chair, michael j. hipple vice chair, linda t. johnson · pdf filepublic comment period ......

HRTAC • 723 Woodlake Drive • Chesapeake, Virginia 23320 • 757.420.8300 • www.hrtac.org

Chair,MICHAELJ.HIPPLE•Vice‐Chair,LINDAT.JOHNSON

ExecutiveDirector,KEVINB.PAGE

AGENDAWITHPRESENTEDMATERIALS

HamptonRoadsTransportationAccountabilityCommissionFinanceCommitteeMeeting

September6,201712:00p.m.

HRTACConferenceRoom723WoodlakeDrive,Chesapeake,VA23320

1. CalltoOrder

2. ApprovalofAgenda

‐ RecommendedAction:Approval

3. PublicCommentPeriod

‐ Limit5minutesperindividual

4. Chair’sComments

5. ConsentItem

‐ RecommendedAction:Approval

A. MinutesoftheJune5,2017HRTACFinanceCommitteeMeeting

6. ActionItems

‐ RecommendedAction:Discussion/Endorsement/Recommendation/Direction

A. HRTACFY2018–FY2023PlanofFinanceUpdate‐ExecutiveDirectorPageB. HRTAC2040LongRangePlanofFinanceUpdate‐ExecutiveDirectorPageC. HRTAC ProposedDebtManagement Plan ‐ Executive Director Page and PFM

FinancialAdvisors

7. InformationItems

A. HRTAC Economic Update and Quarterly Investment Performance Report – Executive Director Page and PFM Asset Management LLC

B. Smart Scale Technical Guide/Policy Changes – Executive Director Page

8. Adjournment

HRTACFinanceCommitteeMeeting│September6,2017│AgendaConsentItem5A

AgendaItem5AConsentItem

To: ChairWagnerandtheothermembersoftheFinanceCommitteeFrom:KevinB.Page,ExecutiveDirectorDate:September6,2017Re: June5,2017Meeting’sMinutes Recommendation:TheFinanceCommitteeisaskedtoapprovetheJune5,2017FinanceCommitteemeeting’sminutes.Background:TheFinanceCommitteeapprovesmeetingminutesforthepermanentrecordoftheFinanceCommittee.FiscalImpact:ThereisnofiscalimpactinrelationtothisConsentItem.SuggestedMotion:MotionistoapprovetheminutesoftheHRTACFinanceCommitteemeetingonJune5,2017.

HRTACFinanceCommitteeMeeting‐SummaryMinutes–June5,2017PreparedbyJ.Coleman

Page1

HamptonRoadsTransportationAccountabilityCommission

SummaryMinutesoftheJune5,2017FinanceCommitteeMeetingThe Hampton Roads Transportation Accountability Commission (HRTAC) FinanceCommitteeMeetingwascalledtoorderat10:00a.m.intheRegionalBuildingBoardRoomA/B,723WoodlakeDrive,Chesapeake,Virginia,withthefollowinginattendance:HRTACMembersinAttendance:FrankWagner,Chair Dr.McKinleyPriceRexAlphin,ViceChair ChristopherStolleKennethAlexander HRTACExecutiveDirectorKevinPageOtherParticipants:KathleenBowe DanettaJankoskyNelsonBush LiangShanNancyCollins *DenotesLateArrivalorEarlyDepartureOthersRecordedAttending:ThelmaDrake(Norfolk);TonyGibson,MarthaGross,JimUtterback(VDOT);DawnMerkle(Willcox & Savage); Camelia Ravanbakht, Chris Vaigneur (HRPDC); Jennifer Coleman(HRTAC)

ApprovalofAgendaMr.RexAlphinMovedforapprovaloftheagenda;secondedbyMr.ChristopherStolle.TheMotionCarried.PublicCommentPeriod(limit5minutesperindividual)NomembersofthepublicaddressedtheHRTACFinanceCommittee.Chair’sCommentsChairWagnerreviewedtheneedforagastaxandindicatedtheHRTFbalancewasgoingtoreducequicklyduetothetimelineoftheprojectsbeingcompleted.ConsentItemsA. Approval of theminutes of the March 9, 2017 HRTAC Finance Committee

meeting.Mr.RexAlphinMovedtoapprovetheminutesoftheMarch9,2017HRTACFinanceCommitteemeeting;secondedbyMr.ChristopherStolle.TheMotionCarried.


