Los Angeles County Metropolitan Transportation Authority Los Angeles Regional Investors Conference, February 26-27, 2014 Nalini Ahuja‐Executive Director, Finance and Budget Donna R. Mills –Treasurer At a Glance

Metro Operates the 3rd Largest Transportation System in the U.S. • Completely clean-air fleet of over 2,200 Compressed Natural Gas buses • 87 miles of Metro Rail – 83 stations • Approximately 1.1 million bus and 360,000 rail passengers each weekday • Metro Rapid Bus • 535 HOV lane miles • Service area of 1,433 square miles

1 At a Glance

The Extensive Bus System • Service in L.A. County as well as portions of Orange and Ventura Counties • Second largest bus system in the U.S. • Nearly 360 million boardings in FY13 • Twenty-five Metro Rapid corridors – Over 400 miles of express routes throughout the County – Buses have traffic signal priority and fewer stops to speed transit • The Metro Orange Line – 18-mile Bus Rapid Transit service that operates along an exclusive right-of way – Transports thousands of commuters between Warner Center in the west and the Chatsworth Amtrak/ Station to the North and the Metro Red Line subway station in North Hollywood • The Metro Silver Line – Express Bus service stretching over 26 miles from El Monte Station to Harbor Gateway Transit Center

2 At a Glance

The Rail System Currently Consists of Six Rail Lines

• Four light rail lines – Blue, Green, Gold, and Exposition serving 67 stations along 70.3 miles of track. • Two subway lines – Red and Purple, serving 16 stations along 17.4 miles of track. • Projects under construction – Expo 2 to Santa Monica – Gold Line Foothill Extension – Crenshaw/LAX Transit Corridor – – Westside Subway Extension Phase One

3 At a Glance

The Rail System Currently Consists of Six Rail Lines

4 At a Glance

Other Major Transportation Projects Across the County • Highway System Improvements – Freeway construction improvements- interchanges, widening and sound walls. – High Occupancy Vehicle (HOV) lane program, in cooperation with Caltrans, funded through a combination of federal, State and local resources. – Metro ExpressLanes, a pilot program on I-10 and I-110 overseen by Metro, Caltrans and several other mobility partners to convert HOV lanes to High Occupancy Toll (HOT) lanes. – Accelerated Regional Transportation Improvements (ARTI) P3 Project. • Metrolink Commuter Rail Line Fund Assistance – Funding partner with four other participating counties – Seven lines, totaling 512 miles and 55 stations. – Service to Riverside, Ventura, Orange, San Bernardino and San Diego counties. • Other Metro Funded Projects – Freeway service patrols – Over 100 local return and non-profit agencies providing community based transportation.

5 At a Glance

Metro’s Public Support Proposition A • ½ cent sales tax approved by voters in November 1980 with no sunset • Since inception, Proposition A has provided more than $14.4 billion for transportation funding1

Proposition C • ½ cent sales tax approved by voters in November 1990 with no sunset • Since inception, Proposition C has provided more than $11.7 billion for transportation funding1

Measure R • ½ cent sales tax approved by voters in November 2008 with 2/3 majority • 30-year sales tax expiring in 2039 • Commits a projected $34.5 billion to traffic relief and transportation upgrades

1Through FY2013 –Sales tax revenues less administrative fees paid to the State Board of Equalization

6 At a Glance

Proposition A Sales Tax Revenues

$800.0

$700.0

$600.0

$500.0

$400.0

$300.0

$200.0

$100.0

$‐ 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 *Proposition C and Revenues are historically similar to Proposition A Revenues

7 LOOKING FORWARD Long Range Planning

2009 Long Range Transportation Plan May 2013 Update Summary of Sources

Measure R $ 34.6 B 14.3% Federal $ 34.5 B Local 14.3% $ 135.1 B 55.9%

State $ 37.3 B 15.5%

$241.5 Billion Total FY 2013 – FY 2040

9 Measure R

2008 Voters Approved Allocation of Measure R Revenues • Half-cent tax on all taxable sales throughout Los Angeles Rail Operations Metro Rail Capital County 5% 2% Local Return • Taxes are allocated to be spent on specific project needs 15% Rail and/or Bus and operational purposes as set forth on the right Metrolink Capital 3% 35% • Bondholders benefit from a pledge of 85% of all Sales Tax Collections Bus Operations 20%

Highway Capital 20%

10 Measure R

Ten Largest Transit and Highway Projects Estimated Cost Opening Project (in $Millions) Year Exposition Blvd. LRT Phase II $1,511 FY 2017 Gold Line Foothill LRT Extension 786 FY 2017 Crenshaw/LAX Transit Corridor 2,058 FY 2020 Regional Connector 1,399 FY 2021 Westside Subway Extension – Segment 1 2,861 FY 2023 Largest Transit Projects Subtotal $8,615 I-405 North Carpool Lanes from I-10 to US-101 $1,149 FY 2014

