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Downriver Community Conference(On Behalf of Downriver Mutual Aid)

Confidential Financing DocumentOctober 2012

CONFIDENTIAL

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CONFIDENTIAL

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Confidential Financing Document CONFIDENTIAL

This Confidential Information Package (the “Package”) has been prepared by Plante Moran, PLLC (“P&M ) from material supplied by the Downriver Mutual Aid 911 District (“DMA”), solely for informational purposes. It is being furnished solely for use by prospective lenders to assist in the evaluation of this transaction.

The information contained herein has been prepared to assist interested parties in making their own evaluation of DMA and does not purport to contain all of the information that an interested party may desire. In all cases, interested parties should conduct their own investigations and analysis of DMA and the data set forth in this Package. Neither DMA nor P&M makes any representation or warranty as to the accuracy or completeness of the information contained in this Package or made available in connection with any further investigation of DMA,, including any estimates or projections, and shall have no liability for any representations (expressed or implied) contained in, or for any omissions from this Package or any other written or oral communication transmitted to the recipient in the course of its evaluation of DMA. The only information that will have any legal effect will be that specifically represented in the loan documents.

The recipient acknowledges and agrees that neither DMA nor P&M will be subject to any liability based on the information contained in the Package, errors therein, or omissions there from, whether DMA or P&M knew or should have known of any such errors or omissions, or was responsible for or participated in its inclusion in or omission from this Package.

DMA reserves the right to negotiate with one or more prospective lenders at any time and to enter into a definitive agreement for the financing of the project without prior written notice to you or other prospective lenders. Also, DMA reserves the right to terminate, at any time, further participation in the investigation and proposal process by any party and to modify data, documentation and other procedures without assigning any reason therefore.

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Confidential Financing Document CONFIDENTIAL

The recipient agrees not to contact any officers, employees, or affiliates of DMA, either directly or indirectly, without the prior written consent of DMA or P&M. All communications, inquiries and requests for information relating to this Package or to a possible transaction involving DMA must be addressed to:

Kim Donahey, MBAChief Financial Director

Michigan Works! Southgate Service CenterDownriver Community Conference

15100 Northline Rd.Southgate, MI 48195

Email: Kim.Donahey@dccwf.orgDirect: 734-362-7005

Fax: 734-283-0568

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Table of Contents CONFIDENTIAL

• Executive Summary

5 – 8

• Financial Information

9 – 12

• Financing Needs

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Pages

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Executive Summary

DCC Overview The Downriver Community Conference (DCC) was formed as a regional partnership and a common voice for Downriver communities. The DCC is comprised of 20 communities including Huron Township, Romulus, Dearborn, Dearborn Heights, and the 16 communities included in the DMA 911 district outlined below.

Today the DCC develops programs and provides leadership in various areas such as economic and community development, employment and training, weatherization and transportation services.

The Downriver Mutual Aid (DMA) consortium was founded to coordinate public safety activities during emergencies. The DMA is an operating unit within the DCC, and is comprised of 18 communities including Huron Township, Romulus, and the 16 communities included in the DMA 911 district outlined below.

The DMA formalizes a number of sophisticated services that no single department or city could offer, such as creating a regional SWAT Team, a Crisis Negotiation Team, an Underwater Search & Recovery Team, the Downriver Area Narcotics Organization (DRANO), the Downriver Auto Theft Team (DRATT) and a Uniformed Police Task Force.

The DMA 911 District is a consortium of sixteen communities in lower Wayne County that share resources for the primary purpose of economic development. The 16 communities include the following:

These communities provide autonomous public safety and public works operations. Each community acts as a primary Public Safety Answering Point (PSAP) for its residents providing police, fire, and rescue services.

