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Financial-Debt Obligation AnalysisMember FINRA / SIPC / NYSE© 2021 Hilltop Securities Inc.All Rights ReservedContactsWorkshop Discussion MaterialsAnne Burger EntrekinRegional Managing Directoranne.burgerentrekin@hilltopsecurities.com70 Northeast Loop 410, Suite 710San Antonio, Texas 78216Direct: 210.308.2200March 12, 2021City of Port Arthur, Texas Member FINRA / SIPC / NYSE© 2021 Hilltop Securities Inc.All Rights ReservedMarket Update Member FINRA / SIPC / NYSE© 2021 Hilltop Securities Inc.All Rights ReservedBond Buyer’s Index of 20 Municipal Bonds2 Member FINRA / SIPC / NYSE© 2021 Hilltop Securities Inc.All Rights ReservedBond Buyer’s Index of 20 Municipal Bonds3 Member FINRA / SIPC / NYSE© 2021 Hilltop Securities Inc.All Rights ReservedMMD Yield Curve4 Member FINRA / SIPC / NYSE© 2021 Hilltop Securities Inc.All Rights ReservedProposed Timetable of Events Member FINRA / SIPC / NYSE© 2021 Hilltop Securities Inc.All Rights ReservedProposed Timetable of Events6SMTWTFS1234567891011121314 151617 18192021 22 23 24 25262728 29 30 31SMTWTFS1234567891011 12 13 14 15 16 1718 19 20 21 22 23 2425 26 27 28 29 30SMTWTFS123456789101112 13 14 1516 17 18 19 20 21 2223 24 25 26 27 28 293031SMTWTFS123456 7 8 9 10 11 1213 14 15 16 17 18 1920 21 22 23 24 25 2627 28 29 30=Key Dates= HolidaysMarchAprilMayJuneDATE EVENT Friday, March 12, 2021 Workshop of the City Council to discuss issuing Certificates of Obligation (10:00 a.m.). Tuesday, March 16, 2021 Regular meeting of the City Council to consider a Resolution authorizing Notice of Intent to Issue Certificates of Obligation (5:30 p.m.). Thursday, March 18, 2021 Distribute first draft of Preliminary Official Statement ("POS") to working group for comments. Friday, March 19, 2021 First publication of Notice of Intent to Issue Certificates of Obligation. Friday, March 26, 2021 Second publication of Notice of Intent to Issue Certificates of Obligation. Thursday, April 1, 2021 Comments on first draft of POS due from working group. Tuesday, April 6, 2021 Distribute second draft of POS to working group for comments. Send POS and related documents to the Rating Agency (S&P). Week of April 12th or April 19th S&P Conference Call (TBD). Tuesday, April 20, 2021 Comments on second draft of POS due from working group. Thursday, April 22, 2021 Distribute final draft of POS to working group for comments. Week of April 26th Due diligence call. Wednesday, April 28, 2021 Receive rating. Friday, April 30, 2021 Comments on final draft of POS due from working group. Monday, May 3, 2021 POS goes to i-Deal web site for posting. Tuesday, May 11, 2021 Pricing. Regular meeting to conduct sale of Certificates of Obligation (5:30 p.m.). Approve and authorize the execution of the Bond Purchase Agreement. Thursday, June 3, 2021 Closing Date; City delivers the Certificates of Obligation to Underwriter and receives funds. Member FINRA / SIPC / NYSE© 2021 Hilltop Securities Inc.All Rights ReservedProposed Debt Service Schedules Member FINRA / SIPC / NYSE© 2021 Hilltop Securities Inc.All Rights ReservedProjected CO, Series 2021 – Ad Valorem Tax Supported8Projected Series 2021COs -Ad Valorem SupportedProjectedSummary StatisticsPar Amount of Bonds $23,000,000True Interest Cost 3.25%Call Date 2/15/2031Projected Debt Service Tax Rate in FYE 2022No I&S Tax Rate IncreaseProposed Projects:– Street Improvements– Drainage Pump Stations– Animal Shelter– Health Department Building ImpFYEPrincipal Interest Debt Service20212022 455,000$ 926,981$ 1,381,981$ 2023 2,500,000 692,088 3,192,088 2024 835,000 637,894 1,472,894 2025 860,000 610,350 1,470,350 2026 890,000 581,913 1,471,913 2027 920,000 552,500 1,472,500 2028 950,000 522,113 1,472,113 2029 980,000 490,750 1,470,750 2030 1,010,000 458,413 1,468,413 2031 1,045,000 425,019 1,470,019 2032 1,080,000 390,488 1,470,488 2033 1,115,000 354,819 1,469,819 2034 1,155,000 317,931 1,472,931 2035 1,190,000 279,825 1,469,825 2036 1,230,000 240,500 1,470,500 2037 1,270,000 199,875 1,469,875 2038 1,315,000 157,869 1,472,869 2039 1,355,000 114,481 1,469,481 2040 1,400,000 69,713 1,469,713 2041 1,445,000 23,481 1,468,481 23,000,000$ 8,047,000$ 31,047,000$ Fixed Rate 