating Revenues
Aeronautical Revenue
Terminal Fees $ 75,115 $ 78,422
Landing Fees 49,869 48,497
Air Cargo and Hangar Rental 6,751 7,083
Other 12,358 11,044
Non-Aeronautical Revenue
Parking 84,586 81,094
Rental Cars 46,669 52,103
Terminal – Food and Beverage 20,499 22,015
Terminal – Retail 10,879 11,087
Rental Revenue 17,186 17,605
Ground Transportation 4,957 6,318
Other 4,546 5,699
Total Operating Revenues 333,415 340,967
Operating Expenses
Operation and Maintenance
Personal Services 86,250 86,172
Contractual Services 124,420 115,486
Supplies 11,925 10,771
Equipment/Minor Improvements 37,308 31,128
Environmental, Studies and Noise Program 1,956 2,600
Depreciation 166,829 163,691
City Staff and Administrative 7,716 7,969
Total Operating Expenses 436,404 417,817
Operating Loss (102,989) (76,850)
Non-Operating Revenues (Expenses)
Passenger Facility Charges 83,449 84,774
Rental Car Customer Facility Charges 47,118 44,839
Investment Income:
Net Increase (Decrease) in Fair Value of Investments 471 (2,715)
Interest 6,120 5,703
Interest on Capital Debt (67,141) (65,051)
Loss on Disposal of Capital Assets (759) (47)
Total Non-Operating Revenues (Expenses) 69,258 67,503
Net Loss Before Contributions and Transfers (33,731) (9,347)
Capital Contributions 27,803 20,970
Transfer from General Fund – Change for Phoenix 2 1
Transfer to Capital Projects Fund (330) (365)
Change in Net Position (Deficit) (6,256) 11,259
Net Position, July 1 1,651,661 1,640,402
Net Position, June 30 $ 1,645,405 $ 1,651,661
The accompanying notes are an integral part of these financial statements
City of Phoenix, Arizona Aviation Enterprise Fund COMPARATIVE STATEMENTS OF REVENUES, EXPENSES AND CHANGES IN NET POSITION For the Fiscal Years Ended June 30, 2016 and 2015 (in thousands)
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2016 2015
Cash Flows from Operating Activities
Receipts from Customers $ 339,026 $ 343,481
Payments to Suppliers (167,338) (161,771)
Payments to Employees (71,794) (73,254)
Payment of Staff and Administrative Expenses (7,716) (7,969)
Net Cash Provided by Operating Activities 92,178 100,487
Cash Flows from Noncapital Financing Activities
Transfers from Other Funds 2 1
Transfers to Other Funds (330) (365)
Net Cash Used by Noncapital Financing Activities (328) (364)
Cash Flows from Capital and Related Financing Activities
Proceeds from Capital Debt 98,489 20,000
Principal Paid on Capital Debt (44,330) (44,035)
Interest Paid on Capital Debt (71,294) (73,401)
Acquisition and Construction of Capital Assets (138,667) (96,054)
Proceeds from Sales of Capital Assets 144 64
Passenger Facility Charges 83,555 85,434
Rental Car Customer Facility Charges 47,035 44,693
Capital Contributions 31,084 18,400
Net Cash Provided (Used) by Capital and Related Financing Activities 6,016 (44,899)
Cash Flows from Investing Activities
Purchases of Investment Securities (527,842) (549,617)
Proceeds from Sale and Maturities of Investment Securities 527,719 552,183
Net Activity for Short-Term Investments (46,886) (11,099)
Interest on Investments 6,593 2,981
Net Cash Used by Investing Activities (40,416) (5,552)
Net Increase in Cash and Cash Equivalents 57,450 49,672
Cash and Cash Equivalents, July 1 349,744 300,072
Cash and Cash Equivalents, June 30 $ 407,194 $ 349,744
The accompanying notes are an integral part of these financial statements
City of Phoenix, Arizona Aviation Enterprise Fund COMPARATIVE STATEMENTS OF CASH FLOWS For the Fiscal Years Ended June 30, 2016 and 2015 (in thousands)
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2016 2015
Reconciliation of Operating Loss to
Net Cash Provided by Operating Activities
Operating Loss $ (102,989) $ (76,850)
Adjustments
Depreciation 166,829 163,691
Net Pension Expense 8,210 39,427
Deferred Outflows – Pension (5,097) (29,090)
Deferred Inflows – Pension 10,958 2,424
(Increase) Decrease in Assets
Receivables 197 (5,766)
Allowance for Doubtful Accounts 1,222 54
Inventories 38 (42)
OPEB Asset (10) (1)
Increase (Decrease) in Liabilities
Accounts Payable 9,956 4,181
Trust Liabilities and Deposits 1,442 228
Advance Payments 2,751 7,996
Pollution Remediation (1,525) (5,600)
Accrued Compensated Absences 196 (165)
Net Cash Provided by Operating Activities $ 92,178 $ 100,487
Noncash Transactions Affecting Financial Position
Refunding Issuance in Excess of Bond Retirement $ 58 $ 184
Increase in Fair Value of Investments (17) 25
Total Noncash Transactions Affecting Financial Position $ 41 $ 209
Cash and Cash Equivalents
Unrestricted
Cash and Cash Equivalents $ 76,667 $ 56,355
Cash Deposits 326 346
Total Unrestricted 76,993 56,701
Restricted
Cash and Cash Equivalents 47,371 31,978
Cash and Securities with Fiscal Agents/Trustees
Debt Service 217,215 205,492
Customer Facility Charge 65,615 55,573
Total Restricted 330,201 293,043
Total Cash and Cash Equivalents $ 407,194 $ 349,744
The accompanying notes are an integral part of these financial statements
City of Phoenix, Arizona Aviation Enterprise Fund COMPARATIVE STATEMENTS OF CASH FLOWS (CONTINUED) For the Fiscal Years Ended June 30, 2016 and 2015 (in thousands)
31
NOTES TO THE FINANCIAL STATEMENTSNote Description
1 Organization and Summary of Significant Accounting Policies
2 Cash and Investments
3 Receivables
4 Capital Assets
5 Long-Term Obligations
6 Refunded, Refinanced and Defeased Obligations
7 Commercial Paper Notes Payable
8 Risk Management
9 Operating Leases
10 Contractual and Other Commitments
11 Contingent Liabilities
12 Deferred Compensation Plan (DCP)
13 Pension Plan
14 Other Post-Employment Benefits (OPEB)
15 Capital Contributions
16 Passenger Facility Charges
17 Customer Facility Charges
33
The City of Phoenix (the City) owns and operates Phoenix Sky Harbor International Airport (the Airport) and two general aviation airports, Phoenix Goodyear Airport and Phoenix Deer Valley Airport (collectively, the Aviation Enterprise Fund). The City has operated the Aviation Enterprise Fund as a self-supporting enterprise since 1967, according to Part II, Chapter 4 of the City of Phoenix Code of Ordinances.
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The accompanying financial statements have been prepared in conformity with accounting principles
generally accepted in the United States of America (GAAP) as applied to governmental units. The Governmental Accounting Standards Board (GASB) is the accepted standard-setting body for establishing governmental accounting and financial reporting principles.
a) Reporting Entity The accompanying financial statements include only the Aviation Enterprise Fund and are not
intended to present fairly the financial position of the City, and the changes in its financial position and the cash flows of its proprietary fund types in conformity with accounting principles generally accepted in the United States of America.
b) Jointly Governed Organizations-Phoenix-Mesa Gateway Airport Authority The Phoenix-Mesa Gateway Airport Authority is a nonprofit corporation established and funded
by the City of Phoenix, City of Mesa, Towns of Gilbert and Queen Creek, and the Gila River Indian Community. The purpose of the entity is the redevelopment of Williams Air Force Base that was closed in September 1993 to become the Phoenix-Mesa Gateway Airport. The Board of Directors consists of the mayors for the respective municipalities and the governor of the tribal community. The Aviation Enterprise Fund contributed $1.3 million per year in both fiscal years 2016 and 2015 (life to date $18.2 million) to the Phoenix-Mesa Gateway Airport Authority operating and capital budget.
c) Basis of Accounting The Aviation Enterprise Fund is an enterprise fund of the City and the cost of providing services is
recovered primarily through their fees and charges. The Aviation Enterprise Fund, through the City, has established activity rates and fees to recover the cost of providing services, including capital costs, and has issued debt backed by these revenues.
Since the Aviation Enterprise Fund is an enterprise fund of the City, the accrual basis of accounting is followed, whereby revenues are recognized in the accounting period in which they are earned and expenses are recognized when incurred. Operating revenues and expenses are distinguished from non-operating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with the fund’s principal ongoing operations. Operating expenses include the cost of sales and services, environmental expenses, administrative expenses, and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as non-operating items.
d) Pooled Cash and Investments The Aviation Enterprise Fund’s cash resources are combined through the City to form a cash and
investment pool managed by the City Treasurer. Excluded from this pool are the investments of the City of Phoenix Employee Retirement System and certain other legally restricted funds. Interest earned by the pool is distributed monthly to individual funds based on daily equity in the pool.
The Aviation Enterprise Fund’s cash and cash equivalents are considered to be cash in bank, cash on hand, and short-term investments with original maturities of 90 days or less from the date of acquisition.
The Aviation Enterprise Fund’s investments are stated at fair value. Fair value is based on quoted market prices as of the valuation date.
City of Phoenix, Arizona Aviation Enterprise Fund NOTES TO THE FINANCIAL STATEMENTS For the Fiscal Years ended June 30, 2016 and 2015
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e) Accounts Receivable Accounts receivable are reported net of an allowance for doubtful accounts. The allowance for
doubtful accounts is based on management’s assessment of the potential for losses, taking into account historical experience and currently available information.
f) Deposits in Escrow Deposits in Escrow are performance bonds and security deposits made by airport tenants.
g) Inventories Inventories consist of materials and supplies which have been valued at the lower of cost (weighted
average cost method) or market and are primarily accounted for on the consumption method.
h) Capital Assets Capital assets are defined as assets with an initial, individual cost of more than $5,000 and an
estimated useful life greater than two years. All artwork and land is capitalized. Capital assets are recorded at cost or estimated historical cost if purchased or constructed. Donated capital assets are recorded at the estimated fair value at the date of donation.
Major outlays for capital assets and improvements are capitalized as the projects are constructed. Interest incurred during the construction phase of projects is reflected in the capitalized value of the asset constructed. The cost of normal maintenance and repairs that do not add to the value of the asset or materially extend asset lives are not capitalized. Major improvements are capitalized and depreciated over the remaining useful lives of the related capital assets.
Depreciation is computed using the straight-line method over the estimated useful lives of the related assets as follows:
Buildings 10 to 40 years
Improvements other than Buildings
Runways and Taxiways 18 to 25 years
Other Improvements 10 to 50 years
Equipment 5 to 30 years
Intangible Assets 5 to 40 years
A gain or loss on disposal of capital assets is recognized when assets are retired from service or are sold or otherwise disposed of.
i) Compensated Absences Vacation and compensatory time benefits are accrued as liabilities as employees earn the benefits to
the extent that they meet both of the following criteria: 1) the Aviation Enterprise Fund’s obligation through the City is attributable to employees’ services already rendered; and 2) it is probable that the Aviation Enterprise Fund, through the City, will compensate the employees for the benefits through paid time off or some other means, such as cash payments.
Sick leave benefits are accrued as a liability as the benefits are earned by employees, but only to the extent that it is probable that the Aviation Enterprise Fund, through the City, will compensate the employees through cash payments conditioned on the employees’ termination or retirement. All of the outstanding compensated absences are recorded as a liability.
j) Long-Term Obligations In the financial statements, long-term debt and other long-term obligations are reported as liabilities
in the Comparative Statements of Net Position. Bond premiums and discounts are amortized over the life of the bonds using the interest method.
City of Phoenix, Arizona Aviation Enterprise Fund NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) For the Fiscal Years ended June 30, 2016 and 2015
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k) Net Position Net Investment in Capital Assets – This category groups all capital assets into one component of net
position. Accumulated depreciation and the outstanding balances of debt that are attributed to the acquisition, construction, or improvement of these assets reduce the balance in this category.
Restricted Net Position – This category presents external restrictions imposed by creditors, grantors, or laws or regulations of other governments and restrictions imposed by law through constitutional provision or enabling legislation.
Unrestricted Net Position – This category represents the net position that is not restricted for any project or other purpose.
l) Statements of Cash Flows For purposes of the Comparative Statements of Cash Flows, all highly liquid investments (including
restricted assets) with original maturities of 90 days or less when purchased are considered to be cash equivalents.
m) Rates and Charges The Aviation Enterprise Fund annually establishes airline facility rental fees, landing fees and other
charges sufficient to recover the costs of operations, maintenance and debt service related to the airfield and space rented by the airlines. Any differences between amounts collected and the actual costs allocated to the airlines’ leased space are credited or billed to the airlines.
n) Use of Estimates The preparation of financial statements in conformity with accounting principles generally
accepted in the United States of America requires management to make a number of estimates and assumptions that affect the reported amounts of assets, liabilities, deferred inflows and outflows, and net position, the disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses/ expenditures during the reporting period. Actual results could differ from those estimates.
o) New Accounting Pronouncements GASB Statement No. 72, Fair Value Measurement and Application, will enhance comparability of
financial statements among governments by requiring measurement of certain assets and liabilities at fair value using a consistent and more detailed definition of fair value and accepted valuation techniques. This Statement also will enhance fair value application guidance and related disclosures in order to provide information to financial statement users about the impact of fair value measurements on a government’s financial position. The requirements of this Statement are effective for financial statements for reporting periods beginning after June 15, 2015. The Aviation Enterprise Fund implemented this Statement in fiscal year 2016.
GASB Statement No. 73, Accounting and Financial Reporting for Pensions and Related Assets That Are Not within the Scope of GASB Statement 68, and Amendments to Certain Provisions of GASB Statements 67 and 68, will improve financial reporting by establishing a single framework for the presentation of information about pensions, which will enhance the comparability of pension-related information reported by employers and nonemployer contributing entities. The requirements of this Statement for pension plans that are within the scope of Statement 67 or for pensions that are within the scope of Statement 68 are effective for fiscal years beginning after June 15, 2015. There was no material impact to the Aviation Enterprise Fund for fiscal year 2016 as a result of the implementation of Statement No. 73.
GASB Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions, 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 OPEB liability and a
City of Phoenix, Arizona Aviation Enterprise Fund NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) For the Fiscal Years ended June 30, 2016 and 2015
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more comprehensive measure of OPEB expense. The requirements of this Statement are effective for financial statements for reporting periods beginning after June 15, 2017. The Aviation Enterprise Fund will implement this Statement in fiscal year 2018.
GASB Statement No. 76, The Hierarchy of Generally Accepted Accounting Principles for State and Local Governments, will improve financial reporting by (1) raising the category of GASB Implementation Guides in the GAAP hierarchy, thus providing the opportunity for broader public input on implementation guidance; (2) emphasizing the importance of analogies to authoritative literature when the accounting treatment for an event is not specified in authoritative GAAP; and (3) requiring the consideration of consistency with the GASB Concepts Statements when evaluating accounting treatments specified in nonauthoritative literature. The provisions in this Statement are effective for reporting periods beginning after June 15, 2015. The Aviation Enterprise Fund has implemented this Statement in fiscal year 2016.
GASB Statement No. 79, Certain External Investment Pools and Pool Participants, establishes specific criteria used to determine whether a qualifying external investment pool may elect to use and amortized cost exception to fair value measurement. Those criteria will provide qualifying external investment pools and participants in those pools with consistent application of an amortized cost-based measurement for financial reporting purposes. The Statement also establishes additional note disclosures for qualifying external investment pools. The requirements of this Statement are effective for financial statements for periods beginning after June 15, 2015, except for certain provisions on portfolio quality, custodial credit risk, and shadow pricing. Those provisions are effective for reporting periods beginning after December 15, 2015. The Aviation Enterprise Fund has determined there is no impact to the financial statements as a result of this Statement.
GASB Statement No. 81, Irrevocable Split-Interest Agreements, requires that a government that receives resources pursuant to an irrevocable split-interest agreement recognize assets, liabilities, and deferred inflows of resources at the inception of the agreement. The Statement also provides expanded guidance for circumstances in which the government holds the assets. The requirements of this Statement are effective for financial statements for periods beginning after December 15, 2016. The Aviation Enterprise Fund will implement this Statement in fiscal year 2018.
GASB Statement No. 82, Pension Issues-and amendment of GASB Statements No. 67, No. 68, and No. 73, will enhance consistency in the application of financial reporting requirements to certain pension issues. The requirements of this Statement are effective for financial statements for periods beginning after June 15, 2016. The Aviation Enterprise Fund will implement this Statement in fiscal year 2017.
The Aviation Enterprise Fund has not fully determined the effect that implementation of Statements No. 75, 81 and 82 will have on the financial statements.
2. CASH AND INVESTMENTS Cash and cash equivalents at June 30, 2016 and June 30, 2015, was composed of the following (in
thousands):
2016 2015
Cash in Bank $ 2,868 $ 4,479
Cash on Hand 3 3
Short-Term Pooled Investments 98,576 65,180
Short-Term Non-Pooled Investments 22,591 18,671
Total Cash and Cash Equivalents $ 124,038 $ 88,333
City of Phoenix, Arizona Aviation Enterprise Fund NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) For the Fiscal Years ended June 30, 2016 and 2015
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A summary of Aviation Enterprise Fund cash and cash equivalents at June 30, 2016, and June 30, 2015 (in thousands):
2016 2015
Unrestricted $ 76,667 $ 56,355
Restricted 47,371 31,978
Total Cash and Cash Equivalents $ 124,038 $ 88,333
Deposits Cash deposits are subject to custodial risk. Custodial risk is the risk that in the event of a bank failure,
the Aviation Enterprise Fund’s deposits through the City may not be returned. The Aviation Enterprise Fund’s deposits through the City during the year and at fiscal year-end were entirely covered by federal depository insurance or by collateral held by the City’s agent in the City’s name. The carrying amount of the Aviation Enterprise Fund’s deposits at June 30, 2016 and June 30, 2015 was $325,618 and $346,478, respectively and the bank ledger balance was $321,075 and $321,038, respectively.
Cash with fiscal agents and trustees are subject to custodial risk. The Aviation Enterprise Fund’s contracts through the City with the fiscal agents and trustees call for these deposits to be fully covered by collateral held in the fiscal agents’ and trustees’ trust departments but not in the City’s name. Each trust department pledges a pool of collateral against all trust deposits it holds. The carrying amount of the Aviation Enterprise Fund’s cash with fiscal agents and trustees and the bank ledger balance at June 30, 2016 and June 30, 2015 were $261,401,604 and $239,786,473, respectively. Securities with fiscal agents and trustees are not subject to custodial risk. The carrying amount and the bank ledger balance of the Aviation Enterprise Fund’s securities with fiscal agents and trustees at June 30, 2016 and June 30, 2015 was $21,428,788 and $21,278,402, respectively.
Investments Aviation Enterprise Fund investments are included in the City’s pooled investments. The City Charter
and ordinances authorize the City to invest in U.S. Treasury securities, securities guaranteed, insured or backed by the full faith and credit of the U.S. Government, U.S. Government agency securities, repurchase agreements, commercial paper, money market accounts, certificates of deposit, the State Treasurer’s Local Government Investment Pool “LGIP”, highly rated securities issued or guaranteed by any state or political subdivision thereof rated in the highest short-term or second highest long-term category, and investment grade corporate bonds, debentures, notes and other evidence of indebtedness issued or guaranteed by a solvent U.S. corporation which are not in default as to principal or interest. Investments are carried at fair value. It is the City’s policy generally to hold investments until maturity. A detailed listing of City investments can be found in the City CAFR in Note 5 in the Notes to the Financial Statements.
City of Phoenix, Arizona Aviation Enterprise Fund NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) For the Fiscal Years ended June 30, 2016 and 2015
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The Aviation Enterprise Fund maintains a portion of its unrestricted and restricted cash and investments in the City's cash and investment pool. Total investments for the Aviation Enterprise Fund at June 30, 2016 and June 30, 2015 stated at fair value, were $411,266,803 and $364,256,599, respectively. The following summarizes the City's amounts reported as “Investments” in its financial statements (in thousands):
June 30, 2016 June 30, 2015
City Investments
Credit Quality Rating Fair Value
Weighted Average Maturity (Years) Fair Value
Weighted Average Maturity (Years)
Pooled InvestmentsRepurchase Agreements collateralized
by U.S. Treasury Securities Not Rated $ 134,148 0.011 $ 34,505 0.003U.S. Treasury Securities N/A (1) 757,272 1.863 948,268 1.822U.S. Government Agency Securities
FFCB Notes AA+ 126,920 3.524 40,797 4.380FNMA Notes AA+ 159,672 2.242 57,956 3.069FHLMC Notes AA+ 199,310 2.686 143,981 3.317FHLB Notes AA+ 322,986 1.306 185,304 3.372HUD — 1,004 0.086
Total U.S. Government Agency Securities 808,888 2.179 429,042 3.401Pre-Refunded Municipal Securities N/A (2) 9,727 0.241 38,242 0.581Certificates of Deposit N/A (3) 126,514 0.143 59,483 0.392Mortgage Backed Securities
GNMA N/A (1) 19,854 2.301 28,174 2.601FHLMC Notes AA+ 535 2.917 703 2.700
Total Mortgage Backed Securities 20,389 2.317 28,877 2.603
Total Pooled Investments 1,856,938 1.746 1,538,417 2.150Less: Joint Venture Pooled Investments (49,415) (52,064)Less: Short-Term Pooled Investments (266,634) (32,912)
Net Pooled Investments 1,540,889 1,453,441
Non-Pooled InvestmentsU.S. Treasury Securities N/A (1) 347,810 1.156 515,429 1.156U.S. Treasury Securities Money Market Mutual Funds AAAm 6,992 92.503 —U.S. Government Agency Securities
FFCB Notes AA+ 5,497 3.589 2,985 3.589FNMA Notes AA+ 4,562 1.337 4,972 1.337FHLMC Notes AA+ 7,556 2.259 14,976 2.259FHLB Notes AA+ 99,373 0.380 12,992 0.380
Total U.S. Government Agency Securities 116,988 0.689 35,925 0.689Pre-Refunded Municipal Securities N/A (2) 70 1.946 5,296 1.946Investment in Land N/A 872 1.190 —
Total Non-Pooled Investments 472,732 556,650Less: Short-Term Non-Pooled Investments (154,578) (75,129)
Net Non-Pooled Investments 318,154 481,521
Total City Investments $ 1,859,043 $ 1,934,962
Notes:
(1) U.S. Government Guaranteed
(2) Pre-Refunded Municipal Securities for which the payment of interest, and ultimately the repayment of principal, is backed by the U.S. Government Securities.
(3) All Certificates of Deposit are insured by the FDIC.
City of Phoenix, Arizona Aviation Enterprise Fund NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) For the Fiscal Years ended June 30, 2016 and 2015
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Fair Value Hierarchy Aviation Enterprise Fund investments are included in the City’s pooled investments, therefore the fair value
hierarchy mirrors that of the City. The City categorizes its fair value measurements within the fair value hierarchy established by generally accepted accounting principles. The hierarchy is based on the valuation inputs used to measure fair value of the assets. Level 1 inputs are quoted prices in an active market for identical assets; Level 2 inputs are significant other observable inputs; and Level 3 inputs are significant unobservable inputs.
The following is a summary of the fair value hierarchy of the fair value of investments of the City as of June 30:
Fair Value Measurement Using: Fair Value Measurement Using:
Investments by Fair Value Level 06/30/16
Quoted Prices in Active Markets for Identical Assets
(Level 1)
Significant Other
Observable Inputs
(Level 2)
Significant Unobservable
Inputs (Level 3) 06/30/15
Quoted Prices in Active Markets for Identical Assets
(Level 1)
Significant Other
Observable Inputs
(Level 2)
Significant Unobservable
Inputs (Level 3)
U.S. Government securities $ 1,244,592 $ 1,244,592 $ — $ — $ 1,502,370 $ 1,502,370 $ — $ —
U.S. Government agency obligations 925,197 — 925,197 — 463,419 — 463,419 —
U.S. Government agency MBS/CMO 20,330 — 20,330 — 28,788 — 28,788 —
Money market funds 6,992 6,992 — — — — — —
Municipal bonds 9,564 — 9,564 — 40,274 — 40,274 —
Certificates of Deposit & CDARS 126,461 126,461 — — 62,008 62,008 — —
Investment in Land 872 — — 872 — — — —
Total investments and cash
equivalents by fair value level $ 2,334,008 $ 1,378,045 $ 955,091 $ 872 $ 2,096,859 $ 1,564,378 $ 532,481 $ —
U.S. Government securities totaling $1,244,592,000 and $1,378,941,000, Certificates of Deposit & CDARS totaling $126,461,000 and $62,008,000, in fiscal years 2016 and 2015, respectively, and Money Market Funds totaling $6,992,000 in fiscal year 2016 are classified in Level 1 of the fair value hierarchy are valued using quoted prices in active markets.
U.S. Government agency obligations totaling $925,197,000 and $463,419,000, U.S. Government agency MBS/CMO totaling $20,330,000 and $28,788,000, and Municipal bonds totaling $9,564,000 and $40,274,000, in fiscal years 2016 and 2015, respectively, classified in Level 2 of the fair value hierarchy are valued using matrix pricing techniques maintained by various pricing vendors. Matrix pricing is used to value securities based on the securities’ relationship to benchmark quoted prices. Fair value is defined as the quoted market value on the last trading day of the period. These prices are obtained from a pricing source.
Investment in Land totaling $872,000 in fiscal year 2016, classified in Level 3 of the fair value hierarchy is valued by appraisal using valuation techniques in which one or more significant inputs or significant value drivers are unobservable, such as pricing models, discounted cash flow model and similar techniques not on market, exchange, dealer or broker-traded transactions.
Interest Rate Risk The Aviation Enterprise Fund follows the City’s policies for interest rate risk. In order to limit interest rate risk,
the City’s investment policy limits maturities as follows:
U.S. Treasury Securities 5 year final maturitySecurities guaranteed, insured, or backed by
the full faith and credit of the U.S. Government 5 year final maturityU.S. Government Agency Securities 5 year final maturityRepurchase Agreements 60 daysMunicipal Obligations 5 years for long-term issuancesMoney Market Mutual Funds 90 daysCommercial Paper 270 days
City of Phoenix, Arizona Aviation Enterprise Fund NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) For the Fiscal Years ended June 30, 2016 and 2015
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For Mortgage Backed Securities (MBS) and Collateralized Mortgage Obligations (CMO), the maximum weighted average life using current Public Securities Association (PSA) prepayment assumptions shall be 12 years at the time of purchase for MBS and 5 years at the time of purchase for CMO.
Credit Risk The Aviation Enterprise Fund follows the City’s policies regarding credit risk. The City’s investment policy limits its
purchase of investments to the top ratings issued by nationally recognized statistical rating organizations such as Standard & Poor’s (S&P) and Moody’s Investors Service (Moody’s). The portfolio is primarily invested in securities issued by the U.S. Treasury or by U.S. Government Agency Securities which are rated Aaa by Moody’s and AA+ by S&P. Repurchase agreements are generally collateralized by U.S. Treasuries and U.S. Government Agency Securities at 102%. Municipal securities must have a short-term minimum rating of A1 by S&P and P1 by Moody’s and a long-term uninsured rating of A+ by S&P and A1 by Moody’s. The rating requirements do not apply to obligations issued by the City of Phoenix. Money market mutual funds must have a current minimum money market rating of AAAm by S&P and Aaa-mf by Moody’s. For commercial paper, an Issuer’s program must have a minimum rating of A1 by S&P and P1 by Moody’s. The issuing corporation must be organized and operating in the United States and have a minimum long-term debt rating of A+ by S&P and A1 by Moody’s. Programs rated by only one of the agencies are ineligible.
Concentration of Credit Risk Aviation Enterprise Fund investments are included in the City’s pooled investments. Investments in any one issuer
that represent 5% or more of total City investments are as follows (in thousands):
Issuer 2016 2015
Federal National Mortgage Association 7.03% *Federal Home Loan Mortgage Corporation 8.86% 7.57%Federal Home Loan Bank 18.09% 9.45%Federal Farm Credit Bank 5.67% *
* Investment is less than 5% in 2015
City of Phoenix, Arizona Aviation Enterprise Fund NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) For the Fiscal Years ended June 30, 2016 and 2015
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3. RECEIVABLES Receivables at June 30, 2016 and June 30, 2015 are stated net of the allowance for doubtful accounts, and are
summarized as follows (in thousands):
June 30, 2016
Accounts InterestIntergovern- mental (1)
Passenger Facility Charge Total
Unrestricted $ 10,703 $ — $ 180 $ — $ 10,883Restricted 3,144 4 6,426 7,649 17,223
Total Receivables $ 13,847 $ 4 $ 6,606 $ 7,649 $ 28,106
June 30, 2015
Intergovern- PassengerAccounts Interest mental (1) Facility Charge Total
Unrestricted $ 12,122 $ — $ 173 $ — $ 12,295Restricted 3,060 7 9,714 7,755 20,536
Total Receivables $ 15,182 $ 7 $ 9,887 $ 7,755 $ 32,831
(1) Intergovernmental Receivables include monies due from other governmental entities for grants.
An allowance for doubtful accounts of $1,320,082 as of June 30, 2016 and $97,528 as of June 30, 2015 has been established for the Aviation Enterprise Fund. Accounts Receivable includes unbilled charges of $7,250,802 at June 30, 2016 and $8,546,719 at June 30, 2015.
City of Phoenix, Arizona Aviation Enterprise Fund NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) For the Fiscal Years ended June 30, 2016 and 2015
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4. CAPITAL ASSETS Capital asset activity for the Aviation Enterprise Fund at June 30, 2016 and June 30, 2015 was as follows
(in thousands):
Balances BalancesJuly 1, 2015 Additions Deletions June 30, 2016
Non-depreciable assets:Land $ 573,007 $ 1,188 $ — $ 574,195Artwork 7,533 6 (278) 7,261Construction-in-Progress 90,984 114,283 (18,968) 186,299
Total non-depreciable assets 671,524 115,477 (19,246) 767,755
Depreciable assets:Buildings 1,619,698 7,318 (3,198) 1,623,818Improvements 1,626,816 23,427 (13,579) 1,636,664Equipment 606,621 21,464 (3,416) 624,669Intangible Assets 23,521 2,009 (1,825) 23,705
Total depreciable assets 3,876,656 54,218 (22,018) 3,908,856
Less accumulated depreciation for:Buildings (708,534) (58,045) 3,198 (763,381)Improvements (844,307) (65,702) 13,509 (896,500)Equipment (239,152) (40,443) 2,861 (276,734)Intangible Assets (10,249) (2,639) 1,825 (11,063)
Total accumulated depreciation (1,802,242) (166,829) 21,393 (1,947,678)
Total depreciable assets, net 2,074,414 (112,611) (625) 1,961,178
Total capital assets, net $ 2,745,938 $ 2,866 $ (19,871) $ 2,728,933
Balances BalancesJuly 1, 2014 Additions Deletions June 30, 2015
Non-depreciable assets:Land $ 566,437 $ 6,570 $ — $ 573,007Artwork 7,533 — — 7,533Construction-in-Progress 290,848 57,154 (257,018) 90,984
Total non-depreciable assets 864,818 63,724 (257,018) 671,524
Depreciable assets:Buildings 1,531,014 88,833 (149) 1,619,698Improvements 1,505,025 122,854 (1,063) 1,626,816Equipment 522,488 85,915 (1,782) 606,621Intangible Assets 23,068 4,746 (4,293) 23,521
Total depreciable assets 3,581,595 302,348 (7,287) 3,876,656
Less accumulated depreciation for:Buildings (652,312) (56,371) 149 (708,534)Improvements (791,557) (52,954) 204 (844,307)Equipment (188,741) (51,857) 1,446 (239,152)Intangible Assets (12,005) (2,509) 4,265 (10,249)
Total accumulated depreciation (1,644,615) (163,691) 6,064 (1,802,242)
Total depreciable assets, net 1,936,980 138,657 (1,223) 2,074,414
Total capital assets, net $ 2,801,798 $ 202,381 $ (258,241) $ 2,745,938
The amount of interest cost capitalized for the Aviation Enterprise Fund at June 30, 2016 and June 30, 2015 was $571,606 and $2,660,911, respectively.
City of Phoenix, Arizona Aviation Enterprise Fund NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) For the Fiscal Years ended June 30, 2016 and 2015
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5. LONG-TERM OBLIGATIONS Changes in long-term obligations at June 30, 2016 and June 30, 2015 are summarized as follows (in
thousands):
AmountsBalances Balances Due Within
July 1, 2015 Additions Reductions June 30, 2016 One Year
Bonds and Notes Payable:General Obligation Bonds $ 7,865 $ — $ — $ 7,865 $ —Municipal Corporation Obligations
Rental Car Facility Revenue Bonds 195,305 — (9,255) 186,050 9,795Aviation Revenue Bonds 1,156,490 114,440 (58,135) 1,212,795 40,730
Subtotal 1,359,660 114,440 (67,390) 1,406,710 50,525
Discounts/Premiums 51,069 14,051 (5,936) 59,184 —
Total Bonds and Notes Payable 1,410,729 128,491 (73,326) 1,465,894 50,525
Other Liabilities:Accrued Compensated Absences 6,224 6,420 (6,224) 6,420 825Pollution Remediation 3,900 — (1,525) 2,375 75Net Pension Liability 172,577 8,210 — 180,787 —
Total Other Liabilities 182,701 14,630 (7,749) 189,582 900
Total Long-Term Obligations $ 1,593,430 $ 143,121 $ (81,075) $ 1,655,476 $ 51,425
AmountsBalances Balances Due Within
July 1, 2014 Additions Reductions June 30, 2015 One Year
Bonds and Notes Payable:General Obligation Bonds $ 7,870 $ — $ (5) $ 7,865 $ —Municipal Corporation Obligations
Rental Car Facility Revenue Bonds 204,055 — (8,750) 195,305 9,255Aviation Revenue Bonds 1,192,065 — (35,575) 1,156,490 37,320
Subtotal 1,403,990 — (44,330) 1,359,660 46,575
Discounts/Premiums 55,996 — (4,927) 51,069 —
Total Bonds and Notes Payable 1,459,986 — (49,257) 1,410,729 46,575
Other Liabilities:Accrued Compensated Absences 6,389 6,224 (6,389) 6,224 794Pollution Remediation 9,500 — (5,600) 3,900 850Net Pension Liability 133,150 — 39,427 172,577 —
Total Other Liabilities 149,039 6,224 27,438 182,701 1,644
Total Long-Term Obligations $ 1,609,025 $ 6,224 $ (21,819) $ 1,593,430 $ 48,219
City of Phoenix, Arizona Aviation Enterprise Fund NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) For the Fiscal Years ended June 30, 2016 and 2015
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Issues of long-term debt were as follows at June 30, 2016 and June 30, 2015 (dollars in thousands):
June 30, 2016
Effective Average UnamortizedIssue Maturity Interest Life Original Principal Interest DiscountDate Purpose Dates Rate (Years) Amount Outstanding Outstanding (Premium)
Municipal Corporation Obligations (1)06/18/08 Airport Revenue (Non-AMT) (2a) 7/1/20-38 5.02 22.5 $ 206,840 $ 206,840 $ 149,336 $ (430)06/18/08 Airport Revenue (AMT) (2a) 7/1/12-19 4.68 7.8 43,160 18,255 1,950 (183)06/18/08 Airport Revenue Refunding (Non-AMT) (2a) 7/1/09-22 4.26 8.0 109,850 53,730 9,257 (796)06/18/08 Airport Revenue Refunding (AMT) (2a) 7/1/09-20 4.58 5.6 68,520 17,990 2,395 (287)03/05/13 Airport Revenue Refunding (AMT) (2a) 7/1/14-32 3.28 11.8 196,600 176,080 83,872 (24,157)
Total Sr. Lien Obligations 624,970 472,895 246,810 (25,853)
09/01/10 Airport Revenue (Non-AMT) (2b) (3) 7/1/13-40 4.69 19.0 642,680 572,850 410,816 (18,024)09/01/10 Airport Revenue (Taxable) (2b) (3) (4) 7/1/2040 3.67 29.8 21,345 21,345 33,810 —09/01/10 Airport Revenue Refunding (Non-AMT) (2b) 7/1/23-25 4.33 13.9 32,080 32,080 12,884 (1,414)12/15/15 Airport Revenue (Non-AMT) (2b) (3) 7/1/16-45 3.99 18.6 95,785 94,970 84,403 (11,263)12/15/15 Airport Revenue Refunding (Non-AMT) (2b) (3) 7/1/34 4.08 18.5 18,655 18,655 16,790 (2,376)
Total Jr. Lien Obligations 810,545 739,900 558,703 (33,077)
06/02/04 Rental Car Facility (Taxable) (5) 7/1/07-29 6.20 16.5 260,000 186,050 90,528 —
Total Municipal Corporation Obligations 1,695,515 1,398,845 896,041 (58,930)
General Obligation Bonds06/24/14 Refunding 7/1/19-20 2.71 5.4 7,865 7,865 674 (254)
Total General Obligation Bonds 7,865 7,865 674 (254)
Total Aviation Enterprise Fund Bonds $ 1,703,380 $ 1,406,710 $ 896,715 $ (59,184)
June 30, 2015
Effective Average UnamortizedIssue Maturity Interest Life Original Principal Interest DiscountDate Purpose Dates Rate (Years) Amount Outstanding Outstanding (Premium)
Municipal Corporation Obligations (1)06/18/08 Airport Revenue (Non-AMT) (2a) 7/1/20-38 5.02 22.5 $ 206,840 $ 206,840 $ 159,676 $ (460)06/18/08 Airport Revenue (AMT) (2a) 7/1/12-19 4.68 7.8 43,160 23,745 3,196 (299)06/18/08 Airport Revenue Refunding (Non-AMT) (2a) 7/1/09-22 4.26 8.0 109,850 61,345 12,145 (1,045)06/18/08 Airport Revenue Refunding (AMT) (2a) 7/1/09-20 4.58 5.6 68,520 21,805 3,528 (423)03/05/13 Airport Revenue Refunding (AMT) (2a) 7/1/14-32 3.28 11.8 196,600 183,170 93,030 (26,795)
Total Sr. Lien Obligations 624,970 496,905 271,575 (29,022)
09/01/10 Airport Revenue (Non-AMT) (2b) (3) 7/1/13-40 4.69 19.0 642,680 606,160 458,963 (20,128)09/01/10 Airport Revenue (Taxable) (2b) (3) (4) 7/1/2040 3.67 29.8 21,345 21,345 35,219 —09/01/10 Airport Revenue Refunding (Non-AMT) (2b) 7/1/23-25 4.33 13.9 32,080 32,080 14,488 (1,590)
Total Jr. Lien Obligations 696,105 659,585 508,670 (21,718)
06/02/04 Rental Car Facility (Taxable) (5) 7/1/07-29 6.20 16.5 260,000 195,305 102,550 —
Total Municipal Corporation Obligations 1,581,075 1,351,795 882,795 (50,740)
General Obligation Bonds06/24/14 Refunding 7/1/19-20 2.71 5.4 7,865 7,865 871 (329)
Total General Obligation Bonds 7,865 7,865 871 (329)
Total Aviation Enterprise Fund Bonds $ 1,588,940 $ 1,359,660 $ 883,666 $ (51,069)
Notes:(1) Enhanced by a municipal bond insurance policy, a reserve account surety bond, or a debt service reserve fund. (2) The City has pledged net airport revenues as security for these bonds. The net revenues pledged are as follows: (a) Senior lien pledge on all outstanding airport obligations. (b) Junior lien pledge on all outstanding airport obligations.(3) The City has further pledged an irrevocable commitment of 100% of net proceeds of a passenger facility charge for these bonds, with the exception of the Series 2015A bonds.
The Series 2015A bonds have a pledge equivalent to 30% of the principal and interest requirement. The Passenger Facility Charge (PFC) is currently imposed at the rate of $4.50 per qualifying enplaned passenger.
(4) The City has irrevocably elected to treat these bonds as RZEDB for purposes of the American Recovery and Reinvestment Act of 2009 and the Internal Revenue Code of 1986. The RZEDB subsidy payments rebate 45% of the interest requirement for these bonds. On March 1, 2013, the federal government announced the implementation of certain automatic budget cuts known as the sequester, which has resulted in a reduction of the federal subsidy payments by 6.8% and 7.3% (the Sequester Reductions) for the fiscal years 2016 and 2015, respectively. However, the City does not expect the Sequester Reductions to have a material adverse effect on its ability to make payments of interest on this issue.
(5) The City has made a first priority pledge of a $4.50 per day car rental usage fee to be paid by rental car customers arriving at Phoenix Sky Harbor International Airport as security for the bonds.
City of Phoenix, Arizona Aviation Enterprise Fund NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) For the Fiscal Years ended June 30, 2016 and 2015
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The Aviation Enterprise Fund, through the City, has complied with all significant financial covenants of its bonded indebtedness. A brief description of the Aviation Enterprise Fund’s long-term obligations follows.
Municipal Corporation Obligations The Aviation Enterprise Fund, through the City, has entered into certain agreements with the City of Phoenix Civic Improvement Corporation (the “CIC”) an affiliated nonprofit corporation, for the construction and acquisition of certain facilities and equipment. Under the terms of these agreements, the CIC issued bonds or certificates of participation to finance the facilities and equipment, and the Aviation Enterprise Fund, through the City, agreed to make lease and purchase payments sufficient to pay principal and interest on the outstanding obligations. The Aviation Enterprise Fund, through the City, also pays all expenses of operating and maintaining the facilities and equipment.
In December 2015, the CIC issued $95,785,000 of Junior Lien Airport Revenue Bonds, Series 2015A (Non-AMT). Proceeds of the bonds refunded $100,000,000 aggregate outstanding principal of Airport Commercial Paper Program Notes, Series 2014A-1 and 2014A-2. The bonds have an average life of 18.6 years and were sold at an all-in true interest cost of 3.99%.
In December 2015, the CIC issued $18,655,000 of Junior Lien Airport Revenue Refunding Bonds, Series 2015B (Non-AMT). Proceeds of the bonds refunded $20,000,000 of Junior Lien Airport Revenue Bonds, Series 2010A (Non-AMT). The bonds have an average life of 18.5 years, were sold at a true interest cost of 4.08% and produced present value debt service savings, net of transaction costs, of $2,515,668.
General Obligation Bonds The Aviation Enterprise Fund, through the City, has issued General Obligation Bonds for capital programs. The debt service requirements have been paid from Net Airport Revenues remaining after payment of senior lien and junior lien airport revenue bonded debt service requirements. In the event such Net Airport Revenues should prove insufficient to pay airport general obligation debt service requirements or should the Aviation Enterprise Fund, through the City, decide not to pay the debt service from Net Airport Revenues, this indebtedness would then be paid from ad valorem taxes (secondary property taxes) or other available sources.
City of Phoenix, Arizona Aviation Enterprise Fund NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) For the Fiscal Years ended June 30, 2016 and 2015
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Debt Service Requirements Debt service requirements, including principal and interest are as follows (in thousands):
Municipal Corporation Obligations
Fiscal Senior Lien Junior Lien Rental Car Facility
Years Principal Interest Principal Interest Principal Interest
2017 $ 25,235 $ 23,562 $ 15,495 $ 37,092 $ 9,795 $ 11,478
2018 26,575 22,275 16,270 36,321 10,370 10,903
2019 27,935 20,984 16,980 35,611 10,990 10,284
2020 29,505 19,625 17,805 34,783 11,645 9,628
2021 25,710 18,151 18,655 33,934 12,365 8,910
2022 – 26 103,785 73,519 140,220 151,638 74,275 32,106
2027 – 31 119,650 47,150 137,715 117,200 56,610 7,219
2032 – 36 82,680 19,138 174,710 79,025 — —
2037 – 41 31,820 2,406 180,115 30,291 — —
2042 – 46 — — 21,935 2,808 — —
Total $ 472,895 $ 246,810 $ 739,900 $ 558,703 $ 186,050 $ 90,528
Fiscal General Obligation Bonds
Years Principal Interest
2017 $ — $ 197
2018 — 197
2019 4,520 197
2020 3,345 83
Total $ 7,865 $ 674
Pollution Remediation This liability is primarily a result of leaking underground storage tanks at the Airport and Phoenix Goodyear Airport. The tanks at the Airport were discovered to be leaking in 1988 and the Aviation Enterprise Fund is implementing a corrective action plan which was approved by the Arizona Department of Environmental Quality (ADEQ) to ensure the contamination does not spread. The remediation of a fuel release at Phoenix Goodyear Airport discovered in the 1980’s is being implemented as approved by the United States Environmental Protection Agency (US EPA). The total remaining liability for all remediation activities for the Aviation Enterprise Fund as of June 30, 2016 and June 30, 2015 is $2,375,000 and $3,900,000, respectively. This liability is based on estimates by engineers of the efforts needed to complete the remediation. These costs are expected to increase over time due to inflation, which will affect the liability amounts in future years.
6. REFUNDED, REFINANCED AND DEFEASED OBLIGATIONS Future debt service on refunded bonds has been provided through advanced refunding bond issues
whereby refunding bonds are issued and the net proceeds, plus any additional resources that may be required, are used to purchase securities issued and guaranteed by the United States government. These securities are then deposited in an irrevocable trust under an escrow agreement which states that all proceeds from the trust will be used to fund the principal and interest payments of the previously issued debt being refunded. The trust deposits have been computed so that the securities in the trust, along with future cash flows generated by the securities, will be sufficient to service the previously issued bonds.
City of Phoenix, Arizona Aviation Enterprise Fund NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) For the Fiscal Years ended June 30, 2016 and 2015
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During fiscal year 2016, the City issued Junior Lien Airport Revenue Refunding Bonds, Series 2015B (Non-AMT). These bonds reduced the present value of future debt service payments. These savings were available due to improved municipal bond market conditions (i.e., lower interest rates) during the year. The effect of the refunding is summarized as follows (in thousands):
Junior LienAirport
Revenue
Series 2015B
Closing Date 12/15/15
Net Interest Rate 4.32%
Refunding Bonds Issued $ 18,655
Premium 2,447
Underwriter's Discount (85)
Issuance Costs and Insurance (149)
Net Proceeds $ 20,868
Refunded Amount $ 20,000
Decrease in Debt Service 2,592
Economic Gain 2,516
Number of Years Affected 19
City of Phoenix, Arizona Aviation Enterprise Fund NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) For the Fiscal Years ended June 30, 2016 and 2015
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The deferred and amortized amounts of accounting gains and losses on bond refundings (which are reported as deferred inflows or deferred outflows) at June 30, 2016 and June 30, 2015, are summarized as follows (in thousands):
June 30, 2016
Deferred Deferred
Amount Additions Amortization Amount
July 1 (Gains)/Losses Gains/(Losses) June 30
Deferred Outflows of Resources
Municipal Corporation Obligations $ 1,329 $ — $ (228) $ 1,101
Deferred Inflows of Resources
Municipal Corporation Obligations — (802) 42 (760)
General Obligation Bonds (128) — 128 —
Total $ 1,201 $ (802) $ (58) $ 341
June 30, 2015
Deferred Deferred
Amount Additions Amortization Amount
July 1 (Gains)/Losses Gains/(Losses) June 30
Deferred Outflows of Resources
Municipal Corporation Obligations $ 1,641 $ — $ (312) $ 1,329
Deferred Inflows of Resources
General Obligation Bonds (256) — 128 (128)
Total $ 1,385 $ — $ (184) $ 1,201
7. COMMERCIAL PAPER NOTES PAYABLE In December 2015, the CIC issued Junior Lien Airport Revenue Refunding Bonds, Series 2015A (Non-
AMT) to refund $100,000,000 aggregate principal of Airport Commercial Paper (CP) Program Notes, Series 2014A-1 and 2014A-2. On June 1, 2016, the City issued $60,000,000 of Airport CP, Series 2014B-1 and $30,000,000 of Airport CP, Series 2014B-2 for the Terminal 3 Modernization project. The remaining outstanding balances at June 30, 2016 are $100,000,000 of Airport CP, Series 2014B-1 and $30,000,000 of Airport CP, Series 2014B-2. The CP is issued in varying maturities up to 270 days. Interest rates paid on the CP range from 0.02% through 0.53%. The CP is secured by letters of credit issued by Bank of America, N.A. and Barclays Bank PLC for Airport CP Series 2014ABC-1 and Airport CP, Series 2014ABC-2, respectively.
2016 2015
Balance, July 1 $ 140,000 $ 120,000
Additions 90,000 160,000
Reductions (100,000) (140,000)
Balance, June 30 $ 130,000 $ 140,000
City of Phoenix, Arizona Aviation Enterprise Fund NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) For the Fiscal Years ended June 30, 2016 and 2015
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8. RISK MANAGEMENT The Aviation Enterprise Fund maintained a combination of commercial insurance and self-insurance
during the fiscal years ended June 30, 2016 and June 30, 2015, as described below.
Liability – The Aviation Enterprise Fund purchased commercial airport liability insurance specifically covering Airport premises and operations for the Airport System. The stand-alone insurance program provides first dollar coverage through a combination of both primary and excess liability policies. Additionally, general Aviation Enterprise Fund liabilities other than airport operations are covered under the City’s self-insurance program, which has a $7,500,000 retention. Excess liability coverage was purchased for losses that exceed the self-insured retention.
Property – Aviation Enterprise Fund property is insured under the City’s blanket commercial property and boiler/machinery insurance purchased for City owned buildings and structures.
Workers’ Compensation – As City employees, Aviation Enterprise Fund employees have the same benefits package as their City co-workers, whether purchased commercially or self-insured. The City maintained a self-insured retention of $15,000,000 for its workers’ compensation exposure. Excess workers’ compensation insurance was purchased for losses exceeding the self-insured retention.
Fidelity and Surety – Aviation Enterprise Fund officials and employees are covered by public official bonds and surety bonds as required by state statute or City Charter. Further, the City’s blanket “Crime” policy extends to Aviation Enterprise Fund employees.
Health and Dental – Health insurance plans for Aviation Enterprise Fund employees were self-insured through the City of Phoenix Health Care Benefits Trust fiduciary fund. Dental coverage was provided through two different plans. A dental PPO was self-insured through the City of Phoenix Health Care Benefits Trust and a dental HMO was provided through commercial insurance accounted for in the City of Phoenix General Fund.
The Aviation Enterprise Fund is included in the City’s self-insurance reserve. Self-insured claims are reported as liabilities in the accompanying financial statements when it is probable that a loss has occurred and the amount of that loss can be reasonably estimated. This determination is based on an actuarial analysis of reported claims and estimates of claims incurred but not reported.
With the exception of health, dental and long-term disability, the City reports its self-insurance activities in the City General Fund, the Transit Special Revenue Fund and the Government-Wide Statement of Net Position, with the other funds reimbursing the General Fund for their share of the cost of the City’s self-insurance program. Settlements have not exceeded coverages for each of the last three fiscal years.
Long-term disability benefits for Aviation Enterprise Fund employees were self-insured through the City of Phoenix Long-Term Disability Trust fiduciary fund. As a partially funded other post-employment benefit, no liability is reflected. Claims that are expected to be paid with expendable available financial resources are accounted for in the City of Phoenix General Fund. All other claims are accounted for in the City’s government-wide statement of net position. For additional information regarding the City’s Risk Management policies, including information on fiduciary funds, please refer to Note 13 in the Notes to the Financial Statements in the City CAFR.
City of Phoenix, Arizona Aviation Enterprise Fund NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) For the Fiscal Years ended June 30, 2016 and 2015
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9. OPERATING LEASES The Aviation Enterprise Fund leases certain airport facilities to third parties. Minimum future rentals on
non-cancelable operating leases at June 30, 2016 were as follows (in thousands):
Years EndingJune 30
2017 $ 73,728
2018 50,611
2019 31,732
2020 29,729
2021 28,219
2022-2069 212,647
Total $ 426,666
The above amounts do not include contingent rentals, which also may be received under the Aviation Enterprise Fund facilities leases, primarily as a percentage of sales in excess of stipulated minimums. Contingent rentals amounted to $10,483,293 for the fiscal year ended June 30, 2016, and $10,874,731 for the fiscal year ended June 30, 2015. A summary of the assets leased to third parties under the Aviation Enterprise Fund operating lease agreements at June 30, 2016 and June 30, 2015, is as follows (in thousands):
2016 2015
Buildings $ 1,029,896 $ 1,024,871
Less: Accumulated Depreciation (603,862) (566,646)
Net Book Value $ 426,034 $ 458,225
10. CONTRACTUAL AND OTHER COMMITMENTS The Aviation Enterprise Fund has entered into various construction contracts and these commitments
have not been recorded in the accompanying financial statements. Only the currently payable portions of these contracts have been included in accounts payable in the accompanying financial statements. Commitments of $411.8 million and $115.4 million are remaining at June 30, 2016 and June 30, 2015, respectively.
11. CONTINGENT LIABILITIES Pending Litigation The Aviation Enterprise Fund, through the City, is contingently liable in respect to lawsuits and other
claims incidental to the ordinary course of its operations. As discussed in Note 7 (and in more detail in Note 13 in the Notes to the Financial Statements of the City CAFR), the Aviation Enterprise Fund, through the City, is primarily self-insured, and has accrued a liability for estimated claims outstanding. As with any risk retention program, however, the Aviation Enterprise Fund, through the City, is contingently liable in respect to claims beyond those currently accrued. In the opinion of City management, based on the advice of the City Attorney, the outcome of such claims will not have a material adverse effect on the Aviation Enterprise Fund’s financial position, results of operations or liquidity at June 30, 2016.
Sick Leave Aviation Enterprise Fund employees are covered under the same sick leave benefits as City employees.
Sick leave is continuously accumulated at the rate of 15 days per year but can only be taken in the event
City of Phoenix, Arizona Aviation Enterprise Fund NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) For the Fiscal Years ended June 30, 2016 and 2015
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of illness. Upon retirement, for every 173 hours of unused sick leave, one month of creditable service is allowed in determining a General Employee Retirement Plan pension. A balance of over 80 hours after making the above calculation will allow an extra month of creditable service. The dollar amount of any cash payment as described below is included in the final average compensation, but the hours used are excluded from credited service.
Supervisory and Professional, Confidential Office and Clerical, Field Unit 1, Field Unit 2, and Office and Clerical employees who have accumulated 750 qualifying hours or more of unused sick leave at the time of normal service retirement are eligible to receive a payment equal to their base hourly rate for 25% of the hours in excess of 250 hours.
Middle management and Executive General City employees who have accumulated 750 qualifying hours or more of accrued or unused sick leave at the time of normal service retirement are eligible to receive a payment up to 20% of their base hourly rate. Payment percentage is increased by 1% for each full year of service in excess of 20 years to a maximum of 50%.
Sick leave is accrued as a liability as it is earned by the employees only if the leave is attributable to past service and it is probable that the employees will be compensated through cash payments conditioned on the employees’ termination or retirement. In accordance with these criteria, a portion of the sick leave accumulated by general employees as described above has been accrued as a liability in the accompanying financial statements. The June 30, 2016 actuarial valuation of the sick leave liability was based on the termination method, with the liability pro-rated based on the current service of a participant. The projected sick leave benefit payment under the termination method is calculated as the maximum sick leave hours eligible for payment multiplied by the probability of an individual employee reaching retirement multiplied by the employee’s projected salary at first eligibility for retirement pro-rated based on the employee’s current service to date over the projected service to retirement increased by the cost of salary-related fringe benefits.
The Aviation Enterprise Fund employees’ sick leave benefit balances (both accrued and unaccrued) at June 30, 2016 and June 30, 2015, were as follows (in thousands):
2016 2015
Sick Leave Benefit $ 14,862 $ 14,650
Less: Amount Accrued as a Liability (1,858) (1,761)
Total Sick Leave Benefit Balance $ 13,004 $ 12,889
Liabilities Under Grants The Aviation Enterprise Fund participates in a number of federal and state assisted grant programs. The
audits of these programs for earlier years and the year ended June 30, 2016 have not been completed in all cases; accordingly, final determination of the Aviation Enterprise Fund’s compliance with applicable grant requirements will be determined at a future date. The amount, if any, of expenditures which may be disallowed by the granting agencies cannot be determined at this time; although City management believes any such claims would be immaterial to the Aviation Enterprise Fund’s financial position at June 30, 2016.
12. DEFERRED COMPENSATION PLAN (DCP) Aviation Enterprise Fund employees are covered under the same Deferred Compensation Plan and
Defined Contribution Plan as City Employees. The City established the Deferred Compensation Plan and the Defined Contribution Plan to provide eligible employees with a means to supplement retirement income.
City of Phoenix, Arizona Aviation Enterprise Fund NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) For the Fiscal Years ended June 30, 2016 and 2015
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The Deferred Compensation Plan was created in accordance with Internal Revenue Code Section 457. It allowed eligible employees to defer up to $18,000 of their salaries during calendar years 2016 and 2015. The plan has numerous investment options and allows enrollment or changes on an ongoing basis. A 1996 federal law requires all assets and income of Internal Revenue Code Section 457 deferred compensation plans to be held in trust, custodial accounts, or annuity contracts for the exclusive benefit of participants and their beneficiaries. On September 23, 1998, the City Council approved Ordinance No.S-25613 that amended the Plan to comply with the 1996 federal law. The Ordinance established a trust into which all assets of the Plan were transferred December 4, 1998.
The Defined Contribution Plan was created in accordance with Internal Revenue Code Section 415(c) (1)(A) and provides employees with an additional option for tax-deferred retirement savings. Eligible employees may make personal contributions to the Plan by electing to defer a designated percentage of their salary to the Plan. Employee contribution elections are irrevocable. The 2016 and 2015 annual contribution limit was $53,000 each year. The City also contributes to the Plan on behalf of eligible employees in an amount equal to a percentage of employee’s base annual salary. The Aviation Enterprise Fund, through the City, contributed $772,193 for the year ended June 30, 2016, and $1,019,235 for the year ended June 30, 2015.
A governing board makes decisions about fund options available under both plans. Due to the tax-deferred nature of the Plans, generally speaking, the funds cannot be withdrawn while still employed by the City, unless a severe financial hardship exists. IRS regulations provide guidance regarding hardship withdrawals. Nationwide Investment Services Corporation is currently the administrator for both Plans.
13. PENSION PLAN Plan Description Aviation Enterprise Fund full-time employees are covered by the City of Phoenix Employees’ Retirement
Plan (COPERS), a single-employer defined benefit pension plan (the Plan), established by the Phoenix City Charter. The purpose of COPERS is to provide retirement, disability retirement, and survivor benefits to its members. The Plan can be amended or repealed by a vote of the residents of the City.
The general administration, management and operation of COPERS is vested in a nine-member Retirement Board consisting of three elected employee members, four statutory members, a citizen member and a retiree member. The Retirement Board appoints the Retirement Program Administrator and contracts investment counsel and other services necessary to properly administer the Plan.
Employees participate in the plan upon beginning employment with the City. COPERS' membership data is as follows:
June 30
2016 2015
Active Members
Tier 1 6,416 6,741
Tier 2 953 722
Tier 3 414 —
Subtotal 7,783 7,463
Terminated Vested 885 901
In-Pay Members
Service Retirees 5,576 5,419
Disabled Retirees 249 251
Beneficiaries 1,060 1,018
Subtotal 6,885 6,688
Total Members 15,553 15,052
City of Phoenix, Arizona Aviation Enterprise Fund NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) For the Fiscal Years ended June 30, 2016 and 2015
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Plan Benefits Benefits are calculated on the basis of a given rate, final average compensation and service credit.
Tier 1 Pension Benefits: Employees hired prior to July 1, 2013 are eligible for retirement benefits upon meeting one of the following age and service requirements:
1. Age 60 years, with ten or more years of credited service.
2. Age 62 years, with five or more years of credited service.
3. Any age, which added to years of credited service equals 80.
The pension benefit for Tier 1 employees is based on 2% of final average compensation multiplied by the first 32.5 years of service credit, 1% in excess of 32.5 years to 35.5 years, and 0.5% thereafter.
Tier 2 and 3 Pension Benefits: Employees hired on or after July 1, 2013 for Tier 2 and January 1, 2016 for Tier 3 are eligible for retirement benefits upon meeting one of the following age and service requirements:
1. Age 60 years, with ten or more years of credited service.
2. Age 62 years, with five or more years of credited service.
3. Any age, which added to years of credited service, equals 87.
The pension benefit for Tier 2 employees is based on 2.1% of final average compensation multiplied by years of service credit for those with less than 20 years, 2.15% for 20-24.9 years, 2.2% for 25-29.9 years and 2.3% thereafter.
A deferred pension is available at age 62 for terminated members with five or more years of service credit who leave their accumulated contributions in the Plan.
A member who becomes permanently disabled for the performance of duty is eligible for a disability benefit if the disability is 1) due to personal injury or disease and the member has ten or more years of service credit or 2) due to injuries sustained on the job, regardless of service credit.
Dependents of deceased members may qualify for survivor benefits if the deceased member had ten or more years of service credit or if the member’s death was in the line of duty with the City and compensable under the Workman’s Compensation Act of the State of Arizona. Chapter XXIV, Section 25 of the City Charter, specifies the conditions for eligibility of survivor benefits.
A supplemental post-retirement payment and permanent benefit increase (under the Pension Equalization Program) may be provided to Tier 1 and Tier 2 retirees if sufficient reserves are available at the end of the fiscal year. The reserve is funded if the five-year average investment return exceeds 8%.
Contributions and Funding Policy The City contributes an actuarially determined percentage of payroll to COPERS, as required by City
Charter, to fully fund benefits for active members and to amortize any unfunded actuarial liability as a level percent of projected member payroll over a closed 22 year period. For the fiscal year ended June 30, 2016, the total contribution rate was 25.29% of compensation. Tier 1 employees contributed 5% of compensation, Tier 2 employees contributed 15.51% of compensation through December 31, 2015 and beginning January 1, 2016, Tier 2 and Tier 3 employees contributed 11.0% and the City contributed the remainder, $119,844,000.
Net Pension Liability The City's net pension liability was measured as of June 30, 2016, and the total pension liability used to
calculate the net pension liability was determined by an actuarial valuation as of the same date. The Airport's net pension liability is the department's proportionate share of the City's total liability.
City of Phoenix, Arizona Aviation Enterprise Fund NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) For the Fiscal Years ended June 30, 2016 and 2015
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Total Pension Plan Fiduciary Net Pension
Liability (TPL) Net Position Liability (NPL)
(a) (b) (a)-(b)
Balance at June 30, 2015 $ 3,975,907 $ 2,209,526 $ 1,766,381
Changes for the Year:
Service Cost 80,757 — 80,757
Interest 293,206 — 293,206
Changes in Benefits (3,229) — (3,229)
Differences between Expected and
Actual Experience (76,891) — (76,891)
Changes in Assumptions (69,420) — (69,420)
Contributions - Employer — 119,844 (119,844)
Contributions - Member — 29,306 (29,306)
Net Investment Income — 9,171 (9,171)
Benefit Payments (216,193) (216,193) —
Administrative Expense — (233) 233
Net Changes 8,230 (58,105) 66,335
Balance at June 30, 2016 $ 3,984,137 $ 2,151,421 $ 1,832,716
Balance at June 30, 2014 $ 3,614,784 $ 2,222,242 $ 1,392,542
Changes for the Year:
Service Cost 75,310 — 75,310
Interest 266,355 — 266,355
Changes in Benefits — — —
Differences between Expected and
Actual Experience (31,009) — (31,009)
Changes in Assumptions 254,870 — 254,870
Contributions - Employer — 117,092 (117,092)
Contributions - Member — 27,861 (27,861)
Net Investment Income — 47,148 (47,148)
Benefit Payments (204,403) (204,403) —
Administrative Expense — (414) 414
Net Changes 361,123 (12,716) 373,839
Balance at June 30, 2015 $ 3,975,907 $ 2,209,526 $ 1,766,381
COPERS is reflected as a pension trust fund of the City. Detailed information about the plan’s fiduciary net position is available in the separately issued COPERS Comprehensive Annual Financial Report available online at www.phoenix.gov/copers.
The Aviation Enterprise Fund's proportionate share of the net pension liability (in thousands) was $180,787 at June 30, 2016 and $172,577 at June 30, 2015.
City of Phoenix, Arizona Aviation Enterprise Fund NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) For the Fiscal Years ended June 30, 2016 and 2015
55
Actuarial Assumptions Actuarial assumptions used to determine the total pension liability in the June 30, 2016 valuation were
based on the results of the actuarial experience study covering the period from July 1, 2009 through June 30, 2014. Those assumption, applied to all periods included in the measurement, are as follows:
Investment Rate of Return 7.50%
Inflation 3.50%
Salary Increases Inflation plus merit component based on age ranging from
6.60% at age 20 to 0.00% for members age 65 and older
COLA 1.50%
Mortality rates were based on CalPERS Employee Mortality and CalPERS Healthy Annuitant tables both without Scale BB Projection, and also the RP2014 Disabled Retiree Mortality table without MP-2014 Protection. The member contribution crediting rate was updated for the June 30, 2016 actuarial valuation to reflect the provision of the ballot measure that passed in August, 2015.
Based on the assumption that employee and City contributions to COPERS will continue to follow the established contribution policy and the sufficiency of the Fiduciary Net Position, the long-term expected rate of return on System investments, 7.5%, was applied as the single rate to all periods of projected benefit payments to determine the total pension liability.
The target allocation and best estimates of arithmetic real rates of return for each major asset class are summarized in the following table:
Expected Real
Target Rate of Return
Asset Class Allocation (Arithmetic)
Broad US Equity 22% 6.4
Broad International Equity 19 7.7
Intermediate Duration Fixed Income 20 2.6
Emerging Markets Debt Hard 5 5.1
Real Estate 15 6.3
Diversified Hedge Funds 10 4.3
Private Equity 1 7.3
Diversified Inflation Strategies 8 4.6
Sensitivity of the Net Position Liability to Changes in the Discount Rate The table below presents the net pension liability of the System calculated using the discount rate of
7.5% as well as what the net pension liability would be if it were calculated using the discount rate that is 1.0% lower (6.5%) or 1.0% higher (8.5%) than the current rate at June 30, 2016:
Sensitivity of Net Pension Liability to Changes in Discount Rate
(in thousands)
1% Decrease Discount Rate 1% Increase
(6.5 %) (7.5 %) (8.5 %)
Total Pension Liability $ 4,475,602 $ 3,984,137 $ 3,574,561
Plan Fiduciary Net Position 2,151,421 2,151,421 2,151,421
Net Pension Liability $ 2,324,181 $ 1,832,716 $ 1,423,140
Plan Fiduciary Net Position as a Percentage
of the Total Pension Liability 48.1% 54.0% 60.2%
City of Phoenix, Arizona Aviation Enterprise Fund NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) For the Fiscal Years ended June 30, 2016 and 2015
56
Pension Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pension For the years ended June 30, 2016 and 2015, the City recognized pension expense of $248,211,000
and $217,991,000, respectively. At June 30, 2016, the City reported deferred outflows of resources and deferred inflows of resources related to pension from the following sources:
Schedule of Deferred Inflow and Outflows of Resources
(in thousands)
Deferred Deferred
Outflows of Inflows of
Resources Resources
Differences Between Expected and Actual Experience $ — $ 80,119
Changes in Assumptions 152,922 55,536
Net Difference Between Projected and Actual on
Pension Plan Investments 193,642 —
Total $ 346,564 $ 135,655
Aviation Proportionate Share of Deferred Inflows and
Outflows of Resources $ 34,187 $ 13,382
Amounts reported as deferred outflows and deferred inflows of resources will be recognized in pension expense as follows:
Measurement Year Ended June 30
2017 $ 69,786
2018 69,786
2019 69,786
2020 1,551
2021 —
Thereafter —
14. OTHER POST-EMPLOYMENT BENEFITS (OPEB) Post-Employment Healthcare and Long-Term Disability Program The Aviation Enterprise Fund, through the City, provides certain post-employment health care benefits
for its retirees. Retirees meeting certain qualifications are eligible to participate in the City’s health insurance program along with the City’s active employees. As of August 1, 2007, separate rates have been established for active and retiree health insurance.
