CITY OF PHOENIX, ARIZONA of Phoenix - Airport Commercial...Commercial Paper Notes: The 2014 CP Notes...

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)

[email protected]

This RFP does not commit the City to award any agreement. All dates subject to change.

mailto:[email protected]


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


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


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

https://skyharbor.com/About/Information/AnnualFinancialReport


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

http://phoenix.gov/finance/investor/index.html



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

http://phoenix.gov/finance/investor


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


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.


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]


[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



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


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


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.


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


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.

http://www.azleg.gov/


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

V

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

5

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

8

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

11

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.

12

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

13

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


Accounts Receivable 3,144 3,060

Capital Projects

Cash and Cash Equivalents 47,371 31,978


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


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)



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


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



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


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


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)

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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

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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


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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



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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


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.


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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.


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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


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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


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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.


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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.


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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


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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.


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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.


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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.


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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


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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


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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.


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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


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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.


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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


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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.


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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.


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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%


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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.


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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.


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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):

59


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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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

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(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

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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

69

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

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2016 2015

REVENUES

Landing Area $ 54,954 $ 52,082

Terminal Area 129,242 127,641

Ground Transportation 130,764 127,039


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)

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2016 2015

Revenues

Total GAAP Operating Revenues $ 333,415 $ 340,967

Adjusted for :


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


Parking

Amount $ 84,585,621 $ 81,094,038 $ 76,964,416 $ 74,913,811 $ 72,753,006


Rental Cars

Amount $ 46,668,644 $ 52,103,343 $ 49,627,460 $ 47,793,301 $ 47,094,786


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


Landing Fees

Amount $ 41,504,514 $ 38,489,900 $ 37,567,983 $ 34,688,371 $ 34,463,778


Parking

Amount $ 69,837,852 $ 66,087,317 $ 70,231,461 $ 81,543,211 $ 80,052,918


Rental Cars

Amount $ 45,684,285 $ 43,999,292 $ 41,665,110 $ 45,801,605 $ 42,899,798


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


Outstanding Debt per


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


Debt Service per


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


Debt Service per


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+


2010B Airport Revenue Bonds (Taxable)

2010C Airport Revenue Refunding 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



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:


(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


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



06-02-04 2004 $ 260,000,000 7/1/07-29 3.69% - 6.25% $ 186,050,000

$ 186,050,000

Note:


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


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



06-24-14 2014 (b) $7,865,000 7/1/19-20 2.00% – 4.00% $ 7,865,000

Total $ 7,865,000

Notes:


(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


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:


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:


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:


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:


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:


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

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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

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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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PHX 332434747v1

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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PHX 332434747v1

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


“Series 2017A-1 Notes” means the Corporation’s Airport Commercial Paper Program

Notes, Series 2017A-1 (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 2017C-1 Notes” means the Corporation’s Airport Commercial Paper Program

Notes, Series 2017C-1 (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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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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(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


Attn: Chief Financial Officer

To the City: Finance Department

City of Phoenix




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.


CORPORATION

By____________________________________

Its_________________________________

PHX 332435050v1

EXHIBIT C - RFP DRAFT DATED JUNE 8, 2017

ISSUING AND PAYING AGENT AGREEMENT

between


and

U.S. BANK NATIONAL ASSOCIATION,

as Issuing and Paying Agent

______________________________________

Dated as of August 1, 2017

______________________________________

RELATING TO


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


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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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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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


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

-2- PHX 332435050v1

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.

-5- PHX 332435050v1

“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


“Notice of Temporary Non-Issuance” shall have the meaning given such term in the


“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


“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.










Notes, Series 2017B-1 (Non-AMT) 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


“Taxable Notes” means a Series or Subseries of Notes, the interest on which is not


“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


(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


(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

-39- PHX 332435050v1

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


ARTICLE IX

MODIFICATION OR AMENDMENT OF THIS


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;

-41- PHX 332435050v1

(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

-42- PHX 332435050v1

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

-43- PHX 332435050v1

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:

-44- PHX 332435050v1

(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.

-45- PHX 332435050v1

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


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


Attention: Chief Financial Officer

City: City of Phoenix

251 West Washington, 9th

Floor


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

-48- PHX 332435050v1

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

-50- PHX 332435050v1

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.

-51- PHX 332435050v1

(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.

-52- PHX 332435050v1

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.


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


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.


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: __________


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


and

____________________

$___________


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

-ii- PHX 332434512v3

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


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

TABLE OF CONTENTS

Page

-iii- PHX 332434512v3

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

-2- PHX 332434512v3

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

-3- PHX 332434512v3

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.

-4- PHX 332434512v3

“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.

-5- PHX 332434512v3

“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.

-6- PHX 332434512v3

“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


“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


“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


“Note Repayment Fund” means the fund created pursuant to Section 5.01 of the Issuing


“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


“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.


