LAKE OF THE OZARKS COMMUNITY BRIDGE CORPORATION … · MANAGEMENT'S DISCUSSION AND ANALYSIS April...

LAKE OF THE OZARKS COMMUNITY BRIDGE CORPORATION

CAMDEN COUNTY, MISSOURI

Board of Directors

Larry Gridley, Chairman and President Joseph A. Roeger, Vice-President and Treasure!

Eddie B. Pue, Secretary James Werner, Executive Director

David G. Baumgartner Henry Michael Page

Advisorv Board Member

Roger Schwartze, Missouri Department of Transportation

Consulting Engineer

HNTB Corporation Kansas City, Missouri

Traffic Consultant

Jacobs New York, NY

Bond Counsel

Gilrnore & Bell, P.C. Kansas City, Missouri

Counsel t o the Corporation

White Goss Bowers March Schulte & Weisenfels Kansas City, Missouri

Underwriter

Salomon Smith Barney New York, New York

Counsel to the Underwriter

Thompson Coburn St. Louis, Missouri

BNY Trust Company of Missouri St. Louis, Missouri

TABLE OF CONTENTS

Audited Financial Statements

Annual and/or Supplemental Studies

Annual Budget

Annual Traffic Consultant's Report

Annual Consulting Engineer's Report

Officer's Certificate re: Statement of Compliance

Officer's Certification re: Insurance Coverage

Officer's Certification re: Participation of Missouri Highway And Transportation Commission

Consulting Engineer's Report re: Status of Construction

Section 1

Section 2

Section 3

Section 4

Section 5

Section 6

Section 7

Section 8

Section 9

Section 1

Audited Financial Statements

Camden County, Missouri

For the Year Ended April 30,201 1

I I TABLE OF CONTENTS

j PAGE ~. .

I INDEPENDENT AUDITORS' REPORT.. ........................... ;. .......... .:-. .... 1 - 2 !

........... I MANAGEMENT'S DISCUSSION AND ANALYSIS (UNAUDITED). 3 - 6

I FINANCIAL STATEMENTS:

.. ........................................................ Statement of Net Assets.. .:. 7 I I .................. Statement of Revenues, Expenses and Changes in Net Assets.. 8 - 9

I . . . Statement of Cash Flows.. ..................................................... :. ..... 10 - 11 I . ,

.... NOTES TO THE FINANCIAL STATEMENTS.. ............................... .: 12 - 25

I

4 1 I

Certified Public Accountants and Consultants Elmer L Everr

Jerome L Kauffmon R~chord E Ellloft

Dale A Slebeneck K e h L Taylor

Jo L Moore

INDEPENDENT AUDITORS' REPORT

I 1

To the Board of Directors of I Lake of the Ozarks Community Bridge Corporation

Camden County, Missouri:

I I

We have audited the accompanying basic financial statements of the Lake of the Ozarks I Community Bridge Corporation, as of and for the year ended April 30, 201 1, as listed in the 1

Table of Contents. These financial statements are the responsibility of the Corporation's management. Our responsibility is to express an opinion on these financial statements based on our

f i audit.

We conducted our audit in accordance with auditing standards generally accepted in the United I States of America. Those standards require that we plan and perform an audit to obtain reasonable i assurance about whether the financial statements are free of material misstatement. An audit

includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial I statements. An audit also includes assessing the accounting principles used and significant estimates 1 made by management, as well as evaluating the overall financial statement presentation. We believe

that our audit provides a reasonable basis for our opinion. I I

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Lake of the Bzarks Community Bridge Co~pora~on as of April 30,

I 201 1 and the changes in financial position and cash flows for the year then ended in conformity t with accounting principles generally accepted in the United States of America.

I

I 520 Dix Rood * Jefferson Ciy, Missouri 651 09 5731635-0227 = FAX 5731634.3764 Village Green Shopping Center * 1021 W. Buchanan Street, Ste. 10 * California, Missouri 65018 * 5731796-3210 FAX 5731796.3452

I 4571 Hwy. 54, Suite A 0 Osage Beach, Missouri 65065 5731348.4141 0 FAX 5731348-0989

Accounting principles generally accepted in the United States of America require that the I I management's discussion and analysis on pages 3 through 5 be presented to supplement the basic

financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part

1 of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United

I States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management's responses to our

I inquiries, the basic financial statements, and other knowledge we obtained during our audit of the

I basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.

EVERS & COMPANY, CPA's, L.L.C. Jefferson City, Missouri

September 22,201 1

I

MANAGEMENT'S DISCUSSION AND ANALYSIS April 30,201 1

(Unaudited)

I The following discussion and analysis of the Lake of the Ozarks Community Bridge Corporation ('Corporation") financial performance is intended to supplement the information contained in the basic financial statements and the notes thereto and is provided as a summary of operations for the benefit of the users of the Corporation's financial statements.

I 1 The financial statements contain a Statement of Net Assets, Statement of Revenues, Expenses

and Changes in Net Assets, and a Statement of Cash Flows. These statements include all assets and liabilities of the Corporation presented using the accrual method of accounting whereby

I revenues (and the related net asset effect) are recognized when earned, not when cash is received, and expenses (and the related net asset effect) are recognized when incurred, not when

1 the cash expenditure is made.

I The Statement of Net Assets reports the assets and liabilities of the Corporation as of April 30,

I 201 1 together with the excess of liabilities over assets, referred to as Net Assets. The Statement of Revenues, Expenses, and Changes in Net Assets presents the financial effect of the operating activity for the year ended April 30,201 1. As the Corporation accounts for its operating activity

I on an accrual basis the change in net assets will not ordinarily be the same as the change in the Corporation's cash balance during the year. Accordingly, the Statement of Cash Flows provides a summary of how the cash balance changed during the year.

1 i The following table presents condensed financial information for each of the last two years for

the Corporation.

i - I Activitv 201 1 - - 2010

Toll revenues Investment income Unrealized investment gain Total operating revenues Operating expenses Interest expense Change in net assets Total net assets

Toll revenue. Toll revenues increased by $10,518 from 2010 to 201 1. For all class~fications the total number of vehicles utilizing the bndge was 1,221,986 in 201 1 and 1,314,298 in 2010. Toll rates rema~ned stable for the period May 1, 1998 (opening day) until April 30, 2004. Effective May 1, 2004, the higher in-season (May-September) toll rates were extended to April through October and the toll rate for two-axle, dual tired vehicles was increased by $2.00 per trip.

As of October 1, 2010, a new toll rate schedule was adopted that effectively raised toll rates approximately 33% in the off-season and 20% in-season.


(Unaudited)

Investment income: All investments held by the Corporation are in the form of U.S. government securities or government insured certificates of deposit.

Operating expenses: Operating expenses include both items requiring cash expenditures and items representing the systematic recognition of prior year capital expenditures such as bond issuances costs and fixed assets, the recognition of which does not represent current year cash outlays. The non-cash expenses of amortization and depreciation included in the financial statements were $738,746 for both 201 1 and 2010. During 201 1 approximately $200,000 was spent for legal and accounting services related to the formation of a Transportation Development District and the application for alternative financing, see Note 7 to the baslc financial statements for more information on legal and accounting services.

Major operating expenses are set forth below:

Expense 2011 2010

Payroll expense $291,453 $301,940 Employee Benefits 148,446 158,080 Officers' salaries 51,300 51,300 Consulting services 96,840 20,282 Toll plaza and bridge maintenance 28,235 32,117 Insurance 83,358 93,489 Legal and accounting 219,162 2 1,903

Pursuant to the terms of a Bond Trust Indenture dated as of March 1, 1998 the Corporabon is required to deposit all revenues generated by the bridge facility with the bond trustee, BNY Trust Company of Missouri. The bond trustee held the following fund balances at April 30, 201 1 and 2010.

2011 2010

General Fund $ 1,776,483 $4,056,087 Debt Service Reserve Fund 3,670,660 3,653,015 Debt Service Fund 552,657 543,482 Renewal and Replacement Fund 1,427,658 1,227,658 Revenue Fund 130,099 70,279 Maintenance Resenre Fund 30,000 30,938 Insurance Fund 113,215 113,215


(Unaudited)

All funds held by the bond trustee are restricted to uses expressly permitted by the terms of the Bond Trust Indenture. All toll revenues generated by the bridge system are required to be

I deposited immediately in the revenue fund and are then available to pay the ordinary and necessary operation and maintenance expenses of the Corporation. All revenues in excess of operating and maintenance expenses are transferred monthly by the Bond Trustee, first to the

I debt service fund to the extent necessary to satisfy the debt service requirements and then to the general fund.

CAPITAL ASSETS The Corporation had $18,976,290.53 and $19,489,179.33 (net of accumulated depreciation) invested in transportation infrastructure and related support facilities as of April 30, 201 1 and 2010, respectively. The investment in capital assets includes land, bridges, buildings, improvements, toll collection facilities and office equipment. The Corporation's net revenue, and long-term debt are used to finance capital investments. More detailed information about the Corporation's capital assets are presented in Note 8 to the basic financial statements.

Capital Assets, Net of Depreciation

i 201 1 2010 I Land $ 1,505,434.19 $ 1,505,434.19

Building 1,185,632.99 1,217,677.12 I Improvements/Infrastructure 15,962,743.77 16,402,654.34

Equipment 322,479.58 363,413.68

I Totals $ 18,976,290.53 $19,489,179.33

I

I LONGTERM DEBT I Additional information on the Corporation's long-term debt can be found in Note 5 to the basic

financial statements.

Long-Term Debt

Bond Payable Compensated Absences Totals


I (Unaudited) I

1 ECONOMIC FACTORS AND PROSPECTIVE BUDGETS AND RATES

I i The current economic downturn has significantly impacted the number of vehicles using the

bridge. Traffic counts have declined almost 30% since the beginning of the recession in 2007. Additionally improvements to alternative routes completed by the Missouri Department of

I Transportation (MoDOT) in 201 0 have also negatively impacted the traffic counts on the bridge.

The Corporation has addressed the reduction in toll revenue with several courses of action. A

I toll rate study was commissioned and, based on the findings of the rate study, the Corporation raised toll rates approximately 33% off-season and 20% in-season. The Corporation has also

I requested that MoDOT improve the state roads leading the west terminus of the bridge to improve access to the bridge. Improvements to the western access roads may enable fUrther toll rate increases. Additionally, the Corporation continues to work with investment advisors on

I alternative financing options.

I FINANCIAL CONTACT

I This financial report is designed to provide the interested parties with an overview of the

I Corporation's financial operations and financial condition. Should the reader have questions regarding the information included in this report or wish to request additional financial information, please contact the Lake Ozark Community Bridge Corporation at 2140 Bagnall

I Eaii B!-qd., S - t e 404, Lake Czark, MC 55349.

