1 Bloomberg Surveys as of August 9, 1. On December 16, 8, the Fed lowered its target rate to a range of.% -.5%. 8/8/1 CML Lunch & Learn at the League Disclosure Pursuant to revised Securities Rulemaking Board ( MSRB ) Rule G (the Rule ), in connection with new issues for which thetimeofformalawardoccursafternovember7,11,abroker,dealer,or municipal securities dealer ( dealer ) is prohibited from acting as a Financial Advisor or Advisor, as defined in Section 15B of the Exchange Act of 19 (as amended), to an issuer for a particular issue sold on a negotiated or competitive bid basis and subsequently switching roles to act as underwriter or placement agent with respect to the same issue. In compliance with the rules set forth by the MSRB, Stifel, Nicolaus & Company, Inc. ( Stifel ) is acting as an underwriter or placement agent and not a Financial Advisor or Advisor in connection with all services proposed and/or provided. MSRB Notice 11 9 (the Notice ) defines as underwritings both (i) the acquisition of all or any portion of an issue, directly or indirectly, from the issuer as principal, either alone or as a participant in a syndicate or other similar account formed for that purpose and (ii) acting as an agent for the issuer in arranging the placement of an issue.additionally, the MSRB defines the role of an underwriter in the Notice, which states, the primary role of an underwriter is to purchase securities in an arm slength commercial transaction between the issuer and the underwriter and, the underwriter has financial and other interests that differ from those of the issuer. Furthermore, the Rule states that an underwriter may provide advice concerning the structure, timing, terms, and other similar matters related to the issuance of municipal securities to the extent the underwriter discloses that such advice is provided with respect to the underwriting and not in relation to a financial advisory relationship, as specifically defined in the Rule. Accordingly, any such services provided by Stifel as they relate to our role as underwriter or placement agent should not be construed as those of a Financial Advisor or Advisor and such notice, as described above, is hereby provided as set forth in the Rule.? August 9, 1 Additional information is available upon request Stifel, Nicolaus & Company, Inc., 51 N. Broadway, St. Louis, MO 61 Presenters Financial Markets Overview Mike Imhoff Managing Director, Stifel Nicolaus Phone:.91.59, Email: mimhoff@stifel.com Vicki Mattox Managing Director, Stifel Nicolaus Phone:.91.5, Email: mattoxv@stifel.com Rick Reiter Principal, Reiter & Associates Phone:.99.85, Email: rick@reiter58.com Financial markets Global growth forecasts cut as economic data from Europe, the US and emerging economies disappoint European debt fears continue to worry financial markets Dow Jones Index trends upwards over past several weeks Economic indicators GDP growth rate drops to 1.5% in Q 1 (compared to.% of previous quarter and.5% a year ago) Nonfarm payroll increases by 16, in July; unemployment rate unchanged at 8.% Eurozone unemployment at highest level on record Federal Reserve Actions Hints at further easing if economic weakness continues.5%.5%.%.5%.% 1.5% 1.% Aug-11 Sep-11 Oct-11 Nov-11 Dec-11 Jan-1 Feb-1 Mar-1 Apr-1 May-1 Jun-1 -year UST 1-year UST Current Q '1 Q '1 Q1 '1 Q '1 8/17/1 Forecast Forecast Forecast Forecast Fed Funds Target.5.5.5.5.5 -Year T-note.8.9...55 1-Year T-note 1.81 1.71 1.78 1.96.1 -Year Bond.9.7.86..1 Current Rates (%) Securities Industry and Financial Markets Association (SIFMA) Index.1 1-Month LIBOR. Bond Buyer Bond Index GO.8 Bond Buyer Revenue Bond Index.5 Economic Data (%) Q '1 Q '1 Q '1 Q1 '1 Q '1 Actual Forecast Forecast Forecast Forecast Real GDP 1.5 1.8.1 1.9. Consumer Prices 1.9 1.5 1.7 1.6 1.9 Unemployment (%) 8.17 8. 