Notes, Series 2017A-1 (Non-AMT).


Notes, Series 2017A-2 (Non-AMT).

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Notes, Series 2017B-1 (AMT).


Notes, Series 2017B-2 (AMT).


Notes, Series 2017C-1 (Taxable).


Notes, Series 2017C-2 (Taxable).

“Series CP Revenue Obligations” shall have the meaning assigned to such term in the


“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.

-11- PHX 332434512v3

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

-12- PHX 332434512v3

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,

-13- PHX 332434512v3

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

-15- PHX 332434512v3

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

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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


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;

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(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

-38- PHX 332434512v3

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;

-39- PHX 332434512v3

(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

-41- PHX 332434512v3

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.

-42- PHX 332434512v3

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.

-43- PHX 332434512v3

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:

-44- PHX 332434512v3

If to the Corporation:


c/o Finance Department City of Phoenix




Telephone: (602) 262-7166

Facsimile: (602) 495-5605

If to the City:

Finance Department

City of Phoenix




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: ___________________

-45- PHX 332434512v3

If to the Issuing and Paying Agent:

U.S. Bank National Association

100 Wall Street, Suite 1600



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.



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,


100 Wall Street


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


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.


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


(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”);


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.


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:


ANNEX A

SIGHT DRAFT



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:


ANNEX B

CERTIFICATE FOR INTEREST DRAWING



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.


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 _______________, ____.


Paying Agent

By:

Name:

Title:


ANNEX C

CERTIFICATE FOR PRINCIPAL DRAWING



Series 2017ABC-___

Irrevocable Direct Pay Letter of Credit No. _____________

________________

________________

________________

Attention: ________________Letter of Credit Department



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.


(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



Paying Agent

By:

Name:

Title:


ANNEX D

CONFIRMATION OF ISSUANCE OF NOTES



Series 2017ABC-___

Irrevocable Direct Pay Letter of Credit No. ___________

________________

________________

________________

Attention: ________________



with reference to Irrevocable Direct Pay Letter of Credit No. _____________ (the “Letter of



Agent, that:



(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.


Paying Agent

By:

Name:

Title:


ANNEX E

NOTIFICATION OF PERMANENT NON-ISSUANCE



Series 2017ABC-___

Irrevocable Direct Pay Letter of Credit No. SB01651



100 Wall Street

New York, NY 10005



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.


(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:


ANNEX F

NOTIFICATION OF TEMPORARY NON-ISSUANCE



Series 2017ABC-___

Irrevocable Direct Pay Letter of Credit No. __________



100 Wall Street

New York, NY 10005





Paying Agent”) with reference to Irrevocable Direct Pay Letter of Credit No. ________ (the



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



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.


(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:


ANNEX G

NOTIFICATION OF REINSTATEMENT



Series 2017ABC-___




100 Wall Street

New York, NY 10005





Paying Agent”) with reference to Irrevocable Direct Pay Letter of Credit No. __________ (the



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:


ANNEX H

TERMINATION CERTIFICATE

PAYMENT IN FULL; ALTERNATE FACILITY



Series 2017ABC-___


________________

________________

________________

Attention: ________________



with reference to Irrevocable Direct Pay Letter of Credit No. ____________ (the “Letter of



Agent, that:



(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.



Certificate as of the ____ day of ________________, ____.


Paying Agent

By:

Name:

Title:


ANNEX I

CERTIFICATE REGARDING REDUCTION OF STATED AMOUNT



Series 2017ABC-___


________________

________________

________________

Attention: ________________



with reference to Irrevocable Direct Pay Letter of Credit No. ____________ (the “Letter of



Agent, that:



(2) As of the date hereof, the maximum principal amount of Series 2017ABC-___

Notes that may be outstanding has been permanently reduced to $__________.


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].





Paying Agent

By:

Name:

Title:


ANNEX J

NOTIFICATION OF TRANSFER



Series 2017ABC-___


________________

________________

________________

Attention: ________________


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.


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.


Paying Agent

By:

Name:

Title:

SIGNATURE AUTHENTICATION

(Transferee)

By:

Name:

Title:


ANNEX K

NOTICE OF EXTENSION OF STATED EXPIRATION DATE



Series 2017ABC-___




100 Wall Street

New York, NY 10005



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:


ANNEX L

NOTIFICATION OF INCREASE OF AVAILABLE

AMOUNT OF LETTER OF CREDIT



Series _____




100 Wall Street

New York, NY 10005





Paying Agent”) with reference to Irrevocable Direct Pay Letter of Credit No. ___________ (the



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

________________.


(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)


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.



corporation

By:

Its:

ATTEST:

Secretary-Treasurer


Schedule A

Amounts Outstanding and Payments

Under the Bank Note

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



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



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


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

CITY OF PHOENIX, ARIZONA of Phoenix - Airport Commercial...Commercial Paper Notes: The 2014 CP Notes...

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