CONFIDENTIAL

Allen Park Brownstown Ecorse Flat Rock Gibraltar

Grosse Ile Lincoln Park Melvindale River Rouge Riverview

Rockwood Southgate Taylor Trenton Woodhaven

Wyandotte

DMA Overview

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Executive Summary

DMA 911 Radio System

The Downriver Mutual Aid (DMA) radio system has been in existence for over 12-years and covers the members’ police and fire departments.

The current radio system is a 16 channel Motorola Smartnet II 800 MHz simulcast trunked system. It is a dual mode system with both analog and digital trunked talkgroups. There are four tower sites and one main communications room. The tower sites are located in Flat Rock, Riverview, Ecorse and Taylor. All towers except for Taylor are free of rent and are either owned by DMA or have long-term leases.

The type and model number of the subscriber radios are as follows: Portables are Motorola XTS3000 Model H09UCF9PW7BN Mobiles are Motorola Astro Spectra Plus D04UJH9SW3AN, W4 and W5s Consolettes are Motorola Astro Spectra Model L04UJH9PW7AN

The current subscriber radio inventory consists of 1,624 units allocated as follows:

The current 800 MHz system, procured in 1998, was financed through a $12 million dollar bond issue and ultimately paid for with funds captured by the State of Michigan E-911 telephone surcharge.

The telephone charge can capture up to 80-cents per monthly bill on land-line and cellular telephone bills. The current rate is 42-cents per monthly land-line and cellular telephone bill. This surcharge allowed the DCC to finance the radio system which covered four tower sites, radio dispatch consoles for all community PSAP’s, and mobile/portable radios for police and fire departments.

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Control Stations – 37 Fire Portables – 364 Fire mobiles – 171 Police Portables – 715 Police Mobiles – 315

City Portables – 9 City Mobiles – 13

Previous Financing

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Executive Summary

Current Project and Financing Objectives

The Downriver Mutual Aid has solicited bids to replace its 800 MHz Trunked Radio Communications System with a Cassidian solution, called COR p25 network. This turnkey radio infrastructure system consists of a simulcast system with 4 radio tower sites (Taylor, Ecorse, Flat Rock and Riverview); a main communications room; 16 frequency channels; and 20 dispatch consoles distributed to over 14 locations.

The new system, connected by fiberlink and microwave technologies, allows public safety officers the ability to communicate both through voice and data. The backbone infrastructure to the current system is being completely replaced with the newest technology and allows interoperability with the Michigan State Police, and other local, county, and federal agencies.

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COR p25 Equipment: Central Controllers Software Package 5 Channel Gateway Power

Supplies ISSI Connections Spare Parts

Network Timing Equipment: GPS Antenna’s and Servers

Network Management System: Workstations Laser Printers Solarwinds Network Monitor Manager Server

Console Operator Positions: Console Package Headset/Handset Touchscreen Monitor Software Licenses UPS Power Supply

Console Gateway: Redundant VPgate Software

Licenses Endpoint Licenses Computers Display Units Radio Controllers Rack Mount Shelves SIP Telephony Gateway

Professional services System Design Equipment Installation Staging Console Installation Acceptance Testing Routers and Switches Control Stations

Infrastructure Equipment to be Purchased

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Executive Summary

Radios to be Purchased

In addition to the infrastructure, the DMA is also replacing the subscriber units (mobile and portable radios, control stations and consolettes) for each community in the DMA 911 District.

The DMA competitively bid the subscriber units and selected Motorola as the vendor. The subscriber units currently operate using the 800 MHz system as described above. The DMA will be replacing over 1,000 mobile and portable radios; 14 control stations and 25 consolettes as well as the related templates. The selected Motorola products are as follows:

Portable radios – Motorola APX 6000 Mobile radios – Motorola APX 6500 2.5 Control Stations Consolettes

The City of Southgate has received a FEMA AFG grant in the amount of $784,900 (included above). In addition, one of the DMA communities has applied for a regional grant totaling $760,000, to help offset the cost of the subscriber units (which is not included in the summary above).