8.1 8.1 8. Jul-1 Aug-1 Source: Bloomberg. Market data as of August 17, 1. Bloomberg Surveys as of August 9, 1. Market Overview market rates rise in August Long-term high grade yield at.1% after staying below % for nearly a month Except for a brief spike during March, rates have hovered near record lows for most of 1 Since 1, municipal bond yields have experienced significant swings in -Year both and directions 1-Year AAA MMD Yields AAA Rated MMD (1/1/1-8/17/1) Changing Yield Curves 5.% 5.%.5% 11 January Yield Highs (1/1/11) 11 September Rally Lows (9//11) -year MMD.5%.%.% Current.% (8/17/1).5% 1-year MMD 1.%.% 1.5%.% Jan-1 May-1 Sep-1 Jan-11 May-11 Sep-11 Jan-1 May-1 1 7 1 1 16 19 5 8 Maturity Source: Thomson Financial. MMD ( Market Data) is an index of AAA rated general obligation bonds. Investor Demand mutual fund inflows strong Mutual Funds witness large inflow of cash since September 11 After brief dip in March, weekly net inflows from funds regain momentum in recent weeks $5 billion in inflows since the start of the year Mutual Fund Flows and Assets Muni Fund Flows 1-1 - - - -5-6 $16 billion in outflows (Q 8) Mar-8 May-8 Jul-8 Sep-8 Nov-8 Jan-9 Mar-9 May-9 Jul-9 Sep-9 Nov-9 Jan-1 Mar-1 May-1 Jul-1 Sep-1 Nov-1 Jan-11 Mar-11 May-11 Jul-11 Sep-11 Nov-11 Jan-1 Mar-1 May-1 Jul-1 Source: Investment Company Institute $85.billion in inflows (1Q 9-1Q 1) $5 billion in outflows (Nov. 1 - May 11) Muni Fund Assets $7 billion in inflows (since Sep. 11) 6 5 1 Muni Fund Assets 5 6 1
8/8/1 New Issue Supply issuance decreases in July $8 billion in new-issue supply during July; compares with monthly average of $7 billion during previous five month period National supply in 11 lowest in past decade; 1 issuance near historical average Bond Buyer -Day Visible Supply 1 National New Issuance 1 Colorado Issuance Volume Colorado issuance in 1 compares favorably to trend of past three years 7. Average Jan. 1 July 1 CO Issuance (Past years): $. bln 6. Jan. 1 to July 1, 1 CO Issuance: $.8 bln (up 79% from same 5. period last year) 16 1 1 1 8 6 5 15 1 Jan. 1 - June 1 Average Issuance (Past years): $185.6bn 1 Issuance (Jan.1 - June 1): $191.7bn (% Rise) Billions.. 5 Oct-1 Dec-1 Feb-11 Apr-11 Jun-11 Aug-11 Oct-11 Dec-11 Feb-1 Apr-1 Jun-1 Aug-1 8 9 1 11 1. 1. 1 Long term issues only. Weekly averages of estimated -day visible supply Sources: SDC and The Bond Buyer. Source: SDC 8/15/1 8 9 1 11 1 7 8 Tax-exempt revenue bond rates approach record lows Bond Buyer Revenue Bond Index (RBI) 7. 6.5 1. 6. Average 5.1% (%) 5.5 1. Max = 1.9% Min =.8% 5. 1. Current =.5%.5. 11. Aug-7 Aug-8 Aug-9 Aug-1 Aug-11 1. (%) 9. 8. 7. Average 6.6% Tax-exempt revenue bond rates approach record lows Percentage of the Time RBI Has Been Below the Current Level Since 198 (+) +7 bps +6 bps +5 bps + bps + bps + bps +1 bps.5% (Current).5% 1.1% 7.6% 1.8% 1.% 18.6%.% (%) 1. 1. 1. 8. Historical RBI Levels (January 198 to Present) Average = 6.85% 6. 5. (-) -1 bps - bps.%.% 6. Current Level =.5%. Aug-8 Aug-87 Aug-9 Aug-97 Aug- Aug-7 - bps.%. 198 1985 199 1995 5 1 Source: The Bond Buyer. Tax-Exempt Bonds maturing in years with average rating of A1/A+. As of 8/17/1. Source: The Bond Buyer. Tax-Exempt Bonds maturing in years with average rating of A1/A+. As of 8/17/1. 9 1 5.7% Long-term rate hits all-time low on July 5 -Year Market Data Index (MMD).9%.7%.5%.%.1% Average =.8% Historical 1 Year Market Data (MMD) 5..5 Average =.%.7.5..1 1.9 1.7 1.5 Average = 1.98%.9% 5.%.7%.5% Aug-11 Nov-11 Feb-1 May-1 Aug-1..5.7% Average =.%..%.7%.% Max = 5.9% Min =.79% Current =.1%.5 Max =.86%. Min = 1.6% Current = 1.87% 1.5 Aug Aug Aug Aug 5 Aug 6 Aug 7 Aug 8 Aug 9 Aug 1 Aug 11 Aug 1.7% Aug- Aug- Aug-6 Aug-8 Aug-1 Aug-1 Source: Thomson Financial. MMD is an index of AAA rated general obligation bonds. As of 8/17/1. Source: Thompson Financial. As of 8/17/1 11 1