Page2

ActionItemsA. HRTACFY2018‐2023FundingPlan

HRTAC Executive Director, Kevin B. Page, informed the Committee HRTAC had alegal requirement tomaintain a Six‐Year ImprovementPlan for theHRTFmoniesand explained the FY2018‐2023 was going to be more closely aligned with theCommonwealth’sSix‐YearImprovementPlanandfundinginitiatives.CommitteemembersaskedinregardstotheassumptionconditionsintheplanandtheeffectsofSmartScalefundingonestimatedcompletiondates.Ms.LiangShan,PFM,reviewedtheprojectcosts,fundingsourcesandprojectedcashflowswithandwithouttollrevenuesforFY2018‐2023.Mr. Kenneth Alexander Moved to endorse the proposed HRTAC FY2018‐FY2023Plan of Financeupdatewith toll revenues being returned toHRTAC and requeststhattheCommissionauthorizetheFinanceCommitteetoholdapublichearingandreport back public comments for consideration in the Commission’s action at itsSeptember21,2017meeting;SecondedbyChristopherStolle.TheMotionCarried.

B. HRTAC2040PlanofFinanceUpdateMs. Liang Shan, PFM, explained the updated financial plan was to reassess thefinanciallyconstrainedconstructiontimelinefortheHRTACprojectsincludedinthe2040 LRTP. The following areas of reviewed data include:

Projectcosts VDOTFunding HRTFRevenue HRBTTrafficandRevenue

Ms. Shan indicated the approvedproject costs increased to $1.654milliondollarsfrom$1.576milliondollarsinMarchandnotedHRBTcostswerenotincluded.TheHRTFrevenueforecastwasreducedby$153MillionduetothelevelofdebtHRTACpresentonHRTACaccounts.Ms. Shan reviewed the HRTF debt structure and indicated the toll revenue wasaimedtocoverasmuchoftheloanpaymentsaspossible.CommitteememberswereshownagraphdepictingtheHRBTtollrevenuebasedonthe May 2017 CDM Smith Traffic and Revenue forecast update for the followingscenarios:

ConcurrentHOTLanes,HOV2+free Concurrent HOT Lanes, HOV3 + free (baseline analysis used in Financial

Plan) ReversibleHOTLanes,HOV2+free ReversibleHOTLanes,HOV3+free


Page3

Ms. Shan noted the toll revenue debt financing plan had not changed andemphasizedtheimportanceoftheTIFIAloansfortheprojects.Ms. Shan reviewed the annual projected costs of the project and financial planfundingcomponents.Additionally,shestatedHRBTconstructioncompletionwouldbefrom2024/2025to2028withorwithouttollsdueto:

$78Millionincreaseinapprovedprojects(inflation). HRTFrevenueforecastdecrease. ReductionofVDOTfunds. $100 Million incremental HRBT cost increase each year the project is

delayed.Committee discussion ensued in regards to the HRBT and focused on potentialsolutionsforcompletionby2024.Ms.Shannotedthefollowingnextsteps:

Detailedcreditmarketandinterestrateforecasts Developadetaileddebtmanagementplan OutreachtoTIFIAregardingamastercreditagreement Pursueanon‐publiccreditratingassessment

Mr. Christopher Stolle Moved to endorse the proposed 2040 Long Range Plan ofFinance with toll revenues being returned to HRTAC and requests that theCommissionauthorize theFinanceCommittee toholdapublichearingandreportanycommentstothefullCommissionattheSeptember21,2017meeting;SecondedbyMr.RexAlphin.TheMotionCarried.

InformationItemA. InvestmentStrategyDiscussion

Mr.NelsonBush,PFM,commentedoneconomygrowthhoweveritwasslowerthanexpectedandthelabormarkethasincreased.Unemploymenthasdroppedto8.6%,a new low since 2007. Additionally, he reviewed the inflation trend and the USTreasuryyieldcurve.Mr.Bushoutlinedtheinvestmentstrategymodificationsincluded:

Changes to better align with HRTAC’s projected revenues and capitalexpenditureforecast

Creation of two portfolios, enhanced cash and core, each with uniquestrategies

InitiatingHRTACRFP2017tofinalizethecreationoftwoportfolios,ladderedandDMBEmanagedcore.


Page4

Mr.Bushhighlightedthechangestotheportfoliodiversificationandlistedexamplesofvalueaddedthroughchangingsecuritieswhichcomprisetheportfolios.Finally,henotedthenextstepswere:

Incorporate the HRBT Project into the investment strategy and portfoliostructure.