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Estimated Financing Needs

Total Equipment to be Purchased (Estimated)

Infrastructure 4,898,000$ Radios 5,244,997 Total 10,142,997$

Less: Grant Monies Available (Applied) (948,264) DCC Payments Applied (2,281,646)

Financing Needed 6,913,087$

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Historical Financial Information

DMA 911 Fund Historical Balance Sheets

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Assets 2009 2010 2011 2012

Current AssetsCash and Investments 137,472$ 315,233$ 2,329,968$ 2,483,328$ Due from Other Governmental Units 203,724 597,438 794,698 518,264 Restricted Assets 1,212,093 1,135,615 - - Capitalized Assets - - - 1,325,392 [A]

Total Assets 1,553,289$ 2,048,286$ 3,124,666$ 4,326,984$

Liabilities

Liabilities and Fund Balances (Deficit) 2009 2010 2011 2012

LiabilitiesAccrued and Other Liabilities 3,226$ 2,105$ 12,449$ 17,356$ Deferred Revenue 394,765 1,017,949 358,297 118,000

Total Current Liabilities 397,991 1,020,054 370,746 135,356

Fund Balances (Deficit)Reserved for 911 Expenditures 1,212,093 1,135,615 2,753,920 4,191,628 Unreserved Special Revenue Funds (56,795) (107,383) - -

Total Fund Balance (Deficit) 1,155,298 1,028,232 2,753,920 4,191,628

Total Liabilities and Fund Balance (Deficit) 1,553,289$ 2,048,286$ 3,124,666$ 4,326,984$

[A] Represents deposits paid by DMA 911 for infrastructure equipment to replace the current system.

As of September 30,

As of September 30,

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Historical Financial Information

DMA 911 Fund Historical Income Statements

CONFIDENTIAL

For the Years Ended September 30,

2009 2010 2011 2012

Resources (Inflows)

911 User Charge (Land Line) 1,087,357$ 742,526$ 2,332,219$ 1,575,238$ [A]

911 User Charge (Cell Phone) 441,171 584,922 320,786 471,383 [A]

Interest 6,880 1,758 1,582 4,455

Total Resources (Inflows) 1,535,408$ 1,329,206$ 2,654,587$ 2,051,076$

Charges to Appropriations (Outflows)

Salaries 1,901 2,838 10,782 27,885 [B]

Fringe Benefits 431 876 2,948 5,489

Professional Services 7,920 4,503 95,923 40,109 [C]

Subscriptions 194,675 182,689 190,188 183,359 [D]

Travel - 4,613 25 2,748

Office Supplies - 211 - 683

Communication Costs 2,330 578 1,127 225

Maintenance 197,829 208,519 298,053 294,719 [E]

Rent - - 326 1,139

Utilities 18,557 5,109 20,957 22,727

Insurance 52,608 52,175 31,778 33,371 [F]

Miscellaneous 30 512 2,180 915

Capital Outlay - 3,928 853 -

Debt Service 989,721 989,721 273,759 -

Total Charges to Appropriations (Outflows) 1,466,002 1,456,272 928,899 613,368

Resources Greater Than (Less Than) Charges to Appropriations 69,406$ (127,066)$ 1,725,688$ 1,437,708$

Beginning Fund Balance 1,085,892 1,155,298 1,028,232 2,753,920

Ending Fund Balance 1,155,298$ 1,028,232$ 2,753,920$ 4,191,628$

[A] Revenue recognition under GASB #33 represents user charges collected within 90 days of year-end

[B] DMA System Administrator hired in 2012

[C] Primarily related to legal fees and consulting work for RFP and IT Services

[D] Based upon contractual agreement with Comcast Fiberlink Services

[E] Based upon contractual agreement with Cassadian and Solar Winds

[F] Changed insurance provider in 2011

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Projected Financial Information

Projected Income Statements

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For the Years Ended September 30,

2013 2014 2015 2016 2017 2018

Resources (Inflows)