LAKE OF THE OZARKS COMMUNITY BFUDGE CORPORATION Camden County, Missouri

April 30,201 1

ASSETS Current Assets:

Petty Cash $ 1,000.00 Prepaid Expenses 73,001.05

Restricted Assets: Cash in Bank $ 134,452.28 Cash Equivalents and Investments 7,700,771.61 Accrued Interest Receivable 1 2 , 4 5 7 . 5 0

Total Restricted Assets 7.847.681.39 Total Current Assets 7,921,682.44

Noncurrent Assets: Land 1,505,434.19 Net Capital Assets 17,470,856.34 Organizational Costs 705,928.33 Bond Issuance Costs 549,003.73 Origgnal Issue Discount 880,542.05

Less: Accumulated Amortization (1,329.042.98) Total Noncurrent Assets 19.782.721.66

TOTAL ASSETS 27.704.404.10 LIABILITIES

Current Liabilities: Payable from Restricted Assets:

Accounts Payable $ 23,756.88 Accrued Payroll 4,784.62 Pension Plan Payable 690.04 Interest Payable 778,859.40 A-3'-- I luage Rebate Liability 40,038.87 Deferred Revenue 277,337.28 Payroll Taxes Payable 2.867.12

Total Currenr Liabliities 1,128,334.21 Long-term Liabilities:

Bonds Payable (net of unamortized Advanced Refunding Issue Costs) (note 6) 32,948,159.82 Compensated Absences 7,274.49

Total Long-term Liabilities 32,955,434.3 1 TOTAL LIABILITIES 34.083.768.52

NET ASSETS Net Assets:

Invested m Capital Assets, Net of Related Debt 1,917,987.70 Restricted for:

Debt Service 5,205,826.33 Unrestricted (deficit) (13.503.178.45)

TOTAL NET ASSETS R (6.379.~&4,42) -

See accompanying notes to financlai statements 7

LAKE OF THE OZARKS COMMUNITY BRIDGE CORPORATION Camden County, Missouri

STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS

For the Year Ended April 30,201 1

OPERATING REVENUES Charges for Sewices, Pledged as Secmty

for Series 1998 Bonds Cable Attachment Fee Miscellaneous

Total Operating Revenues

OPERATING EXPENSES Amortization Depreciation Expense Trustees Fees Bank Charges Legal and Accounting Officer Payroll Expense Office Expense Travel and Entertainment PayrolI Expense Payroll Tax Expense Employee Benefits Toll Equipment Maintenance Utilities Collrier Fees Traffic Consultant Auto Expense EngineeringiConsulting Finz~cial Consiikait Fees Insurance MoDOT Maintenance Promotional Expenses Repairs & Maintenance Uniforms

Total Expenses

Income (Loss) From Operations 1,296,5 10.03

NONOPERATING REVENUES (EXPENSES) Investment Income 184,815.08

See accompanying notes to financial statements 8


STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS

For the Year Ended Avril30,2011

Unrealized Investment Gain/(Loss) (127,194.70) Interest Expense (1.954.881.15)

Total Non Operating Revenues (Expenses) (1,897.260.77)

Changes in Net Assets Before Special Item

Special Item (Note 5)

Net Interest Cost of Escrow Deposit Agreement

Changes in Net Assets

Total Net Assets (deficit) - Beginning of Year

Total Net Assets (deficit) - End of Year

See accompanying notes to Iinanclai statements. 9


STATEMENT OF CASH FLOWS For the Year Ended April 30,201 1

CASH BLOWS FROM OPERATING ACTMTIES: Cash received from customers Cash paid to suppliers Cash paid to employees

Net Cash Provided (Used) by Operating Activities

CASH mows FROM CAPITAL AND RELATED FINANCING ACTIVITIES:

Interest paid on revenue bonds Arbitrage rebate payment Net interest adjustment on redemption of bonds Bond redemption

Net Cash Used for Capital and Related Financing Activities

CASH FLOWS FROM INVESTING ACTMTIES: Receipts of investment income Proceeds from investments

Net Cash Used for Investing Activities

Net Increase in Cash & Cash Equivalents

Cash & Cash Equivalents at Beginning of Year

Cash & Cash Equivalents at End of Year

See accornpanylngnotes to the fmanc~al statements 10


STATEMENT OF CASH FLOWS For the Year Ended Apnl30,2011

Reconciliation of Operating Income (Loss) to Net Cash Provided (Used) by Operating Activities:

Operahng Income (Loss)

Adjustments to Reconcile Operating Income (Loss) to Net Cash Provlded by Operating Act~v~ties:

Depreciahon and amortization (Increase) Decrease in:

Prepaid expenses Increase (Decrease) m:

Accounts payable Payroll taxes payable Deferred revenue Accrued payroll Compensated absences Pension plan payable

Total Adjustments Net Cash Provided by Operating Activities

Cash Eq-.'- 3 - A uiialeuts Beginoing of Year

Petty Cash $ 1,000.00 Cash in Bank 129,258.20 Cash Equ~valents Held by Bond Trustee Treasury I1 Money Market Fund 3,429,949.46

Totals $ 3,560,207.66

Increase or En& of Year (Decrease)

See accompanying notes to the financ~al statements 11


NOTES TO THE FINANCIAL STATEMENTS For the Year Ended April 30,201 1

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

The Corporation

The Corporation is a nonprofit transportation corporation organized and existing under the laws of the State of Missouri, including in particular the Missouri Transportation Corporation Act, Section 238.300 to 238.360 of the Revised Statutes of Missouri and the Missouri Nonprofit Corporation A 4 Chapter 355 of the Revised Statutes of Missouri for the purpose of funding, promoting, planning, designing, constructing, maintaining and operating a bridge for vehicular traffic and other ancillary uses across the main channel of the Lake of the Ozarks (the "Lake") near Lake Ozark, Missouri (as more completely described herein, the "Corporation Project"). The Corporation is governed by a seven member Board of Directors, each of whom is appointed by the Missoun Highway and Transportation Commission (the "Highway Commission"). The Highway Commission has authorized formation of the Corporation and entered into various agreements with the Corporation with respect to planning, construction and operation of the Corporation Project.

The Corporation is not included in the Comprehensive Annual Financial Report of the State of Missouri, however, it is considered a related organization because the state does appoint a voting majority of the Corporation's board members.

The Corporation Project consisted of the acquisition of right-of-way for and the construction of an approximately 2,700 fooi long hvo-lane bridge facility w5ch &a-verses the ~ a i n chanae! of the Lake and a related toll plaza and equipment facilities. The Corporation Project was constructed to readily allow the construction of two additional lanes of traffic at a latcr time. In addition, the Highway Commission funded and constructed approximately 3.6 miles of approach roadways (the "Commission Project") which connects the Corporation Project to existing state roadways with state funds and not from proceeds of the Series 1996 Bonds (hereinafter defined). The Corporation Project and the Commission Project were constructed pursuant to separate construcbon contracts with a single construction contractor. The construction contracts were bid by the Highway commission on a required combination basis and awarded by the Highway Commission and the Corporation. The Highway Comss ion approved the plans and specifications for the Corporation Project and served as construction manager for both the Corporation Project and the Commission Project.

LAKE OF THE OZARKS COMMUNITY BlUDGE CORPORATION Camden County, Missouri

I


i

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (Cont'd.) I I Basis of Presentation - Fund Accounting

The accounting system is organized and operated on a fund basis. A h d is defined as a fiscal and accounting entity with a self-balancing set of accounts, which are segregated for the purpose of canying on specific activities or attaining certain objectives in accordance with special regulations, restrictions or limitations.

I The Corporation has one broad fund category that includes one generic fund type for financial statement presentation purposes. The Proprietary Fund includes the Enterprise Fund.

I Basis of Accounting

I Proprzetary Fund

The proprietary fund is accounted for using the accrual basis of accounting. The fund accounts for operations that are primarily financed by user charges. The economic resource

I measurement focus concerns determining costs as a means of maintaining the capital I investment and management control. Their revenues are recognized when they are earned and

their expenses are recognized when they are incurred. Allocations of costs, such as

I depreciation, are recorded in proprietary funds. The Corporation sells prepaid toll passes to various entities that use the facility frequently. The deferred revenue figure represents the unused portion of the prepaid passes. The proprietary fund has selected to consistently not

I follow Financial Accounting Standkds Board pronouncements issued subsequent to November 30, 1989 as permitted under Governmental Accounting Standards Board Statement No. 20.

Operating income reported in the proprietay fund financial statement includes revenues and expenses related to the primary, continuing operations of the fund. Principal operating revenues for the proprietary fund are charges to customers for sales or services. Principal operating expenses are the costs of providing goods or services and include administrative expenses and depreciation of capital assets. Other revenues and expenses are classified as nonoperating in the financial statements.

Cash and Cash Equivalents

1 The Corporation's cash and cash equivalents are considered to be cash on hand, demand deposits I and short-term investments with original maturities of three montks or less from the date of

acquisition. Cash and cash equivalents are combined with investments in the Statement of Net t Assets. I



NOTE 1 -SUMMARY OF SIGNIF'ICANT ACCOUNTING POLICIES: (Cont'd.)

The Series 1996 Bonds

The Series 1996 Bonds consisted of $40,085,000 aggregate principal amount of Bridge System Revenue Bonds, Series 1996, dated January 1,1996.

The Series 1998 Bonds

The Series 1998 Bonds were issued in the aggregate principal amount of $43,445,000 for the purpose of providing funds, together with other available funds of the Corporation, to (1) refund the Series 1996 Bonds, (2) fund a debt service reserve for the Series 1998 bonds and certain other reserves, and (3) pay certain costs of issuance of the Series 1998 Bonds. This series of Bonds has been designated "Bridge System Relbding Bonds, Series 1998" (the "Series 1998 Bonds"). The Series 1998 Bonds dated March 1, 1998, were issued under a Bond Trust Indenture (the "Indenture") between the Corporation and Bank of New York Mellon Trust Company as successor of Central Trust Bank, of Jefferson City, Missouri (the "Trustee") and a resolution adopted by the Corporation.

Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect certain rep...ted mlmtts md disclos~es. Actud resdts could differ &om those estimates.

Investments

Investments are stated at fair market value. Fair market values for investments are determined by closing market prices at year-end as reported by the investment custodian.

Cost of Borrowing

Interest costs incurred on the Series 1996 Bonds and the Series 1998 Bonds durlng the period of construction of the Corporation Project were capitalized as a component of the cost of constructing the Corporation Project.