I-5 North Carpool Lanes from State Route 170 to State Route 134 608 FY 2016

I-5 South from Orange County Line to I-605 (includes Carmenita Interchange) 1,894 FY 2017 I-10 Carpool Lanes from I-605 to State Route 57 578 FY 2018 Alameda Corridor East 1,446 FY 2012+ Largest Highway Projects Subtotal $5,675 GRAND TOTAL $14,290

(As of May 2013) 11 Measure R Transit Capital Plan

12 Measure R Highway Plans

13 Long Range Planning

Metro Continues to Issue and Seek New Funding

• New capital projects will be funded through Measure R subject to the Long Range Transportation Plan • Metro continues to seek alternative funding sources for various projects – Secured a $545.9 million TIFIA loan for the Crenshaw/LAX transit corridor – In final negotiations for $160 million TIFIA loan for Regional Connector project plus FFGA – Application in progress for $856 million Phase One of Westside Subway Extension • Metro issued $320 million of Proposition C new money bonds in calendar 2013, for two to three years of capital funding for highways.

14 CREDIT AND DEBT CHARACTERISTICS Metro Credit

Debt Policy Guides Future Debt Issuance Measure R Debt Affordability Targets and Policy Limits Category Allowable Uses & Status Debt Policy Maximum 87% of MR Transit Capital – Transit Capital 35% – New Rail New Rail and/or Bus Rapid Transit. Initial issuance occurred in New Rail and/ or Bus Rapid CY2010. and/or Bus Rapid Transit Transit revenues.

Transit Capital 3% – Metrolink Capital Operations, Maintenance and Expansion for system improvements, 87% of MR Transit Capital – Improvement Projects Within LA rail yards and rail cars. Currently no debt service. Issuance likely in Metrolink Capital County the future. Improvements in LA County. Transit Capital 2% – Metro Rail System improvements, rail yards and rail cars. Initial issuance 87% of MR Transit Capital – Capital 87% of MR Transit Capital occurred in CY2010. Metro Rail Capital Carpool lanes, highways, goods movement, grade separations and Highway Capital 20% – 60% of MR Highway Capital soundwalls. Currently no debt service. Issuance likely in the future. Rail operations for new transit project operations and maintenance. Operations 5% – Rail Operations No debt issuance. Currently no debt service. No debt issuance permitted. Bus operations for countywide bus service and maintenance. Operations 20% – Bus Operations No debt issuance. Currently no debt service. No debt issuance permitted. Major street resurfacing, rehabilitation and reconstruction; pothole repair; left turn signals; bikeways, pedestrian improvements; Local Return 15% – N/A streetscapes; signal synchronization; and transit. Distributed to localities based on population.

16 Metro Credit

Sales Tax Bonds – Security Features Prop A Prop C Measure R

Payments secured by Payments secured by Payments secured by Trust Structure Trust Agreement/ Trust Agreement/ Trust Agreement/ Trustee intercept Trustee intercept Trustee intercept

½ cent sales tax ½ cent sales tax ½ cent sales tax approved 1980 (no approved 1990 (no approved 2008 (30 sunset) sunset) year sunset) Funding Source Approx. 75% (excludes Approx. 80% (excludes Approx. 85% (excludes 25% Local Jurisdiction 20% Local Jurisdiction 15% Local Jurisdiction and administrative and administrative and administrative fees) fees) fees) • First Tier Senior • Senior Bonds • Senior Bonds Bonds • Subordinate Bonds, • Subordinate Flow of Funds • Subordinate Bonds, Notes or Other Bonds, Notes or Notes or Other Obligations Other Obligations Obligations • TIFIA Loans

17 Metro Credit

Outstanding Debt and Ratings

Credit Outstanding Par Rating (Moody’s/S&P/Fitch) Prop A – 1st Tier Senior Bonds $1,249,900,000 Aa2/AAA/NR Prop A – 2nd Tier Senior Bonds 20,520,000 Aa3/AA-/NR Prop C – Senior Bonds 1,316,285,000 Aa3/AA+/AA Measure R – Senior Bonds 701,935,000 Aa2/AAA/NR General Revenue Bonds 148,685,000 A1/A/NR

Prop A Commercial Paper 119,020,000 P-1/A-1 (Sumitomo/Union LOCs)

Prop C Commercial Paper 21,594,000 P-1/A-1 (State Street LOC) Prop C Revolving Credit Facility 45,000,000 NR Outstanding Debt $3,622,939,000