AssistinreviewingandpotentialexpansionofHRTAC’sInvestmentPolicy.With no further business to come before the Hampton Roads TransportationAccountabilityCommissionFinanceCommittee,themeetingadjournedat11:19a.m._________________________________________FrankW.WagnerHRTACcFinanceCommitteeChair

HRTACFinanceCommitteeMeeting│September6,2017│AgendaActionItem6A

AgendaItem6AActionItem

To: ChairWagnerandtheothermembersoftheFinanceCommitteeFrom:KevinB.Page,ExecutiveDirectorDate:September6,2017Re: FinalizingtheProposedHRTACFY2018‐FY2023PlanofFinanceUpdateRecommendation:HRTACStaffisrecommendingtheFinanceCommitteeprovideendorsementfortheCommissiontofinalizetheProposedHRTACFY2018‐FY2023–SixYearOperatingandCapitalProgramofProjectsfortheRegion’sHighPriorityProjects(WithTollRevenuestoHRTAC)toupdatetheHRTAC‐adopted2016‐2022FinancialPlantoincludecertainmodificationsfortheRegion’sHighPriorityProjectsandadditionalrevenuesbasedonneworupdatedinformation.Background:AtitsMarch9,2017meeting,theFinanceCommitteeendorsedtheProposedHRTACFY2018‐FY2023–SixYearOperatingandCapitalProgramofProjectsfortheRegion’sHighPriorityProjects.TheCommissionauthorizedconductingapublichearingforthepurposeofsharingtheproposedupdatewiththepublicandsolicitingpublicinputfortheCommissiontobeawareofpriortotheCommissiontakingActionontheProposedHRTACFY2018‐FY2023–SixYearOperatingandCapitalProgramofProjectsfortheRegion’sHighPriorityProjectsatitsSeptember21,2017meeting.ThepublichearingwasconductedbyHRTACFinanceCommitteeChairWagneronJuly20,2017at1:00p.m.Nooralorwrittenpubliccommentshavebeenreceived.MinoradjustmentshavebeenmadetobringtheproposedplantoreflectupdatedprojectestimatesandobligationsofbothHRTACandVDOT,includingtheJune2017SmartScaleawardstotwoHRTACprojectsandthereductionoftwoprojectHRTACobligationsduetoareductionintotalprojectcostsorareturnofthefundingobligationbyVDOTduetotheuseoffederalfundingtosupporttotalprojectcosts.FiscalImpact:ThefiscalimpacttotheHamptonRoadsTransportationFundinrelationtothisActionItemis$4,317,190,088forthesix‐yearperiodFY2018throughFY2023.ThefiscalimpacttotheHamptonRoadsTransportationFundsinceitsinception,FY2015throughFY2023,inrelationtothisactionitemis$4,582,321,157.

HRTACFinanceCommitteeMeeting│September6,2017│AgendaActionItem6A

SuggestedMotion:Motion:TheFinanceCommitteeendorsesandrecommendsthattheCommissionfinalizetheProposedHRTACFY2018‐FY2023–SixYearOperatingandCapitalProgramofProjectsfortheRegion’sHighPriorityProjects(WithTollRevenuestoHRTAC)asitsPlanofFinanceUpdateandauthorizestheFinanceCommitteeChairtocommunicatethisendorsementandrecommendationtotheCommissionatitsSeptember21,2017RegularMeeting.

HAMPTON ROADS TRANSPORTATION

ACCOUNTABILITY COMMISSION

Economic Vitality and Quality of Life Unlocking Hampton Roads

Finalizing the Proposed HRTAC FY2018‐FY2023 Plan of Finance Update

(With Toll Revenues to HRTAC)

Kevin B. PageExecutive Director

9/6/2017

ProposedHRTACFY2018‐FY2023–SixYearOperatingandCapitalProgramofProjectsfortheRegion’sHighPriorityProjects(WithTollRevenuestoHRTAC)

• On June 15, 2017, HRTAC released for public comment the HRTAC FY2018‐FY2023 Funding Plan

• Public hearing was conducted the update on July 20, 2017• No comments were received

• Assumptions/Adjustments made:• HRBT advances on schedule – completion 2024• First bond activity FY2019• Smart Scale funding for HRTAC funded projects continues• Minor adjustments have been made to bring the proposed plan to reflect updated project estimates and obligations of both HRTAC and VDOT

• June 2017 Smart Scale awards to two HRTAC projects• Reduction in total project costs• Return of the funding obligation by VDOT due to the use of federal funding to support total

project costs.