Bond issuance costs, bond discounts md the difference between the reacquisition price and the net carrying value of refunded debt are amortized over the period the Series 1998 Bonds are outstanding, using the straight-line method.



NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (Cont'd.)

I Capital Assets and Depreciation

I The valuation bases for proprietary fund capital assets are h~storical cost, or where historical cost is i not available, estimated historical cost based on replacement cost. Donated capital assets are

capitalized at estimated fair market value on the date donated. I I Depreciation of capital assets is computed and recorded by the straight-line method. Estimated

useful lives of the various classes of depreciable capital assets are as follows: buildings, structures, I improvements/infrastructure, 20 to 50 years; equipment, 5 to 10 years.

Net Assets

I Net assets comprise the various net earnings fiom operating income, nonoperating revenues and expenses, capital contributions, and special items. Net assets are classified in the following three

I components: 1

I Invested in Capital Assets, Net of Related Debt - This component of net assets consists of capital assets, net of accumulated depreciation and reduced by the outstanding balances of any bonds, mortgages, notes or other borrowings that are attributable to the acquisition, construction or inprovement of those zssets. If there are sigrifica?t >mspent related debt proceeds at year-end, the portion of the debt attributable to the unspent proceeds are not included in the calculation of invested in capital assets, net of related debt. Rather, that

I pomon of the debt is included in the same net assets component as the unspent proceeds. I

Restricted - This component of net assets consists of constraints imposed by creditors (such as through debt covenants), grantors, contributors, or laws or regulations of other governments or constramts imposed by law through constitutional provisions of enabling legislation.

Unrestricted Net Assets - This component of net assets consists of net assets that do not meet the definition of "restricted" or "invested in capital assets, net of related debt." It is the District's policy to first use restricted net assets pnor to the use of unrestricted net assets when an expense is incurred for purposes for which both restricted and unrestricted net assets are available. The Corporation has a deficit net asset balance of $6,379,364.42 as of April 30, 201 1. The Corporation incurred debt to fund the construction of the bridge, establish various reserve funds required in the indenture, and provide funds for anticipated operating deficits in the first several years of operation. The Corporation annuaiiy commissions traffic studies to determine whether rates need to be changed in order to comply with indenture provisions.



I NOTE 1 - SUMMARY OF SIGNIFlCANT ACCOUNTING POLICIES: (Cont'd.)

1 Net Assets (Cont'd.)

I

I The Corporation continually assesses short and long term revenue projections in order to anticipate toll rate changes necessary to ensure compliance with financial performance covenants contained in the Indenture.

I Subse~uent Events

I (

The Corporation evaluates events and transactions occurring subsequent to the date of the financial statements for matters requiring recognition or disclosure in the financial statements. The

i accompanying financial statements consider events through September 22, 201 1, which is the date the financial statements were available to be issued.

I NOTE 2 -DEPOSITS AND INVESTMENTS:

Custodial Credit Risk - The Corporation maintains its cash in bank deposit accounts at a high credit quality financial institution. The Corporation must maintain balances sufficient to pay

1 operating expenses. The required balances can fluctuate due to the nature of the payment process. All investments are held by the investment's counterparty, in the name of the Corporation.

I t

Investment Interest Rate Risk - The Corporation has no formal investment policy that limits

I investment maturities as a mean of managing its exposure to fair value losses arising from 1 increasing interest rates, except limitations to allow for debt service commitments.

I As of April 30, 2011, the Corporation held with the Trustee the following investments and I I maturities:

XxlE Maturities Fair Value

Dreyfus Gov't Cash Management (cash equivalents) less than one year $ 2,813,242.03 I Certificates of Deposit less than one year 1,505,3 18.33 ! U.S. Treasury Notes less than one year 3,382,211.25



NOTE 2 -DEPOSITS AND INVESTMENTS: (Cont'd)

I Investment Credit Risk - The Corporation has no investment policy that limits its investment I choices other than those permitted by the Bond indenture. The Corporahon is in compliance

with the ~ndenture provisions.

I I I Concentration of Investment credit Risk - The Corporation places no limit on the amount it may

invest in any one issuer.

I I NOTE 3 - INCOME TAXES:

I The Corporation submtted a request for ruling to the Internal Revenue Service. In response to that

1 request the IRS ruled that the income of the Corporation is excludable from gross income for federal income tax purposes under Section 115 of the Code. The IRS further concluded that the

I Corporation is an instrumentality of the state serving an exclusively public purpose, and therefore, contributions to the Corporation are deductible as charitable contributions under Section 170(c)(l) of the Code, subject to the limitations described in that section. The Corporation is required to file

I an annual income tax return on Form 1120. The tax returns are subject to examination by the IRS generally for three years after they are filed.

NOTE 4 - RESTRICTED m D S : I

Funds held bv Bond Trustee f I I In accordance with the Indenture, the following special trust funds and accounts were created and

established in the custody of the Bond Trustee in the name of the Corporation. All of the net 1 1 proceeds of the Series 1998 Bonds have been deposited with the Trustee.

Revenue Fund - The Corporation shall deposit promptly in the name of the Bond Trustee with one or more Depositories as and when received all Revenues derived and collected from the operation of the Bridge System, and the Bond Trustee shall credit and deposit all Revenues received from the Corporation or received directly by the Bond Trustee into the Revenue Fund.

I All Non-Toll Revenues shall be credited to the Non-Toll Revenue Account in the Revenue Fund and all Toll Revenues shall be credited to the Toll Revenue Account in the Revenue Fund.

1

As of Apnl30,2011, the Revenue Fund was comprised of the foilowing balances:

Cash in Depository Account $ 105,685.21 Dreyfus Gov't Cash Management 130,098.95

$235.784.16 17



NOTE 4 - RESTRICTED FUND: (Cont'd.)

Operating Fund - The amounts paid and credited to the Operating Fund shall be disbursed by the Corporation, and shall be expended and used by the Corporation solely for the purpose of paying the reasonable and necessary operating expenses of the Bridge System as the same become due and payable.

As of April 30,201 1 the Operating Fund was comprised of the following balances:

Cash in Bank - Checking $28.767.07

Debt Service Fund - The moneys in the Debt Service Fund shall be held in trust and shall be applied solely in accordance with the provisions of the Bond Indenture to pay the principal and redemption premium, if any, and interest on the Bonds as the same become due and payable. Moneys in the Debt Service Fund shall be expended solely as follows: (a) to pay interest on the Bonds as the same becomes due; @) to pay principal of the Bonds as the same mature or become due and upon mandatory sinking fund redemption thereof; and (c) to pay principal of and redemption premium, if any, on the Bonds as the same become due upon redemption (other than mandatory sinking h d redemption) prior to maturity.

Each month the Bond Trustee shall transfer from the Revenue Fund. after making transfers to - the Operating Fund, to the Debt Semce Fund amounts specified in the Indenture necessary to meet on each payment date the payment of a11 interest on and principal of the Bon6s.

At April 30,201 1, the Debt Service Fund was comprised of the following balances:

DreyfUs Gov't Cash Management $ 552.656.60

Debt S m c e Reserve Fund - Moneys in the debt service reserve account for the Series 1998 Bonds in the Debt Service Reserve Fund shall be disbursed and expended by the Bond Trustee solely for the payment of the principal of and redemption premium, if any, and interest on the Bonds if sufficient monies are not available in the Debt Service Fund. In the event the balance of moneys in the Debt Service Fund is insufficient to pay principal of or interest on the Bonds when due and payable, moneys in the Debt Service Reserve Fund for the Series 1998 Bonds shall be b-ansferred Into the Debt Service Fund in an amount sufficient to make up such deficieficy.




At April 30,201 1 the Debt Service Reserve Fund was comprised of the following balances:

Dreyfus Gov't Cash Management $ 288,449.22 U.S. Treasury Notes 3,382.21 1.25

$3.670.660.47

Renewal and Replacement Fund - Beginning after the 5" full fiscal year of operation of the Bridge System after completion of the Corporation Project the amount in the Renewal and Replacement Fund shall not be less than the amount recommended by the Consulting Engineer, as defined in the Indenture. The written report filed by the Consulting Engneer shall state the cost of major or extraordinary renewal, replacement, resurfacing or reconstruction of the Bridge System and shall conclude such moneys are necessary: (1) to restore, or prevent physical damage to the Bridge System, and (2) for the safe and efficient operation of the Bridge System.

At April 30, 2011 the Renewal and Replacement Fund was comprised of the following balances:

Dreyfus Gov't Cash Management $1.427.657.60

Maintenance Reserve Fund - The Corporation shdl establish and mainL& a maintenance Reserve Fund to be used in the event that Toll Revenues and Non-Toll Revenues generated by the Bridge System are not sufficient to pay the Highway Commission for the Highway Commission's services in maintaining the Corporation Project If at any time such expenditure reduces the amount of said fund below $30,000, the Bond Trustee shall make up such deficiency fiom funds available in the Revenue Fund, until said fund shall again aggregate $30,000.

At April 30,201 1 the Maintenance Reserve Fund was comprised of the following balances:

Dreyfus Gov't Cash Management $30.000.00

Insurance Fund - After all payments and credits required at the time to be made to the Operating Fund, the Debt Service Fund, and the Debt Service Reserve Fund have been made, there shall next be paid and credit to the Insurance Fund an amount equal to such amount as set forth in an Officer's Certificate filed with the Bond Trustee as the amount determined by a resolution of the Corporabon as necessary to comply with the Indenture.

At April 30,201 1, the Insurance Fund was comprised of the following balances:

Dreyfus Gov't Cash Management $ 113.215.12 19



NOTE 4 -RESTRICTED m D : (Cont'd.)

General Fund - After all payments and credits required at the time to be made to the Operating Fund, the Debt Service Fund, the Debt Service Reserve Fund, the Subordinated Debt Fund, the Insurance Fund, the Renewal and Replacement Fund and the Maintenance Reserve Fund under the provisions of the Indenture have been made, all monies remaining in the Revenue Fund shall be paid and credited to the General Fund. Monies in the General Fund may be expended and used for the following purposes as determined by the board of directors of the Corporation:

(a) Pay the costs of the operation, maintenance and repair of the Bridge System to the extent that may be necessary after the application of the monies held in the Operating Fund under the provisions of the Indenture;

(b) Paying the cost of extenchng, enlarging or improving the Bridge System;

(c) Preventing default in, anticipating payments into or increasing the amounts in the Debt Service Fund, the Debt Service Reserve Fund, or the Renewal and Replacement Fund referred to in the Indenture, or any one of them, or establishing or increasing the amount of any debt service account or debt senice reserve account created by the Corporation for the payment of any parity bonds;

(d) To the extent the General Fund will not be r e d u d to less than $5,000,000, calling, redeeming and paying prior to stated maturity, or, at the option of the Corporation, purchasing in the open market at the best price obtainable not exceeding the redemption price (if any bonds are callable), the Series 1998 Bonds or any panty bonds, including principal, interest and redemption premium, if any;

(e) Any other lawll purpose in connection with the operation of the Bridge System and benefiting the Bridge System; or

(f) If subsequent to May 1, 2003, monies remain in the General Fund in excess of $5,000,000 after the payments permitted by this Section, then one-half of such excess shall be transferred to the Redemption Fund and the other one-half of such excess shall be transferred to the Renewal and Replacement Fund.