8/8/1 Yields 1-year US bill yield rises over past weeks Year Muni/ Ratios Muni ratios decline 1-Year U.S. Note 16.% 1 1.% Max = 15.8% Min = 1.% Current = 1.81% 5.%.%.% Average =.1% -Yr MMD as a % of -Yr UST % 1% 15% 1% 115% 11% 15% 1% Average = 11% 1.% (%) 8.% 1.% Aug-7 Aug-8 Aug-9 Aug-1 Aug-11 Aug-1 Average = 6.71% 18% 16% Max = 1% Min = 8% Current = 1% 95% 9% Aug-11 Oct-11 Dec-11 Feb-1 Apr-1 Jun-1 Aug-1 6.% 1% 1%.% 1% Average = 11%.% Aug-6 Aug-7 Aug-78 Aug-86 Aug-9 Aug- Aug-1 Source: Federal Reserve & Bloomberg. As of 8/17/1. 8% Aug- Aug- Aug-6 Aug-8 Aug-1 Aug-1 1 1 MMD Yields AAA MMD Yields 5.%.%.% 1.% 1 Year Ago (8/17/11) Current (8/17/1 ) U.S. Bond Market Issuance since 1996 8, Asset-Backed 7, Federal Agency 6, Mortgage-Related 5,,,, U.S. Bond Market Outstanding Debt (Q 11) Asset- Backed 7% Federal Agency 7% 1% Money Market 5% 1% 6%.% 1 5 7 9 11 1 15 17 19 1 5 7 9 Maturity 1, 1996 1997 1998 1999 1 5 6 7 8 9 1 11 Mortgage- Related % 15 16 U.S. Bond Market Trading Volume since 1996 1, Federal Agency 1, Mortgage-Related 8 6 1996 1997 1998 1999 1 5 6 7 8 9 1 11 U.S. Bond Market Trading Volume (11) % Mortgage- Related 8% Federal Agency 6% 1% Treasu ry 6%,,5,,5, 1,5 1, 5 U.S. Bond Market Holders since 1996 Other Banking Institutions Individuals Insurance Companies Mutual Funds 1996 1997 1998 1999 1 5 6 7 8 9 1 11 (Q) Transportation 11% U.S. Bond Issuance Volume By Sector (11) Development General 5% Purpose 9% Education 5% Utilities 11% Public Facilities % Electric Power % Health Care 9% Housing % 17 18
8/8/1 ity Pass/F ail ities Spring 1 Election Type: (CML's Dollar YES % NO % categories) Amt Purpose 11 Pocketbook Issues by Government Type Debt Buena Vista Pass 11 61.6 56 8.8 Muncipal Debt $M Debt increase for designing, construction and insally street impovements Nederland Pass 58.6 1.8 Muncipal Debt $1M Debt increase for DDA to design and construct sidewalks and master planning/beautification of downtown area Windsor (DDA) Pass 1 7.8 11 6. Muncipal Debt $5M Finance development projects in DDA to be paid by tax increment revenues Revenue and Spending Monument Pass 7 6.7 9.9 Revenue & Spending All revenue through 15 for town parks, recreation and senior services. Fruita Pass 16 77. 6.78 Revenue & Spending All grants and revenues for capital improvement plan through 1/1/18 Tax Rates Calhan Pass 17 66.87 5.1 Tax Rates Increase taxes by $5K annually by levying 1% sales and use tax for improved transit services within PPTRA boundaries and specific roadway capital i DeBeque Pass 85 7.7 1 6.7 Tax Rates Increase of $K by a use tax on construction and building materials at % Erie Pass 76 7. 91 5.6 Tax Rates Extend existing mill property tax until 1/1/ to protect natural areas along Coal Creek and Boulder Creek, protect wildlife habitat and acquire natural areas. Fleming Fail Tax Rates Increase taxes by imposition of sales tax at the rate of % Fowler Fail 111 5.5 19 9.55 Tax Rates Increase sales and use tax by 1% from % for the cemetary and library. Gilcrest Pass 88 57.1 66.86 Tax Rates Increae taxes by 1% (from %) for capital impovement such as stormwater and sanitary sewer capital improvements. Green Mtn. Falls Pass 1 59.7 8. Tax Rates Increase taxes by $,5 by mill levy not to exceed mills for town general operations. Montrose Fail 7.9 971 55.61 Tax Rates Increase taxes by $89, by increasing sales and use tax from % to.