Medical Expense Reimbursement Plan Employees eligible to retire in 15 years or less from August 1, 2007, will receive a monthly subsidy from
the City’s Medical Expense Reimbursement Plan (MERP) when they retire. The MERP is a single-employer, defined benefit plan. Contributions by the City (plus earnings thereon) are the sole source of funding for the MERP.
The purpose of the monthly subsidy is to reimburse retirees for qualified medical expenses. The subsidy varies with length of service or bargaining unit, from $117 to $202 per month. Retirees may be eligible for additional subsidies depending on their bargaining unit, retirement date, or enrollment in the City’s medical insurance program. Current and future eligible retirees who purchase health insurance through the City’s plan during retirement will receive an additional subsidy to minimize the impact of unblending health insurance rates for active and retired employees.
City of Phoenix, Arizona Aviation Enterprise Fund NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) For the Fiscal Years ended June 30, 2016 and 2015
57
The City established the City of Phoenix MERP Trust to fund all or a portion of the City’s share of liabilities incurred in providing the benefits as reflected in Administrative Regulation 2.42 – Medical Expense Reimbursement Plan for Retirees and Eligible Surviving Spouses or Qualified Domestic Partners. A five-member Board of Trustees has been delegated responsibility for fiduciary oversight of the MERP Trust, subject to oversight of the City Council.
The City’s annual other postemployment benefit (OPEB) expense is calculated based on the annual required contribution (ARC), an amount actuarially determined in accordance with the parameters of GASB Statement 45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and amortize any unfunded actuarial liabilities over a period not to exceed 30 years.
The following table shows the components of the City’s annual MERP related OPEB cost for the year, the amount actually contributed to the plan, and changes in the City’s net OPEB obligation (in thousands):
Annual required contribution $ 27,897
Interest on OPEB oblilgation —
Contributions from the City 27,898
Increase in net OPEB obligation (1)
Net OPEB obligation, beginning of year 1
Net OPEB obligation, end of year $ —
The City’s annual MERP related OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the net OPEB obligation/(asset) since implementation were as follows (in thousands):
FiscalYear
EndedAnnual
OPEB CostEmployer
Contributions
Percentage ofAnnual OPEB
Cost ContributedNet OPEB
Obligation/(Asset)
06/30/16 $ 27,897 $ 27,897 100.0% $ —
06/30/15 27,937 27,936 100.0 1
06/30/14 29,508 29,508 100.0 —
06/30/13 34,021 34,021 100.0 —
06/30/12 33,456 33,456 100.0 —
06/30/11 38,007 38,007 100.0 —
06/30/10 37,574 17,204 45.8 —
06/30/09 37,967 43,579 114.8 (20,370)
06/30/08 39,000 53,758 137.8 (14,758)
As of July 1, 2015, the most recent actuarial valuation date, MERP benefits were funded by the City to a dedicated MERP Trust. The actuarial accrued liability for benefits was $433,805,000 and the actuarial value of assets was $138,466,000, resulting in an unfunded actuarial accrued liability (UAAL) of $295,339,000. The covered payroll (annual payroll of active employees covered by the plan) was $379,302,000 and the ratio of the UAAL to the covered payroll was 77.9 percent.
City of Phoenix, Arizona Aviation Enterprise Fund NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) For the Fiscal Years ended June 30, 2016 and 2015
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City of Phoenix, Arizona Aviation Enterprise Fund NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) For the Fiscal Years ended June 30, 2016 and 2015
The following table summarizes the more significant actuarial methods and assumptions used to calculate the ARC.
Valuation date 07/01/15
Actuarial cost method Projected unit credit
Amortization method Level dollar, closed
Remaining amortization period 27 years
Asset valuation method Market value
Actuarial assumptions:
Investment rate of return 7%
Projected salary increase N/A
Inflation rate 3%
Pre-medicare healthcare cost trend 5% – 9%
Post-medicare healthcare cost trend 5% – 6%
The number of participants as of July 1, 2015, the effective date of the biennial OPEB valuation, follows. There have been no significant changes in the number covered or the type of coverage since that date.
General City Public Safety Total
Active employees 2,936 2,385 5,321
Retirees and Beneficiaries 5,672 2,528 8,200
Total 8,608 4,913 13,521
Post-Employment Health Plan Employees eligible to retire in more than 15 years from August 1, 2007 who have payroll deductions for
City medical insurance coverage are entitled to a $150 monthly contribution to a Post-Employment Health Plan (PEHP) account in lieu of MERP subsidies. PEHP is a 100% employer-paid defined contribution. Funds accumulated in the account can be used upon termination of employment for qualified medical expenses. The current administrator of the plan is Nationwide Retirement Solutions.
Long-Term Disability Program Long‑term disability (LTD) benefits are available to regular, full-time, benefit-eligible employees who have been
employed by the City for at least 12 consecutive months. The program provides income protection of 2/3 of an employee's monthly base salary following a continuous three-month waiting period from the last day worked and the use of all leave accruals. The benefit continues to age 80 for those disabled prior to July 1, 2013 and age 75 for those disabled on or after July 1, 2013. Contributions to the LTD Trust by the City, plus earnings thereon, are the sole source of funding for the LTD program. The City pays 100 percent of the cost of this benefit.
The City established the City of Phoenix Long-Term Disability Trust to fund all or a portion of the City’s liabilities incurred in providing the benefits as reflected in Administrative Regulation 2.323 City of Phoenix Long-Term Disability Program. A five-member Board of Trustees has been delegated fiduciary responsibility for the LTD Trust, subject to oversight by the City Council. The LTD Trust issues a separate report that can be obtained through the City of Phoenix, Finance Department, Financial Accounting and Reporting Division, 251 W. Washington Street, 9th Floor, Phoenix, Arizona, 85003.
The City’s annual LTD related OPEB expense is calculated based on the ARC, an amount determined actuarially in accordance with the parameters of GASB Statement 45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and amortize any unfunded actuarial liabilities (or funding excess) over a period not to exceed 30 years. The following table shows the components of the City’s annual LTD related OPEB cost for the year, the amount actually contributed to the plan, and changes in the City’s net OPEB asset (in thousands):
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City of Phoenix, Arizona Aviation Enterprise Fund NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) For the Fiscal Years ended June 30, 2016 and 2015
Annual required contribution* $ 1,152
Interest on Net OPEB Asset 78
Contributions made 1,335
Increase in OPEB Asset 261
Net OPEB asset, beginning of year 1,121
Net OPEB asset, end of year $ 1,382
* The City does not calculate an adjustment to the ARC based on the value of the OPEB Asset.
The City’s annual LTD related OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the net OPEB asset since implementation were as follows (in thousands):
FiscalYear
EndedAnnual
OPEB CostEmployer
Contributions
Percentage ofAnnual OPEB
Cost ContributedNet OPEB
Asset
06/30/16 $ 1,074 $ 1,335 124.3% $ 1,382
06/30/15 2,578 2,581 100.1 1,121
06/30/14 2,719 2,751 101.2 1,118
06/30/13 2,872 2,971 103.4 1,086
06/30/12 2,391 2,018 84.4 987
06/30/11 2,965 997 33.6 1,360
06/30/10 2,456 848 34.5 3,328
06/30/09 (323) — N/A 4,936
06/30/08 — — N/A 4,613
As of July 1, 2015, the most recent actuarial valuation date, the LTD was 132.1 percent funded. The actuarial accrued liability for benefits was $57,943,000, and the actuarial value of assets was $76,522,000, resulting in an unfunded actuarial accrued liability (UAAL) of ($18,579,000). The covered payroll (annual payroll of active employees covered by the plan) was $775,313,000, and the ratio of the UAAL to the covered payroll was (2.40) percent.
The following table summarizes the more significant actuarial methods and assumptions used to calculate the ARC.
Valuation date 7/1/2015
Actuarial cost method Projected unit credit
Amortization method Level percentage of pay, open
Amortization period 30 years
Asset valuation method Market value
Actuarial assumptions:
Investment rate of return 7%
Projected salary increase 3.5%
Inflation rate 3%
Healthcare cost trend N/A
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City of Phoenix, Arizona Aviation Enterprise Fund NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) For the Fiscal Years ended June 30, 2016 and 2015
The number of participants as of July 1, 2015, the effective date of the biennial OPEB valuation, follows. There have been no significant changes in the number or category of employees covered since that date.
Fire Police General City Total
Current Active Employees 1,592 2,731 7,736 12,059
Currently Disabled Employees 4 10 306 320
Total Covered Participants 1,596 2,741 8,042 12,379
Actuarial Valuations Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions
about the probability of occurrence of events far into the future. Examples include assumptions about future employment, mortality, and the healthcare cost trend. Amounts determined regarding the funded status of the plan and the annual required contributions of the City are subject to continual revision as actual results are compared with past expectations and new assumptions are made about the future. The schedule of funding progress, presented as required supplementary information following the notes to the financial statements, presents multiyear trend information about whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial liabilities for benefits.
Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as understood by the City and plan members) and include the types of benefits provided at the time of each valuation. The actuarial methods and assumptions used include techniques that are designed to reduce the effects of short-term volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the long-term perspective of the calculations.
15. CAPITAL CONTRIBUTIONS The Aviation Enterprise Fund periodically receives grant revenues from federal and state agencies which are
either for capital projects or operating purposes. Revenue is considered earned as the related approved capital outlays or expenses are incurred. Revenues from capital grants are reported as capital contributions on the Statements of Revenue, Expenses, and Changes in Net Position and revenues from operating grants are reported as non-aeronautical operating revenue. In fiscal years 2016 and 2015, the Department received $27.8 million and $21.0 million, respectively, in federal and state grants combined.
16. PASSENGER FACILITY CHARGES The Passenger Facility Charge Program allows the collection of PFC fees up to $4.50 for boarded passenger at
commercial airports controlled by public agencies. PFC fees are not levied on "non-revenue" passengers and are applied only on the first two legs of a connecting flight. The Airport uses these fees to fund FAA-approved projects that enhance safety, security, or capacity; reduce noise; or increase air carrier competition. The fees are currently set at $4.50.
The Airport recorded $83.4 million and $84.8 million in passenger facility charges for the years ended June 30, 2016 and 2015, respectively.
17. CUSTOMER FACILITY CHARGES All on-airport rental car companies who lease space at the Airport and all off-airport rental car companies who
obtain customers through the Sky Harbor Rental Car Center collect a daily customer facility charge of $6.00 per transaction day per vehicle from Sky Harbor Airport customers. Vehicle rental companies remit customer facility charges that were collected or should have been collected from its airport customers on a monthly basis to the City, together with the monthly statement of transactions and transaction days.
The Airport recorded $47.1 million and $44.8 million in customer facility charges for the years ended June 30, 2016 and 2015, respectively.
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City of Phoenix, Arizona Aviation Enterprise Fund REQUIRED SUPPLEMENTARY INFORMATION For the Fiscal Years ended June 30, 2016 and 2015
City of Phoenix Employees' Retirement System (COPERS)
Schedule of Changes in Net Pension Liability and Related Ratios
(in thousands) 2016 2015 2014
Total Pension Liability
Service cost $ 80,757 $ 75,310 $ 78,331
Interest (includes interest on service cost) 293,206 266,355 257,219
Changes of benefit terms (3,229) — —
Differences between expected and actual experience (76,891) (31,009) (20,336)
Changes of assumption (69,420) 254,870 —
Benefit payments, including refunds of
member contributions (216,193) (204,403) (179,877)
Net change in total pension liability 8,230 361,123 135,337
Total Pension Liability - beginning 3,975,907 3,614,784 3,479,447
Total Pension Liability - ending $ 3,984,137 $ 3,975,907 $ 3,614,784
Plan Fiduciary Net Position
Contributions - Employer $ 119,844 $ 117,092 $ 110,629
Contributions - Members 29,253 27,861 27,760
Net investment income 9,171 47,148 298,736
Benefit payments, including refunds of
member contributions (216,409) (204,403) (179,877)
Administrative expense (234) (414) (628)
Net change in plan fiduciary net position (58,375) (12,716) 256,620
Plan fiduciary net position - beginning 2,209,526 2,222,242 1,965,622
Plan fiduciary net position - ending $ 2,151,151 $ 2,209,526 $ 2,222,242
Net Pension Liability - ending $ 1,832,716 $ 1,766,381 $ 1,392,542
Plan Fiduciary Net Position as a Percentage of the
Total Pension Liability 54.00% 55.57% 61.48%
Covered Employee Payroll (in thousands) $ 473,974 $ 460,441 $ 485,227
Net Pension Liability as a Percentage of Covered
Employee Payroll 386.67% 383.63% 286.99%
Aviation Enterprise Fund proportionate share
of the net pension liability:
Amount $ 180,787 $ 172,577 $ 133,150
Percentage 9.86% 9.77% 9.56%
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City of Phoenix Employees' Retirement System (COPERS)
Schedule of Employer Contributions
Actual
Contribution as
a percentage
Year Actuarially Contribution Covered of Covered
Ended Determined Actual Deficiency Employee Employee
June 30, Contribution Contribution (excess) Payroll Payroll
2016 $ 119,844 $ 119,844 $ — $ 473,974 25.28%
2015 117,092 117,092 — 484,309 24.18%
2014 110,629 110,629 — 518,746 21.33%
2013 115,244 115,244 — 524,648 21.97%
2012 114,709 114,709 — 540,792 21.21%
2011 105,682 105,682 — 541,388 19.52%
2010 90,965 90,965 — 578,327 15.73%
2009 86,241 86,241 — 587,171 14.69%
2008 66,383 66,383 — 580,207 11.44%
2007 64,198 64,198 — 538,211 11.93%
Notes to the Schedule
Valuation date June 30, 2014
Timing Actuarially determined contribution rates are calculated based on the
actuarial valuation one year prior to the beginning of the plan year
Actuarial cost method Entry Age
Asset valuation method 4-year smoothed market
Amortization method The UAL as of June 30, 2013 is amortized as a level percentage of payroll over a
closed 25-year period. The impact of the September 2013 assumption change
is amortized over a closed 25-year period with a four-year phase-in. Future
gains and losses are amortized over closed 20-year periods. However, future
gains will not be amortized over a shorter period than the remaining period
on the amortization of the 2013 UAL.
Discount rate 7.50%
Salary increases 3.50% plus merit component based on age ranging from 3.80% at age 20
to 0.00% for members age 65 and older
Amortization payment 3.50%
growth rate
COLA 1.50%
Mortality Male and female RP-2000 combined employee and annuitant tables
A complete description of the methods and assumptions used to determine contribution rates for the fiscal year ending June 30, 2016 can be found in the June 30, 2014 actualrial valuation report.
City of Phoenix Aviation Enterprise Fund REQUIRED SUPPLEMENTARY INFORMATION For the Fiscal Years Ended June 30, 2016 and 2015
64
(Unaudited) Schedule of Funding Progress (in thousands)
Unfunded UAL
Actuarial (Funding
Liability- Excesss) as a
Actuarial Actuarial UAL Percent Annual Percentage
Actuarial Value of Accrued (Funding Percent Covered of Covered
Valuation Assets Liability Excess) Funded Payroll Payroll
Date (a) (b) (b-a) (a/b) (c) (b-a)/(c)
MERP (1)
7/1/2015 $ 138,466 $ 433,805 $ 295,339 31.9% $ 379,302 77.9%
7/1/2013 113,666 419,610 305,944 27.1% 461,156 66.3%
8/1/2011 86,964 423,058 336,094 20.6% 510,561 65.8%
8/1/2009 60,459 424,989 364,530 14.2% 593,932 61.4%
8/1/2006 — 345,579 345,579 —% 563,570 61.3%
LTD (2)
7/1/2015 $ 76,522 $ 57,943 $ (18,579) 132.1% $ 775,313 (2.40)%
7/1/2013 69,463 69,504 41 99.9% 816,086 0.01%
7/1/2011 68,087 68,413 326 99.5% 816,962 0.04%
7/1/2009 60,992 66,523 5,531 91.7% 876,001 0.63%
7/1/2007 64,956 60,344 (4,612) 107.6% 856,510 (0.54)%
Notes: (1) The initial valuation for MERP was dated August 1, 2006. Valuations are performed biennially beginning with the valuation
dated August 1, 2009. (2) Valuations are performed biennially beginning with the valuation dated July 1, 2007. The funding value for the August 1,
2007 valuation has been adjusted to reflect a $9,100,000 reduction during fiscal year 2007-08.
City of Phoenix Aviation Enterprise Fund REQUIRED SUPPLEMENTARY INFORMATION For the Fiscal Years Ended June 30, 2016 and 2015
67
STATISTICAL INFORMATIONTHE STATISTICAL SECTION CONTAINS UNAUDITED INFORMATION ABOUT THE AVIATION ENTERPRISE FUND OR THE AIRPORT.
SUBSECTIONS INCLUDE:Subsection Description
1 Financial Schedules
2 Debt Schedules
3 Economic and Demographic Schedules
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FINANCIAL SCHEDULESTHE FINANCIAL SCHEDULES INCLUDE:Schedule Description
1 Comparative Schedules of Revenues, Expenditures and Changes in Fund Balances (non-GAAP)
2 Reconciliation of Airport Cash on Hand to Available Fund Balance per Budgetary Presentation
3 Reconciliation of GAAP Operating Revenues and Expenses to Revenues and Expenditures per Budgetary Presentation
4 Changes in Net Position
5 Principal Revenue Sources
6 Rates and Charges
70
2016 2015
REVENUES
Landing Area $ 54,954 $ 52,082
Terminal Area 129,242 127,641
Ground Transportation 130,764 127,039
Interest 3,092 1,842
Other 27,275 31,129
Total Revenues before Reimbursement 345,327 339,733
Transportation O&M Expense Reimbursement (1) 14,837 14,488
Total Revenues 360,164 354,221
EXPENDITURES AND ENCUMBRANCES
Cost of Operation and Maintenance
Personal Services 105,591 105,760
Contractual Services 108,376 105,198
Supplies 11,686 11,092
Equipment/Minor Improvements 4,583 4,115
Total Cost of Operation and Maintenance (1) 230,236 226,165
Net Airport Revenue Available for Debt 129,928 128,056
Service (Net Airport Revenues)
Total Senior Lien Airport Revenue Bond Debt Service 48,775 48,732
Net Airport Revenue Available After Senior Lien Revenue
Bond Debt Service (Designated Revenues) 81,153 79,324
Total Junior Lien Airport Revenue Bond Debt Service (2) 3,962 1,604
Net Airport Revenue Available After Senior and Junior
Lien Revenue Bond Debt Service 77,191 77,720
Other Expenditures
Capital Improvements 54,493 17,719
General Obligation Bond Debt Service 197 206
Total Other Expenditures 54,690 17,925
Total Expenditures and Encumbrances 337,663 294,426
Excess of Revenues Over Expenditures
and Encumbrances 22,501 59,795
SCHEDULE 1 City of Phoenix, Aviation Enterprise Fund COMPARATIVE SCHEDULES OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES (NON-GAAP) (In Expense Priority Established by the Airport Bond Ordinance) (For the fiscal years ended June 30; in thousands)
71
2016 2015
OTHER FINANCING SOURCES (USES)
Recovery of Prior Years Expenditures $ 1,192 $ 2,368
Transfer to General Fund:
Staff and Administrative – Central Service (7,716) (7,969)
Transfers (to) from Other Funds
Transfers to Other Funds (17,233) (46,599)
Transfers from Other Funds 3 533
Total Other Financing Sources (Uses) (23,754) (51,667)
Net Increase in Fund Balance (1,253) 8,128
FUND BALANCE, JULY 1 327,287 319,159
FUND BALANCE, JUNE 30 326,034 327,287
Non-Cash Budgetary Transactions (3) 49,578 (426)
Total Airport Cash on Hand, June 30 $ 375,612 $ 326,861
Days Cash Calculation (4)
Total Airport Cash on Hand, June 30 $ 375,612 $ 326,861
Total Cost of Maintenance and Operation 230,236 226,165
Days Cash on Hand 595 528
(1) Rental Car Center Transportation O&M Expenses as defined in the CFC Bond Documents are included as a Cost of Operation and Maintenance. Amounts reimbursed to the City by the CFC trustee to pay the rental car busing service expenses (included as a Cost of Operation and Maintenance) are included as Revenues.
(2) Debt service is net of the Junior Lien Passenger Facility Charge Credits and the Recovery Zone Economic Development Bonds subsidy from the United States Treasury.
(3) Consists of budgetary encumbrances, revenue recoveries and other timing differences.
(4) Days cash on hand is calculated as follows: Total airport cash on hand divided by total cost of maintenance and operation multiplied by 365.
SCHEDULE 1 City of Phoenix, Aviation Enterprise Fund COMPARATIVE SCHEDULES OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES (NON-GAAP) (CONTINUED) (In Expense Priority Established by the Airport Bond Ordinance) (For the fiscal years ended June 30; in thousands)
72
2016 2015
Comparative Statements of Net Position
Cash and Cash Equivalents (Unrestricted) $ 76,667 $ 56,355
Investments (Unrestricted) 298,945 270,506
Total Airport Cash on Hand, June 30 375,612 326,861
Adjusted For:
Non-Cash Budgetary Transactions (1) (49,578) 426
Available Fund Balance per Budgetary Presentation (2) $ 326,034 $ 327,287
Notes:
(1) Consists of budgetary encumbrances, revenue recoveries and other timing differences.
(2) Budgetary Presentation is shown on Schedule 1 - City of Phoenix Aviation Enterprise Fund Comparative Schedule of Revenues, Expenditures, and Changes in Fund Balances
SCHEDULE 2 City of Phoenix, Aviation Enterprise Fund RECONCILIATION OF AIRPORT CASH ON HAND TO AVAILABLE FUND BALANCE PER BUDGETARY PRESENTATION (For the fiscal years ended June 30; in thousands)
73
2016 2015
Revenues
Total GAAP Operating Revenues $ 333,415 $ 340,967
Adjusted for :
Interest 3,092 1,842
Transportation O&M Expense Reimbursement 14,837 14,488
All Other (1) 8,820 (3,076)
Revenues per Budgetary Presentation (2) $ 360,164 $ 354,221
Operating Expenses/Expenditures
Total GAAP Operating Expenses $ 436,404 $ 417,817
Adjusted for :
Environmental, Studies & Noise Program (1,956) (2,600)
Depreciation (166,829) (163,691)
Staff and Administrative (7,716) (7,969)
Expensed Capital (3) (2,733) (5,031)
Other (1) (26,934) (12,361)
Maintenance and Operation Expenditures
per Budgetary Presentation (2) $ 230,236 $ 226,165
Senior Lien Coverage Calculation
Revenue $ 360,164 $ 354,221
Operating Expenditures 230,236 226,165
Designated Revenue for Senior Lien Debt Service $ 129,928 $ 128,056
Senior Lien Debt Service $ 48,775 $ 48,732
Senior Lien Debt Service Coverage (4) 2.66 2.63
Junior Lien Coverage Calculation
Designated Revenue for Senior Lien Debt Service $ 129,928 $ 128,056
Senior Lien Debt Service 48,775 48,732
Designated Revenue for Junior Lien Debt Service $ 81,153 $ 79,324
Junior Lien Debt Service $ 49,802 $ 46,470
Adjusted for :
Junior Lien PFC Credit (45,249) (44,278)
2010 RZEDB Subsidy Payments (591) (588)
Net Junior Lien Debt Service $ 3,962 $ 1,604
Junior Lien Debt Service Coverage (4) 20.48 49.45
Aggregate Senior & Junior Liens Coverage Calculation
Designated Revenue for Debt Service $ 129,928 $ 128,056
Aggregate Senior & Junior Liens Debt Service 52,737 50,336
Aggregate Senior & Junior Liens Debt Service Coverage 2.46 2.54
Notes:
(1) Includes various GAAP accounting entries. Also includes budgetary encumbrances and revenue recoveries.
(2) Budgetary Presentation is shown on the City of Phoenix Aviation Enterprise Fund Comparative Schedule of Revenues, Expenditures and Changes in Fund Balances on page 62.
(3) Includes repairs and studies that do not result in a major improvement to the Aviation Enterprise Fund.
(4) As defined in the City Purchase Agreement.
SCHEDULE 3 City of Phoenix, Aviation Enterprise Fund RECONCILIATION OF GAAP OPERATING REVENUES AND EXPENSES TO REVENUES AND EXPENDITURES PER BUDGETARY PRESENTATION (For the fiscal years ended June 30; in thousands)
74
2016 2015 2014 2013
Operating Revenues
Aeronautical Revenue $ 144,093 $ 145,046 $ 141,633 $ 129,026
Non-Aeronautical Revenue 189,322 195,921 184,411 176,660
Total Operating Revenue 333,415 340,967 326,044 305,686
Operating Expenses
Operation and Maintenance
Personal Services 86,250 86,172 65,339 72,791
Contractual Services 124,420 115,486 124,360 114,748
Supplies 11,925 10,771 11,014 11,797
Equipment/Minor Improvements 37,308 31,128 26,045 32,850
Environmental, Studies and Noise 1,956 2,600 5,099 8,361
City Staff and Administrative 7,716 7,969 7,262 6,869
Depreciation 166,829 163,691 158,760 146,034
Total Operating Expenses 436,404 417,817 397,879 393,450
Net Operating Loss (102,989) (76,850) (71,835) (87,764)
Non-Operating Revenues (Expenses)
Passenger Facility Charges 83,449 84,774 79,672 78,184
Rental Car Customer Facility Charges 47,118 44,839 43,113 41,457
Investment Income 6,591 2,988 3,831 519
Interest on Capital Debt (67,141) (65,051) (64,863) (70,785)
Loss on Disposal of Capital Assets (759) (47) (29) (153)
Total Non-Operating Revenues (Expenses) 69,258 67,503 61,724 49,222
Capital Contributions 27,803 20,970 27,184 14,516
Transfer from Other Funds 2 1 — 31
Transfer to Other Funds (330) (365) (166) —
Change in Net Position (6,256) 11,259 16,907 (23,995)
Net Position - July 1 1,651,661 1,640,402 1,765,618 1,789,613
Restatement of Beginning Net Position — — (142,123) —
Net Position - July 1, as restated 1,651,661 1,640,402 1,623,495 1,789,613
Net Position - June 30 $ 1,645,405 $ 1,651,661 $ 1,640,402 $ 1,765,618
Net Position - June 30
Net Investment in Capital Assets $ 1,104,662 $ 1,170,752 $ 1,241,513 $ 1,255,699
Restricted 350,755 343,472 272,624 266,673
Unrestricted 189,988 137,437 126,265 243,246
Total Net Position $ 1,645,405 $ 1,651,661 $ 1,640,402 $ 1,765,618
SCHEDULE 4 City of Phoenix, Aviation Enterprise Fund CHANGES IN NET POSITION Last Ten Fiscal Years (in thousands)
75
2012 2011 2010 2009 2008 2007
$ 124,112 $ 118,580 $ 110,979 $ 111,451 $ 104,146 $ 99,829
175,655 170,080 155,799 161,628 180,148 177,399
299,767 288,660 266,778 273,079 284,294 277,228
71,987 69,189 71,253 62,639 62,576 57,440
103,669 104,365 97,580 109,108 118,537 94,601
11,061 11,294 9,333 11,071 13,474 13,744
31,225 36,026 19,249 44,504 16,388 10,021
8,218 15,364 13,811 3,028 — —
5,889 4,364 5,037 5,943 6,388 6,188
127,699 128,697 129,034 110,067 86,364 86,269
359,748 369,299 345,297 346,360 303,727 268,263
(59,981) (80,639) (78,519) (73,281) (19,433) 8,965
78,807 79,870 77,165 74,134 82,248 86,052
41,253 39,274 36,050 33,573 35,016 34,428
2,750 2,609 3,518 8,958 14,142 18,505
(75,927) (70,612) (46,768) (43,076) (32,845) (43,711)
16 7,803 (1,420) (24) 2,692 (197)
46,899 58,944 68,545 73,565 101,253 95,077
32,694 33,832 40,000 25,005 44,668 37,553
— — — — — —
— — — — (1,267) (134)
19,612 12,137 30,026 25,289 125,221 141,461
1,770,001 1,757,864 1,727,838 1,896,919 1,771,698 1,630,237
— — — (194,370) — —
1,770,001 1,757,864 1,727,838 1,702,549 1,771,698 1,630,237
$ 1,789,613 $ 1,770,001 $ 1,757,864 $ 1,727,838 $ 1,896,919 $ 1,771,698
$ 1,325,444 $ 1,312,605 $ 1,465,741 $ 1,493,939 $ 1,531,043 $ 1,533,973
106,337 106,350 51,730 52,019 37,822 49,671
357,832 351,046 240,393 181,880 328,054 188,054
$ 1,789,613 $ 1,770,001 $ 1,757,864 $ 1,727,838 $ 1,896,919 $ 1,771,698
SCHEDULE 4 City of Phoenix, Aviation Enterprise Fund CHANGES IN NET POSITION (CONTINUED) Last Ten Fiscal Years (in thousands)
76
Fiscal Year
2016 2015 2014 2013 2012
Terminal Fees
Amount $ 75,114,921 $ 78,422,082 $ 73,089,595 $ 64,904,028 $ 56,745,994
Percent of Operating Revenue 22.53% 23.00% 22.42% 21.23% 18.93%
Landing Fees
Amount $ 49,869,087 $ 48,497,053 $ 49,860,459 $ 46,892,628 $ 42,970,142
Percent of Operating Revenue 14.96% 14.22% 15.29% 15.34% 14.33%
Parking
Amount $ 84,585,621 $ 81,094,038 $ 76,964,416 $ 74,913,811 $ 72,753,006
Percent of Operating Revenue 25.37% 23.78% 23.61% 24.51% 24.27%
Rental Cars
Amount $ 46,668,644 $ 52,103,343 $ 49,627,460 $ 47,793,301 $ 47,094,786
Percent of Operating Revenue 14.00% 15.28% 15.22% 15.63% 15.71%
Fiscal Year
2011 2010 2009 2008 2007
Terminal Fees
Amount $ 45,524,353 $ 40,505,843 $ 45,397,236 $ 41,533,432 $ 39,602,808
Percent of Operating Revenue 15.77% 15.18% 16.62% 14.61% 14.29%
Landing Fees
Amount $ 41,504,514 $ 38,489,900 $ 37,567,983 $ 34,688,371 $ 34,463,778
Percent of Operating Revenue 12.45% 14.43% 13.76% 12.20% 12.43%
Parking
Amount $ 69,837,852 $ 66,087,317 $ 70,231,461 $ 81,543,211 $ 80,052,918
Percent of Operating Revenue 24.19% 24.77% 25.72% 28.68% 28.88%
Rental Cars
Amount $ 45,684,285 $ 43,999,292 $ 41,665,110 $ 45,801,605 $ 42,899,798
Percent of Operating Revenue 15.83% 16.49% 15.26% 16.11% 15.47%
SCHEDULE 5 City of Phoenix, Aviation Enterprise Fund PRINCIPAL REVENUE SOURCES for Operating Revenues over Ten Percent of Total Operating Revenues Last Ten Fiscal Years
77
Fiscal Year
2016 2015 2014 2013 2012
Airline Terminal Fees (1)
Fee per square foot
Terminal 2 $ 106.68 $ 118.26 $ 112.80 $ 110.65 $ 79.99
Terminal 3 106.68 118.26 112.80 110.65 83.73
Terminal 4 106.68 118.26 112.80 110.65 104.56
Landing Fees
Fee per 1,000 pounds 1.98 1.87 1.99 1.93 1.67
Parking Rates
Terminal Garages (per hour) 4.00 4.00 4.00 4.00 4.00
Terminal Garages (daily max) 25.00 25.00 25.00 25.00 25.00
Economy Covered 11.00 11.00 11.00 11.00 11.00
Economy Uncovered 9.00 9.00 9.00 9.00 9.00
Rental Car Center Rates
Percent of Gross Rent 10% 10% 10% 10% 10%
Fiscal Year
2011 2010 2009 2008 2007
Airline Terminal Fees
Fee per square foot
Terminal 2 $ 75.80 $ 66.83 $ 59.49 $ 52.09 $ 49.78
Terminal 3 81.92 79.76 59.84 58.15 53.19
Terminal 4 90.90 85.60 69.65 66.79 63.31
Landing Fees
Fee per 1,000 pounds 1.59 1.53 1.39 1.25 1.18
Parking Rates
Terminal Garages (per hour) 4.00 4.00 4.00 4.00 3.00
Terminal Garages (daily max) 25.00 25.00 25.00 20.00 20.00
Economy Covered 11.00 10.00 10.00 10.00 10.00
Economy Uncovered 9.00 8.00 8.00 8.00 8.00
Rental Car Center Rates
Percent of Gross Rent 10% 10% 10% 10% 10%
Note:
(1) In January 2012, the Aviation Department implemented a single terminal rental rate to be effective at all of its passenger terminals. The mid-year change to the terminal rent methodology did not change the overall budgeted costs associated with the three terminals at the Airport. It was a technical change that allowed for the equalization of rental rates across all terminals.
SCHEDULE 6 City of Phoenix, Aviation Enterprise Fund RATES AND CHARGES for Principal Revenue Sources Last Ten Fiscal Years
79
DEBT SCHEDULESTHE DEBT SCHEDULES INCLUDE:Schedule Description
7 Outstanding Debt Payable from General Airport Revenue, per Enplaned Passenger
8 Debt Service Paid from General Airport Revenue, per Enplaned Passenger
9 Bond Ratings
City of Phoenix Civic Improvement Corporation Bonds
10 Senior Lien Airport Revenue Bonds – Schedule of Outstanding Debt
11 Senior Lien Airport Revenue Bonds – Schedule of Debt Service Requirements
12 Junior Lien Airport Revenue Bonds – Schedule of Outstanding Debt
13 Junior Lien Airport Revenue Bonds – Schedule of Debt Service Requirements
14 Rental Car Facility Charge Revenue Bonds – Schedule of Outstanding Debt
15 Rental Car Facility Charge Revenue Bonds – Schedule of Debt Service Requirements
City of Phoenix Airport General Obligation Bonds
16 Schedule of Outstanding Debt
17 Schedule of Debt Service Requirements
80
Fiscal Year
2016 2015 2014 2013 2012
Outstanding Debt (in thousands)
Revenue Bonds
Senior Lien Bonds $ 472,895 $ 496,905 $ 519,775 $ 542,920 $ 599,615
Junior Lien Bonds 739,900 659,585 672,290 684,395 696,105
Commercial Paper Notes 130,000 140,000 120,000 100,000 —
General Obligation Bonds 7,865 7,865 7,870 8,905 9,615
Total Outstanding Debt $ 1,350,660 $ 1,304,355 $ 1,319,935 $ 1,336,220 $ 1,305,335
Enplaned Passengers 22,055,907 21,488,569 20,518,748 20,235,788 20,278,458
Outstanding Debt per
Enplaned Passenger $ 61.24 $ 60.70 $ 64.33 $ 66.03 $ 64.37
Fiscal Year
2011 2010 2009 2008 2007
Outstanding Debt (in thousands)
Revenue Bonds
Senior Lien Bonds (a) $ 625,270 $ 680,165 $ 699,320 $ 718,310 $ 457,430
Junior Lien Bonds 696,105 — — — —
Voter-Approved Bonds — — — — 28,745
Commercial Paper Notes — 200,000 80,000 — 4,000
General Obligation Bonds 10,500 11,350 12,195 13,580 17,360
Total Outstanding Debt $ 1,331,875 $ 891,515 $ 791,515 $ 731,890 $ 507,535
Enplaned Passengers 19,681,233 19,096,529 18,912,120 20,667,530 20,762,870
Outstanding Debt per
Enplaned Passenger $ 67.67 $ 46.68 $ 41.85 $ 35.41 $ 24.44
Note:(a) Includes Subordinated Excise Tax Variable Rate Demand Revenue Bonds (Airport Improvements), Series 1995, which
were refunded by the Senior Lien Airport Revenue Refunding Bonds, Series 2008D (AMT) in June 2008.
Includes a portion of the Senior Lien Excise Tax Revenue Refunding Bonds, Series 2007, which were issued for Airport,in fiscal years 2007 through 2011. The Airport portion on the bonds were paid in full in fiscal year 2011.
Rental Car Facility Charge Bonds have been omitted from this schedule because payments do not come from generalairport revenue.
SCHEDULE 7 City of Phoenix, Aviation Enterprise Fund OUTSTANDING DEBT PAYABLE FROM GENERAL AIRPORT REVENUE, PER ENPLANED PASSENGER Last Ten Fiscal Years
81
Fiscal Year
2016 2015 2014 2013 2012
Debt Service (in thousands)
Revenue Bonds
Principal $ 38,135 $ 35,575 $ 35,250 $ 33,615 $ 25,655
Interest 60,567 59,626 61,248 64,495 66,925
General Obligation Bonds
Principal — 5 500 710 885
Interest 197 201 360 395 430
Total Debt Service $ 98,899 $ 95,407 $ 97,358 $ 99,215 $ 93,895
Enplaned Passengers 22,055,907 21,488,569 20,518,748 20,235,788 20,278,458
Debt Service per
Enplaned Passenger $ 4.48 $ 4.44 $ 4.74 $ 4.90 $ 4.63
Fiscal Year
2011 2010 2009 2008 2007
Debt Service (in thousands)
Revenue Bonds
Principal $ 20,610 $ 19,155 $ 18,990 $ 14,595 $ 18,350
Interest 62,453 35,744 37,286 25,195 34,672
General Obligation Bonds
Principal 850 845 1,385 3,780 3,590
Interest 464 498 563 770 1,104
Total Debt Service $ 84,377 $ 56,242 $ 58,224 $ 44,340 $ 57,716
Enplaned Passengers 19,681,233 19,096,529 18,912,120 20,667,530 20,762,870
Debt Service per
Enplaned Passenger $ 4.29 $ 2.95 $ 3.08 $ 2.15 $ 2.78
Source:
City of Phoenix, Aviation Department
Note:
Rental Car Facility Charge Bonds have been omitted from this schedule because payments do not come from generalairport revenue.
SCHEDULE 8 City of Phoenix, Aviation Enterprise Fund DEBT SERVICE PAID FROM GENERAL AIRPORT REVENUE, PER ENPLANED PASSENGER Last Ten Fiscal Years
83
Rating
Series Moody's S & P
City of Phoenix Civic Improvement Corporation
Senior Lien Revenue Bonds Aa3 AA-
2008A Airport Revenue Bonds (Non-AMT)
2008B Airport Revenue Bonds (AMT)
2008C Airport Revenue Refunding Bonds (Non-AMT)
2008D Airport Revenue Refunding Bonds (AMT)
2013 Airport Revenue Refunding Bonds (AMT)
Junior Lien Revenue Bonds A1 A+
2010A Airport Revenue Bonds (Non-AMT)
2010B Airport Revenue Bonds (Taxable)
2010C Airport Revenue Refunding Bonds (Non-AMT)
2015A Airport Revenue Bonds (Non-AMT)
2015B Airport Revenue Refunding Bonds (Non-AMT)
Rental Car Facility Charge Revenue Bonds A3 A
2004 Rental Car Facility Bonds (Taxable)
City of Phoenix General Obligation Bonds Aa1 AA+
2014 General Obligation Refunding Bonds
Source:
City of Phoenix, Finance Department
SCHEDULE 9 City of Phoenix, Aviation Enterprise Fund BOND RATINGS
84
Delivery Original Maturity Bonds
Date Series Issuance Dates Coupons Outstanding (a)
06-18-08 2008A $ 206,840,000 7/1/20-38 4.80% – 5.00% $ 206,840,000
06-18-08 2008B 43,160,000 7/1/12-19 5.00% – 5.25% 18,255,000
06-18-08 2008C (b) 109,850,000 7/1/09-22 3.00% – 5.00% 53,730,000
06-18-08 2008D (b) 68,520,000 7/1/09-20 4.00% – 5.50% 17,990,000
03-05-13 2013 (b) 196,600,000 7/1/14-32 3.00% – 5.00% 176,080,000
Total $ 472,895,000
Notes:
(a) Does not include bonds maturing on July 1, 2016.
(b) Series 2008C, 2008D and 2013 were used for refunding purposes.
SCHEDULE 10 City of Phoenix, Aviation Enterprise Fund SENIOR LIEN AIRPORT REVENUE BONDS SCHEDULE OF OUTSTANDING DEBT (as of June 30, 2016)
85
Fiscal
Year Principal Interest Total
2017 $ 25,235,000 $ 23,561,763 $ 48,796,763
2018 26,575,000 22,275,450 48,850,450
2019 27,935,000 20,983,500 48,918,500
2020 29,505,000 19,624,625 49,129,625
2021 25,710,000 18,151,250 43,861,250
2022 26,995,000 16,865,750 43,860,750
2023 17,810,000 15,544,550 33,354,550
2024 18,710,000 14,654,050 33,364,050
2025 19,640,000 13,718,550 33,358,550
2026 20,630,000 12,736,550 33,366,550
2027 21,655,000 11,705,050 33,360,050
2028 22,740,000 10,622,300 33,362,300
2029 23,870,000 9,487,750 33,357,750
2030 25,065,000 8,294,250 33,359,250
2031 26,320,000 7,041,000 33,361,000
2032 27,635,000 5,725,000 33,360,000
2033 12,770,000 4,343,250 17,113,250
2034 13,410,000 3,704,750 17,114,750
2035 14,080,000 3,034,250 17,114,250
2036 14,785,000 2,330,250 17,115,250
2037 15,520,000 1,591,000 17,111,000
2038 16,300,000 815,000 17,115,000
Total $ 472,895,000 $ 246,809,888 $ 719,704,888
SCHEDULE 11 City of Phoenix, Aviation Enterprise Fund SENIOR LIEN AIRPORT REVENUE BONDS SCHEDULE OF DEBT SERVICE REQUIREMENTS
86
Delivery Original Maturity Bonds
Date Series Issuance Dates Coupons Outstanding (a)
09-01-10 2010A (c) $ 642,680,000 7/1/13-40 2.00% – 5.25% $ 572,850,000
09-01-10 2010B(c),(d) 21,345,000 7/1/2040 6.6% 21,345,000
09-01-10 2010C (b) 32,080,000 7/1/23-25 5% 32,080,000
12-15-15 2015A (e) 95,785,000 7/1/16-45 4% - 5% 94,970,000
12-15-15 2015B (c) 18,655,000 7/1/34 5% 18,655,000
Total $ 739,900,000
Notes:
(a) Does not include bonds maturing on July 1, 2016.
(b) Series 2010C was used for refunding purposes.
(c) 100% of debt service due on or before July 1, 2021 on these bonds is also secured by an irrevocable commitment of net proceeds of a passenger facility charge (the PFC) imposed by the City and collected on behalf of the City by non-exempt passenger air carriers at Phoenix Sky Harbor International Airport. The PFC is currently imposed at the rate of $4.50 per qualifying enplaned passenger and is required to be remitted to the City less any accrued interest and an $0.11 per PFC airline collection fee.
(d) Represents bonds issued as RZEDB Bonds for purposes of the American Recovery and Reinvestment Act of 2009, and the Internal Revenue Code of 1986. Subject to the City’s compliance with certain requirements of the Code, the City expects to receive semiannual cash subsidy payments rebating a portion of the interest on these bonds from the United States Treasury in an amount equal to 45% of the interest payable each respective interest payment date. The debt service shown above has not been reduced by the expected subsidy payments. On March 1, 2013, the federal government announced the implementation of certain automatic budget cuts known as the sequester, which has resulted in a reduction of the federal subsidy by 6.8% and 7.3% (the Sequester Reductions), in fiscal years 2016 and 2015, respectively. However, the City does not expect the Sequester Reductions to have a material adverse effect on its ability to make payments of interest on the RZEDB Bonds.
(e) 30% of debt service due on or before July 1, 2021 on these bonds is also secured by an irrevocable commitment of net proceeds of a passenger facility charge imposed by the City and collected on behalf of the City by non-exempt passenger air carriers at Phoenix Sky Harbor International Airport.
SCHEDULE 12 City of Phoenix, Aviation Enterprise Fund JUNIOR LIEN AIRPORT REVENUE BONDS SCHEDULE OF OUTSTANDING DEBT (as of June 30, 2016)
87
Fiscal
Year Principal Interest Total
2017 $ 15,495,000 $ 37,091,851 $ 52,586,851
2018 16,270,000 36,321,351 52,591,351
2019 16,980,000 35,610,551 52,590,551
2020 17,805,000 34,782,752 52,587,752
2021 18,655,000 33,934,276 52,589,276
2022 19,580,000 33,006,526 52,586,526
2023 30,735,000 32,027,526 62,762,526
2024 32,270,000 30,490,777 62,760,777
2025 33,885,000 28,877,276 62,762,276
2026 23,750,000 27,236,182 50,986,182
2027 24,935,000 26,048,683 50,983,683
2028 26,185,000 24,801,932 50,986,932
2029 27,490,000 23,492,683 50,982,683
2030 28,865,000 22,118,182 50,983,182
2031 30,240,000 20,738,108 50,978,108
2032 31,765,000 19,226,107 50,991,107
2033 33,420,000 17,566,433 50,986,433
2034 33,820,000 15,820,270 49,640,270
2035 36,930,000 14,129,270 51,059,270
2036 38,775,000 12,282,770 51,057,770
2037 40,695,000 10,362,470 51,057,470
2038 42,705,000 8,346,920 51,051,920
2039 44,825,000 6,231,670 51,056,670
2040 47,045,000 4,011,170 51,056,170
2041 4,845,000 1,339,000 6,184,000
2042 5,090,000 1,096,750 6,186,750
2043 5,345,000 842,250 6,187,250
2044 5,610,000 575,000 6,185,000
2045 5,890,000 294,500 6,184,500
Total $ 739,900,000 $ 558,703,236 $ 1,298,603,236
(a) Includes debt service on $21,345,000 par amount of RZEDB. Debt service has not been reduced by the expected RZEDB subsidy payments.
SCHEDULE 13 City of Phoenix, Aviation Enterprise Fund JUNIOR LIEN AIRPORT REVENUE BONDS SCHEDULE OF DEBT SERVICE REQUIREMENTS
88
Delivery Original Maturity Bonds
Date Series Issuance Dates Coupons Outstanding (a)
06-02-04 2004 $ 260,000,000 7/1/07-29 3.69% - 6.25% $ 186,050,000
$ 186,050,000
Note:
(a) Does not include bonds maturing on July 1, 2016.
SCHEDULE 14 City of Phoenix, Aviation Enterprise Fund RENTAL CAR FACILITY CHARGE REVENUE BONDS SCHEDULE OF OUTSTANDING DEBT (as of June 30, 2016)
89
Fiscal
Year Principal Interest Total
2017 $ 9,795,000 $ 11,478,392 $ 21,273,392
2018 10,370,000 10,903,426 21,273,426
2019 10,990,000 10,284,336 21,274,336
2020 11,645,000 9,628,234 21,273,234
2021 12,365,000 8,909,737 21,274,737
2022 13,130,000 8,146,816 21,276,816
2023 13,940,000 7,336,696 21,276,696
2024 14,800,000 6,476,597 21,276,597
2025 15,710,000 5,563,438 21,273,438
2026 16,695,000 4,581,562 21,276,562
2027 17,740,000 3,538,125 21,278,125
2028 18,845,000 2,429,375 21,274,375
2029 20,025,000 1,251,563 21,276,563
Total $ 186,050,000 $ 90,528,297 $ 276,578,297
SCHEDULE 15 City of Phoenix, Aviation Enterprise Fund RENTAL CAR FACILITY CHARGE REVENUE BONDS SCHEDULE OF DEBT SERVICE REQUIREMENTS
90
Delivery Original Maturity Bonds
Date Series Issuance Dates Coupons Outstanding (a)
06-24-14 2014 (b) $7,865,000 7/1/19-20 2.00% – 4.00% $ 7,865,000
Total $ 7,865,000
Notes:
(a) Does not include bonds maturing on July 1, 2016.
(b) Series 2014 refunded the 2003 GO Bonds
SCHEDULE 16 City of Phoenix, Aviation Enterprise Fund AIRPORT GENERAL OBLIGATION BONDS SCHEDULE OF OUTSTANDING DEBT (as of June 30, 2016)
91
Fiscal
Year Principal Interest Total
2017 $ — $ 197,050 $ 197,050
2018 — 197,050 197,050
2019 4,520,000 197,050 4,717,050
2020 3,345,000 82,700 3,427,700
Total $ 7,865,000 $ 673,850 $ 8,538,850
SCHEDULE 17 City of Phoenix, Aviation Enterprise Fund AIRPORT GENERAL OBLIGATION BONDS SCHEDULE OF DEBT SERVIC REQUIREMENTS
93
ECONOMIC AND DEMOGRAPHIC SCHEDULESTHE ECONOMIC AND DEMOGRAPHIC SCHEDULES INCLUDE:Schedule Description
18 Demographic Statistics for the Airport Service Area
19 Principal Employers
20 Airport Employee Trends
21 Capital Assets and Other Airport Information
22 Schedule of Annual Passenger Enplanements by Type of Passenger
23 Schedule of Annual Passenger Enplanements by Flight Destination
24 Schedule of Enplaned Passengers by Airline
25 Schedule of Annual Average Cost Per Enplanement
26 Schedule of PFC Approvals and Revenues
27 Schedule of Annual PFC Collections
28 Rental Car Facility Charge Revenue Bonds - Schedule of Annual Receipts, Net Annual CFC Revenues, and Debt Service Coverage
29 Schedule of Rental Car Gross Sales by Company
94
Personal
Fiscal Population Income Per Capita Unemployment
Year (July 1) (in thousands) Income Rate
2016 (a) — $ — $ — 5.3%
2015 4,574,531 186,693,084 40,811 5.3%
2014 4,489,109 178,871,199 39,846 6.0%
2013 4,404,129 170,637,978 38,745 6.8%
2012 4,330,974 166,686,196 38,487 7.4%
2011 4,254,149 158,211,801 37,190 8.7%
2010 4,209,347 148,838,301 35,359 9.6%
2009 4,153,609 147,153,657 35,428 9.3%
2008 4,106,372 154,461,916 37,615 5.5%
2007 4,018,128 153,858,420 38,291 3.3%
Sources
U.S. Department of Commerce, Bureau of the Census website, www.census.gov
U.S. Department of Commerce, Bureau of Economic Analysis website, www.bea.gov
U.S. Department of Labor, Bureau of Labor Statistics website, www.bls.gov
Notes
The data in this table is for the Phoenix-Mesa-Scottsdale, AZ Metropolitan Statistical Area
(a) Population, Personal Income, and Per Capita Income are not available for June 30, 2016 as of the date of publication.
SCHEDULE 18 City of Phoenix, Aviation Enterprise Fund DEMOGRAPHIC STATISTICS FOR THE AIRPORT SERVICE AREA
95
2016 2007
Employer Employees Rank Percentage Employees Rank Percentage
State of Arizona 42,687 1 2.23% 49,305 1 2.57%
Banner Health 40,226 2 2.10% 16,400 3 0.86%
Wal-Mart Stores Inc. 34,350 3 1.79% 28,800 2 1.50%
Fry's Food Stores 18,870 4 0.99% 11,780 8 0.61%
Wells Fargo 14,860 5 0.78% 11,800 7 0.62%
City of Phoenix 14,421 6 0.75% 14,166 4 0.74%
US Postal Service 13,509 7 0.71% 11,000 9 0.57%
Arizona State University 12,488 8 0.65% 12,083 6 0.63%
Intel Corporation 11,000 9 0.57%
Bank of America 9,809 10 0.51%
Maricopa County 13,274 5 0.69%
Honeywell Aerospace 10,700 10 0.56%
Sources:
Phoenix Business Journal Book of Lists
Arizona Department of Commerce, Workforce Development
Note:
Top employers in Maricopa County.
SCHEDULE 19 CITY OF PHOENIX, AVIATION ENTERPRISE FUND PRINCIPAL EMPLOYERS CURRENT YEAR AND NINE YEARS AGO
97
2016 2015 2014 2013 2012
Division/Group
Administration 8 12 9 10 15
Business and Properties 19 18 20 20 18
Design and Construction Services 29 30 36 37 28
Facilities and Services 381 374 384 374 367
Financial Management 27 30 32 31 30
Human Resources 15 12 12 13 13
Technology 39 37 41 39 41
Operations 186 181 188 185 187
Planning, Environmental and
Capital Management 19 19 21 21 29
Public Relations 13 14 13 12 13
Other 12 5 18 27 30
Total 748 732 774 769 771
2011 2010 2009 2008 2007
Division/Group
Administration 12 12 14 18 14
Business and Properties 20 22 22 22 24
Design and Construction Services 30 35 35 28 23
Facilities and Services 380 382 396 403 407
Financial Management 35 34 36 34 27
Human Resources 14 14 16 13 14
Technology 45 39 39 38 37
Operations 183 179 173 172 176
Planning, Environmental and
Capital Management 27 26 23 20 16
Public Relations 14 13 12 10 12
Other 29 19 9 4 1
Total 789 775 775 762 751
Source:
City of Phoenix, Aviation Department
SCHEDULE 20 City of Phoenix, Aviation Enterprise Fund EMPLOYEE TREND Last Ten Fiscal Years Ended June 30
98
PHOENIX SKY HARBOR INTERNATIONAL AIRPORT (PHX)About the AirportPhoenix Sky Harbor International Airport (the Airport) has been owned and operated by the City of Phoenix (the City) since 1935. It is the largest of the three airports that comprise the City’s Aviation Enterprise Fund. The Airport is located approximately four miles east of the downtown Phoenix area. It is the only Arizona airport designated as a large hub by the Federal Aviation Administration (FAA) and is the principal commercial service airport serving metropolitan Phoenix and most of the State’s population.
Terminal, Parking and Rental Car FacilitiesThe Airport currently has three active passenger terminal buildings, Terminals 2, 3, and 4. Terminal 1 was constructed in 1952 at a cost of $835 thousand and was among the most modern and efficient passenger terminals of its time. Terminals were added over the years to accommodate increasing traffic, and in 1991 Terminal 1 was demolished, but the other terminals were never renumbered.
Terminal 2 opened in 1962, the year Sky Harbor surpassed the one million passenger mark. Constructed for $2.7 million, Terminal 2 contains approximately 330,000 square feet and 13 gates. Alaska, Boutique Great Lakes, Spirit, Sun Country, and United airlines serve passengers through Terminal 2.
Terminal 3 opened in 1979 with construction costs at $35 million. Terminal 3 contains approximately 880,000 square feet and 15 gates. The Airport has launched a Terminal 3 modernization project, designed to provide consistent and enhanced customer service and more efficient operations for airlines and concessionaires. Delta, Frontier, Hawaiian, and JetBlue airlines serve passengers through Terminal 3.
Terminal 4 opened in 1990, at an initial cost of $248 million. The Terminal opened with five concourses, later adding two additional concourses for a total of seven. Terminal 4 contains approximately 2.3 million square feet and 84 gates. Air Canada, American, British, Southwest, Volaris and WestJet airlines serve passengers through Terminal 4.
The Airport has approximately 31,400 public and employee parking spaces in five parking garages and five surface lots.
A consolidated rental car facility is located west of the terminals on a 141-acre site that includes approximately 5,600 ready/return garage spaces in a 2.2 million square foot garage and a 113,000 square foot customer service building.
PHX Sky Train®
The PHX Sky Train® is an electrically-powered, automated people mover that operates 24-hours a day, 365 days a year. It provides a seamless connection among the three terminal buildings, East Economy parking and the Valley Metro Light Rail.
RunwaysThe Airport has three parallel runways (8/26 is 11,490 feet in length, 7L/25R is 10,300 feet in length, and 7R/25L is 7,800 feet in length) and a network of supporting taxiways, aprons and hold areas. Together with the terminals, the Airport facilities are capable of accommodating the operations of all commercial jet aircraft currently in use.
SCHEDULE 21 City of Phoenix, Aviation Enterprise Fund CAPITAL ASSETS AND OTHER AIRPORT INFORMATION
99
PHOENIX DEER VALLEY AIRPORT (DVT)About the AirportPhoenix Deer Valley Airport serves to relieve air traffic from Sky Harbor Airport. As such, the Airport is capable of accommodating all segments of civil aviation, except commercial passenger service. Deer Valley Airport encompasses approximately 914 acres of property. This airport is located fifteen miles north of downtown Phoenix near the intersection of Interstate 17 and Loop 101.
Terminal and Hangar FacilitiesThe Terminal was originally constructed in 1975 and then renovated in 2002 with a total cost of $6.2 million. It is roughly 28,000 square feet. Deer Valley Airport has 779 Hangars and 380 Covered and Uncovered Tie-Down spaces, constructed for a total cost of $17 million.
RunwaysDeer Valley Airport has two runways, 07L/25R is 4,500 feet long and 75 feet wide and 07R/25L is 8,200 feet long and 100 feet wide.
PHOENIX GOODYEAR AIRPORT (GYR)About the AirportPhoenix Goodyear Airport is classified as a general aviation reliever airport for Phoenix Sky Harbor International Airport. It is located on 789 acres of property approximately two miles south of Interstate 10 on Litchfield Road. This airport was previously known as the Naval Air Facility Litchfield Park until it was purchased by the City of Phoenix in 1968.
Terminal and Hangar FacilitiesThe Terminal is approximately 5,200 square feet and was completed in 2000, for a cost of $2.9 million. Goodyear Airport has 147 Hangars and 22 Tie-Downs, constructed for a cost of $18 million.
RunwayGoodyear Airport has a single runway, 03/21 is 8,500 feet long and 150 feet wide and can accommodate aircraft up to the size of a Boeing 747.
SCHEDULE 21 City of Phoenix, Aviation Enterprise Fund CAPITAL ASSETS AND OTHER AIRPORT INFORMATION
100
By Type of Passenger Percent of Total
Fiscal Origin-Destination (O&D)
Year Resident Visitor Total O&D Connecting Total O&D Connecting
2016 6,147,109 7,391,369 13,538,478 8,517,429 22,055,907 61.4% 38.6%
2015 5,750,807 6,987,079 12,737,886 8,750,683 21,488,569 59.3% 40.7%
2014 5,518,158 6,637,193 12,155,351 8,363,397 20,518,748 59.2% 40.8%
2013 5,512,623 6,462,505 11,975,128 8,260,660 20,235,788 59.2% 40.8%
2012 5,441,823 6,501,508 11,943,331 8,335,127 20,278,458 58.9% 41.1%
2011 5,155,409 6,205,267 11,360,676 8,320,557 19,681,233 57.7% 42.3%
2010 5,112,219 6,281,679 11,393,898 7,702,631 19,096,529 59.7% 40.3%
2009 5,229,892 6,092,828 11,322,720 7,589,400 18,912,120 59.9% 40.1%
2008 6,015,226 6,792,654 12,807,880 7,859,650 20,667,530 62.0% 38.0%
2007 6,007,470 6,807,235 12,814,705 7,948,165 20,762,870 61.7% 38.3%
Source:
U.S. DOT, Air Passenger Origin-Destination Survey, reconciled to Schedules T100.
SCHEDULE 22 City of Phoenix, Aviation Enterprise Fund Phoenix Sky Harbor International Airport SCHEDULE OF ANNUAL PASSENGER ENPLANEMENTS BY TYPE OF PASSENGER Last Ten Fiscal Years
101
Fiscal By flight destination Percent of Total
Year Domestic International Total Domestic International
2016 20,984,439 1,071,468 22,055,907 95.1% 4.9%
2015 20,348,751 1,139,818 21,488,569 94.7% 5.3%
2014 19,403,918 1,114,830 20,518,748 94.6% 5.4%
2013 19,094,138 1,141,650 20,235,788 94.4% 5.6%
2012 19,134,426 1,144,032 20,278,458 94.4% 5.6%
2011 18,592,674 1,088,559 19,681,233 94.5% 5.5%
2010 18,095,390 1,001,139 19,096,529 94.8% 5.2%
2009 17,980,137 931,983 18,912,120 95.1% 4.9%
2008 19,751,515 916,015 20,667,530 95.6% 4.4%
2007 19,891,566 871,304 20,762,870 95.8% 4.2%
Source:
City of Phoenix, Aviation Department
SCHEDULE 23 City of Phoenix, Aviation Enterprise Fund Phoenix Sky Harbor International Airport SCHEDULE OF ANNUAL PASSENGER ENPLANEMENTS BY FLIGHT DESTINATION Last Ten Fiscal Years
102
Fiscal Year
2016 2015 2014 2013 2012
Enplaned Passengers
American Airlines Group (a) 10,962,440 10,978,341 10,734,648 10,620,512 10,443,129
Southwest (b) 7,149,550 6,750,373 6,305,923 6,294,553 6,353,423
Delta (c) 1,401,639 1,325,051 1,262,548 1,240,735 1,296,941
United (d) 1,080,742 981,702 960,710 984,130 1,058,382
Alaska 376,264 370,801 339,086 324,218 343,867
Frontier (e) 235,602 279,517 207,590 218,072 217,964
WestJet 219,614 214,812 179,257 163,247 150,795
Spirit 165,376 148,673 106,036 — —
British Airways 105,173 103,408 99,380 91,609 92,099
Air Canada 104,995 101,417 81,683 78,611 79,454
JetBlue 91,947 90,195 87,332 90,743 109,521
Hawaiian 87,094 85,368 83,715 85,553 86,867
All Other 75,471 58,911 70,840 43,805 46,016
Total 22,055,907 21,488,569 20,518,748 20,235,788 20,278,458
Share of Total
American Airlines Group (a) 49.7% 51.0% 52.2% 52.5% 51.5%
Southwest (b) 32.4 31.4 30.7 31.0 31.3
Delta (c) 6.4 6.2 6.2 6.1 6.4
United (d) 4.9 4.6 4.7 4.9 5.2
Alaska 1.7 1.7 1.7 1.6 1.7
Frontier (e) 1.1 1.3 1.0 1.1 1.1
WestJet 1.0 1.0 0.9 0.8 0.7
Spirit 0.7 0.7 0.6 — —
British Airways 0.5 0.5 0.5 0.5 0.5
Air Canada 0.5 0.5 0.4 0.4 0.4
JetBlue 0.4 0.4 0.4 0.6 0.6
Hawaiian 0.4 0.4 0.4 0.4 0.4
All Other 0.3 0.3 0.3 0.1 0.2
Total 100.0% 100.0% 100.0% 100.0% 100.0%
Source:
City of Phoenix, Aviation Department Monthly Statistics Reports
Notes:
Passengers reported by regional affiliates have been grouped with their respective code-sharing partners.
(a) US Airways merged with American Airlines in December 2013. The two airlines were granted a combined operating certificate on April 8, 2015.
(b) Includes AirTran, which was acquired by Southwest in September 2010, for all years shown.
(c) Includes Northwest Airlines, which merged with Delta in October 2008, for all years shown.
(d) Includes Continental Airlines, which merged with United in May 2010, for all years shown.
(e) Includes Midwest Airlines, which merged with Frontier in April 2010, for all years shown.
SCHEDULE 24 City of Phoenix, Aviation Enterprise Fund Phoenix Sky Harbor International Airport SCHEDULE OF ENPLANED PASSENGERS BY AIRLINE Last Ten Fiscal Years
103
Fiscal Year
2011 2010 2009 2008 2007
Enplaned Passengers
American Airlines Group (a) 10,168,306 9,886,705 9,859,978 10,485,695 10,412,365
Southwest (b) 6,036,115 5,665,452 5,546,157 6,200,672 6,285,404
Delta (c) 1,256,788 1,250,333 1,180,336 1,340,302 1,180,998
United (d) 1,121,492 1,236,187 1,253,507 1,386,791 1,533,290
Alaska 328,390 326,624 332,754 382,930 376,946
Frontier (e) 253,391 276,521 289,627 309,091 322,157
WestJet 116,551 89,400 64,363 50,748 37,985
Spirit — — — — —
British Airways 85,600 75,619 79,479 87,041 87,104
Air Canada 78,022 57,468 54,915 51,082 55,432
JetBlue 99,601 80,861 76,917 85,395 120,435
Hawaiian 85,197 84,912 87,649 86,755 84,820
All Other 51,780 66,447 86,438 201,028 265,934
Total 19,681,233 19,096,529 18,912,120 20,667,530 20,762,870
Share of Total
American Airlines Group (a) 51.6% 51.9% 52.2% 50.8% 50.0%
Southwest (b) 30.7 29.7 29.3 30.0 30.3
Delta (c) 6.4 6.5 6.2 6.5 5.7
United (d) 5.7 6.5 6.6 6.7 7.4
Alaska 1.7 1.7 1.8 1.9 1.8
Frontier (e) 1.3 1.4 1.5 1.5 1.6
WestJet 0.6 0.5 0.3 0.2 0.2
Spirit — — — — —
British Airways 0.4 0.4 0.4 0.4 0.4
Air Canada 0.4 0.3 0.3 0.2 0.3
JetBlue 0.5 0.4 0.4 0.4 0.6
Hawaiian 0.4 0.4 0.5 0.4 0.4
All Other 0.3 0.3 0.5 1.0 1.3
Total 100.0% 100.0% 100.0% 100.0% 100.0%
SCHEDULE 24 City of Phoenix, Aviation Enterprise Fund Phoenix Sky Harbor International Airport SCHEDULE OF ENPLANED PASSENGERS BY AIRLINE Last Ten Fiscal Years
105
Total Airline Enplaned
Fiscal Revenues Passengers Cost Per
Year (in thousands) Enplanement
2016 $ 127,708 22,056 $ 5.79
2015 128,596 21,489 5.98
2014 118,747 20,519 5.79
2013 111,911 20,236 5.53
2012 106,121 20,278 5.23
2011 101,338 19,681 5.15
2010 93,161 19,097 4.88
2009 95,143 18,912 5.03
2008 88,874 20,668 4.30
2007 86,436 20,763 4.16
Source:
City of Phoenix, Aviation Department
SCHEDULE 25 City of Phoenix, Aviation Enterprise Fund Phoenix Sky Harbor International Airport SCHEDULE OF ANNUAL AVERAGE COST PER ENPLANEMENT Last Ten Fiscal Years
106
Approval Remaining
Amount Revenues (a) Authority
PFC Approvals
Closed PFC Approvals
PFC 1 $ 93,230,839 $ 93,230,839 $ —
PFC 2 147,875,677 147,875,677 —
PFC 3 208,085,801 208,085,801 —
PFC 4 246,977,086 246,977,086 —
PFC 5 179,036,442 179,036,442 —
Subtotal 875,205,845 875,205,845 —
Active PFC Approvals
PFC 6 1,972,404,781 525,280,823 1,447,123,958
PFC 7 82,163,209 44,001,928 38,161,281
Subtotal 2,054,567,990 569,282,751 1,485,285,239
Total PFC Approvals $ 2,929,773,835 $ 1,444,488,596 $ 1,485,285,239
Sources:
City of Phoenix Aviation Department
Notes:
(a) Revenues includes PFC collections plus related interest income.