So long as any of the Bonds remain outstanding, no monies derived ffom the operation of the Bridge System shall be diverted to any other purpose.




General Fund (Cont'd.)

At April 30,201 1, the General Fund was comprised of the following balances:

Dreyfus Gov't Cash Management Certificates of Deposit

NOTE 5 - LONGTERM DEBT:

The following is a summary of bond transactions of the Corporation for the year ended April 30, 2011:

Bonds payable at April 30,2010 $ 37,245,000.00 Redemption of bonds [1,640,000.00) Deferred Amounts:

Net unamortized advance refunding issue costs (2,656.840.1 8)

Net Bonds Payahle at April 30,201 ! $ 32.948.159.82

Bonds payable at April 30,201 1 is comprised of the following individual issue:

Series 1998 Bonds: $43,445,000 Bridge System serial bonds due in annual installments of $1,640,000 to $3,355,000 from December 1,2012 through December 1, 2026; interest at 5.25% $35.605.000



NOTE 5 -LONG -TERM DEBT: (Cont'd.)

I The annual requirements to amortize all bonds outstanding as of April 30,201 1 are as follows:

I Annual Requirements to Amortize Long-Term Bonds

i April 30.2011

Year Ending April 30 Principal Interest Total

I 2012 - 1,869,263 1,869,263

I 2013 1,725,000 1,869,263 3,594,263 2014 1,815,000 1,778,700 3,593,700

1 201 5 1,910,000 1,683,413 3,593,413 2016 2,015,000 1,583,138 3,598,138

2017 -2021 1 1,765,000 6,214,426 17,979,426 2022 - 2026 15,185,000 2,785,652 17,970,652

2027 1.1 90.000 62.475 1,252.475 Total ................ $35.605.000 $1 7.846.330 $54.451.330

I There are a number of limitations and restrictions contained in the various bond indentures. The Corporation is in compliance with all sigmficant limitations and restrictions.

I

I Redemption of Debt In April, the Corporation instructed the Trustee to pre-pay on June 1, 201 1, the mandatory sinking

I fundredemption payment due in the amount of $1,640,000 on December 1, 201 1. On April 28, I I 201 1 the Corporation deposited into emow with the Paying Agent, the amount of $1,683,050 that

will be held uninvested as a cash balance. The Paying Agent was authorized to withdraw funds

i from the escrow account on or before June 1, 201 1, an amount equal to the principal and interest due and payable and apply such money to the payment in full of such bonds. Accordmgly, the amount of debt considered defeased at April 30, 2011 is $1,640,000. The trust account assets and

I the liability for the defeased debt are not included in the Corporation's financial statements.



NOTE 5 - LONG -TERM DEBT: (Cont'd.)

Redemption of Debt (Cont'd.)

Beginning Ending Due Within Balance Additions Reductions Balance One Year

Bonds Payable: Bonds $37,245,000.00 $ - $(1,640,000.00) $35,605,000.00 $ - Less Deferred Amounts:

On Refunding (2,834,952.37) - 178.1 12.19 (2.656.840.18) - Total Bonds Payable 34,410,047.63 - (1,461,887.81) 32,948,159.82 Compensated Absences 8,960.40 - (1,685.91) 7,274.49 -

Business-type Activity

Long-term Liabilities $34.419.008.03 $ - $(1.463.573.72) $32.955.434.31 -

NOTE 6 -RISK MANAGEMENT:

The Corporation is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors arid omissions; injuries to employees' and natural disasters. The Corporation purchases commercial insurance for all risks of loss. There have been no significant reductions in coverage from the prior year and settlements, if any, have not exceeded coverage in the past three years.

NOTE 7 - TRANSPORTATION DEVELOPMENT DISTRICT:

Dunng the 201 1 fiscal year, the Corporation formed a Transportation Development District (TDD) to facilitate the exploration of additional financing ophons. Legal and accounting expenses include approximately $200,000 legal and accounting expenses directly related to the formation of this separate entity and the loan application process. No activity was conducted by the TDD in fiscal year 201 1 and no additional financing was obtained.



1 NOTE 8 -CAPITAL ASSETS AND DEPRECIATION:

Beginning Ending

1 Balance Increases Decreases Balance Business-type activities:

I Not being depreciated: Land $ 1,505,434.19 $ -0- $ -0- $ 1.505.434.19

Other capital assets: Buildings 1,602,206.68 -0- -0- 1,602,206.68

I Improvements/inE e 21,681,581.18 -0- -0- 21,681,581.18 Equipment 461.717.41 -0- -0- 461.717.41

Subtotal 23,745,505.27 -0- -0- 23,745,505.27

I I Accumulated depreciation:

Buildings (384,529.56) (32,044.13) -0- (416,573.69)

i Improvements/inkh-ucture (5,278,926.84) (439,910.57) -0- (5,718,837.41) Equipment (98,303.73) (40.934.10) -0- (139.237.83)

I Subtotal (5,751,760.13) (512.888.80) -0- (0,274,648.93)

Net other capital assets 17,983,745.14 (512,888.80) -0- 17,470,856.34 Net capital assets $ 19.489.179.33 $ (512.888.80) $ - - $ 18.976.290.53

I I

Depreciation expense for the year ended April 30,201 1 was $512,888.80

I NOTE 9 - DEFERRED REVENUE - NON TOLL:

Deferred Revenue is comprised of prepaid toll accounts totaling $162,677.28 and prepaid license fees of $1 14,660.00. The Corporation allows entities who use the bndge facility frequently to purchase prepaid toll cards. The cards are machine readable and the Corporation recognizes revenue as the cards are presented for passage. j

I The Corporation entered into a conduit occupancy licensing agreement with a cable communication

I provider. The license agreement, which allows the cable company to iocare cable conduit on the I underside of the Bridge, is for 550 years. The license fee was prepaid and will be recognized as

revenue on a pro rata basis over the term of the agreement.



i NOTE 10 - PENSION PLAN: I

I During the fiscal year ended April 30, 2004, the Corporation established a profit sharing plan covering

I substantially all of its eligible employees. The plan also contains a deferred salary arrangement under I.R.C. Section 401(K). The 401(K) plan allows the Corporation to match, within certain limits,

I contributions made by employees. The Corporation's expense was $6,809.17 for 201 1.

NOTE 11 - ARBITRAGE REBATE LIABILITY: i I

The Tax Reform Act of 1986 (Act) substantially revised the treatment to be afforded to earnings on

I the proceeds of tax-exempt debt and required the Corporation to calculate and remit rebatable arbitrage earnings to the Internal Revenue Service. Certain of the Corporation's debt and interest eamed on the proceeds thereof are subject to the requirements of the Act. During the year ended

I April 30, 2011 the Corporation remitted $360,316 to the Internal Revenue Service for arbitrage rebate. The Corporation has accrued a liability for estimated rebatable arbitrage earnings. At April 30,201 1, the arbitrage rebate liability for business-type activities was $40,038.87.

I I NOTE 12 -RELATED PARTY TRANSACTION:

I As noted in Note 1, the Corporation is considered a related organization of the State of Missouri due to the fact the State has authority to appoint Board members. The Missouri Department of Transportation CMODOT) provides maintenance services to the Corporation. During the fiscai

1 year ended April 30, 201 1, the Corporation paid $3,570.72 to MODOT for services provided to the Corporation.

I NOTE 13 - CURRENT VULNERABILITY DUE TO CERTAIN CONCENTRATIONS:

The Bridge Corporation's operations are concentrated in the operation of a toll facility. In addition, the Corporation is subject to stringent regulations imposed via the bond agreement. Funds are set aside in reserve to help insure debt service requirements will be met. However, since inception, the toll revenues have not been adequate to fund the entire debt service obligation. This shortfall was anticipated before the project was started and operating funds were provided for in the original borrowing. As these funds are depleted, the ability to service the debt obligation becomes more burdensome. Tie Corporation does conducr rare srudies and has increased toll rates, however, more aggressive steps may be needed in the future to insure debt service requirements will contlnue to be met.

Section 2

Annual and/or Supplemental Studies

Central District Missouri 1511 Mfssourf Boulevard

P O Box 718

Department Jefferson Cfty, MO 65102

I (573) 751-3322

of Transooftation fax (573) 522-1059

Toll free 1-888 ASK MoDOT

Roger Schwartze, District Engineer www modot state mo.us

-,

September 20,201 0

James D. Werner Executive Director

i Lake of the Ozarks Community Bridge corporation P.O. Box 39 Lake Ozarks, MO'65049

?

I I

Dear Mr. Werner:

I \ The Community Bridge was inspected January 6,2010. Inspection findings are as Follows:

I Item 58) Deck rating = 7 good conditiog. I

Item 59) Superstructure rating = 8 good condition I I Item 60) Substructure rating = 8 good condition.

I The deck was sealed with Star Macro Deck sealer in 2009. I

Maintenance recommendations are: I i Clean pier and abutment caps of debris

i 1 Repair some minor erosion at the northwest corner of the bridge and repair or extend the mat

gutters should. ~~- ~~ ~ ~~~ ~~~~ ~~ -~ -~

I i The troughs under the expansion devises need to be flushed of debris !

Clean and flush deck

If you have any questions or need more information please feel free to call me at (573) 751-7696.