2

Project Costs and Expenses & Funding Sources (With Toll Revenues to HRTAC)

HRTAC Six-Year Plan FY 2018 to FY 2023

Prior Years

FY 2018

FY 2019

FY 2020

FY 2021

FY 2022

FY 2023 Total PayGo

Debt

Proceeds1

Operating/HRTF Fees $7 $2 $2 $2 $2 $3 $3 $22 $22I-64 Peninsula Widening $247 $96 $62 $51 $147 $43 $645 $400 $245I-64/I-264 Interchange Improvement $136 $77 $73 $44 $24 $8 $362 $290 $67 $2 $3I-64 Southside/High Rise Bridge $57 $44 $170 $170 $164 $0 $605 $500 $105

Project Development $8 $29 $4 $1 $41 $41Mega-Project Delivery (HRBT) $164 $332 $473 $742 $795 $824 $3,330 $352 $2,978Total $455 $412 $643 $741 $1,079 $848 $826 $5,004 $1,605 $2,978 $417 $2 $3

Funding SourcesPrior Years

FY 2018

FY 2019

FY 2020

FY 2021

FY 2022

FY 2023 Total

VDOT Funds $186 $49 $46 $69 $60 $8 $417

HRTPO Funds $2 $2Outside Contribution $3 $3HRTAC Share $265 $363 $597 $672 $1,020 $840 $826 $4,582

Total $455 $412 $643 $741 $1,079 $848 $826 $5,004

Notes:

1. Net of financing costs

HRTAC Project Costs and Expenses

HRTAC ShareVDOT Funds

HRTPO Funds

OutsideContribution

3

HRTAC Projected Cash Flow FY 2018 to FY 2023 (With Toll Revenues to HRTAC)

Maintain General Reserve Balance at Minimum 10% of HRTF Revenue in Current Fiscal Year

HRTAC Six-Year Plan FY 2018 to FY 2023

FY 2018 FY 2019 FY 2020 FY 2021 FY 2022 FY 2023 TotalHRTF .7% local Sales Tax Funds $133 $136 $138 $141 $144 $147 $840

HRTF 2.1% Fuel Tax Funds $27 $30 $33 $35 $37 $38 $200

Total HRTF Revenue $160 $165 $172 $177 $181 $185 $1,040

HRTAC Toll Revenues1 $0 $0 $0 $0 $0 $2 $2

HRTF Interest Income2 $1 $2 $2 $2 $1 $1 $7

HRTF Investment Income2 $2 $2 $2 $0 $0 $0 $5

HRTAC HRTF Revenue Debt Proceeds3 $164 $320 $438 $693 $710 $652 $2,978

HRTAC Toll Revenue Debt Proceeds $0 $0 $0 $0 $0 $0 $0

Total Available HRTAC Funding $328 $489 $613 $871 $892 $840 $4,031

HRTAC Share - PayGo Funding $363 $585 $637 $970 $755 $730 $4,040HRTAC Share - Debt Service $12 $35 $50 $85 $96 $277

Total Annual Expenditure $363 $597 $672 $1,020 $840 $826 $4,317

Carryover Balance From Previous Year $371 $336 $228 $169 $20 $71Remaining HRTAC Funds Unobligated $336 $228 $169 $20 $71 $85

1. High Rise Bridge Phase I toll revenues starting FY 2023

2. Rounded income

3. Net of financing costs

HRTAC Projected Cash Flow

4

9/4/17

Project Location Project Description User Source of FundsPre-SYIP Funding

Activities HRTAC FY18 HRTAC FY19 HRTAC FY20 HRTAC FY21 HRTAC FY22 HRTAC FY23 Total

Operating/HRTF Fees

HRTAC Districtwide HRTAC Operating Budget HRTAC HRTAC HRTF $ 4,230,095 $ 1,300,000 $ 1,332,500 $ 1,365,813 $ 1,399,958 $ 1,434,957 $ 1,470,831 $ 12,534,153 HRTAC Project Initiation Budget HRTAC HRTAC HRTF 2,225,000 970,000 994,250 1,019,106 1,044,584 1,070,699 1,097,466 8,421,105

Department of Taxation Fees TAX HRTAC HRTF 499,518 - - - - - - 499,518 Department of Motor Vehicle Fees DMV HRTAC HRTF 98,695 - - - - - - 98,695