SCHEDULE 26 City of Phoenix, Aviation Enterprise Fund Phoenix Sky Harbor International Airport SCHEDULE OF PFC APPROVALS AND REVENUES (as of June 30, 2016)
107
Enplaned Passengers
Fiscal Year PFC RateAirline
Admin Fee Net PFC RateTotal
(in thousands)PFC Eligible
(a)
Total PFC Collections (b) (in thousands)
2016 $ 4.50 $ 0.11 $ 4.39 22,056 86.3% $ 83,595
2015 4.50 0.11 4.39 21,489 90.1% 84,976
2014 4.50 0.11 4.39 20,519 88.2% 79,406
2013 4.50 0.11 4.39 20,236 88.1% 78,273
2012 4.50 0.11 4.39 20,278 88.8% 79,092
2011 4.50 0.11 4.39 19,681 93.4% 80,682
2010 4.50 0.11 4.39 19,097 91.3% 76,530
2009 4.50 0.11 4.39 18,912 87.8% 72,924
2008 4.50 0.11 4.39 20,668 94.7% 85,964
2007 4.50 0.11 4.39 20,763 92.4% 84,212
Notes:
(a) Imputed from enplaned passengers, net PFC rate, and total PFC collections. Timing variances exist between when PFCs are collected by airlines and when they are remitted to the airport, which can result in annual fluctuations of PFC collections and percent eligible passengers.
(b) Total PFC Collections represent amounts that were received from the airlines during the fiscal year. Adjustments have not been made for receivables at fiscal year-end. These amounts are calculated on a different basis than the revenues reported in the Basic Financial Statements.
SCHEDULE 27 City of Phoenix, Aviation Enterprise Fund Phoenix Sky Harbor International Airport SCHEDULE OF ANNUAL PFC COLLECTIONS Last Ten Fiscal Years
108
Annual Receipts (c)
Transaction Pledged Additional Annual Administrative
Fiscal Days (a) Pledged CFCs Deposits Receipts (d) Costs
Year (in thousands) CFC Rate (b) (in thousands)
2016 7,828 $ 4.50 $ 35,226 $ 11,743 $ 46,969 $ 24
2015 7,650 4.50 34,425 11,474 45,899 25
2014 6,976 4.50 31,394 10,464 41,858 28
2013 6,763 4.50 30,434 10,145 40,579 19
2012 6,923 4.50 31,154 10,385 41,539 22
2011 6,565 4.50 29,541 9,847 39,388 146
2010 5,854 4.50 26,341 8,780 35,121 3
2009 6,361 4.50 28,626 8,534 37,160 50
2008 8,348 4.50 37,565 — 37,565 3
2007 7,651 4.50 34,428 — 34,428 31
Source:
City of Phoenix, Aviation Department
Notes:
(a) Imputed from Trustee records using Annual Receipts, reflects Transaction Days on deposits for July 1 through June 30.
(b) Effective January 1, 2009, the Customer Facility Charge (CFC) collection rate increased to $6.00 per transaction day from $4.50 per transaction day. $4.50 of the $6.00 collection rate is considered Pledged Revenues and is required to be deposited into the Trustee-held Revenue Fund. The Pledged Revenues must be used to fund various accounts established under the Bond Indenture. The City may, but is not required to, deposit the CFC receipts generated by the additional $1.50 into the Trustee-held Revenue Fund. If the additional $1.50 is deposited into the Trustee-held Revenue Fund, the monies become Pledged Revenues.
(c) Includes CFC receipts generated by the $4.50 Pledged collection rate and $1.50 additional non-pledged collection rate.
(d) Annual CFC Receipts represent amounts that were received from the Rental Car Companies during the fiscal year. Adjustments have not been made for receivables at fiscal year-end. These amounts are calculated on a different basis than the revenues reported in the Basic Financial Statements.
SCHEDULE 28 City of Phoenix, Aviation Enterprise Fund Rental Car Facility Charge Revenue Bonds SCHEDULE OF ANNUAL RECEIPTS, NET ANNUAL CFC REVENUES, AND DEBT SERVICE COVERAGE Last Ten Fiscal Years
109
Net Annual Debt Service Coverage
Amount CFC By Net
Net Available in Receipts Annual CFC
Annual Debt Service Available Receipts and
CFC Coverage for Debt 2004 Bonds By Net Debt Service
Fiscal Receipts Fund Service Debt Service Annual CFC Coverage
Year (in thousands) Receipts Fund
2016 $ 46,945 $ 5,337 $ 52,282 $ 21,277 $ 2.21 $ 2.46
2015 45,874 5,332 51,206 21,277 2.16 2.41
2014 41,830 5,327 47,157 21,277 1.97 2.22
2013 40,560 5,320 45,880 21,276 1.91 2.16
2012 41,517 5,320 46,837 21,273 1.95 2.20
2011 39,242 5,320 44,562 21,274 1.84 2.09
2010 35,118 5,320 40,438 21,277 1.65 1.90
2009 37,110 5,320 42,430 21,278 1.74 1.99
2008 37,562 5,320 42,882 21,278 1.77 2.02
2007 34,397 5,320 39,717 21,278 1.62 1.87
SCHEDULE 28 City of Phoenix, Aviation Enterprise Fund Rental Car Facility Charge Revenue Bonds SCHEDULE OF ANNUAL RECEIPTS, NET ANNUAL CFC REVENUES, AND DEBT SERVICE COVERAGE Last Ten Fiscal Years
110
Fiscal Year
2016 2015 2014
Gross Receipts
National Car Rental $ 86,464,376 $ 85,686,661 $ 75,652,653
Hertz Car Rental (a) 76,070,691 80,874,148 79,554,220
Avis Rent-A-Car 47,875,285 51,395,858 50,501,871
Budget Rent-A-Car 46,421,353 41,477,241 40,319,865
Enterprise Leasing 38,959,521 44,566,663 38,528,880
Dollar Rent A Car 18,511,518 23,359,134 25,073,941
Thrifty Car Rental 15,388,611 15,869,267 15,368,625
Payless Car Rental 14,813,795 14,928,495 13,181,905
Simply Wheelz 13,910,041 14,382,508 11,478,015
Fox Rent A Car 11,978,642 12,681,093 11,175,717
SIXT Rent a Car 10,760,452 9,231,403 4,557,559
Total $ 381,154,285 $ 394,452,471 $ 365,393,251
Share of Total
National Car Rental 22.7% 21.9% 20.8%
Hertz Car Rental 20.0 20.5 21.8
Avis Rent-A-Car 12.6 13.0 13.8
Budget Rent-A-Car 12.2 10.5 11.0
Enterprise Leasing 10.2 11.3 10.5
Dollar Rent A Car 4.9 5.9 6.9
Thrifty Car Rental 4.0 4.0 4.2
Payless Car Rental 3.9 3.8 3.6
Simply Wheelz 3.6 3.6 3.1
Fox Rent A Car 3.1 3.2 3.1
SIXT Rent a Car 2.8 2.3 1.2
Total 100.0% 100.0% 100.0%
Source:
City of Phoenix, Aviation Department
Note:
(a) The fiscal year 2014 Gross Receipts and share of total for Hertz has been corrected.
SCHEDULE 29 City of Phoenix, Aviation Enterprise Fund Phoenix Sky Harbor International Airport SCHEDULE OF RENTAL CAR GROSS SALES BY COMPANY Last Three Fiscal Years
City of Phoenix Aviation Department • 2485 East Buckeye Road • Phoenix, Arizona 85034 Phone: 602-273-3300 • TTY: 1-800-781-1010 • www.skyharbor.com
PHX 332434747v1
EXHIBIT B - RFP DRAFT DATED JUNE 8, 2017
CITY OF PHOENIX, ARIZONA
as Purchaser
AND
CITY OF PHOENIX CIVIC IMPROVEMENT CORPORATION
as Seller
CITY PURCHASE AGREEMENT
Dated as of August 1, 2017
Certain rights of the City of Phoenix Civic Improvement Corporation hereunder have
been assigned to U.S. Bank National Association, as Issuing and Paying Agent, under an Issuing
and Paying Agent Agreement dated as of August 1, 2017 by and between the City of Phoenix
Civic Improvement Corporation and U.S. Bank National Association, as Issuing and Paying
Agent.
This instrument was prepared by:
William R. DeHaan
Greenberg Traurig, LLP
2375 East Camelback Road
Suite 700
Phoenix, Arizona 85016
-i- PHX 332434747v1
TABLE OF CONTENTS
(This Table of Contents is for informational purposes only
and is not to be considered a part of the City Purchase Agreement)
SECTION HEADING PAGE
PARTIES ....................................................................................................................................... 1
GRANTING CLAUSES ................................................................................................................ 1
ARTICLE I
DEFINITIONS
ARTICLE II
ISSUANCE OF NOTES; APPLICATION OF PROCEEDS;
NOTE PROCEEDS FUND
Section 2.1. Agreement to Issue Notes; Application of Note Proceeds .................................. 9
Section 2.2. Obligation of the City to Cooperate in Furnishing Documents ........................ 10
Section 2.3. Note Proceeds Fund .......................................................................................... 10
ARTICLE III
AGREEMENT OF SALE, PURCHASE PRICE AND
SOURCE OF PAYMENTS
Section 3.1. Agreement of Sale............................................................................................. 12
Section 3.2. Possession of 2017 Property ............................................................................. 12 Section 3.3. Amounts of Purchase Price Payable Upon Issuance of Notes .......................... 12
Section 3.4. Manner and Place of Section 3.3 Payments ...................................................... 14 Section 3.5. Obligations of City Hereunder Unconditional .................................................. 14 Section 3.6. No Prepayment of Purchase Price..................................................................... 14
Section 3.7. Pledge of Junior Subordinate Lien Revenues as Security for Payment
Obligations ...................................................................................................... 15
ARTICLE IV
SOURCE OF CITY PAYMENTS; CAPACITY FOR ISSUANCE
OF SERIES CP REVENUE OBLIGATIONS
Section 4.1. Limitation of Source of City Payments ............................................................ 15 Section 4.2. Capacity for Issuance of Series CP Revenue Obligations; Priority of
Pledge of Proceeds .......................................................................................... 15
Section 4.3. Rate Covenant ................................................................................................... 16
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ARTICLE V
COVENANTS REGARDING THE AIRPORT; MAINTENANCE;
INVESTMENT TAXES
Section 5.1. Covenants Regarding the Airport ..................................................................... 16 Section 5.2. Maintenance and Utilities ................................................................................. 16
Section 5.3. Investments ....................................................................................................... 16 Section 5.4. Taxes ................................................................................................................. 17
Section 5.5. Tax Covenants .................................................................................................. 17
ARTICLE VI
INDEMNIFICATION
Section 6.1. Disclosure Documents ...................................................................................... 19
Section 6.2. Indemnification ................................................................................................. 19
ARTICLE VII
DEFAULT AND REMEDIES
Section 7.1. Events of Default .............................................................................................. 21
Section 7.2. Remedies on Default by City ............................................................................ 21 Section 7.3. Default by Corporation ..................................................................................... 21
Section 7.4 Bank’s Rights Upon the Occurrence of an Event of Default ............................ 22
ARTICLE VIII
GENERAL COVENANTS
Section 8.1. Quiet Possession ............................................................................................... 22
Section 8.2. Termination upon Payment of Purchase Price .................................................. 22 Section 8.3. Left Blank Intentionally .................................................................................... 22
Section 8.4. Amendments for Securities and Exchange Commission, Blue Sky and
Other Limited Purposes .................................................................................. 22 Section 8.5. Authority of Corporation to Pledge Its Interest Hereunder .............................. 23
Section 8.6. Recordation and Filing of Instruments ............................................................. 23 Section 8.7. Right of Corporation and Issuing and Paying Agent to Perform City’s
Obligations Hereunder .................................................................................... 23
Section 8.8. Excess Payments ............................................................................................... 23 Section 8.9. City’s Representations and Warranties ............................................................. 23 Section 8.10. Additional Covenants and Representations ...................................................... 24
Section 8.11. Third Party Beneficiary..................................................................................... 25
-iii- PHX 332434747v1
ARTICLE IX
MISCELLANEOUS
Section 9.1. Arizona Law to Govern .................................................................................... 25 Section 9.2. Notices; Mailing Addresses .............................................................................. 25 Section 9.4. Severability ....................................................................................................... 26
Section 9.5. Counterparts ...................................................................................................... 27 Section 9.6. Net Purchase Agreement................................................................................... 27 Section 9.7. Assignment by City........................................................................................... 27
Section 9.8. Interested Parties Herein ................................................................................... 27
AUTHORIZED SIGNATURES .................................................................................................. 28
EXHIBIT A — DESCRIPTION OF PROJECT
EXHIBIT B — FORM OF BILL OF SALE
PHX 332434747v1
CITY PURCHASE AGREEMENT
THIS CITY PURCHASE AGREEMENT, dated as of August 1, 2017, by and between the CITY
OF PHOENIX CIVIC IMPROVEMENT CORPORATION, a nonprofit corporation organized under the
laws of the State of Arizona (the “Corporation”), and the CITY OF PHOENIX, a municipal
corporation of the State of Arizona (the “City”),
W I T N E S S E T H :
WHEREAS, it is necessary and desirable for the City to acquire title to or interests in the
2017 Property, as defined herein and it is necessary for the City to finance and refinance certain
improvements to the City’s Airport (as defined herein); and
WHEREAS, portions of the 2017 Property have been or will be initially acquired by the
Corporation pursuant to a resolution adopted by the Board of Directors of the Corporation on
June ___, 2017, and Ordinance No. S-33916 adopted by the Mayor and Council of the City on
May 9, 2007, and this City Purchase Agreement; and
WHEREAS, pursuant to this City Purchase Agreement the City has agreed to purchase
portions of the 2017 Property from the Corporation from time to time; and
WHEREAS, the City has requested that the Corporation enter into an Issuing and Paying
Agent Agreement dated as of August 1, 2017 with U.S. Bank National Association (the “Issuing
and Paying Agent”), in order to provide for the authentication and delivery from time to time of
City of Phoenix Civic Improvement Corporation Airport Commercial Paper Program Notes,
Series 2017A-1, Series 2017B-1, Series 2017C-1, Series 2017A-2, Series 2017B-2 and Series
2017C-2 in an aggregate amount not to exceed $200,000,000 outstanding at any time (the
“Series 2017 Notes” and together with any Additional Original Issue Notes or Rollover Notes
(each as defined herein) with respect thereto, the “Notes”); and
WHEREAS, a portion of the proceeds of the Series 2017A-1 Notes and Series 2017A-2
Notes will be applied to reimburse the providers of the respective letters of credit for draws
relating to the maturing principal amount of $____________ aggregate principal amount of the
Corporation’s Airport Commercial Paper Program Notes, Series 2014B-1 and Series 2014B-2
(collectively, the “Series 2014B Notes”);
WHEREAS, in order to enhance the marketability of the Series 2017 Notes, the
Corporation has determined that a separate Letter of Credit (as defined herein) shall be issued
with respect to each Series of the Series 2017 Notes which will permit the Issuing and Paying
Agent to draw certain amounts in order to pay the principal of and interest on the Series 2017
Notes as provided in such Letters of Credit; and
WHEREAS, the City and the Corporation agree that it is desirable to enter into this City
Purchase Agreement:
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NOW, THEREFORE, for and in consideration of the mutual covenants hereinafter
contained, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
In addition to the words and terms defined elsewhere in this City Purchase Agreement,
the following words and terms as used herein shall have the respective meanings indicated below
unless the context or use requires a different meaning or intent. All accounting terms not
otherwise defined in the Issuing and Paying Agent Agreement or herein shall have the meanings
assigned to them in accordance with generally accepted accounting principles. All capitalized
terms used herein and not defined herein shall have the meaning given to them in the Issuing and
Paying Agent Agreement (as defined herein).
“Airport” means the airports of the City presently known as “Phoenix Sky Harbor
International Airport,” “Phoenix Goodyear Airport,” and “Phoenix Deer Valley Airport,”
including all additions, extensions and improvements thereto which may be made while any
Revenue Obligations remain Outstanding, including all property and facilities of every nature
owned or operated by the City and used in connection with its airports or for airport purposes,
including but without limitation, lands, rights-in-land, terminals and other buildings and
facilities, hangars, runways, ramps, shops, stores and similar facilities located in the terminal
building areas, parking meters and facilities, facilities for limousine, taxi and car rental services,
restrooms, sinks, showers, toilets, luggage lockers, repair shops, facilities for the sale of oil and
fuel, communication facilities, restaurant and bar facilities, and all other property and facilities of
every nature located on or used in connection with the airports and the land on which each is
located, and including airport facilities not described in this definition if such facilities have been
added to the definition of Airport by subsequent resolution or ordinance of the City.
“Airport Revenues” or “Revenues” means all income and revenue received by the City
directly or indirectly from the use and operation of the Airport, including but without limitation,
revenues pledged, dedicated or allocated for the benefit of the Airport, rentals, landing fees, use
charges, income from the sale of services, fuel, oil and other supplies or commodities, income
from the use for agricultural purposes of portions of the Airport not currently used for Airport
purposes, fees from concessions, amounts received from or in behalf of the Arizona National
Guard, parking meter and parking lot receipts, storage locker and restroom income, income from
communication services, fees or income from limousine, taxi and car rental services, bar and
restaurant income, advertising revenues, receipts derived from the lease or any other contractual
arrangement with respect to the use of the Airport, receipts from the sale of any property of the
Airport, proceeds of any insurance covering business interruption loss. Airport Revenues and
Revenues also includes income received from the investment of any moneys held in the funds
and accounts (other than the Construction Fund and the Rebate Fund) created under the Airport
Revenue Bond Ordinance. Airport Revenues and Revenues shall not include the following:
(i) money received as grants or gifts from the United States of America or the State of Arizona,
except to the extent that any such money shall be received as payments for use of the Airport or
its facilities; (ii) proceeds received on insurance resulting from casualty damage to assets of the
Airport to the extent such proceeds are used to repair or replace facilities or property of the
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Airport; (iii) rentals or other charges derived by the City under and pursuant to a lease or leases
relating to Special Purpose Facilities, including customer facility charges imposed pursuant to
Ordinance No. G-4375 adopted by the Mayor and Council on July 5, 2001, as amended to date
and as further amended from time to time; (iv) the proceeds of the sale of any Bonds or other
obligations issued for Airport purposes; or (v) receipts from Passenger Facility Charges.
“Airport Revenue Bond Ordinance” means Ordinance No. S-21974 adopted by the
Mayor and Council of the City on April 20, 1994, as amended to date and as further
supplemented and amended from time to time.
“Alternate Facility” means a credit facility provided pursuant to Section 6.10 of the
Issuing and Paying Agent Agreement and the instruments pursuant to which such facility is
provided.
“Authorized City Representative” means the Chief Financial Officer of the City or any
other person at any time designated to act on behalf of the City by written certificate furnished to
the Corporation and the Issuing and Paying Agent, containing the specimen signature of such
person and signed by the City Manager or his designee. Such certificate may designate one or
more alternates.
“Authorized Corporation Representative” means the Chief Financial Officer of the City
or any other person at any time designated to act on behalf of the Corporation by written
certificate furnished to the City and the Issuing and Paying Agent, containing the specimen
signature of such person and signed on behalf of the Corporation by its president or any
authorized vice president. Such certificate may designate one or more alternates.
“Available Funds” means, with respect to a Series of Notes, (a) amounts on deposit in
the applicable account or subaccount of the Note Proceeds Fund and the Note Repayment Fund
and investment earnings thereon, including proceeds of Notes and including any Additional
Original Issue Notes or Rollover Notes, (b) proceeds of the sale of Series CP Revenue
Obligations (with respect to the principal amount of any Outstanding Notes or Payment
Obligations), (c) Other Available Monies which the City determines to make available to pay
principal of and interest on the Notes or other expenses hereunder, and (d) amounts on deposit in
the applicable account or subaccount of the Letter of Credit Fund made available from draws
under the Letter of Credit with respect to the applicable Series of Notes, which amounts shall be
applied exclusively to the payment of principal of and interest on the applicable Series of Notes.
“Bank” means the provider of a Letter of Credit or Alternate Facility securing a Series or
multiple Series of Notes, and initially means (i) the Series 2017ABC-1 Bank, as issuer of the
Letter of Credit with respect to the Series 2017ABC-1 Notes and (ii) the Series 2017ABC-2
Bank as issuer of the Letter of Credit securing the Series 2017ABC-2 Notes, in each case
including any Additional Original Issue Notes and Rollover Notes with respect thereto, and any
successor or assignee thereto or any issuer of an Alternate Facility or Letter of Credit for one or
more series of Additional Original Issue Notes and Rollover Notes with respect thereto.
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“Bond Year” means a twelve-month period beginning July 2 of the calendar year and
ending on the next succeeding July 1.
“Bonds” has the meaning ascribed to such term in the Airport Revenue Bond Ordinance.
“City” means the City of Phoenix, Arizona.
“City Purchase Agreement” or “Agreement” means this City Purchase Agreement dated
as of August 1, 2017 by and between the Corporation and the City, as amended or supplemented
with the consent of the Bank and the Issuing and paying Agent from time to time to the extent
required by the Issuing and Paying Agent Agreement.
“Code” means the Internal Revenue Code of 1986, as amended, and the regulations
applicable thereto or issued thereunder.
“Corporation” means City of Phoenix Civic Improvement Corporation, a corporation
organized under the laws of the State of Arizona, its successors and assigns.
“Cost of Maintenance and Operation” means all expenditures (exclusive of depreciation
and interest on money borrowed) which are necessary to the efficient maintenance and operation
of the Airport and its facilities, such expenditures to include the items normally included as
essential expenditures in the operating budgets of municipally owned airports.
“Dealer” means _____________________, or any successor or assign of either such
party as may be permitted by the respective Dealer Agreement or any other party entering into a
dealer agreement (or similar document) with the Corporation at the direction of the City. Unless
otherwise set forth herein specifically, “Dealer” shall mean Dealer with respect to the related
Series of Notes.
“Dealer Agreement” means the respective Dealer Agreements, dated as of August 1,
2017, by and among the Corporation, the City and ___________________, with respect to the
Series 2017ABC-1 Notes and __________________ with respect to the Series 2017ABC-2
Notes and any and all modifications, alterations, amendments and supplements thereto, or any
other dealer agreement entered into by the Corporation at the direction of the City and a Dealer
with respect to the related Series of Notes.
“Designated Revenues” or “Junior Lien Revenues” means Net Airport Revenues, after
making all payments required by the Senior Lien Revenue Obligation Documents for the benefit
of the Senior Lien Revenue Obligations. Designated Revenues do not include earnings on
investments held in any project fund or rebate fund established for Junior Lien Revenue
Obligations.
“Event of Default” means one of the events defined as such in Section 7.1 hereof.
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“Fiscal Year” means the 12-month period used by the City for its general accounting
purposes as the same may be changed from time to time, said fiscal year currently extending
from July 1 to June 30.
“Issuing and Paying Agent” means U.S. Bank National Association, a national banking
association duly organized and existing under the laws of the United States, or its successor, as
Issuing and Paying Agent under the Issuing and Paying Agent Agreement.
“Issuing and Paying Agent Agreement” means the Issuing and Paying Agent Agreement
dated as of September 1, 2017 by and between the Corporation and the Issuing and Paying
Agent, as the same may from time to time be supplemented or amended in accordance with its
terms.
“Junior Lien Revenue Obligation Documents” means the Junior Lien City Purchase
Agreement dated as of August 1, 2010 between the Corporation and the City, or any other
ordinance, indenture, contract or agreement of the City continuing or authorizing Junior Lien
Revenue Obligations.
“Junior Lien Revenue Obligations” means the obligations of the City which are issued
under Junior Lien Revenue Obligation Documents which are payable from Designated Revenues
on a parity therewith.
“Junior Subordinate Lien Revenue Obligations” means obligations which are issued or
incurred and payable by, or the payment of which is assumed by the City, which obligations
share pro rata in payments to be made by the City from Junior Subordinate Lien Revenues,
including Payment Obligations.
“Junior Subordinate Lien Revenues” means Designated Revenues, after making all
payments required by the Junior Lien Revenue Obligation Documents for the benefit of the
Junior Lien Revenue Obligations.
“Letter of Credit” means, with respect to a Series of Notes, an irrevocable direct pay
letter of credit securing payment of such Series of Notes, or any substitution therefor, including
any Alternate Facility, and including specifically a Letter of Credit issued by the Bank pursuant
to the Reimbursement Agreement.
“Maximum Annual Junior Subordinate Lien Debt Service” means an amount equal to the
highest aggregate amount of principal of and interest on Junior Subordinate Lien Revenue
Obligations to become due in any Bond Year, calculated as set forth herein.
In case any Junior Subordinate Lien Revenue Obligations outstanding or proposed to be
issued shall bear interest at a variable rate, the amount of interest due in any Bond Year shall be
computed at the lesser of:
(i) the maximum rate which such Junior Subordinate Lien Revenue
Obligations may bear under the terms of their issuance or
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(ii) the rate of interest established for long-term bonds by the 20-year bond
index most recently published by THE BOND BUYER of New York, New York, prior to the
date of computation (or in the absence of such published index, some other index selected
in good faith by the Chief Financial Officer of the City after consultation with one or
more reputable, experienced investment bankers as being equivalent thereto) ((i) and (ii)
together, the “Variable Rate Assumption”).
With respect to any Junior Subordinate Lien Revenue Obligations issued or proposed to
be issued with a variable rate, the maximum amount of principal due in any Bond Year shall be
calculated as if the entire amount issued or authorized to be issued was to be amortized over a
term of thirty (30) years commencing in the year in which such obligations were issued or
proposed to be issued and with substantially level annual debt service payments and the
maximum amount of interest to be due in any Bond Year shall be computed using the Variable
Rate Assumption. In connection with any calculation of interest or principal with respect to any
variable rate Junior Subordinate Lien Revenue Obligation or Note which is the subject of a
derivative product pursuant to which the debt service payment, net of amounts received or owed
to a counterparty, is a fixed rate obligation, the net fixed rate debt service payments shall be
assumed in the calculation.
“Net Airport Revenues” means Airport Revenues, after provision for payment of the Cost
of Maintenance and Operation.
“Note Payment Date” means the day on which principal of and interest on a Note
becomes due in accordance with the Issuing and Paying Agent Agreement.
“Notes” means the Series 2017 Notes which the Corporation intends to issue as
described in Section 2.1 of this City Purchase Agreement, together with any Additional Original
Issue Notes or Rollover Notes with respect thereto and which will be authenticated, delivered
and secured pursuant to the Issuing and Paying Agent Agreement.
“Opinion of Counsel” means a written opinion of counsel (who may be counsel for the
City or the Corporation) selected by the City and acceptable to the Corporation.
“Original Issue Notes” has the meaning assigned to such term in the Tax Certificate.
“Other Available Monies” means Passenger Facility Charges, unrestricted grant money
and other moneys available to the Airport which are not included in the definition of Revenues or
Airport Revenues.
“Parity Bonds” has the meaning ascribed to such term in the Airport Revenue Bond
Ordinance.
“Passenger Facility Charges” means charges collected by the City pursuant to the
authority granted by the Aviation Safety and Capacity Expansion Act of 1990 and 14 CFR
Part 158, as amended from time to time, in respect of any component of the Airport and interest
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earnings thereon, net of amounts that collecting air carriers are entitled to retain for collecting,
handling and remitting such passenger facility charge revenues.
“Payment Obligations” means all amounts owing to the Bank under the Reimbursement
Agreement, including without limitation, any Unreimbursed Drawings and Term Loans (as
defined therein).
“Permitted Investments” means any investment security in which the City or the
Corporation is permitted by law to invest.
“Project” means, in the aggregate, the improvements described on Exhibit A hereto as
amended from time to time.
“Purchase Price” means the sum of the payments required by Section 3.3 of this City
Purchase Agreement to be paid by the City to or for the account of the Corporation.
“Reimbursement Agreement” means (i) the Letter of Credit Reimbursement Agreement
dated as of August 1, 2017, between the Corporation and the Series 2017ABC-1 Bank, including
any related letter agreements regarding fees and costs and (ii) the Letter of Credit
Reimbursement Agreement dated as of August 1, 2017, by and between the Corporation and the
Series 2017ABC-2 Bank, including any related letter agreements regarding fees and costs and in
each case, as such agreement may be amended or supplemented from time to time and any other
reimbursement agreement entered into by the Corporation and the Bank with respect to the
Letters of Credit or an Alternate Facility or Facilities.
“Revenue Obligations” means Senior Lien Revenue Obligations, Junior Lien Revenue
Obligations and Junior Subordinate Lien Revenue Obligations.
“Rollover Notes” means the meaning given to that term in the Tax Certificate.
“Senior Lien Revenue Obligation Documents” means the Airport Revenue Bond
Ordinance and any other ordinance, indenture, contract or agreement of the City constituting or
authorizing Senior Lien Revenue Obligations.
“Senior Lien Revenue Obligations” means the Bonds or Parity Bonds.
“Series 2017 Notes” means, collectively, the Series 2017ABC-1 Notes and the Series
2017ABC-2 Notes.
“Series 2017ABC-1 Bank” means ____________ as issuer of the Letter of Credit with
respect to the Series 2017ABC-1 Notes.
“Series 2017ABC-1 Notes” means, collectively, the Series 2017A-1 Notes, the Series
2017B-1 Notes and the Series 2017C-1 Notes.
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“Series 2017ABC-2 Bank” means _____________ as issuer of the Letter of Credit with
respect to the Series 2017ABC-2 Notes.
“Series 2017 ABC-2 Notes” means, collectively, the Series 2017A-2 Notes, Series
2017B-2 Notes and the Series 2017C-2 Notes.
“Series 2017A-1 Notes” means the Corporation’s Airport Commercial Paper Program
Notes, Series 2017A-1 (Non-AMT) authorized hereunder.
“Series 2017A-2 Notes” means the Corporation’s Airport Commercial Paper Program
Notes, Series 2017A-2 (Non-AMT) authorized hereunder.
“Series 2017B Notes” means, collectively, the Series 2017B-1 Notes and the Series
2017B-2 Notes.
“Series 2017B-1 Notes” means the Corporation’s Airport Commercial Paper Program
Notes, Series 2017B-1 (AMT) authorized hereunder.
“Series 2017B-2 Notes” means the Corporation’s Airport Commercial Paper Program
Notes, Series 2017B-2 (AMT) authorized hereunder.
“Series 2017C-1 Notes” means the Corporation’s Airport Commercial Paper Program
Notes, Series 2017C-1 (Taxable) authorized hereunder.
“Series 2017C-2 Notes” means the Corporation’s Airport Commercial Paper Program
Notes, Series 2017C-2 (Taxable) authorized hereunder.
“Series CP Revenue Obligations” means Revenue Obligations issued to pay any or all of
the principal amount and accrued interest thereon of the Payment Obligations and, in the event
the Bank shall have failed to make payment due under a Letter of Credit, the principal of any
Note at maturity.
“Special Purpose Facilities” means:
(i) hangars, aircraft overhaul, maintenance or repair shops, reservation
centers, motels, hotels, storage facilities, garages, cargo handling buildings and necessary
ramp areas incidental thereto, and other similar facilities,
(ii) projects as now or hereafter provided in the Industrial Development
Financing Act (Title 35, Chapter 5 of the Arizona Revised Statutes), and
(iii) such other facilities or projects as the City shall designate as a Special
Purpose Facility, and the cost of construction and acquisition of which facilities are
financed with the proceeds of bonds, notes, leases, purchase agreements or other
obligations which are payable solely from revenues of the Special Purpose Facility or
revenues of the user of the Special Purpose Facilities.
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“2017 Property” means, collectively, the 2017A Property, the 2017B Property and the
2017C Property.
“2017A Property” means any or all components of the Project actually financed or
refinanced with proceeds of the Series 2017A Notes.
“2017B Property” means any or all components of the Project actually financed or
refinanced with proceeds of the Series 2017B Notes.
“2017C Property” means any or all components of the Project actually financed or
refinanced with proceeds of the Series 2017C Notes.
“Term” means the period from the date of execution and delivery of this City Purchase
Agreement and, unless terminated prior hereto, shall continue through the latest date permitted
under the Tax Certificate or the date following the final payment of the principal of and interest
on the Notes, the expiration of the Letters of Credit and payment of all Payment Obligations.
“Tax-Exempt Notes” means a Series or Subseries of Notes, the interest on which is
intended to be excludible from gross income for federal income tax purposes.
“Written Request” with reference to the Corporation shall mean a request in writing
signed by the Authorized Corporation Representative, and with reference to the City shall mean
a request in writing signed by an Authorized City Representative.
ARTICLE II
ISSUANCE OF NOTES; APPLICATION OF PROCEEDS; NOTE PROCEEDS FUND
Section 2.1. Agreement to Issue Notes; Application of Note Proceeds. In order to
provide funds for payment of the cost of the 2017 Property and to finance and refinance certain
improvements to the Airport and costs relating thereto, including but not limited to costs of
issuance of the Notes, the Corporation will cause to be issued the Notes under the Issuing and
Paying Agent Agreement. The Authorized Corporation Representative is authorized to approve
the specific terms of the Notes, including, without limitation, the aggregate principal amount,
which, unless amended in accordance with the terms hereof and the Issuing and Paying Agent
Agreement, shall not exceed $200,000,000 at any one time outstanding, consisting initially, of
two Series of Notes, each consisting of three Subseries neither Series of which shall exceed
$100,000,000 at any one time outstanding; the respective maturities of which shall not exceed
270 days each (but in no event later than the Term of this City Purchase Agreement); interest rate
or rates for each maturity (but in no event higher than the lesser of (i) 12% for any Note or
(ii) the maximum rate permitted by law) and the method of determination of such interest rates;
method, place, frequency and medium of payment of principal and interest; denominations; form
of issuance, whether certificated or book-entry; designations; credit enhancement features; the
application of proceeds thereof and any other terms of the Notes. The sale proceeds of the Series
2017A Notes shall be applied by the Issuing and Paying Agent first to reimburse the providers of
the respective letters of credit for draws relating to the maturing principal amounts of the Series
2014B Notes in an amount not to exceed $______________. The City covenants that all
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additional amounts owed to the respective letter of credit providers for the Series 2014B Notes
will be paid concurrently with issuance of the Series 2017A Notes and that it will direct the
issuing and paying agent for the Series 2014B Notes to return the letters of credit to the
respective providers with a termination certificate in the form of Annex H to each letter of credit.
The City will pay the reasonable expenses of the Corporation, the Issuing and Paying
Agent, the Bank and the Dealer, if any, including, but not limited to, out-of-pocket expenses and
charges, fees and disbursements of counsel, including bond counsel, if any, all printing expenses,
rating agency fees, and all other expenses reasonably incurred by the Corporation, the Issuing
and Paying Agent, the Bank and the Dealer, if any, by reason of the execution of this City
Purchase Agreement.
Section 2.2. Obligation of the City to Cooperate in Furnishing Documents. The City
agrees to cooperate with the Corporation in order that the Corporation may comply fully with the
requirements of the Issuing and Paying Agent Agreement, each Dealer Agreement and the
Reimbursement Agreement.
Section 2.3. Note Proceeds Fund. The Corporation shall establish and maintain a
separate fund known as the “Note Proceeds Fund,” on behalf of the City which shall be held by
the City and funded from amounts transferred to the City by the Issuing and Paying Agent
pursuant to Section 4.01 of the Issuing and Paying Agent Agreement and other funds which may
be made available by the City from time to time. The Corporation shall also establish, maintain
and hold, initially, six separate accounts designated “Series 2017A-1 Account, Series 2017A-2
Account, Series 2017B-1 Account, Series 2017B-2 Account, Series 2017C-1 Account and Series
2017C-2 Account”. Moneys in each account of the Note Proceeds Fund shall be disbursed by
the City for the following purposes and for no other purposes:
(i) Costs of Issuance relating to the issuance, sale and delivery of the
respective Series of Notes;
(ii) payment for labor, services and materials used or furnished in the
improvement and construction of the Project, and all real and personal property deemed
necessary in connection with the Project and for the miscellaneous expenses incidental to
any of the foregoing including the premium on each performance and payment bond
provided that in the case of any contract providing for the retention of a portion of the
contract price, there shall be paid from the Note Proceeds Fund only the net amount
remaining after deduction of any such portion;
(iii) reimbursement of capital expenditures relating to the Project advanced
prior to the issuance of the Notes; and
(iv) payment of the Purchase Price representing principal of or interest on the
Notes or amounts owed to the applicable Bank with respect to any Payment Obligation.
Before any of the foregoing payments described in (i), (ii) or (iii) above may be made, the
City shall maintain a record with respect to each such payment to the effect that: (x) none of the
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items for which the payment is proposed to be made has formed the basis for any payment
previously made from the Note Proceeds Fund, (y) each item for which payment is proposed to
be made is or was necessary in connection with the Project and (z) each item for which payment
is proposed is for a purpose permitted by this Section 2.3. In the event the Issuing and Paying
Agent shall notify the City pursuant to Section 5.03 of the Issuing and Paying Agent Agreement
of a failure of the Bank to honor a properly presented draw under a Letter of Credit, the City
shall transfer amounts available in the Note Proceeds Fund for deposit to the applicable
subaccount of the Debt Service Account of the Note Repayment Fund. Notwithstanding the
foregoing, withdrawals from the Note Proceeds Fund for transfers to the Rebate Fund may be
made by the City provided that all withdrawals and payments shall be in compliance with
applicable law.
The City shall, on behalf of the Corporation, upon acquisition and completion of all
portions of the Project to be financed with proceeds of Original Issue Notes, transfer any moneys
held in the Note Proceeds Fund that are not needed to pay costs of the Project to the Issuing and
Paying Agent for deposit to the applicable subaccount of the Reimbursement Agreement
Account of the Note Repayment Fund.
Amounts on deposit in the Series 2017A-1, Series 2017A-2, Series 2017B-1 and Series
2017B-2 Accounts of the Note Proceeds Fund shall be invested to the fullest extent possible, in
Permitted Investments. Interest income and gain received, or loss realized, from investments or
moneys in the Note Proceeds Fund shall be credited or charged, as the case may be, to the Note
Proceeds Fund. The City shall not knowingly make any investment at a “yield” in excess of the
maximum yield, if any, stated with respect to the source of moneys therefor in the Tax
Certificate or any other similar certificate executed and delivered pursuant to Section 148 of the
Code or any successor section of the Code, issued by the Corporation in connection with the
issuance of the Notes except during any “temporary period” stated in the Tax Certificate or any
other certificate, and the City shall make and keep appropriate records of such investments,
yields and temporary periods as required by Section 148 of the Code or any successor section
thereof. Notwithstanding the foregoing, investments may be made at a higher “yield” or for a
different “temporary period” or both in accordance with written instructions of Bond Counsel
filed with and addressed to the City.
Neither the City nor the Corporation shall knowingly use or direct or permit the use of
any moneys of the Corporation in its possession or control in any manner which would cause any
Tax-Exempt Note to be an “arbitrage bond” within the meaning ascribed to such term in
Section 148 of the Code, or any successor section of the Code to the extent required by the Tax
Certificate.
All moneys and investments held by the City under this City Purchase Agreement shall
be subject to the provisions of the Tax Certificate and shall remain subject to those provisions
notwithstanding any satisfaction or discharge of the Issuing and Paying Agent Agreement or this
City Purchase Agreement.
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ARTICLE III
AGREEMENT OF SALE, PURCHASE PRICE AND SOURCE OF PAYMENTS
Section 3.1. Agreement of Sale. The Corporation hereby sells and conveys to the City,
and the City hereby purchases from the Corporation, the 2017 Property. In order to evidence
such sale and conveyance, the Corporation agrees that contemporaneously with its execution and
delivery of this City Purchase Agreement, it has or will also execute and deliver to the City a bill
of sale in substantially the form hereto attached as Exhibit B. The City hereby agrees that it will
pay to the account of the Corporation at the principal office of the Issuing and Paying Agent, as
the Purchase Price, but only from the Available Funds, Junior Subordinate Lien Revenues (with
respect to Payment Obligations) or any combination of the foregoing as hereinafter prescribed,
an amount equal to the aggregate of the sums prescribed by Section 3.3 hereof and elsewhere in
this City Purchase Agreement, to be paid at or before the respective dates called for in said
Section 3.3 or elsewhere in this City Purchase Agreement. Notwithstanding any other provision
in this City Purchase Agreement to the contrary, amounts drawn under a Letter of Credit shall be
available to pay only components of the Purchase Price representing principal of and interest on
the applicable Series of Notes.
Section 3.2. Possession of 2017 Property. It is the intention of the parties hereto that
upon the execution and delivery of this City Purchase Agreement, the City shall be entitled to
possession of the 2017 Property.
At all times from and after the execution and delivery of this City Purchase Agreement
the City’s agents, officers and employees shall have the full right of possession of the 2017
Property. The Corporation agrees that the City shall have sole and exclusive possession of the
2017 Property on and after the execution and delivery of this City Purchase Agreement. The
City agrees that the 2017 Property will be made a part of the Airport and will be used in
accordance with all applicable laws.
Section 3.3. Amounts of Purchase Price Payable Upon Issuance of Notes. The City
agrees that it will pay, solely from the sources hereinafter specified, as the Purchase Price, the
aggregate of the amounts for which provision is made in this Section and elsewhere in this City
Purchase Agreement, including payments corresponding to principal of and interest on the Notes
and other obligations payable hereunder, including Payment Obligations.
(a) (i) On or before each Note Payment Date, until principal of and interest on the
Notes shall have been fully paid or provision for the payment thereof shall have been made in
accordance with the Issuing and Paying Agent Agreement, the City shall pay, from Available
Funds only, a sum equal to principal of and the interest on the Notes falling due on the next
succeeding Note Payment Date including any deficiency in the applicable subaccount of the
Debt Service Account of the Note Repayment Fund and (ii) in the event principal of and interest
on the Notes shall have been paid from amounts drawn under a Letter of Credit, the City shall
pay, from Available Funds, Junior Subordinate Lien Revenues or any combination of the
foregoing, to the Bank the amount necessary to pay any Payment Obligations when due, either
directly or from amounts transferred by the Issuing and Paying Agent pursuant to Section 3.02(1)
of the Issuing and Paying Agent Agreement.
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(b) [Left Blank Intentionally.]
(c) The City shall pay, from Available Funds, Junior Subordinate Lien Revenues or any
combination of the foregoing, all amounts owed to the Bank by the Corporation pursuant to the
Reimbursement Agreement and not otherwise described in subsection (a)(ii) above.
(d) The City shall pay, from Available Funds only (excluding amounts drawn under a
Letter of Credit), to the Issuing and Paying Agent in accordance with the provisions of the
Issuing and Paying Agent Agreement:
(i) An amount equal to the annual fee of the Issuing and Paying Agent for the
ordinary services of the Issuing and Paying Agent rendered and its ordinary expenses
incurred under the Issuing and Paying Agent Agreement; and
(ii) The reasonable fees and charges of the Issuing and Paying Agent for
extraordinary services rendered by it and extraordinary expenses incurred by it under the
Issuing and Paying Agent Agreement, as and when the same become due; provided, that
the City may, without creating a default hereunder, contest in good faith the
reasonableness of any such fees, charges or expenses and the necessity for any such
extraordinary services and extraordinary expenses.
(e) The City shall pay, from Available Funds only (excluding amounts drawn under a
Letter of Credit), to the Dealer its fees and expenses in accordance with the provisions of the
Dealer Agreement.
(f) In the event the City should fail to make when due any of the payments required in
this Section, the item or installment so in default shall continue as an obligation of the City
payable solely from the source or sources specified therefor, until the amount in default shall
have been fully paid, and the City agrees to pay from the source or sources specified therefor the
same with interest thereon at the rate applicable to the corresponding maturities of Notes (other
than interest which shall be payable to the Bank determined pursuant to the Reimbursement
Agreement), from the date said payment was to be made by the City until the date paid.
(g) The City shall pay, from Available Funds only (excluding amounts drawn under a
Letter of Credit), to the official entitled to collect the same, when due, all taxes of whatever
nature, if any, that may be imposed upon the 2017 Property, the Corporation, its property,
operations or income, whether by state, local or federal government, and including every
governmental charge whether for services rendered or not, which the Corporation is required or
may be required by law to pay with respect to the 2017 Property.
(h) To the extent not paid from proceeds of the Notes, the City shall pay solely to the
Corporation amounts sufficient to reimburse the Corporation for all its expenses in connection
with the issuance of the Notes and this City Purchase Agreement if and when paid by the
Corporation. Such amounts, if any, shall be paid solely from Available Funds (other than
amounts available under a Letter of Credit) to the Corporation or, if an Authorized City
Representative submits a requisition, signed by an officer of the Corporation, accompanied by
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invoices showing that the payments represented thereby have been made for purposes approved
by the City, such amounts shall be paid from Available Funds (other than amounts available
under a Letter of Credit) as directed by the Corporation.
Section 3.4. Manner and Place of Section 3.3 Payments. The payments provided for in
Section 3.3(a) hereof not otherwise deposited in the Letter of Credit Fund shall be paid in lawful
money of the United States of America directly to the Issuing and Paying Agent for the account
of the Corporation and will be deposited in the applicable subaccount of the Debt Service
Account of the Note Repayment Fund, provided that the City may satisfy its obligations pursuant
to Section 3.3(a) and (c) by payment directly to the Bank. The remainder of the payments
specified in Section 3.3 shall be made to the Issuing and Paying Agent or the Corporation, as
applicable, for disbursement to the persons entitled thereto.
Section 3.5. Obligations of City Hereunder Unconditional. The obligations of the City
to make the payments required in Section 3.3 (subject to the provisions of Sections 3.4 and 4.1
hereof) and to perform and observe the other agreements on its part contained herein shall be
absolute and unconditional, regardless of the continued existence of the 2017 Property or its
physical condition. Until such time as the principal of and interest on the Notes, Unreimbursed
Drawings, Term Loans and Payment Obligations shall have been fully paid or provision for the
payment thereof shall have been made in accordance with the Issuing and Paying Agent
Agreement and the Reimbursement Agreement, as applicable, the City (i) shall not diminish,
suspend or discontinue any payments provided for in Section 3.3 hereof, (ii) shall perform and
observe all of its other agreements contained in this City Purchase Agreement, and (iii) shall not
terminate this City Purchase Agreement for any cause including, without limiting the generality
of the foregoing, any acts or circumstances that may constitute failure of consideration, loss,
theft or destruction of or damage to the 2017 Property, or any part thereof, frustration of purpose,
any change in the tax or other laws of the United States of America or of Arizona or any political
subdivision of either thereof or any failure of the Corporation to perform and observe any
agreement, whether express or implied, or any duty, liability or obligation arising out of or
connected with this City Purchase Agreement. Nothing contained in this Section shall be
construed to release the Corporation from the performance of any of the agreements on its part
herein contained; and in the event the Corporation shall fail to perform any such agreement on its
part, the City may institute such action against the Corporation as the City may deem necessary
to compel performance or recover its damages for non-performance so long as such action shall
not violate or impair the effectiveness of the agreements on the part of the City contained in this
section. The City may, however, at its own cost and expense and in its own name or in the name
of the Corporation, prosecute or defend any action or proceeding or take any other action
involving third persons which the City deems reasonably necessary in order to secure or protect
its rights of ownership, possession and use hereunder, and in such event the Corporation hereby
agrees to cooperate fully with the City and to take all action necessary to effect the substitution
of the City for the Corporation in any such action or proceeding if the City shall so request.
Section 3.6. No Prepayment of Purchase Price. No prepayment of the Purchase Price
with respect to the Notes, except as provided in Section 10.01 of the Issuing and Paying Agent
Agreement, shall be permitted.
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Section 3.7. Pledge of Junior Subordinate Lien Revenues as Security for Payment
Obligations. The City hereby pledges and grants a security interest in the Junior Subordinate
Lien Revenues as security for the payment of Payment Obligations on a parity basis to each
Bank. Such amounts shall be paid to the applicable Bank at such times and under such
conditions as are specified in Section 3.3 hereof and the Reimbursement Agreement. The
Corporation hereby agrees to pay such Junior Subordinate Lien Revenues to the applicable Bank
when due from amounts paid by the City.
ARTICLE IV
SOURCE OF CITY PAYMENTS; CAPACITY FOR ISSUANCE
OF SERIES CP REVENUE OBLIGATIONS
Section 4.1. Limitation of Source of City Payments.
(a) Except as otherwise expressly provided herein, all amounts to be paid by the City
under Section 3.3 hereof or under any other section of this City Purchase Agreement shall be
payable solely from Available Funds, Junior Subordinate Lien Revenues (with respect to
Payment Obligations), or any combination of the foregoing. The City agrees to apply Available
Funds or Junior Subordinate Lien Revenues, as applicable in such amounts and in such manner
as required herein to make the payments required to be made by the City under this City
Purchase Agreement and covenants to make said payments from Available Funds (other than
amounts drawn under a Letter of Credit) or Junior Subordinate Lien Revenues (with respect to
Payment Obligations), as applicable.
(b) The City may, at its sole option, make payments hereunder from Other Available
Monies as the City shall determine from time to time, but the Corporation acknowledges that it
has no claim hereunder to have payments made from such Other Available Monies. The use of
Other Available Monies to make payment hereunder shall never constitute a pledge of such
Other Available Monies nor a claim on ad valorem taxes of the City.
Section 4.2. Capacity for Issuance of Series CP Revenue Obligations; Priority of Pledge
of Proceeds. The City covenants that unless a Series of Notes is paid from Available Funds
described in (c) of the definition thereof, the Series CP Revenue Obligations will be issued in an
amount sufficient to pay when due the principal amount of all Payment Obligations and, to the
extent that the Bank has not paid under the Letter of Credit, principal of the Notes prior to the
latest maturity date permitted under the Tax Certificate. The City will not issue, or permit the
Corporation to issue, additional Revenue Obligations (other than for refunding purposes) unless
(a) the conditions set forth in applicable Junior Lien Revenue Obligation Documents, Senior
Lien Revenue Obligation Documents and the documents providing for all Junior Subordinate
Lien Revenue Obligations are satisfied (subject to the additional requirement that Junior
Subordinate Lien Revenues, subject to adjustment as permitted therein, for the most recently
completed Fiscal Year for which audited financial statements are available, were equal to at least
110% of Maximum Annual Junior Subordinate Lien Debt Service, including the debt service
requirements for the Revenue Obligations proposed to be issued) and (b) if the proposed
Revenue Obligations are not Series CP Revenue Obligations, the City determines that Series CP
Revenue Obligations could have been issued under the additional indebtedness tests described
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above in addition to the proposed Revenue Obligations, in an amount sufficient to pay when due
all principal of and interest on the Outstanding Notes and Payment Obligations at maturity. The
City represents and covenants that issuance of the Series CP Revenue Obligations in an
aggregate principal amount of not to exceed $200,000,000 has been duly authorized by
ordinance adopted by the Mayor and Council of the City on May 9, 2007. Upon issuance of the
Series CP Revenue Obligations, the proceeds thereof will be applied and pledged to the extent
necessary, to pay the principal amount of all Payment Obligations and, to the extent that the
Bank has not paid under a Letter of Credit, the principal of all Outstanding Notes at maturity,
which pledge shall be prior to any pledge of such amounts to payment of Revenue Obligations.
Section 4.3. Rate Covenant. The City shall comply with all covenants requiring it to
establish, maintain and enforce schedules of rates, fees and charges for the use of the Airport set
forth in the Junior Lien Revenue Obligation Documents and Senior Lien Revenue Obligation
Documents. In addition, the City shall establish, maintain and enforce schedules of rates, fees
and charges for the use of the Airport sufficient at all times to produce Junior Subordinate Lien
Revenues in an amount equal to Maximum Annual Junior Subordinate Lien Debt Service.
ARTICLE V
COVENANTS REGARDING THE AIRPORT;
MAINTENANCE; INVESTMENTS; TAXES
Section 5.1. Covenants Regarding the Airport. The City agrees that, so long as any of
the Notes remain outstanding under the Issuing and Paying Agent Agreement, it will observe all
covenants regarding the Airport contained in Section 4.2 and 4.3 hereof and in the Airport
Revenue Bond Ordinance as in effect on the date of execution of this City Purchase Agreement,
notwithstanding any termination, amendment, supplement or modification of the Airport
Revenue Bond Ordinance. In the observance of such covenants, the Notes outstanding under the
Issuing and Paying Agent Agreement shall be treated as being “Bonds which remain
Outstanding” under the Airport Revenue Bond Ordinance solely for purposes of Article VII of
the Airport Revenue Bond Ordinance, provided that nothing contained herein shall be construed
to mean that Notes outstanding under the Issuing and Paying Agent Agreement shall constitute
“Bonds which remain Outstanding” under the Airport Revenue Bond Ordinance for any other
purpose of such ordinance or that the Notes shall constitute Revenue Obligations.
Section 5.2. Maintenance and Utilities. All maintenance and repair of the 2017 Property
and utilities therefor shall be the responsibility of the City. In exchange for the payment of the
Purchase Price hereunder, the Corporation agrees to provide nothing more than the 2017
Property.
Section 5.3. Investments. Upon the issuance of the Notes and in order to achieve the
maximum economy in the acquisition and financing of the 2017 Property, the Corporation agrees
that it will, at all times practicable, keep moneys held by it invested in Permitted Investments.
Such investments shall be made by the Issuing and Paying Agent in accordance with
Section 5.04 of the Issuing and Paying Agent Agreement and all such investments shall be
limited as to duration as provided in the Issuing and Paying Agent Agreement.
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Section 5.4. Taxes. It is understood and agreed that all taxes of any type or nature
charged to the Corporation or affecting the 2017 Property or affecting the amount available to
the Corporation from payments received hereunder for the retirement of the Notes (including
charges assessed or levied by any governmental agency, district or corporation having power to
levy taxes) shall upon receipt of invoices therefor be paid by the City under Section 3.3 hereof as
additional installments of Purchase Price. Upon Written Request of the City, the Corporation
agrees to take whatever steps are necessary to contest the amount of tax, or to recover any tax
paid if the City believes such tax or assessment to be improper or invalid. The City agrees to
reimburse the Corporation for any and all costs, including reasonable attorneys’ fees, thus
incurred by the Corporation.
Section 5.5. Tax Covenants. Each of the City and the Corporation represents, covenants
and warrants that:
(a) It will not make any use of the proceeds of the Tax-Exempt Notes, it will not permit
any use of the property financed or refinanced with the proceeds of the Tax-Exempt Notes and it
has not taken and shall not take any action or permit any action to be taken with respect to the
property financed or refinanced with the proceeds of the Tax-Exempt Notes that would adversely
affect the exclusion of interest on the Tax-Exempt Notes from gross income for federal income
tax purposes; it shall take, or cause to be taken, all actions that may be required of it for the
interest on any Series of Tax-Exempt Notes to be and remain excluded from gross income for
federal income tax purposes and the appropriate officers are hereby authorized and directed to
take any and all actions and give such certifications as may be appropriate to assure such
exclusion of that interest, except where the holder of a Series 2017B Note is a “substantial user”
of the 2017B Property or a “related person” as those terms are used in Section 147 of the Code.
(b) At no time will any funds constituting gross proceeds of the Tax-Exempt Notes be
used in a manner as to constitute a prohibited payment under the applicable IRS Regulations
pertaining to, or in any other fashion as would constitute failure of compliance with, Section 148
of the Code. As used herein, the term “gross proceeds” has the meaning assigned to it for
purposes of Section 148 of the Code.
(c) The information to be included in the Information Returns for Private Activity Bond
Issues, IRS Form 8038-G (for any Series 2017A Notes) and IRS Form 8038 (for any Series
2017B Notes), or such other form as is required by Section 149(e) of the Code, submitted by the
City on behalf of the Corporation, or caused by the City to be so submitted, is or will be true and
complete for the purposes for which intended as of the date(s) of delivery of the applicable Tax-
Exempt Notes.
(d) At least 95 percent of the net proceeds (within the meaning of Sections 142(a) and
150(a)(3) of the Code) of the Series 2017B Notes will be used, to provide “airports” within the
meaning of Section 142 of the Code, and the City will not make any disbursement from the
Series 2017B-1 or Series 2017B-2 Accounts of the Note Proceeds Fund, which, if paid, would
result in less than 95 percent of the net proceeds of the Series 2017B Notes being used for the
construction of the allocable 2017B Property. None of the proceeds of the Series 2017B Notes
will be used and to provide (i) working capital; (ii) hotels or other lodging facilities; (iii) retail
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facilities (including food and beverage facilities) in excess of the size necessary to serve
passengers (and persons who meet or accompany them) and employees at the Airport; (iv) any
retail facility (other than parking) for passengers or the general public located outside the
Airport; (v) office buildings for individuals who are not employees of a governmental unit or of
the City; or (vi) industrial parks or manufacturing facilities.
(e) Any office space constructed or refinanced with the proceeds of the Series 2017B
Notes shall be located on the premises of the Airport. Not more than a de minimis amount of the
function to be performed at such office will not be directly related to the day-to-day operations at
the Airport.
(f) In accordance with Section 147(b) of the Code, the average maturity of the Series
2017B Notes does not exceed 120 percent of the average reasonably expected economic life of
the allocable 2017B Property.
(g) None of the proceeds of the Series 2017B Notes will be used to provide any
airplane, skybox or other private luxury box, health club facility, facility primarily used for
gambling, or any store the principal business of which is the sale of alcoholic beverages for
consumption off premises.
(h) Less than 25 percent of the proceeds of the Series 2017B Notes will be used directly
or indirectly to acquire land or any interest therein except as permitted under Section 147(c) of
the Code, and no portion of such land has been or will be used for farming purposes.
(i) No portion of the proceeds of the Series 2017B Notes will be used to acquire or
refinance existing property or any interest therein unless such acquisition meets the rehabilitation
requirements of Section 147(d) of the Code.
(j) In connection with any lease or grant by the City for the use of any portion of the
Airport financed with proceeds of the Series 2017B Notes, the City shall require that the lessee
or user of any portion of the 2017B Property shall not use that portion of the 2017B Property in
any manner which would violate the covenants set forth in paragraphs (g), (h) and (i) above.
Any such lease (i) shall require the lessee to irrevocably elect (binding on the lessee and all
successors in interest under the lease) not to claim depreciation or any investment credit for
federal tax purposes with respect to such property, (ii) shall be of a term of no more than 80
percent of the reasonably expected economic life of the property leased, and (iii) shall not give to
the lessee an option to purchase the property other than at fair market value. Any management
contract or similar operating agreement entered into by the City for the management or
operations of any portion of the 2017B Property will contain such provisions similar to those in
the preceding sentence as are necessary to ensure compliance with Section 147 of the Code.
(k) The costs of issuance financed by the Series 2017B Notes will not exceed two
percent of the proceeds of the Series 2017B Notes.
(l) No portion of the Tax-Exempt Notes shall be federally guaranteed within the
meaning of Section 149(b) of the Code.
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(m) Except for proceeds invested for any applicable temporary period, none of the
proceeds of the Tax-Exempt Notes will be invested in higher yielding investments (within the
meaning of Section 148(b) of the Code).
(n) Neither any information, exhibit or report furnished by the Corporation or the City
in connection with the transactions contemplated hereby nor any of their representations
contained in this City Purchase Agreement contains any untrue statement of an adverse material
fact, or omits to state a material adverse fact necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading in any adverse respect.
All representations of each contained herein or in any certificate or other instrument
delivered by each pursuant hereto, pursuant to the Issuing and Paying Agent Agreement or in
connection with the transactions contemplated thereby, shall survive the execution and delivery
thereof and the issuance, sale and delivery of the Tax-Exempt Notes, as representations of facts
existing as of the date of execution and delivery of the instrument containing such representation.
The Corporation need not comply with the covenants contained in this Section in the event the
City is provided an Opinion of Bond Counsel that such action or inaction will not adversely
affect the exclusion of interest on the Tax-Exempt Notes from gross income for federal tax
purposes.
ARTICLE VI
INDEMNIFICATION
Section 6.1. Disclosure Documents. The City hereby recognizes that in connection with
the issuance and sale of the Notes, the Corporation may have issued or caused to be issued one or
more official statements, offering memoranda or disclosure documents describing the Notes and
the security for the payment thereof and containing certain information about the City which will
be furnished to the Corporation by the City and that such offering materials may be
supplemented or amended from time to time to facilitate the issuance and sale of additional
Notes. Recognizing that the Corporation and its officers, directors, agents and employees have
no practicable independent means of verifying such information, the City hereby represents and
warrants to the Corporation that all material contained in the Corporation’s official statement or
disclosure documents and any other applications or other documents provided by the City in
conjunction with the issuance of the Notes, insofar as it relates to the City or the Corporation and
the Airport or otherwise describes the security of this City Purchase Agreement and the rights of
the Noteholders and the Bank with respect thereto, is accurate, contains no material
misrepresentation of fact and does not omit any statement of fact which in the light of the
circumstances under which said disclosure was made, would be misleading in any adverse
respect. The City further covenants that any supplement or amendment thereto, insofar as the
material therein will relate to the City or the Corporation and the Airport will be accurate, will
contain no material misrepresentations of fact and will not omit any statement of fact which in
the light of the circumstances under which they will be made, be misleading in any adverse
respect.
Section 6.2. Indemnification. The City agrees to and does, to the extent permitted by
law, hereby indemnify and hold the Corporation and the Issuing and Paying Agent, their
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directors, officers, agents, attorneys and employees, harmless for, from and against any and all
claims, expenses, liens, judgments, liability or loss whatsoever, including reasonable legal fees
and expenses, relating to or in any way arising out of:
(i) this City Purchase Agreement, the Issuing and Paying Agent Agreement,
the Dealer Agreement, financing statements, supplements, amendments or additions
thereto or the enforcement of any of the terms thereof;
(ii) the Notes;
(iii) any official statement or disclosure documents, either preliminary or final,
pertaining to such Notes; or
(iv) the issuance and sale of the Notes or the transactions contemplated in any
of the aforementioned acts, agreements or documents.
The right of the Issuing and Paying Agent to indemnification from the City shall not
extend to claims, suits and actions successfully brought against the Issuing and Paying Agent for,
or losses, liabilities or expenses incurred as a result of the Issuing and Paying Agent’s own
negligence, bad faith, willful misconduct or breach of trust.
The City shall give notice to the Corporation and the Issuing and Paying Agent of any
event or condition which requires indemnification by the City hereunder, or any allegation of
such event or condition, promptly upon obtaining knowledge thereof. To the extent that the City
makes or provides for payment to the satisfaction of the Corporation or the Issuing and Paying
Agent under the indemnity provisions hereof, the City shall be subrogated to the rights of the
Corporation and the Issuing and Paying Agent with respect to such event or condition and shall
have the right to determine the settlement of claims thereon. The City shall pay all amounts due
hereunder promptly upon notice thereof from the Corporation and the Issuing and Paying Agent.
In case any action, suit or proceeding is brought against the Corporation or the Issuing
and Paying Agent by reason of any act or condition which requires indemnification by the City
hereunder, the Corporation or the Issuing and Paying Agent, as the case may be, shall notify the
City promptly of such action, suit or proceeding, and the City may (and will upon the request of
the Corporation or the Issuing and Paying Agent), at the City’s expense, resist and defend such
action, suit or proceeding, or cause the same to be resisted and defended, by counsel designated
by the City and approved by the Corporation or the Issuing and Paying Agent, as the case may
be. If the Corporation or the Issuing and Paying Agent desires to participate in the defense of
such action, suit or proceeding through its own counsel, it may do so at its own expense.
To the extent permitted by law, the Corporation and the Issuing and Paying Agent, their
directors, officers, agents, attorneys, and employees, shall not be liable to the City or to any other
party whomsoever for any death, injury or damage that may result to any person or property by
or from any cause whatsoever in connection with the 2017 Property or the Airport. These
indemnity provisions shall survive the satisfaction and expiration of this City Purchase
Agreement and the Issuing and Paying Agent Agreement.
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The right of the Issuing and Paying Agent and the Corporation to indemnification from
the City shall not extend to claims, suits and actions successfully brought against the Issuing and
Paying Agent or the Corporation for, or losses, liabilities or expenses incurred as a result of the
Corporation’s or the Issuing and Paying Agent’s own negligence, bad faith, willful misconduct
or, in the case of the Issuing and Paying, breach of trust.
ARTICLE VII
DEFAULT AND REMEDIES
Section 7.1. Events of Default. Any one or more of the following events (herein called
“Events of Default”) shall constitute a default hereunder:
(a) The City shall fail to make any payment of the Purchase Price when due under
Section 3.3(a) hereof or shall fail to pay a Payment Obligation after the expiration of any
applicable grace period under the Reimbursement Agreement; or
(b) The City shall fail to make any payment of the Purchase Price under Section 3.3
hereof (except as set forth in Section 7.1(a) above) for a period of 30 days after notice of such
failure shall have been given in writing to the City by the Corporation or by the Issuing and
Paying Agent; or
(c) The City shall fail to perform any other covenant herein for a period of 30 days after
written notice specifying such default shall have been given to the City by the Corporation, the
Bank or the Issuing and Paying Agent, provided that if such failure be such that it cannot be
remedied within such 30 day period, it shall not be deemed an Event of Default so long as the
City diligently tries to remedy the same; or
(d) The filing by the City of a voluntary petition in bankruptcy, or failure by the City
promptly to lift any execution, garnishment or attachment, or assignment by the City for the
benefit of creditors, or the entry by the City into an agreement of composition with creditors, or
the approval by a court of competent jurisdiction of a petition applicable to the City in any
proceedings instituted under the provisions of the Federal Bankruptcy statutes, as amended, or
under any similar acts which may hereafter be enacted.
Section 7.2. Remedies on Default by City. Upon the occurrence of an Event of Default
as above defined, the Corporation shall, but only if requested to do so by the Issuing and Paying
Agent, without further demand or notice, exercise any of the available remedies at law or in
equity, including, but not limited to, specific performance, however, under no circumstances may
amounts due hereunder be accelerated. The Corporation may assign any or all of its rights and
privileges under this section to the Issuing and Paying Agent, and upon furnishing evidence of
such assignment to the City, the Issuing and Paying Agent may exercise any or all of such rights
or privileges as it may deem advisable.
Section 7.3. Default by Corporation. The Corporation shall in no event be in default in
the performance of any of its obligations hereunder unless and until the Corporation shall have
failed to perform such obligation within thirty (30) days or such additional time as is reasonably
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required to correct any such default after notice by the City to the Corporation properly
specifying wherein the Corporation has failed to perform any such obligation. No default by the
Corporation shall relieve the City of its obligations to make the various payments herein
required, so long as any of the Notes or Payment Obligations remain outstanding; however, the
City may exercise any other remedy available at law or in equity to require the Corporation to
remedy such default so long as such remedy does not interfere with or endanger the payments
required to be made to the Issuing and Paying Agent under the Issuing and Paying Agent
Agreement.
Section 7.4 Bank’s Rights Upon the Occurrence of an Event of Default. Upon the
occurrence of an Event of Default, the Bank shall have the right to exercise any of the remedies
to which it is entitled at law, in equity and as set forth in the Reimbursement Agreement.
ARTICLE VIII
GENERAL COVENANTS
Section 8.1. Quiet Possession. The parties hereto mutually covenant and agree that the
City, by keeping and performing the covenants and agreements herein contained, shall at all
times during the life of this City Purchase Agreement, peaceably and quietly, have, hold and
enjoy the 2017 Property, without suit, trouble or hindrance from the Corporation.