Sincerely yours:

I Ed Moody District Bridge Engineer

Our mission is to preserve and improve Missouri's transportation system to enhance safety and encourage prosperity. I 1

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Section 3

Annual Budget

LAKE OF THE OZARKS COMMUNITY BRIDGE CORPORATION OPERATING AND CAPITAL BUDGET

FOR THE YEAR ENDING APRIL 30.2012

REVENUES: Toll Revenue

EXPENSES: Salaries and wages

Payroll taxes Employee benefits Pension expense (401k)

Vehicle expenses Office and maintenance supplies

Uniforms

Toll equipment maintenance Building and grounds maintenance

Legal Trustee fee Rating agency fee Travel & entertainment

Insurance Traffic consultant MoDOT maintenance

Consulting engineering services Utilities Audit & accounting services

Courier service & other Financial consultant

Total Expenses

Operating income available for debit service

lnterest income lnterest expense

Net income (loss)

Anticipated capital expenditures

Deposit t o the Renewal and Replacement Fund

Section 4

Annual Traffic Consultant's Report

FYI2 Traffic and Toll Revenue Forecast

Lake ojthe Ozarks Community Bridge Corporation

TABLE OF CONTENTS 0 ZntroductionfBackground ................................................................................................................ 1 20 EconomicReview ............................................................................................................................. 5

. . 2 7 General Economic Condzhons ................................................................................................... 5 22Employment ............. 23 Population ........... 24Development in Corridor ............ 2 5 G a s Price ................................................................................ 11

3.0 Historical Traffic Review .............................................................................................................. 11 3. 7Annual ..... ................................................. 12 3.2Monthly .................................................................................................................................. 13 33Dai ly ...................................................................................................................................... 15 3.4Vehicle Classification ............... 16

40 Transportation Improvements ....................................................................................................... 18 4 /Existing Transportation Network ..... 18

.............................................................................. 42Proposed and Implemented Improvements 19 .................................................................................................... 2 7 New State Route 42 19

.......................................................................................................... 422 State Route 5 19 .......................................................................................................................... 423 US 54 20

......................................................................................... 424 Horseshoe Bend Parkway 20 ......................................................................................... 50 Estimates of Traffic and Toll Revenue 21

6.0 Disclaimers ..................................................................................................................................... 22

JACOBS Page i

FYI2 Trafic and Toll Revenue Forecast

Lake ofthe Ozarks Community Bridge Corporation

The Lake of the Ozarks Community Bridge Corporation (LOCBC) retained the services of Jacobs Engineering Group to develop traffic and toll revenue estimates for the Lake of the Ozarks Community Bridge (LOCB) under the current toll schedule for FY12 by month. The LOCBC fiscal year runs from May to April such that FYI2 represents months May 201 1 to April 201 2. In addition estimates for FYI3 through FY15 are provided, as well as estimates for the fmal two months of FYl1. This report presents the estimates of traffic and toll revenue as well as background information and support for the forecast.

The LOCB opened to traffic in May 1998 providing access from Shawnee Bend peninsula to Lake Ozark, Osage Beach and other communities on the eastern side of the Lake of the Ozarks. A location map of the Bridge and the surrounding communities is provided in Figure 1.

JACOBS Page I


Lake of the Ozarks Community Bridge Corporation

Figure 1: Location Map

JACOBS Page 2

FYI2 TraJJic and Toll Revenue Forecast


The current toll schedule for the LOCB is presented in Table 1. There are two different rates for peak and off-peak season which is defined as April to October and November to March, respectively. The tolls generally increase with the size of the vehicles with special consideration given to passenger vehicles carrying a trailer.

Table 1: Current LOCB Toll Schedule

(1) Peak Period is from April to October

(2) Off-Peak Period is from November to March

The current toll schedule was implemented in November 2010 representing a $0.50 increase for each

vehicle class in both peak and off-peak seasons. The previous toll schedule is presented in Table 2.

This is a significant change in toll policy that is important for appropriate review of the most recent

traffic trends as well as the forecast.

JACOBS Page 3

FY12 Traflc and Toll Revenue Forecast


(1) Peak Period is from April to October

rable 2: Previous LOCB Toll Schedule, before November 2010

(2) Off-Peak Period is from November to March

Vehicle Class

Passenger Car, Van, Pickup or

Motorcycle

Passenger Car, Van, Pickup or

Motorcycle with trailer

Two and Three-Axle Truck or

Bus

Four-Axle Truck

Five-Axle Truck

Six or more Axle Truck

The report structure follows the development of the analysis from data collection to traffic and toll revenue estimation. First the historical traffic and toll revenue for the LOCB is reviewed. Next the demographic and economic factors are reviewed, including historical and forecasted. The

assumptions of the analysis are then provided as well as the methodology for the development of the traffic and toll revenue model that ultimately provides the estimates of future traffic and toll revenue

for the LOCB. Finally the estimates of traffic and toll revenue are provided.

JACOBS Page 4

Toll Rate

Peak '

$2.50

$3.75

$4.50

$6.00

$7.50

$9.00

Off-Peak '

$1.50

$2.25

$3.00

$4.00

$5.00

$6.00



2.0 Economic Review In this section the economic factors that have relevant correlation with LOCB traffic are reviewed. The LOCB receives a significant portion of its traffic and the most significant share of the toll revenue from tourists and part-time residents to the area. This means that economic factors well beyond the region must be reviewed to understand the potential impact on future traffic levels for LOCB. This includes the metropolitan centers of Kansas City and St. Louis as well as Springfield, Columbia and Jefferson City. The local counties of Morgan, Miller and Camden must also he reviewed to understand the particular climate for local traffic.

2.1 General Economic Conditions On October 29, 2009, the economic recession was declared over and the economy was officially in the recovery stage. This official declaration reflects the fact that the Gross Domestic Product (GDP) was estimated to have grown 3.5 percent annualized for the third quarter. While this is considered to be technical recovery it is apparent that employment levels will lag. According to Blue Chip Economic Indicators, a clearinghouse of over 50 economic forecasting entities, it is anticipated that the national unemployment rate will not be sustained below 7 percent until 2014, which is a year and a half later than previous estimates, which were made just 6 months ago.

It is evident that while GDP is in growth mode and the stock market continues to increase, recovery from the recession is purely technical. It is also evident that the existence of cheap credit and the belief in ever increasing real estate values has also departed for the time being. These facts have czxsed LQCB to lese a significant "tm.ocnt of haKc ye= OVP'. year for the past 37 mcr.ths b&r,g thrke. It is also these facts that the LOCB must overcome to recover traffic and toll revenue to past levels.

2.2 Employment We estimate that the single most important economic factor for LOCB traffic is employment levels and unemployment rates in the metropolitan areas that serve the bridge, both as local traffic and tourist traffic. Employment is a surrogate for a number of indicators including consumer confidence, which is exactly what is needed for people to begin taking vacations again, spending money in the region and possibly buying the second home. Real estate has historically been a safe place to invest money but that has been proven wrong nationwide and the Lake of the Ozarks region is no exception to this new trend. Therefore, it is our view that tourism and all the ancillruy benefits to the region, including toll traffic, will return when emp!oyment has a full year of stability.

Figure 2 presents the unemployment rate for the major metropolitan areas serving the region smoothed out by using the 12 month moving average. Note the increases from the lows of 2007 of

JACOBS Page 5


Lake o f the Ozarkr Community Bridxe Corporation

around 5 percent to over 10 percent for St. Louis and almost 9 percent for Kansas City. These unemployment rates, almost universally, have decreased since the highs of spring 2010, albeit very modestly.

Figure 2: Regional Unemployment Rates, 12 Month Moving Average, BLS

Figure 3 provides the employment levels for the same geographies indexed to January 2008 for comparative purposes. Employment typically follows the unemployment rate except in high growth areas, in which employment levels can increase dramatically without a change to the unemployment rate. In addition to employment levels, LOCB traffic is graphed. It is evident from the graph that traffic levels were much more sensitive than employment levels, due to a myriad of factors. However, note that the trends are the same, each reacting in step with the recession, both being lagging indicators, as the recession started slightly before. Again, the traffic appears to be more sensitive, slightly quicker to downturn and estimated to be longer to recover. These extended traffic decreases can also be attributed to the toll increase in November 2010 thss fwther pushing traffic levels lower as motorists potentially react to higher tolls.

~ ~ c # x x 3 ' Page 6

FYI2 Traffrc and Toll Revenue Forecast

Lake of the Ozarkv Cornmunip Bridge Corporation

Figure 3: Regional Employment Levels, 12 Month Moving Average (1 .&January 2008), BLS I I

The local unemployment and employment rates are also noteworthy as a portion of bridge traffic is from local residents, and also local employment is an indicator of overall economic health of the

region as many jobs are in the tourist industry.

Figure 4 presents the local unemployment rate for Camden, Miller and Morgan Counties. The 12 month moving average of the unemployment rates in these counties were historically slightly higher than the regional rates and have recently been even higher as well, reaching over 12 percent for Camden and Miller County. It is evident that the region is stabilizing. Figure 5 presents the same information but without the smoothing effect of the 12 month moving average. This demonstrates the seasonality of the region, with lower unemployment during the summer months, with the increase in tourist trade.

JACOBS Page 7

FY12 Tranc and Toll Revenue Forecast


Figure 4: Local Unemployment Rates, 12 Month Moving Average, BLS

Fiaure 5: Local Unem~lownent Rates. BLS

JACOBS Page 8


Lake of the Ozarks Communiiy Bridge Corporation

Figure 6 presents the local employment levels and LOCB traffic, again revealing a correlation between the two.

Figure 6: Local Employment Levels, 12 Month Moving Average (1.k January 2W8), BLS I 1

2.3 Population In addition to employment, population growth in both the larger region that serves the Lake area and the local area itself can drive traffic volumes. The long term population growth trends in the region are estimated to be around 1 percent per year according to the planning organizations of St. Louis and Kansas City. The anticipated local population growth for Camden, Miller and Morgan Counties are even smaller, ranging from 0.6 to 0.9 percent per year according to the Missouri State Demographer.

While these population growth estimates are not sizable, the breakdown of the population in the future by age shows an aging population, moving from an average age in Missouri of 36.5 to 40.4 years old from 2000 to 2030. The more important fact is that the percentage of the population that will be 60 years old and older will increase from 34 to 47 percent in this timeframe. It is possible the area could increase its population through an increase in the retirement community.

JACOBS Page 9


Lake of the Ozarkr Community Bridge Corporation

2.4 Development in Corridor Relevant projects to LOCB would include those on Shawnee Bend as well as neighboring communities including Lake Ozark, Osage Beach and Camdenton, among others. Due to the

economic climate, there have been a number of potential developments being stalled due to uncertain funding. This is the general outlook for the near term with no specific sizable developments moving forward at this time. It is the larger macroeconomic effects, discussed earlier in this section, that are anticipated to spur development in the area and influence the long term forecast, for which this review is being undertaken, and which follows that theory.

The major developments on Shawnee Bend including Porto Cima and The Villages at Shawnee Bend have stalled. Home lots are available but again will not be acted upon until individuals come forward which, we believe, will be a function of employment levels in the nearby supporting major metropolitan centers.

It is anticipated that developments will occur upon the completion of the Horseshoe Bend Parkway Extension, however completion will occur in early calendar year 2012, therefore is anticipated to have little impact in FYI2 traffic for the LOCB.