% fro the Montrose County Rec. District for facilities. Morrison Pass 65 8. 1 16.67 Tax Rates Increase taxes by $75, by lodging tax of 6%. Naturita Pass 88 77.19 6.81 Tax Rates Continue 1% tax for provision of hour urgent medical care for capital equipment and improvements. Nederland Pass 8 85.19 9 1.81 Tax Rates Portion of sales tax used to pay water and sewer debt be equally split Nederland Pass 58.6 1.8 Tax Rates Increase taxes by $6,7 through 19 by extending ad valorem property tax not more than 5 mills within DDA. Windsor Fail 198 9.8 19 5. Tax Rates Increase taxes by imposing an excise tax of % upon lodging dedicated to sponsoring community events, promoting tourism and conventions Windsor (DDA) Pass 1 7.8 11 6. Tax Rates Increase taxes by ad valorem not more than 5 mills within DDA. Winter Park Pass 65 8. 16 19.76 Tax Rates Extend through 7/1/17 1% sales and lodging tax with 1/ devoted to marketing and 1/ for capital improvements. ISSUES Win/Loss Win % Counties 1 6-6 5% pocketbook (new) 9-6 % pocketbook (other) - 1% ities 5 15-1 6% pocketbook (new) 9 1-8 11% pocketbook (other) 16 1-88% School Districts 1 1-9 9% Bonds, non-b.e.s.t. 7 1-6 1% MLO's 5-18 % Special Districts 15-18 58% pocketbook (new) 1-17 % pocketbook (other) 1 1-1 9% 11 TOTAL 89 New Taxes % won 9 W, 6 L Other Pocketbook 91 % won 9 W, L 19 Pocketbook Issues by Counties ISSUES Win/Loss Win % Counties 1 6-6 5% pocketbook (new) 9-6 % pocketbook (other) - 1% 9 New Tax Increases passed (%), 6 failed a) Of the three, all had sunsets b) All were small counties (two had <8 voters), plus Aspen c) Two issues addressed health care, one supplemented K-1 schools (Jackson) other pocketbook questions all passed (extension, reallocation, de- Brucing of existing taxes) 1 Pocketbook Issues by ities ities 5 15-1 6% pocketbook (new) 9 1-8 11% pocketbook (other) 16 1-88% The lone winner: Win: sales tax to guarantee air carrier in Steamboat ( rd attempt) Of the 1 other that passed: debt questions 1 Utility Franchise Tax (Boulder) 7 Tax on Other People (hotel, rental cars, MMJ) 1 Extensions of existing taxes Reallocation of existing tax 1 de-brucing Pocketbook Issues by Special Districts Special Districts 5-18 58% pocketbook (new) 1-17 % pocketbook (other) 1 1-1 9% new tax increases proposed 1 passed (%) o Bonds - 1 of (5%) o Property/Sales - 1 of 6 (6%) Pocketbook Issues by SPECIAL DISTRICTS Special Districts 5-18 58% pocketbook (new) 1-17 % pocketbook (other) 1 1-1 9% new tax increases proposed 1 passed (%) a) 7 of 1 were fire districts b) Others were small, mostly developer districts or water sanitation districts c) All Politics is Local Politics 1 had 6,1 voters 5 were 1,, voters 7 had fewer than 1, voters (half of those < than 6 voters)
8/8/1 Pocketbook Issues by School Districts School Districts 1 1-9 9% Bonds, non-b.e.s.t. 7 1-6 1% MLO's 5-18 % Bonds, non B.E.S.T. - 1 of 7 (1%) Bonds, B.E.S.T. - 6 of 11 (55%) MLO - 5 of (%) 5 Pocketbook Issues by School Districts School Districts 1 1-9 9% Bonds, non-b.e.s.t. 7 1-6 1% MLO's 5-18 % Historically, from 199-7 o Bonds enjoyed a 65% success-rate o MLO witnessed a 56% rate In odd-year elections; o Bonds 6% o MLO 61% Roaring Fork, Englewood o Started a year out o Respect your polling o Community politics equals or trumps message politics 6 5