911 User Charge (Land Line) 1,551,216$ 1,628,777$ 1,710,216$ 1,795,726$ 1,885,513$ 1,979,788$

911 User Charge (Cell Phone) 471,176 494,735 519,472 545,445 572,717 601,353

Interest 5,000 5,250 5,513 5,788 6,078 6,381

Total Resources (Inflows) 2,027,392$ 2,128,762$ 2,235,200$ 2,346,960$ 2,464,308$ 2,587,523$

Charges to Appropriations (Outflows)

Salaries [A] 36,722 38,558 40,486 42,510 44,636 46,868

Fringe Benefits [A] 7,592 7,972 8,370 8,789 9,228 9,690

Professional Services [B] 50,000 30,000 31,000 32,000 33,000 35,000

Maintenance Contract on Firewall/Servers [A] 30,000 31,500 33,075 34,729 36,465 38,288

Maintenance - Recabling/Tower Sites [C] 110,000 - - - - -

Motorola Service Agreement [D] 86,000 - - - - -

Subscriptions [E] 189,000 189,000 189,000 189,000 189,000 189,000

Travel [A] 5,000 5,250 5,513 5,788 6,078 6,381

Office Supplies [A] 1,500 1,575 1,654 1,736 1,823 1,914

Communication Costs [A] 3,600 3,780 3,969 4,167 4,376 4,595

Maintenance [F] 226,000 272,000 272,000 272,000 272,000 272,000

Rent [A] 1,500 1,575 1,654 1,736 1,823 1,914

Utilities [A] 27,750 29,138 30,594 32,124 33,730 35,417

Insurance [A] 50,000 52,500 55,125 57,881 60,775 63,814

Miscellaneous [A] 1,000 1,050 1,103 1,158 1,216 1,276

Equipment [C] 835,305 - - - - -

Computer Related Fees [A] 35,000 36,750 38,588 40,517 42,543 44,670

Training [G] 135,000 10,000 10,000 10,000 10,000 10,000

Total Charges to Appropriations (Outflows) 1,830,969 710,647 722,130 734,136 746,693 760,827

Resources in Excess of Appropriations 196,423$ 1,418,114$ 1,513,070$ 1,612,824$ 1,717,615$ 1,826,696$

(Before Debt Service)

Add Back: Non-Operating Expenses [C] 945,305 - - - - -

Resources Available for Debt Service 1,141,728 1,418,114 1,513,070 1,612,824 1,717,615 1,826,696

[A] - [G] See page 12 for footnote explanation

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Projected Financial Information

Notes to Projected Income Statements

CONFIDENTIAL

[A] Assumed growth of 5% a year for the projected period.

[B] Professional Services estimated by management to decline after 2013 to approximately $30,000 to $35,000 per year.

[C] Non-Operating Expenses related to equipment acquisitions, towers, or recabling that will be paid for from the organization's

fund balance resources as of September 2012.

[D] Management has indicated this is a one time expense.

[E] Management has indicated that subscriptions will remain constant throughout the projected period due to contractual obligations.

[F] Maintenance expense is $272,000 in year 2014 and beyond consistent with maintenance contract.

[G] Management has estimated training costs to be $10,000 in year 2014 and beyond.

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Estimated Financing Needs

Financing Needs Summary

CONFIDENTIAL

Below is a summary of the financing needed for this project:

Infrastructure - Equipment - Estimated Costs 4,898,000$

Less: Payments already made as of 9/30/2012Payment #1 911 fees (494,182) Payment #2 911 fees (988,364) Payment #2 COPS VI/VII (163,364)

Subtotal - Infrastructure 3,252,090$

Subscriber Units - Estimated Costs 5,244,997$

Less: Payments made or comitted as of 9/30/2012AFG Grant - Southgate (784,900) Cash match for grant (199,100) Initial deposit 10% - cash (600,000)

Subtotal - Subscriber Units 3,660,997$

Total Estimated Financing Needed 6,913,087$