JACOBS Page 10

FYI2 Tranc and Toll Revenue Forecast

Lake of the Ozarks Conmunity Bridge Corporation

2.5 Gas Prices

Gas prices have increased tremendously in the beginning of 201 1 and could have an impact on tourism in the Lake of the Ozarks region, as it was estimated to do in the summer of 2008 when prices neared $4.00. The future of gas prices is unknown but it is certainly conceivable that summer 201 1 prices could reach those of three years ago.

Figure 7: National and State Hiioriml Gas Prices

48 Menth Averaqe Retail Price Chart - lular Gas ci E ~ I C u c s - miss our^ Regulai --- '.. - Gas

Pric, ,,, ,,,, ---. USA Average rrrce (US $IGJ

4.12

Date [Monthmay)

3.0 Historical Traffic Review As part of the analysis a review of relevant traffic data was undertaken. The traffic data collected from LOCB was the basis of the traffic and toll revenue model that was developed for this analysis and the development of which is detailed in a later section. Monthly transaction data (equivalent to traffic) was collected since the inception of the LOCB by vehicle class. Additionally, daily data was collected for the previous 12 months from March 2010 to February 201 1. The LOCB fiscal year runs from May to April and traffic and toll revenue data that is presented will be in regard to the fiscal

year.

JACOBS Page 11

FYI2 TrafJic and Toll Revenue Forecast


3.1 Annual The annual trafi7c on LOCB is presented numerically in Table 3 and illustratively in Figure 8. The

LOCB demonstrated strong growth through N 0 7 , with a leveling off in FY08 and then dramatic decline in FY09 and N l O . In N l l , through Februruy, traffic has decreased 5.4 percent as

compared to the same months of FY10, showing a slowing of the decrease in traffic, but still a continued decrease. These recent decreases over the last few years are a direct result of the economic recession as can be shown by reviewing monthly data. Additionally, the toll increase in November

2010 (FY11) is estimated to have had an impact on traffic levels for most recent four months of FY11.

Table 3: LOCB Historical Traffic

FYI 1 is Year-to-date through February

JACOBS Page 12

FYI2 TraSfrc and Toll Revenue Forecast


Figure 8: LOCB Historical Traffic

FY99 FYOO FYOl FY02 FY03 FY04 FY05 FY06 FY07 FYO8 FY09 FYI0

Fiscal Year

3.2 Monthly In the review of monthly traffic data a more detailed look at the start of the MCB decreases in traffic can be analyzed as well as the seasonality of the facility. Table 4 presents the monthly traffic for LOCB since inception. It is difficult to discern trends from large numbers in the table therefore Table 5 and Figure 9 provide a more intelligible analysis with the percent change in traffic year over year by month and the graphical depiction of the traffic including a 12 month moving average to smooth the seasonality trends, respectively.

JACOBS Page 13



The LOCB has always had some months of decreases as compared to the year before due to weather events or holidays falling in different months year over year but starting in February FY08 (February 2008) the decreases were sizable and unrelenting. The size of the loss in traffic decreased in FYlO as compared to FYO9. This lower loss continued for the first part of FY11, which does not spell recovery but at least slowing of loss. Then in November FYI 1 losses in traffic became much higher as a result, it is estimated, of the $0.50 toll increase that was implemented on November 1. For the first 6 months of FYI1 traffic decreased 2.7 percent from FYlO and for the last 4 months (all of which were affected by the toll increase) traffic decreased 13.1 percent. Thus far in FYll traffic is

down 5.4 percent year to date.

Figure 9 provides a clear depiction of the decreases in LQCB traffic with the 12 month moving average represented by the green line. The fluctuating blue line presents the extreme seasonality of LOCB. The highest volume month, typically July can be up to 150 percent higher than the lowest month, typically February. This represents a tremendous change between the peak season and off- peak season, a distinction that is an important factor in the development of the traffic and toll revenue estimates.

dAcOfX5' Page 14


Lake of the Ozarks Comrnunitj Bridge Corporation

Figure 9: LOCB Monthly Traffic and 12 Month Moving Average

3.3 Daily In addition to monthly variations, daily variations were reviewed by season to analyze possible differences in usage dwir?g the ppezk md aff-pexk seasox Figwe i O presents the daily variation by season indexed to 1.0 respective to the season. In previous years heavy travel was seen on Friday and Saturday during the spring, summer and fall but the winter showed more consistent travel throughout the week, which pointed towards non-recreational trip purposes for motorists using LOCB in the winter months. In the most recent year it is apparent that the toll increase has curtailed weekday travel in the winter months and the daily profile for all seasons is very similar.

JACOBS ~ a b e 15



Figure 10: LOCB Daily Traffic Variation by Season

Seasonal Weekly Variation

Summer +Fall

+Winter

I Sun Mon Tue Wed Th u Fii Sat I Weekday

3.4 Vehicle Classification The vehicle mix on LOCB has a direct impact on toll revenue as different vehicle classes pay different tolls. LOCB has verifiably consistent split between passenger vehicles and commercial vehicles on its facility, month over month for the past few years. Figure 11 presents the percentage of traffic that is passenger vehicles, classes 1 and 2 as defined by the toll schedule, by month since May 2004. For years it was between 94 and 96 percent with recent slight increases due to the lack of construction related traffic on the bridge. These trends are important to note and again are factored into the forecasting process.

JACOBS' Page 16

FYI2 Tranc and Toll Revenue Forecast


Figure 11: Percent Passenger Cars on LOCB I I

JACOBS Page 17


Lake of the Ozark Community Bridge Corporation

4.0 Transportation Improvements Transportation improvements in the Lake of the Ozarks region were reviewed to understand the potential impact on LOCB traffic levels in the future. In a tourist area, such as Lake of the Ozarks, improvements to the transportation network not only result in altered travel patterns for motorists as is typical impact of a roadway improvement but also help provide the opportunity for further economic development in the areas that are served by those improved corridors.

This section briefly reviews the existing transportation network and then catalogues the proposed transportation improvements in the region and the estimated impact on motorists travel patterns as well as potential for economic development.

4.1 Existing Transportation Network In order to understand how transportation improvements could impact LOCB traffic and toll revenue levels, the existing transportation network and its usage must be evaluated. Lake of the Ozarks is between Kansas City and St. Louis south of Interstate 70 and north of Interstate 44.

Motorists with origins near St. Louis and other points east of the area can access the region via 1-70 westbound and US 54 from the north or 1-44 eastbound and State Route 7 from the south. Those coming from Kansas City and other points west typically access the region via 1-70 or US 50 eastbound and SR 5, SR 135 andlor US 54 depending on the exact destination address in the region. Motorists coming from the southwest, including those from Springfield as well as Arkansas and Oklahoma would be using 1-44 eastbound and SR 5.

There are many other points from which regional trips originate but within the Interstates of 1-70 and 1-44 it is typically the SR 5, SR 135, US 54 and US 50 that provide the access to the lake area. Improvements to these roads could translate to faster travel to the region which would make it more attractive for economic development and possibly more traffic on the LOCB.

The local transportation network surrounding the LOCB consists of mainly the following four roadways:

1. SR MM/TT/F, essentially connecting LOCB to SR 5 across the Shawnee Bend peninsula; 2. Bus 54, connecting LOCB to US 54 in Lake Ozark; 3. SR 5, the northlsouth corridor from 1-44 to 1-70 on the west side of the lake; and 4. US 54, the northlsouth corridor on the eastern side of the Lake as well as the eastlwest

corridor on the southern side of the lake.

JACOBS Page 18



It is improvements to these corridors, both regional, to gain access to the area, and local, to traverse the area once in the region, that could affect travel patterns and economic development surrounding LOCB.

4.2 Proposed and Implemented Improvements In this section the proposed transportation improvements in the region are highlighted and their potential impacts on LOCB are reviewed.

4.2.1 New State Route 42 The new SR 42 is planned to replace the MMi'M/F connection from Shawnee Bend #4 to SR 5. Shawnee Bend #4 is an intersection approximately 3.5 miles west of LOCB. The existing two-lane undivided roadways without shoulders will be upgraded onto a new alignment, with shoulders, having speed limits of 55 mph.

The new SR 42 is currently unfunded .For this analysis it is assumed that the roadway will not be open during the forecast period. The upgrade of MM through the implementation of SR 42 would provide better access to the Shawnee Bend peninsula and thus provide the opportunity for economic growth.

This could also be considered an alternative route to the tolled route using the LOCB. Any movement from the Shawnee Bend peninsula to the eastern side of the Lake would take less time because the alternate routing by taking SR 42 to SR 5 to US 54 would be shorter (in terms of t i e ) than previously. However, it is estimated that if this alternate route were constructed motorists with trip ends on Shawnee Bend would not divert to alternate routing causing them to stop using the LOCB.

4.2.2 State Route 5 State Route 5 has been improved over the years including a recent upgrade serving as a relief route to the City of Camdenton. Generally, SR 5 is a two lane undivided highway running northlsouth from 1-44 to 1-70 (in the region). The improvement around Camdenton upgraded the route to a four lane limited access divided highway.

The current improvement project on SR 5 includes implementation of a "shared 4 lane" concept which offers a passing lane on a widened two lane undivided roadway. This improvement will be from the southern terminus of the already improved SR 5 around Camdenton to north of Lebanon near the SR 5/I-44 junction. This widening project will allow for better operations between Lebanon and the Lake increasing the potential attractiveness of the area.

JACOBS Page 19



To the north of Shawnee Bend SR 5 will also be upgraded to provide more dedicated left turn lanes and overall better traffic operations. Similar to the larger improvement south of the region, it is anticipated that this improvement will ease travel to and from the region.

4.2.3 US 54 Outside of the Osage Beach and eastern Lake of the Ozarks area, US 54 operates as a limited access, four lane divided highway. Within the Osage Beach area the roadway, until recently, operated as a four lane arterial with center turning lane. This is a function of the commercial development that has occurred on the route. A significant improvement project is being completed that provides a new alignment for US 54, bypassing the commercial development and providing a continuous 4 lane limited access divided roadway through the area. The previous US 54 will be renamed Business 54. The full project will be complete in spring of 2012.

This improvement will, again, provide more mobility in the area and make the whole region more attractive to potential residents and tourists alike. It is the infrastructure that is necessary to bring larger economic development to the region and allow the LOCB to have potential growth in the future.

4.2.4 Horseshoe Bend Parkway Horseshoe Bend Parkway is currently under construction to connect US 54 to LOCB more directly. Currently motorists traveling on US 54 wishing to access LOCB must take Business 54 either over the Bagnall Dam from the north or Bagnall Dam Road from the south or east. The Horseshoe Bend Parkway will provide more direct access to LOCB as well as open up currently undeveloped space to commercial potentials.