18 Metro Credit

Proposition A Sales Tax Coverage History (in $Millions) Metro Maintains Net Sales Tax Allocation to Local Pledged Senior Lien Year Revenue Governments Revenues Coverage 2007 $686.2 (171.5) $514.6 3.60x Strong Coverage 2008 683.4 (170.8) 512.5 3.47x 2009 620.8 (155.2) 465.6 3.03x • Historically, Metro has maintained 2010 565.7 (141.4) 424.3 2.71x strong coverage on its long term debt 2011 601.9 (150.5) 451.4 3.00x 2012 648.7 (162.2) 486.5 3.04x supported by Proposition A and 2013 687.2 (171.8) 515.4 3.39x Proposition C Proposition C Sales Tax Coverage History (in $Millions) • A portion of the sales tax collected per Net Sales Tax Allocation to Local Pledged Senior Lien Year Revenue Governments Revenues Coverage proposition is used for local agencies, 2007 $686.3 (137.3) $549.0 5.86x the remainder is pledged to pay the 2008 683.5 (136.7) 546.8 5.31x 2009 620.9 (124.2) 496.7 4.22x Sales Tax Revenue bonds. 2010 565.8 (113.2) 452.6 4.29x – Proposition A: 25% to local agencies 2011 601.9 (120.4) 481.5 4.28x – Proposition C: 20% to local agencies 2012 648.8 (129.8) 519.0 4.68x 2013 687.3 (137.5) 549.9 4.81x – Measure R: 15% to local agencies Measure R Sales Tax Coverage History • In FY 2013, the Metro’s coverage was: (in $Millions) – Proposition A: 3.39x Net Sales Tax Allocation to Local Pledged Senior Lien Year Revenue Governments Revenues Coverage – Proposition C: 4.81x 2011 $598.6 (89.8) $508.9 24.42x – Measure R: 10.85x 2012 645.0 (96.8) 548.3 10.22x 2013 684.9 (102.7) 582.1 10.85x 19 Metro Credit

Variable Rate and Liquidity Summary Variable Rate Auction Rate Prop A 2008-A General Revenue Bonds Variable Rate Bonds Series 2004-A $257,000,000 (Weekly Mode) Auction Rate Securities Outstanding Principal $63,750,000 $63,825,000 $127,775,000 $86,175,000 Issuance Date 8/1/2011 8/1/2011 8/1/2011 Expiration Date 8/4/2014 8/1/2014 8/1/2014 Sumitomo Mitsui RBC Liquidity Provider Bank of America (SBPA) None (direct purchase) (direct purchase) Failed Auction Rate is 2.25x 1 Index/Spread n/a SIFMA + 60 bps SIFMA + 55 bps month LIBOR Associated Swap Bank of Montreal Bank of Montreal Deutsche Bank Bank of Montreal Swap Fixed Rate 3.373% 3.373% 3.358% 3.501% Swap Variable Rate 63% 1 month L +14bps 63% 1 month L +14bps 63% of 1 month L +14bps 64% of 1 month L + 21bp

Commercial Paper Proposition C Proposition A Proposition C Commercial Paper Commercial Paper Outstanding Principal $21,594,000 $45,000,000 $119,020,000 Issuance Date 4/24/2013 4/24/2013 3/11/2013 Expiration Date 4/22/2016 4/22/2016 3/11/2016 Sumitomo/Union State Street Bank (LOC) Wells Fargo Bank (RCF) Liquidity Provider Bank (LOC) $75,000,000 $75,000,000 $150,000,000

20 Metro Credit

Swap Update

MTM Valuation Report as of December 27, 2013 Cancellable Swaps Client Effective Maturity Accrued Associated Bonds Client Receives Notional Bank Counterparty Moody's S&P Fitch MTM Value Pays Date Date Interest 2004 Gateway 64% of USD- 3.501% 9/22/2004 7/1/2027 $86,175,000 Bank of Montreal Aa3 A+ AA- ($1,455,180) ($2,580,848) Bonds LIBOR + 0.21% Prop A Series 2008- 63% of USD- 3.373% 8/23/2005 7/1/2031 $127,575,000 Bank of Montreal Aa3 A+ AA- ($2,081,046) ($7,314,612) A1 and A2 LIBOR + 0.14% Prop A Series 2008- 63% of USD- Deutsche Bank AG - 3.358% 8/23/2005 7/1/2031 $127,775,000 A2 A A+ ($2,074,938) ($7,276,146) A3 and A4 LIBOR + 0.14% New York Branch TOTAL ($5,611,163) ($17,171,606)

Deutsche Bank (A2 / A) Bank of 37% Montreal (Aa3/ A+) 63%

21 Metro Credit

Metro’s Fundamental Credit Strengths • Very high historic and projected debt service coverage combined with conservative financial management – Large population base, economic diversity and above average wealth levels reinforce the highest credit quality – Lowest sales tax volatility among self-help counties – Recovering sales tax base, increasing 7.8% from FY11 to FY12 and 6.2% from FY12 to FY13 • Bondholder legal provisions further protect credit quality – Gross pledge of tax revenues – independent of operations and capital program – Trustee intercept and monthly principal & interest set-asides – Allocation to ordinance uses and need to operate system restrict future borrowing • Strong management – Successful management of Prop A and Prop C over two decades – Proven ability to deliver capital program – Long Range Transportation Plan remains intact despite sales tax adjustments • Mandate from community and voters to improve regional transportation – 67% yes vote on Measure R (November 2008) – Metro is a key element in regional economy and growth

22 Questions? Contact Us: Donna R. Mills –Treasurer [email protected] 213‐922‐4047

LuAnne Edwards Schurtz – Assistant Treasurer [email protected] 213‐922‐2554