Total Operating Costs/HRTF Fees Total $ 7,053,308 $ 2,270,000 $ 2,326,750 $ 2,384,919 $ 2,444,542 $ 2,505,655 $ 2,568,297 $ 21,553,470

Construction Projects

I-64 Peninsula Widening

Newport News I-64 Widening Segment 1 VDOT VDOT 100,000,000 $ - $ - $ - $ - $ - $ - $ 100,000,000 UPC 104905 HRTAC HRTF 44,000,000 - - - - - - 44,000,000

Total 144,000,000 - - - - - - 144,000,000

Newport News, I-64 Widening Segment 2 VDOT VDOT - - - - - - - - James City County, PE UPC 106665 HRTAC HRTF 6,000,000 - - - - - - 6,000,000

York County Total 6,000,000 - - - - - - 6,000,000

Newport News, I-64 Widening Segment 2 VDOT VDOT - - - - - - - - James City County, ROW/Construction UPC 106665 HRTAC HRTF 84,583,377 69,210,987 29,913,311 - - - - 183,707,675

York County Total 84,583,377 69,210,987 29,913,311 - - - - 183,707,675

York County I-64 Widening Segment 3 VDOT VDOT - - - - - - - - PE UPC 106689 HRTAC HRTF 2,800,000 7,200,000 - - - - - 10,000,000

Total 2,800,000 7,200,000 - - - - - 10,000,000

York County I-64 Widening Segment 3 - RW Construction VDOT VDOT 10,000,000 19,210,469 32,000,000 25,858,850 57,858,434 - - 144,927,753 Construction UPC 106689 - 109790 HRTAC HRTF - - - 24,752,207 89,013,751 42,610,108 - 156,376,066

Total 10,000,000 19,210,469 32,000,000 50,611,057 146,872,185 42,610,108 - 301,303,819

Norfolk I-64/I-264 Interchange Improvement Phase I VDOT VDOT 5,047,700 - - - - - - 5,047,700 PE/ROW UPC 57048 - 108042 HRTAC HRTF 15,071,063 - - - - - - 15,071,063

Total 20,118,763 - - - - - - 20,118,763

Norfolk I-64/I-264 Interchange Improvement Phase 1 VDOT VDOT - - - - - - - - Construction UPC 57048 - 108042 HRTAC HRTF 22,402,977 64,831,612 41,680,228 8,108,836 - - - 137,023,653

Total 22,402,977 64,831,612 41,680,228 8,108,836 - - - 137,023,653

Norfolk I-64/I-264 Interchange Improvement Phase II VDOT HRTPO RSTP 1,892,000 - - - - - - 1,892,000 PE/ROW UPC 17630 - 108041 VDOT 11,990,900 - - - - - - 11,990,900

HRTAC HRTF 54,592,576 - - - - - - 54,592,576 Total 68,475,476 - - - - - - 68,475,476

Norfolk I-64/I-264 Interchange Improvement Phase II VDOT VDOT 21,396,361 7,950,000 10,288,526 2,756,222 - 7,608,946 - 50,000,055 Construction UPC 17630 - 108041 Outside Contribution 2,871,294 - - - - - - 2,871,294

HRTAC HRTF - - 17,243,819 31,993,778 23,919,465 - - 73,157,062 Total 24,267,655 7,950,000 27,532,345 34,750,000 23,919,465 7,608,946 - 126,028,411

Norfolk I-64/I-264 Interchange Improvement - Phase III VDOT VDOT - - - - - - - -

PE UPC 106693 HRTAC HRTF 1,100,000 3,750,000 3,750,000 1,400,000 - - - 10,000,000 Total 1,100,000 3,750,000 3,750,000 1,400,000 - - - 10,000,000

I-64 Southside/High Rise Bridge

Chesapeake, Suffolk I- 64 Southside/High Rise Bridge VDOT VDOT 5,000,000 - - - - - - 5,000,000 PE UPC 106692 HRTAC HRTF 20,000,000 - - - - - - 20,000,000

Total 25,000,000 - - - - - - 25,000,000

Chesapeake, Suffolk I- 64 Southside/High Rise Bridge VDOT VDOT 32,133,168 22,064,038 3,404,718 40,381,657 1,849,715 166,704 - 100,000,000 ROW/Construction UPC 106692 - 108990 HRTAC HRTF - 21,802,794 166,595,282 129,618,343 161,983,581 - - 480,000,000