Section 8.2. Termination upon Payment of Purchase Price. Subject to Section 6.2
hereof, upon full payment or provision for payment of the Purchase Price and Payment
Obligations, and in consideration of the timely payment of all payments provided for herein, and
provided that the City has performed all the covenants and agreements required by the City to be
performed and the Corporation shall have filed with the Issuing and Paying Agent a certificate
directing termination of the Issuing and Paying Agent Agreement pursuant to Section 10.01
thereof, this City Purchase Agreement shall cease and expire. Upon the expiration of this City
Purchase Agreement as provided in this Section 8.2, the Corporation shall cause the Issuing and
Paying Agent under the Issuing and Paying Agent Agreement to release any interest which the
Issuing and Paying Agent may have in the 2017 Property or the revenues thereof from the lien of
the Issuing and Paying Agent Agreement.
Section 8.3. Left Blank Intentionally.
Section 8.4. Amendments for Securities and Exchange Commission, Blue Sky and Other
Limited Purposes. The City and the Corporation agree that if it shall ever become necessary to
make any amendment to this City Purchase Agreement or to the Issuing and Paying Agent
Agreement in order to permit the qualification of the Issuing and Paying Agent Agreement under
the Trust Indenture Act of 1939 or the registration of the Notes with the Securities and Exchange
Commission or the sale of the Notes in accordance with the Blue Sky laws of any state, the City
and the Corporation will agree to such amendments to both this City Purchase Agreement and
the Issuing and Paying Agent Agreement as may be necessary or advisable, in the Opinion of
Counsel, to permit such qualification, registration or sale.
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Section 8.5. Authority of Corporation to Pledge Its Interest Hereunder. The City agrees
that the Corporation may mortgage, hypothecate or pledge all or any part of the interest of the
Corporation in this City Purchase Agreement as security for the Notes and as security for any
Payment Obligations under the Reimbursement Agreement.
Section 8.6. Recordation and Filing of Instruments. The City shall prepare all
documents of every kind and description, make all filings and recordings, and shall deliver all
Opinions of Counsel to the Corporation and to the Issuing and Paying Agent required under any
provision of the Issuing and Paying Agent Agreement.
Section 8.7. Right of Corporation and Issuing and Paying Agent to Perform City’s
Obligations Hereunder. In the event that the City should fail for any reason to make any
payment or perform any obligation hereunder, and such failure shall continue for a period of 30
days after written notice has been given to the City by the Corporation or the Issuing and Paying
Agent specifying such failure and requesting that it be remedied, the Corporation, or the Issuing
and Paying Agent on its behalf, may but shall not be required to make any such payment or to
perform any such duty. The amount of such payment and all expenses reasonably incurred by
the Corporation and the Issuing and Paying Agent in making such payment and performing such
duty shall be additional items of the Purchase Price and shall be paid by the City immediately
upon invoices by the Corporation or the Issuing and Paying Agent with interest (other than
interest which shall be payable to the Bank as determined pursuant to the Reimbursement
Agreement) at the weighted average rate of interest applicable to the Notes from the date said
payment was due or expenses incurred to the date of payment by the City.
Section 8.8. Excess Payments. Upon the retirement of all of the Notes, or upon
provision for the payment of principal, interest and premium, if any, thereof in accordance with
the Issuing and Paying Agent Agreement, upon payment of all Payment Obligations and upon
payment or provision for payment of any fees and charges due and owing to the Issuing and
Paying Agent and Dealer:
(a) Any money remaining in the Note Proceeds Fund shall be paid over to any other
account of the City as directed by the Authorized City Representative.
(b) Any money remaining in the Note Repayment Fund which is not otherwise required
to be applied to the payment of Notes and interest thereon shall likewise be paid over to the City
or its order as overpayments of the Purchase Price.
Section 8.9. City’s Representations and Warranties. The City represents and warrants to
the Corporation as follows:
(a) The City is a political subdivision duly organized and existing under the laws of the
State.
(b) The Constitution and the laws of the State authorize the City to enter into this City
Purchase Agreement and to enter into the agreements and transactions contemplated by, and to
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PHX 332434747v1
carry out its obligations under, said agreements, and the City has duly authorized and executed
all of the aforesaid agreements.
(c) Neither the execution and delivery of this City Purchase Agreement, nor the
fulfillment of or compliance with the terms and conditions hereof or thereof, nor the
consummation of the transactions contemplated hereby or thereby, conflicts with any applicable
law or regulations, order or rule of any governmental authority or results in a breach of or default
under the terms, conditions or provisions of any restriction or any agreement or instrument to
which the City is now a party or by which the City is bound, or constitutes a default under any of
the foregoing, or results in the creation or imposition of any lien, charge or encumbrance
whatsoever upon any of the property or assets of the City or upon the Project.
(d) The City has duly adopted Ordinance No. S-33916 and duly authorized and
executed this City Purchase Agreement and all other documents and agreements required in
connection with the transactions contemplated thereby in accordance with the laws of the State
and each constitutes a valid and binding obligation of the City, enforceable against the City in
accordance with its terms, except as such enforceability may be limited by the City’s bankruptcy,
insolvency, reorganization, moratorium or other laws or equitable principles relating to or
affecting creditors’ rights generally. No further authorization, consent, approval, permit, license
or exemption of, or filing or registration with, any court or governmental authority that has not
been obtained is or will be necessary for the valid adoption, execution, delivery or performance
by the City of this City Purchase Agreement.
(e) There is no pending action, proceeding or investigation before any governmental
authority, against or directly involving the City or, to the best of the City’s knowledge, any
threatened action, proceeding or investigation affecting the City before any governmental
authority, which may materially and adversely affect the financial condition or operations of the
City or the Airport or the validity or enforceability of this City Purchase Agreement or
Ordinance No. S-33916.
(f) The City’s comprehensive annual financial report for the period ended June 30,
2016 (which includes information regarding the financial status of the Airport for such period),
together with the auditors’ reports with respect thereto for such period, are complete and correct
and fairly present such financial information of the City (and the Airport) at such dates and for
such period and were prepared in accordance with generally accepted accounting principles. As
of the date of this City Purchase Agreement, the Airport has no contingent liabilities which are
material to it other than as indicated in such financial statements or as otherwise disclosed in the
offering circular relating to the Series 2017 Notes. Since the date of such comprehensive annual
financial report, there have been no material adverse changes in the condition (financial or
otherwise) of the Airport.
Section 8.10. Additional Covenants and Representations. So long as a Letter of Credit is
outstanding or any Payment Obligation remains outstanding, the City, for the benefit of the Bank
and in consideration of the Bank’s issuance of the Letter of Credit, agrees to comply with its
terms, covenants and conditions herein and agrees to comply with the following requirements,
unless the Bank shall otherwise give its prior consent in writing:
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PHX 332434747v1
(a) The City will promptly give written notice to the Bank of the occurrence of any
Event of Default hereunder or under the Reimbursement Agreement within 30 days of the
occurrence of such event such notice to be signed by the Authorized City Representative setting
forth the details of, and the actions which the Corporation or the City proposes to take with
respect to, such Event of Default.
(b) The City will not make amendments or modifications or terminate or agree to make
amendments or modifications or terminate, and will not permit any other person to make
material amendments or modifications or terminate, this City Purchase Agreement or covenants
incorporated by reference herein without the prior written consent of the Bank, which consent
shall not be unreasonably withheld. Any attempted assignment not permitted hereunder shall be
null and void.
(c) After due investigation, the City is not aware of any reason the Series CP Revenue
Obligations could not be issued in an aggregate principal amount of $200,000,000 at an interest
rate equal to the lesser of (i) the weighted average rate of interest (calculated on a net interest
cost basis) applicable to all fixed rate Junior Lien Revenue Obligations and (ii) 6% using a
twenty-five (25) year principal amortization schedule with no principal amortization during the
first five (5) years with level debt service (either through serial maturities or sinking fund
installments over the remaining twenty (20) years).
(d) Subject to any limitations contained herein, the City will take such actions as may
be required to enable the Corporation to comply with its obligations under the Reimbursement
Agreement.
(e) Sections 3.2, 3.3 and 4.3 of the Airport Revenue Bond Ordinance have not been
amended since April 16, 2008 and are in full force and effect.
Section 8.11. Third Party Beneficiary. The Bank shall be deemed to be a third party
beneficiary of the covenants, obligations and undertakings of the City contained herein,
including without limitation, Articles III, IV, V, VI and VIII hereof.
ARTICLE IX
MISCELLANEOUS
Section 9.1. Arizona Law to Govern. This City Purchase Agreement shall be governed
exclusively by the provisions hereof and by the laws of the State of Arizona as the same from
time to time exist and the City Charter and City Code as they now exist. This City Purchase
Agreement expresses the entire understanding and all agreements of the parties hereto with each
other and neither party hereto has made or shall be bound by any agreement or by representation
to the other party with respect to the matters covered hereby which is not expressly set forth in
this City Purchase Agreement.
Section 9.2. Notices; Mailing Addresses. All notices, consents or other communications
required or permitted hereunder shall be deemed sufficient if given in writing addressed and
mailed by registered or certified mail, delivered, or transmitted by telecopy, telex or other
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PHX 332434747v1
electronic transmission that produces written evidence of its delivery, to the party for which the
same is intended, as follows:
To the Corporation: City of Phoenix Civic Improvement
Corporation
c/o Finance Department City of Phoenix
251 West Washington Street
Phoenix, Arizona 85003
Attn: Chief Financial Officer
To the City: Finance Department
City of Phoenix
251 West Washington Street
Phoenix, Arizona 85003
Attn: Chief Financial Officer
To the Issuing and Paying Agent: U.S. Bank National Association
100 Wall Street, Suite 1600
New York, New York 10005
To the Series 2017ABC-1 Dealer:
To the Series 2017ABC-2 Dealer:
To the 2017ABC-1 Bank:
General Matters
To the Series 2017ABC-1 Bank:
Operational Matters
To the 2017ABC-2 Bank:
General Matters
To the Series 2017ABC-2 Bank:
Operational Matters
or to such other address as such party may hereafter designate by notice in writing addressed and
mailed or delivered to the other party hereto.
Section 9.3. Amendments. Except as otherwise set forth in Section 8.10(b) hereof, this
City Purchase Agreement may only be amended in accordance with the provisions of the Issuing
and Paying Agent Agreement.
Section 9.4. Severability. If any term or provision of this City Purchase Agreement or
the application thereof to any person or circumstance, shall to any extent be invalid or
unenforceable, the remainder of this City Purchase Agreement or the application of such term or
provision to persons or circumstances other than those as to which it is invalid or unenforceable,
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PHX 332434747v1
shall not be affected thereby, and each term and provision of this City Purchase Agreement shall
be valid and be enforced to the fullest extent permitted by law.
Section 9.5. Counterparts. This City Purchase Agreement may be simultaneously
executed in any number of counterparts, each of which when so executed shall be deemed to be
an original, but all together shall constitute but one and the same City Purchase Agreement, and
it is also understood and agreed that separate counterparts of this City Purchase Agreement may
separately be executed by the Corporation and the City, all with the same full force and effect as
though the same counterpart had been executed by both the Corporation and the City.
Section 9.6. Net Purchase Agreement. This City Purchase Agreement shall be deemed
and construed to be a “net purchase agreement”, and the City hereby agrees that the payments
provided for in Section 3.3 hereof shall be an absolute net return to the Corporation free and
clear of any expenses or charges whatsoever, except as otherwise specifically provided herein.
Section 9.7. Assignment by City. Neither this City Purchase Agreement nor any interest
of the City herein may at any time after the date hereof, without the prior written consent of the
Issuing and Paying Agent, be mortgaged, pledged, assigned or transferred by the City by
voluntary act or by operation of law or otherwise. In any of the aforementioned circumstances,
the Issuing and Paying Agent shall not provide its consent until it has received an opinion of
Bond Counsel to the effect that such event will not cause interest on any Tax-Exempt Notes to
become subject to federal income taxation. The City shall at all times remain liable for the
performance of all of the covenants and conditions on its part to be performed, notwithstanding
any such action. The City may lease to others, or may enter into arrangements with others for
use of all or a portion of the 2017 Property from time to time in the ordinary course of the City’s
operation of the 2017 Property provided that such lease or other agreement shall in all respects
comply with the Constitution and laws of the State of Arizona and this City Purchase Agreement
and shall not relieve the City of its responsibility or performance hereunder.
Section 9.8. Interested Parties Herein. Nothing in this City Purchase Agreement
expressed or implied is intended or shall be construed to confer upon, or to give or grant to, any
person or entity, other than the City, the Issuing and Paying Agent, the Bank and the registered
owners of the Notes, any right, remedy or claim under or by reason of this City Purchase
Agreement or any covenant, condition or stipulation hereof, and all covenants, stipulations,
promises and agreements in this City Purchase Agreement contained by and on behalf of the City
shall be for the sole and exclusive benefit of the City, the Issuing and Paying Agent, the Bank
and the registered owners of the Notes.
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PHX 332434747v1
IN WITNESS WHEREOF, the City and the Corporation have caused their respective
corporate names to be signed hereto by their respective authorized officers thereunto duly
authorized, all as of the day and year first above written.
CITY OF PHOENIX CIVIC IMPROVEMENT
CORPORATION, an Arizona nonprofit
corporation
By ____________________________________
Its President
ATTEST:
________________________________
Secretary
CITY OF PHOENIX, a municipal corporation
BY ED ZUERCHER,
Its City Manager
By ____________________________________
Its Chief Financial Officer
ATTEST:
________________________________
City Clerk
APPROVED AS TO FORM:
_________________________________
City Attorney
EXHIBIT A PHX 332434747v1
EXHIBIT A
DESCRIPTION OF PROJECT
Proceeds of the Series 2017B Notes were used for improvements to facilities at
Terminal 3, including but not limited to concourses, gates, concessions space, airline offices,
mechanical rooms, ticketing space and baggage handling space and equipment.
EXHIBIT B PHX 332434747v1
EXHIBIT B
FORM OF BILL OF SALE
KNOW ALL MEN BY THESE PRESENTS:
That the City of Phoenix Civic Improvement Corporation, an Arizona corporation, (the
“Corporation”), for good and valuable consideration received by the Corporation from the City
of Phoenix, Arizona (the “City”), receipt of which is hereby acknowledged, does by these
presents grant, bargain, sell and convey to the City, its successors and assigns, the property
described in Exhibit A to the City Purchase Agreement, dated as of August 1, 2017, by and
between the Corporation and the City, to have and to hold the property sold to the City and its
successors and assigns forever.
IN WITNESS WHEREOF, the Corporation has caused this Bill of Sale to be executed this
______ day of August, 2017.
CITY OF PHOENIX CIVIC IMPROVEMENT
CORPORATION
By____________________________________
Its_________________________________
PHX 332435050v1
EXHIBIT C - RFP DRAFT DATED JUNE 8, 2017
ISSUING AND PAYING AGENT AGREEMENT
between
CITY OF PHOENIX CIVIC IMPROVEMENT CORPORATION
and
U.S. BANK NATIONAL ASSOCIATION,
as Issuing and Paying Agent
______________________________________
Dated as of August 1, 2017
______________________________________
RELATING TO
CITY OF PHOENIX CIVIC IMPROVEMENT CORPORATION
AIRPORT COMMERCIAL PAPER PROGRAM NOTES
consisting of
Series 2017A-1 (Non-AMT) Series 2017A-2 (Non-AMT)
Series 2017B-1 (AMT) Series 2017B-2 (AMT)
Series 2017C-1 (Taxable) Series 2017C-2 (Taxable)
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TABLE OF CONTENTS
SECTION HEADING PAGE
PARTIES ....................................................................................................................................... 1
PREAMBLES ................................................................................................................................ 1
GRANTING CLAUSES ................................................................................................................ 1
EXCEPTED PROPERTY .............................................................................................................. 2
ARTICLE I DEFINITIONS; CONTENT OF CERTIFICATES AND OPINIONS .................... 3
Section 1.01. Definitions............................................................................................ 3 Section 1.02. Content of Certificates and Opinions ................................................. 10
ARTICLE II THE NOTES ......................................................................................................... 11 Section 2.01. Authorization of Notes ....................................................................... 11
Section 2.02. Terms of the Notes ............................................................................. 12 Section 2.03. Form of Notes .................................................................................... 13
Section 2.04. Execution of Notes ............................................................................. 13 Section 2.05. Authentication of Notes ..................................................................... 13 Section 2.06. Notes Mutilated, Lost, Destroyed or Stolen....................................... 15
Section 2.07. Cancellation of Notes ......................................................................... 15
Section 2.08. Master Note; Registration of Notes ................................................... 15 Section 2.09 Additional Original Issue Notes......................................................... 18
ARTICLE III ISSUE AND SALE OF NOTES .......................................................................... 18 Section 3.01. Issuance and Sale of Notes ................................................................ 18
Section 3.02. Proceeds of Sale of Notes .................................................................. 21
ARTICLE IV NOTE PROCEEDS FUND ................................................................................. 21 Section 4.01. Establishment and Application of Note Proceeds Fund .................... 21
ARTICLE V AVAILABLE FUNDS AND ACCOUNTS.......................................................... 22 Section 5.01. Pledge of Available Funds; Note Repayment Fund ........................... 22
Section 5.02. Debt Service Account and Reimbursement Agreement
Account of the Note Repayment Fund............................................. 23
Section 5.03. Draws under Letter of Credit; Payment of Principal and
Interest; Enforcement ....................................................................... 24 Section 5.04. Monies in Funds and Accounts .......................................................... 25
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SECTION HEADING PAGE
ARTICLE VI COVENANTS OF THE CORPORATION ......................................................... 26 Section 6.01. Punctual Payment............................................................................... 26
Section 6.02. Extension of Payment of Notes.......................................................... 26 Section 6.03. Waiver of Laws .................................................................................. 26 Section 6.04. Further Assurances............................................................................. 26 Section 6.05. Against Encumbrances....................................................................... 27 Section 6.06. Accounting Records and Financial Statements.................................. 27
Section 6.07. Rebate Fund ....................................................................................... 27 Section 6.08. Tax Covenants ................................................................................... 28 Section 6.09. Maintenance of Issuing and Paying Agent ........................................ 28 Section 6.10. Letters of Credit; Alternate Facility ................................................... 28
Section 6.11. Appointment of Dealer ...................................................................... 29 Section 6.12. Rating Confirmation from Moody’s and Standard and Poor’s .......... 29
ARTICLE VII EVENTS OF DEFAULT AND REMEDIES OF NOTEHOLDERS................. 29
Section 7.01. Events of Default ............................................................................... 29 Section 7.02. Application of Available Funds other than Letter of Credit
Proceeds and Other Funds after Default .......................................... 30
Section 7.03. Issuing and Paying Agent to Represent Noteholders ......................... 31 Section 7.04. Noteholders’ Direction of Proceedings .............................................. 31
Section 7.05. Limitation on Noteholders’ Right to Sue ........................................... 32 Section 7.06. Obligation of the Corporation ............................................................ 32 Section 7.07. Termination of Proceedings ............................................................... 33
Section 7.08. Remedies Not Exclusive .................................................................... 33
Section 7.09. No Waiver of Default......................................................................... 33 Section 7.10. Consent of the Bank ........................................................................... 33 Section 7.11. Certain Events Affecting the Bank’s Consent Rights ........................ 34
ARTICLE VIII THE ISSUING AND PAYING AGENT .......................................................... 34
Section 8.01. Appointment; Duties, Immunities and Liabilities of Issuing
and Paying Agent ............................................................................. 34
Section 8.02. Merger or Consolidation .................................................................... 36 Section 8.03. Liability of Issuing and Paying Agent ............................................... 36 Section 8.04. Right of Issuing and Paying Agent to Rely on Documents ............... 38 Section 8.05. Compensation and Indemnification of Issuing and Paying
Agent ................................................................................................ 39
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SECTION HEADING PAGE
ARTICLE IX MODIFICATION OR AMENDMENT OF THIS ISSUING AND
PAYMENT AGENT AGREEMENT AND CITY PURCHASE AGREEMENT .......... 39 Section 9.01. Amendments Permitted ...................................................................... 39 Section 9.02. Effect of Supplement ......................................................................... 41 Section 9.03. Amendment of Particular Notes ......................................................... 41 Section 9.04. Amendments to City Purchase Agreement Not Requiring
Consent of Noteholders.................................................................... 41 Section 9.05. Amendments to City Purchase Agreement Requiring Consent
of Noteholders .................................................................................. 42
ARTICLE X DEFEASANCE ..................................................................................................... 42 Section 10.01. Payment of Notes ............................................................................... 42
Section 10.02. Discharge of Liability on Notes ......................................................... 43 Section 10.03. Deposit of Money or Securities with Issuing and Paying
Agent ................................................................................................ 43 Section 10.04. Payment of Notes after Discharge of Issuing and Paying
Agent ................................................................................................ 44
ARTICLE XI MISCELLANEOUS ............................................................................................ 45
Section 11.01. Liability of Corporation Limited to Available Funds ........................ 45 Section 11.02. Successor Is Deemed Included in All References to
Predecessor ...................................................................................... 45
Section 11.03. Limitation of Rights to Corporation, the City, Issuing and
Paying Agent, Bank and Noteholders .............................................. 45 Section 11.04. Waiver of Notice ................................................................................ 45 Section 11.05. Destruction or Delivery of Canceled Notes ....................................... 45
Section 11.06. Severability of Invalid Provisions ...................................................... 45 Section 11.07. Notices ............................................................................................... 46
Section 11.08. Notice to Rating Agencies ................................................................. 47 Section 11.09. Evidence of Rights of Noteholders .................................................... 48
Section 11.10. Disqualified Notes ............................................................................. 48 Section 11.11. Money Held for Particular Notes ....................................................... 49 Section 11.12. Funds and Accounts ........................................................................... 49 Section 11.13. Article and Section Headings and References ................................... 49 Section 11.14. Waiver of Personal Liability .............................................................. 49
Section 11.15. Governing Law .................................................................................. 50 Section 11.16. Business Day ...................................................................................... 50
Section 11.17. Effective Date of Issuing and Paying Agent Agreement ................... 50 Section 11.18. Execution in Counterparts.................................................................. 50 Section 11.19. Certain Statutory Provisions .............................................................. 50
EXHIBIT A — Form of Note
EXHIBIT B — Letters of Representation to The Depository Trust Company
EXHIBIT C — Form of Issuance Request to Issuing and Paying Agent
PHX 332435050v1
ISSUING AND PAYING AGENT AGREEMENT
This ISSUING AND PAYING AGENT AGREEMENT, dated as of August 1, 2017 (the “Issuing
and Paying Agent Agreement”), by and between the CITY OF PHOENIX CIVIC IMPROVEMENT
CORPORATION, an Arizona nonprofit corporation (the “Corporation”), and U.S. BANK
NATIONAL ASSOCIATION, a national banking association duly organized and existing under and
by virtue of the laws of the United States, as issuing and paying agent (the “Issuing and Paying
Agent”);
W I T N E S S E T H:
WHEREAS, the Corporation was formed to assist the City of Phoenix, Arizona (the
“City”) in financing its capital improvement projects at no profit to the Corporation; and
WHEREAS, the City and the Corporation have entered into a City Purchase Agreement
dated as of August 1, 2017 (the “City Purchase Agreement”) pursuant to which the Corporation
has agreed to enter into this Issuing and Paying Agent Agreement in order to provide for the
authentication and delivery of the hereinafter defined Notes, to establish and declare the terms
and conditions upon which the Notes shall be issued and secured and to secure the payment of
the principal thereof and interest thereon; and
WHEREAS, in order to provide for the payment of the hereinafter defined Series
2017ABC-1 Notes, the Corporation has determined to enter into a Letter of Credit
Reimbursement Agreement, dated as of August 1, 2017 (the “Series 2017ABC-1 Reimbursement
Agreement”), by and between the Corporation, and _____________ (the “Series 2017ABC-1
Bank”), pursuant to which the Series 2017ABC-1 Bank will extend an irrevocable, direct-pay
letter of credit to the Issuing and Paying Agent for the account of the Corporation; and
WHEREAS, in order to provide for the payment of the hereinafter defined Series
2017ABC-2 Notes, the Corporation has determined to enter into a Letter of Credit
Reimbursement Agreement, dated as of September 1, 2017 (the “Series 2017ABC-2
Reimbursement Agreement” and together with the Series 2017ABC-1 Reimbursement
Agreement, the “Reimbursement Agreement”), by and between the Corporation, and
______________ (the “Series 2017ABC-2 Bank”), pursuant to which the Series 2017ABC-2
Bank will extend an irrevocable, direct-pay letter of credit to the Issuing and Paying Agent for
the account of the Corporation; and
GRANTING CLAUSES
NOW, THEREFORE, THIS ISSUING AND PAYING AGENT AGREEMENT FURTHER WITNESSETH:
That the Corporation in consideration of the mutual premises contained herein, of the acceptance
by the Issuing and Paying Agent of the trusts hereby created, and of the purchase and acceptance
of the Notes by the holders thereof, and for the purpose of fixing and declaring the terms and
conditions upon which the Notes are to be issued, authenticated, delivered, secured and accepted
by all persons who shall from time to time be or become holders thereof, and in order to secure
the payment of all of the Notes at any time issued and Outstanding (as defined herein) hereunder
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and the interest and premium, if any, thereon according to their tenor, purport and effect, and in
order to secure the performance and observance of all of the covenants and conditions therein
and herein contained and to secure the Payment Obligations of the Corporation under the
Reimbursement Agreement, the Corporation has executed this Issuing and Paying Agent
Agreement and does hereby grant a security interest in, assign, transfer, pledge, grant and convey
unto the Issuing and Paying Agent and its successors and assigns the following described
property:
A. All rights and interests of the Corporation in, under and pursuant to the
City Purchase Agreement, provided that the assignment made by this clause shall not
include (i) any assignment of any obligation of the Corporation under the City Purchase
Agreement (and the Issuing and Paying Agent shall have no duties with respect thereto)
or (ii) any assignment of any right of the Corporation thereunder to inspect books and
records, or to give or receive notices, approvals, consents, requests or other
communications or approvals, or any right to limitation of liability, indemnification of
liability, or payment or reimbursement of fees, costs or expenses;
B. Amounts on deposit from time to time in the funds and accounts created
pursuant hereto (except for the Rebate Fund defined herein, if any), subject to the
provisions of this Issuing and Paying Agent Agreement permitting the application thereof
for the purposes and on the terms and conditions set forth herein; and
C. Any and all other real or personal property of any kind from time to time
hereafter by delivery or by writing of any kind specifically conveyed, pledged, assigned
or transferred, as and for additional security hereunder for the Notes, by the Corporation
or by anyone on its behalf or with its written consent, in favor of the Issuing and Paying
Agent, which is hereby authorized to receive any and all such property at any and all
times and to hold and apply the same subject to the terms hereof.
EXCEPTED PROPERTY
There is, however, expressly excepted and excluded from the lien and operation of this
Issuing and Paying Agent Agreement amounts to be transferred pursuant to this Issuing and
Paying Agent Agreement to, or held by the Issuing and Paying Agent or the City as the case may
be, in the Rebate Fund (defined herein, if any). It is expressly understood by the parties hereto
that no lien shall be created on the Property or the Airport (as defined in the City Purchase
Agreement) in favor of Noteholders and that remedies available to the Noteholders and the
Issuing and Paying Agent shall be limited to those specified in Article VII hereof and in
Section 7.2 of the City Purchase Agreement.
TO HAVE AND TO HOLD all said properties pledged, assigned and conveyed by the
Corporation hereunder, including all additional property which by the terms hereof has or may
become subject to the encumbrance hereof, unto the Issuing and Paying Agent and its successors
in trust and its assigns forever, subject, however, to the rights reserved hereunder.
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IN TRUST NEVERTHELESS, for the equal and proportionate benefit and security of the
Bank and the holders from time to time of the Notes issued, authenticated, delivered and
Outstanding hereunder, without preference, priority or distinction as to lien or otherwise of any
of said Notes over any other or others of said Notes to the end that each holder of such Notes has
the same rights, privileges and lien under and by virtue hereof; and conditioned, however, that if
the Corporation shall well and truly pay or cause to be paid fully and promptly when due all
liabilities, obligations and sums at any time secured hereby, and shall promptly, faithfully and
strictly keep, perform or observe or cause to be kept, performed and observed all of its
covenants, warranties and agreements contained herein, then and in such event, this Issuing and
Paying Agent Agreement shall be and become void and of no further force and effect; otherwise,
the same shall remain in full force and effect, and upon the trust and subject to the covenants and
conditions hereafter set forth.
ARTICLE I
DEFINITIONS; CONTENT OF CERTIFICATES AND OPINIONS
Section 1.01. Definitions. Unless the context otherwise requires, the terms defined in this
Section shall, for all purposes of this Issuing and Paying Agent Agreement and of any
Supplement and of any certificate, opinion or other document herein mentioned, have the
meanings herein specified, to be equally applicable to both the singular and plural forms of any
of the terms herein defined. Unless otherwise defined in this Issuing and Paying Agent
Agreement, all terms used herein shall have the meanings assigned to such terms in the City
Purchase Agreement.
“Additional Original Issue Notes” means Notes in addition to the Series 2017 Notes
authorized pursuant to Sections 2.09 and 9.01(b)(5) hereof.
“Advice” means a notice or a written instrument executed by the Issuing and Paying
Agent and delivered to the Depository which specifies the amount by which the indebtedness
evidenced by a Master Note is to be increased or decreased on any particular date, and such other
information as may be required pursuant to the systems and procedures of the Depository
applicable to implementation of its book-entry program for obligations of the character of the
Notes.
“Alternate Facility” means a credit facility provided pursuant to the provisions of
Section 6.10 and the instruments pursuant to which such facility is provided.
“Available Amount” means, with respect to a Letter of Credit and all Notes of any Series
secured thereby, the aggregate initial amount available to be drawn on the Letter of Credit as set
forth therein, as such amount may be reduced and/or reinstated or increased pursuant to the terms
thereof, including as such amounts may be reduced by the amount of Term Loans and
Unreimbursed Drawings outstanding.
“Available Funds” means, with respect to a Series of Notes, (a) amounts on deposit in
the applicable account or subaccount of Note Proceeds Fund and the Note Repayment Fund and
investment earnings thereon, including proceeds of Notes issued to repay Outstanding Notes,
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including any Additional Original Issue Notes or Rollover Notes, (b) proceeds of the sale of
Series CP Revenue Obligations (with respect to the principal amount of any Outstanding Notes
or Payment Obligations), (c) Other Available Monies which the City determines to make
available to pay principal of and interest on the Notes or other expenses under the City Purchase
Agreement, and (d) amounts on deposit in the appropriate subaccount within the Letter of Credit
Fund made available under the related Letter of Credit, which amounts shall be applied
exclusively to the payment of principal of and interest on the applicable Notes.
“Bank” means the provider of a letter of credit or Alternate Facility securing a Series or
multiple Series of Notes, and initially means (i) the Series 2017ABC-1 Bank, as issuer of the
Letter of Credit with respect to the Series 2017ABC-1 Notes and (ii) the Series 2017ABC-2
Bank, as issuer of the Letter of Credit with respect to the Series 2017ABC-2 Notes.
“Bond Counsel” means Greenberg Traurig, LLP or such other firm of national standing
in the field of public finance selected by the Corporation at the direction of the City.
“Business Day” means any day other than a Saturday, Sunday or day upon which banks
in Phoenix, Arizona, or New York, New York are authorized or required to be closed, or a day
on which the New York Stock Exchange is authorized or obligated by law or executive order to
be closed or a day on which the office of the bank at which drafts are to be presented under the
Letter of Credit or the corporate trust office of the Issuing and Paying Agent is authorized or
required to be closed.
“Certificate,” “Statement,” “Request,” “Requisition” and “Order” of the Corporation
mean, respectively, a written certificate, statement, request, requisition or order signed in the
name of the Corporation by an Authorized Corporation Representative. Any such instrument
and supporting opinions or representations, if any, may, but need not, be combined in a single
instrument with any other instrument, opinion or representation, and the two or more so
combined shall be read and construed as a single instrument. If and to the extent required by
Section 1.02, each such instrument shall include the statements provided for in Section 1.02.
“Certificate Agreement” shall have the meaning given to that term in Section 2.08
hereof.
“City Purchase Agreement” means that certain City Purchase Agreement dated as of
September 1, 2017 between the Corporation and the City, as such agreement may be
supplemented or amended from time to time with the consent of the Bank and the Issuing and
Paying Agent to the extent required herein.
“Code” means the Internal Revenue Code of 1986, and the regulations applicable thereto
or issued thereunder.
“Corporate Trust Office” or “corporate trust office” means the corporate trust office of
the Issuing and Paying Agent at 100 Wall Street, Suite 1600, New York, New York 10005, or
such other or additional offices as may be designated by the Issuing and Paying Agent.
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“Costs of Issuance” means all items of expense directly or indirectly payable by or
reimbursable to the City or the Corporation and related to the authorization, execution, sale and
delivery of the Notes, including but not limited to advertising and printing costs, costs of
preparation and reproduction of documents, filing and recording fees, travel expenses and costs
relating to rating agency meetings and other meetings concerning the Notes, initial fees and
charges of the Issuing and Paying Agent, legal fees and charges, fees and disbursements of
consultants and professionals, including fees of the Dealer, financial advisor fees and expenses,
rating agency fees, fees and charges for preparation, execution, transportation and safekeeping of
Notes, surety insurance, liquidity and credit enhancements costs, including, without limitation,
fees and expenses payable to the Bank under the Reimbursement Agreement, and any other cost,
charge or fee in connection with the delivery of Notes.
“Dealer” means ____________________________ or any successor or assign of either
such party as may be permitted by the respective Dealer Agreement or any other party entering
into a dealer agreement (or similar document) with the Corporation at the direction of the City.
Unless otherwise set forth herein specifically, “Dealer” shall mean Dealer with respect to the
related Series of Notes.
“Dealer Agreement” means, collectively, the respective the Dealer Agreements dated as
of August 1, 2017, by and among the Corporation, the City and __________________ with
respect to the Series 2017ABC-1 Notes and ________________ with respect to the Series
2017ABC-2 Notes, and any and all modifications, alterations, amendments and supplements
thereto, or any other dealer agreement entered into by the Corporation at the direction of the City
and a Dealer with respect to the related Series of Notes.
“Debt Service Account” means the account of the Note Repayment Fund by that name
established pursuant to Section 5.02(a) hereof.
“Depository” means (i) initially, DTC, and (ii) any other qualified securities depository
acting as Depository pursuant to Section 2.08 of this Issuing and Paying Agent Agreement.
“Depository System Participant” means any participant in the Depository’s book-entry
system.
“DTC” means The Depository Trust Company, New York, New York, and its successors
and assigns.
“Eligible Depository” means (i) a federal depository institution or state-chartered
depository institution or trust company that has a short-term debt rating of at least “A-2” by S&P
(or if no short-term rating, a long-term debt rating of at least “BBB+”) or (ii) the corporate trust
department of a federal depository institution or state-chartered depository institution which, in
either case, has corporate trust powers and is acting in its fiduciary capacity.
“Event of Default” means any of the events specified in Section 7.01 hereof.
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“Fiscal Year” means the period beginning on July 1 of each year and ending on the next
succeeding June 30, or any other twelve-month period hereafter selected and designated as the
official fiscal year period of the City which designation shall be provided to the Issuing and
Paying Agent in a Certificate of the City.
“Holder” — see “Owner.”
“Issuance Request” means a request made by the Corporation, acting through an
Authorized Corporation Representative with respect to Original Issue Notes or through a Dealer
with respect to Rollover Notes, to the Issuing and Paying Agent for the authentication and
delivery of a Note or Notes of a Series and Subseries. A form of Issuance Request is attached
hereto as Exhibit C with respect to Original Issue Notes.
“Issuing and Paying Agent” means U.S. Bank National Association, a national banking
association duly organized and existing under the laws of the United States, or its successor, as
Issuing and Paying Agent, as provided in Section 8.01 hereof.
“Issuing and Paying Agent Agreement” means this Issuing and Paying Agent Agreement,
dated as of August 1, 2017, by and between the Issuing and Paying Agent and the Corporation,
as originally executed or as it may from time to time be supplemented or amended by any
Supplement delivered pursuant to the provisions of Section 9.01 hereof.
“Letter of Credit” means, with respect to a Series of Notes, an irrevocable, direct-pay
letter of credit securing payment of such Series of Notes, or any substitution therefor, including
any Alternate Facility, and specifically including the (i) Letter of Credit issued by the Series
2017ABC-1 Bank pursuant to the Reimbursement Agreement related to the Series 2017ABC-1
Notes and (ii) the Letter of Credit issued by the Series 2017ABC-2 Bank pursuant to the
Reimbursement Agreement related to the Series 2017ABC-2 Notes.
“Letter of Credit Expiration Date” means, with respect to a Letter of Credit, the stated
expiration date thereof, taking into account any extension of such stated expiration date.
“Letter of Credit Fund” means the fund by that name established pursuant to
Section 5.03 hereof.
“Letter of Representations” means a letter to the Depository from the Corporation
representing such matters as shall be necessary to qualify the Notes for the Depository’s book-
entry system in the form attached hereto as Exhibit B.
“Master Note” means a separate Note with respect to each Subseries of the Series
2017ABC-1 Notes and the Series 2017ABC-2 Notes and any Additional Original Issue Notes,
each substantially in the form attached hereto as an exhibit to the Letters of Representations.
“Moody’s” means Moody’s Investors Service, a corporation duly organized and existing
under and by virtue of the laws of the State of Delaware, and its successors and assigns, except
that if such corporation shall be dissolved or liquidated or shall no longer perform the functions
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of a securities rating agency, then the term “Moody’s” shall be deemed to refer to any other
nationally recognized securities rating agency selected by the Corporation at the direction of the
City.
“Nominee” means (i) initially, Cede & Co., as nominee of DTC, and (ii) such other
nominee of a Depository designated pursuant to Section 2.08 of this Issuing and Paying Agent
Agreement.
“Noteholder,” “Noteowner” — see “Owner.”
“Note Proceeds Fund” means the fund (and all accounts within such fund) by that name
established by the Corporation on behalf of the City pursuant to Section 4.01 to hold the
proceeds of the Notes prior to expenditure on the Project.
“Note Repayment Fund” means the Note Repayment Fund established pursuant to
Section 5.01.
“Notes” means, collectively, the Series 2017ABC-1 Notes and the Series 2017ABC-2
Notes and any Additional Original Issue Notes or Rollover Notes with respect thereto.
“Notice of Permanent Non-Issuance” shall have the meaning given such term in the
Reimbursement Agreement.
“Notice of Temporary Non-Issuance” shall have the meaning given such term in the
Reimbursement Agreement.
“Opinion of Bond Counsel” means a written opinion of Bond Counsel.
“Order of the Corporation” — see “Certificate.”
“Original Issue Notes” has the meaning given to that term in the Tax Certificate.
“Outstanding,” when used as of any particular time with reference to Notes, means
(subject to the provisions of Section 11.10) all Notes theretofore, or thereupon being,
authenticated and delivered by the Issuing and Paying Agent under this Issuing and Paying
Agent Agreement except (1) Notes theretofore canceled by the Issuing and Paying Agent or
surrendered to the Issuing and Paying Agent for cancellation; (2) Notes with respect to which all
liability of the City shall have been discharged in accordance with Section 10.02, including
Notes (or portions of Notes) referred to in Section 11.10; and (3) Notes for the transfer or
exchange of or in lieu of or in substitution for which other Notes shall have been authenticated
and delivered by the Issuing and Paying Agent pursuant to this Issuing and Paying Agent
Agreement.
“Owner” or “Holder” or “Noteholder” or “Noteowner,” whenever used herein with
respect to a Note, means the person in whose name such Note is registered.
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“Payment Obligations” means all amounts owing to the Bank under the Reimbursement
Agreement, including, without limitation, any Unreimbursed Drawings and Term Loans (as
defined therein).
“Permitted Investments” means any investment security in which the City or the
Corporation is permitted by law to invest.
“Person” means a corporation, firm, association, partnership, trust, or other legal entity
or group of entities, including a governmental entity or any agency or political subdivision
thereof.
“Rating Agency” means each nationally recognized securities rating agency, including
Moody’s and Standard & Poor’s, if the Notes are then rated by such rating agency.
“Rebate Fund” means the fund by that name, if established pursuant to Section 6.07
herein or pursuant to the Tax Certificate.
“Rebate Requirement” means the amount of arbitrage rebate, if any, required to be paid
to the United States as determined in accordance with Article IV of the Tax Certificate.
“Reimbursement Agreement” means (i) the Letter of Credit Reimbursement Agreement
dated as of August 1, 2017, by and between the Corporation and the Series 2017ABC-1 Bank
including any related letter agreements regarding fees and costs, and (ii) the Letter of Credit
Reimbursement Agreement dated as of August 1, 2017 by and between the Corporation as the
Series 2017ABC-2 Bank including any related letter agreements regarding fees and costs, and in
each case, as such agreement may be amended or supplemented from time to time in accordance
with the terms thereof, and any other reimbursement agreement entered into by the Corporation
and a Bank with respect to a Letter of Credit or an Alternate Facility.
“Reimbursement Agreement Account” means the account by that name of the Note
Repayment Fund established pursuant to Section 5.02 herein.
“Responsible Officer” means, when used with respect to the Issuing and Paying Agent,
any vice president, assistant vice president, senior associate or other officer of the Issuing and
Paying Agent within the corporate trust office specified in Section 11.07 hereof (or any
successor corporate trust office) having direct responsibility for the administration of this Issuing
and Paying Agent Agreement.
“Rollover Notes” has the meaning given to that term in the Tax Certificate.
“Request, Requisition of the Corporation” — see “Certificate.”
“Series,” whenever used herein with respect to Notes, means all of the Notes designated
as being of the same series, regardless of variations in Subseries, maturity, interest rate and other
provisions. The initial series of Notes authorized hereunder consist of the Series 2017B-1 Notes
and the Series 2017B-2 Notes.
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“Series 2017ABC-1 Bank” means ______________ as issuer of the initial Letter of
Credit with respect to the Series 2017ABC-1 Notes.
“Series 2017ABC-2 Bank” means Barclays Bank PLC as issuer of the initial Letter of
Credit with respect to the Series 2017ABC-2 Notes.
“Series 2017 Notes” means, collectively, the Series 2017ABC-1 Notes and the Series
2017ABC-2 Notes.
“Series 2017A-1 Notes” means the Corporation’s Airport Commercial Paper Program
Notes, Series 2017A-1 (Non-AMT) authorized hereunder.
“Series 2017A-2 Notes” means the Corporation’s Airport Commercial Paper Program
Notes, Series 2017A-2 (Non-AMT) authorized hereunder.
“Series 2017ABC-1 Notes” means, collectively, the Series 2017A-1 Notes, the Series
2017B-1 Notes and the Series 2017C-1 Notes.
“Series 2017ABC-2 Notes” means, collectively, the Series 2017A-1 Notes, the Series
2017B-1 Notes and the Series 2017C-1 Notes.
“Series 2017B-1 Notes” means the Corporation’s Airport Commercial Paper Program
Notes, Series 2017B-1 (Non-AMT) authorized hereunder.
“Series 2017B-2 Notes” means the Corporation’s Airport Commercial Paper Program
Notes, Series 2017B-2 (AMT) authorized hereunder.
“Series 2017C-1 Notes” means the Corporation’s Airport Commercial Paper Program
Notes, Series 2017C-1 (Taxable) authorized hereunder.
“Series 2017C-2 Notes” means the Corporation’s Airport Commercial Paper Program
Notes, Series 2017C-2 (Taxable) authorized hereunder.
“Standard & Poor’s” means S&P Global Ratings, a division of Standard & Poor’s
Financial Services LLC, and its successors and assigns, except that if such corporation shall be
dissolved or liquidated or shall no longer perform the functions of a securities rating agency, then
the term “Standard & Poor’s” shall be deemed to refer to any other nationally recognized
securities rating agency selected by the Corporation at the direction of the City.
“State” means the State of Arizona.
“Statement of the Corporation” — see “Certificate of the Corporation.”
“Stop Order” means either a Notice of Permanent Non-Issuance or a Notice of
Temporary Non-Issuance.
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“Subseries” means, with respect to a Series of Notes, a subdivision of such Series to the
extent necessary to identify different consequences of owning such subseries for purposes of
federal income taxation.
“Supplement” means any amendment to this Issuing and Paying Agent Agreement
hereafter duly executed and delivered, supplementing, modifying or amending this Issuing and
Paying Agent Agreement, but only if and to the extent that such Supplement is specifically
authorized hereunder.
“Tax-Exempt Notes” means a Series or Subseries of Notes, the interest on which is
intended to be excludible from gross income for federal income tax purposes.
“Taxable Notes” means a Series or Subseries of Notes, the interest on which is not
intended to be excludible from gross income for federal income tax purposes.
“Tax Certificate” means (i) with respect to the Tax-Exempt Notes, the Tax Exemption
Certificate and (ii) with respect to Taxable Notes, a corresponding certificate relating to federal
tax matters; in each case delivered by the Corporation and the City at the time of the
authorization and initial issuance and delivery of each Series and Subseries of Notes, as the same
may be amended or supplemented in accordance with its terms.
“Term Loan” shall have the meaning given such term in the Reimbursement Agreement.
“Unreimbursed Drawing” shall have the meaning given such term in the Reimbursement
Agreement.
Section 1.02. Content of Certificates and Opinions. Every certificate or opinion provided
for in this Issuing and Paying Agent Agreement with respect to compliance with any provision
hereof shall include (1) a statement that the person making or giving such certificate or opinion
has read such provision and the definitions herein relating thereto; (2) a brief statement as to the
nature and scope of the examination or investigation upon which the certificate or opinion is
based; (3) a statement that, in the opinion of such person, he has made or caused to be made such
examination or investigation as is necessary to enable him to express an informed opinion with
respect to the subject matter referred to in the instrument to which his signature is affixed; and
(4) a statement as to whether, in the opinion of such person, such provision has been complied
with.
Any such certificate or opinion made or given by an officer of the Corporation may be
based, insofar as it relates to legal or accounting matters, upon a certificate or opinion of or
representation by counsel, an accountant, a financial advisor, an investment banker or an
independent consultant, unless such officer knows, or in the exercise of reasonable care should
have known, that the certificate, opinion or representation with respect to the matters upon which
such certificate or statement may be based, as aforesaid, is erroneous. Any such certificate or
opinion made or given by counsel, an accountant or an independent consultant may be based,
insofar as it relates to factual matters (with respect to which information is in the possession of
the Corporation) upon a certificate or opinion of or representation by an officer of the
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Corporation, unless such counsel, accountant or independent consultant knows, or in the exercise
of reasonable care should have known, that the certificate or opinion or representation with
respect to the matters upon which such person’s certificate or opinion or representation may be
based, as aforesaid, is erroneous. The same officer of the Corporation, or the same counsel or
accountant or independent consultant, as the case may be, need not certify to all of the matters
required to be certified under any provision of this Issuing and Paying Agent Agreement, but
different officers, counsel, accountants or independent consultants may certify to different
matters, respectively.
ARTICLE II
THE NOTES
Section 2.01. Authorization of Notes. (a) Notes may be issued hereunder, in registered
form, from time to time as authorized by this Article. Unless otherwise amended pursuant to
Sections 2.09 and 9.01(b)(5) hereof, the maximum principal amount of Notes which may be
issued hereunder is not limited; subject, however, to an aggregate maximum principal amount of
Notes Outstanding of both initial Series of $200,000,000 at any time and a maximum principal
amount of either Series of $100,000,000 at any time and subject further to any limitations
contained in the laws of the State. The Notes are designated as “City of Phoenix Civic
Improvement Corporation Airport Commercial Paper Program Notes;” each Series and Subseries
thereof to bear such additional designation as may be necessary or appropriate to distinguish
such Series from every other Series and Subseries of Notes.
(b) (i) An initial Series of Notes, consisting of three Subseries entitled “Series 2017A-1,
Series 2017B-1 and Series 2017C-1”, respectively, is hereby authorized to be issued. The Series
2017ABC-1 Notes shall be issued from time to time as provided herein to finance and refinance
costs of the Property and to pay related Costs of Issuance, in each case subject to the
requirements of the Tax Certificate and the City Purchase Agreement. Proceeds of each
subseries of Series 2017ABC-1 Notes may be used to pay maturing Series 2017ABC-1 Notes of
the same Subseries and to reimburse the Series 2017ABC-1 Bank for Unreimbursed Drawings
and Term Loans used to pay maturing Series 2017ABC-1 Notes of the same Subseries. Such
authorization specifically includes the authorization to issue and reissue Notes for such purposes.
(ii) An initial Series of Notes, consisting of three Subseries entitled “Series 2017A-
2, Series 2017B-2 and Series 2017C-2”, respectively, is hereby authorized to be issued. The
Series 2017ABC-2 Notes shall be issued from time to time as provided herein to finance and
refinance costs of the Property and to pay related Costs of Issuance, in each case subject to the
requirements of the Tax Certificate and the City Purchase Agreement. Proceeds of each
Subseries of Series 2017ABC-2 Notes may be used to pay maturing Series 2017ABC-2 Notes of
the same Subseries and to reimburse the Series 2017ABC-2 Bank for Unreimbursed Drawings
and Term Loans used to pay maturing Series 2017ABC-2 Notes of the same Subseries. Such
authorization specifically includes the authorization to issue and reissue Notes for such purposes.
(c) The aggregate principal amount of, plus the amount of interest due at maturity on,
all Notes Outstanding hereunder payable from the related Letter of Credit, plus the aggregate
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principal amount of any Unreimbursed Drawings and Terms Loans related to such Series of
Notes, shall not at any one time exceed the Stated Amount with respect to such Letter of Credit.
(d) The Corporation agrees to furnish the Issuing and Paying Agent with an adequate
supply of Notes of each Subseries from time to time, which will be serially numbered and which
will have been executed in accordance with Section 2.04, with the principal amount, date of
issue, registered Owner, maturity date, interest rate and amount of interest left blank. Pending
receipt of an Issuance Request, a form of which with respect to Original Issue Notes is set forth
as Exhibit C hereto, the Issuing and Paying Agent agrees to hold the Notes of each Subseries in
safekeeping for the account of the Corporation in accordance with the customary practice of the
Issuing and Paying Agent.
(e) Notes of any Series may not be sold at initial execution and delivery to the
Corporation or the City.
(f) The Series 2017A-1 Notes, the Series 2017A-2 Notes, the Series 2017B-1 Notes
and the Series 2017B-2 Notes shall be Tax-Exempt Notes.
(g) The Corporation shall not submit an Issuance Request for Original Issue Notes
which are Tax-Exempt Notes more than eighteen months after the first issuance of Original Issue
Notes of an issue described in the Tax Certificate unless the Corporation delivers an opinion
described in Section 2.09(c) hereof with respect to such Original Issue Notes.
Section 2.02. Terms of the Notes. (a) Each Subseries of Notes shall be dated the date of
their respective authentication and issuance; shall be issued in registered form, registered as
designated by the Dealer (subject to Section 2.08); shall be issued and sold at a price of 100% of
par in denominations of $100,000 and in integral multiples of $1,000 in excess thereof; and
interest on the Notes, if any, shall be separately stated by rate and amount on the face of each
Note. Notes shall bear interest, if any, from their respective dates, payable on their respective
maturity dates.
(b) The Notes (i) shall bear interest payable at maturity at a rate not to exceed 12% per
annum (calculated on the basis of a 365/366 day year based on the actual number of days
elapsed), (ii) shall mature not later than the earliest of (A) 270 days after their respective dates,
(B) the second Business Day prior to the Letter of Credit Expiration Date of the Letter of Credit
securing such Series of Notes and (C) the latest date permitted under the Tax Certificate,
(iii) shall mature no earlier than two days after the date of delivery, (iv) with respect to Rollover
Notes, shall be sold at a price of not more than the principal amount of the Notes maturing on the
date of issuance of such Rollover Notes, and (v) shall mature on a Business Day. The stated
interest rate, maturity date and other terms of each Note, so long as not inconsistent with the
terms of this Issuing and Paying Agent Agreement, shall be as set forth in the Issuance Request
required to be delivered pursuant to Section 3.01 hereof directing the issuance of such Note.
(c) The Notes shall not be subject to prepayment prior to maturity.
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(d) Within each Subseries, Notes shall be numbered consecutively from No. 1 upward.
The Issuing and Paying Agent may make additional provisions for numbering, including
additional prefixes and suffixes, as it may deem appropriate.
(e) The principal of and the interest on the Notes shall be paid in federal or other
immediately available funds in such coin or currency of the United States of America as, at the
respective times of payment, is legal tender for the payment of public and private debts. The
principal of and the interest on the Notes, if any, shall be payable at the Corporate Trust Office of
the Issuing and Paying Agent on any Business Day upon which such Notes have become due and
payable provided that such Notes are presented and surrendered on a timely basis. Upon
presentation of such a Note to the Issuing and Paying Agent no later than 2:15 p.m. (New York
City time) on or after any Business Day upon which such Notes have become due and payable,
payment for such Note shall be made by the Issuing and Paying Agent immediately available
funds on such Business Day. If a Note is presented for payment after 2:15 p.m. (New York City
time) on such Business Day, payment therefor shall be made by the Issuing and Paying Agent on
the next succeeding Business Day without the accrual of additional interest thereon.
Section 2.03. Form of Notes. The Series 2017 Notes shall be in the form set forth in
Exhibit A hereto. Notwithstanding the foregoing, the Corporation may deliver the Notes in the
form of a Master Note representing the Notes to be issued from time to time, each maturing no
later than the dates provided in Section 2.02(b) hereof. Each Master Note may be replaced by a
new Master Note having a later maturity date so long as the maturity date thereof does not
extend beyond the dates provided in Section 2.02(b) hereof. Each Master Note shall evidence
indebtedness of the Corporation as set forth in the Advices. Each Advice shall have the
limitations on Notes set forth in Sections 2.01 and 2.02. The aggregate indebtedness evidenced
by the Master Note payable from a Letter of Credit shall at all times equal or be less than the
Available Amount under such Letter of Credit. References herein to Notes when a Master Note
has been issued therefor shall refer to the indebtedness under the Master Note or the Advices
issued with respect thereto.
Section 2.04. Execution of Notes. The Notes shall be executed in the name and on behalf
of the Corporation with the facsimile or manual signature of the President attested by the
facsimile or manual signature of the Secretary-Treasurer, except in the case of a Master Note,
which shall be executed by the manual signature of an Authorized Corporation Representative.
In case any of the officers who shall have signed or attested any of the Notes shall cease to be
such officer or officers of the Corporation before the Notes so signed or attested shall have been
authenticated or delivered by the Issuing and Paying Agent or issued by the Corporation, such
Notes may nevertheless be authenticated, delivered and issued and, upon such authentication,
delivery and issue, shall be as binding upon the Corporation as though those who signed and
attested the same had continued to be such officers of the Corporation.
Section 2.05. Authentication of Notes. (a) Each Note shall be authenticated by manual
signature of the Issuing and Paying Agent who shall, pursuant to the provisions hereof,
authenticate and deliver Notes in accordance with the terms of an Issuance Request delivered
pursuant to Section 3.01 hereof. Notwithstanding anything to the contrary, the Issuing and
Paying Agent shall not authenticate any Note if:
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(i) such delivery would result in the principal amount of all Notes of each
Series Outstanding hereunder payable from the related Letter of Credit, plus the amount
of interest due on all such Outstanding Notes at the maturity thereof, being in excess of
the Available Amount with respect to such Letter of Credit; or
(ii) such delivery would result in the delivery of Series 2017 Notes or any
Additional Original Issue Notes bearing interest at a rate per annum in excess of the
lesser of (A) 12% per annum or (B) the maximum rate then permitted by law; or
(iii) the maturity date specified in the Issuance Request for such Notes extends
beyond the earliest of (A) 270 days from the respective dates of authentication and
issuance of such Notes, (B) the second Business Day prior to the Letter of Credit
Expiration Date of the Letter of Credit issued to secure such Notes or (C) the latest date
permitted under the Tax Certificate; or
(iv) a Responsible Officer of the Issuing and Paying Agent shall have actual
knowledge or shall have been given written notice that an Event of Default under this
Issuing and Paying Agent Agreement (other than an Event of Default described in
subsection (e) of Section 7.01) shall have occurred and is continuing, or shall have
received a Stop Order from the Bank or notice from the Bank that an Event of Default
described in subsection (e) of Section 7.01 has occurred and is continuing; or
(v) the Issuing and Paying Agent shall have received notice that the Opinion
of Bond Counsel delivered regarding the exclusion of interest on any Tax-Exempt Notes
from the gross income of the Holders thereof for federal income tax purposes has been or
is being withdrawn, which notice shall be concurrently delivered by such Bond Counsel
to the Corporation, the City, the Dealer and the Bank; or
(vi) all Outstanding Notes have been defeased pursuant to Section 10.01
hereof.
(b) Notwithstanding Section 2.01(c) and Section 2.05(a)(i), in the event an
Unreimbursed Drawing or a Term Loan is outstanding with respect to a Letter of Credit, the
Issuing and Paying Agent shall authenticate and deliver a principal amount of Notes of the Series
secured by such Letter of Credit which, together with the principal plus interest due at maturity
on all Outstanding Notes of such Series secured by such Letter of Credit exceeds the Available
Amount if, upon receipt of the proceeds of such Notes, the Issuing and Paying Agent shall have
sufficient funds immediately available, and authorized pursuant to Section 2.01(b) to be used, to
reimburse the Bank for any Unreimbursed Drawings or Term Loans equal in the aggregate to the
amount by which the Available Amount is exceeded, and the Issuing and Paying Agent shall
have received written confirmation from the Bank that upon such reimbursement, the Letter of
Credit will be reinstated to an aggregate amount sufficient to pay when due all of the principal
and interest on all Notes then Outstanding secured by such Letter of Credit. Upon receipt of the
proceeds of such Series of Notes of the appropriate Series, the Issuing and Paying Agent shall
immediately notify the Bank whose Unreimbursed Drawing is outstanding that it is holding such
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proceeds for the benefit of, and will immediately wire the same to, such Bank, and the Issuing
and Paying Agent shall immediately do so.
(c) Only Notes of a Series as shall bear thereon a certificate of authentication
substantially in the form set forth in Exhibit A hereto, manually executed by the Issuing and
Paying Agent, shall be valid or obligatory for any purpose or entitled to the benefits of this
Issuing and Paying Agent Agreement, and such certificate of authentication when manually
executed by the Issuing and Paying Agent shall be conclusive evidence that the Notes so
authenticated have been duly executed, authenticated and delivered hereunder and are entitled to
the benefits of this Issuing and Paying Agent Agreement.
(d) The Corporation agrees to furnish, from time to time, the Issuing and Paying Agent
with a certificate certifying the incumbency and specimen signatures of Authorized Corporation
Representatives. Until the Issuing and Paying Agent receives a subsequent incumbency
certificate of the Corporation, the Issuing and Paying Agent is entitled to rely on the last such
certificate delivered to it for purposes of determining the Authorized Corporation
Representatives.
Section 2.06. Notes Mutilated, Lost, Destroyed or Stolen. If any Note shall become
mutilated, the Corporation, at the expense of the Holder of said Note, shall execute and deliver a
new Note of like Series, Subseries, tenor and number in exchange and substitution for the Note
so mutilated, but only upon surrender to the Corporation of the Note so mutilated. If any Note
shall be lost, destroyed or stolen, evidence of such loss, destruction or theft may be submitted to
the Corporation and, if such evidence be satisfactory to it and the Issuing and Paying Agent and
indemnity satisfactory to it shall be given, the Corporation, at the expense of the Owner, shall
execute and deliver a new Note of like tenor in lieu of and in substitution for the Note so lost,
destroyed or stolen. Neither the Corporation nor the Issuing and Paying Agent shall be required
to treat both the original Note and any replacement Note as being Outstanding for the purpose of
determining the principal amount of Notes which may be issued hereunder, but both the original
and the replacement Note shall be treated as one and the same.
Section 2.07. Cancellation of Notes. The Issuing and Paying Agent agrees promptly to
cancel the Note(s) presented for payment and return such Notes to the Corporation. Promptly
upon the written request of the Corporation, the Issuing and Paying Agent agrees to cancel and
return to the Corporation all unissued Notes in the possession of the Issuing and Paying Agent at
the time of such request.
Section 2.08. Master Note; Registration of Notes. (a) Original Delivery. (1) Each
Subseries of Notes shall be initially delivered in the form of a separate Master Note registered in
the name of the Depository or its Nominee, or any successor or assignee.
(2) The Issuing and Paying Agent shall maintain such books, records and accounts as
may be necessary to evidence the obligations of the Corporation resulting from each Master Note
and each Advice delivered by the Issuing and Paying Agent, the principal amounts owing
thereunder, the maturity schedule therefor, the respective rates of interest thereon and the
principal and interest paid from time to time thereunder. In any legal action or proceeding in
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respect of any Master Note, the entries made in such books, records or accounts shall be, absent
manifest error, conclusive evidence of the existence and the amounts of the obligations of the
Corporation therein recorded. The Issuing and Paying Agent shall comply with Section 13-3 of
the Phoenix City Code with respect to release of information concerning the names and
addresses of the registered owners of the Notes.
(3) The Issuing and Paying Agent may treat and consider the person in whose name
each Note is registered as the absolute Owner of such Note for the purpose of payment of
principal and interest on such Note, for the purpose of giving notices and other matters with
respect to such Note, for the purpose of registering transfers of ownership of such Note, and for
all other purposes whatsoever. The Issuing and Paying Agent shall pay the principal of and the
interest on the Notes only to the respective Owners of the Notes or their respective attorneys duly
authorized in writing, and all such payments shall be valid and effective to fully satisfy and
discharge all obligations with respect to payment of principal of and interest on the Notes to the
extent of the sum or sums so paid. No person other than the Owner of a Note shall receive a
Note evidencing the obligation of the Corporation to make payments of principal and interest
pursuant to this Issuing and Paying Agent Agreement.
(b) Certificate Agreement and Letter of Representations. The Issuing and Paying Agent
has executed and delivered to DTC a commercial paper certificate agreement (“Certificate
Agreement”) dated November 6, 2003, and the Corporation and the Issuing and Paying Agent
are hereby authorized and directed to execute and deliver to DTC a Letter of Representations
substantially in the form provided by DTC in order to provide for the issuance of the Master
Notes and the Advices relating thereto and to qualify for the Depository’s book-entry only
system. Notwithstanding any other provision of this Issuing and Paying Agent Agreement and
so long as all outstanding Notes are registered in the name of Cede & Co. as nominee of DTC or
its registered assigns, the Corporation and the Issuing and Paying Agent shall cooperate with
DTC, as sole registered Owner of the Notes, and its registered assigns, in effecting payment of
the principal of and interest on the Notes by arranging for payment in such manner that funds for
such payment are properly identified and are made available on the date they are due, all in
accordance with the Letter of Representations, the provisions of which the Issuing and Paying
Agent may rely upon to implement the foregoing procedures notwithstanding any inconsistent
provisions herein. Notwithstanding the effectiveness of the Letter of Representations and a
book-entry system with respect to the Notes, the Issuing and Paying Agent shall (i) furnish to the
Bank a copy of each notice or other communication provided or required to be provided to
Owners pursuant to this Issuing and Paying Agent Agreement, and (ii) ensure that amounts
drawn under each Letter of Credit are applied in accordance with the provisions of this Issuing
and Paying Agent Agreement.
(c) Transfers Outside Book-Entry System. (1) In the event that either (i) the Depository
determines not to continue to act as Depository for a Subseries of Notes, or (ii) the Corporation
determines to terminate the Depository as such, then the Corporation shall thereupon discontinue
the book-entry system with such Depository with respect to such Notes. In such event, the
Depository shall cooperate with the Corporation and the Issuing and Paying Agent in the
issuance of replacement Notes by providing the Issuing and Paying Agent with a list showing the
interests of the Depository System Participants in a Subseries of Notes and by surrendering such
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Notes registered in the name of the Nominee to the Issuing and Paying Agent on or before the
date such replacement Notes are to be issued. The Depository, by accepting delivery of such
Notes, agrees to be bound by the provisions of this Subsection 2.08(c). If, prior to the
termination of the Depository acting as such, the Corporation fails to identify another qualified
securities depository to replace the Depository, then the Notes shall no longer be required to be
re-registered in the name of the Nominee, but shall be re-registered in whatever name or names
the Owners of the Notes transferring or exchanging Notes shall designate, in accordance with the
provisions of this Section 2.08.
(2) In the event the Corporation determines that it is in the best interests of the
beneficial owners of a Subseries of Notes that they be able to obtain certificated Notes, the
Corporation may notify the Depository System Participants of the availability of such certificated
Notes through the Depository. In such event, the Issuing and Paying Agent will issue, transfer
and exchange Notes as required by the Depository and others in appropriate amounts, and
whenever the Depository in taking appropriate action (i) to make available one or more separate
certificates evidencing a Subseries of Notes to any Depository System Participant having such
Notes credited to its account with the Depository, or (ii) to arrange for another qualified
securities depository to maintain custody of a single certificate evidencing a Subseries of Notes,
all at the Corporation’s expense.
(d) Payments to the Nominee. Notwithstanding any other provision of this Issuing and
Paying Agent Agreement to the contrary, so long as a Subseries of Notes is issued in the form of
the Master Note, all payments with respect to principal of and interest on such Notes and all
notices with respect to such Notes shall be made and given, respectively, as provided in the
Letter of Representations described in subsection 2.08(b) or as otherwise instructed in writing by
the Depository.
(e) Registration of Notes. (1) Any Note may, in accordance with its terms, be
transferred, upon the register required to be kept pursuant to the provisions of this Section, by the
person in whose name it is registered, in person or by such person’s duly authorized attorney,
upon surrender of such Note for cancellation, accompanied by delivery of a written instrument of
transfer, duly executed in a form approved by the Issuing and Paying Agent.
(2) Whenever any Note or Notes shall be surrendered for transfer, the Corporation shall
execute and the Issuing and Paying Agent shall authenticate and deliver a new Note or Notes, of
the same tenor, maturity and interest rate and for a like aggregate principal amount. The Issuing
and Paying Agent shall require the Owner of the Note requesting such transfer to pay any tax or
other governmental charge required to be paid with respect to such transfer.
(3) The Issuing and Paying Agent will keep or cause to be kept at its corporate trust
office sufficient books for the registration and transfer of Notes, which shall at all times be open
to inspection during normal business hours by the Corporation upon reasonable prior notice, and
upon presentation for such purpose, the Issuing and Paying Agent shall, under reasonable
regulations as it may prescribe, register or transfer or cause to be registered or transferred on
such books the Notes, as herein provided.
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Section 2.09 Additional Original Issue Notes. This Agreement may be amended to
provide for an increase in the aggregate principal amount of Series 2017 Notes which may be
Outstanding or to provide for one or more Series and Subseries of Additional Original Issue
Notes upon satisfaction of the following conditions:
(a) The applicable Bank shall provide the Issuing and Paying Agent its written consent
to such issuance and authorization and confirm that a Letter of Credit in the required Available
Amount is applicable to such Additional Original Issue Notes pursuant to Section 6.10 hereof;
(b) The Corporation makes the representations set forth in Section 3.01(a) hereof;
(c) The Corporation shall deliver to the Issuing and Paying Agent, the City and the
Bank an Opinion of Bond Counsel to the effect that (i) such issuance is authorized by the terms
of this Agreement, as amended, (ii) such issuance will not cause interest on any of the
Outstanding Notes to become includible in gross income to the Holders thereof for federal
income tax purposes and (iii) if the Additional Original Issue Notes are Tax-Exempt Notes,
interest on the Additional Original Issue Notes is excludible from gross income to the Holders
thereof for federal income tax purposes;
(d) Execution and delivery of a Supplement providing such additional terms as shall be
necessary to implement the issuance of such Additional Original Issue Notes;
(e) The Corporation shall deliver to the applicable Bank and the Issuing and Paying
Agent an executed Dealer Agreement (or an amendment to the existing Dealer Agreement) with
respect to such Additional Original Issue Notes; and
(f) To the extent otherwise required under the terms of this Agreement, confirmation
from the Rating Agencies that the ratings on any Outstanding Notes will not be reduced or
withdrawn as a result of such issuance.