Construction began on this project in January 201 1 and is expected to be completed by early 2012. It is anticipated that the commercial development that will result because of the new roadway capacity will be limited in FYI2 but begin to positively affect LOCB traffic in the following years as the nation and region emerge from the recession.

JACOBS Page 20


Lake of the Ozarks Communiry Bridge Corporation

5.0 Estimates of Traffic and Toll Revenue The estimates of traffic and toll revenue for the LOCB are presented in this section of the report. The traffic and toll revenue model that was developed specifically for the LOCB for previous analyses was updated to reflect the latest traffic and toll revenue data as well as recent economic and development trends and revised transportation improvements in the region. Table 6 presents the historical and projected annual traffic on LOCB under the existing toll schedule.

Based on the economic forecasts, employment is currently beginning to rebound. It is estimated that tourism in the region and thus LOCB traffic will lag in this recovely by one year, with continued losses in FY12, partially because of the toll increase from November 2010 and then flattening out in FY13. It is estimated that recovely will begin in later IT13 and continue in FY14 and beyond.

May 1 117,700 1 $371,000 Jun 1 126,100 1 $396,000

Table 6: Projected Toll Traffic and Toll Revenue for LOCB

Lake of the Ozarks Community Bridge Corporation Traffic and Toll Revenue Estimates

rul ( 157,100 1 $490,000 Aug 1 128,700 / $403,000

I Sep ( 105,600 1 $332,000 ]

Fiscal Year

201 1

Traffic 82,000 96,800

Month Mar

Apr

Toll Revenue $175,000 $308,000

1 2012

2013 I All 1 1,123,000 1 $3,196,000 2014 I All 1 1,151,000 1 $3,275,000

Dec Jan Feb Mar

Apr

JACOBS Page 21

Oct 89,000 1 $28 1,000

63,900 53,700 50,300 78,900 93,100

Nov 1 74,000 1 $156,000 $134,000 $1 12,000 $105,000 $167,000 $296,000

FY12 Trafic and Toll Revenue Forecast

Lake ofthe Ozarks Community Bridge Corporation

6.0 Disclaimers It is Jacobs' opinion that the traffic and gross toll revenue estimates provided herein are reasonable and that they have been prepared in accordance with accepted indushy-wide practice. However,

given the uncertainties within the current economic climate, it is important to note the following assumptions which, in our opinion, are reasonable:

This report presents the results of Jacobs' consideration of the information available as of the date hereof and the application of our experience and professional judgment to that information. It is not a guarantee of any future events or trends.

The trafic and gross toll revenue estimates will be subject to future economic and social conditions, demographic developments and regional transportation construction activities that cannot be predicted with certainty.

= The estimates contained in this report, while presented with numeric specificity, are based on a number of estimates and assumptions which, though considered reasonable to us, are inherently subject to economic and competitive uncertainties and contingencies, most of which are beyond the control of the LOCBC and cannot be predicted with certainty. In many instances, a broad range of alternative assumptions could be considered reasonable. Changes in the assumptions used could result in material differences in estimated outcomes.

Jacobs' traffic and gross toll revenue estimations only represent ow best judgment and we do not warrant or represent that the actual gross toll revenues will not vary from our estimates.

= We do not express any opinion on the following items: socioeconomic and

demographic forecasts, proposed land use development projects and potential improvements to the regional transportation network.

= The standards of operation and maintenance on all of the system will be maintained as planned within the business rules and practices.

= The general configuration and location of the system and its interchanges will

remain as discussed in this report.

= Access to and from the system will remain as discussed in this report.

= No other competing highway projects, tolled or non-tolled are assumed to be constructed or significantly improved in the project corridor during the project period, except those identified within this report.

JACOBS Page 22


Lake ojthe Ozarks Community Bridge Corporation

Major highway improvements that are currently underway or fully funded will be completed as planned.

The system will be well maintained, efficiently operated, and effectively signed to encourage maximum usage.

= No reduced growth initiatives or related controls that would significantly inhibit normal development patterns will he introduced during the estimate period.

= There will be no future serious protracted recession during the estimate period.

= There will be no protracted fuel shortage or significant changes to fuel price during the estimate period.

= No local, regional, or national emergency will arise that will abnormally restrict the use of motor vehicles.

In Jacobs' opinion, the assumptions underlying the projections provide a reasonable basis for the revenue projections and operating expenses. However, any financial projection is subject to uncertainties. Inevitably, some assumptions used to develop the projections will not be realized, and unanticipated events and circumstances may occur. There are likely to be differences between the projections and actual results, and those differences may he material. Because of these uncertainties, Jacobs makes no guaranty or warranty with respect to the projections disclosed in this Study.

JACOBS Page 23

Section 5

Annual Consulting Engineer's Report

, HHTB Gorpcratlon i- ' ' * The HNTB Companies ! Li- ~

En~ ineers Arcr i tec is Planners

7450 W 130th Street Telephone (913) 491-9333 Suite 400 Facsimile (913) 491-9337 Overland Park. KS 66213 www.hntb.com

April 30, 2011

Mr. Larry E. Gridley Chairman & President Lake of the Ozarks Community Bridge Corporation PO Box 3 9 Lake Ozark, Missouri 65049

RE: LAKE OF THE OZARKS COMMUNITY BRIDGE BUDGET. MAINTENANCE AND OPERATIONS REVIEW

Dear Mr. Gridley:

The purpose o f this letter is to provide the reviews and evaluations required by Work Order Number 17 under our General Consulting Engineering Agreement f o r the fiscal year ending April 30. 2011. Our reviews and evaluations follow:

Annual Budqet I

Review of the proposed Annual Budget was undertaken t o fulf i l l the requirements of the Bond Trust Indenture Section 7 0 8 that requires the Consulting Engineer to review the operation and maintenance of the bridge system i o r the purpose o i estimating the operation and maintenance expenses for the upcoming fiscal year. Additionally, per Section 711 the Corporation is required to prepare the budget based on recommendations of the consult in^; Engineer and the Traffic Consultant.

i We have reviewed the Fiscal Year 2012 Proposed Budget (Exhibit A) with consideration t o

I the recorded actual expenses and revenues from May 2010 t o Apri l 2011 (See Exhibit B), with consideration t o Bond Trust Indenture Sections 601 and 607 concerning the Renewal and Replacement Fund, and with consideration to our review of the bridge system operation and maintenance. Based on these considerations the proposed budget expenses for fisca! year

! ending Apri l 2012 are appropriate.

Renewal and Replacement Fund

We have reviewed the possible need t o deposit moneys in the Renewal and Replacement Fund per Bond Trust Indenture Section 607. Section 607 states that moneys shall be

1 deposited in the Renewal and Replacement Fund if the Consulting Engineer files a wri t ten report with the Corporation and the Bond Trustee stating the cost of major or extraordinary renewal, replacement, resurfacing or reconstruction of the Bridge System are necessary. Further, per Section 601 unde i the sixth order of precedence fo r revenue iund ~lliocations,

I moneys necessary to enable the Corporation to comply with the Corporation covenant t o operate and maintain the Bridge System pursuant to Section 6 0 7 shall be deposited in the Renewal and Replacement Fund beginning after the fifth ful l fiscal year of Bridge System

1 operation (May 1,2003).

Based on these considerations and the MoDOT report for the bridge inspection performed on January 6. 2010 (Exhibit D), we recommend deposit of moneys in the Renewal and Replacement iund for the fiscal year ending April 2011 in the amount of $200,000. This is consistent with the deposit schedule shown in the Official Statement and will provide funding towards a future half sole deck repair (scarify and resurface). This type of repair 1)

Mr. Larry Gridley April 30, 2011

Page 2

is normal for a bridge that has been in service for about 25 years (1998 to 20231, 2) would prevent physical damage to the bridge sub deck from chloride (salts) contamination, 3) would restore the bridge surface t o provide safe and effective operation, and 4) would extend the life of bridge deck by approximately 2 0 years.

Maintenance of Insurance

We have evaluated the full insurable value of such damageable portion of the Bridge System to fulfill the requirements of Bond Trust Indenture Section 705. I t is our recommendation that the insurable value be based on the occurrence of a catastrophic event such as an earthquake in which full project replacement would be necessary.

For purpose of determining insurable value, the Bridge System can be divided into the following elements: bridge, approach roadways, tol l plaza, tol l equipment, and administration building. When the bridge was opened in 1998, the best estimate for the replacement cost was based largely on the actual construction cost, with some adjustments. Thirteen years have passed since the Bridge System opening. Per information revealed in Engineering News Record (ENR) website, the average annual building cost index change for the 12 month period ending December 2010 was +2.39%. Reference Exhibit C for a historical tabulation o f recommended insurable values. Our recommended insurable values for the fiscal year starting F4ay 2011 are increased by about 2.39% over last year's values and are as follows:

Bridge - A catastrophic event could require complete bridge replacement, including all substructure and superstructure components. Estimated replacement cost is $23,080,000.

Approach Roadways - The initial construction cost of the approach roadways included the cost of earthwork necessary to build the roadway t o the required alignment and grade. A catastrophic event would not require this level of earthwork be duplicated fo r roadway replacement. However, because of the proximity of the east approach roadway to the steep rock cliff adjacent t o the lake, the possibility exists that a catastrophic event could require substantial corrective measures to regain a stable roadway foundation. This type of cost was not incurred during the original construction, so there is a potential for a trade-off in costs from what was experienced in the original construction. Estimated replacement cost is $2,177,000.

- !oil Plaza - A catastrophic event could require compiete toll plaza replacement. Estimated replacement cost is $1,161,000.

Toll Equipment - A catastrophic event could require compiete toll equipment hardware replacement. A copy of the software is stored off site, and so would not need to be repurchased. Estimated replacement cost is $363,000.

Adrnin~stration Bullding - In the event a complete replacement, the construction cost of the building 1s required exclud~ng the cost of initial site work that would not be necessary. Estimated replacement cost is $508,000.


The total replacement cost based on the above listed elements of the project is $27,289,000.

Section 705 also requires that the Consulting Engineer determine the amount, if any, which is necessary t o be deposited in the Insurance Fund so that the balance in such fund relating to this type of insurance will equal the deductible amount on the insured replacement value of the Bridge System. We understand that the budgeted insurance premium for the year ending April 30, 2011 includes a real property insurance total of approximately $27,289,000 with a $100,000 deductible. This is appropriate. We recommend $100.000 be directed t o the Insurance Fund.

Toll Facilitv Operations and Maintenance Review

HNTB Corporation performed a review of Toll Facility Operations and Maintenance services being performed by the Lake of the Ozarks Community Bridge Corporation staff. The review consisted of a site visit April 5, 2011 to gather information and witness operational and maintenance activities.