Total 32,133,168 43,866,832 170,000,000 170,000,000 163,833,296 166,704 - 580,000,000

Project Development

Newport News, Norfolk, Third Crossing SEIS VDOT VDOT - - - - - - - - Portsmouth, Chesapeake, Study UPC 106724 HRTAC HRTF - - - - - - - - Suffolk Total - - - - - - - -

Norfolk, Hampton, HRCS SEIS Preferred Alternative Refinement VDOT VDOT - - - - - - - - Newport News PE UPC 110577 HRTAC HRTF 3,000,000 22,000,000 - - - - - 25,000,000

Total 3,000,000 22,000,000 - - - - - 25,000,000

Newport News, Norfolk, Remaining Projects of the Third Crossing SEIS HRTPO VDOT - - - - - - - - Portsmouth, Chesapeake, Projects Outside of Alternative A Modified HRTAC HRTF 3,000,000 4,000,000 - - - - - 7,000,000 Suffolk Total 3,000,000 4,000,000 - - - - - 7,000,000

Portsmouth, Chesapeake, Remaining Projects of the Third Crossing SEIS VDOT VDOT - - - - - - - - Suffolk Bowers Hill Environmental Study UPC 106724 HRTAC HRTF - 1,640,000 1,950,000 410,000 - - - 4,000,000 Total - 1,640,000 1,950,000 410,000 - - - 4,000,000

Suffolk Route 460/58/13 VDOT VDOT - - - - - - - - PE UPC 106694 HRTAC HRTF 1,527,768 1,666,656 1,666,656 138,920 - - - 5,000,000

Total 1,527,768 1,666,656 1,666,656 138,920 - - - 5,000,000

Mega-Project Delivery

Norfolk, Hampton, Financing Proceeds - I-64 HRBT Expansion HRTAC VDOT - - - Newport News HRTAC HRTF (Pay Go) - - - - - - 75,405,969 75,405,969

HRTF (HRTF Rev Bonds) - 164,134,647 320,194,927 438,131,930 692,765,808 710,084,953 652,431,108 2,977,743,373 HRTAC Toll Rev (TIFIA) - -

HRTF Rev Bonds (Debt Service) - - 11,528,500 34,750,625 49,540,750 85,169,375 95,701,000 276,690,250 HRTAC Toll Revenue TIFIA (Debt Service) - -

Total - 164,134,647 331,723,427 472,882,555 742,306,558 795,254,328 823,538,077 3,329,839,592

Total Development/Construction Project Costs Total $ 448,409,184 $ 409,461,203 $ 640,215,967 $ 738,301,368 $ 1,076,931,504 $ 845,640,086 $ 823,538,077 $ 4,982,497,389

Total Estimated Operating and Capital Costs $ 455,462,492 $ 411,731,203 $ 642,542,717 $ 740,686,287 $ 1,079,376,046 $ 848,145,741 $ 826,106,374 $ 5,004,050,859 Estimates Carried into Out Years as Place Holders Less: VDOT Sourced Funds 185,568,129 49,224,507 45,693,244 68,996,729 59,708,149 7,775,650 - 416,966,408 Mega-Project Under Development - Not Under Contract Outside Contribution Funds (HRSD, VA Beach) 2,871,294 - - - - - - 2,871,294

HRTPO RSTP Funds 1,892,000 - - - - - - 1,892,000 Total HRTAC Share $ 265,131,069 362,506,696 $ 596,849,473 $ 671,689,558 $ 1,019,667,897 $ 840,370,091 $ 826,106,374 $ 4,582,321,157

HRTF .7% local Sales Tax Funds by Year * $ 574,131,352 133,000,000$ 135,500,000$ 138,300,000$ 141,300,000$ 144,300,000$ 147,300,000$ 1,413,831,352 HRTF 2.1% Fuel Tax Funds by Year * $ 51,686,469 27,400,000 29,900,000 33,200,000 35,200,000 36,800,000 37,700,000 251,886,469

HRTF Interest Income 2,126,836 1,250,000 1,500,000 1,500,000 1,500,000 500,000 500,000 8,876,836

HRTF Investment Income 7,987,545 2,000,000 1,750,000 1,500,000 - - - 13,237,545 HRTAC HRTF Debt (HRTF Revenue Bonds) - 164,134,647 320,194,927 438,131,930 692,765,808 710,084,953 652,431,108 2,977,743,373