3.25%2021 Debt Issuance$23,000,000 Member FINRA / SIPC / NYSE© 2021 Hilltop Securities Inc.All Rights ReservedProjected CO, Series 2021 – Water and Wastewater System Supported9Projected Series 2021COs -Utility System SupportedSummary StatisticsPar Amount of Bonds $9,900,000True Interest Cost 3.25%Call Date 2/15/2031Proposed Projects:– Various Waterworks andWastewater SystemProjectsFYEPrincipal Interest Debt Service20212022 310,000$ 346,500$ 656,500$ 2023 390,000 268,520 658,520 2024 400,000 257,600 657,600 2025 410,000 246,400 656,400 2026 425,000 234,920 659,920 2027 435,000 223,020 658,020 2028 445,000 210,840 655,840 2029 460,000 198,380 658,380 2030 470,000 185,500 655,500 2031 485,000 172,340 657,340 2032 500,000 158,760 658,760 2033 515,000 144,760 659,760 2034 530,000 130,340 660,340 2035 540,000 115,500 655,500 2036 555,000 100,380 655,380 2037 575,000 84,840 659,840 2038 590,000 68,740 658,740 2039 605,000 52,220 657,220 2040 620,000 35,280 655,280 2041 640,000 17,920 657,920 9,900,000$ 3,252,760$ 13,152,760$ Debt Issuance $9,900,000Series 2021 Member FINRA / SIPC / NYSE© 2021 Hilltop Securities Inc.All Rights ReservedProposed Timing Considerations Member FINRA / SIPC / NYSE© 2020 Hilltop Securities Inc.All Rights ReservedTiming ConsiderationsInterest rate risk– Currently near historical lows– Recent Increase in BBI– Recent discussions regarding inflationary considerationsTax-exempt debt obligation spend down expectations– With each tax-exempt debt issue, the issuer executes a certificatestating there arereasonable expectationsthat85%of the bondproceeds with be spent in3 yearsoWith proposed certificates of obligation of $32,900,000 and aprojected closing date of June 3, 2021,theCitymusthavereasonable expectations a projected $27,965,000 will be spentby June 3, 202411 Member FINRA / SIPC / NYSE© 2021 Hilltop Securities Inc.All Rights ReservedPotential Refinancing Opportunity Member FINRA / SIPC / NYSE© 2020 Hilltop Securities Inc.All Rights ReservedRefunding Opportunity: Summary of Bonds for Consideration13InterestMaturity Principal Rate Call Date2/15/2022 235,000 3.000% 5/15/20212/15/2023 255,000 3.000% 5/15/20212/15/2024 270,000 3.500% 5/15/20212/15/2025 290,000 3.500% 5/15/20212/15/2026 310,000 3.500% 5/15/20212/15/2027 330,000 3.500% 5/15/20211,690,000$ Certificates of Obligation, Series 2012Original Principal $2,230,000 Callable Principal $1,690,000 Callable Maturities 2022‐2027Coupons 3.00% ‐ 3.50%Call Date 5/15/2021 Member FINRA / SIPC / NYSE© 2020 Hilltop Securities Inc.All Rights ReservedProjected Debt Service Savings –Refunding Series 2012 CO*For purposes of illustration rates are as of 3/3/2021 plus 20 basis points.14DatePrior Debt ServiceRefunding Debt ServiceProjected Savings9/30/2021 $28,350 $19,438 $8,9139/30/2022 288,175 272,750 15,425 9/30/2023 300,825 292,000 8,825 9/30/2024 307,275 295,125 12,150 9/30/2025 317,475 307,250 10,225 9/30/2026 326,975 318,125 8,850 9/30/2027 335,775 322,875 12,900 $1,904,850 $1,827,563 $77,288 PROJECTED SAVINGSCity of Port Arthur, TexasPotential Refunding Bonds, Series 20214.50%Present Value Benefit (%)True Interest CostRefunding Par AmountGross SavingsAverage Annual Savings (2022‐2027)Net Present Value SavingsProjected Debt Service Savings$1,690,000 $77,288 11,396 1.23%$76,017 Member FINRA / SIPC / NYSE© 2020 Hilltop Securities Inc.All Rights ReservedNext Steps if City Council is Interested in Pursuing a Potential RefundingProvide guidance for consultants to initiate processFor a future City Council meeting place on the agenda consideration of parameter/delegation bond sale ordinanceBond issue is in ‘Day-to-Day’ mode, meaning bonds can be priced at any time and in an interest rate environment that is advantageous rather than being locked into pricing on the date of a City Council meetingMinimum Savings Threshold for RefundingMaximum Interest RateMaximum Principal Amount of IssueMaximum Maturity DateExpiration of Delegated Authority (Generally 6 months)Delegation Authority- The Mayor, the City Manager and/or the Director of FinanceRevise CO Timetable of Events to have potential Refunding Bonds price the samedayContinue to monitor the municipal bond interest rate markets for changes15