A listing of our review categories and results follow:

1. Documentation: Three copies of all operations documentation were located in the administration building. No changes in the operations manual were made during fiscal year ending April, 2010.

2. Services: Pest control was provided by All American Pest Control, Inc., on a monthly basis (except for December, January, and February). Sanitation services were provided by Allied Waste Services. Lanes including treadles are swept and blown clean as daily maintenance operations during the 11:OO P.M. t o 7:00 A.M. shift. This is acceptable.

3. Personnel: LOCBC employs 1 ful l time accountant/book-keeper, 1 full time manager, 3 full-time supervisors. 2 part-time supervisor, 5 on call collectors (average 8-24 hours per week), 5 full-time collectors and 1 full-time office assistant. Toll collector performance is monitored by the toll collection system. The manager and the accountant/book-keeper compare traff ic counts and vehicle classifications t o revenues daily. The accountant/book-keeper posts a daily income record, actual traffic count report, an account user report and monitors non-revenue users. This information is reconciled daily. Additionally, the collectors and supervisor count money and compare to computer record as a final task of each shift. Staffing and monitoring procedures appear acceptable.

4. Parking Lots: The parking lots appear to be in satisfactory condition. Parking lots were sealed in 2 0 0 8 and the back driveway was patched.

5. Supplies and Eqiiipmeni: L O C K ma~ntains an inventory of all furniture and non-toil system equipment in the admin~stration building. An inventory of the toll collection

Mr. Larry Gridley April 30. 2011

Page 4

equipment is also maintained. Equipment owned by LOCBC is as follows: 4 work stations (CPU, monitor, keyboard, and printer), one server including monitor and keyboard, 4 terminals including receipt printers and scanners in tol l booth plus one spare of each.

No records are maintained for consumable supplies. This is acceptable.

6. Audit and Accounting Reporting Procedures: HNTB reviewed typical toll facility audit reports. The standard tol l system audit reports generated monthly and additional ad-hoc reports are provided t o the Board. The ad-hoc reports track non-revenue patrons (Fire Dept., Highway Patrol, MoDOT, Camden County Sheriff Dept., CAM0 Ambulance District, and Water Patrol), delinquent patrons, and document collector performance. There are currently 1302 patron prepaid tol l accounts with 5208 cards in circulation. A prepaid accounts daily balance report and monthly summary report are produced. Evers 6 Company, CPA's, L.L.C., audits and monitors accounting-reporting procedures annually. Bednara (outside bookkeeper) monitors the payroll and bank accounts. All appeared acceptable.

7. Toll Collection: General toll collection procedures appear to be acceptable and consistent with the operations policies originally developed by Alltech and approved by HNTB and the Corporation. Money handling and bank deposit procedures appear t o be acceptable; in conformance with project requirements. Central Armored Transport. Inc. (armored car service) is employed by LOCBC t o transport tol l revenue deposits t o the bank. Deposits are picked up each business day except that on holiday weekends specific request is made for Saturday pickup.

Effective April 1, 2011 toll rates were increased by $0.50.

The manager reported that the lane equipment operates satisfactorily. One treadle was replaced in 2010. All the treadles have exceeded the warranty period (6,000,000 axles or two years). There is one spare treadle stored in the administration building basement and one week lead time is needed for new treadle delivery. A computer hardware and software upgrade was completed February 2009 by The Revenue Markets. Inc. at a cost of $406,000. New touchscreen monitors and keyboards were added in the toll booths. These new monitors are still functioning well in 2011.

8. CCTV :doni'toring System: The security system appears t o function properly. Two cameras are mounted i n the canopy to monitor vehicles and attendants. One camera covers the two lanes closest t o toll building. The other camera covers the one lane furthest away f rom toll build~ng. Although personnel report that the booth camera is unable t o detect l~cense plate numbers in night time light they still enhance attendant safety. Considering that the unresolved toll collection violation rate is less than $10 per month, the cost of a camera upgrade does not appear cost effective.

9. Maintenance of Facilities: The appearance of the facility and grounds was satisfactory The generator is serv~ced annually in January and is tested every Thursday at 12:30 P.M.


Page 5

fo r 20 minutes under load. The administration building basement slab exhibits evidence of heaving soil under the slab that shows as cracks in the slab. The cracking although noticeable, appears unchanged from last year. Landscaping in the front of the administration building appeared in satisfactory condition with mulch placed around plants and reseeding grass areas. The manager reported that the septic tank system performed satisfactorily over the last year.

We trust this letter provides the reviews needed by the Corporation to fulfill the requirements of the Bond Trust Indenture at this time. Should you have questions about the information we have provided, please contact me.

Sincerely

HNTB CORPORATION

Barbara Friedman, P.E. Senior Project Manager

Attachment

Copy to: Mr. J im Werner, Exec. Director Mr. Joseph A. Roeger, Secretary & Treasurer

EXHIBIT A

LAKE OF THE OmRKS COMMUNITY BRIDGE CORPOWTIOF1 Operating and Capital Budget

for the year ending April 30,2012

Revenues:

Toll revenue

EXPENSES:

Salaries and wages Payroll taxes Employee benefits Pension expense Vehicle expenses Office and maintenance supplies Uniforms Toll equipment maintenance Building and grounds maintenance Legal Trustee fee Rating agency fee Travel & entertainment Insurance Traffic consultant MoDOT maintenance Consulting engineering services Utilities Audit & accounting services Courier service & other Financial consultant -

Total expenses 734,768

Operating income availble for debt service 2,508,232

Interest income Interest expense

Net income (loss) 780,468

Anticipated capital expenditures 0

Deposit lo the Renewal and Replacement Fund 200,000

EXHIBIT B

LAME OF THE OmRKS GOMMUNITV BRIDGE GORPOWWTION COMPARATIVE BUDGETS

Previous FY (Unaudited Actuals) vs. FY 2012 (Proposed)

Toll revenue I 1 3,029.520 13,422,609 I $ 3029.016 I REVENUES

EXPENSES I I I

FY 201 1 FY 2012 Approved Proposed

Budget Budget i FY2010 Actuals

(unaudited) 5109- 4/10

Total expenses

Operating income available for debt service

FY2010 Approved Budget

Interest income interest expense

FY 201 1 Actuals

(unaudited) 5-17 0- 411 1

Net income or loss

Capital expenditures

Deposit to the Renewal and Replac. Fund

I L

HNTB Corporation i

l o f l

EXHIBIT t2

Fiscal Year

Starting May-98 May-99

LAKE OF THE OZARKS COMMUNIN BRIDGE CORPORATION MAINTENANCE OF INSURANCE

. . (Prior Yea1

N A 0.80 1.92 2.40 0.99 1.37 1.96 7.85 5.55 3.90 2.68 4.57 1.66

ENR Annual Avg.

Building Cost Index

~bsdways I Toll Plaza $2,500,000 1 $800,000

Equipment $250,000 $252,000 $257,000 $263,000 $266,000 $269,000 $275,000 $296,000 $313,000 $325,000 $333,000 $349,000 $354,000

Approx. Annual Inflation Rate (%)

Building I Totals $350,000 ) $ I 8,800,000

Recommended Insurable Values ($) I A ~ ~ r o a c h I I Toll I Admin. I

HNTB CORPORATION

; a . . . . . . s . . . . . . m o D o c n % z % z s z z z z

E E E E g O c c c E E E E G $ Z $ 2 ; $ 9 8 2 $ g $ g $ ieeee- , , L : s ~ ~ : E F ~ ~ C : s < 0 - x '5 s

3 E e S $ 8 3

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mars 318BWOISVm

IIBx3N0301JlodNIIY Ila8~hloJ"IJUolNIsI

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Section 6

Officer's Certificate re: Statement of Compliance

The undersigned, Larry Gridley, Chairman of the Board o f Directors and President of the Lake of the Ozarks Community Bridge Corporation hereby states and certifies that, as of the date set forth below:

Section 7

Officer's Certificate re: Insurance Coverage

I

I rlhe v ~ & ~ ~ i g n & ~ GrE&e% &aiman -tlf &e mr& of'

I P ~ d d m a F t k & O h Wwh mmmanXiry Wge &e-&rn be~eby

1 I

4t-at.r; and ce thar, as & tke date set fmk

I a. The C@~m@tEon is not- w@vidEni;a@ TmBrance -t;o a &4~zjczf an- prmm; and

! R, M&&&tStis e-t-3~ *&laAk a &rim&& ~UMWC-P& cur~mty in far &fi&% &Zke

I .f;srwaUm; a& 1

I & ER as MtBe Tmsf &&~um; and

i d FJog&m c# the W&e 5 ~ - been &ama@ ar d &rffig h ymr an&& A@ mz7?0X1 w f a r t h e wri&frm %ch

I &tie %e tbe d&e hreaf ,

I The undersigned has executed this Officer's Certificate as of September 15,2011.

Overview 2011-2012 Lake o f t h e Ozarks Community Bridge Corporation

Property Bridge Limit (Includes $200,000 approach roadways)

Toll Plaza Toll Equipment Administration Building Office Contents Business Income Earthquake Limit (Bridge) Flood Limit Bridge Deductible All Other Deductible Earthquake Deductible Flood Deductible Annual Premium

General Liability Limit

Deductible Estimated Exposure Rate Annual Premium Surplus Lines Tax & Fee Total Annual Premium

Crime (Employee Theft) Limit Deductible Premium

Workers Compensation Limit Employers Liability

Audit Frequency Experience Mod Annual Premium

$ 1,000,000 Each Occurrence $ 2,000,000 Aggregate Limit $ 50,000 Fire Legal Liability $ 5,000 Medical Payments $ 1,000

1,244,571 Vehicles $ 13.27 $ 17,341.00 $ 1,392.05 $ 18,733.05

"Statutory" $1,000,000 Per Accident $1,000,000 Policy Limit by Disease $1,000,000 Each Employee by Disease

Annual 1.00

$6,821

Directors & Officers Liability & Employment Practices Liab Limit $1,000,000 Deauctibie-wrongful acts other than Employment Practices $ 10,000 Employment Practices $ 15,000 Annual Premium $ 3,118.50

Section 8

Officer's Certificate re: Participation of Missouri Highway I I and Transportation Commission

The undersigned, Larry Gridley, Chairman of the Board of Directors and President of the Lake of the Ozarks Community Bridge Corporation hereby states and certifies that the information describing the participation of the Missouri Department of Transportation Commission in the Official Statement is true and correct in all material respects as of the date set forth

Section 9

I

Consulting Engineer's Report re: Status of Construction

There is no Engineer's Report. Construction was completed in 1998.

LAKE OF THE OZARKS COMMUNITY BRIDGE CORPORATION … · MANAGEMENT'S DISCUSSION AND ANALYSIS April...

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