ARTICLE III
ISSUE AND SALE OF NOTES
Section 3.01. Issuance and Sale of Notes. (a) Except as provided in subsection (g) of this
Section in the case of issuance of book-entry Notes under a Master Note as provided in
Section 2.08, whenever an Authorized Corporation Representative or a Dealer on behalf of the
Corporation with respect to Rollover Notes determines that the Corporation shall sell or issue
Notes of a Series or Subseries, such Authorized Corporation Representative shall deliver an
Issuance Request to the Issuing and Paying Agent prescribing the terms of such Notes and the
sale or issuance thereof in accordance with Section 2.02, and representing (i) that all action on
the part of the Corporation necessary for the valid issuance of the Notes then to be issued has
been taken and has not been rescinded or revoked, and (ii) that such Notes in the hands of the
Owners thereof will be valid and binding obligations of the Corporation according to their terms.
Each such Issuance Request shall also certify or constitute a representation and warranty that:
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(1) no Event of Default under Section 7.01 has occurred and is continuing as
of the date of such Issuance Request;
(2) the Corporation is in compliance with the covenants set forth in Article VI
hereof, including without limitation the tax covenants contained in Section 6.07 and 6.08
and the Corporation and the City are in compliance with the covenants set forth in the
City Purchase Agreement and the Tax Certificate, as of the date of such Issuance
Request;
(3) no Stop Order is in effect; and
(4) a Letter of Credit, either as originally issued or as amended, has an
Available Amount sufficient to comply with Section 6.10 hereof.
Upon receipt of an Issuance Request, the Issuing and Paying Agent shall authenticate and
deliver the Notes of such Subseries to the Dealer for the consideration and in the manner
hereinafter provided, but only if the Issuing and Paying Agent shall have received such Issuance
Request no later than 12:30 p.m. (New York City time) on the Business Day on which such
Notes are to be delivered. If an Issuance Request is received after 12:30 p.m. (New York City
time) on a given day, the Issuing and Paying Agent shall not be obligated to deliver the requested
Notes until the next succeeding Business Day. The Issuing and Paying Agent is further
authorized to accept an Issuance Request for Rollover Notes of such Series by electronic or
facsimile transmission delivered by the Dealer. The Corporation acknowledges that it has
provided the initial Dealer for a Subseries of Notes with the terms and conditions under which
Rollover Notes are to be issued and that failure to notify the Issuing and Paying Agent to the
contrary shall be deemed to be a representation of the Corporation of items (1), (2) and (3) in this
subsection (a).
(b) An Issuance Request for Original Issue Notes will be given by an Authorized
Corporation Representative by telephone, promptly confirmed in writing (which writing may be
transmitted by fax). An Issuance Request for Rollover Notes will be given by a Dealer by
electronic or facsimile transmission. The Issuing and Paying Agent shall incur no liability to the
Corporation or the City in acting hereunder upon telephonic or other instructions contemplated
hereby which the recipient thereof believed in good faith to have been given by an Authorized
Corporation Representative or an Authorized Dealer Representative. In the event a discrepancy
exists between the telephonic instructions and the written confirmation, or in the absence of
receiving a written confirmation, the telephonic instructions as transcribed and understood by the
Issuing and Paying Agent will be deemed the controlling and proper instructions.
(c) Upon receipt of an Issuance Request as described in subsection (b), except as
provided in subsection (g) of this Section, the Issuing and Paying Agent agrees to withdraw the
necessary Note(s) from safekeeping and, in accordance with such Issuance Request, agrees to:
(1) complete each Note as to principal amount (in denominations as
prescribed by Section 2.02(a)), date of issue, maturity date, interest rate and amount of
interest thereon (or, in the case of Notes issued at a price below the principal amount
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thereof, initial amount and value at maturity) and to register such Note as directed by the
Dealer, unless it has received express instructions as to registration from the Dealer;
(2) manually authenticate each Note by any officer or employee duly
authorized and designated for such purpose;
(3) deliver the Note(s) to or upon the order of the Dealer or its agent within
the Borough of Manhattan, City and State of New York, which delivery shall be against
receipt for payment as herein provided or as otherwise provided in such Issuance Request
(if such Issuance Request does not provide for such receipt, the Dealer shall nevertheless
pay the purchase price for the Note(s) in accordance with subsection (e) hereof); and
(4) retain one of the nonnegotiable copies of each Note for its records and
promptly forward one nonnegotiable copy of each Note to the Corporation.
(5) notify the Bank on the date of such delivery of the fact thereof, the
principal amounts of Notes issued and the maturity date thereof, and whether the Notes
constitute Original Issue Notes, Additional Original Issue Notes or Rollover Notes.
(d) The Corporation understands that although the Issuing and Paying Agent has been
instructed and has agreed to deliver the Notes against payment, in accordance with the custom
prevailing in the commercial paper market, delivery of the Notes will be made before receipt of
payment in immediately available funds. Therefore, once the Issuing and Paying Agent has
delivered a Note to the Dealer or its agent, as provided in subsection (c)(3), the Corporation
agrees to bear the risk that the Dealer or its agent shall fail to remit payment for the Note to the
Issuing and Paying Agent. The Issuing and Paying Agent shall have no liability to the
Corporation or the City for any failure or inability on the part of the Dealer to make payment for
the Notes. It is understood that each delivery of Notes hereunder shall be subject to the rules of
the New York Clearing House in effect at the time of such delivery and, in accordance therewith,
Notes are to be delivered by 2:15 p.m. (New York City time).
(e) Notwithstanding any other provision of this Issuing and Paying Agent Agreement to
the contrary, no such Notes shall be delivered by the Issuing and Paying Agent if the delivery of
such Notes would result in violation of any of the prohibitions respecting authentication of Notes
set forth in Section 2.05. If the Issuing and Paying Agent is unable to comply with an Issuance
Request under this Section 3.01, the Issuing and Paying Agent shall immediately notify the
Corporation or the City and the Dealer of the circumstances prohibiting the issuance of the
Notes.
(f) Notwithstanding any other provision hereof, if a Stop Order has been delivered and
has not been withdrawn, the Issuing and Paying Agent shall not issue or authenticate any Notes
hereunder which are affected by such Stop Order, except to effect transfers or exchanges of
Outstanding Notes as provided in Section 2.06 and Section 2.07. In the event an Issuance
Request is received by the Issuing and Paying Agent compliance with which would violate a
Stop Order, the Issuing and Paying Agent shall return such Issuance Request to the Corporation
and the City together with a copy of the Stop Order, and shall notify the Dealer of such action.
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The Issuing and Paying Agent shall resume issuance and authentication of Notes upon written
direction from the Bank that a Stop Order has been rescinded. If a Stop Order is received by the
Issuing and Paying Agent, the Issuing and Paying Agent shall promptly comply with any
requests on the part of the Bank for a statement showing the principal amounts and maturity
dates of all Notes of the affected Series issued and Outstanding at the time the Stop Order is
received.
(g) So long as any Master Note is held by the Depository as provided in Section 2.08,
the Issuing and Paying Agent shall deliver Notes thereunder in accordance with the terms of the
Letter of Representations and the Certificate Agreement.
Section 3.02. Proceeds of Sale of Notes. Upon receipt from the Dealer, the Issuing and
Paying Agent shall deposit all monies representing proceeds of the Notes, including Additional
Original Issue Notes and Rollover Notes, to the credit of the following funds and accounts in the
following order of priority:
(1) with respect to the proceeds of the initial $___________ of Series 2017B-
1 Notes and Series 2017B-2 Notes which are Original Issue Notes, to the letter of credit
providers for the maturing Series 2014B Notes as provided in Section 2.1 of the City
Purchase Agreement;
(2) to the applicable Subaccount of the Reimbursement Agreement Account
of the Note Repayment Fund, which the Issuing and Paying Agent shall establish and
maintain, to the extent required to reimburse the Bank for Unreimbursed Drawings and
Term Loans with respect to payments of principal on maturing Notes of such Series, as
directed by the Corporation; and
(3) to the City for deposit in the applicable account of the Note Proceeds Fund
established pursuant to Section 4.01, to the extent of any remaining proceeds.
Amounts transferred from the Note Proceeds Fund pursuant to Section 4.01(b) hereof or
other amounts transferred to a Subaccount of the Reimbursement Agreement Account of the
Note Repayment Fund pursuant to Section 5.02(b) hereof shall be applied first, to reimburse the
applicable Bank for Unreimbursed Drawings and Term Loans made with respect to payments of
principal and/or interest on maturing Notes of such Subseries, and second, to the payment at
maturity of Notes of such Subseries.
ARTICLE IV
NOTE PROCEEDS FUND
Section 4.01. Establishment and Application of Note Proceeds Fund. (a) The Corporation
shall establish a separate fund designated as the “Note Proceeds Fund”, which Note Proceeds
Fund shall be held by the City pursuant to the City Purchase Agreement. The Corporation shall
also establish, maintain and hold within the Note Proceeds Fund six separate accounts designated
the “Series 2017A-1 Account,” “Series 2017 B-1 Account,” “Series 2017C-1 Account,” “Series
2017A-2 Account,” “Series 2017B-2 Account” and “Series 2017C-2 Account”. Amounts
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transferred to the City by the Issuing and Paying Agent pursuant to Section 3.02(2) from the
proceeds of the Notes shall be used as described in Section 2.3 of the City Purchase Agreement.
All investment earnings on funds held within each account in the Note Proceeds Fund shall be
retained therein unless directed by the City to be deposited in the Rebate Fund established under
the Tax Certificate or hereunder. The City has covenanted pursuant to the City Purchase
Agreement to transfer to the Issuing and Paying Agent for deposit in the applicable subaccount
of the Debt Service Account any amounts on deposit in the Note Proceeds Fund to pay interest or
principal of the Notes of a Series when due to the extent the applicable Bank has failed to honor
a draw under the related Letter of Credit.
(b) When the City determines that the portion of the Project hereof described on
Exhibit A to the City Purchase Agreement, as amended from time to time, to be financed with
the proceeds of a Subseries of Notes has been completed, the City shall transfer the remaining
balance in the appropriate account within the Note Proceeds Fund to the Issuing and Paying
Agent for deposit in the applicable subaccount of the Reimbursement Agreement Account of the
Note Repayment Fund and the Issuing and Paying Agent shall apply such funds as soon as
practicable to the payment first, of amounts owing to the Bank with respect to any Unreimbursed
Drawing, Term Loan or other Payment Obligation then outstanding and second, to the extent that
the Bank has not honored a draw under the related Letter of Credit, to the Note Repayment Fund
for payment at maturity of such Notes. If no amounts are then owing to the applicable Bank and
no amounts are needed to pay the maturing amount of Notes, the balance may be transferred to
the City pursuant to Section 5.02(b).
ARTICLE V
AVAILABLE FUNDS AND ACCOUNTS
Section 5.01. Pledge of Available Funds; Note Repayment Fund. (a) The Notes are
limited obligations of the Corporation and are payable as to both principal and interest
exclusively from the Available Funds. All Available Funds are hereby pledged to secure the
payment of the principal of and interest on the Notes, Unreimbursed Drawings, Term Loans and
any Payment Obligations in accordance with their terms, subject only to the provisions of this
Issuing and Paying Agent Agreement permitting the application thereof for purposes and on the
terms and conditions set forth herein. There are hereby pledged to secure the payment of the
principal of and interest on the Notes and amounts owed to the Bank for reimbursement of
Unreimbursed Drawings, Term Loans and Payment Obligations pursuant to the Reimbursement
Agreement, each in accordance with their terms, all amounts held by the Issuing and Paying
Agent hereunder (except for amounts held in the Rebate Fund, if established) and amounts in the
applicable account of the Note Proceeds Fund subject only to the provisions of this Issuing and
Paying Agent Agreement permitting the application thereof for the purposes and on the terms
and conditions set forth herein. Said pledge shall be valid and binding from and after delivery by
the Issuing and Paying Agent of the Notes and the initiation or incurrence of any Payment
Obligations.
The pledge of Available Funds herein made shall be irrevocable until no Notes remain
Outstanding and all Payment Obligations, Unreimbursed Drawings and Term Loans have been
paid in full.
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To the extent that the sources of funds described in the immediately preceding sentence
are insufficient to pay, when due, any Unreimbursed Drawings, Term Loans or other Payment
Obligations then outstanding, there shall be deposited on a parity basis Junior Subordinate Lien
Revenues to the applicable subaccount of the Reimbursement Agreement Account.
In addition, the Payment Obligations are payable from and shall be secured by a first
priority pledge of and security interest in the Junior Subordinate Lien Revenues, as more fully
provided in Section 3.7 of the City Purchase Agreement.
By 1:00 p.m. (New York City time) on the date that any Notes are scheduled to mature,
the Corporation agrees that the Corporation shall have provided, or caused to be provided, to the
Issuing and Paying Agent from amounts made available by the City under the City Purchase
Agreement, sufficient funds from which to pay the maturing Notes and the interest thereon
which shall be paid from the funds provided as set forth in this Article V. When any matured
Note is presented to the Issuing and Paying Agent for payment by the holder thereof, payment
shall be made from funds held pursuant to the provisions set forth in this Article V and in
accordance with the terms of such Note.
(b) The Issuing and Paying Agent shall establish, maintain and hold in trust, for the
benefit of the Bank and the Owners of the Notes, the Note Repayment Fund consisting of the
Debt Service Account and the Reimbursement Agreement Account, each of which shall contain
subaccounts designated “Series 2017A-1,” “Series 2017B-1,” “Series 2017C-1” and “Series
2017A-2,” “Series 2017B-2” and “Series 2017C-2” , respectively.
Section 5.02. Debt Service Account and Reimbursement Agreement Account of the Note
Repayment Fund. So long as any Notes are Outstanding or any Unreimbursed Drawing, Term
Loan and Payment Obligations remain unpaid, the Issuing and Paying Agent shall deposit into,
and apply the amounts so deposited in, the Debt Service Account and the Reimbursement
Agreement Account of the Note Repayment Fund (each of which the Issuing and Paying Agent
shall establish, maintain and hold in trust for the benefit of the Bank and the Owners of the
Notes) as follows:
(a) Debt Service Account. There shall be deposited to the credit of the applicable
subaccount of the Debt Service Account amounts transferred by the City from the Note Proceeds
Fund pursuant to Section 4.01 hereof and any Other Available Monies transferred to the Issuing
and Paying Agent by the City for such purpose. Amounts in the applicable subaccount of the
Debt Service Account shall be applied only to pay interest on and principal of the Notes when
due because of a failure of the Bank to honor a draw on the Letter of Credit. Any amounts not
needed to pay interest on and principal of the Notes or to any Payment Obligations then
outstanding shall be transferred to the City.
(b) Reimbursement Agreement Account. There shall be deposited to the credit of the
applicable subaccount of the Reimbursement Agreement Account amounts transferred by the
City from the applicable subaccount of the Note Proceeds Fund pursuant to Section 2.3 of the
City Purchase Agreement, amounts transferred pursuant to Sections 3.02 and 5.01 hereof and
Other Available Monies and proceeds of the Series CP Revenue Obligations, transferred to the
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Issuing and Paying Agent for such purpose or amounts paid by the City pursuant to
Section 3.3(a) of the City Purchase Agreement. Amounts in the Reimbursement Agreement
Account shall be applied to pay Unreimbursed Drawings, Term Loans and Payment Obligations
outstanding as shown in a written notice delivered by the applicable Bank to the Issuing and
Paying Agent and the Corporation. Any amounts not needed to pay Unreimbursed Drawings,
Term Loans and Payment Obligations shall be returned to the City.
Section 5.03. Draws under Letter of Credit; Payment of Principal and Interest;
Enforcement. The Issuing and Paying Agent shall draw upon the Letter of Credit by the times
and in accordance with the terms thereof, in amounts sufficient to pay the interest on and
principal of the respective Series of maturing Notes when due; provided, however, that no draws
shall be made with respect to Notes registered in the name of the City or the Corporation.
Monies drawn under the Letter of Credit shall be deposited in the appropriate subaccount of a
special fund designated the “Letter of Credit Fund,” which the Issuing and Paying Agent shall
establish, hold and maintain. The Issuing and Paying Agent shall hold the funds in the Letter of
Credit Fund for the benefit of the holders of the maturing Notes, shall set such funds aside
exclusively for the payment of the principal of and interest on the respective Series of Notes for
which the draw on the Letter of Credit was made (and shall create within such account two
subaccounts designated as “Series 2017ABC-1” and “Series 2017ABC-2”) and shall apply such
amounts to the payment of principal of and interest on such Notes, upon presentation thereof for
payment, in accordance with the terms of this Issuing and Paying Agent Agreement. Neither the
Issuing and Paying Agent nor any Dealer shall have a lien on the Letter of Credit Fund for the
payment of any fees or expenses or other obligations owing to the Issuing and Paying Agent
hereunder or said Dealer. Any monies drawn under a Letter of Credit not needed to pay the
interest on and principal of the applicable Series of Notes shall be promptly remitted by the
Issuing and Paying Agent to the Bank. In the event the Issuing and Paying Agent is no longer an
Eligible Depository, the Trustee shall appoint an Eligible Depository to hold and maintain the
Letter of Credit Fund on its behalf.
The Corporation hereby directs the Issuing and Paying Agent to diligently enforce all
terms, covenants and conditions of the Letter of Credit, including payment when due of any
draws on a Letter of Credit, and the provisions thereof relating to the payment of draws on the
Letters of Credit and the increase or reinstatement of the Available Amounts, and to refrain from
consenting to or agreeing to or permitting any amendment or modification thereof which would
materially adversely affect the rights or security of the Holders of the Notes. If the Issuing and
Paying Agent shall receive a Stop Order, the Issuing and Paying Agent shall continue to draw
under the Letter of Credit for all Outstanding Notes until such Notes are no longer Outstanding.
If at any time during the term of the Letter of Credit any successor Issuing and Paying Agent
shall be appointed and qualified under this Issuing and Paying Agent Agreement, the resigning
or removed Issuing and Paying Agent shall request that the Bank transfer its Letter of Credit to
the successor Issuing and Paying Agent. If the resigning or removed Issuing and Paying Agent
fails to make this request, the successor Issuing and Paying Agent shall do so before accepting
appointment. When the Letter of Credit expires in accordance with its terms or is replaced by an
Alternate Facility, the Issuing and Paying Agent shall immediately surrender the expired or
replaced Letter of Credit to the Bank. Except following payment in full of all Outstanding
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Notes, the Issuing and Paying Agent shall not return the Letter of Credit to the Bank for
cancellation except as contemplated in Section 10.01 hereof.
In making draws upon a Letter of Credit, the Issuing and Paying Agent shall be acting as
the agent solely of, and for the exclusive benefit of, the Holders of the related Series of Notes,
and shall not be acting as the agent of the Corporation, the City or any Dealer. Neither the
Corporation, any Dealer, the Issuing and Paying Agent nor the City shall have any right, title, or
interest in or to the Letter of Credit Fund, the funds therein, or funds derived from a draw under
the Letter of Credit.
In the event the Bank shall fail to honor a properly presented draw on the Letter of Credit,
the Issuing and Paying Agent shall immediately notify the Corporation, the Dealer and the City.
Any provisions herein requiring notice to or from the Bank or the consent of the Bank
prior to any action by the Issuing and Paying Agent or the Corporation shall have no force or
effect (1) following the later of (i) the expiration of the Bank’s Letter of Credit and (ii) the
repayment of all Payment Obligations owing to such Bank or (2) during any period in which
such Bank is continuing to dishonor a conforming draw or draws under the Letter of Credit.
The Issuing and Paying Agent shall continue to draw under the Letter of Credit
notwithstanding any indemnification rights under Section 8.05 hereof.
The Issuing and Paying Agent is authorized to execute and deliver to the Bank the
certificates contemplated by the annexes to the Letter of Credit, provided, however, that no such
certificate shall deprive Notes previously issued and Outstanding prior thereto of the benefit of
amounts to be drawn thereunder and applied to amounts due with respect to such Notes at the
maturity thereof.
Section 5.04. Monies in Funds and Accounts. All funds or accounts held by the Issuing
and Paying Agent hereunder shall be accounted for separately as required by this Issuing and
Paying Agent Agreement and the Issuing and Paying Agent shall segregate such funds and
accounts if so instructed by the Authorized Corporation Representative to assist in the
calculation of the Rebate Requirement.
Monies held by the Issuing and Paying Agent hereunder in the Letter of Credit Fund and
the Reimbursement Agreement Account of the Note Repayment Fund shall be held uninvested,
in cash, and shall not be commingled with any other funds held hereunder. Monies held by the
Issuing and Paying Agent in any other fund shall be invested in Permitted Investments at the
direction of the Authorized Corporation Representative. Monies in the Letter of Credit Fund
may not be used for any purposes other than those set forth in Section 5.03 hereof.
The Issuing and Paying Agent shall keep proper books of record and accounts containing
complete and correct entries of all transactions made by it relating to the receipt, disbursement,
allocation and application of the monies related to the Notes, including monies derived from,
pledged to, or to be used to make payments on the Notes. Such records shall specify the account
or fund to which such monies are to be allocated.
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The Corporation, on behalf of the City acknowledges that to the extent regulations of the
Comptroller of the Currency or other applicable regulatory entity grant the Corporation or the
City the right to receive brokerage confirmations of security transactions as they occur, the
Corporation on behalf of the City, specifically waives receipt of such confirmations to the extent
permitted by law. The Trustee will furnish the City periodic transaction statements which
include detail for all investment transactions made by the Trustee hereunder.
To help the government fight the funding of terrorism and money laundering activities,
Federal law requires all financial institutions to obtain, verify and record information that
identifies each person who opens an amount. For a non-individual person such as a business
entity, a charity, a trust or other legal entity, the Trustee will ask for documentation to verify its
formation and existence as a legal entity. The Trustee may also ask to see financial statements,
licenses, identification and authorization documents from individuals claiming authority to
represent the entity or other relevant documentation.
ARTICLE VI
COVENANTS OF THE CORPORATION
Section 6.01. Punctual Payment. The Corporation will punctually pay or cause to be paid
the principal of and interest on all the maturing Notes of a Series, in strict conformity with the
terms of such Notes and of this Issuing and Paying Agent Agreement, according to the true intent
and meaning thereof, but in each case only out of Available Funds as provided in this Issuing and
Paying Agent Agreement.
Section 6.02. Extension of Payment of Notes. The Corporation will not directly or
indirectly extend or assent to the extension of the maturity of any of the Notes or the time of
payment of any Notes or claims for interest by the purchase or funding of such Notes or claims
for interest or by any other arrangement and in case the maturity of any of the Notes or the time
of payment of any such claims for interest shall be extended, such Notes or claims for interest
shall not be entitled, in case of any default hereunder, to the benefits of this Issuing and Paying
Agent Agreement, except subject to the prior payment in full of the principal of all of the Notes
of the related Series then Outstanding and of all claims for interest thereon which shall not have
been so extended. Nothing in this Section shall be deemed to limit the right of the Corporation
to issue debt for the purpose of refunding any Outstanding Notes, and such issuance shall not be
deemed to constitute an extension of maturity of Notes.
Section 6.03. Waiver of Laws. The Corporation will not at any time insist upon or plead
in any manner whatsoever, or claim or take the benefit or advantage of, any stay or extension law
now or at any time hereafter in force that may affect the covenants and agreements contained in
this Issuing and Paying Agent Agreement or in the Notes, and all benefit or advantage of any
such law or laws is hereby expressly waived by the Corporation to the extent permitted by law.
Section 6.04. Further Assurances. The Corporation will make, execute and deliver any
and all such instruments and assurances as may be reasonably necessary or proper to carry out
the intention or to facilitate the performance of this Issuing and Paying Agent Agreement, and
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for further assuring and confirming unto the Owners of the Notes the rights and benefits
provided in this Issuing and Paying Agent Agreement.
Section 6.05. Against Encumbrances. The Corporation will not create any pledge, lien or
charge upon any of the Available Funds having priority over or having parity with the lien of the
Notes of each Series.
Section 6.06. Accounting Records and Financial Statements. The Corporation will at all
times keep, or cause to be kept, proper books of record and account, prepared in accordance with
generally accepted accounting principles, in which complete and accurate entries shall be made
of all transactions relating to the Available Funds. The Corporation will cause such books of
record and account to be available for inspection by the Issuing and Paying Agent and the Bank
at reasonable hours and under reasonable circumstances.
Section 6.07. Rebate Fund. (a) The Issuing and Paying Agent may, at the direction of
the Authorized Corporation Representative, establish and maintain a fund separate from any
other fund established and maintained hereunder designated as the Rebate Fund. Within the
Rebate Fund, if any, the Issuing and Paying Agent shall maintain such accounts as shall be
necessary in order to comply with the terms and requirements of the Tax Certificate. Subject to
the transfer provisions provided in subsection (c) below, all money at any time deposited in the
Rebate Fund, if established hereunder, shall be held by the Issuing and Paying Agent for the
account of the Corporation in trust, to the extent required to satisfy the Rebate Requirement, for
payment to the federal government of the United States of America, and neither the Issuing and
Paying Agent nor the Owner of any Notes nor the Bank shall have any rights in or claim to such
money. All amounts deposited into or on deposit in the Rebate Fund, if established hereunder,
shall be governed by this Issuing and Paying Agent Agreement and by the Tax Certificate (which
is incorporated herein by reference). The Corporation hereby covenants to comply with the
directions contained in the Tax Certificate and the Issuing and Paying Agent hereby covenants to
comply with all written instructions of the Corporation delivered to the Issuing and Paying Agent
pursuant to the Tax Certificate (which instructions shall state the actual amounts to be deposited
in or withdrawn from the Rebate Fund, if established hereunder, and shall not require the Issuing
and Paying Agent to make any calculations with respect thereto). The Issuing and Paying Agent
shall be deemed conclusively to have complied with the provisions of this Section 6.07(a) if it
follows such instructions of the Corporation, and the Issuing and Paying Agent shall have no
liability or responsibility to enforce compliance by the Corporation or the City with the terms of
the Tax Certificate nor to make computations in connection therewith.
(b) The Issuing and Paying Agent shall hold all amounts in the Rebate Fund, if
established hereunder, subject to the restrictions set forth in the Tax Certificate.
(c) Upon receipt of the instructions of the Corporation, the Issuing and Paying Agent
shall remit part or all of the balances in the Rebate Fund, if established hereunder, to the federal
government of the United States of America, as directed. In addition, if such instructions so
direct, the Issuing and Paying Agent will deposit monies into or transfer monies out of the
Rebate Fund, if established hereunder, from or into such accounts or funds (other than the Letter
of Credit Fund) as directed. Any funds remaining in the Rebate Fund, if established hereunder,
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after payment of all of the Notes and payment and satisfaction of any Rebate Requirement, shall
be withdrawn and remitted to the City in accordance with a Request of the City.
(d) Notwithstanding any other provision of this Issuing and Paying Agent Agreement,
including in particular Article X hereof, the obligation to remit the Rebate Requirement to the
federal government of the United States of America and to comply with all other requirements of
this Section and the Tax Certificate shall survive the defeasance or payment in full of the Tax-
Exempt Notes.
The Corporation shall retain all records with respect to the calculations and instructions
required by this Section for at least six (6) years after the date on which the last of the principal
of and interest on the Notes of the respective Series has been paid, whether upon maturity or
prior redemption thereof.
Section 6.08. Tax Covenants. The Corporation covenants that it will not take any action,
or fail to take any action, if any such action or failure to take action would adversely affect the
exclusion from gross income of the interest on any Subseries of Tax-Exempt Notes under
Section 103 of the Code or, if applicable, comparable provisions necessary to maintain eligibility
for federal tax credits. Without limiting the generality of the foregoing, the Corporation shall
comply with all requirements and covenants contained in the Tax Certificate. In the event that at
any time the Corporation is of the opinion that for purposes of this Section 6.08 it is necessary to
restrict or limit the yield on the investment of any monies held by the Issuing and Paying Agent
under this Issuing and Paying Agent Agreement, the Corporation shall so instruct the Issuing and
Paying Agent in writing, and the Issuing and Paying Agent shall take such action as may be
necessary in accordance with such instructions.
Notwithstanding any provision of this Section 6.08 and Section 6.07 hereof, if the
Corporation shall receive an Opinion of Bond Counsel to the effect that any action required
under the Tax Certificate or this Section 6.08 and Section 6.07 hereof is no longer required, or to
the effect that some further action is required, to maintain the exclusion from gross income of the
interest on a Subseries of Tax-Exempt Notes pursuant to Section 103 of the Code or, if
applicable, comparable provisions necessary to maintain eligibility for federal tax credits, the
Corporation and the Issuing and Paying Agent may rely conclusively on such opinion in
complying with the provisions hereof, and the covenants hereunder shall be deemed to be
modified to that extent.
Section 6.09. Maintenance of Issuing and Paying Agent. The Corporation will at all
times maintain an Issuing and Paying Agent for the Notes in New York, New York.
Section 6.10. Letters of Credit; Alternate Facility. The Corporation will at all times
maintain in effect a Letter of Credit or another credit facility (an “Alternate Facility”) in an
aggregate Available Amount equal to the sum of the principal amount of each Series of Notes
Outstanding hereunder plus interest due at maturity of the related Series issued by the same Bank
with respect to Notes of the related Series. Any substitution of an Alternate Facility shall take
effect upon the maturity of all Outstanding Notes of the related Series. On or prior to the date of
the delivery of an Alternate Facility to the Issuing and Paying Agent, the Corporation shall
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furnish to the Issuing and Paying Agent written evidence from each Rating Agency, in each case
to the effect that such Rating Agency has reviewed the proposed Alternate Facility and that the
substitution of the proposed Alternate Facility for the preceding Letter of Credit will not, by
itself, result in a reduction or withdrawal of its rating of the Notes of such Series to be secured
thereby from the rating which then prevails. Following the substitution of an Alternate Facility
for a Letter of Credit, the terms “Reimbursement Agreement,” “Letter of Credit” and “Bank”
will include reference to the instrument pursuant to which such Alternate Facility is delivered,
such Alternate Facility, and the issuer thereof, respectively. The Issuing and Paying Agent shall
give 30 days’ advance written notice of the intended acceptance of such Alternate Facility to the
Owners of the Notes of such Series by first class mail, postage prepaid, to the addresses
appearing on the registration books, if any.
Section 6.11. Appointment of Dealer. The Corporation covenants and agrees to take all
reasonable steps necessary to ensure that, at all times, there shall be a Dealer for the Notes, and
to that end shall from time to time enter into a Dealer Agreement or Agreements with one or
more Dealers, providing for the services specified in such Dealer Agreements to be performed by
such Dealers, in connection with the offering, sale and issuance of Notes. The Corporation, at
the direction of the City, hereby appoints _______________________ as the initial Dealer with
respect to the Series 2017ABC-1 Notes and ______________________ as the initial Dealer with
respect to the Series 2017ABC-2 Notes. The Corporation, at the direction of the City, may
remove a Dealer in accordance with the applicable Dealer Agreement.
Section 6.12. Rating Confirmation from Moody’s and Standard and Poor’s. The
Corporation shall obtain written confirmation from Moody’s and Standard & Poor’s to the effect
that a proposed action will not result in a reduction or withdrawal of any rating maintained by
Moody’s and Standard & Poor’s with respect to: (a) an increase in the aggregate principal
amount of Notes Outstanding in excess of $200,000,000, (b) an increase in the aggregate Stated
Amount of a Letter of Credit in excess of its initial maximum authorized Stated Amount,
(c) issuance of obligations on a parity with the Notes pursuant to an authorizing document other
than the Issuing and Paying Agent Agreement or (d) defeasance of any Notes pursuant to
Section 10.01 hereof.
ARTICLE VII
EVENTS OF DEFAULT AND REMEDIES OF NOTEHOLDERS
Section 7.01. Events of Default. The following events shall be Events of Default:
(a) default in the due and punctual payment of the principal of any Note when
and as the same shall become due and payable, whether at maturity as therein expressed,
by declaration or otherwise;
(b) default in the due and punctual payment of any installment of interest on
any Note when and as such interest installment shall become due and payable;
(c) if the Corporation shall fail to observe or perform any material covenant,
condition, agreement or provision in this Issuing and Paying Agent Agreement on its part
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to be observed or performed, other than as referred to in subsection (a) or (b) of this
Section, for a period of sixty (60) days after written notice, specifying such failure and
requesting that it be remedied, has been given to the Corporation by the Issuing and
Paying Agent; except that, if such failure can be remedied but not within such sixty (60)
day period and if the Corporation has taken all action reasonably possible to remedy such
failure within such sixty (60) day period, such failure shall not become an Event of
Default for so long as the Corporation shall diligently proceed to remedy the same in
accordance with and subject to any directions or limitations of time established by the
Issuing and Paying Agent;
(d) the occurrence of an event of default under Section 7.1 of the City
Purchase Agreement;
(e) the occurrence of an event of default under the Reimbursement
Agreement;
(f) if the Corporation files a petition in voluntary bankruptcy, for the
composition of its affairs or for its corporate reorganization under any state or federal
bankruptcy or insolvency law, or makes an assignment for the benefit of creditors, or
admits in writing to its insolvency or inability to pay debts as they mature, or consents in
writing to the appointment of a trustee or receiver for itself;
(g) if a court of competent jurisdiction shall enter an order, judgment or
decree declaring the Corporation insolvent, or adjudging it bankrupt, or appointing a
trustee or receiver of the Corporation, or approving a petition filed against the
Corporation seeking reorganization of the Corporation under any applicable law or
statute of the United States of America or any state thereof, and such order, judgment or
decree shall not be vacated or set aside or stayed within sixty (60) days from the date of
the entry thereof; or
(h) if, under the provisions of any other law for the relief or aid of debtors,
any court of competent jurisdiction shall assume custody or control of the Corporation or
of the Available Funds, and such custody or control shall not be terminated within sixty
(60) days from the date of assumption of such custody or control.
Section 7.02. Application of Available Funds other than Letter of Credit Proceeds and
Other Funds after Default. If an Event of Default shall occur and be continuing, the Issuing and
Paying Agent shall apply all Available Funds and any other funds then held or thereafter
received by the Issuing and Paying Agent under any of the provisions of this Issuing and Paying
Agent Agreement (except as otherwise provided in this Issuing and Paying Agent Agreement
and excluding monies on deposit in the Letter of Credit Fund or proceeds of draws on a Letter of
Credit which shall be used exclusively for the Series of Notes for which such draw or draws
were made) as follows and in the following order:
(a) To the payment of amounts, if any, payable pursuant to the Tax
Certificate;
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(b) To the payment of any expenses necessary in the opinion of the Issuing
and Paying Agent to protect the interests of the Owners of the Notes and of the Bank,
including the costs and expenses of the Issuing and Paying Agent and the Noteholders in
declaring such Event of Default, and payment of reasonable fees and expenses of the
Issuing and Paying Agent (including reasonable fees and disbursements of its counsel and
other agents (and the creation of a reasonable reserve for the anticipated costs, fees and
expenses) incurred in and about the performance of its powers and duties under this
Issuing and Paying Agent Agreement;
(c) To the payment of the whole amount of the Payment Obligations to be
applied ratably between the Banks; and
(d) To the payment to the persons entitled thereto of all installments of
interest then due and the unpaid principal of any Notes which shall have become due,
with interest on the overdue principal at the rate borne by the respective Notes, subject to
the provisions of this Issuing and Paying Agent Agreement; and, if the amount available
shall not be sufficient to pay in full the Notes due or to become due, together with such
interest, then to the payment thereof ratably, according to the amounts of principal or
interest due or to become due to the persons entitled thereto, without any discrimination
or preference.
Section 7.03. Issuing and Paying Agent to Represent Noteholders. Upon the occurrence
and continuance of an Event of Default or other occasion giving rise to a right in the Issuing and
Paying Agent to represent the Noteholders, the Issuing and Paying Agent in its discretion may,
and upon the written request of the Owners of not less than twenty-five percent (25%) in
aggregate amount of Notes then Outstanding, and upon being indemnified and provided with
terms of compensation for such services to its satisfaction therefor, shall, proceed to protect or
enforce its rights or the rights of such Owners by such appropriate action, suit, mandamus or
other proceedings, as it shall deem most effectual to protect and enforce any such right, at law or
in equity, either for the specific performance of any covenant or agreement contained herein, or
in aid of the execution of any power herein granted, or for the enforcement of any other
appropriate legal or equitable right or remedy vested in the Issuing and Paying Agent or in such
Owners under this Issuing and Paying Agent Agreement, and upon instituting such proceeding,
the Issuing and Paying Agent shall be entitled, as a matter of right, to the appointment of a
receiver of the Available Funds and other assets pledged under this Issuing and Paying Agent
Agreement, pending such proceedings. All rights of action under this Issuing and Paying Agent
Agreement or the Notes or otherwise may be prosecuted and enforced by the Issuing and Paying
Agent without the possession of any of the Notes or the production thereof in any proceeding
relating thereto, and any such suit, action or proceeding instituted by the Issuing and Paying
Agent shall be brought in the name of the Issuing and Paying Agent for the benefit and
protection of all the Owners of such Notes, subject to the provisions of this Issuing and Paying
Agent Agreement (including Section 7.05).
Section 7.04. Noteholders’ Direction of Proceedings. Anything in this Issuing and
Paying Agent Agreement to the contrary notwithstanding, the Owners of a majority in aggregate
principal amount of the Notes then Outstanding and the Bank shall have the right by an
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instrument or concurrent instruments in writing executed and delivered to the Issuing and Paying
Agent and upon furnishing the Issuing and Paying Agent with indemnification satisfactory to it,
to direct the method of conducting all remedial proceedings taken by the Issuing and Paying
Agent hereunder, provided that such direction shall not be otherwise than in accordance with law
and the provisions of this Issuing and Paying Agent Agreement, that the Issuing and Paying
Agent may take any other action deemed proper by the Issuing and Paying Agent which is not
inconsistent with such direction, and that the Issuing and Paying Agent shall have the right to
decline to follow any such direction which in the opinion of the Issuing and Paying Agent would
be unjustly prejudicial to Noteholders not parties to such direction. In the event of any conflict
between the direction of the Bank and that of the Owners, the Issuing and Paying Agent shall
follow the direction of the Bank so long as the Bank has not failed to honor a properly presented
and conforming draw under the Letter of Credit.
Section 7.05. Limitation on Noteholders’ Right to Sue. No Owner of any Note shall have
the right to institute any suit, action or proceeding at law or in equity, for the protection or
enforcement of any right or remedy under this Issuing and Paying Agent Agreement, or any
applicable law with respect to such Note, unless (1) such Owner shall have given to the Issuing
and Paying Agent written notice of the occurrence of an Event of Default; (2) the Owners of not
less than twenty-five percent (25%) in aggregate principal amount of the Notes then Outstanding
shall have made written request upon the Issuing and Paying Agent to exercise the powers
hereinbefore granted; (3) such Owner or said Owners shall have tendered to the Issuing and
Paying Agent reasonable indemnity against the costs, expenses and liabilities to be incurred in
compliance with such request; (4) the Issuing and Paying Agent shall have refused or omitted to
comply with such request for a period of sixty (60) days after such written request shall have
been received by, and said tender of indemnity shall have been made to, the Issuing and Paying
Agent; and (5) the Issuing and Paying Agent shall not have received contrary directions from the
Owners of a majority in aggregate principal amount of the Notes then Outstanding.
Such notification, request, tender of indemnity and refusal or omission are hereby
declared, in every case, to be conditions precedent to the exercise by any Owner of Notes of any
remedy hereunder or under law; it being understood and intended that no one or more Owners of
Notes shall have any right in any manner whatever by his or their action to affect, disturb or
prejudice the security of this Issuing and Paying Agent Agreement or the rights of any other
Owners of Notes, or to enforce any right under this Issuing and Paying Agent Agreement, or
under applicable law with respect to the Notes, except in the manner herein provided, and that all
proceedings at law or in equity to enforce any such right shall be instituted, had and maintained
in the manner herein provided and for the benefit and protection of all Owners of the
Outstanding Notes, subject to the provisions of this Issuing and Paying Agent Agreement.
Section 7.06. Obligation of the Corporation. Nothing in Section 7.05 or in any other
provision of this Issuing and Paying Agent Agreement, or in the Notes, contained shall affect or
impair the obligation of the Corporation, which is absolute and unconditional, to pay the
principal of and interest on the Notes to the respective Owners of the Notes at their respective
dates of maturity, but only from Available Funds under the City Purchase Agreement, or affect
or impair the right of such Owners, which is also absolute and unconditional, to enforce such
payment by virtue of the contract embodied in the Notes.
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Section 7.07. Termination of Proceedings. In case any proceedings taken by the Issuing
and Paying Agent or any one or more Noteholders on account of any Event of Default shall have
been discontinued or abandoned for any reason or shall have been determined adversely to the
Issuing and Paying Agent or the Noteholders, then in every such case the Corporation, the
Issuing and Paying Agent and the Noteholders, subject to any determination in such proceedings,
shall be restored to their former positions and rights hereunder, severally and respectively, and
all rights, remedies, powers and duties of the Corporation, the Issuing and Paying Agent and the
Noteholders shall continue as though no such proceedings had been taken.
Section 7.08. Remedies Not Exclusive. No remedy herein conferred upon or reserved to
the Issuing and Paying Agent, the Bank or to the Owners of the Notes is intended to be exclusive
of any other remedy or remedies, and each and every such remedy, to the extent permitted by
law, shall be cumulative and in addition to any other remedy given hereunder or now or hereafter
existing at law or in equity or otherwise.
Section 7.09. No Waiver of Default. No delay or omission of the Issuing and Paying
Agent or of any Owner of the Notes to exercise any right or power arising upon the occurrence
of any Event of Default shall impair any such right or power or shall be construed to be a waiver
of any such Event of Default or an acquiescence therein; and every power and remedy given by
this Issuing and Paying Agent Agreement to the Issuing and Paying Agent, the Bank or to the
Owners of the Notes may be exercised as often as may be deemed expedient. Notwithstanding
the foregoing, none of the Issuing and Paying Agent, the Owners of the Notes or the Bank may
waive any Event of Default unless the Bank shall have confirmed to the Issuer and Paying Agent
that the Available Amount under each Letter of Credit is sufficient to pay the principal of and
interest on all Notes Outstanding having the benefit of such Letter of Credit.
Section 7.10. Consent of the Bank. Notwithstanding any provision of this Issuing and
Paying Agent Agreement to the contrary, while a Letter of Credit is in effect or Payment
Obligations are outstanding and subject to the provisions of Section 7.11 hereof:
(i) Any provision of this Issuing and Paying Agent Agreement expressly
recognizing or granting rights in or to the Bank may not be amended in any manner
which affects the rights of the Bank hereunder without the prior written consent of the
affected Bank.
(ii) Unless otherwise provided in this Section, the Bank shall exercise any
consent required of the owners of the Notes, when required, for the following purposes:
(a) adoption, execution and delivery of any Supplement (other than a Supplement
specified in Section 9.01(a)(2) of this Issuing and Paying Agent Agreement which require
the consent of each Noteholder so affected in addition to the consent of the Bank);
(b) removal of the Issuing and Paying Agent and selection and appointment of any
successor Issuing and Paying Agent; and (c) initiation or approval of any action not
described in (i) or (ii) above which requires consent of the owners of the Notes.
(iii) Upon the occurrence and continuance of an Event of Default, the Bank
shall be entitled to control and direct the enforcement of all rights and remedies granted
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to the Noteholders, and the Bank shall also be entitled to control and direct the rights of
the Noteholders with respect to all waivers of Events of Default.
(iv) The consent of the affected Bank shall be required for the issuance of
Additional Original Issue Notes hereunder.
Section 7.11. Certain Events Affecting the Bank’s Consent Rights. Notwithstanding any
other provision of this Issuing and Paying Agent Agreement to the contrary, no consent of the
Bank shall be required under any provisions hereunder nor shall the Bank have any right to
consent to, direct or control any actions, restrictions, rights, remedies or waivers pursuant to any
provision of this Issuing and Paying Agent Agreement during any time which:
(i) a Letter of Credit issued by the Bank for any reason ceases to be valid and
binding on the Bank in whole or in part or is declared to be null and void, or the validity
or enforceability of any material provision of the Letter of Credit is denied by the Bank or
the Bank is denying further liability or obligation under the Letter of Credit, in all of the
above cases contrary to the terms of the Letter of Credit,
(ii) a petition has been filed and is pending against the Bank under any
bankruptcy, reorganization, rehabilitation, arrangement, insolvency, readjustment of debt,
dissolution or liquidation law of any jurisdiction, whether now or hereafter in effect, and
has not been dismissed within thirty (30) days after such filing, or
(iii) the Bank has filed a petition in relation to itself, which is pending, under
any bankruptcy, reorganization, rehabilitation, arrangement, insolvency, readjustment of
debt, dissolution or liquidation law, of any jurisdiction whether now or hereafter in effect,
or has consented to the filing or any petition against it under such law.
ARTICLE VIII
THE ISSUING AND PAYING AGENT
Section 8.01. Appointment; Duties, Immunities and Liabilities of Issuing and Paying
Agent. (a) U.S. Bank National Association is hereby appointed as Issuing and Paying Agent
under this Issuing and Paying Agent Agreement and hereby accepts the duties imposed upon it as
Issuing and Paying Agent hereunder and to perform all the functions and duties of the Issuing
and Paying Agent hereunder, subject to the terms and conditions set forth in this Issuing and
Paying Agent Agreement. The Issuing and Paying Agent shall, prior to an Event of Default, and
after the curing of all Events of Default which may have occurred, perform such duties and only
such duties as are specifically set forth in this Issuing and Paying Agent Agreement and no
implied covenants shall be read into this Issuing and Paying Agent Agreement against the
Issuing and Paying Agent.
(b) The Corporation, at the direction of the City, may remove the Issuing and Paying
Agent at any time unless an Event of Default shall have occurred and then be continuing, and
shall remove the Issuing and Paying Agent if at any time requested to do so by an instrument or
concurrent instruments in writing signed by the Owners of not less than a majority in aggregate
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amount of principal of the Notes then Outstanding (or their attorneys duly authorized in writing)
or if at any time the Issuing and Paying Agent shall cease to be eligible in accordance with
subsection (e) of this Section, or shall become incapable of acting, or shall be adjudged a
bankrupt or insolvent, or a receiver of the Issuing and Paying Agent or its property shall be
appointed, or any public officer shall take control or charge of the Issuing and Paying Agent or
of its property or affairs for the purpose of rehabilitation, conservation or liquidation, in each
case by giving written notice of such removal to the Issuing and Paying Agent, and thereupon
shall appoint a successor Issuing and Paying Agent by an instrument in writing.
(c) The Issuing and Paying Agent may at any time resign by giving written notice of
such resignation to the Corporation, the City, the Bank and the Dealer. Upon receiving such
notice of resignation, the Corporation, at the direction of the City, shall promptly appoint a
successor Issuing and Paying Agent by an instrument in writing. Prior to any voluntary
resignation or any sale, assignment, merger, consolidation or reorganization by the Issuing and
Paying Agent, the Issuing and Paying Agent shall pay to the Corporation any and all amounts
which will be payable by the Corporation to the Bank or to the provider of any Alternate Facility
due to any resulting transfer of the Letter of Credit or Alternate Facility.
(d) Any removal or resignation of the Issuing and Paying Agent and appointment of a
successor Issuing and Paying Agent shall become effective upon acceptance of appointment by
the successor Issuing and Paying Agent. If no successor Issuing and Paying Agent shall have
been appointed and have accepted appointment within sixty (60) days of giving notice of
removal or notice of resignation as aforesaid, the resigning Issuing and Paying Agent or any
Noteholder (on behalf of himself and all other Noteholders) may petition any court of competent
jurisdiction for the appointment of a successor Issuing and Paying Agent, and such court may
thereupon, after such notice (if any) as it may deem proper, appoint such successor Issuing and
Paying Agent. Any successor Issuing and Paying Agent appointed under this Issuing and Paying
Agent Agreement, shall signify its acceptance of such appointment by executing and delivering
to the Corporation and the City and to its predecessor Issuing and Paying Agent a written
acceptance thereof, and thereupon such successor Issuing and Paying Agent, without any further
act, deed or conveyance, shall become vested with all the monies, estates, properties, rights,
powers, trusts, duties and obligations of such predecessor Issuing and Paying Agent, including
each Letter of Credit, with like effect as if originally named Issuing and Paying Agent herein;
but, nevertheless at the Request of the Corporation or the request of the successor Issuing and
Paying Agent, such predecessor Issuing and Paying Agent shall execute and deliver any and all
instruments of conveyance or further assurance and do such other things as may reasonably be
required for more fully and certainly vesting in and confirming to such successor Issuing and
Paying Agent all the right, title and interest of such predecessor Issuing and Paying Agent in and
to any property held by it under this Issuing and Paying Agent Agreement including each Letter
of Credit, and shall pay over, transfer, assign and deliver to the successor Issuing and Paying
Agent any money or other property subject to the trusts and conditions herein set forth. Upon
request of the successor Issuing and Paying Agent, the Corporation shall execute and deliver all
instruments as may be reasonably required for more fully and certainly vesting in and confirming
to such successor Issuing and Paying Agent all such monies, estates, properties, rights, powers,
trusts, duties and obligations, including each Letter of Credit. Upon acceptance of appointment
by a successor Issuing and Paying Agent as provided in this subsection, the Corporation or the
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City shall give notice of the succession of such Issuing and Paying Agent to the trusts hereunder
by mail to the Bank and the Dealer.
(e) Any Issuing and Paying Agent appointed under the provisions of this Section in
succession to the Issuing and Paying Agent shall be a trust company or bank having the powers
of a trust company having a combined capital and surplus of at least fifty million dollars
($50,000,000), subject to supervision or examination by federal or state authority, and having a
Corporate Trust Office in New York, New York. If such bank or trust company publishes a
report of condition at least annually, pursuant to law or to the requirements of any supervising or
examining authority above referred to, then for the purpose of this subsection the combined
capital and surplus of such bank or trust company shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published. In case at any time the
Issuing and Paying Agent shall cease to be eligible in accordance with the provisions of this
subsection (e), the Issuing and Paying Agent shall resign immediately in the manner and with the
effect specified in this Section.
Section 8.02. Merger or Consolidation. Any company into which the Issuing and Paying
Agent may be merged or converted or with which it may be consolidated or any company
resulting from any merger, conversion or consolidation to which it shall be a party or any
company to which the Issuing and Paying Agent may sell or transfer all or substantially all of its
corporate trust business, provided such company shall be eligible under subsection (e) of
Section 8.01, shall be the successor to such Issuing and Paying Agent without the execution or
filing of any paper or any further act, anything herein to the contrary notwithstanding.
Section 8.03. Liability of Issuing and Paying Agent. (a) The recitals of facts herein and in
the Notes contained shall be taken as statements of the Corporation, and the Issuing and Paying
Agent assumes no responsibility for the correctness of the same, and makes no representations as
to the validity or sufficiency of this Issuing and Paying Agent Agreement or of the Notes as to
the sufficiency of the Available Funds or the priority of the lien of this Issuing and Paying Agent
Agreement thereon, or as to the financial or technical feasibility of any portion of the Project and
shall not incur any responsibility in respect of any such matter, other than in connection with the
duties or obligations expressly herein or in the Notes assigned to or imposed upon it. The
Issuing and Paying Agent shall not be liable in connection with the performance of its duties
hereunder, except for its own negligence, willful misconduct or breach of the express terms and
conditions hereof. The Issuing and Paying Agent and its directors, officers, employees or agents
may in good faith buy, sell, own, hold and deal in any of the Notes and may join in any action
which any Owner of a Note may be entitled to take, with like effect as if the Issuing and Paying
Agent was not the Issuing and Paying Agent under this Issuing and Paying Agent Agreement.
The Issuing and Paying Agent may in good faith hold any other form of indebtedness of the City
or the Corporation, own, accept or negotiate any drafts, bills of exchange, acceptances or
obligations of the City and make disbursements for the City or the Corporation and enter into any
commercial or business arrangement therewith, without limitation.
(b) The Issuing and Paying Agent shall not be liable for any error of judgment made in
good faith by a responsible officer unless it shall be proved that the Issuing and Paying Agent
was negligent in ascertaining the pertinent facts. The Issuing and Paying Agent may execute any
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of the trusts or powers hereof and perform the duties required of it hereunder by or through
attorneys, agents, or receivers, and shall be entitled to advice of counsel concerning all matters of
trust and its duty hereunder, but the Issuing and Paying Agent shall be liable for the negligence
or misconduct of any such attorney, agent, or receiver selected by it.
(c) The Issuing and Paying Agent shall not be liable with respect to any action taken or
omitted to be taken by it in good faith in accordance with the direction of the Owners of not less
than twenty-five percent (25%) in aggregate principal amount of the Notes at the time
Outstanding relating to the time, method and place of conducting any proceeding for any remedy
available to the Issuing and Paying Agent, or exercising any trust or power conferred upon the
Issuing and Paying Agent under this Issuing and Paying Agent Agreement.
(d) Except for the obligation of the Issuing and Paying Agent to draw on a Letter of
Credit in amounts sufficient to pay the interest on and principal of the Notes of the applicable
Series when due pursuant to Section 5.03 hereof and to apply such amounts to the payment of the
Notes, the Issuing and Paying Agent shall be under no obligation to exercise any of the rights or
powers vested in it by this Issuing and Paying Agent Agreement at the request, order or direction
of any of the Noteholders pursuant to the provisions of this Issuing and Paying Agent
Agreement, including, without limitation, the provisions of Article VII hereof, unless such
Noteholders of the applicable Series shall have offered to the Issuing and Paying Agent security
or indemnity satisfactory to it against the costs, expenses, and liabilities which may be incurred
therein or thereby.
(e) No provision of this Issuing and Paying Agent Agreement shall require the Issuing
and Paying Agent to expend or risk its own funds or otherwise incur any financial liability in the
performance or exercise of any of its duties hereunder, or in the exercise of its rights or powers,
if repayment of such funds or adequate indemnity against such risk or liability is not assured to
its satisfaction. Notwithstanding the foregoing, this subsection (e) shall not be construed to
relieve the Issuing and Paying Agent of its obligation to draw on a Letter of Credit in amounts
sufficient to pay the interest on and principal of the Notes of the applicable Series when due
pursuant to Section 5.03 hereof and to apply such amounts to the payment of the Notes
(f) The Issuing and Paying Agent shall not be deemed to have knowledge of, and shall
not be required to take any action with respect to, any Event of Default (other than an Event of
Default described in subsections (a) or (b) of Section 7.01) or event which would, with the giving
of notice, the passage of time or both, constitute an Event of Default, unless a Responsible
Officer of the Issuing and Paying Agent shall have actual knowledge of such event or shall have
been notified of such event by the City, the Corporation, the Bank or the Owners of 25% of the
principal amount of the Notes of the applicable Series at the time Outstanding. Without limiting
the generality of the foregoing, the Issuing and Paying Agent shall not be required to ascertain,
monitor or inquire as to the performance or observance by the Corporation of the terms,
conditions, covenants or agreements set forth in Article VI hereof (including, without limitation,
the covenants of the Corporation set forth in Sections 6.07 or 6.08 hereof), other than the
covenants of the Corporation to make payments with respect to the Notes when due as set forth
in Section 6.01 and to file with the Issuing and Paying Agent when due, such reports and
certifications as the Corporation is required to file with the Issuing and Paying Agent hereunder.
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(g) No permissive power, right or remedy conferred upon the Issuing and Paying Agent
hereunder shall be construed to impose a duty to exercise such power, right or remedy.
(h) The Issuing and Paying Agent shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice,
request, direction, consent, order, bond, debenture, coupon or other paper or document but the
Issuing and Paying Agent, in its discretion, may make such further inquiry or investigation into
such facts or matters as it may see fit, and, if the Issuing and Paying Agent shall determine to
make such further inquiry or investigation, it shall be entitled to examine the books, records and
premises of the Corporation, personally or by agent or attorney.
(i) The Issuing and Paying Agent shall not be responsible for:
(1) the application or handling by the City or the Corporation of any Available
Funds or other monies transferred to or pursuant to a Request of the Corporation in
accordance with the terms and conditions hereof;
(2) the application and handling by the City or the Corporation of any other
fund or account designated to be held by the City or the Corporation hereunder;
(3) any error or omission by the Corporation or the City in making any
computation or giving any instruction pursuant to Sections 6.07 and 6.08 hereof and may
rely conclusively on any computations or instructions furnished to it by the Corporation
or the City in connection with the requirements of Sections 6.07, 6.08 and the Tax
Certificate;
(4) the construction, operation or maintenance of any portion of the Project.
(j) Whether or not therein expressly so provided, every provision of this Issuing and
Paying Agent Agreement relating to the conduct or affecting the liability of or affording
protection to the Issuing and Paying Agent shall be subject to the provisions of this Article VIII.
Section 8.04. Right of Issuing and Paying Agent to Rely on Documents. The Issuing and
Paying Agent shall be protected in acting upon any notice, resolution, request, consent, order,
certificate, report, opinion, note or other paper or document believed by it to be genuine and to
have been signed or presented by the proper party or parties. The Issuing and Paying Agent may
consult with counsel, including, without limitation, counsel of or to the City or the Corporation,
with regard to legal questions, and the opinion of such counsel shall be full and complete
authorization and protection in respect of any action taken or suffered by it hereunder in good
faith and in accordance therewith unless it shall be proved that the Issuing and Paying Agent was
negligent in ascertaining the pertinent facts.
Whenever in the administration of the trusts imposed upon it by this Issuing and Paying
Agent Agreement the Issuing and Paying Agent shall deem it necessary or desirable that a matter
be proved or established prior to taking or suffering any action hereunder, such matter (unless
other evidence in respect thereof be herein specifically prescribed) may be deemed to be
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conclusively proved and established by a Certificate of the City or the Corporation, and such
Certificate shall be full warrant to the Issuing and Paying Agent for any action taken or suffered
in good faith under the provisions of this Issuing and Paying Agent Agreement in reliance upon
such Certificate, but in its discretion the Issuing and Paying Agent may, in lieu thereof, accept
other evidence of such matter or may require such additional evidence as to it may seem
reasonable. The Issuing and Paying Agent may also rely conclusively on any report or
certification of any certified public accountant, investment banker, financial consultant, or other
expert selected by the City or the Corporation or selected by the Issuing and Paying Agent with
due care in connection with matters required to be proven or ascertained in connection with its
administration of the trusts created hereby.
Section 8.05. Compensation and Indemnification of Issuing and Paying Agent. The
Corporation covenants to pay to the Issuing and Paying Agent from time to time, and the Issuing
and Paying Agent shall be entitled to, reasonable compensation for all services rendered by it in
the exercise and performance of any of the powers and duties hereunder of the Issuing and
Paying Agent, and the Corporation will pay or reimburse the Issuing and Paying Agent upon its
request for all expenses, disbursements and advances incurred or made by the Issuing and Paying
Agent in accordance with any of the provisions of this Issuing and Paying Agent Agreement
(including the reasonable compensation and the expenses and disbursements of its counsel and of
all persons not regularly in its employ) except any such expense, disbursement or advance as
may arise from its negligence, default or willful misconduct. The Corporation, to the extent
permitted by law, shall indemnify, defend and hold harmless the Issuing and Paying Agent
against any loss, damages, liability or expense incurred without negligence or bad faith on the
part of the Issuing and Paying Agent, arising out of or in connection with the acceptance or
administration of the trusts created hereby, including costs and expenses (including reasonable
attorneys’ fees) of defending itself against any claim or liability in connection with the exercise
or performance of any of its powers hereunder. The rights of the Issuing and Paying Agent and
the obligations of the Corporation under this Section 8.05 shall survive the discharge of the
Notes and this Issuing and Paying Agent Agreement and the resignation or removal of the
Issuing and Paying Agent.
ARTICLE IX
MODIFICATION OR AMENDMENT OF THIS
ISSUING AND PAYING AGENT AGREEMENT
AND CITY PURCHASE AGREEMENT
Section 9.01. Amendments Permitted. (a) (1) This Issuing and Paying Agent Agreement
and the rights and obligations of the Corporation, the Owners of the Notes, the Bank and the
Issuing and Paying Agent may be modified or amended at any time by a Supplement, which the
Corporation and the Issuing and Paying Agent may enter into with the written consent of the
Bank and the Owners of more than fifty percent in aggregate principal amount of the Notes (or,
if such Supplement is only applicable to a Series of Notes, such Series of Notes) then
Outstanding and which shall have been filed with the Issuing and Paying Agent; provided that if
such modification or amendment will, by its terms, not take effect so long as any Notes of any
particular maturity remain Outstanding, the consent of the Owners of such Notes shall not be
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required and such Notes shall not be deemed to be Outstanding for the purpose of any calculation
of Notes Outstanding under this Section.
(2) No such modification or amendment shall (A) extend the fixed maturity of any
Note, or reduce the amount of principal thereof, or extend the time of payment provided for any
Note, or reduce the rate of interest thereon, or extend the time of payment of interest thereon,
without the consent of the Owner of each Note so affected, or (B) reduce the aforesaid
percentage of principal the consent of the Owners of which is required to effect any such
modification or amendment, or permit the creation of any lien on the Available Funds and other
assets pledged under this Issuing and Paying Agent Agreement prior to or on a parity with the
lien created by this Issuing and Paying Agent Agreement, or deprive the Owners of the Notes or
the Bank of the lien created by this Issuing and Paying Agent Agreement on such Available
Funds and other assets (in each case, except as expressly provided in this Issuing and Paying
Agent Agreement), without the consent of the Owners of all of the Notes then Outstanding and
the Bank. It shall not be necessary for the consent of the Noteholders to approve the particular
form of any Supplement, but it shall be sufficient if such consent shall approve the substance
thereof.
(b) This Issuing and Paying Agent Agreement and the rights and obligations of the
Corporation, the Issuing and Paying Agent and the Owners of the Notes may also be modified or
amended at any time by a Supplement, which the Corporation may adopt without the consent of
any Noteholders or the Bank but only to the extent permitted by law and only for any one or
more of the following purposes:
(1) to add to the covenants and agreements of the Corporation contained
herein and to add other covenants and agreements thereafter to be observed, to pledge or
assign additional security for the Notes or the obligations owed the Bank under the
Reimbursement Agreement (or any portion thereof), or to surrender any right or power
herein reserved to or conferred upon the Corporation;
(2) to make provisions for the purpose of curing any ambiguity, inconsistency
or omission, or of curing or correcting any defective provision, contained in this Issuing
and Paying Agent Agreement;
(3) to modify, amend or supplement this Issuing and Paying Agent Agreement
in such manner as to permit the qualification hereof under the Trust Indenture Act of
1939, as amended, or any similar federal statute hereafter in effect, and to add such other
terms, conditions and provisions as may be permitted by said act or similar federal
statute, and which shall not materially and adversely affect the interests of the Owners of
the Notes or the Bank;
(4) to provide for the issuance of Notes in book-entry form, provided that no
such provision shall materially and adversely affect the interests of the Owners of the
Notes;
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(5) to increase the aggregate principal amount of Notes authorized to be
issued by the Corporation (subject, however, to prior written confirmation from the
Rating Agencies that such action will not, in and of itself, cause any current ratings of the
Notes to be reduced or withdrawn) or to provide for the issuance of one or more Series or
Subseries of Additional Original Issue Notes and Rollover Notes with respect thereto and
in either event, to make changes necessary to implement such issuance;
(6) to make modifications or adjustments necessary, appropriate or desirable
to accommodate credit enhancements and liquidity facilities, including any Alternate
Facility, provided that no such provision shall materially and adversely affect the
interests of the Owners of the Notes; and
(7) for any other purpose that does not materially and adversely affect the
interests of the Owners of the Notes or the Bank, including, without limitation, to provide
for changes requested by a Rating Agency in order to obtain or maintain a credit rating
for any Series of Notes.
Notwithstanding any other provision hereof, no modification or amendment hereto shall
affect the rights, remedies or security of the Bank hereunder without the prior written consent of
the Bank.
Section 9.02. Effect of Supplement. From and after the time any Supplement becomes
effective pursuant to this Article, this Issuing and Paying Agent Agreement shall be deemed to
be modified and amended in accordance therewith, and the respective rights, duties and
obligations under this Issuing and Paying Agent Agreement of the Corporation, the Bank, the
Issuing and Paying Agent, and all Owners of Notes Outstanding shall thereafter be determined,
exercised and enforced hereunder subject in all respects to such modification and amendment,
and all the terms and conditions of any such Supplement shall be deemed to be part of the terms
and conditions of this Issuing and Paying Agent Agreement for any and all purposes.
Section 9.03. Amendment of Particular Notes. The provisions of this Article shall not
prevent any Noteholder from accepting any amendment as to the particular Notes held by him,
provided that due notation thereof is made on such Notes.
Section 9.04. Amendments to City Purchase Agreement Not Requiring Consent of
Noteholders. The Corporation and the Issuing and Paying Agent may, without the consent of or
notice to any of the Noteholders, but with the consent of the Bank, consent to and join with the
City in the execution and delivery of any amendment, change or modification of the City
Purchase Agreement as may be required (a) by the provisions thereof; (b) to cure any ambiguity
or formal defect or omission therein or to correct or supplement any provision therein which may
be inconsistent with any other provision therein, or to make any other provisions with respect to
matters or questions arising thereunder, provided such action shall, in the opinion of the Issuing
and Paying Agent, not materially adversely affect the interests of the Noteholders or the Bank;
and (c) to preserve the exclusion of the interest on Tax-Exempt Notes from gross income for
purposes of federal or State income taxes and to preserve the power of the Corporation to
continue to issue bonds or other obligations (specifically not limited to the Notes authorized
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hereby) the interest on which is likewise exempt from federal and State income taxes in
connection with any other change therein which in the opinion of the Issuing and Paying Agent
will not materially adversely affect the interests of the Noteholders or the Issuing and Paying
Agent. Notwithstanding the foregoing, the consent of the Issuing and Paying Agent and the
Bank shall not be required for supplements or modifications to Exhibit A to the City Purchase
Agreement.
Section 9.05. Amendments to City Purchase Agreement Requiring Consent of
Noteholders. Except for amendments, changes or modification to the City Purchase Agreement
referred to in Section 9.04 hereof and subject to the terms and provisions and limitations
contained in this Article and not otherwise, the Issuing and Paying Agent may consent to and
join with the City in the execution and delivery of any amendment, change or modification to the
City Purchase Agreement only upon the consent of the Bank and not less than a majority in
principal amount of Notes then Outstanding (or if such Supplement is only applicable to a Series
of Notes, such Series of Notes), given as provided in this Section, provided, however, no such
amendment, change or modification may affect the obligation of the City to make payments
under the City Purchase Agreement or reduce the amount of or extend the time for making such
payments without the consent of the Owners of all Notes then Outstanding.
ARTICLE X
DEFEASANCE
Section 10.01. Payment of Notes. Notes or a portion thereof may be paid by the
Corporation in any of the following ways:
(a) by paying or causing to be paid the principal of and interest on such
Outstanding Notes, as and when the same become due and payable;
(b) by depositing with the Issuing and Paying Agent, an escrow agent or other
fiduciary, in trust, at or before maturity, money or securities in the necessary amount (as
provided in Section 10.03) to pay such Outstanding Notes; or
(c) by delivering to the Issuing and Paying Agent, for cancellation by it, such
Outstanding Notes purchased by the City or the Corporation.
If the Corporation shall pay all Notes which are Outstanding and also pay or cause to be
paid all other sums payable hereunder by the Corporation and shall pay all Payment Obligations,
then and in that case, at the election of the Corporation (evidenced by a Certificate of the
Corporation, filed with the Issuing and Paying Agent and the Bank, signifying the intention of
the Corporation to discharge all such indebtedness and this Issuing and Paying Agent
Agreement), and notwithstanding that any Notes shall not have been surrendered for payment,
this Issuing and Paying Agent Agreement and the pledge of Available Funds and, except as
provided in Section 6.07 and Section 6.08, all covenants, agreements and other obligations of the
Corporation under this Issuing and Paying Agent Agreement shall cease, terminate, become void
and be completely discharged and satisfied. In such event, upon Request of the Corporation, the
Issuing and Paying Agent shall cause an accounting for such period or periods as may be
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requested by the Corporation to be prepared and filed with the Corporation and shall execute and
deliver to the Corporation all such instruments as may be necessary or desirable to evidence such
discharge and satisfaction, and the Issuing and Paying Agent shall pay over, transfer, assign or
deliver to the Corporation all monies (other than those held in the applicable account of the
Letter of Credit Fund) or securities or other property held by it pursuant to this Issuing and
Paying Agent Agreement which, as evidenced by a verification report, upon which the Issuing
and Paying Agent may conclusively rely, from a firm of independent certified public
accountants, or other firm acceptable to the Issuing and Paying Agent, are not required for the
payment of Notes not theretofore surrendered for such payment and outstanding Payment
Obligations. Notwithstanding the payment of all Notes which are Outstanding and any other
Payment Obligations (except Notes that have not been presented for payment), this Issuing and
Paying Agent Agreement shall not terminate unless the Corporation shall submit a certificate to
the Issuing and Paying Agent directing termination of this Issuing and Paying Agent Agreement
as of a specified date. Until this Issuing and Paying Agent Agreement is terminated and for so
long as a Letter of Credit is in full force and effect with respect to the related Series of Notes, the
Corporation may continue to issue Notes of such Series payable hereunder (subject to any Stop
Order being in effect) notwithstanding the payment of all Notes which are Outstanding and any
other Payment Obligations (except Notes that have not been presented for payment). This
Issuing and Paying Agent Agreement shall not terminate unless the Corporation shall submit a
certificate to the Issuing and Paying Agent and the Bank directing termination of this Issuing and
Paying Agent Agreement and the related Letter(s) of Credit as of a specified date.
Section 10.02. Discharge of Liability on Notes. Upon the deposit with the Issuing and
Paying Agent, escrow agent or other fiduciary, in trust, at or before maturity, of money or
securities in the necessary amount (as provided in Section 10.03) to pay any Outstanding Note,
then (provided that the Bank has been paid in full all Payment Obligations and each Letter of
Credit has expired or been terminated) all liability of the Corporation in respect of such Note
shall cease, terminate and be completely discharged, provided that the Owner thereof shall
thereafter be entitled to the payment of the principal of and interest on such Note, and the
Corporation shall remain liable for such payment, but only out of such money or securities
deposited as aforesaid for their payment, subject, however, to the provisions of Section 10.04 and
the continuing duties of the Issuing and Paying Agent hereunder including, without limitation,
the provisions of Section 2.07.
The Corporation may at any time surrender to the Issuing and Paying Agent for
cancellation by it any Notes previously issued and delivered, which the Corporation may have
acquired in any manner whatsoever, and such Notes, upon such surrender and cancellation, shall
be deemed to be paid and retired.
Section 10.03. Deposit of Money or Securities with Issuing and Paying Agent. Whenever
in this Issuing and Paying Agent Agreement it is provided or permitted that there be deposited
with or held in trust money or securities in the necessary amount to pay any Notes, the money or
securities so to be deposited or held may include money or securities held by the Issuing and
Paying Agent in the funds and accounts (other than the applicable account of the Letter of Credit
Fund) established pursuant to this Issuing and Paying Agent Agreement and shall be:
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(a) lawful money of the United States of America in an amount equal to the
principal amount of such Notes and all unpaid interest thereon to maturity; or
(b) noncallable and non-prepayable investment securities consisting of (i) any
bonds or other obligations which as to principal and interest constitute direct obligations
of, or are unconditionally guaranteed as to full and timely payment by, the United States
of America, (ii) any certificates, receipts, securities or other obligations (excluding
mutual funds and unit investment trusts) evidencing ownership of, or the right to receive,
a specified portion of one or more interest payments or principal payments, or any
combination thereof, to be made on any bond, note, or other obligation described above
in clause (i), the principal of and interest on which when due will, in the opinion of an
independent certified public accountant delivered to the Issuing and Paying Agent (upon
which opinion the Issuing and Paying Agent may conclusively rely), provide money
sufficient to pay the principal of and all unpaid interest to maturity, on the Notes to be
paid, as such principal and interest become due;
provided, in each case, that the Issuing and Paying Agent, escrow agent or other fiduciary shall
have been irrevocably instructed (by the terms of this Issuing and Paying Agent Agreement or by
Request of the City) to apply such money to the payment of such principal and interest with
respect to such Notes. Notwithstanding the foregoing, Notes may only be considered defeased
and no longer Outstanding under this Issuing and Paying Agent Agreement if funds are deposited
with the Issuing and Paying Agent (A) which are supplied by the City or which represent
proceeds of Revenue Obligations or (B) which come from any other source and the deposit of
which, in the written opinion of counsel with nationally recognized expertise in bankruptcy
matters addressed to the City, the Corporation, the Issuing and Paying Agent and the Bank,
would not constitute a voidable preference under Section 547 of the United States Bankruptcy
Code (the “Bankruptcy Code”) and would not be subject to the automatic stay under Section 362
of the Bankruptcy Code should the Corporation become a debtor under the Bankruptcy Code.
Section 10.04. Payment of Notes after Discharge of Issuing and Paying Agent. Provided
that the Bank has been paid in full all applicable Payment Obligations and the applicable Letter
of Credit has terminated, any monies (other than those held in the applicable account of the
Letter of Credit Fund) held by the Issuing and Paying Agent in trust for the payment of the
principal of, or interest on, any Notes and remaining unclaimed for two (2) years after the
principal of all of the Notes has become due and payable, if such monies were so held at such
date, or two (2) years after the date of deposit of such monies if deposited after said date when all
of the Notes became due and payable, shall, upon Request of the City, be repaid to the City free
from the trusts created by this Issuing and Paying Agent Agreement, and all liability of the
Issuing and Paying Agent with respect to such monies shall thereupon cease. All monies held by
or on behalf of the Issuing and Paying Agent for the payment of principal of or interest on Notes
shall be held uninvested, in trust for the account of the Owners thereof, and the Issuing and
Paying Agent shall not be required to pay Owners any interest on, or be liable to the Owners or
any other person (other than the City) for any interest earned on, monies so held. Any interest
earned thereon (other than on funds held in the applicable account of the Letter of Credit Fund)
shall belong to the City and shall be deposited monthly by the Issuing and Paying Agent into the
Note Repayment Fund.
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ARTICLE XI
MISCELLANEOUS
Section 11.01. Liability of Corporation Limited to Available Funds. Notwithstanding
anything in this Issuing and Paying Agent Agreement or in the Notes contained, the Corporation
shall not be required to advance any monies derived from any source other than the Available
Funds in this Issuing and Paying Agent Agreement mentioned, whether for the payment of the
principal of or interest on the Notes or for any other purpose of this Issuing and Paying Agent
Agreement.
Section 11.02. Successor Is Deemed Included in All References to Predecessor. Whenever
in this Issuing and Paying Agent Agreement either the Corporation or the Issuing and Paying
Agent is named or referred to, such reference shall be deemed to include the successors or
assigns thereof, and all the covenants and agreements in this Issuing and Paying Agent
Agreement contained by or on behalf of the Corporation, the City or the Issuing and Paying
Agent shall bind and inure to the benefit of the respective successors and assigns thereof whether
so expressed or not.
Section 11.03. Limitation of Rights to Corporation, the City, Issuing and Paying Agent,
Bank and Noteholders. Nothing in this Issuing and Paying Agent Agreement or in the Notes
expressed or implied is intended or shall be construed to give to any person other than the
Corporation, the City, the Issuing and Paying Agent, the Bank and the Owners of the Notes, any
legal or equitable right, remedy or claim under or in respect of this Issuing and Paying Agent
Agreement or any covenant, condition or provision therein or herein contained; all such
covenants, conditions and provisions are and shall be held to be for the sole and exclusive benefit
of the Corporation, the City, the Issuing and Paying Agent, the Bank, the City and the Owners of
the Notes, and the Bank and the Owners of the Notes shall be third party beneficiaries of this
Issuing and Paying Agent Agreement.
Section 11.04. Waiver of Notice. Whenever in this Issuing and Paying Agent Agreement
the giving of notice by mail or otherwise is required, the giving of such notice may be waived in
writing by the person entitled to receive such notice and in any such case the giving or receipt of
such notice shall not be a condition precedent to the validity of any action taken in reliance upon
such waiver.
Section 11.05. Destruction or Delivery of Canceled Notes. Whenever in this Issuing and
Paying Agent Agreement provision is made for the cancellation by the Issuing and Paying Agent
and the delivery to the Corporation of any Notes, the Issuing and Paying Agent may, in its sole
discretion, in lieu of such cancellation and delivery, destroy such Notes, and deliver a certificate
of such destruction to the Corporation.
Section 11.06. Severability of Invalid Provisions. If any one or more of the provisions
contained in this Issuing and Paying Agent Agreement or in the Notes shall for any reason be
held to be invalid, illegal or unenforceable in any respect, then such provision or provisions shall
be deemed severable from the remaining provisions contained in this Issuing and Paying Agent
Agreement and such invalidity, illegality or unenforceability shall not affect any other provision
-46- PHX 332435050v1
of this Issuing and Paying Agent Agreement, and this Issuing and Paying Agent Agreement shall
be construed as if such invalid or illegal or unenforceable provision had never been contained
herein. The Corporation hereby declares that it would have adopted this Issuing and Paying
Agent Agreement and each and every other Section, subsection, paragraph, sentence, clause or
phrase hereof and authorized the issuance of the Notes pursuant thereto irrespective of the fact
that any one or more Sections, subsections, paragraphs, sentences, clauses or phrases of this
Issuing and Paying Agent Agreement may be held illegal, invalid or unenforceable.
Section 11.07. Notices. Except as otherwise provided herein or in the Issuing and Paying
Agent Agreement, the Reimbursement Agreement or the Dealer Agreement, for the purposes of
each such Agreement, respectively, any notice to or demand may be served or presented, and
such demand may be made and shall be deemed to have been sufficiently given or served for all
purposes by being deposited, first-class mail postage prepaid, in a post office letter box,
addressed, as the case may be, to the parties as follows:
Issuing and
Paying Agent: U.S. Bank National Association
100 Wall Street, 16th
Floor
New York, New York 10005
Attention: Commercial Paper Operations
Facsimile No.: (212) 509-4529
Telephone No.: (212) 361-3838
Corporation: City of Phoenix Civic Improvement Corporation
c/o City of Phoenix
251 West Washington, 9th
Floor
Phoenix, Arizona 85003
Attention: Chief Financial Officer
City: City of Phoenix
251 West Washington, 9th
Floor
Phoenix, Arizona 85003
Attention: Chief Financial Officer
-47- PHX 332435050v1
Series 2017ABC-1 Bank:
General Matters _______________________
_______________________
_______________________
Attention: _______________________
Telephone: _______________________
Operational Matters _______________________
_______________________
_______________________
Attention: _______________________
Telephone: _______________________
Series 2017ABC-2 Bank:
General Matters _______________________
_______________________
_______________________
Attention: _______________________
Telephone: _______________________
Operational Matters _______________________
_______________________
_______________________
Attention: _______________________
Telephone: _______________________
Series 2017ABC-1 Dealer: _______________________
_______________________
_______________________
Attention: _______________________
Telephone: _______________________
Facsimile: _______________________
Series 2017ABC-2 Dealer _______________________
_______________________
_______________________
Attention: _______________________
Telephone: _______________________
Facsimile: _______________________
Section 11.08. Notice to Rating Agencies. The Issuing and Paying Agent shall give notice
to each Rating Agency of any supplements or amendments to or termination of this Issuing and
Paying Agent Agreement, any changes to, or expiration, substitution, termination or extension of
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the term of, the Letter of Credit or the Reimbursement Agreement, any substitution of the Dealer,
and the appointment of a successor Issuing and Paying Agent, and of when there are no longer
any Notes outstanding under this Issuing and Paying Agent Agreement, initially at each
respective address given below, or at such other address as may be furnished to the Corporation
from time to time by each Rating Agency:
Moody’s Investors Service
7 World Trade Center
250 Greenwich Street, 23rd
Floor
New York, NY 10007
Attention: Municipal Department-Structured Finance Group
Standard & Poor’s Financial Services LLC
55 Water Street, 38th Floor
New York, NY 10041
Attn: Municipal Structured Surveillance
Section 11.09. Evidence of Rights of Noteholders. Any request, consent or other
instrument required or permitted by this Issuing and Paying Agent Agreement to be signed and
executed by Noteholders may be in any number of concurrent instruments of substantially
similar tenor and shall be signed or executed by such Noteholders in person or by an agent or
agents duly appointed in writing. Proof of the execution of any such request, consent or other
instrument or of a writing appointing any such agent, or of the holding by any person of Notes
transferable by delivery, shall be sufficient for any purpose of this Issuing and Paying Agent
Agreement and shall be conclusive in favor of the Issuing and Paying Agent and of the
Corporation if made in the manner provided in this Section.
The fact and date of the execution by any person of any such request, consent or other
instrument or writing may be proved by the certificate of any notary public or other officer of
any jurisdiction, authorized by the laws thereof to take acknowledgments of deeds, certifying
that the person signing such request, consent or other instrument acknowledged to him the
execution thereof, or by an affidavit of a witness of such execution duly sworn to before such
notary public or other officer.
The ownership of Notes shall be proved by the Note registration books held by the
Issuing and Paying Agent. The Issuing and Paying Agent may establish a record date as of
which to measure consent of the Noteowners in order to determine whether the requisite consents
are received.
Any request, consent, or other instrument or writing of the Owner of any Note shall bind
every future Owner of the same Note and the Owner of every Note issued in exchange therefor
or in lieu thereof, in respect of anything done or suffered to be done by the Issuing and Paying
Agent or the City in accordance therewith or reliance thereon.
Section 11.10. Disqualified Notes. In determining whether the Owners of the requisite
aggregate principal amount of Notes have concurred in any demand, request, direction, consent
-49- PHX 332435050v1
or waiver under this Issuing and Paying Agent Agreement, Notes which are owned or held by or
for the account of the Corporation, or by any other obligor on the Notes, or by any person
directly or indirectly controlling or controlled by, or under direct or indirect common control
with, the Corporation or any other obligor on the Notes, shall be disregarded and deemed not to
be Outstanding for the purpose of any such determination. Notes so owned which have been
pledged in good faith may be regarded as Outstanding for the purposes of this Section if the
pledgee shall establish to the satisfaction of the Issuing and Paying Agent the pledgee’s right to
vote such Notes and that the pledgee is not a person directly or indirectly controlling or
controlled by, or under direct or indirect common control with, the City or any other obligor on
the Notes. In case of a dispute as to such right, any decision by the Issuing and Paying Agent
taken upon the advice of counsel shall be full protection to the Issuing and Paying Agent.
Section 11.11. Money Held for Particular Notes. The money held by the Issuing and
Paying Agent for the payment of the interest or principal due on any date with respect to
particular Notes shall, on and after such date and pending such payment, be set aside on its books
and held in trust by it for the Owners of the Notes entitled thereto, subject, however, to the
provisions of Section 10.04.
Section 11.12. Funds and Accounts. Any fund required by this Issuing and Paying Agent
Agreement to be established and maintained by the Issuing and Paying Agent may be established
and maintained in the accounting records of the Issuing and Paying Agent, either as a fund or an
account, and may, for the purposes of such records, any audits thereof and any reports or
statements with respect thereto, be treated either as a fund or as an account; but all such records
with respect to all such funds shall at all times be maintained in accordance with customary
standards of the industry, to the extent practicable, and with due regard for the protection of the
security of the Notes and the Payment Obligations and the rights of every Holder thereof and the
Bank.
Section 11.13. Article and Section Headings and References. The headings or titles of the
several Articles and Sections hereof, and any table of contents appended to copies hereof, shall
be solely for convenience or reference and shall not affect the meaning, construction or effect of
this Issuing and Paying Agent Agreement.
All references herein to “Article,” “Sections” and other subdivisions are to corresponding
Articles, Sections or subdivisions of this Issuing and Paying Agent Agreement; the words
“herein,” “hereof,” “hereby,” “hereunder” and other words of similar import refer to this Issuing
and Paying Agent Agreement as a whole and not to any particular Article, Section or subdivision
hereof; and words of the masculine gender shall mean and include words of the feminine and
neuter genders.
Section 11.14. Waiver of Personal Liability. No Board member, Council member, officer,
agent or employee of the Corporation, the City or the Issuing and Paying Agent shall be
individually or personally liable for the payment of the principal of or interest on the Notes or be
subject to any personal liability or accountability by reason of the issuance thereof; but nothing
herein contained shall relieve any such Board member, officer, agent or employee of the
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Corporation, the City or the Issuing and Paying Agent from the performance of any official duty
provided by law or by this Issuing and Paying Agent Agreement.
Section 11.15. Governing Law. This Issuing and Paying Agent Agreement shall be
construed and governed in accordance with the laws of the State of Arizona with respect to the
duties of the Corporation, and shall be construed and governed in accordance with the laws of
the State of New York with respect to the duties of the Issuing and Paying Agent.
Section 11.16. Business Day. Except as specifically set forth in a Supplement, any
payments or transfers which would otherwise become due on any day which is not a Business
Day shall become due or shall be made on the next succeeding Business Day.
Section 11.17. Effective Date of Issuing and Paying Agent Agreement. This Issuing and
Paying Agreement shall take effect upon its execution and delivery.
Section 11.18. Execution in Counterparts. This Issuing and Paying Agent Agreement may
be executed in several counterparts, each of which shall be deemed an original, and all of which
shall constitute but one and the same instrument.
Section 11.19. Certain Statutory Provisions. (a) Pursuant to Section 35-393 et seq.,
Arizona Revised Statutes, the Issuing and Payment Agent hereby certifies it is not currently
engaged in, and for the duration of this Issuing and Paying Agent Agreement shall not engage in,
a boycott of Israel. The term “boycott” has the meaning set forth in Section 35-393, Arizona
Revised Statutes. If the Corporation determines that the Issuing and Payment Agent’s
certification above is false or that it has breached such agreement, the Corporation, at the
direction of the City, may impose remedies as provided by law, including, without limitation,
terminating this Agreement.
(b) As required by the provisions of Section 38-511, Arizona Revised Statutes, as
amended, notice is hereby given that the State, its political subdivisions (including the
Corporation) or any department or agency of either may, within three years after its execution,
cancel any contract, without penalty or further obligation, made by the State, its political
subdivisions, or any of the departments or agencies of either if any person significantly involved
in initiating, negotiating, securing, drafting or creating the contract on behalf of the State, its
political subdivisions, or any of the departments or agencies of either is, at any time while the
contract or any extension of the contract is in effect, an employee or agent of any other party to
the contract in any capacity or a consultant to any other party of the contract with respect to the
subject matter of the contract. The State, its political subdivisions or any department or agency
of either may recoup any fee or commission paid or due to any person significantly involved in
initiating, negotiating, securing, drafting or creating the contract on behalf of the State, its
political subdivisions or any department or agency of either from any other party to the contract
arising as the result of the contract.
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(b) To the extent applicable under Section 41-4401, Arizona Revised Statutes, as
amended, the Issuing and Paying Agent shall comply with all federal immigration laws and
regulations that relate to its employees and its compliance with the “E-verify” requirements
under Section 23-214(A), Arizona Revised Statutes, as amended. The breach by the Issuing and
Paying Agent of the foregoing shall be deemed a material breach of this Issuing and Paying
Agent Agreement and may result in the termination of the services of the Issuing and Paying
Agent by the Corporation. The Corporation, or the City on its behalf, retains the legal right to
randomly inspect the papers and records of the Issuing and Paying Agent to ensure that the
Issuing and Paying Agent is complying with the above-mentioned warranty. The Issuing and
Paying Agent shall keep such papers and records open for random inspection during normal
business hours by the Corporation or the City on its behalf. The Issuing and Paying Agent shall
cooperate with the random inspections by the Corporation including granting the Corporation or
the City on its behalf entry rights onto its property to perform such random inspections and
waiving its respective rights to keep such papers and records confidential.
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IN WITNESS WHEREOF, the parties hereto have executed this Issuing and Paying Agent
Agreement by their officers thereunto duly authorized as of the day and year first written above.
CITY OF PHOENIX CIVIC IMPROVEMENT
CORPORATION
_______________________________________
President
Attest:
_______________________
Secretary
U.S. Bank National Association, as Issuing and
Paying Agent
By: ____________________________________
Authorized Officer
EXHIBIT A PHX 332435050v1
EXHIBIT A
[FORM OF NOTE]
UNITED STATES OF AMERICA
STATE OF ARIZONA
CITY OF PHOENIX CIVIC IMPROVEMENT CORPORATION
AIRPORT COMMERCIAL PAPER PROGRAM NOTES,
SERIES __________
Principal Amount _______________
Note Number: 1 Interest Rate:
Registered Owner:
Date of Issue:
Maturity Date: Interest Amount: $
The City of Phoenix Civic Improvement Corporation (the “Corporation”), for value
received, hereby promises to pay to the Registered Owner designated above (herein called the
“Holder”), on the Maturity Date identified above, but solely from the revenues, income and
other monies hereinafter mentioned, the Principal Amount identified above, together with
interest on said Principal Amount at the Interest Rate per annum (calculated on the basis of a
365/366 day year) identified above, upon the presentation and surrender hereof at the Corporate
Trust Office of U.S. Bank National Association (together with any successor, the “Issuing and
Paying Agent”). For payment of this Note on the Maturity Date hereof, this Note must be
presented to the Issuing and Paying Agent no later than 2:15 p.m. (New York City time) on such
day. If a Note is presented for payment after 2:15 p.m. (New York City time), payment therefor
shall be made by the Issuing and Paying Agent on the next succeeding business day without the
accrual of additional interest thereon. The principal of and interest on this Note shall be payable
in lawful money of the United States of America. This Note may be transferred or exchanged in
accordance with the terms and conditions and upon payment of the charges set forth in the
Issuing and Paying Agent Agreement hereinafter described.
The Corporation has entered into an Issuing and Paying Agent Agreement, dated as of
August 1, 2017 (as supplemented and amended, the “Issuing and Paying Agent Agreement”),
with the Issuing and Paying Agent.
This Note is one of a duly authorized issue of The City of Phoenix Civic Improvement
Corporation Airport Commercial Paper Program Notes, Series ________ (the “Series ___
Notes”) issued under, and secured by, the Issuing and Paying Agent Agreement. The Issuing
A-2 PHX 332435050v1
and Paying Agent Agreement also provides for the issuance of additional series of notes (which,
together with the Series 2017 Notes or any subsequent series of notes, the “Notes”). The Notes
are being issued to provide funds for the construction or acquisition of improvements to the
airport of the City of Phoenix, Arizona (the “City”) pursuant to a City Purchase Agreement
dated as of August 1, 2017, as amended from time to time (the “City Purchase Agreement”).
The Notes and the interest thereon (to the extent set forth in the Issuing and Paying Agent
Agreement), are payable from payments to be made by the City under the City Purchase
Agreement, and are secured by amounts drawn under an irrevocable, direct-pay letter of credit
with respect to each Series of Notes issued by __________________ and a pledge of (a) amounts
on deposit in the Note Proceeds Fund and the Note Payment Fund and investment earnings
thereon, (b) proceeds of the sale of Series CP Revenue Obligations (with respect to the principal
amount thereof) and (c) Other Available Monies which the City determines to make available,
(as more particularly described in the Issuing and Paying Agent Agreement the “Available
Funds”). All of the Notes are equally secured by a pledge of the Available Funds.
The Notes are limited obligations of the Corporation and are payable, both as to principal
and interest, solely from the amounts drawn under the Letter of Credit and Available Funds, and
neither the City nor the Corporation is obligated to pay the Notes except from such amounts.
Neither the State of Arizona nor any of its political subdivisions (except the City to the extent of
the Available Funds) is liable on the Notes, nor in any event shall the Notes be payable out of
any funds other than those specified in the Issuing and Paying Agent Agreement. The Notes do
not constitute an indebtedness within the meaning of any constitutional or statutory debt
limitation or restriction.
This Note shall not be entitled to any security or benefit under the Issuing and Paying
Agent Agreement or become valid or obligatory for any purpose until the certificate of
authentication hereon endorsed shall have been signed by the Issuing and Paying Agent.
The Notes are not subject to redemption prior to maturity.
It is hereby certified and recited that all acts, conditions and things required to exist, to
happen and to be performed, precedent to and in the incurring of the indebtedness evidenced by
this Note and in the issuing of this Note, do exist, have happened and have been performed in
due time, form and manner, as required by the Constitution and statutes of the State of Arizona,
and that this Note, together with all other indebtedness of the City pertaining to the Available
Funds, is within every debt and other limit prescribed by the Constitution and the statutes of the
State of Arizona, and is not in excess of the amount of Notes permitted to be issued under the
Issuing and Paying Agent Agreement or the laws of the State of Arizona.
A-3 PHX 332435050v1
IN WITNESS WHEREOF, the President and Vice President has caused this Note to be
executed in the name of the Corporation by the facsimile signature of said President and attested
by the facsimile signature of said Vice President, all as of the date written above.
CITY OF PHOENIX CIVIC IMPROVEMENT
CORPORATION
By: ____________________________________
President
Attest:
______________________________
Vice President
A-4 PHX 332435050v1
CERTIFICATE OF AUTHENTICATION
This Note is one of an issue described in the Issuing and Paying Agent Agreement
mentioned herein.
U.S. BANK NATIONAL ASSOCIATION, as Issuing
and Paying Agent
By: ____________________________________
Authorized Signatory
Date of Authentication:
EXHIBIT B PHX 332435050v1
EXHIBIT B
LETTERS OF REPRESENTATION TO THE DEPOSITORY TRUST COMPANY
See Transcript Item __
EXHIBIT C PHX 332435050v1
EXHIBIT C
FORM OF ISSUANCE REQUEST TO ISSUING AND PAYING AGENT*
This is to confirm the Issuance Request previously given by telephone on this date.
Pursuant to Section 3.01 of the Issuing and Paying Agent Agreement, dated as of
August 1, 2017 (the “Issuing and Paying Agent Agreement”), between the Corporation and the
Issuing and Paying Agent, the undersigned, an Authorized Corporation Representative of the
City of Phoenix Civic Improvement Corporation (the “Corporation”) does hereby request U.S.
Bank National Association, as Issuing and Paying Agent (the “Issuing and Paying Agent”) under
the Issuing and Paying Agent Agreement, to issue Airport Revenue Bond Anticipation Notes, as
follows:
1. Date of Requested Issuance: __________________
2. Principal Amount Purchase Price**
Rollover Notes, Series _____ $____________ $____________
Original Issue Notes, Series _____ $____________ $____________
Rollover Notes, Series _____ $____________ $____________
Original Issue Notes, Series _____ $____________ $____________
Total Principal Amount and Purchase
Price**
for Notes:
$____________
$____________
Pursuant to Section 3.01 of the Issuing and Paying Agent Agreement the undersigned
hereby certifies as follows:
(i) that all action on the part of the Corporation necessary for the valid
issuance of the Notes to be issued has been taken and has not been rescinded or revoked;
(ii) that the Notes in the hands of the Owners thereof will be valid and binding
obligations of the Corporation according to their terms;
(iii) that no Event of Default under Section 7.01 of the Issuing and Paying
Agent Agreement has occurred and is continuing as of the date of this Issuance Request;
(iv) that No Stop order is in effect;
* To promptly follow telephone issuance request, given no later than 12:30 p.m. (New York City
time) on the Date of Issuance specified in Paragraph 1 herein. **
The Purchase Price for Rollover Notes may not be greater than the Principal Amount of Notes
maturing on the date of issuance.
C-2 PHX 332435050v1
(v) the Letter of Credit as originally issued or as amended has an Available
Amount sufficient to comply with Section 6.10 of the Issuing and Paying Agent
Agreement; and
(vi) the Corporation is in compliance with the covenants set forth in Article VI
of the Issuing and Paying Agent Agreement, and including, without limitation, the tax
covenants contained in Section 6.07 and 6.08 and the Corporation and the City are in
compliance with the Tax Certificate of the Corporation and the City with respect to the
Series _____ Notes as amended (the “Tax Certificate”) and the City Purchase Agreement
and hereby reconfirms all of its expectations set forth in the Tax Certificate, as of the date
of this Issuance Request.
(vii) if applicable, the City has notified Bond Counsel of the intended
reasonably expected use of the proceeds of Tax-Exempt Notes which are Original Issue
Notes.
All capitalized terms used but not defined herein shall have the meanings ascribed thereto in the
Issuing and Paying Agent Agreement.
Date: ____________________
Request Number: __________
CITY OF PHOENIX CIVIC IMPROVEMENT
CORPORATION
_______________________________________
Authorized Corporation Representative
C-3 PHX 332435050v1
TERM OF SERIES 2017___ NOTES
MATURITY DATE PRINCIPAL AMOUNT ISSUE PRICE INTEREST RATE
__________ $__________ __________ __________
__________ __________ __________ __________
__________ __________ __________ __________
__________ __________ __________ __________
__________ __________ __________ __________
__________ __________ __________ __________
PHX 332434512v3
EXHIBIT D: RFP DRAFT DATED JUNE 8, 2017
LETTER OF CREDIT REIMBURSEMENT AGREEMENT
dated as of August 1, 2017
By and Between
City of Phoenix Civic Improvement Corporation
and
____________________
$___________
City of Phoenix Civic Improvement Corporation
Airport Commercial Paper Program Notes
Series 2017A-___ (Non-AMT)
Series 2017B-___ (AMT)
Series 2017C-___ (Taxable)
TABLE OF CONTENTS
Page
-i- PHX 332434512v3
ARTICLE 1
DEFINITIONS
Section 1.01 Certain Defined Terms ..................................................................................... 2
Section 1.02 Computation of Time Periods ................................................................................ 11 Section 1.03 Construction ........................................................................................................... 11 Section 1.04 Incorporation of Section ................................................................................ 11 Section 1.05 Accounting Terms and Determinations ......................................................... 11 Section 1.06 Relation to Other Documents; Acknowledgment of Different
Provisions of Related Documents; Incorporation by Reference .................. 11
ARTICLE 2
AMOUNT AND TERMS OF LETTER OF CREDIT
Section 2.01 Amount and Terms of Letter of Credit .......................................................... 12 Section 2.02 Fees and Expenses ......................................................................................... 14 Section 2.03 Reimbursement for Letter of Credit Drawings .............................................. 14 Section 2.04 Non Issuance Notices ..................................................................................... 15
Section 2.05 Place and Manner of Payment; Computation of Interest and Fees ................ 15 Section 2.06 Increased Costs .............................................................................................. 16
Section 2.07 Net of Taxes, Etc............................................................................................ 18 Section 2.08 Recapture ....................................................................................................... 19 Section 2.09 Evidence of Debt............................................................................................ 20
Section 2.10 Obligations Absolute ..................................................................................... 20 Section 2.11 Security .......................................................................................................... 21
ARTICLE 3
TERM LOAN
Section 3.01 Term Loan ...................................................................................................... 22 Section 3.02 Interest............................................................................................................ 23
Section 3.03 Prepayment .................................................................................................... 23 Section 3.04 Repayment ..................................................................................................... 23 Section 3.05 Payments by the Corporation ......................................................................... 23
ARTICLE 4
CONDITIONS PRECEDENT TO ISSUANCE OF THE
AMENDED LETTER OF CREDIT
Section 4.01 Documentary Requirements........................................................................... 24 Section 4.02 Conditions Precedent to Delivery of Additional Original
Issue Notes ................................................................................................... 26
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF THE CORPORATION
Section 5.01 Organization and Powers ............................................................................... 27 Section 5.02 Authorization; Contravention ........................................................................ 27
Section 5.03 Governmental Consent or Approval .............................................................. 27 Section 5.04 Valid and Binding Obligations ...................................................................... 28 Section 5.05 Offering Circular ............................................................................................ 28
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Page
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Section 5.06 Pending Litigation and Other Proceedings .................................................... 28 Section 5.07 [Reserved] ...................................................................................................... 28
Section 5.08 No Conflict..................................................................................................... 28 Section 5.09 Defaults .......................................................................................................... 28 Section 5.10 Sovereign Immunity....................................................................................... 28 Section 5.11 Resolution ...................................................................................................... 29 Section 5.12 Incorporation by Reference............................................................................ 29
Section 5.13 Accuracy of Information ................................................................................ 29 Section 5.14 Reliance by the Bank and the Bank Participants ........................................... 29 Section 5.15 No Proposed Legal Changes .......................................................................... 29 Section 5.16 Tax Exempt Status ......................................................................................... 30 Section 5.17 Permitted Investments .................................................................................... 30
Section 5.18 Federal Reserve Board Regulations 30 Section 5.19 Investment Company Act .............................................................................. 30
Section 5.20 Patriot Act Representation ............................................................................. 30
ARTICLE 6
COVENANTS OF THE CORPORATION
Section 6.01 Reporting Requirements ................................................................................ 31 Section 6.02 Notices ........................................................................................................... 32
Section 6.03 Sale or Encumbrance of Airport .................................................................... 33 Section 6.04 Access to Records .......................................................................................... 33
Section 6.05 Limitation on Additional Debt ....................................................................... 33 Section 6.06 Proceeds of Notes, Additional Original Issue Notes and Series CP
Revenue Obligations .................................................................................... 33
Section 6.07 Amendment of Certain Contracts or Ordinances ........................................... 33
Section 6.08 Rates ............................................................................................................... 33 Section 6.09 Performance and Compliance with Other Covenants .................................... 33 Section 6.10 Taxes and Liabilities ...................................................................................... 34
Section 6.11 Further Assurances......................................................................................... 34 Section 6.12 Efforts to Pay ................................................................................................. 34 Section 6.13 Restrictions on Use of Proceeds .................................................................... 34
Section 6.14 Maintenance of Franchises ............................................................................ 34 Section 6.15 Compliance with Rules and Regulations ....................................................... 34 Section 6.16 Maintenance and Operation of the Airport .................................................... 34 Section 6.17 Insurance ........................................................................................................ 35 Section 6.18 Incorporation of Covenants by Reference ..................................................... 35
Section 6.19 Alternate Facility ........................................................................................... 35 Section 6.20 Accounting Methods and Fiscal Year ............................................................ 35
Section 6.21 Issuing and Paying Agent; Dealer ................................................................. 35 Section 6.22 Offering Circular ............................................................................................ 35 Section 6.23 Non-Extension of Letter of Credit ................................................................. 36 Section 6.24 Sovereign Immunity....................................................................................... 36 Section 6.25 No Additional Original Issue Notes During Event of Default ...................... 36
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ARTICLE 7
EVENTS OF DEFAULT
Section 7.01 Events of Default ........................................................................................... 36 Section 7.02 Consequences of an Event of Defaul ............................................................. 39 Section 7.03 Remedies Cumulative; Solely for the Benefit of the Bank ............................ 40 Section 7.04 Waivers of Omissions .................................................................................... 40 Section 7.05 Continuance of Proceedings .......................................................................... 40
Section 7.06 Injunctive Relief............................................................................................. 41
ARTICLE 8
IMDENIFICATION AND LIABILITY
Section 8.01 Indemnification .............................................................................................. 41
Section 8.02 Liability of the Bank ...................................................................................... 42 Section 8.03 Facsimile Transmission ................................................................................. 42 Section 8.04 No Implied Covenants ................................................................................... 42
Section 8.05 Survival .......................................................................................................... 42
ARTICLE 9
MISCELLANEOUS
Section 9.01 Duration ......................................................................................................... 43 Section 9.02 Amendments and Waivers ............................................................................. 43
Section 9.03 No Implied Waiver ........................................................................................ 43 Section 9.04 Addresses ....................................................................................................... 43
Section 9.05 No Third Party Rights .................................................................................... 45 Section 9.06 Severability .................................................................................................... 45
Section 9.07 Governing Law; Venue; Waiver of Jury Trial ............................................... 45 Section 9.08 Counterparts ................................................................................................... 45
Section 9.09 Successors and Assigns.................................................................................. 46 Section 9.10 Participations.................................................................................................. 46 Section 9.11 USA Patriot Act ............................................................................................. 46
Section 9.12 Prior Understandings ..................................................................................... 46 Section 9.13 Preferences ..................................................................................................... 46 Section 9.14 Headings ........................................................................................................ 47
Section 9.15 Certain Statutory Provisions .......................................................................... 47
EXHIBIT A - Irrevocable Direct Pay Letter of Credit No. __________
EXHIBIT B - Form of Bank Note
EXHIBIT C - Request for Increase of Available Amount of Letter of Credit
EXHIBIT D - Certificate Responsive to Section 4.02(d) in Connection with Issuance of
Additional Original Issue Notes
TABLE OF CONTENTS
Page
PHX 332434512v3
LETTER OF CREDIT REIMBURSEMENT AGREEMENT
THIS AMENDED AND RESTATED LETTER OF CREDIT REIMBURSEMENT
AGREEMENT, dated as of August 1, 2017 (this “Agreement”), amends and restates the Letter
of Credit Reimbursement Agreement, dated as of September 1, 2011 (the “Original Agreement”),
by and between CITY OF PHOENIX CIVIC IMPROVEMENT CORPORATION, a nonprofit
corporation organized under the laws of the State of Arizona (the “Corporation”), and
________________, a _______________ under the laws of ______________ (the “Bank”);
WHEREAS, the Corporation was formed to assist the City of Phoenix, Arizona (the
“City”) in financing its capital improvement projects at no cost to the Corporation; and
WHEREAS, it has been determined necessary and desirable for the City to acquire title to
or interests in certain property described in Exhibit A (the “Property”) to the City Purchase
Agreement, by and between the City and the Corporation, dated as of August 1, 2017 (the “City
Purchase Agreement”), in addition to financing and refinancing certain improvements to the
Airport (as defined herein) of the City; and
WHEREAS, the Corporation has agreed to enter into an Issuing and Paying Agent
Agreement, dated as of August 1, 2017 (the “Issuing and Paying Agent Agreement”), with
U.S. Bank National Association, a national banking association, duly organized and existing
under the laws of the United States of America, as issuing and paying agent (the “Issuing and
Paying Agent”), in order to provide, among other matters, for the authentication and delivery
from time to time of up to $_____________ in aggregate principal amount of its Airport
Commercial Paper Program Notes, Series 2017ABC-___ (the “Series 2017ABC-___ Notes”)
consisting of three subseries (the “Series 2017A-___ Notes,” the “Series 2017B-___ Notes” and
the “Series 2017C-___ Notes,” respectively) and Series 2017ABC-___ (the “Series 2017ABC-
___ Notes”, and together with the Series 2017ABC-___ Notes, the “Notes”) consisting of three
subseries (the “Series 2017A-___ Notes,” the “Series 2017B-___ Notes,” and the “Series 2017C-
___ Notes,” respectively). The Series 2017ABC-___ Notes and the Series 2017ABC-___ Notes
shall be deemed to include any Rollover Notes and, subject to satisfaction of certain conditions
precedent therefor, Additional Original Issue Notes, as both such terms are defined herein, to be
issued from time to time in two series, each series to be in an aggregate principal amount not to
exceed $100,000,000 and the proceeds of which will be used to finance the acquisition of the
Property and the financing and refinancing of the improvements; and
WHEREAS, to enhance the marketability of the Series 2017ABC-___ Notes, the
Corporation has requested ______________ (the “Series 2011ABC-___ Bank”) to issue an
irrevocable, direct pay letter of credit (the “Series 2017ABC-___ Letter of Credit”), in an initial
stated amount of _________________ Dollars ($__________) to be available to be drawn upon
to provide funds for the payment of maturing Series 2017ABC-___ Notes and interest thereon;
and
WHEREAS, the Bank has agreed to issue the Letter of Credit upon the terms and
conditions herein set forth and the Series 2017ABC-___ Bank has agreed to issue the Series
2017ABC-___ Letter of Credit, upon the terms and conditions set forth in a Letter of Credit
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Reimbursement Agreement, dated as of August 1, 2017 (the “Series 2017ABC-___
Reimbursement Agreement”), between the Corporation and the Series 2017ABC-___ Bank; and
WHEREAS, the Corporation may, with the consent of the Bank and upon satisfaction of
the conditions set forth in Section 4.02 hereof and in Section 2.09 of the Issuing and Paying
Agent Agreement, cause the issuance of Additional Original Issue Notes and may request that all
or a portion of the Letter of Credit be available with respect to a series of Additional Original
Issue Notes (and the Rollover Notes with respect thereto); and
WHEREAS, the Corporation’s obligations to the Bank with respect to the Letter of Credit
are secured by this Agreement upon the terms and conditions herein set forth and by the Bank
Note (as hereinafter defined), the City Purchase Agreement and the Issuing and Paying Agent
Agreement.
NOW, THEREFORE, in consideration of the premises and to induce the Bank to issue
the Letter of Credit, and intending to be legally bound hereby, the Corporation and the Bank
hereby agree as follows:
ARTICLE 1
DEFINITIONS
Section 1.01 Certain Defined Terms. In addition to the terms defined in the
introductory and “WHEREAS” clauses and elsewhere in this Agreement, the following terms
shall have the following meanings:
“Additional Original Issue Notes” means notes supported by the Letter of Credit issued
by the Bank and issued pursuant to Sections 2.09 and 9.01(b)(5) of the Issuing and Paying Agent
Agreement.
“Airport” means the airports of the City presently known as “Phoenix - Sky Harbor
International Airport,” “Phoenix - Goodyear Municipal Airport,” and “Phoenix - Deer Valley
Municipal Airport,” including all additions, extensions and improvements thereto which may be
made while any Revenue Obligations remain Outstanding, including all property and facilities of
every nature owned or operated by the City and used in connection with its airports or for airport
purposes, including but without limitation, lands, rights-in-land, terminals and other buildings
and facilities, hangars, runways, ramps, shops, stores and similar facilities located in the terminal
building areas, parking meters and facilities, facilities for limousine, taxi and car rental services,
restrooms, sinks, showers, toilets, luggage lockers, repair shops, facilities for the sale of oil and
fuel, communication facilities, restaurant and bar facilities, and all other property and facilities of
every nature located on or used in connection with the airports and the land on which each is
located, and including airport facilities not described in this definition if such facilities have been
added to the definition of Airport by subsequent resolution or ordinance of the City.
“Airport Revenues” or “Revenues” means all income and revenue received by the City
directly or indirectly from the use and operation of the Airport, including but without limitation,
revenues pledged, dedicated or allocated for the benefit of the Airport, rentals, landing fees, use
charges, income from the sale of services, fuel, oil and other supplies or commodities, income
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from the use for agricultural purposes of portions of the Airport not currently used for Airport
purposes, fees from concessions, amounts received from or in behalf of the Arizona National
Guard, parking meter and parking lot receipts, storage locker and restroom income, income from
communication services, fees or income from limousine, taxi and car rental services, bar and
restaurant income, advertising revenues, receipts derived from the lease or any other contractual
arrangement with respect to the use of the Airport, receipts from the sale of any property of the
Airport, proceeds of any insurance covering business interruption loss. Airport Revenues and
Revenues also includes income received from the investment of any moneys held in the funds
and accounts (other than the Construction Fund and the Rebate Fund) created under the Airport
Revenue Bond Ordinance. Airport Revenues and Revenues shall not include the following:
(i) money received as grants or gifts from the United States of America or the State of Arizona,
except to the extent that any such money shall be received as payments for use of the Airport or
its facilities; (ii) proceeds received on insurance resulting from casualty damage to assets of the
Airport to the extent such proceeds are used to repair or replace facilities or property of the
Airport; (iii) rentals or other charges derived by the City under and pursuant to a lease or leases
relating to Special Purpose Facilities, including customer facility charges imposed pursuant to
Section 4, Articles IV and V of the Phoenix City Code, as further amended from time to time;
(iv) the proceeds of the sale of any Revenue Obligations or other obligations issued for Airport
purposes; or (v) receipts from Passenger Facility Charges.
“Airport Revenue Bond Ordinance” means Ordinance No. S-21974, adopted by the
Mayor and Council of the City on April 20, 1994, as amended to date and as further
supplemented and amended.
“Alternate Facility” means an alternate letter of credit or other credit facility delivered to
the Issuing and Paying Agent pursuant to Section 6.10 of the Issuing and Paying Agent
Agreement.
“Applicable Law” means all applicable provisions of all constitutions, statutes, rules,
regulations and all binding orders, judgments and decrees of any Governmental Authority.
“Annual Letter of Credit Fee” has the meaning set forth in the Fee Letter.
“Authorized Corporation Representative” shall have the meaning assigned to that term in
the City Purchase Agreement.
“Available Amount” means the Maturity Value of all Outstanding Notes supported by the
Letter of Credit.
“Available Funds” shall have the meaning assigned to that term in the City Purchase
Agreement, as applicable to the Notes supported by the Letter of Credit.
“Available Stated Amount” means the amount set forth in paragraph number 5 of the
Letter of Credit, as such amount shall be reduced and reinstated in accordance with its terms.
“Bank Note” means the Bank Note issued by the Corporation to the Bank, dated the Date
of Issuance, to secure the Corporation’s Obligations to the Bank, the form of which is attached
hereto as Exhibit B.
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“Bank Participant” means any person to whom the Bank has assigned its rights under this
Agreement and the Letter of Credit or to which the Bank or any Bank Participant has sold a
participation in rights under this Agreement and the Letter of Credit.
“Bank Rate” means, in connection with each Unreimbursed Drawing, a rate of interest
equal to the following:
(a) from the date of any such Unreimbursed Drawing through and including
the ninetieth (90th) day thereafter, the Base Rate;
(b) from the ninety-first (91st) day following any such Unreimbursed Drawing
through and including the one-hundred eightieth (180th
) day thereafter, the Base Rate plus
_______% (except that the ______% addition shall not be applicable to the extent that the
Base Rate is determined based upon component (d) of the definition of Base Rate);
(c) from the one hundred eighty-first (181st) day following any such
Unreimbursed Drawing until a Conversion Date applicable to such Unreimbursed
Drawing or until the date said Unreimbursed Drawing is repaid in full, the Default Rate;
and
(d) from any applicable Conversion Date (provided the conditions thereto
have occurred pursuant to Section 3.01) until the date said Term Loan is repaid in full,
the Term Loan Rate;
provided, however, that (i) at no time shall the Bank Rate for any Unreimbursed Drawing
or Term Loan, as applicable, be less than the highest interest rate borne on any issued and
outstanding Series 2017ABC-___ Note, and (ii) upon and following the occurrence of an Event
of Default hereunder, each Unreimbursed Drawing or Term Loan, as applicable, hereunder shall
bear interest in an amount equal to the Default Rate.
“Base Rate” means a rate of interest per annum equal to the highest of (a) the Prime Rate
plus ______%, (b) the Fed Funds Rate plus _____%, (c) _____%, and (d) _____% of the yield
on a 30-year United States Treasury bond.
“Bond Orders” means any ordinance, indenture, contract or agreement of the City
authorizing and/or evidencing Senior Lien Revenue Obligations, Junior Lien Revenue
Obligations, Junior Subordinate Lien Revenue Obligations and any other Debt payable from or
secured by an interest in the Airport Revenues senior to or on a parity with the Obligations.
“Business Day” means a day other than a Saturday, Sunday or a legal holiday in the State
of Arizona or State of New York or any other day on which banking institutions chartered under
the laws of the State of Arizona or State of New York are authorized or required by law to close
or a day on which the New York Stock Exchange, the office of the Bank at which drafts are to be
presented under the Letter of Credit or the corporate trust office of the Issuing and Paying Agent
is authorized to be closed.
“CAFR” means the City’s Comprehensive Annual Financial Report prepared in
accordance with Generally Accepted Accounting Principles.
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“Change of Law” means the adoption, after the Issuance Date, of or change in any law,
rule, regulation, statute, treaty, guideline or directive of any Governmental Authority or the
occurrence on the Issuance Date of any of the foregoing if adopted prior to the Issuance Date or
any change after the Issuance Date in the application, interpretation or enforcement of any of the
foregoing.
“Code” means the Internal Revenue Code of 1986, as amended, and when appropriate,
any statutory predecessor or successor thereto, and all applicable regulations (whether proposed,
temporary or final) thereunder and any applicable official rulings, announcements, notices,
procedures and judicial determinations relating to the foregoing.
“Conditional Default” means any event or condition which with notice, passage of time
or any combination of the foregoing, would constitute an Event of Default.
“Conversion Date” means the day on which, subject to Section 3.01 hereof, the
Corporation elects to convert an Unreimbursed Drawing into a Term Loan.
“Cost of Maintenance and Operation” means all expenditures (exclusive of depreciation
and interest on money borrowed) which are necessary to the efficient maintenance and operation
of the Airport and its facilities, such expenditures to include the items normally included as
essential expenditures in the operating budgets of municipally owned airports.
“Date of Issuance” or “Issuance Date” means the date of issuance of the Letter of Credit.
“Dealer” means, initially, ______________, in the case of the Series 2017ABC-___
Notes and ______________, in the case of the Series 2017ABC-___ Notes, or any successor or
assign of either such party as may be permitted by the respective Dealer Agreement, or any other
party entering into a dealer agreement (or similar document) with the Corporation at the direction
of the City. Unless otherwise set forth specifically, “Dealer” shall mean the Dealer with respect
to the related Series of Notes.
“Dealer Agreements” means the Dealer Agreements, each dated as of August 1, 2017, by
and between the Corporation and each Dealer and any subsequent dealer agreement entered into
by the Corporation and any successor Dealer.
“Debt” of any Person means at any date, without duplication, (a) all obligations of such
Person for borrowed money, (b) all obligations of such Person evidenced by bonds, debentures,
notes or other similar instruments, (c) all obligations of such Person to pay the deferred purchase
price of property or services, except trade accounts payable arising in the ordinary course of
business, (d) all obligations of such Person as lessee under capital leases, (e) all bank agreements
or interest rate protection or other derivative instruments or agreements, (f) all debt of others
secured by a lien on any asset of such Person, whether or not such Debt is assumed by such
Person, and (g) all guarantees by such Person of debt of other Persons; provided, however, in
each case, such debt shall be payable from or secured by the Airport Revenues.
“Default Rate” means a rate equal to the Base Rate plus ______% per annum.
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“Designated Revenues” shall have the meaning assigned to such term in the City
Purchase Agreement.
“Drawing” means an Interest Drawing or a Principal Drawing, as the case may be.
“Event of Default” shall have the meaning assigned to that term in Section 7.01 of this
Agreement.
“Fed Funds Rate” means, for any day a fluctuating interest rate per annum equal to the
weighted average (rounded to the next higher 1/100 of 1%) of the rates on overnight Federal
funds transactions with members of the Federal Reserve System arranged by Federal funds
brokers, as published for such day (or, if such day is not a Business Day, for the next preceding
Business Day) by the Federal Reserve Bank of New York, or, if such rate is not so published for
any day which is a Business Day, the average (rounded to the next higher 1/100 of 1%) of the
quotations for such day on such transactions received by the Bank from three Federal funds
brokers of recognized standing selected by the Bank. Each determination of the Fed Funds Rate
by the Bank shall be conclusive and binding on the Corporation.
“Fee Letter” means the Fee Letter Agreement, dated the Date of Issuance, entered into
between the Corporation and the Bank.
“Fiscal Year” has the meaning assigned to that term in the City Purchase Agreement.
“Fitch” means Fitch Ratings Inc. and its successors and assigns.
“Generally Accepted Accounting Principles” means generally accepted accounting
principles consistently applied and maintained throughout the period indicated, except for
changes permitted by the Financial Accounting Standards Board or any similar accounting
authority of comparable standing.
“Governmental Authority” means any national, state or local government (whether
domestic or foreign), any political subdivision thereof or any other governmental, quasi-
governmental, judicial, public or statutory instrumentality, authority, body, tribunal, agency,
bureau, court or entity (including the Federal Reserve Board, any central bank or any comparable
authority), or any arbitrator with authority to bind a party at law.
“Highest Lawful Rate” means the maximum legal rate of interest which the Bank is
legally entitled to charge, contract for or receive under any Applicable Law to which such
interest is subject.
“Interest Drawing” means a drawing on the Letter of Credit to pay accrued interest on
maturing Series 2017ABC-___ Notes.
“Junior Lien Revenue Obligations” shall have the meaning assigned to that term in the
City Purchase Agreement.
“Junior Subordinate Lien Revenue Obligations” shall have the meaning assigned to that
term in the City Purchase Agreement.
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“Junior Subordinate Lien Revenues” shall have the meaning assigned to that term in the
City Purchase Agreement.
“Material Adverse Effect” means (a) (i) with respect to any Person, a materially adverse
effect upon such Person’s business, assets, liabilities, financial condition, results of operations or
business prospects, and (ii) with respect to a group of Persons as a whole, a materially adverse
effect upon such Persons’ business, assets, liabilities, financial condition, results of operations or
business prospects taken as a whole, and (b) with respect to any agreement or obligation, a
materially adverse effect upon the binding nature, validity or enforceability of such agreement or
obligation.
“Maturity Date” means, with respect to any Term Loan, the last day of such Term Loan
as provided in Section 3.01 hereof.
“Maturity Value” means the principal amount of each Series 2017ABC-___ Note plus
two hundred seventy (270) days’ interest thereon computed at the Maximum Rate.
“Maximum Rate” means twelve percent (12.00%) per annum.
“Moody’s” means Moody’s Investors Service, Inc. and its successors and assigns.
“Net Airport Revenues” means Airport Revenues, after provision for the payment of the
Cost of Maintenance and Operation.
“Non Issuance Period” means (a) all times following receipt by the Issuing and Paying
Agent of a Notice of Permanent Non Issuance and (b) during the period following receipt of the
Issuing and Paying Agent of a Notice of Temporary Non Issuance and prior to receipt by the
Issuing and Paying Agent of a Notice to Resume Issuance.
“Note Payment Date” shall have the meaning assigned to that term in the City Purchase
Agreement.
“Note Proceeds Fund” shall have the meaning assigned to that term in the Issuing and
Paying Agent Agreement.
“Note Repayment Fund” means the fund created pursuant to Section 5.01 of the Issuing
and Paying Agent Agreement.
“Notes” shall have the meaning assigned to that term in the fifth WHEREAS clause to
this Agreement, and shall be deemed to include, subject to satisfaction of Section 4.03 hereof,
Additional Original Issue Notes and any Rollover Notes that may be issued from time to time
pursuant to the Issuing and Paying Agent Agreement with respect to a Series of Notes; provided,
however, that at no time shall the Maturity Value of Notes secured by the Letter of Credit exceed
the Stated Amount thereof.
“Notice of Permanent Non Issuance” means a notice from the Bank to the Issuing and
Paying Agent in the form of Annex E to the Letter of Credit.
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“Notice of Temporary Non Issuance” means a notice from the Bank to the Issuing and
Paying Agent in the form of Annex F to the Letter of Credit.
“Notice to Resume Issuance” means a notice from the Bank to the Issuing and Paying
Agent in the form of Annex G to the Letter of Credit.
“Obligations” means all amounts payable to the Bank pursuant to this Agreement, the Fee
Letter and the Bank Note.
“Offering Circular” means the offering memorandum, relating to the issuance of the
Notes, including any supplement thereto.
“Ordinance” means Ordinance No. S-33916, adopted by the Mayor and Council of the
City on May 9, 2007, authorizing, among other things, the Corporation to issue the Notes and the
Series CP Revenue Obligations.
“Other Available Monies” shall have the meaning assigned to that term in the City
Purchase Agreement.
“Other Taxes” has the meaning assigned to that term in Section 2.07 hereof.
“Outstanding” (a) when used with reference to Notes means all Notes theretofore issued
by the Corporation and authenticated by the Issuing and Paying Agent which are deemed to be
“Outstanding” under the Issuing and Paying Agent Agreement and (b) when used with reference
to Revenue Obligations, means all Revenue Obligations theretofore issued by the Corporation
and deemed to be “Outstanding” under any Bond Order pursuant to which such Revenue
Obligations were issued.
“Passenger Facility Charges” means charges collected by the City pursuant to the
authority granted by the Aviation Safety and Capacity Expansion Act of 1990 and 14 CFR Part
158, as amended from time to time, in respect of any component of the Airport and interest
earnings thereon, net of amounts that collecting air carriers are entitled to retain for collecting,
handling, and remitting such passenger facility charge revenues.
“Person” means an individual, partnership, corporation (including a business trust), trust,
unincorporated association, joint venture or other entity, including a government or political
subdivision or any agency or instrumentality thereof.
“Prime Rate” means for any day, the rate established by the Bank, from time to time as
its prime rate, with each change in the Prime Rate being effective from and including the date
such change is publicly announced as being effective; provided, however, the Bank may lend to
its customers at rates that are at, above or below the Prime Rate. Each determination of the
Prime Rate by the Bank shall be deemed conclusive and binding on the Corporation, absent
manifest error.
“Principal Drawing” means a drawing on the Letter of Credit to pay the principal of
maturing Series 2017ABC-___ Notes.
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“Project” shall have the meaning assigned to such term in the City Purchase Agreement.
“Rating Agency” means Moody’s or S&P, if the Series 2017ABC-___ Notes are then
rated by such rating agency.
“Reimbursement Agreement Account” shall have the meaning assigned to such term in
the Issuing and Paying Agent Agreement.
“Related Documents” means the Notes, the Issuing and Paying Agent Agreement, the
City Purchase Agreement, the Resolution, the Dealer Agreement, each Bond Order, the Offering
Circular and any other document or instrument related thereto or issued thereunder.
“Resolution” means the resolution of the Board of Directors of the Corporation adopted
on ____________, 2017, authorizing, among other things, the issuance of the Notes and the
Series CP Revenue Obligations by the Corporation.
“Revenue Obligations” means Senior Lien Revenue Obligations, Junior Lien Revenue
Obligations and any other long-term Debt payable from or secured by an interest in the Airport
Revenues senior to or on a parity with the Junior Subordinate Lien Revenue Obligations.
“Rollover Notes” means Series 2017ABC-___ Notes, the proceeds of which are used in
whole or in part to reimburse the Bank for Principal Drawings related to the Series 2017ABC-
___ Notes and any Additional Original Issue Notes.
“S&P” means Standard & Poor’s Ratings Services, a division of The McGraw Hill
Companies, and its successors and assigns.
“Security” shall have the meaning assigned to such term in Section 2.11 hereof.
“Senior Lien Revenue Obligations” shall have the meaning assigned to such term in the
City Purchase Agreement.
“Series” means the Series 2017ABC-1 Notes or the Series 2017ABC-2 Notes, as
applicable, including any related Subseries.
“Series 2017ABC-1 Notes” means, collectively the three Subseries of Notes consisting of
the Series 2017A-1 Notes, the Series 2017B-1 Notes and the Series 2017C-1 Notes authorized in
an aggregate principal amount not to exceed $100,000,000.
“Series 2017ABC-2 Notes” means, collectively the three Subseries of Notes consisting of
the Series 2017A-2 Notes, the Series 2017B-2 Notes and the Series 2017C-2 Notes authorized in
an aggregate principal amount not to exceed $100,000,000.
“Series 2017A-1 Notes” means the Corporation’s Airport Commercial Paper Program
Notes, Series 2017A-1 (Non-AMT).
“Series 2017A-2 Notes” means the Corporation’s Airport Commercial Paper Program
Notes, Series 2017A-2 (Non-AMT).
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“Series 2017B-1 Notes” means the Corporation’s Airport Commercial Paper Program
Notes, Series 2017B-1 (AMT).
“Series 2017B-2 Notes” means the Corporation’s Airport Commercial Paper Program
Notes, Series 2017B-2 (AMT).
“Series 2017C-1 Notes” means the Corporation’s Airport Commercial Paper Program
Notes, Series 2017C-1 (Taxable).
“Series 2017C-2 Notes” means the Corporation’s Airport Commercial Paper Program
Notes, Series 2017C-2 (Taxable).
“Series CP Revenue Obligations” shall have the meaning assigned to such term in the
City Purchase Agreement.
“Special Purpose Facilities” shall have the meaning assigned to such term in the City
Purchase Agreement.
“State” means the State of Arizona.
“Stated Amount” means the amount set forth in paragraph number 2 of the Letter of
Credit, as such amount shall be reduced in accordance with its terms by any amendments to the
Letter of Credit made pursuant to the terms of this Agreement.
“Stated Expiration Date” means August ___, 20__, as it may be extended pursuant to
Section 2.01(c) of this Agreement.
“Subseries” means, with respect to a Series of Notes, a subdivision of such Series to the
extent necessary to identify different consequences of owning such subseries for purposes of
federal income taxation.
“Taxes” has the meaning assigned to that term in Section 2.07.
“Term Loan” means an Unreimbursed Drawing that has been converted pursuant to the
terms and conditions set forth in Section 3.01 hereof.
“Term Loan Rate” means a rate equal to the Base Rate plus ____% (except that the ____%
addition shall not be applicable to the extent that the Base Rate is determined based upon
component (d) of the definition of Base Rate).
“Unreimbursed Drawing” means a Drawing under the Letter of Credit that has not been
repaid in full and has not been converted into a Term Loan.
“Unutilized Portion of the Stated Amount” for any day means the difference between the
Stated Amount and the Available Amount, as determined as of the end of such day.
“Utilized Portion of the Stated Amount” for any day means the Available Amount.
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Section 1.02 Computation of Time Periods. In this Agreement, in the computation of a
period of time from a specified date to a later specified date, the word “from” means “from and
including” and the words “to” and “until” each mean “to but excluding.”
Section 1.03 Construction. Unless the context of this Agreement otherwise clearly
requires, references to the plural include the singular; the singular the plural; and the part, the
whole and “or” has the inclusive meaning represented by the phrase “and/or.” The words
“hereof,” “herein,” “hereunder” and similar terms in this Agreement refer to this Agreement as a
whole and not to any particular provision of this Agreement. The section headings contained in
this Agreement and the table of contents preceding this Agreement are for reference purposes
only and shall not control or affect the construction of this Agreement or the interpretation
thereof in any respect. Section, subsection and exhibit references are to this Agreement unless
otherwise specified.
Section 1.04 Incorporation of Certain Definitions by Reference. Any capitalized term
used herein and not otherwise defined herein shall have the meaning provided therefor in the
Issuing and Paying Agent Agreement and the City Purchase Agreement.
Section 1.05 Accounting Terms and Determinations. Unless otherwise specified
herein, all accounting terms used herein shall be interpreted, all accounting determinations
hereunder shall be made, and all financial statements required to be delivered hereunder shall be
prepared, in accordance with Generally Accepted Accounting Principles.
Section 1.06 Relation to Other Documents; Acknowledgment of Different Provisions of
Related Documents; Incorporation by Reference.
(a) Nothing in this Agreement shall be deemed to amend, or relieve the
Corporation of its obligations under, any Related Document to which it is a party.
Conversely, to the extent that the provisions of any Related Document allow the
Corporation to take certain actions, or not to take certain actions, the Corporation
nevertheless shall be fully bound by the provisions of this Agreement.
(b) Except as provided in (c), all references to other documents shall be
deemed to include all amendments, modifications and supplements thereto to the extent
such amendment, modification or supplement is made in accordance with the provisions
of such document and this Agreement.
(c) All provisions of this Agreement making reference to specific sections of
any Related Document shall be deemed to incorporate such sections into this Agreement
by reference as though specifically set forth herein (with such changes and modifications
as may be herein provided) and shall continue in full force and effect with respect to this
Agreement notwithstanding payment of all amounts due under or secured by the Related
Documents, the termination or defeasance thereof or any amendment thereto or any
waiver given in connection therewith, so long as this Agreement is in effect and until all
Obligations are paid in full. No amendment, modification, consent, waiver or termination
with respect to any of such sections shall be effective as to this Agreement until
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specifically agreed to in writing by the parties hereto with specific reference to this
Agreement.
ARTICLE 2
AMOUNT AND TERMS OF LETTER OF CREDIT
Section 2.01 Amount and Terms of Letter of Credit.
(a) The Bank agrees, on the terms and subject to the conditions hereinafter set
forth, to issue the Letter of Credit on the date of initial authentication of any Series
2017ABC-___ Notes for the benefit of the Issuing and Paying Agent on behalf of the
holders of the Series 2017ABC-___ Notes from time to time Outstanding. The Letter of
Credit will be issued in an initial Stated Amount equal to $___________, consisting of
$100,000,000, which may be drawn upon to pay the principal amount of the maturing
Series 2017ABC-___ Notes, and $____________, which may be drawn upon to pay
interest accrued on the Series 2017ABC-___ Notes for a period of up to 270 days at the
Maximum Rate and computed on the basis of a 365/366 day year and actual days elapsed.
The Letter of Credit shall be issued to the Issuing and Paying Agent for the account of the
Corporation and shall be substantially in the form of Exhibit A hereto, with such changes
to the form set forth in Exhibit A as the Corporation and the Bank shall agree in writing
are necessary or advisable. All Drawings on the Letter of Credit shall be honored by the
Bank with its own funds and not with funds of the Corporation or the City.
(b) The Available Amount of the Letter of Credit may be reduced, increased
and reinstated from time to time, as more fully provided therein; provided, that at no time
shall the Available Amount of the Letter of Credit exceed the Available Stated Amount
thereof. After (i) any reduction of the Stated Amount and Available Stated Amount as
provided in the Letter of Credit, (ii) any increase of the Available Amount as provided in
Section 2.01(f) hereof and as provided in the Letter of Credit or (iii) any extension of the
Stated Expiration Date as provided in Section 2.01(c) hereof, the Bank may, at its option,
deliver a substitute Letter of Credit to the Issuing and Paying Agent reflecting such
reduction to the Stated Amount and Available Stated Amount, an increase in the
Available Amount or the extension of the Stated Expiration Date (but otherwise having
terms identical to the Letter of Credit for which it is substituted) in exchange for and
upon surrender to the Bank of the Letter of Credit affected by such reduction, increase or
extension; provided that in no event shall the Available Amount at any time exceed the
Available Stated Amount.
(c) The Letter of Credit shall expire, subject to subsection (d) hereof, at
5:00 P.M. (New York City time) on its Stated Expiration Date, or as otherwise provided
in the Letter of Credit. Upon the written request of the Corporation received by the Bank
not earlier than one hundred twenty (180) days prior to the expiration date of the Letter of
Credit, but not less than sixty (60) days, the Bank may, in its sole and absolute discretion,
agree to extend the then Stated Expiration Date for the Letter of Credit for an additional
term of not less than one (1) year and not exceeding _______ (___) years and upon such
other terms and conditions and fees as the Bank, in its sole and absolute discretion,
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renegotiates with the Corporation. The Bank agrees to advise the Corporation in writing
of its decision concerning an acceptance or denial of a requested extension within thirty
(30) days of receipt of such request, provided that a failure of the Bank to respond to such
request shall be deemed a denial of the request. If the Stated Expiration Date for the
Letter of Credit is to be extended, the Bank will, on or before the date the extension is to
take effect, provide to the Issuing and Paying Agent written notice in the form of Annex
K to the Letter of Credit of the new Stated Expiration Date.
(d) Notwithstanding Section 2.01(c), the Letter of Credit shall terminate
earlier than its Stated Expiration Date upon the first to occur of (i) 5:00 P.M. (New York
City time) on the date of the final maturity of all Series 2017ABC-___ Notes
authenticated prior to receipt by the Issuing and Paying Agent of a Notice of Permanent
Non Issuance, or (ii) the date and time of receipt by the Bank of notice from the Issuing
and Paying Agent that an Alternate Facility has been accepted in substitution for the
Letter of Credit pursuant to Section 6.10 of the Issuing and Paying Agent Agreement or
that all Outstanding Series 2017ABC-___ Notes have been paid or deemed to have been
paid in full in accordance with the Issuing and Paying Agent Agreement and the
Corporation has delivered a certificate to the Issuing and Paying Agent directing it to
terminate the Letter of Credit.
(e) The Corporation may provide an Alternate Facility in accordance with
Section 6.10 of the Issuing and Paying Agent Agreement upon maturity of all Series
2017ABC-___ Notes; provided, that before such substitution takes effect, all Obligations
then due and owing to the Bank shall have been paid. In addition, if the Corporation
terminates the Letter of Credit, or directs the Issuing and Paying Agent to terminate the
Letter of Credit, prior to August ___, 2018, the Corporation shall pay to the Bank a
termination fee in an amount equal to the Annual Letter of Credit Fee that would have
been payable through August ___, 2018 if the Available Amount were equal to the Stated
Amount for the entire period; provided, that such fee shall not be payable by the
Corporation if: (i) the Letter of Credit is terminated by the Corporation on or after
August ___, 2018, (ii) any Rating Agency then maintaining a rating on the Series
2017ABC-___ Notes shall have suspended or withdrawn the Bank’s short-term rating or
downgraded the Bank’s short-term rating below “A-1” by S&P or “P-1” by Moody’s, (iii)
the Corporation shall refinance or refund the Notes with fixed rate debt and shall
permanently reduce the commercial paper program authorized by the Ordinance and the
Related Documents, as evidenced by authorized resolutions or ordinances of the City and
the Corporation, or (iv) the Corporation has received the certificate of the Bank required
by Section 2.06 hereof and become obligated to pay increased costs pursuant to Section
2.06 hereof as a result of the adoption of any applicable law, rule or regulation or any
change therein or in the interpretation thereof by any court, or central bank or
Governmental Authority.
(f) Upon presentation by the Corporation to the Bank of a certificate in the
form of Exhibit C, the Bank may deliver to the Issuing and Paying Agent a certificate in
the form of Annex L thereto confirming that the particular Series of Notes originally
identified in the Letter of Credit shall be deemed to include the series of Additional
Original Issue Notes (including the related Rollover Notes with respect thereto) with the
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series or subseries designation and other related matters identified in such Exhibit C;
provided that the Bank shall have no obligation to deliver said Annex L unless and until
all of the conditions set forth therefor in Section 4.02 hereof and Section 2.09 of the
Issuing and Paying Agent Agreement have been satisfied.
Section 2.02 Fees and Expenses. The Corporation hereby agrees to pay, or cause to be
paid, to the Bank:
(a) the fees and amounts required by the Fee Letter on the Date of Issuance;
(b) the Annual Letter of Credit Fee as required by and described in the Fee
Letter, and such fee shall be paid on the dates described in the Fee Letter; and
(c) all other fees and expenses described in the Fee Letter.
Section 2.03 Reimbursement for Letter of Credit Drawings.
(a) Except as provided in Article 3, the Corporation agrees to reimburse the
Bank without the requirement for notice or demand, both of which are expressly waived
by the Corporation, for any amounts drawn on the Letter of Credit on the same Business
Day as such Drawing is honored by the Bank. The Corporation shall cause the Issuing
and Paying Agent to wire transfer to the Bank amounts in the Series 2017ABC-___
Account of the Note Repayment Fund which (i) with respect to Principal Drawings,
represent proceeds of Rollover Notes and (ii) with respect to Interest Drawings, represent
amounts deposited therein by the Corporation for the purpose of reimbursing the Bank
for Interest Drawings under the Letter of Credit. To the extent the amount on deposit in
the Series 2017ABC-___ Account of the Note Repayment Fund is insufficient to fully
reimburse the Bank for any such Drawing, the Corporation shall cause to be promptly
deposited in the Series 2017ABC-___ Account of the Note Repayment Fund or directly
wire transfer to the Bank the amount of such insufficiency from Available Funds, Junior
Subordinate Lien Revenues or any combination of the foregoing. Except as provided in
Article 3 and Article 7, (i) amounts not reimbursed for Interest Drawings by 4:30 p.m.
(New York City time) in immediately available funds on such Business Day shall bear
interest at the Default Rate from and including the date of Drawing to but excluding the
date of reimbursement, and (ii) amounts not reimbursed for Principal Drawings by 4:30
p.m. (New York City time) become Unreimbursed Drawings and bear interest at the
Bank Rate from and including the date of Drawing to but excluding the date of
reimbursement. The Corporation and the Bank agree that the reimbursement in full for
each Drawing on the date such Drawing is honored is intended to be a contemporaneous
exchange for new value given to the Corporation by the Bank.
(b) Each Unreimbursed Drawing shall be repaid in full within one hundred
eighty (180) days of such drawing unless converted to a Term Loan as provided in
Article 3 hereof. Interest on Unreimbursed Drawings shall bear interest at the applicable
Bank Rate, calculated on the basis of a year comprised of 365/366 days over the actual
number of days elapsed, and shall be payable on the first (1st) day of each calendar month
in which any Unreimbursed Drawing is outstanding and on each date on which all or part
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of an Unreimbursed Drawing is paid or payable hereunder. Interest on Unreimbursed
Drawings with respect to which any required payment is overdue shall accrue at the
Default Rate and be payable at any time upon demand by the Bank.
(c) All Unreimbursed Drawings on the Letter of Credit shall be noted on the
Bank Note, provided that failure to do so shall not affect the obligation of the Corporation
to repay amounts represented by such Unreimbursed Drawing.
Section 2.04 Non Issuance Notices. Upon the occurrence of an Event of Default, the
Bank may deliver a Notice of Permanent Non Issuance or a Notice of Temporary Non-Issuance,
in the Bank’s sole discretion, to the Issuing and Paying Agent (a copy of which shall be delivered
by the Bank to the Corporation and the Dealer) directing the Issuing and Paying Agent to cease
authentication of (i) any Rollover Notes and Additional Original Issue Notes, and (ii) any Series
2017ABC-___ Notes in an amount equal to all or any part of the Unutilized Portion of the Stated
Amount on such date. From the date it receives a notice described in the immediately preceding
sentence and until the Issuing and Paying Agent receives a Notice to Resume Issuance, it shall
not authenticate any Rollover Notes or Additional Original Issue Notes or any new Series
2017ABC-___ Notes in an amount equal to all or any portion of the Unutilized Portion of the
Stated Amount on such date. The Bank agrees that if, within thirty (30) days after the delivery of
a Notice of Temporary Non Issuance (or such longer period as shall be agreed to by the Bank in
its sole discretion) the Event of Default shall no longer be continuing and the Bank shall have
received a notice and supporting evidence satisfactory to the Bank from an Authorized
Corporation Representative to that effect, then the Bank shall deliver a Notice to Resume
Issuance to the Issuing and Paying Agent (a copy of which shall be delivered by the Bank to the
Corporation and the Dealer) rescinding the Notice of Temporary Non Issuance and reinstating
the Letter of Credit under the terms of this Agreement to the Stated Amount.
Section 2.05 Place and Manner of Payment; Computation of Interest and Fees. All
payments by the Corporation to the Bank hereunder and under the Bank Note shall be made in
lawful currency of the United States and in immediately available funds as follows:
________________
A.B.A. Number: ___________
Credit to: ________________
Credit Account: ____________
Reference: City of Phoenix Civic Improvement Corporation (Airport – Series 2017)
Any payment received by the Bank later than 4:30 p.m., New York City time, shall be deemed to
be made on the next succeeding Business Day. As and to the extent that amounts owing to the
Bank are repaid on the same day that they are borrowed or incurred, they shall not be deemed to
constitute Obligations hereunder and, therefore, no interest shall be deemed to have accrued in
connection therewith. Whenever any payment under the terms of this Agreement or the Bank
Note is due on a day which is not a Business Day, such payment shall be due and payable on the
next succeeding Business Day and shall include interest to such succeeding Business Day.
Notwithstanding any provision of this Agreement to the contrary, any failure by the Bank
to submit an invoice as required by the terms hereof shall neither affect nor diminish the
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obligation of the Corporation to pay such amounts at the times and in the amounts required by
the terms of said invoice.
All computations of fees payable by the Corporation under this Agreement shall be made
on the basis of a three hundred sixty (360) day year and actual days elapsed.
Section 2.06 Increased Costs.
(a) Reserves. If after the date hereof, the Bank shall have determined that the
adoption or implementation of any change in any law, rule, treaty or regulation or any
policy, guideline, or directive of, or any change in the enforcement, interpretation,
implementation, or administration thereof by, any court, central bank, or other
administrative authority or Governmental Authority or compliance by the Bank with any
request or directive of any such court, central bank, or other administrative authority or
Governmental Authority (in each case, whether or not having the force of law) shall at
any time (i) impose, modify or deem applicable any reserve, special deposit or similar
requirement (including, without limitation, pursuant to Regulation D of the Board of
Governors of the Federal Reserve System) against credits or commitments to extend
credit extended by, or assets (funded or contingent) of, deposits with or for the account
of, or other acquisitions of funds or bonds by the Bank, (ii) subject credits or
commitments to extend credit extended by the Bank to any assessment or other cost
imposed by the Federal Deposit Insurance Corporation or any successor thereto or the
Financial Services Authority or any successor thereto, (iii) change the basis of taxation of
payments to the Bank of any amounts payable hereunder (except for taxes on the overall
net income of the Bank), or (iv) impose on the Bank any other or similar condition
regarding this Agreement, the commitment or obligations of the Bank hereunder, and the
result of any event referred to in clause (i), (ii), (iii) or (iv) above shall be to increase the
cost to the Bank of maintaining the Letter of Credit, any Unreimbursed Drawing, Term
Loan or any other credit facilities hereunder (which increase in cost shall be determined
by the Bank’s reasonable allocation of the aggregate of such cost increases resulting from
such event) or to reduce the amount of any payment received by the Bank, or to require
the Bank to make any payment on or calculated by reference to the gross amount of any
sum received by it, then, upon demand by the Bank, the Corporation shall pay, or cause
to be paid, to the Bank, from time to time as specified by the Bank, additional amounts
which shall be sufficient to compensate the Bank for such increased cost, in a manner
consistent with that in which such increased costs are passed along to other borrowers of
the Bank in general. A certificate setting forth such increased cost incurred by the Bank
as a result of any event mentioned in subsection (i), (ii) (iii) or (iv) above, and giving a
reasonable explanation of the basis and computation thereof shall constitute such demand
and shall, in the absence of manifest error, be conclusive and binding for purposes of
payment of such amount. Payment shall be made by the Corporation within 30 days of
the Corporation’s receipt of the above-mentioned certificate, and, to the extent that
continuing payments are required under this Section, payments shall be made quarterly
on the dates that the Annual Letter of Credit Fee is due. In determining the amount or
amounts payable under this Section, the Bank may use any reasonable averaging and
attribution methods. The initial payment will include payment for the period from the
date the Bank was first affected to the date of such payment.
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(b) Capital Charges. If after the date hereof, the Bank shall have determined
that the adoption or implementation of any change in any law, rule, treaty or regulation or
any policy, guideline, or directive of, or any change in the enforcement, interpretation,
implementation, or administration thereof by, any court, central bank, or other
administrative authority or Governmental Authority or compliance by the Bank or any
Participant with any request or directive of any such court, central bank, or other
administrative authority or Governmental Authority (in each case, whether or not having
the force of law) shall impose, modify or deem applicable any capital adequacy or similar
requirement (including, without limitation, a request or requirement that affects the
manner in which the Bank allocates capital resources to its commitments (including its
obligations under letters of credit)) that either (i) affects or would affect the amount of
capital to be maintained by the Bank or (ii) reduces or would reduce the rate of return on
the Bank’s capital to a level below that which the Bank could have achieved but for such
circumstances (taking into consideration the policies of the Bank with respect to capital
adequacy) then, upon demand by the Bank as may be applicable, the Corporation shall
pay to the Bank such additional amounts as will compensate the Bank for such event such
that the Bank shall enjoy the same economic benefit that the Bank would have enjoyed if
such event had not occurred. A certificate setting forth in reasonable detail such
reduction in the rate of return on capital, or such capital increase, of the Bank as a result
of any event mentioned in this paragraph shall be submitted to the Corporation and such
certificate shall, in the absence of manifest error, be conclusive as to the amount thereof.
Payment shall be made by the Corporation within 30 days of the Corporation’s receipt of
the above mentioned certificate together with interest on such amount for each day from
the 30th day after such demand is received by the Corporation until payment in full at the
Default Rate.
(c) Dodd-Frank Act. Notwithstanding anything contained in this Agreement
to the contrary, for purposes of this Agreement (i) all regulations, requests, rules,
guidelines or directives enacted, adopted, issued or promulgated following the date
hereof in connection with the Dodd Frank Act shall be deemed to be a change of law, and
(ii) all laws, requests, rules, guidelines or directives enacted, adopted, issued or
promulgated by the Bank for International Settlements, the Basel Committee on Banking
Regulations and Supervisory Practices (or any successor or similar authority) or any
Governmental Authority shall be deemed a change of law, regardless of the date enacted,
adopted or issued.
“Dodd Frank Act” means the Dodd Frank Wall Street Reform and Consumer
Protection Act of 2010, as enacted by the United States Congress, and signed into law on
July 21, 2010, and all statutes, rules, guidelines or directives promulgated thereunder.
(d) The protections of this Section shall be available to the Bank regardless of
any possible contention of invalidity or inapplicability of the law, regulation or condition
which has been imposed; provided, however, that if it shall be later determined that any
amount so paid by the Corporation pursuant to this Section is in excess of the amount
payable under the provisions hereof, the Bank shall refund such excess amount to the
Corporation. As used in this Section, the term “Bank” shall include each Bank
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Participant; provided, however, that no Bank Participant shall be entitled to recover
amounts under this Section greater than those that the Bank would be entitled to recover.
The obligations of the Corporation under this Section 2.06 shall survive the termination
of this Agreement.
Section 2.07 Net of Taxes, Etc.
(a) Any and all payment to the Bank by the Corporation hereunder shall be
made, free and clear of and without deduction for any and all taxes, levies, imposts,
deductions, charges, withholdings or liabilities imposed as a result of a Change of Law,
excluding, however, taxes imposed on or measured by the net income or capital of the
Bank by any jurisdiction or any political subdivision or taxing authority thereof or therein
solely as a result of a connection between the Bank and such jurisdiction or political or
political subdivision (all such non-excluded taxes, levies, imposts, deductions, charges,
withholdings and liabilities being hereinafter referred to as “Taxes”). If as a result of a
Change of Law, the Corporation shall be required by law to withhold or deduct any Taxes
imposed by the United States or any political subdivision thereof from or in respect of
any sum payable hereunder to the Bank, (i) the sum payable shall be increased as may be
necessary so that after making all required deductions (including deductions applicable to
additional sums payable under this Section 2.07), the Bank receives an amount equal to
the sum it would have received had no such deductions been made, (ii) the Corporation
shall make such deductions and (iii) the Corporation shall pay the full amount deducted
to the relevant taxation authority or other authority in accordance with applicable law. If
the Corporation shall make any payment under this Section 2.07 to or for the benefit of
the Bank with respect to Taxes and if the Bank shall claim any credit or deduction for
such Taxes against any other taxes payable by the Bank to any taxing jurisdiction in the
United States, then the Bank shall pay to the Corporation an amount equal to the amount
by which such other taxes are actually reduced; provided, that the aggregate amount
payable by the Bank pursuant to this sentence shall not exceed the aggregate amount
previously paid by the Corporation with respect to such Taxes. In addition, the
Corporation agrees to pay any present or future stamp, recording or documentary taxes
and, if as a result of a Change of Law, any other excise or property taxes, charges or
similar levies that arise under the laws of the United States of America, the State of
Arizona or the State of New York from any payment made hereunder or from the
execution or delivery or otherwise with respect to this Agreement or the Letter of Credit
(hereinafter referred to as “Other Taxes”). The Bank shall provide to the Corporation
within a reasonable time a copy of any written notification it receives with respect to
Other Taxes owing by the Corporation to the Bank hereunder provided that the Bank’s
failure to send such notice shall not relieve the Corporation of its obligation to pay such
amounts hereunder.
(b) The Corporation shall, to the extent permitted by law, compensate the
Bank for the full amount of Taxes and Other Taxes including any Taxes or Other Taxes
imposed by any jurisdiction on amounts payable under this Section 2.07 paid by the Bank
or any liability (including penalties, interest and expenses) arising therefrom or with
respect thereto, whether or not such Taxes or Other Taxes were correctly or legally
-19- PHX 332434512v3
asserted. The Bank agrees to give notice to the Corporation of the assertion of any claim
against the Bank relating to such Taxes or Other Taxes as promptly as is practicable after
being notified of such assertion; provided, that the Bank’s failure to notify the
Corporation promptly of such assertion shall not relieve the Corporation of its obligation
under this Section 2.07. Payments by the Corporation pursuant to this section shall be
made within thirty (30) days from the date the Bank makes written demand therefor,
which demand shall be accompanied by a certificate describing in reasonable detail the
basis thereof. The Bank agrees to repay to the Corporation any refund (including that
portion of any interest that was included as part of such refund) with respect to Taxes or
Other Taxes paid by the Corporation pursuant to this Section 2.07 and to contest, with the
cooperation and at the expense of the Corporation, any such Taxes or Other Taxes which
the Bank or the Corporation reasonably believes not to have been properly assessed. The
Corporation shall not be liable for any Taxes or Other Taxes resulting from a Change in
Law prior to the date of such Change in Law, unless the Change in Law purports to have
retroactive provisions.
(c) Within thirty (30) days after the date of any payment of Taxes by the
Corporation, the Corporation shall furnish to the Bank the original or a certified copy of a
receipt evidencing payment thereof. The Corporation shall compensate the Bank for all
reasonable losses and expenses sustained by the Bank as a result of any failure by the
Corporation to so furnish such copy of such receipt.
(d) All payments to the Bank under this Agreement and the Bank Note shall
be made in U.S. Dollars and in immediately available and freely transferable funds at the
place of payment without counterclaim, set-off, condition or qualification, and free and
clear of and without deduction or withholding for or by reason of any present or future
taxes, levies, imposts, deductions or charges of any nature whatsoever. In the event that
the Corporation is compelled by law to make any such deduction or withholding, the
Corporation shall nevertheless pay to the Bank such amounts as will result in the receipt
by the Bank of the sum it would have received had no such deduction or withholding
been required to be made. If requested, the Bank shall from time to time provide the
Corporation, the Issuing and Paying Agent and the United States Internal Revenue
Service (to the extent such information and forms may be lawfully provided by the Bank)
with such information and forms as may be required by Treasury Regulations Section
1.411 or any other such information and forms as may be necessary to establish that the
Corporation is not subject to any withholding obligation under Section 1442 or other
comparable provisions of the Code and Treasury Regulations promulgated thereunder.
(e) As used in this Section, the term “Bank” shall include each Bank
Participant; provided, however, that no Bank Participant shall be entitled to recover
amounts under this Section greater than those that the Bank would be entitled to recover.
The obligations of the Corporation under this Section 2.07 shall survive the termination
of this Agreement.
Section 2.08 Recapture. Any interest payable pursuant to Section 2.03, 3.02 or
otherwise pursuant to this Agreement, the Fee Letter or the Bank Note shall not exceed the
Highest Lawful Rate, and for such purpose all interest and other charges, fees, goods, things in
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action or any other sums, things of value and reimbursable costs that the Corporation or the City
are or may become obligated to pay or reimburse in connection with this Agreement, the Fee
Letter or the Bank Note, and which may be deemed to constitute “interest” within the meaning of
Arizona Revised Statutes Sections 44-1201 et seq., shall be deemed to constitute items of interest
in addition to the rate(s) of interest specified herein, which the Corporation hereby contracts in
writing to pay. In the event any interest required to be paid hereunder at any time exceeds the
Highest Lawful Rate, the portion of such interest required to be paid on a current basis shall
equal such Highest Lawful Rate; provided, however, that the differential between the amount of
interest payable assuming no Highest Lawful Rate was then in effect and the amount paid on a
current basis after giving effect to the Highest Lawful Rate shall be carried forward and shall be
payable on any subsequent date of calculation so as to result in a recovery of interest previously
unrealized (because of the limitation dictated by such Highest Lawful Rate) at a rate of interest,
and as part of the interest payable, that, after giving effect to the recovery of such excess and all
other interest paid and accrued hereunder to the date of calculation, does not exceed such Highest
Lawful Rate. Until such time as the amount of interest paid to the Bank is equal to the
cumulative amount which otherwise would have been paid to the Bank but for the limitation of
the Highest Lawful Rate, no repayment may be made by the Corporation on the Obligations, the
maturity date with respect to such Obligations shall be extended (unless the Bank shall otherwise
direct by written notice to the Corporation) and this Agreement and the Bank Note shall remain
outstanding for so long as necessary until the Bank shall have recovered such cumulative amount
of interest in respect of all Obligations.
Section 2.09 Evidence of Debt. The Corporation’s Obligations to the Bank shall be
evidenced by the Bank Note substantially in the form of Exhibit B. The Bank shall maintain in
accordance with its usual practice an account or accounts (which shall include entries on the
Bank Note) evidencing all Obligations of the Corporation and the amounts paid from time to
time hereunder. In any legal action or proceeding in respect of this Agreement, the entries made
in such account or accounts shall be prima facie evidence of the existence and amounts of the
Obligations of the Corporation therein recorded.
Section 2.10 Obligations Absolute. The Obligations of the Corporation to pay money
under this Agreement, the Fee Letter and the Bank Note shall be unconditional and irrevocable,
and shall be paid strictly in accordance with the terms of this Agreement and the Bank Note
under all circumstances, including, without limitation, the following:
(a) any lack of validity or enforceability of this Agreement, the Fee Letter the
Bank Note, the Letter of Credit, the Notes or any of the Related Documents;
(b) any amendment or waiver of or any consent to departure from all or any of
the Related Documents;
(c) the existence of any claim, set-off, defense or other right which the
Corporation may have at any time against the City, the Issuing and Paying Agent or any
other beneficiary, or any transferee, of the Letter of Credit (or any Person for whom the
Issuing and Paying Agent, any such beneficiary or any such transferee may be acting),
the Bank or any Bank Participant, or any other Person, whether in connection with this
Agreement, the Fee Letter, the Bank Note, the Letter of Credit, the Series 2017ABC-___
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Notes, the Related Documents, the transactions contemplated herein or therein or any
unrelated transaction;
(d) any statement or any other document presented under the Letter of Credit
proving to be forged, fraudulent, invalid or insufficient in any respect or any statement
therein being untrue or inaccurate in any respect;
(e) payment by the Bank under the Letter of Credit against presentation of a
draft or certificate which does not comply with the terms of the Letter of Credit, unless
the Bank shall have acted with gross negligence or willful misconduct (it being
understood the Bank assumes no responsibility or liability for the genuineness,
falsification or effect of any document which appears on such examination to be regular
on its face); or
(f) any other circumstances or happening whatsoever, whether or not similar
to any of the foregoing.
Section 2.11 Security.
(a) The Corporation hereby pledges and grants to the Bank, as security for the
payment by the Corporation when due of all Obligations now or at any time hereafter
owing to the Bank under this Agreement, the Fee Letter, the Letter of Credit and the
Bank Note and the due and punctual observance and performance of the Corporation’s
Obligations to the Bank under this Agreement, the Fee Letter, the Bank Note, the Letter
of Credit and the Related Documents (collectively, the “Security”):
(i) the proceeds from (a) the sale of Series CP Revenue Obligations
issued to repay Obligations to the Bank (the proceeds of which shall only be
applied to pay the principal amount of said Obligations) and (b) the sale of
Rollover Notes and Additional Original Issue Notes issued pursuant to the Issuing
and Paying Agent Agreement;
(ii) Other Available Monies which the City determines to make
available to pay the Obligations hereunder or under the Fee Letter or the Bank
Note;
(iii) a first lien and security interest in the Junior Subordinate Lien
Revenues, subject to but on a parity with the Corporation’s obligations to the
Series 2017ABC-___ Bank under the Series 2017ABC-___ Reimbursement
Agreement and the additional Junior Subordinate Lien Revenue Obligations as
permitted under the City Purchase Agreement; and
(iv) any other amounts deposited into the Reimbursement Agreement
Account pursuant to Section 5.02 of the Issuing and Paying Agent Agreement.
(b) The Corporation and the City have determined that the Obligations are
“Junior Subordinate Lien Revenue Obligations” and, accordingly have provided,
pursuant to the City Purchase Agreement, that the lien on and pledge of Junior
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Subordinate Lien Revenues to secure payment of the Obligations under this Agreement,
the Fee Letter and the Bank Note shall be subordinate only to the lien and pledge of the
Net Airport Revenues securing the payment of Senior Lien Revenue Obligations and the
lien and pledge of the Designated Revenues securing the Junior Lien Revenue
Obligations and shall be on a parity with the lien and pledge of Junior Subordinate Lien
Revenues securing the payment of all outstanding Junior Subordinate Lien Revenue
Obligations and shall be senior to the lien that any holders of the Airport’s general
obligations or the providers of other financial commitments of the Airport regarding
expenditures, encumbrances and transfers unrelated to the Revenue Obligations and the
Notes that may have a lien with respect to the Net Airport Revenues of the Airport.
(c) The Corporation shall in good faith and with due diligence endeavor to
sell, or cause to be sold, a sufficient principal amount of Series 2017ABC-___ Notes
(including Rollover Notes) or Series CP Revenue Obligations to have funds available,
together with other moneys available therefor, to pay all amounts owed to the Bank. The
proceeds of all Series CP Revenue Obligations issued to repay the Obligations shall be
deposited in the Series 2017ABC-___ Subaccount of the Reimbursement Agreement
Account and applied solely to pay the principal amount outstanding of any Obligations of
the Corporation to the Bank then due and owing, including any Unreimbursed Drawings
and Term Loans.
(d) The Corporation authorizes the Bank to file financing statements with any
appropriate filing offices naming the Corporation as debtor and the Bank as the secured
party, and describing the collateral as the Security.
ARTICLE 3
TERM LOAN
Section 3.01 Term Loan. Any Unreimbursed Drawing shall, subject to satisfaction of
the conditions set forth below, be converted on the first to occur of (a) the ___________
(______) day immediately following the date of such Unreimbursed Drawing, and (b) the Stated
Expiration Date of the Letter of Credit, into a Term Loan made by the Bank to the Corporation in
an amount equal to the principal portion of such Unreimbursed Drawing, which Term Loan shall
have a term commencing on the Conversion Date and ending on the earliest to occur of (i) the
fifth anniversary following the date of the respective Drawing, (ii) the date that an Alternate
Facility is accepted in substitution for the Letter of Credit pursuant to Section 6.10 of the Issuing
and Paying Agent Agreement, and (iii) the date of receipt by the Issuing and Paying Agent of a
Notice of Permanent Non-Issuance or the Letter of Credit is otherwise terminated prior to its
Stated Expiration Date, including upon the occurrence of an Event of Default under this
Agreement, and shall be payable as to principal in quarterly principal installments, as nearly
equal as possible, beginning on the date which is three months from the Conversion Date of such
Term Loan, in an amount due on each such date derived by dividing the aggregate original
principal amount of such Term Loan by the total number of such payment dates, and with
interest payable as set forth below; provided, however, that such conversion to a Term Loan shall
take place only if, as of the Conversion Date: (1) no Conditional Default or Event of Default has
occurred and is continuing, (2) the representations and warranties contained in this Agreement
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are true and correct as of such date, or to the extent that they relate to a specified earlier date, as
of such specified date, and (3) the aggregate principal amount of all outstanding Unreimbursed
Drawings, plus the aggregate principal amount of all Term Loans outstanding, is not greater than
the principal amount of all Series 2017ABC-___ Notes.
Unless the Corporation shall have previously advised the Bank in writing that the above
statements are no longer true, the Corporation shall be deemed to have represented and
warranted, on each Conversion Date, that the above conditions are met.
Each such Term Loan and each Conversion Date shall be noted on the Bank Note.
Section 3.02 Interest. The Corporation shall pay to the Bank interest on Term Loans
outstanding from time to time at a rate equal to the Term Loan Rate calculated on the basis of a
year comprised of 365/366 days over the actual number of days elapsed; provided, however, that
upon the occurrence and continuation of an Event of Default, interest shall accrue on each Term
Loan at the Default Rate. Interest on Term Loans shall be payable in arrears on the first (1st) day
of each calendar month in which any Term Loan is outstanding and on each date on which all or
part of the principal amount of such Term Loan is paid or payable hereunder. Interest on Term
Loans with respect to which any required payment is overdue shall accrue at the Default Rate
and be payable at any time upon demand by the Bank.
Section 3.03 Prepayment. Any portion of a Term Loan may be prepaid by the
Corporation, without premium or penalty, upon one (1) Business Day’s prior written, electronic
or telephonic notice to the Bank (which notice if electronic or telephonic shall be promptly
confirmed in writing), in whole or in part but, if in part, in a minimum aggregate principal
amount of $500,000 and integral multiples of $100,000 in excess thereof. The Bank shall have
no obligation to purchase, sell and/or match funds in connection with the funding or maintaining
of the Term Loan. The obligations of the Corporation under this Section shall survive any
termination of this Agreement, the Fee Letter or the Bank Note and payment of any respective
Term Loan and shall not be waived by any delay by Bank in seeking such compensation. In
addition, Term Loans are required to be prepaid on the date of authentication of any Rollover
Notes or Series CP Revenue Obligations in the amount of the proceeds of such Rollover Notes or
Series CP Revenue Obligations.
Section 3.04 Repayment. The full principal amount of the Term Loans shall be repaid
by the Corporation on the earliest of (i) the date on which the Bank shall declare the Term Loans
to be due and payable after an Event of Default pursuant to Section 7.01 hereof, (ii) the date on
which the Letter of Credit is terminated in accordance with Section 2.01(d) or an Alternate
Facility is delivered in accordance with Section 2.01(e), and (iii) the Maturity Date of such Term
Loan.
Section 3.05 Payments by the Corporation. The Corporation shall direct the Issuing
and Paying Agent to wire transfer to the Bank amounts in the Note Repayment Fund which
(i) represent proceeds of Rollover Notes and (ii) amounts deposited therein by the Corporation
for the purpose of paying the Bank for Term Loans and interest thereon. To the extent the
amount on deposit in the Note Repayment Fund is insufficient to pay the Bank for any payment
due with respect to Term Loans, the Corporation shall promptly deposit in the Series 2017ABC-
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___ Account of the Note Repayment Fund or directly wire transfer to the Bank the amount of
such insufficiency from Available Funds, Junior Subordinate Lien Revenues or any combination
of the foregoing.
ARTICLE 4
CONDITIONS PRECEDENT TO ISSUANCE OF THE AMENDED LETTER OF
CREDIT
Section 4.01 Documentary Requirements. The obligation of the Bank to issue the
Letter of Credit is subject to the condition precedent that the Bank shall have received on or
before the Issuance Date the following, each dated such date, in form and substance satisfactory
to the Bank:
(a) Resolution; Ordinance. A copy of the Resolution, certified by the
Secretary-Treasurer of the Corporation as being true and complete, and a copy of the
Ordinance, certified by the City Clerk of the City as being true and complete.
(b) Other Related Documents.
(i) An executed original counterpart of:
(1) this Agreement and the Fee Letter;
(2) the Issuing and Paying Agent Agreement;
(3) the City Purchase Agreement;
(4) the Offering Circular; and
(5) the Dealer Agreement.
(ii) The original executed Bank Note.
(iii) A specimen of the Notes.
(c) Closing Documents.
(i) The opinions of counsel to the Corporation and the City, each
dated the Issuance Date, and each addressed to the Bank.
(ii) The approving and supplemental opinions of bond counsel, each
dated the Issuance Date, and each addressed to the Bank.
(iii) A certificate signed by an Authorized Corporation Representative
of the Corporation, dated the Issuance Date and stating that:
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(1) the representations and warranties contained in Article 5 of
this Agreement are true and correct on and as of the Issuance Date as
though made on such date;
(2) no petition by or against the Corporation has at any time
been filed under the United States Bankruptcy Code or under any similar
act;
(3) all conditions precedent to the execution and delivery of
this Agreement and the Related Documents have been satisfied and the
Corporation has duly executed and delivered this Agreement and the
Related Documents to which it is a party;
(4) no event that could reasonably be expected to have a
Material Adverse Effect with respect to the City’s, the Corporation’s or
the Airport’s business, assets, liabilities, financial condition, results of
operation or business prospects shall have occurred subsequent to the date
of the most recent CAFR (except as may otherwise have been disclosed in
writing to the Bank prior to the Issuance Date); and
(5) no Event of Default or Conditional Default has occurred
and is continuing, or would result from, the execution and delivery of this
Agreement, the Fee Letter, the Bank Note or any Related Document.
(iv) Evidence of the due authorization, execution and delivery by the
parties thereto of this Agreement, the Fee Letter, the Bank Note, the Resolution,
the Ordinance and the other Related Documents.
(v) True and correct copies of all governmental approvals, if any,
necessary for the Corporation and the City to execute, deliver and perform this
Agreement, the Fee Letter, the Bank Note, the Resolution, the Ordinance and the
Related Documents to which each is a party.
(vi) Certificates of duly authorized officers of the Corporation, the City
and the Issuing and Paying Agent certifying the names and true signatures of the
officers of the Corporation, the City and the Issuing and Paying Agent,
respectively, authorized to sign this Agreement, the Fee Letter, the Bank Note, the
Resolution, the Ordinance and the other Related Documents to which each is a
party.
(vii) A certificate of an authorized officer of the City, dated the Issuance
Date, providing the representations and warranties required by Section 8.10(c) of
the City Purchase Agreement.
(viii) Evidence that the Series 2017ABC-___ Notes are rated at least “P-
1” by Moody’s and “A-1” by S&P.
(ix) Copies of the organizational documents related to the Corporation.
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(x) The opinion(s) of _______________, [each] dated the Issuance
Date, and addressed to the Corporation, the City, the Dealer and the Issuing and
Paying Agent.
(xi) Arrangements satisfactory to the Bank have been made for the
payment of the fees and expenses and all other amounts (including the fees and
expenses of Bank’s counsel) payable pursuant to this Agreement and the Fee
Letter.
(xii) Evidence that all filings, recordings, re-filings and re-recordings
shall have been made, notices given, all filing fees, taxes and expenses in
connection therewith shall have been paid and all such action shall have been
taken, which are necessary or advisable on the Issuance Date to create a duly
perfected security interest in the Security in favor of, and other property pledged
as security to and for the benefit of, the holders of the Series 2017ABC-___ Notes
and the Bank.
(xiii) Such other documents, certificates and opinions as the Bank or
Bank’s counsel may reasonably request.
(d) Since the date of the CAFR for the period ending June 30, 2013, no
material adverse change shall have occurred in the status of the business, operations or
conditions (financial or otherwise) of the City, the Airport or the Corporation or the
ability of the City or the Corporation to perform their respective obligations under the
documents to which each is a party.
(e) No law, regulation, ruling or other action of the United States, the State of
New York or the State of Arizona or any political subdivision or authority therein or
thereof shall be in effect or shall have occurred, the effect of which would be to prevent
the Bank from fulfilling its obligations under the Letter of Credit.
(f) Delivery to the Bank of a full and complete copy of the CAFR for the
period ended June 30, 2016.
(g) All legal requirements provided herein incident to the execution, delivery
and performance of this Agreement, the Fee Letter, the Bank Note, the Resolution, the
Ordinance and the Related Documents, and the transactions contemplated hereby and
thereby, shall have been complied with to the reasonable satisfaction of the Bank and
Bank’s counsel.
Section 4.02 Conditions Precedent to Delivery of Additional Original Issue Notes.
Additional Original Issue Notes may be issued by the Corporation and secured by the Letter of
Credit at any time that the Available Amount is less than the Available Stated Amount and shall
be conditioned upon the Bank’s delivery of Annex L thereto. The conditions precedent to the
Bank’s delivery of Annex L to the Letter of Credit are as follows:
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(a) Receipt by the Bank, not less than five (5) Business Days prior to the
requested issuance of Additional Original Issue Notes, of a written request from the
Corporation in the form of Exhibit C;
(b) A determination by the Bank that (i) there are no Outstanding Notes of the
Series previously secured thereby, nor any Unreimbursed Drawings, Term Loans or other
Obligations that remain due and payable in connection therewith, and (ii) the Maturity
Value of the Additional Original Issue Notes shall not exceed the amount equal to the
Available Stated Amount minus the Available Amount;
(c) Receipt by the Bank of those items set forth in Sections 2.09(c), (d), (e)
and (f) of the Issuing and Paying Agent Agreement; and
(d) Receipt by the Bank of certification by the Corporation to the effect that
(i) the representations and warranties set forth in Sections 2.09(b) and 3.01 of the Issuing
and Paying Agent Agreement and Article 5 of this Agreement are true and correct as of
the date of issuance of the Additional Original Issue Notes, (ii) no Conditional Default or
Event of Default has occurred and is continuing as of the date of issuance of the
Additional Original Issue Notes, and (iii) no Notice of Permanent Non-Issuance or Notice
of Temporary Non-Issuance is in effect. Such certificate shall be in the form of Exhibit
D.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF THE CORPORATION
Section 5.01 Organization and Powers. The Corporation (a) is duly established and
validly existing as a non-profit corporation under the laws of the State; (b) has all corporate
powers and all material governmental licenses, authorizations, consents, and approvals required
to carry on its business as now conducted; (c) has full power and authority to assist the City in
the acquisition and financing of the Project; and (d) has full power and authority to adopt,
execute, deliver and perform its obligations under this Agreement, the Bank Note and the
Related Documents and to borrow hereunder.
Section 5.02 Authorization; Contravention. The execution, delivery and performance
by the Corporation of the City Purchase Agreement, this Agreement, the Bank Note and the
other Related Documents to which it is a party, and the making of the payments required hereby
or thereunder, have been duly authorized by all necessary action by the Corporation and do not
contravene, or result in the violation of, or constitute a default under, any provision of Applicable
Law or regulation, or any order, rule, or regulation of any Governmental Authority located in the
United States or any agreement, resolution or instrument to which the Corporation is a party or
by which it or any of its property is bound.
Section 5.03 Governmental Consent or Approval. No authorization, consent, approval,
permit, license, or exemption of, or filing or registration with, any court or Governmental
Authority that has not been obtained or issued is or will be necessary for the valid adoption,
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execution, delivery or performance by the Corporation of the Related Documents to which it is a
party and, in particular, this Agreement and the Bank Note.
Section 5.04 Valid and Binding Obligations. This Agreement, the Bank Note and the
other Related Documents are, and the Series 2017ABC-___ Notes when issued will be, valid and
binding obligations of the Corporation, enforceable against the Corporation in accordance with
their respective terms, except as such enforceability may be limited by the Corporation’s
bankruptcy, insolvency, reorganization, moratorium or other laws or equitable principles relating
to or limiting creditors’ rights generally.
Section 5.05 Offering Circular. The information contained in the Offering Circular
(except for the information therein provided by and relating to the Bank, as to which no
representation is made) is, as of its date, correct in all material respects and does not contain an
untrue statement of a material fact or omit to state a material fact necessary to make the
statements made therein, in light of the circumstances under which they were made, not
misleading.
Section 5.06 Pending Litigation and Other Proceedings. There is no pending action,
proceeding or investigation before any Governmental Authority, against or directly involving the
Corporation and, to the best of the Corporation’s knowledge, there is no threatened action,
proceeding or investigation affecting the Corporation before any Governmental Authority which,
in any case, may materially and adversely affect the financial condition or operations of the
Corporation, the City, or both, as the case may be, or the Airport or the validity or enforceability
of any of this Agreement, the Bank Note, the Ordinance or the other Related Documents.
Section 5.07 [Reserved].
Section 5.08 No Conflict. The execution, delivery and performance by the Corporation
of this Agreement, the Bank Note and the other Related Documents to which it is a party, the
consummation of the transactions contemplated hereby and thereby, and the fulfillment of the
terms and conditions hereof and thereof did not at any relevant time, does not now and will not
violate any law, rule, regulation, order, writ, judgment, injunction, decree or award binding on it,
its organizational documents or the provisions of any indenture, instrument or agreement to
which it is a party or is subject, or by which it or its property is bound, or conflict with or
constitute a default under or result in the creation or imposition of any lien pursuant to the terms
of any such indenture, instrument or agreement.
Section 5.09 Defaults. No Event of Default and no Conditional Default has occurred
and is continuing, or exists. No “event of default” specified in the Issuing and Paying Agent
Agreement, the City Purchase Agreement, any other Related Document or the Resolution, and no
event which, with the giving of notice or lapse of time or both would become such an event of
default, has occurred and is continuing.
Section 5.10 Sovereign Immunity. The defense of immunity on the grounds of
sovereignty or otherwise is not available to the Corporation in any proceeding by the Bank to
enforce the Obligations or the performance of any obligations of the Corporation under this
Agreement, the Bank Note or the other Related Documents.
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Section 5.11 Resolution. The Resolution is in full force and effect, duly authorizes the
issuance of the Series CP Revenue Obligations in an amount sufficient to repay up to
$200,000,000 with respect to the principal component of Unreimbursed Drawings and Term
Loans made hereunder and under the Series 2017ABC-___ Reimbursement Agreement, and
constitutes a valid, binding and enforceable obligation of the Corporation.
Section 5.12 Incorporation by Reference. The Corporation hereby makes to the Bank
the same representations and warranties as are set forth by it in each other Related Document to
which it is a party, which representations and warranties, as well as the related defined terms
contained therein, are hereby incorporated herein by reference for the benefit of the Bank with
the same effect as if each and every such representation and warranty and defined term were set
forth herein in its entirety and were made as of the date hereof. No amendment to such
representations and warranties or defined terms made pursuant to any such Related Document
shall be effective to amend such representations and warranties and defined terms as
incorporated by reference herein without the prior written consent of the Bank.
Section 5.13 Accuracy of Information. All information, reports and other documents
and data with respect to the Corporation, the Airport, the City and the Project furnished to the
Bank are complete and correct in all material respects, to the extent necessary to give the Bank
true and accurate knowledge of the subject matter. No fact is known to the Corporation which
may have a Material Adverse Effect which has not been set forth in the financial statements of
the City and the Airport or in such information, reports, papers and data or otherwise disclosed in
writing to the Bank prior to the Issuance Date. No document furnished or statement made by the
Corporation in connection with the negotiation, preparation or execution of this Agreement
contains any untrue statement of a fact material to its creditworthiness or omits to state a material
fact necessary in order to make the statements contained therein not misleading in any adverse
respect.
Section 5.14 Reliance by the Bank and the Bank Participants. All representations and
warranties made herein to the Bank are made with the understanding that the Bank and the Bank
Participants are relying upon the accuracy of such representations and warranties.
Notwithstanding that the Bank and the Bank Participants may conduct their own investigation as
to some or all of the matters covered by the representations and warranties in the Related
Documents, and any certificates, information, opinions or documents delivered in connection
therewith, the Bank and the Bank Participants are entitled to rely on all representations and
warranties as a material inducement to the Bank’s extension of the credit evidenced hereby and
by the Letter of Credit.
Section 5.15 No Proposed Legal Changes. There is no amendment or, to the
knowledge of the Corporation, proposed amendment certified for placement on a statewide ballot
to the Constitution of the State or any published administrative interpretation of the Constitution
of the State or any law of the State, or any legislation that has passed either house of the
legislature of the State or the United States Congress, or any published judicial decision
interpreting any of the foregoing, the effect of which could reasonably be expected to have a
Material Adverse Effect with respect to its ability to repay when due its obligations under this
Agreement, the Bank Note, any of the Series 2017ABC-___ Notes, the Series CP Revenue
Obligations and the other Related Documents.
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Section 5.16 Tax Exempt Status. The Corporation has not taken any action or omitted
to take any action, and knows of no action taken or omitted to be taken by any other person or
entity, which action, if taken or omitted, would cause interest on the Series 2017ABC-___ Notes
designated as Tax-Exempt Notes, as defined in the Issuing and Paying Agent Agreement or the
Series CP Revenue Obligations to be subject to Federal income taxes or to personal income taxes
levied by the State or such bond or note to be subject to local personal property taxes levied by
any political subdivision thereof.
Section 5.17 Permitted Investments. The Corporation has neither made any investment
nor entered into any agreements for the purpose of effecting any investment which are not
permitted to be made by it pursuant to the Resolution, any Bond Order or any other Related
Document.
Section 5.18 Federal Reserve Board Regulations. The Corporation will not use any part
of the proceeds of the Series 2017ABC-___ Notes or the funds advanced hereunder and has not
incurred any indebtedness to be reduced, retired or purchased by the Corporation out of such
proceeds, for the purpose of purchasing or carrying any margin stock, and the Corporation does
not own and will not acquire any such margin stock.
Section 5.19 Investment Company Act. The Corporation is not an “investment
company” or a company “controlled” by an “investment company,” as such terms are defined in
the Investment Company Act of 1940, as amended.
Section 5.20 Patriot Act Representation.
(a) Neither the Corporation nor any of its affiliates is in violation of any laws
relating to terrorism or money laundering (“Anti Terrorism Laws”), including Executive
Order No. 13224 on Terrorist Financing, effective September 24, 2001 (the “Executive
Order”), and the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October
26, 2001)) (the “Patriot Act”).
(b) Neither the Corporation nor any of its affiliates is any of the following:
(i) a Person that is listed in the annex to, or is otherwise subject to the
provisions of, the Executive Order;
(ii) a Person owned or controlled by, or acting for or on behalf of, any
Person that is listed in the annex to, or is otherwise subject to the provisions of,
the Executive Order;
(iii) a Person with which the Bank is prohibited from dealing or
otherwise engaging in any transaction by any Anti Terrorism Law;
(iv) a Person that commits, threatens or conspires to commit or
supports “terrorism” as defined in the Executive Order; or
(v) a Person that is named as a “specially designated national and
blocked person” on the most current list published by the Office of Foreign Asset
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Control (“OFAC”) or any list of Persons issued by OFAC pursuant to the
Executive Order at its official website or any replacement website or other
replacement official publication of such list.
(c) Neither the Corporation nor any of its affiliates (i) conducts any business
or engages in making or receiving any contribution of funds, goods or services to or for
the benefit of any Person described in subsection (b)(ii) above, (ii) deals in, or otherwise
engages in any transaction relating to, any property or interests in property blocked
pursuant to the Executive Order or (iii) engages in or conspires to engage in any
transaction that evades or avoids, or has the purpose of evading or avoiding, or attempts
to violate, any of the prohibitions set forth in any Anti Terrorism Law.
ARTICLE 6
COVENANTS OF THE CORPORATION
So long as this Agreement has not been terminated or any Obligations are due and owing
to the Bank, the Corporation covenants to the Bank to comply with the provisions contained in
this Article 6 unless the Bank shall otherwise consent in writing:
Section 6.01 Reporting Requirements. The Corporation shall keep, or use its best
efforts to cause the City to keep, proper books of record and account in which full, true and
correct entries will be made of all dealings or transactions of or in relation to the business and
affairs of the Corporation and the Airport in accordance with Generally Accepted Accounting
Principles consistently applied, and will furnish, or cause the City to furnish, to the Bank each of
the following:
(a) Annual Financial Statements. As soon as available, and in any event
within two hundred seventy (270) days after the close of each Fiscal Year of the City, the
CAFR, which includes the complete audited financial statements of the Airport, including
the balance sheet as of the end of such Fiscal Year and the related statements of revenues,
expenses and changes in retained earnings and cash flows for such Fiscal Year, setting
forth in each case in comparative form the corresponding figures for the preceding Fiscal
Year, all in reasonable detail, certified by an independent certified public accountant in
accordance with Generally Accepted Accounting Principles, consistently applied and
fairly presenting the financial condition of the Airport as of the end of such Fiscal Year.
(b) Certificate of Compliance. Simultaneously with the delivery of each set of
financial statements referred to in Section 6.01(a), (i) a certificate signed by the chief
executive officer or by the Chief Financial Officer of the City stating that, to the best of
his or her knowledge, the City has kept, observed, performed and fulfilled each and every
covenant, provision and condition of the City Purchase Agreement (including, without
limitation, those contained in Sections 4.2 and 4.3 thereof), the Ordinance and the Bond
Orders on the City’s part to be performed and is not in default in the performance or
observance of any of the terms, covenants, provisions or conditions thereof, or if the City
shall be in default, such certificate shall specify all such defaults, the nature and status
thereof and any remedial steps taken or proposed to correct such default, and (ii) a
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certificate signed by an Authorized Corporation Representative stating that, to the best of
his or her knowledge, the Corporation has kept, observed, performed and fulfilled each
and every covenant, provision and condition of the City Purchase Agreement, the Issuing
and Paying Agent Agreement, the Resolution and the other Related Documents on the
Corporation’s part to be performed and is not in default in the performance or observance
of any of the terms, covenants, provisions or conditions thereof, or if the Corporation
shall be in default, such certificate shall specify all such defaults, the nature and status
thereof and any remedial steps taken or proposed to correct such default.
(c) Offering Circulars. As soon as practicable but in any event within thirty
(30) days after the issuance or incurrence thereof, (i) copies of any prospectus, official
statement, offering circular, placement memorandum, or similar or corresponding
document, and any supplements thereto and updates and amendments thereof, that the
Corporation makes available in connection with the offering for sale of any securities
secured by a pledge of Airport Revenues of the Airport, or, in the case of any ordinance,
indenture, contract or agreement by the Corporation involving the creation of any Debt
on a parity with or senior to the Obligations hereunder, but not involving the offering for
sale of any securities related thereto, a copy of such ordinance, indenture, contract or
agreement creating the related Debt, together with, in either case, (ii) a certificate of an
Authorized City Representative (as defined in the City Purchase Agreement) stating that
to the best of his or her knowledge the covenants set forth in Sections 4.2 and 4.3 of the
City Purchase Agreement were complied with at the time such securities were issued or
such Debt was incurred and otherwise providing the Bank with such additional assurance
of compliance with the covenants, terms and other provisions of this Agreement and the
Related Documents at the time such securities were issued or such Debt was incurred.
(d) Budget. As soon as available after adoption, a copy of the City’s budget
for each Fiscal Year, which will include the budget for the Airport for such Fiscal Year or
notice that such document is available on the City’s website and providing the address.
(e) Continuing Disclosure Documents. Simultaneously with the filing
thereof, all continuing disclosure documents filed by the City with respect to the Revenue
Obligations in compliance with Securities and Exchange Commission rules codified at 17
C.F.R. Section 240.15c2 12 or notice that such filing is available through the Municipal
Securities Rulemaking Board through its Electronic Municipal Market Access system.
(f) Other Information. Such other information respecting the business,
properties or the condition or operations, financial or otherwise, of the Corporation, the
City, the Airport or the Project as the Bank may from time to time reasonably request.
Section 6.02 Notices. The Corporation shall provide to the Bank:
(a) Notice of Default. Immediate notice by telephone, promptly confirmed in
writing, of any event, action or failure to take any action which constitutes an (i) Event of
Default or Conditional Default or (ii) an “event of default” under the Ordinance, the City
Purchase Agreement or any Related Document to which the City is a party.
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(b) Other Events. Prompt written notice of any event which is likely to have a
Material Adverse Effect with respect to its ability to repay when due its obligations under
this Agreement, the Bank Note, any of the 2017ABC-___ Notes, the Series CP Revenue
Obligations and the other Related Documents.
Section 6.03 Sale or Encumbrance of Airport. The Corporation has obtained a
covenant from the City in the City Purchase Agreement that the City will not sell or dispose of
the Airport, except as permitted under the Airport Ordinance or as required by law.
Section 6.04 Access to Records. The Corporation will permit or use its best efforts to
cause the City to permit any officers, employees, or agents of the Bank to visit and inspect any of
the properties of the Corporation and the Airport and to discuss matters reasonably pertinent to
an evaluation of the credit of the Airport, all at such reasonable times as the Bank may
reasonably request. All information received by or provided to the Bank pursuant to this
Agreement, unless otherwise made public by the Corporation, will be held as confidential
information by the Bank.
Section 6.05 Limitation on Additional Debt. The Corporation covenants and agrees
that it will not issue additional Senior Lien Revenue Obligations, Junior Lien Revenue
Obligations or Junior Subordinate Lien Revenue Obligations or otherwise incur any Debt
secured by Airport Revenues on a parity with or senior to the Obligations unless the provisions
of Section 4.2 of the City Purchase Agreement have been satisfied in full.
Section 6.06 Proceeds of Notes, Additional Original Issue Notes and Series CP
Revenue Obligations. The proceeds of the Notes (including the Rollover Notes) and the Series
CP Revenue Obligations will be used by the Corporation solely for the purposes described
herein, in the Related Documents and in the Ordinance.
Section 6.07 Amendment of Certain Contracts or Ordinances. The Corporation will not
effect any amendment to or modification of the Related Documents which adversely affects the
Bank’s rights or adversely affects the ability of the Corporation to perform its obligations under
this Agreement without the prior written consent of the Bank. The Corporation will give the
Bank notice as promptly as practicable (but in no event less than ten (10) Business Days) of any
proposed amendments to or modifications of the Related Documents or the City Purchase
Agreement and of any meeting of the Corporation with the City at which any of the foregoing
will be discussed or considered.
Section 6.08 Rates. The Corporation shall use its best efforts to require compliance by
the City with covenants contained in Section 4.3 of the City Purchase Agreement.
Section 6.09 Performance and Compliance with Other Covenants. The Corporation
shall fully and faithfully perform each of the covenants required of it, and use its best efforts to
cause the Issuing and Paying Agent and the City to fully and faithfully perform each of the
covenants required of each such party, pursuant to the provisions of the Related Documents to
which each is a party, the Ordinance, in the case of the City, and this Agreement, in the case of
the Corporation.
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Section 6.10 Taxes and Liabilities. The Corporation will pay, or cause the City to pay,
all Debt of the Corporation and the Airport promptly and in accordance with the terms thereof
and to pay and discharge, or cause to be paid and discharged, promptly all taxes, assessments,
and governmental charges or levies imposed upon it or the Airport or upon the Corporation’s
income and profits, or upon any of their respective property, real, personal, or mixed, or upon
any part thereof, before the same shall become in default, except for those matters which are
reasonably being contested in good faith by appropriate action or proceedings or for which the
Corporation has established adequate reserves in accordance with Generally Accepted
Accounting Principles.
Section 6.11 Further Assurances. The Corporation agrees that it will from time to time,
at its expense, promptly execute and deliver all further instruments and documents, and take all
further action, that may be necessary or desirable, or that the Bank may reasonably request, in
order to (a) perfect and protect any lien, pledge, or security interest or other right or interest
given, or purported to be given, to the Bank under or in connection with this Agreement, the
Resolution or any Related Document or (b) enable the Bank to exercise or enforce its rights or
remedies under or in connection with this Agreement and the Bank Note.
Section 6.12 Efforts to Pay. In the event that the Bank Note, any Term Loan or any
other Obligations are not paid at maturity, the Corporation shall as promptly as possible take all
action reasonably necessary to cause payment to be made from the sources described in Section
2.11 hereof.
Section 6.13 Restrictions on Use of Proceeds. The proceeds of Principal Drawings and
Interest Drawings will be applied by the Corporation only to pay the principal of and interest on
maturing Series 2017ABC-1 Notes, which Series 2017ABC-2 Notes (a) were issued during a
period which is not a Non Issuance Period and (b) mature on or prior to the Stated Expiration
Date.
Section 6.14 Maintenance of Franchises. The Corporation will use its best efforts to
require the City to maintain, or cause to be maintained, all licenses and franchises, required by
the State or any other Governmental Authority for operation of the Airport, the loss of which
would have a Material Adverse Effect.
Section 6.15 Compliance with Rules and Regulations. The Corporation shall use its
best efforts to require the City to comply, and cause the Airport to comply, with all Applicable
Laws which, if not complied with, could reasonably be expected to result in a Material Adverse
Effect.
Section 6.16 Maintenance and Operation of the Airport. The Corporation covenants
that it will use its best efforts to require the City to at all times maintain the Airport, or within the
limits of its authority cause the same to be maintained, in good condition and working order and
to operate the same, or cause the same to be operated, in an efficient and economical manner at a
reasonable cost and in accordance with sound business principles. In operating and maintaining
the Airport, the Corporation will use its best efforts to require the City to comply with all
contractual provisions and agreements entered into by it and with all rules, regulations, directions
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or orders of any governmental, administrative or judicial body promulgating same,
noncompliance with which could reasonably be expected to result in a Material Adverse Affect.
Section 6.17 Insurance. The Corporation will use its best efforts to require the City to
keep, or cause to be kept, the Airport insured either through self-insurance or with insurers of
good standing against risks, accidents or casualties against which and to the extent customarily
insured against by entities operating similar properties, to the extent that such insurance is
available. All net proceeds of such insurance shall be applied in accordance with the Bond
Orders and the Related Documents.
Section 6.18 Incorporation of Covenants by Reference. The Corporation agrees that it
will perform and comply with each and every covenant and agreement required to be performed
or observed by it in the Related Documents, which provisions, as well as related defined terms
contained therein, are hereby incorporated by reference herein with the same effect as if each and
every such provision were set forth herein in its entirety all of which shall be deemed to be made
for the benefit of the Bank and shall be enforceable by the Bank against the Corporation, which
covenants, agreements, definitions and provisions shall continue in effect with regard to the
Bank without regard or giving effect to any amendment or modification of such provisions or
any waiver of compliance therewith unless consented to in writing by the Bank.
Section 6.19 Alternate Facility. The Corporation will not provide an Alternate Facility
for the Letter of Credit unless (a) the Corporation shall have given the Bank at least 30 calendar
days’ prior written notice thereof, and (b) contemporaneously with the effectiveness of an
Alternate Facility or Facilities, all Obligations of the Corporation hereunder and under the Bank
Note are paid in full.
Section 6.20 Accounting Methods and Fiscal Year. The Corporation will cause the
Bank to be notified of any change in the City’s Fiscal Year.
Section 6.21 Issuing and Paying Agent; Dealer. U.S. Bank National Association is the
duly appointed and acting Issuing and Paying Agent. The Corporation shall not replace the
Issuing and Paying Agent without the prior written consent of the Bank and the appointment of
any successor Issuing and Paying Agent shall be subject to the written consent of the Bank
(which consent will not be unreasonably withheld). Any successor Issuing and Paying Agent
shall have officially reported combined capital, surplus, undivided profits and reserves
aggregating at least $500,000,000 and be assigned long-term ratings of at least “A” by S&P and
“A2” by Moody’s. _____________ is the duly appointed and acting Dealer for the Series
2017ABC-___ Notes. The Corporation shall not replace the Dealer for the Series 2017ABC-___
Notes without the prior written consent of the Bank and the appointment of any successor Dealer
for the Series 2017ABC-___ Notes shall be subject to the written consent of the Bank (which
consent shall not be unreasonably withheld). Any successor Dealer for the Series 2017ABC-___
Notes shall have officially reported combined capital, surplus, undivided profits and reserves
aggregating at least $500,000,000 and be assigned long-term ratings of at least “A” by S&P and
“A2” by Moody’s.
Section 6.22 Offering Circular. Except with respect to (i) the information provided by
the Bank in writing to the Corporation for inclusion in the Offering Circular and (ii) references to
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the Bank or the Letter of Credit in sections of offering documents discussing the City’s financial
data, the Corporation will not refer to the Bank in any offering document or make changes in
reference to the Bank in the Offering Circular without the Bank’s prior written consent thereto.
Section 6.23 Non-Extension of Letter of Credit. If the Stated Expiration Date of the
Letter of Credit is not extended in accordance with Section 2.01(c), the Corporation covenants
and agrees to use its best efforts, on or prior to the then existing Stated Expiration Date, to either
(a) deliver an Alternate Facility with respect to such Letter of Credit or (b) cause the delivery of
the Series CP Revenue Obligations with the result, in either case, of providing for the
termination of the Letter of Credit and repayment of the Obligations outstanding hereunder and
under the Bank Note on the date such Alternate Facility or the Series CP Revenue Obligations
are delivered.
Section 6.24 Sovereign Immunity. To the extent that the Corporation has or hereafter
may acquire under any applicable law any right to immunity from set-off or legal proceedings on
the grounds of sovereignty or otherwise, the Corporation hereby irrevocably waives, to the extent
permitted by law, such rights to immunity for itself in respect of its obligations arising under or
related to this Agreement, the Bank Note or the other Related Documents to which it is a party.
Section 6.25 No Additional Original Issue Notes During Event of Default. Upon the
occurrence and during the continuation of an Event of Default, the Corporation will not direct or
request the Issuing and Paying Agent to issue any Additional Original Issue Notes, unless the
Corporation has received a written waiver of this covenant from the Bank.
ARTICLE 7
EVENTS OF DEFAULT
Section 7.01 Events of Default. The occurrence of any of the following events
(whatever the reason for such event and whether voluntary, involuntary or effected by operation
of law) shall be an “Event of Default” hereunder unless waived in writing by the Bank:
(a) (i) the Corporation shall fail to pay any amount specified in Section 2.03
or Article 3 constituting reimbursement of an Interest Drawing, or reimbursement of a
Principal Drawing from amounts representing the proceeds of Rollover Notes or interest
on an Unreimbursed Drawing or interest on a Term Loan within one (1) Business Day
following the day when due, or (ii) the Corporation shall fail to pay when due any
amount specified in Section 2.03 or Article 3 constituting reimbursement of a Principal
Drawing from amounts not representing the proceeds of Rollover Notes or principal of an
Unreimbursed Drawing or principal of a Term Loan, or (iii) the Corporation shall fail to
pay when due any other amount specified in this Agreement, the Fee Letter or the Bank
Note and any such failure shall remain unremedied for three (3) Business Days after the
day such amount was due;
(b) failure of the Corporation to observe or perform any of the covenants or
conditions contained in Sections 6.03, 6.05, 6.06, 6.07, 6.13 and 6.19;
-37- PHX 332434512v3
(c) failure of the Corporation to observe or perform any of the covenants,
conditions or provisions of this Agreement or the Bank Note (other than as specified in
subparagraphs (a) or (b)) and to remedy such default within thirty (30) calendar days;
provided, however, that any failure to comply with the reporting requirements of Section
6.01 hereof shall constitute an Event of Default hereunder only upon written notice from
the Bank thereof and a failure by the Corporation to remedy such failure within fifteen
(15) Business Days of the receipt of such notice;
(d) any representation or warranty made by the Corporation herein or in any
certificate, financial or other statement furnished by the Corporation to the Bank pursuant
to this Agreement or the Related Documents shall prove to have been untrue or
incomplete in any material adverse respect when made;
(e) the Corporation or the City shall apply for or consent to the appointment
of, or the taking of possession by, a receiver, trustee, liquidator or custodian or the like of
itself or of a substantial part of the Airport, admit in writing its inability, or be generally
unable, to pay its debts as they become due, make a general assignment for the benefit of
creditors, or commence a voluntary case as a debtor under the federal bankruptcy laws of
the United States of America or file a voluntary petition or answer seeking
reorganization, an arrangement with creditors or an order for relief as a debtor or seeking
to take advantage of any insolvency law or file an answer admitting the material
allegations of a petition filed against it in any bankruptcy, reorganization or insolvency
proceeding, or action shall be taken by it for the purpose of effecting any of the
foregoing;
(f) if a proceeding shall be instituted, without the application or consent of the
Corporation or the City, in any court of competent jurisdiction under any law relating to
bankruptcy, insolvency, reorganization, dissolution, winding up, liquidation, seeking a
composition or arrangement with creditors, a readjustment of debts, the appointment of a
trustee, receiver, liquidator or custodian or the like of the Corporation or the City or of all
or any substantial part of the Airport, or other like relief in respect thereof under any
bankruptcy or insolvency law, and the same shall result in the entry of an order for relief
or any such adjudication or appointment, or continue undismissed, or pending and
unstayed for any period of sixty (60) consecutive calendar days;
(g) any material provision of this Agreement, the Bank Note, any Related
Document or the Ordinance shall at any time for any reason cease to be the legal, valid
and binding obligation of the Corporation or the City, as the case may be, or shall cease
to be in full force and effect, or shall be declared to be not valid or binding in accordance
with the terms thereof, or the validity or enforceability thereof shall be contested by the
Corporation, the City or any Governmental Authority, as the case may be, or the
Corporation or the City, as the case may be, shall renounce the same or deny that it has
any further liability hereunder or thereunder;
(h) the Corporation shall (i) fail to make any payment or payments of any
Debt when due (whether by scheduled maturity, required prepayment, acceleration,
demand or otherwise) and such failure shall continue after the applicable grace period, if
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any, specified in the agreement or instrument relating to such Debt, or (ii) fail to perform
or observe any term, covenant or condition on its part to be performed or observed under
any such agreement or instrument (other than any failure to perform any term
contemplated by sub clause (i) hereof) if, in either case, the effect of such failure to
perform or observe is to accelerate, or to permit the acceleration of the maturity of, or
mandatory redemption of any Debt of the Corporation the stated amount of which is
equal to or greater than $5,000,000;
(i) the City shall (i) fail to make any payment or payments when due in
connection with any Senior Lien Revenue Obligations, Junior Lien Revenue Obligations
or Junior Subordinate Lien Revenue Obligations (whether by scheduled maturity,
required prepayment, acceleration, demand or otherwise), or under any bank agreements
or derivative transaction related thereto, and such failure shall continue after the
applicable grace period, if any, specified in the related Bond Order, or (ii) fail to perform
or observe any term, covenant or condition on its part to be performed or observed under
any such Bond Order (except as described in sub-clause (i) hereof), if, with respect to a
failure described in (ii), the effect of such failure to perform or observe is to accelerate, or
to permit the acceleration of the maturity of, or cause the mandatory redemption of, such
Senior Lien Revenue Obligations, Junior Lien Revenue Obligations or Junior
Subordinate Revenue Obligations;
(j) (i) any litigation or administrative proceeding ensues resulting in a
judgment, which judgment is not dismissed or appealed within sixty (60) days, involving
the Corporation, the Airport, the City or any instrument, contract or document delivered
to the Bank in compliance herewith, and the adverse result of such litigation or
proceeding could have, in the Bank’s reasonable judgment, a Material Adverse Effect or
(ii) a final, nonappealable judgment or order for the payment of money constituting Debt
in excess of $25,000,000 shall be rendered against the Corporation, the Airport or the
City (insofar as it relates to the Airport), and such judgment or order shall continue
unsatisfied and unstayed for a period of sixty (60) days;
(k) the occurrence of an “event of default” as defined in any other loan or
credit agreement under which the Corporation is now or hereafter obligated to the Bank
or an “event of default” shall have occurred under any Related Document;
(l) the powers of the Corporation or the City shall be limited in any way or a
Related Document or the Ordinance shall be modified or amended in any way without the
prior written consent of the Bank, the result of which, in either case, is to prevent the
Corporation or the City, as the case may be, from fixing, charging or collecting rates and
charges for the use and services of the Airport in an amount sufficient to pay
indebtedness payable from revenues derived from the Airport as due;
(m) any lien, pledge or security interest created to secure any amount due
under this Agreement or the Bank Note, including the Security described in Section 2.11
hereof, should fail to be fully enforceable with the same priority as and when such lien,
pledge or security interest was first created;
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(n) the unenhanced ratings assigned to the Senior Lien Revenue Obligations
by S&P or Moody’s shall be reduced below “A-” or “A3,” respectively, or if another
rating agency is then maintaining a rating by agreement with the City, said rating shall be
reduced below a level comparable to the foregoing, or either or both of said unenhanced
ratings (or a comparable rating as contemplated above) shall be withdrawn or suspended
for reasons other than debt maturity, redemption or defeasance;
(o) a court of competent jurisdiction has found any Senior Lien Revenue
Obligation, Junior Lien Revenue Obligation or Junior Subordinate Lien Revenue
Obligation to have been issued illegally or in violation of the related Bond Order;
(p) Any federal, state or local legislation is enacted or amended which action
or event has (i) a Material Adverse Effect on the ability of Corporation to pay amounts
due under this Agreement or to perform its obligations under this Agreement or the
Related Documents, or (ii) reduces the Highest Lawful Rate applicable to payment
obligations of the Corporation under this Agreement;
(q) There shall be appointed or designated with respect to the Corporation, an
entity such as an organization, board, commission, authority, agency or body to monitor
or declare a financial emergency or similar state of financial distress with respect to it or
there shall be declared by it or by any legislative or regulatory body with competent
jurisdiction over it, the existence of a state of financial emergency or similar state of
financial distress in respect of it; or
(r) A final determination by the Internal Revenue Service or by a court of
competent jurisdiction in the United States that interest payable on any Series 2017ABC-
___ Note which was issued as a Tax-Exempt Note is or will become includable in the
gross income of the owner thereof for federal income tax purposes (other than an owner
who is a “substantial user” or “related person” within the meaning of Section 147(a) of
the Code).
Section 7.02 Consequences of an Event of Default. If an Event of Default specified in
Section 7.01 hereof shall occur and be continuing, the Bank may:
(a) by written notice to the Corporation, declare the outstanding amount of the
Obligations (including any Term Loans) to be immediately due and payable without
presentment, demand, protest or further notice of any kind, all of which are hereby
expressly waived, and an action therefor shall immediately accrue; provided, that if any
Event of Default described in Section 7.01(e) or (f) shall occur, the Obligations shall be
automatically accelerated on the date of the occurrence of such Event of Default without
presentment, demand, protest, notice of intention to accelerate, notice of acceleration or
other notice of any kind to the Corporation or any other Person, all of which are hereby
expressly waived;
(b) either personally or by attorney or agent without bringing any action or
proceeding, or by a receiver to be appointed by a court in any appropriate action or
proceeding, may take whatever action at law or in equity may appear necessary or
-40- PHX 332434512v3
desirable to collect the amounts due and payable under this Agreement and the Bank
Note or to enforce performance or observance of any obligation, agreement or covenant
of the Corporation under this Agreement and the Bank Note, whether for specific
performance of any agreement or covenant of the Corporation or in aid of the execution
of any power granted to the Bank in this Agreement or the Bank Note or the Related
Documents;
(c) deliver to the Issuing and Paying Agent a Notice of Temporary Non
Issuance or a Notice of Permanent Non-Issuance as it shall, in its absolute discretion,
determine; and
(d) exercise, or cause to be exercised, any and all remedies as it may have
under this Agreement, the Bank Note and the other Related Documents.
In each case, the Obligations of the Corporation shall, from and after the occurrence of an
Event of Default, bear interest at the Default Rate until such time as the Bank shall have waived
same or said Event of Default shall have been cured.
Section 7.03 Remedies Cumulative; Solely for the Benefit of the Bank. To the extent
permitted by, and subject to the mandatory requirements of, Applicable Law, each and every
right, power and remedy herein specifically given to the Bank in this Agreement, the Bank Note
and the Related Documents shall be cumulative, concurrent and nonexclusive and shall be in
addition to every other right, power and remedy herein specifically given or now or hereafter
existing at law, in equity or by statute, and each and every right, power and remedy (whether
specifically herein given or otherwise existing) may be exercised from time to time and as often
and in such order as may be deemed expedient by the Bank, and the exercise or the beginning of
the exercise of any power or remedy shall not be construed to be a waiver of the right to exercise
at the same time or thereafter any other right, power or remedy.
The rights and remedies of the Bank specified herein are for the sole and exclusive
benefit, use and protection of the Bank, and the Bank is entitled, but shall have no duty or
obligation to the Corporation, the Issuing and Paying Agent, the City or any other Person or
otherwise, to exercise or to refrain from exercising any right or remedy reserved to the Bank or
under this Agreement, the Bank Note or the other Related Documents.
Section 7.04 Waivers of Omissions. No delay or omission by the Bank in the exercise
of any right, remedy or power or in the pursuit of any remedy shall impair any such right,
remedy or power or be construed to be a waiver of any default on the part of the Bank or to be
acquiescence therein. No express or implied waiver by the Bank of any Event of Default shall in
any way be, or be construed to be, a waiver of any future or subsequent Event of Default.
Section 7.05 Continuance of Proceedings. In case the Bank shall proceed to invoke any
right, remedy or recourse permitted under this Agreement, the Bank Note or the Related
Documents and shall thereafter elect to discontinue or abandon the same for any reason, the
Bank shall have the unqualified right so to do and, in such event, the Corporation and the Bank
shall be restored to their former positions with respect to the Obligations, this Agreement, the
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Bank Note and the other Related Documents and otherwise, and the rights, remedies, recourse
and powers of the Bank hereunder shall continue as if the same had never been invoked.
Section 7.06 Injunctive Relief. The Corporation recognizes that in the event the
Corporation fails to perform, observe or discharge any of its obligations or liabilities under this
Agreement or the Bank Note, any remedy of law may prove to be inadequate relief to the Bank;
therefore, the Corporation agrees that the Bank, if the Bank so requests, shall be entitled to
temporary and permanent injunctive relief in any such case.
ARTICLE 8
IMDEMNIFICATION AND LIABILITY
Section 8.01 Indemnification. In addition to any and all rights of reimbursement,
indemnification, subrogation or any other rights pursuant hereto or under law or equity, the
Corporation hereby agrees, to the extent permitted by law, to indemnify and hold harmless the
Bank and its officers, directors and agents and each Bank Participant (the “Indemnitees”) from
and against any and all claims, damages, losses, liabilities, costs or expenses whatsoever
(including reasonable attorneys’ fees) which the Bank and each Bank Participant may incur (or
which may be claimed against the Bank and each Bank Participant by any Person or entity
whatsoever) by reason of or in connection with the transactions contemplated by this Agreement
or the Letter of Credit, including, without limitation (a) any untrue statement or alleged untrue
statement of any material fact contained or incorporated by reference in the Offering Circular or
the omission or alleged omission to state in the Offering Circular a material fact necessary to
make such statements, in light of the circumstances under which they are or were made, not
misleading (excluding, however, the information therein provided by the Bank for such purpose);
(b) the execution and delivery or transfer of, or failure to pay under, the Letter of Credit; (c) the
issuance and sale of the Series 2017ABC-___ Notes; (d) the use of the proceeds of the Series
2017ABC-___ Notes; or (e) the use or occupancy of the Project by any Person; provided,
however, that the Corporation shall not be required to indemnify the Bank for any claims,
damages, losses, liabilities, costs or expenses to the extent, but only to the extent, that any such
claim, damage, loss, liability, cost or expense shall be caused by the Bank’s negligence or willful
misconduct in connection with the Letter of Credit. If any proceeding shall be brought or
threatened against an Indemnitee by reason of or in connection with the events described in
clause (a), (b), (c), (d) or (e) (and except as otherwise provided in clauses (i) or (ii) below), the
Bank shall promptly notify the Corporation in writing and the Corporation shall assume the
defense thereof, including the employment of counsel satisfactory to the Bank and the payment
of all costs of litigation. Notwithstanding the preceding sentence, the Bank shall have the right
to employ its own counsel and to determine its own defense of such action in any such case, but
the fees and expenses of such counsel shall be at the expense of the Bank unless (i) the
employment of such counsel shall have been authorized in writing by the Corporation or (ii) the
Corporation, after due notice of the action, shall not have employed counsel satisfactory to the
Bank to have charge of such defense, in either of which events, the reasonable fees and expenses
of counsel for the Bank shall be borne by the Corporation. The Corporation shall not be liable
for any settlement of any such action effected without its consent. Nothing under this Section
8.01 is intended to limit the Corporation’s payment of Obligations.
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Section 8.02 Liability of the Bank. As between the Corporation and the Bank, the
Corporation, to the greatest extent permitted by law, assumes all risks of the acts or omissions of
the Issuing and Paying Agent and any transferee of the Letter of Credit with respect to its use of
the Letter of Credit. Neither the Bank nor any of its officers or directors shall be liable or
responsible for: (a) the use which may be made of the Letter of Credit or for any acts or
omissions of the Issuing and Paying Agent and any transferee in connection therewith; (b) the
validity, sufficiency or genuineness of documents, or of any endorsement(s) thereon, even if such
documents should in fact prove to be in any or all respects invalid, insufficient, fraudulent or
forged; (c) payment by the Bank against presentation of documents by the Issuing and Paying
Agent which do not comply with the terms of the Letter of Credit, including failure of any
documents to bear any reference or adequate reference to the Letter of Credit; or (d) any other
circumstances whatsoever in making or failing to make payment under the Letter of Credit,
except only that the Corporation shall have a claim against the Bank, and the Bank shall be liable
to the Corporation, to the extent, but only to the extent, of any direct, as opposed to
consequential or punitive, damages suffered by the Corporation which the Corporation proves
were caused by the Bank’s negligence or willful misconduct in connection with the Letter of
Credit. In furtherance and not in limitation of the foregoing, the Bank may accept documents
that appear on their face to be in order, without responsibility for further investigation, regardless
of any notice or information to the contrary.
The Bank shall not be liable in any way for any failure on its part to honor any draft
under the Letter of Credit as a result of any cause beyond the control of the Bank.
Section 8.03 Facsimile Transmission. At the request of the Corporation, the Letter of
Credit provides that demands for payment thereunder may be presented to the Bank by, among
other methods, facsimile transmission. The Corporation acknowledges and assumes all risks
relating to the use of such demands for payment transmitted by facsimile transmission and agrees
that its Obligations under this Agreement shall remain absolute, unconditional and irrevocable as
provided in Section 2.10 if the Bank honors such demands for payment transmitted by facsimile
transmission.
Section 8.04 No Implied Covenants. The duties and obligations of the Bank with
respect to demands for payment under the Letter of Credit shall be determined solely by the
express provisions of, or those incorporated by reference into, the Letter of Credit, and no
implied covenants or obligations relating to the Letter of Credit or the making of any payment
thereunder shall be read into this Agreement or the Letter of Credit against the Bank.
Section 8.05 Survival. The obligations of the Bank and the Corporation under this
Article 8 shall survive the payment of Series 2017ABC-1 Notes and the termination of this
Agreement; provided, however, the Bank’s obligations under the Letter of Credit shall terminate
upon its surrender and cancellation.
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ARTICLE 9
MISCELLANEOUS
Section 9.01 Duration. All representations and warranties of the Corporation contained
herein or in the Related Documents shall survive the making of and shall not be waived by the
execution and delivery of this Agreement or the Bank Note. Subject to the provisions of
Sections 2.06 and 2.07 and Article 8, all covenants and agreements of the Corporation contained
herein shall continue in full force and effect from and after the date hereof so long as the
Corporation may borrow hereunder and until payment in full of the Bank Note, interest thereon
and all other Obligations of the Corporation.
Section 9.02 Amendments and Waivers. The Bank and the Corporation may from time
to time enter into agreements amending, modifying or supplementing this Agreement, the Bank
Note or the Related Documents or changing the rights of the Bank or the Corporation hereunder
or thereunder, and the Bank may from time to time grant waivers or consents to a departure from
the due performance of the obligations of the Corporation hereunder or thereunder. Any such
agreement, waiver or consent must be in writing and shall be effective only to the extent
specifically set forth in such writing. In the case of any such waiver or consent relating to any
provision hereof, any Conditional Default or Event of Default so waived or consented to shall be
deemed to be cured and not continuing, but no such waiver or consent shall extend to any other
or subsequent Conditional Default or Event of Default or impair any right consequent thereto.
Section 9.03 No Implied Waiver. No course of dealing and no delay or failure of the
Bank in exercising any right, power or privilege under this Agreement, the Bank Note or the
Related Documents shall affect any other or future exercise thereof or exercise of any other right,
power or privilege; nor shall any single or partial exercise of any such right, power or privilege
or any abandonment or discontinuance of steps to enforce such a right, power or privilege
preclude any further exercise thereof or of any other right, power or privilege.
Section 9.04 Addresses. All notices, requests, demands, directions and other
communications (collectively “notices”) under the provisions of this Agreement shall be in
writing (including facsimile communication) unless otherwise expressly permitted hereunder and
shall be sent by first class mail or overnight delivery as follows: (i) if by first class mail, five (5)
days after mailing; (ii) if by overnight delivery, on the next Business Day; (iii) if by telephone,
when given to a person who confirms such receipt; and (iv) if by facsimile, when confirmation of
receipt is obtained. All notices shall be sent to the applicable party at the following address or in
accordance with the last unrevoked written direction from such party to the other parties hereto:
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If to the Corporation:
City of Phoenix Civic Improvement Corporation
c/o Finance Department City of Phoenix
251 West Washington Street
Phoenix, Arizona 85003
Attn: Chief Financial Officer
Telephone: (602) 262-7166
Facsimile: (602) 495-5605
If to the City:
Finance Department
City of Phoenix
251 West Washington Street
Phoenix, Arizona 85003
Attn: Chief Financial Officer
Telephone: (602) 262-7166
Facsimile: (602) 495-5605
If to the Series 2017ABC-___ Dealer:
___________________
___________________
___________________
Attention: ___________________
Telephone: ___________________
Facsimile Transmission Number: ______________
If to the Bank:
General Matters ___________________
___________________
___________________
Attention: ______________
Telephone: _____________
Facsimile: _____________
Operational Matters ___________________
___________________
___________________
Attention: Letter of Credit Department
Telephone: ___________________
Facsimile: ___________________
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If to the Issuing and Paying Agent:
U.S. Bank National Association
100 Wall Street, Suite 1600
New York, New York 10005
Attention: Commercial Paper Operations
Telephone: (212) 361-2525
Facsimile: (212) 509-3384
The Bank may rely on any notice (including telephoned communication) purportedly
made by or on behalf of the Corporation, and shall have no duty to verify the identity or
authority of the Person giving such notice.
Section 9.05 No Third Party Rights. Nothing in this Agreement, whether express or
implied, shall be construed to give to any Person other than the parties hereto any legal or
equitable right, remedy or claim under or in respect of this Agreement, which is intended for the
sole and exclusive benefit of the parties hereto.
Section 9.06 Severability. The provisions of this Agreement are intended to be
severable. If any provision of this Agreement shall be held invalid or unenforceable in whole or
in part in any jurisdiction, such provision shall, as to such jurisdiction, be ineffective to the
extent of such invalidity or unenforceability without in any manner affecting the validity or
enforceability thereof in any other jurisdiction or the remaining provisions hereof in any
jurisdiction. The parties shall endeavor, in good faith negotiations, to replace the invalid, illegal
or unenforceable provisions with valid provisions, the economic effect of which comes as close
as possible to that of the invalid, illegal or unenforceable provisions.
Section 9.07 Governing Law; Venue; Waiver of Jury Trial.
(a) THIS AGREEMENT AND THE LETTER OF CREDIT AND ANY
OTHER DOCUMENTS TO WHICH THE BANK SHALL BECOME A PARTY
SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF NEW YORK, EXCEPT THE CAPACITY, POWER AND
AUTHORITY OF THE CORPORATION TO ENTER INTO AND PERFORM ITS
OBLIGATIONS UNDER THIS AGREEMENT SHALL BE GOVERNED BY THE
LAWS OF THE STATE OF ARIZONA.
(b) To the extent permitted by applicable law, the Corporation` and the Bank
agree to waive their respective rights to a jury trial of any and all claims or causes of
action based upon or arising out of this Agreement and the Related Documents.
(c) The waivers made pursuant to this Section 9.07 shall be irrevocable and
unmodifiable, whether in writing or orally, and shall be applicable to any subsequent
amendments, renewals, supplements or modifications of this Agreement. In the event of
litigation, this Agreement may be filed as a written consent to a trial by the court.
Section 9.08 Counterparts. This Agreement may be executed in any number of
counterparts and by the different parties hereto on separate counterparts each of which, when so
-46- PHX 332434512v3
executed, shall be deemed an original, but all such counterparts shall constitute but one and the
same instrument.
Section 9.09 Successors and Assigns. This Agreement shall be binding upon and inure
to the benefit of the parties to this Agreement and their respective successors and permitted
assigns.
The Corporation may not assign its rights or obligations under this Agreement, the Bank
Note or the Related Documents without the prior consent of the Bank. The Bank may participate
a portion of its interest in accordance with Section 9.10.
Section 9.10 Participations. The Bank may, in the ordinary course of its business and
in accordance with Applicable Law, at any time sell participations to Bank Participants in all or a
portion of its rights and obligations under this Agreement and the Bank Note, provided that:
(a) the Bank’s obligations under this Agreement, the Letter of Credit and the
Bank Note shall remain unchanged,
(b) the Bank shall remain solely responsible to the Corporation for the
performance of such obligations, and
(c) the Corporation shall continue to deal solely and directly with the Bank in
connection with the Bank’s rights and obligations under this Agreement, the Letter of
Credit, the Bank Note and the Related Documents.
The Corporation waives any prior notice of any participation and authorizes the Bank to
provide financial and operational information previously provided to the Bank to potential Bank
Participants; provided, however, that the Bank agrees upon the request of the Corporation from
time to time to disclose to the Corporation the identity of all Bank Participants and the respective
amounts of their participations.
Section 9.11 USA Patriot Act. The Bank hereby notifies the Corporation that pursuant
to the requirements of the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law
October 26, 2001)) (the “Patriot Act”), it is required to obtain, verify and record information that
identifies the Corporation, which information includes the name and address of the Corporation
and other information that will allow the Bank to identify the Corporation in accordance with the
Patriot Act, and the Corporation hereby agrees to take any action necessary to enable the Bank to
comply with the requirements of the Patriot Act.
Section 9.12 Prior Understandings. This Agreement, the Letter of Credit and the Bank
Note supersede all other prior understandings and agreements, whether written or oral, among
the parties hereto relating to the transactions provided for herein and therein.
Section 9.13 Preferences. To the extent that the Bank receives any payment from or on
behalf of the Corporation which payment or any part thereof is subsequently:
(a) invalidated;
-47- PHX 332434512v3
(b) declared to constitute a fraudulent conveyance or preferential transfer;
(c) set aside; or
(d) required to be repaid to a trustee, receiver or any other party under any
bankruptcy law, state or federal law, common law or equitable cause,
then, to the extent of such payment received, the Obligations or part thereof intended to be
satisfied shall be revived and continue in full force and effect, as if such payment has not been
received by the Bank.
Section 9.14 Headings. Section headings in this Agreement are included herein for
convenience of reference only and shall not constitute a part of this Agreement for any other
purpose.
Section 9.15 Certain Statutory Provisions.
(a) To the extent applicable under Section 38-511, Arizona Revised Statutes,
as amended, notice is hereby given that the State, its political subdivisions (which may
include the Corporation) or any department or agency of either may, within three years
after its execution, cancel any contract, without penalty or further obligation, made by the
State, its political subdivisions, or any of the departments or agencies of either if any
person significantly involved in initiating, negotiating, securing, drafting or creating the
contract on behalf of the State, its political subdivisions, or any of the departments or
agencies of either is, at any time while the contract or any extension of the contract is in
effect, an employee or agent of any other party to the contract in any capacity or a
consultant to any other party of the contract with respect to the subject matter of the
contract. The State, its political subdivisions or any department or agency of either may
recoup any fee or commission paid or due to any person significantly involved in
initiating, negotiating, securing, drafting or creating the contract on behalf of the State, its
political subdivisions or any department or agency of either from any other party to the
contract arising as the result of the contract.
(b) To the extent applicable under Section 41-4401, Arizona Revised Statutes,
as amended, the Bank shall comply with all federal immigration laws and regulations that
relate to its employees and its compliance with the “E-verify” requirements under Section
23-214(A), Arizona Revised Statutes, as amended. The breach by the Bank of the
foregoing shall be deemed a material breach of this Agreement and may result in the
termination of the services of the Bank by the Corporation. The Corporation, or the City
on its behalf, retains the legal right to randomly inspect the papers and records of the
Bank to ensure that the Bank is complying with the above- mentioned warranty. The
Bank shall keep such papers and records open for random inspection during normal
business hours by the Corporation or the City on its behalf. The Bank shall cooperate
with the random inspections by the Corporation including granting the Corporation or the
City on its behalf entry rights onto its property to perform such random inspections and
waiving its respective rights to keep such papers and records confidential.
-48- PHX 332434512v3
(c) Pursuant to Section 35-393 et seq., Arizona Revised Statutes, the Bank
hereby certifies it is not currently engaged in, and for the duration of this Agreement shall
not engage in, a boycott of Israel. The term “boycott” has the meaning set forth in
Section 35-393, Arizona Revised Statutes. If the Corporation determines that the Bank’s
certification above is false or that it has breached such agreement, the Corporation, at the
direction of the City, may impose remedies as provided by law.
[Remainder of page left blank intentionally]
-49- PHX 332434512v3
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed and delivered by their respective officers thereunto duly authorized as of the date first
above written.
CITY OF PHOENIX CIVIC IMPROVEMENT
CORPORATION, an Arizona nonprofit
corporation
By:
Its: President
ATTEST:
Secretary-Treasurer
_____________________________
By:
_______________________
Its:____________________________________
[Signature page of Series 2017ABC-___
Letter of Credit Reimbursement Agreement]
Exhibit A - page 1 PHX 332434512v3
EXHIBIT A
IRREVOCABLE DIRECT PAY LETTER OF CREDIT NO. SB01651
Bank Name: ________________
Bank Address: ______________
Attention: __________________
August ___, 2017
U.S. Bank National Association,
as Issuing and Paying Agent
100 Wall Street
New York, New York 10005
Ladies and Gentlemen:
At the request and for the account of City of Phoenix Civic Improvement Corporation
(the “Corporation”), we hereby establish this Irrevocable Direct Pay Letter of Credit (the “Letter
of Credit”) in your favor as Issuing and Paying Agent pursuant to an Issuing and Paying Agent
Agreement, dated as of August 1, 2017 (as amended and supplemented from time to time, the
“Issuing and Paying Agent Agreement”), by and between the Corporation and you providing for
the authentication and payment of the Series 2017ABC-___ Notes (as hereinafter defined), and
for the benefit of the holders of the Series 2017ABC-___ Notes in accordance with the following
terms and conditions.
1. Expiration. This Letter of Credit shall expire automatically at 5:00 p.m. (New
York time) on the earliest of:
(a) August ___, 20__, or such later date as may be specified in our certificate
received by you in the form of Annex K hereto (the “Stated Expiration Date”);
(b) Our receipt of your certificate in the form of Annex H hereto appropriately
completed, together with this Letter of Credit; and
(c) The date on which all Series 2017ABC-___ Notes outstanding on the
effective date of a notice from us to you in the form of Annex E hereto have been paid in full in
accordance with the statement that you deliver pursuant paragraph 3 of said Annex.
In the event such Stated Expiration Date shall not be a Business Day, then this Letter of
Credit shall expire on the next succeeding Business Day.
2. Stated Amount. The maximum aggregate amount available under this Letter of
Credit shall be _____________________ Dollars ($_________), consisting of $100,000,000.00
Principal Portion and $____________ Interest Portion which amount, as from time to time
Exhibit A - page 2 PHX 332434512v3
permanently reduced as provided in paragraph 3, is hereinafter referred to as the “Stated
Amount”.
3. Permanent Reduction in Stated Amount. The Stated Amount and the Available
Stated Amount (as defined in paragraph 5) shall be permanently reduced upon our receipt of
your certificate in the form of Annex I hereto appropriately completed, by an amount equal to the
amount specified in such certificate. The Stated Amount (and the Available Stated Amount) also
shall be permanently reduced upon your receipt of our certificate in the form of Annex E hereto
appropriately completed on the maturity dates of Series 2017ABC-___ Notes issued and
outstanding as specified in such certificate and in the statement that you deliver to us as
requested in paragraph 3 of said Annex.
4. The Commercial Paper Notes. The “Series 2017ABC-___ Notes” shall constitute
the $100,000,000.00 in aggregate principal amount of City of Phoenix Civic Improvement
Corporation Airport Commercial Paper Program Notes Series 2017A-___, Series 2017B-___ and
Series 2017C-___ (collectively, the “Series 2017ABC-___ Notes”) issued pursuant to the Issuing
and Paying Agent Agreement and the Resolution of the Corporation adopted on August 25, 2017.
5. Available Amount. The amount available to be drawn under this Letter of Credit
shall equal the aggregate principal amount of outstanding Series 2017ABC-___ Notes (the
“Principal Portion”) and interest thereon at the Maximum Rate (as hereinafter defined) for up to
270 days (based on a year of 365/366 days) (the “Interest Portion” and, collectively with the
Principal Portion, the “Available Amount”), as from time to time reduced and reinstated or
increased, as provided in paragraphs 7 and 8, but shall at no time exceed the Available Stated
Amount. The Principal Portion shall be available for the payment of the principal of Series
2017ABC-___ Notes when due upon maturity and the Interest Portion shall be available for the
payment of interest on the aggregate principal amount of Series 2017ABC-___ Notes when due
upon maturity.
The “Available Stated Amount” shall mean the Stated Amount (as adjusted pursuant to
paragraph 3 above) (i) less the amount of all prior reductions pursuant to Interest Drawings or
Principal Drawings, (ii) plus the amount of all reinstatements as provided in paragraph 8 below.
6. Maximum Rate. The “Maximum Rate” shall be 12 % per annum.
7. Changes in the Available Stated Amount and the Available Amount. The
Available Stated Amount shall be reduced automatically from time to time upon our honoring of
a demand for payment hereunder by an amount equal to the amount of such demand for payment.
Upon your receipt of our certificate in the form of Annex E hereto, appropriately completed as
specified in such certificate, the Available Stated Amount shall equal the Available Amount as of
the date of your receipt of such certificate. The Available Amount shall be increased
automatically to cover a new Series of Notes from time to time upon your receipt of our
certificate in the form of Annex L hereto, appropriately completed as specified in such certificate.
Exhibit A - page 3 PHX 332434512v3
8. Automatic Reinstatement.
(a) Except as provided in paragraphs 8(c) and (d), reductions under paragraph
7 with respect to any demand for payment pursuant to Annex B hereto for payment of interest
(an “Interest Drawing”) on Series 2017ABC-___ Notes on the date each demand is honored by
us, shall be automatically reinstated by an amount equal to the amount of that demand; after such
reinstatement, the Available Stated Amount of this Letter of Credit shall be the same as it was
immediately prior to such demand; however, the amount of any reinstatement of the Available
Amount shall not exceed an amount equal to the then effective Interest Portion of the Available
Amount following the Interest Drawing based upon the then effective Principal Portion,
calculated on the basis of the Maximum Rate for up to 270 days based on a year of 365/366 days.
(b) Except as provided in paragraphs 8(c) and (d), reductions under paragraph
7 with respect to any demand for payment pursuant to Annex C hereto for payment of principal
(a “Principal Drawing”) of the Series 2017ABC-___ Notes shall be automatically reinstated upon
(i) your receipt of funds, to the credit of the Series 2017A-___ Subaccount, the Series 2017B-___
Subaccount or the Series 2017C-___ Subaccount of the Reimbursement Agreement Account of
the Note Repayment Fund, as applicable, and your agreement to transfer such funds to us on the
same day, in the amount so credited, or (ii) upon your authentication and delivery to the Dealer
of Rollover Notes, the proceeds of which will be deposited in the Series 2017A-___ Subaccount,
the Series 2017B-___ Subaccount or the Series 2017C-___ Subaccount of the Reimbursement
Agreement Account, as applicable, and your agreement to transfer such funds to us on the same
day, in the principal amount of such Rollover Notes or (iii) your receipt from us of written notice
that we have been otherwise reimbursed for all or a portion of said Principal Drawing. You shall
promptly confirm to us in writing in the form of Annex D hereto the authentication and delivery
of Rollover Notes; provided, however, that the failure to give such confirmation shall not affect
reinstatement of the Available Stated Amount of this Letter of Credit.
(c) Reductions under paragraph 7 with respect to any demand for payment
(as hereinafter defined) made after your receipt of a certificate from us in the form of Annex F
hereto appropriately completed shall not be reinstated unless and until your receipt of our
certificate in the form of Annex G hereto appropriately completed.
(d) Reductions under paragraph 7 with respect to any demand for payment
made after your receipt of a certificate from us in the form of Annex E hereto appropriately
completed shall not be reinstated.
9. Documents To Be Presented. Funds under this Letter of Credit are available to
you upon the presentation of a draft payable on sight signed by you in the form of Annex A
hereto (a “Sight Draft”), which Sight Draft shall be accompanied by:
(a) in the case of an Interest Drawing for payment of the accrued but unpaid
interest due on maturing Series 2017ABC-___ Notes, a certificate signed by you in the form of
Annex B hereto appropriately completed; and
Exhibit A - page 4 PHX 332434512v3
(b) in the case of a Principal Drawing for payment of the principal of
maturing Series 2017ABC-___ Notes, a certificate signed by you in the form of Annex C hereto
appropriately completed.
10. Method and Notice of Presentment.
(a) The drafts and certificates referenced in paragraph 9 (each, a “demand for
payment”) may be delivered to us in person, by mail, by an express delivery service or by
facsimile transmission, at (___) _________ or at such other number as we shall notify you from
time to time in writing. A demand for payment shall be presented on a Business Day prior to the
expiration hereof at our office at _______________________, Attention: _____________, or at
such other address as we may notify you in writing from time to time.
(b) Prior to or concurrently with the delivery of any demand for payment, you
shall give us telephonic notice of your intention to deliver such demand for payment, stating the
method of presentment and the amount of such demand for payment. The telephonic notice
required hereunder shall be given to our Operations Officer at (___) __________ or (___)
____________, or such other department or persons as we shall notify you in writing from time
to time. However, your failure to give such telephonic notice shall not affect our obligation to
make payment pursuant to an otherwise conforming demand.
11. Time and Method for Payment and Receipt of Certificates.
(a) If demand for payment is made on a Business Day in strict conformity
with the terms and conditions hereof, payment shall be made to you if a demand for payment is
received by us prior to 1:00 p.m. (New York time), by not later than 1:00 p.m. (New York time)
on the immediately succeeding Business Day or such later date as you may specify in such
demand for payment. If such demand for payment is received by us after 1:00 p.m. (New York
time), such demand shall be deemed to have been received on the immediately succeeding
Business Day.
(b) Unless otherwise agreed, payment under this Letter of Credit shall be
made in immediately available funds to: U.S. Bank National Association, as Issuing and Paying
Agent, A.B.A. Number: __________, Account Number: _________, Account Name: U.S. Bank
N.A.; Reference: City of Phoenix Airport Series 2017.
(c) All payments made by us under this Letter of Credit shall be made in our
own funds and not with funds of the Corporation.
12. Transferability. This Letter of Credit is transferable in its entirety, but not in part,
to any transferee who has succeeded you as Issuing and Paying Agent under the Issuing and
Paying Agent Agreement and may be successively transferred. Transfer shall be effected by
(a) the presentation to us of this Letter of Credit accompanied by a certificate substantially in the
form of Annex J hereto appropriately completed and (b) payment to us of a $___________
transfer fee.
13. Governing Law. This Letter of Credit shall be subject to the International
Standby Practices, 1998, International Chamber of Commerce Publication No. 590 (the “ISP”);
Exhibit A - page 5 PHX 332434512v3
and shall, as to matters not governed by the ISP, be governed by and construed in accordance
with Article 5 of the Uniform Commercial Code as in effect in the State of New York.
14. Irrevocability. This Letter of Credit shall be irrevocable.
15. No Negotiation. A demand for payment under this Letter of Credit shall be
presented directly to us and shall not be negotiated to or by any third party.
16. Excluded Notes. No demand for payment under this Letter of Credit may be
made with respect to any Series 2017ABC-___ Notes registered in the name of the Corporation,
the City or any entity holding Series 2017ABC-___ Notes by or on behalf of either the
Corporation or the City (each, an “Excluded Note”).
17. Address for Communications. Other than your demand for payment,
communications with respect to this Letter of Credit shall be in writing and shall be addressed to
us at the address referenced in paragraph 10, specifically referring thereon to our Letter of Credit
No. _________. Any communications to you pursuant to Annexes E, F, G and K hereto may be
addressed and sent to your address as referenced on page one hereof or sent by facsimile to
(___) ________.
18. New York Time. All times referenced in this Letter of Credit and Annexes hereto
are as of New York, New York time.
19. Complete Agreement. This Letter of Credit, including the Annexes hereto, sets
forth in full the terms of our undertaking. Reference in this Letter of Credit to other documents
or instruments is for identification purposes only and such reference shall not modify or affect
the terms hereof or cause such documents or instruments to be deemed incorporated herein.
20. Other Definitions. As used herein: (i) the term “Business Day” means a day
other than a Saturday, Sunday or a legal holiday in the State of Arizona or State of New York are
authorized or required to close or a day on which the New York Stock Exchange, the office of
the Bank at which drafts are to be presented under the Letter of Credit or the office of the Issuing
and Paying Agent is authorized to be closed; the term “Series 2017ABC-___ Reimbursement
Agreement Account of the Note Repayment Fund” means that account described in Section 5.02
of the Issuing and Paying Agent Agreement; the term “Dealer” means Barclays Capital Inc., or
any successor or assign of either such party as may be permitted by the Dealer Agreement
between such party and you, or any other party entering into a dealer agreement (or similar
document) with you; and the term “Rollover Notes” means Series 2017ABC-___ Notes, the
proceeds of which are used in whole or in part to reimburse us for Principal Drawings.
Exhibit A - page 6 PHX 332434512v3
We hereby agree with you to honor your demand for payment presented in strict
compliance with the terms and conditions of this Letter of Credit.
Very truly yours,
________________
By:
Name:
Title:
Exhibit A - page 7 PHX 332434512v3
ANNEX A
SIGHT DRAFT
City of Phoenix Civic Improvement Corporation
Airport Commercial Paper Program Notes
Series 2017ABC-___
Irrevocable Direct Pay Letter of Credit No. ____________
Date: _____________
________________
________________
________________
Attention: ________________
To Whom It May Concern:
Pay to the order of U.S. Bank National Association, as Issuing and Paying Agent, the
amount ______________________________ ($__________) drawn on ________________, as
issuer of Irrevocable Direct Pay Letter of Credit No. __________, dated August ___, 2017.
U. S. Bank National Association, as Issuing and
Paying Agent
By:
Name:
Title:
Exhibit A - page 8 PHX 332434512v3
ANNEX B
CERTIFICATE FOR INTEREST DRAWING
City of Phoenix Civic Improvement Corporation
Airport Commercial Paper Program Notes
Series 2017ABC-___
Irrevocable Direct Pay Letter of Credit No. SB01651
________________
________________
________________
Attention: ________________
To Whom It May Concern:
The undersigned, a duly authorized officer of U.S. Bank National Association (the
“Issuing and Paying Agent”), hereby certifies to ________________ (“________________”),
with reference to Irrevocable Direct Pay Letter of Credit No. ______________ (the “Letter of
Credit”); any capitalized term used herein and not defined shall have its respective meaning as
set forth in the Letter of Credit) issued by ________________ in favor of the Issuing and Paying
Agent that:
1. The Issuing and Paying Agent is the Issuing and Paying Agent under the Issuing
and Paying Agent Agreement and is making this demand for payment of interest accrued on
maturing Series 2017ABC-___ Notes. The Available Amount at the time of this demand without
taking into account the effect of this drawing is $__________, consisting of a Principal Portion
in the amount of $__________ and an Interest Portion in the amount of $__________.
2. The interest accrued on Series 2017ABC-___ Notes for which this demand for
payment is requested is to be paid on _______________, ____ (the “Payment Date”).
3. Demand is hereby made under the Letter of Credit for $__________ with respect
to interest accrued on Series 2017ABC-2 Notes, which amount does not exceed the Interest
Portion of the Available Amount.
4. The amount demanded hereunder does not include any amount payable with
respect to (i) an Excluded Note, (ii) a Rollover Note authenticated after our receipt of your
certificate of non-issuance in the form of Annex E to the Letter of Credit or (iii) a Rollover Note
issued after our receipt of your certificate of non-issuance in the form of Annex F to the Letter of
Credit but before our receipt of your certificate in the form of Annex G to the Letter of Credit
rescinding the prior notice of non-issuance.
5. The proceeds hereof shall be applied solely to the payment of unpaid interest on
maturing Series 2017ABC-___ Notes in accordance with the Issuing and Paying Agent
Agreement.
Exhibit A - page 9 PHX 332434512v3
6. (a) Payment of this demand for payment is requested on or before the later of
(i) the Payment Date (or if the Payment Date is not a Business Day, the immediately succeeding
Business Day) and (ii) the Business Day next succeeding the Business Day on which this
Certificate is received or deemed to have been received by ________________ in accordance
with paragraph 11 (a) of the Letter of Credit.
(b) Payment of this demand for payment shall be made to us in accordance with the
payment instructions provided in paragraph 11 (b) of the Letter of Credit.
IN WITNESS WHEREOF, the Issuing and Paying Agent has executed and delivered this
Certificate as of the ____ day of _______________, ____.
U. S. Bank National Association, as Issuing and
Paying Agent
By:
Name:
Title:
Exhibit A - page 10 PHX 332434512v3
ANNEX C
CERTIFICATE FOR PRINCIPAL DRAWING
City of Phoenix Civic Improvement Corporation
Airport Commercial Paper Program Notes
Series 2017ABC-___
Irrevocable Direct Pay Letter of Credit No. _____________
________________
________________
________________
Attention: ________________Letter of Credit Department
The undersigned, a duly authorized officer of U.S. Bank National Association (the
“Issuing and Paying Agent”), hereby certifies to ________________ (“________________”),
with reference to Irrevocable Direct Pay Letter of Credit No. _____________ (the “Letter of
Credit”; any capitalized term used herein and not defined shall have its respective meaning as set
forth in the Letter of Credit) issued by ________________ in favor of the Issuing and Paying
Agent, that:
(1) The Issuing and Paying Agent is the Issuing and Paying Agent under the Issuing
and Paying Agent Agreement and is making this demand for payment of principal of maturing
Series 2017ABC-___ Notes. The Available Amount at the time of this demand without taking
into account the effect of this drawing is $__________, consisting of a Principal Portion in the
amount of $__________ and an Interest Portion in the amount of $__________.
(2) The amount of principal of the maturing Series 2017ABC-___ Notes for which
this demand for payment is requested is to be paid on _______________, ____ (the “Payment
Date”).
(3) Demand is hereby made under the Letter of Credit for $__________ with respect
to principal of maturing Series 2017ABC-___ Notes, which amount does not exceed the
Principal Portion of the Available Amount.
(4) The amount demanded hereunder does not include any amount payable with
respect to (i) an Excluded Note, (ii) a Rollover Note authenticated after our receipt of your
certificate of non-issuance in the form of Annex E to the Letter of Credit or (iii) a Rollover Note
issued after our receipt of your certificate of non-issuance in the form of Annex F to the Letter of
Credit but before our receipt of your certificate in the form of Annex G to the Letter of Credit
rescinding the prior notice of non-issuance.
(5) The proceeds hereof shall be applied solely to the payment of the principal of
maturing Series 2017ABC-___ Notes in accordance with the Issuing and Paying Agent
Agreement.
Exhibit A - page 11 PHX 332434512v3
(6) (a) Payment of this demand for payment is requested on the later of (i) the
Payment Date (or if the Payment Date is not a Business Day, the immediately succeeding
Business Day) or (ii) the Business Day next succeeding the Business Day on which this
Certificate is received or deemed to have been received by ________________ in accordance
with paragraph 11(a) of the Letter of Credit.
(b) Payment of this demand for payment shall be made to us in accordance with the
payment instructions provided in paragraph 11 (b) of the Letter of Credit.
IN WITNESS WHEREOF, the Issuing Paying Agent executed and delivered this
Certificate as of the ____ day of _______________, ____.
U. S. Bank National Association, as Issuing and
Paying Agent
By:
Name:
Title:
Exhibit A - page 12 PHX 332434512v3
ANNEX D
CONFIRMATION OF ISSUANCE OF NOTES
City of Phoenix Civic Improvement Corporation
Airport Commercial Paper Program Notes
Series 2017ABC-___
Irrevocable Direct Pay Letter of Credit No. ___________
________________
________________
________________
Attention: ________________
The undersigned, a duly authorized officer of U.S. Bank National Association (the
“Issuing and Paying Agent”), hereby certifies to ________________ (“________________”),
with reference to Irrevocable Direct Pay Letter of Credit No. _____________ (the “Letter of
Credit”; any capitalized term used herein and not defined shall have its respective meaning as set
forth in the Letter of Credit) issued by ________________ in favor of the Issuing and Paying
Agent, that:
(1) The Issuing and Paying Agent is the Issuing and Paying Agent under the Issuing
and Paying Agent Agreement.
(2) In such capacity, the Issuing and Paying Agent has, on the date hereof,
authenticated Rollover Notes in accordance with the Issuing and Paying Agent Agreement in the
principal amount of $__________, and such Series 2017ABC-___ Notes have been released for
delivery to the Dealer, and the proceeds of which have been deposited in the appropriate
Subaccount of the Reimbursement Agreement Account of the Note Payment Fund and shall be
transferred to you on the date hereof.
(3) This certificate confirms ________________’s reinstatement of the Available
Amount in the amount of $__________, which amount equals (i) with respect to the Principal
Portion, the amount specified in paragraph (2) and (ii) with respect to the Interest Portion,
$__________, representing 270 days of interest on the principal amount of such Rollover Notes
at the Maximum Rate based on a year of 365/366 days.
U. S. Bank National Association, as Issuing and
Paying Agent
By:
Name:
Title:
Exhibit A - page 13 PHX 332434512v3
ANNEX E
NOTIFICATION OF PERMANENT NON-ISSUANCE
City of Phoenix Civic Improvement Corporation
Airport Commercial Paper Program Notes
Series 2017ABC-___
Irrevocable Direct Pay Letter of Credit No. SB01651
U.S. Bank National Association,
as Issuing and Paying Agent
100 Wall Street
New York, NY 10005
Attention: Commercial Paper Operations
Ladies and Gentlemen:
The undersigned, a duly authorized officer of ________________
(“________________”), hereby notifies U.S. Bank National Association (the “Issuing and
Paying Agent”) with reference to Irrevocable Direct Pay Letter of Credit No. ____________ (the
“Letter of Credit”; any capitalized term used herein and not defined shall have its respective
meaning as set forth in the Letter of Credit) issued by ________________ in favor of the Issuing
and Paying Agent, that:
(1) The Letter of Credit shall terminate automatically at 5:00 p.m., New York time,
on the date that all Series 2017ABC-___ Notes issued and outstanding prior to your receipt of
this certificate shall be paid in full. You are to permanently cease authentication of any Rollover
Notes.
(2) On each maturity date of Series 2017ABC-___ Notes issued and outstanding prior
to your receipt of this certificate, the Stated Amount of the Letter of Credit shall be automatically
and permanently reduced at 5:00 p.m., New York time, on such maturity date, such reduction to
be (i) with respect to the Principal Portion, in an amount equal to the principal amount of such
Series 2017ABC-___ Notes maturing on such date and (ii) with respect to the Interest Portion, in
an amount equal to 270 days of interest at the Maximum Rate on such matured Series 2017ABC-
___ Notes at the Maximum Rate based on a year of 365/366 days.
Exhibit A - page 14 PHX 332434512v3
(3) Request is made in accordance with Section 3.01(f) of the Issuing and Paying
Agent Agreement for a statement showing the respective principal amounts and maturity dates of
all Series 2017ABC-___ Notes issued and outstanding at the time of your receipt of this
certificate.
Very truly yours,
________________
By:
Name:
Title:
Exhibit A - page 15 PHX 332434512v3
ANNEX F
NOTIFICATION OF TEMPORARY NON-ISSUANCE
City of Phoenix Civic Improvement Corporation
Airport Commercial Paper Program Notes
Series 2017ABC-___
Irrevocable Direct Pay Letter of Credit No. __________
U.S. Bank National Association,
as Issuing and Paying Agent
100 Wall Street
New York, NY 10005
Attention: Commercial Paper Operations
Ladies and Gentlemen:
The undersigned, a duly authorized officer of ________________
(“________________”), hereby notifies U.S. Bank National Association (the “Issuing and
Paying Agent”) with reference to Irrevocable Direct Pay Letter of Credit No. ________ (the
“Letter of Credit”; any capitalized term used herein and not defined shall have its respective
meaning as set forth in the Letter of Credit) issued by ________________ in favor of the Issuing
and Paying Agent, that:
(1) You are to cease, until your receipt of further notice from us in the form of Annex
G to the Letter of Credit, authentication of any Series 2017ABC-___ Notes under the Issuing and
Paying Agent Agreement.
(2) On each maturity date of Series 2017ABC-___ Notes issued and outstanding prior
to your receipt of this certificate, the Available Amount and Available Stated Amount of the
Letter of Credit shall be automatically reduced at 5:00 p.m., New York time, on such maturity
date, such reduction to be (i) with respect to the Principal Portion, in an amount equal to such
Series 2017ABC-___ Notes maturing on such date and (ii) with respect to the Interest Portion, in
an amount equal to 270 days of interest on such matured Series 2017ABC-___ Notes at the
Maximum Rate based on a year of 365/366 days.
Exhibit A - page 16 PHX 332434512v3
(3) Request is made in accordance with Section 3.01(f) of the Issuing and Paying
Agent Agreement for a statement showing the respective principal amounts and maturity dates of
all Series 2017ABC-___ Notes issued and outstanding at the time of your receipt of this
certificate.
Very truly yours,
________________
By:
Name:
Title:
Exhibit A - page 17 PHX 332434512v3
ANNEX G
NOTIFICATION OF REINSTATEMENT
City of Phoenix Civic Improvement Corporation
Airport Commercial Paper Program Notes
Series 2017ABC-___
Irrevocable Direct Pay Letter of Credit No. ____________
U.S. Bank National Association,
as Issuing and Paying Agent
100 Wall Street
New York, NY 10005
Attention: Commercial Paper Operations
Ladies and Gentlemen:
The undersigned, a duly authorized officer of ________________
(“________________”), hereby notifies U.S. Bank National Association (the “Issuing and
Paying Agent”) with reference to Irrevocable Direct Pay Letter of Credit No. __________ (the
“Letter of Credit”; any capitalized term used herein and not defined shall have its respective
meaning as set forth in the Letter of Credit) issued by ________________ in favor of the Issuing
and Paying Agent, that
(1) Effective upon your receipt of this certificate, our notice to you dated
_______________, ____ in the form of Annex F to the Letter of Credit is hereby rescinded and
you may resume authentication and delivery of Rollover Notes.
(2) The Available Amount of the Letter of Credit is reinstated to $__________,
which amount equals (i) with respect to the Principal Portion, $__________ which is the
maximum principal amount of Series 2017ABC-___ Notes that may be outstanding and (ii) with
respect to the Interest Portion, an amount equal to 270 days of interest on the amount specified in
clause (i) at the Maximum Rate based on a year of 365/366 days.
Very truly yours,
________________
By:
Name:
Title:
Exhibit A - page 18 PHX 332434512v3
ANNEX H
TERMINATION CERTIFICATE
PAYMENT IN FULL; ALTERNATE FACILITY
City of Phoenix Civic Improvement Corporation
Airport Commercial Paper Program Notes
Series 2017ABC-___
Irrevocable Direct Pay Letter of Credit No. ____________
________________
________________
________________
Attention: ________________
The undersigned, a duly authorized officer of U.S. Bank National Association (the
“Issuing and Paying Agent”), hereby certifies to ________________ (“________________”),
with reference to Irrevocable Direct Pay Letter of Credit No. ____________ (the “Letter of
Credit”; any capitalized term used herein and not defined shall have its respective meaning as set
forth in the Letter of Credit) issued by ________________ in favor of the Issuing and Paying
Agent, that:
(1) The Issuing and Paying Agent is the Issuing and Paying Agent under the Issuing
and Paying Agent Agreement.
(2) [check (i) or (ii), as applicable]
(i) As of the date hereof, all outstanding Series 2017ABC-___ Notes have
been paid or deemed to have been paid in full in accordance with the Issuing and Paying
Agent Agreement and the Corporation has delivered a certificate to the Issuing and
Paying Agent directing it to terminate this Letter of Credit in conjunction therewith.
(ii) The conditions precedent as provided in Section 6.10 of the Issuing and
Paying Agent Agreement to the acceptance of an Alternate Facility have been satisfied,
and such Alternate Facility has become effective with respect to all outstanding Series
2017ABC-___ Notes.
The Letter of Credit is attached hereto and being surrendered to you herewith.
Exhibit A - page 19 PHX 332434512v3
IN WITNESS WHEREOF, the Issuing and Paying Agent has executed and delivered this
Certificate as of the ____ day of ________________, ____.
U. S. Bank National Association, as Issuing and
Paying Agent
By:
Name:
Title:
Exhibit A - page 20 PHX 332434512v3
ANNEX I
CERTIFICATE REGARDING REDUCTION OF STATED AMOUNT
City of Phoenix Civic Improvement Corporation
Airport Commercial Paper Program Notes
Series 2017ABC-___
Irrevocable Direct Pay Letter of Credit No. __________
________________
________________
________________
Attention: ________________
The undersigned, a duly authorized officer of U.S. Bank National Association (the
“Issuing and Paying Agent”), hereby certifies to ________________ (“________________”),
with reference to Irrevocable Direct Pay Letter of Credit No. ____________ (the “Letter of
Credit”; any capitalized term used herein and not defined shall have its respective meaning as set
forth in the Letter of Credit) issued by ________________ in favor of the Issuing and Paying
Agent, that:
(1) The Issuing and Paying Agent is the Issuing and Paying Agent under the Issuing
and Paying Agent Agreement.
(2) As of the date hereof, the maximum principal amount of Series 2017ABC-___
Notes that may be outstanding has been permanently reduced to $__________.
(3) On each maturity date of Series 2017ABC-___ Notes issued and outstanding prior
to the date of this certificate, the Stated Amount shall be automatically reduced at 5:00 p.m.,
New York time, on such maturity date and no Rollover Notes shall be authenticated until the
aggregate amount of all reductions effected by this certificate results in a Stated Amount equal to
$__________, which amount equals (i) with respect to the Principal Portion, the amount
specified in paragraph (2) and (ii) with respect to the Interest Portion, an amount equal to 270
days of interest on the amount specified in paragraph (2) at the Maximum Rate based on a year
of 365/366 days.
(4) With reference to paragraph (3) above, the next scheduled maturities of Series
2017ABC-___ Notes which will so reduce the Stated Amount are as follows: $__________
maturing on _______________, 200__; $__________ maturing on _______________, 200__;
[insert additional maturities as needed].
Exhibit A - page 21 PHX 332434512v3
IN WITNESS WHEREOF, the Issuing and Paying Agent has executed and delivered this
Certificate as of the ____ day of _______________, ____.
U. S. Bank National Association, as Issuing and
Paying Agent
By:
Name:
Title:
Exhibit A - page 22 PHX 332434512v3
ANNEX J
NOTIFICATION OF TRANSFER
City of Phoenix Civic Improvement Corporation
Airport Commercial Paper Program Notes
Series 2017ABC-___
Irrevocable Direct Pay Letter of Credit No. __________
________________
________________
________________
Attention: ________________
Ladies and Gentlemen:
For value received, the undersigned beneficiary hereby irrevocably transfers to:
(Name of Transferee)
(Address)
all rights of the undersigned beneficiary to draw under Irrevocable Direct Pay Letter of Credit
No. ___________ (the “Letter of Credit”) in its entirety. Said Transferee has succeeded the
Transferor as Issuing and Payment Agent under the Issuing and Payment Agent Agreement dated
as of August 1, 2017, capitalized term used herein and not defined shall have its respective
meaning as set forth in the Letter of Credit issued by you in connection with the
above-referenced Series 2017ABC-___ Notes.
By this transfer, all rights of the undersigned beneficiary in the Letter of Credit are
transferred to the transferee and the transferee shall have the sole rights as beneficiary thereof,
including sole rights relating to any amendments, whether increases or extensions or other
amendments and whether now existing or hereafter made. All amendments are to be advised
directly to the transferee without necessity of any consent of or notice to the undersigned
beneficiary.
By its signature below the undersigned transferee acknowledges that it has duly
succeeded as Issuing and Paying Agent under the Issuing and Paying Agent Agreement.
Exhibit A - page 23 PHX 332434512v3
The Letter of Credit is returned herewith and we ask you to notify the transferee in such
form as you deem advisable of this transfer and of the terms and conditions of the Letter of
Credit.
U. S. Bank National Association, as Issuing and
Paying Agent
By:
Name:
Title:
SIGNATURE AUTHENTICATION
(Transferee)
By:
Name:
Title:
Exhibit A - page 24 PHX 332434512v3
ANNEX K
NOTICE OF EXTENSION OF STATED EXPIRATION DATE
City of Phoenix Civic Improvement Corporation
Airport Commercial Paper Program Notes
Series 2017ABC-___
Irrevocable Direct Pay Letter of Credit No. ____________
U.S. Bank National Association,
as Issuing and Paying Agent
100 Wall Street
New York, NY 10005
Attention: Commercial Paper Operations
Ladies and Gentlemen:
Reference is hereby made to that certain Irrevocable Direct Pay Letter of Credit No.
___________ (the “Letter of Credit”; any capitalized term used herein and not defined shall have
its respective meaning as set forth in the Letter of Credit) issued by us in your favor as Issuing
and Paying Agent under the Issuing and Paying Agent Agreement. We hereby notify you that
the Stated Expiration Date of the Letter of Credit has been extended from _______________
20__ to _______________, ____. All terms of the Letter of Credit shall continue in full force
and effect except as set forth herein.
Very truly yours,
________________
By:
Name:
Title:
Exhibit A - page 25 PHX 332434512v3
ANNEX L
NOTIFICATION OF INCREASE OF AVAILABLE
AMOUNT OF LETTER OF CREDIT
City of Phoenix Civic Improvement Corporation
Airport Commercial Paper Program Notes
Series _____
Irrevocable Direct Pay Letter of Credit No. ____________
U.S. Bank National Association,
as Issuing and Paying Agent
100 Wall Street
New York, NY 10005
Attention: Commercial Paper Operations
Ladies and Gentlemen:
The undersigned, a duly authorized officer of ________________
(“________________”), hereby notifies U.S. Bank National Association (the “Issuing and
Paying Agent”) with reference to Irrevocable Direct Pay Letter of Credit No. ___________ (the
“Letter of Credit”; any capitalized term used herein and not defined shall have its respective
meaning as set forth in the Letter of Credit) issued by ________________ in favor of the Issuing
and Paying Agent that, effective upon your receipt of this certificate, City of Phoenix Civic
Improvement Corporation Airport Commercial Paper Program Notes, Series ____ may be issued
as Additional Original Issue Notes (which shall include any Rollover Notes with respect thereto)
in an authorized principal amount of up to $__________, which amount, together with the
interest thereon at the Maximum Rate for up to 270 days (based on a year of 365/366 days), shall
be deemed to be Series ____ Notes [which were deemed previously to be Series 20__ Notes]
entitled to the benefits and coverage of the Letter of Credit and the Available Amount of the
Letter of Credit shall thereupon be $__________. Any reference in the Letter of Credit to the
Series ____ Notes name is hereby amended to read the Series ____ Notes.
Very truly yours,
________________
By:
Name:
Title:
Exhibit B - page 1 PHX 332434512v3
EXHIBIT B
FORM OF BANK NOTE
BANK NOTE
August __, 2017
For value received, the CITY OF PHOENIX CIVIC IMPROVEMENT CORPORATION,
a nonprofit corporation organized under the laws of the State of Arizona (the “Corporation”),
hereby unconditionally promises to pay to the order of ________________
(“________________”), a principal sum equal to the obligations of the Corporation as set forth
in the Letter of Credit Reimbursement Agreement (the “Credit Agreement”), dated as of
August 1, 2017, by and between the Corporation and ________________ (the “Bank”), the
principal amount of which shall not exceed _______________ Dollars ($___________), plus
interest thereon as computed in the Credit Agreement, and all other fees and amounts due to
________________ from the Corporation pursuant to the Credit Agreement and the Fee Letter,
dated the date hereof, between the Corporation and the Bank.
This Bank Note is the Bank Note referred to in the Credit Agreement, and is entitled to
all of the rights, benefits and privileges provided for in the Credit Agreement (which, among
other things, contains provisions for the repayment hereof and also for mandatory and voluntary
prepayments hereof under certain conditions). Capitalized terms used herein and not otherwise
defined shall have the meaning assigned to such terms in the Credit Agreement.
All drawings on the Letters of Credit shall be reimbursed to ________________ in
accordance with Section 2.03 of the Credit Agreement, except for amounts converted to Term
Loans in accordance with Article 3 of the Credit Agreement. Drawings on the Letter of Credit
not reimbursed by 4:30 p.m. (New York City time) in immediately available funds on the
Business Day such drawing is honored shall bear interest at the rate set forth in the Credit
Agreement from and including the date of drawing to but excluding the date of reimbursement,
provided, however, that upon the occurrence and continuation of an Event of Default, interest
shall accrue at the Default Rate. Interest on such Unreimbursed Drawings shall be payable on
the first (1st) day of each calendar month, on each date on which all or part of such unreimbursed
drawing is paid or payable hereunder and anytime upon demand by ________________.
The principal of Term Loans and interest thereon shall be payable as follows:
(a) The Corporation hereby agrees to pay to ________________ interest on Term
Loans outstanding from time to time at a rate equal to the Term Loan Rate; provided, however,
that upon the occurrence and continuation of an Event of Default, interest shall accrue at the
Default Rate. Interest on Term Loans shall be payable in arrears on the first (1st) day of each
calendar month in which any Term Loan is outstanding and on each date on which all or part of
the principal amount of such Term Loan is paid or payable hereunder. Interest on overdue Term
Loans shall accrue at the Default Rate and be payable at any time upon demand by
________________.
Exhibit B - page 2 PHX 332434512v3
(b) The full principal amount of the Term Loans shall be repaid by the Corporation
on the earliest of (i) the date established as the end of the respective term thereof pursuant to
Section 3.01 of the Credit Agreement, (ii) the date on which ________________ shall declare
the Term Loans to be due and payable after an Event of Default occurs pursuant to Section 7.01
of the Credit Agreement and (iii) the date on which the Letter of Credit is terminated in
accordance with Section 2.01(d) of the Credit Agreement and its terms or Alternate Facilities are
delivered in substitution therefor in accordance with Section 2.01(e) of the Credit Agreement.
(c) Any Term Loan may be prepaid by the Corporation, without premium or penalty,
upon one (1) Business Day’s prior written, electronic or telephonic notice to the
________________ (which notice if electronic or telephonic shall be promptly confirmed in
writing), in whole or in part but, if in part, in a minimum aggregate principal amount of $500,000
and integral multiples of $100,000. In addition, Term Loans must be prepaid on the date of
authentication of any Rollover Notes or Series CP Revenue Obligations in the amount of the
proceeds of such Rollover Notes or Series CP Revenue Obligations.
Any amount which is not paid when due shall bear interest at the Default Rate.
Any interest payable hereunder shall not exceed the Highest Lawful Rate and for such
purpose all interest and other charges, fees, goods, things in action or any other sums, things of
value and reimbursable costs that the Corporation or the City are or may become obligated to pay
or reimburse in connection herewith, and which may be deemed to constitute “interest” within
the meaning of Arizona Revised Statutes Sections 44-1201 et seq., shall be deemed to constitute
items of interest in addition to the rate(s) of interest specified above, which the Corporation
hereby contracts in writing to pay. In the event any interest required to be paid hereunder at any
time exceeds the Highest Lawful Rate, the portion of such interest required to be paid on a
current basis shall equal such Highest Lawful Rate; provided, however, that the differential
between the amount of interest payable assuming no Highest Lawful Rate and the amount paid
on a current basis after giving effect to the Highest Lawful Rate shall be carried forward and
shall be payable on any subsequent date of calculation so as to result in a recovery of interest
previously unrealized (because of the limitation dictated by such Highest Lawful Rate) at a rate
of interest, and as part of the interest payable, that, after giving effect to the recovery of such
excess and all other interest paid and accrued hereunder to the date of calculation, does not
exceed such Highest Lawful Rate. Until such time as the amount of interest paid to
________________ is equal to the cumulative amount which otherwise would have been paid to
________________ but for the limitation of the Highest Lawful Rate, no repayment may be
made by the Corporation on the Obligations, the maturity date with respect to such Obligations
shall be extended (unless ________________ shall otherwise direct by written notice to the
Corporation) and the Credit Agreement and the Bank Note shall remain outstanding for so long
as necessary until ________________ shall have recovered such cumulative amount of interest
in respect of all Obligations.
The provisions of Section 2.10 of the Credit Agreement are hereby incorporated herein as
of fully set forth herein.
________________ shall, and is hereby authorized by the Corporation to, endorse on
Schedule A forming a part of this Bank Note (or on a continuation of such Schedule A)
Exhibit B - page 3 PHX 332434512v3
appropriate notations evidencing, among other matters, the amount of each Term Loan, the date
of the related Unreimbursed Drawing, the Conversion Date and the date and amount of each
repayment of principal and interest, if any, received by ________________. In any legal action
or proceeding in respect of this Bank Note, the entries made on such grids shall be presumptive
evidence of the existence and amounts of the obligations of the Corporation therein recorded.
The failure to record any such amount shall not, however, limit or otherwise affect the
obligations of the Corporation hereunder to repay all amounts owed hereunder and pursuant to
the Credit Agreement.
Both principal and interest are payable in lawful money of the United States of America
in immediately available funds on the date when such payment is due by Federal wire transfer to
________________, ABA No. ____________, credit to CLAD Account #____________,
Reference: City of Phoenix Civic Improvement Corporation (Airport) - Series 2017 Notes, with
indication of the purpose of the payment (or to such other account as ________________ may
specify by written notice to the Corporation) by not later than 4:00 p.m. (New York City time)
on the date payment is due. Any payment received by ________________ after 4:30 p.m. (New
York City time) shall be deemed to have been received by ________________ on the next
Business Day.
This Bank Note shall be governed by, and construed in accordance with, the laws of the
State of Arizona.
CITY OF PHOENIX CIVIC IMPROVEMENT
CORPORATION, an Arizona nonprofit
corporation
By:
Its:
ATTEST:
Secretary-Treasurer
Exhibit C PHX 332434512v3
EXHIBIT C
REQUEST FOR INCREASE IN AVAILABLE AMOUNT
OF LETTER OF CREDIT IN CONNECTION WITH
ISSUANCE OF ADDITIONAL ORIGINAL ISSUE NOTES
City of Phoenix Civic Improvement Corporation
Airport Commercial Paper Program Notes
Series _____
[For Use In Connection with Issuance of New Series of Notes]
The undersigned, a duly authorized representative of City of Phoenix Civic Improvement
Corporation (the “Corporation”), hereby requests and certifies to ________________
(“________________”), with reference to Irrevocable Direct Pay Letter of Credit No.
__________ (the “Letter of Credit”; any capitalized term used herein and not defined shall have
its respective meaning as set forth in the Letter of Credit) issued by ________________ favor of
the Issuing and Paying Agent, that:
(1) As of the date hereof, all outstanding Series ____ Notes have been paid or
deemed to have been paid in full in accordance with the Issuing and Paying Agent Agreement.
(2) The Corporation intends to authorize the issuance of Additional Original Issue
Notes in a principal amount equal to $__________, which amount, together with the interest
thereon at the Maximum Rate for up to 270 days (based on a year of 365/366 days), will not
exceed the Unutilized Portion of the Stated Amount (as defined in the Reimbursement
Agreement) which, of the date hereof, is equal to $__________. Said Additional Original Issue
Notes will be issued in accordance with and pursuant to the Issuing and Paying Agent
Agreement, will be designated as the Corporation’s Airport Commercial Paper Program Notes,
Series ____ Notes, will mature no later than the Stated Expiration Date and will be secured as
and to the same extent as the Series ____ Notes that are being replaced thereby.
(3) The Corporation hereby requests that, for the purposes of the Letter of Credit, the
Series ____ Notes [insert series designation of new Notes] and any Rollover Notes with respect
thereto be deemed to be Series ____ Notes (insert series designation of the Notes previously
secured by the Letter of Credit) [which were previously deemed to be Series ____ Notes] (insert
bracketed language if Additional Original Issue Notes were previously issued), entitled to the
benefits and coverage of the Letter of Credit.
IN WITNESS WHEREOF, the Corporation has executed and delivered this Certificate as
of the ____ day of _______________, ____.
By:
Name:
Title: Authorized Corporation Representative
Exhibit D PHX 332434512v3
EXHIBIT D
CERTIFICATE RESPONSIVE TO SECTION 4.02(E)
IN CONNECTION WITH INCREASE OF AVAILABLE
AMOUNT OF LETTER OF CREDIT
City of Phoenix Civic Improvement Corporation
Airport Commercial Paper Program Notes
Series _____
[For Use In Connection with Issuance of New Series of Notes]
The undersigned, a duly authorized representative of City of Phoenix Civic Improvement
Corporation (the “Corporation”), hereby requests and certifies to _______________ (“Bank of
America”), with reference to Irrevocable Direct Pay Letter of Credit No. __________ (the
“Letter of Credit”; any capitalized term used herein and not defined shall have its respective
meaning as set forth in the Letter of Credit) issued by Bank of America in favor of the Issuing
and Paying Agent, and in connection with the issuance on the date hereof of Additional Original
Issue Notes in a principal amount equal to $__________ of Series ____ Notes pursuant to the
Issuing and Paying Agent Agreement:
Responsive to Section 4.02(e) of the Reimbursement Agreement, the undersigned
certifies that (i) the representations and warranties of the Corporation set forth in Section 3.01 of
the Issuing and Paying Agent Agreement and Article 5 of the Reimbursement Agreement are
true and correct as of the date hereof, (ii) no Conditional Default or Event of Default has
occurred and is continuing as of the Increase Date, and (iii) no notice of Permanent Non-Issuance
or Temporary Non-Issuance is in effect.
IN WITNESS WHEREOF, the Corporation has executed and delivered this Certificate as
of the ____ day of _______________, ____.
By:
Name:
Title: Authorized Corporation Representative