HRTAC Toll Revenue Debt (TIFIA) - - - - - - - - HRTAC Toll Revenues - 1,577,500 1,577,500

Deobligated Funds From Previous Projects - - - - - - - - Carryover from Previous Years - 370,801,134 336,079,085 228,074,539 169,016,911 20,114,822 71,429,684

$ 635,932,203 $ 698,585,781 $ 824,924,012 $ 840,706,469 $ 1,039,782,719 $ 911,799,775 $ 910,938,292

Total HRTAC HRTF Funds Unobligated $ 370,801,134 $ 336,079,085 $ 228,074,539 $ 169,016,911 $ 20,114,822 $ 71,429,684 $ 84,831,918

Pre-SYIP Funding Activities

HRTAC FY18 HRTAC FY19 HRTAC FY20 HRTAC FY21 HRTAC FY22 HRTAC FY23

Hampton Roads Transportation Accountability Commission Proposed - FY2018 - FY2023 - Six-Year Operating and Capital Program of Projects (With Toll Revenues to HRTAC)

I-64/I-264 Interchange Improvement

Total Available HRTAC HRTF Funding

www.hrtac.org

Unlocking

Ham

pton

Roads

9/6/2017

5

HRTACFinanceCommitteeMeeting│September6,2017│AgendaActionItem6B

AgendaItem6BActionItem

To: ChairWagnerandtheothermembersoftheFinanceCommitteeFrom:KevinB.Page,ExecutiveDirectorDate:September6,2017Re: FinalizingtheProposedHRTAC2040LongRangePlanofFinanceUpdateRecommendation:HRTACStaffisrecommendingtheFinanceCommitteeprovideendorsementtofinalizetheProposed2040LongRangePlanofFinanceUpdate(WithTollRevenuestoHRTAC)fortheHRTACHighPriorityProjectsandrecommendCommissionapprovaloftheHRTAC2040LongRangePlanofFinanceUpdatetoincludecertainmodificationsfortheRegion’sHighPriorityProjectsandadditionalrevenuesbasedonneworupdatedinformation.Background:AtitsMarch9,2017meeting,theFinanceCommitteeendorsedtheProposed2040LongRangePlanofFinanceUpdatefortheHRTACHighPriorityProjects.TheCommissionauthorizedconductingapublichearingforthepurposeofsharingtheproposedupdatewiththepublicandsolicitingpublicinputfortheCommissiontobeawareofpriortotheCommissiontakingActiononthe2040LongRangePlanofFinanceUpdate(WithTollRevenuestoHRTAC)fortheHRTACHighPriorityProjectsatitsSeptember21,2017meeting.ThepublichearingwasconductedbyHRTACFinanceCommitteeChairWagneronJuly20,2017at1:30p.m.Nooralorwrittenpubliccommentshavebeenreceived.FiscalImpact:TheLongRangePlanfiscalimpacttotheHamptonRoadsTransportationFundinrelationtothisActionItemis$8,558,000throughFY2040.SuggestedMotion:Motion:TheFinanceCommitteeendorsesandrecommendsthattheCommissionfinalizetheProposed2040LongRangePlanofFinanceUpdate(WithTollRevenuestoHRTAC)fortheHRTACHighPriorityProjectsandrequeststhattheCommissionapprovetheHRTAC2040LongRangePlanofFinanceUpdate(WithTollRevenuestoHRTAC)fortheHRTACHighPriorityProjectsatitsSeptember21,2017RegularMeetingandcommunicatetheupdatetotheHRTPO.

HAMPTON ROADS TRANSPORTATION

ACCOUNTABILITY COMMISSION

Economic Vitality and Quality of Life Unlocking Hampton Roads

HRTAC Proposed 2040 Long Range Plan of Finance Update

(With Toll Revenues to HRTAC)Kevin B. Page

Executive Director 9/6/2017

ProposedHRTACProposed2040LongRangePlanofFinanceUpdate(WithTollRevenuestoHRTAC)

• On June 15, 2017, HRTAC released for public comment the HRTAC Proposed 2040 Long Range Plan of Finance Update (With Toll Revenues to HRTAC)

• Public hearing was conducted the update on July 20, 2017• No comments were received

• Assumptions/Adjustments made:• HRBT advances on schedule – completion 2024 • First bond activity FY2019• Smart Scale funding for HRTAC funded projects continues• Minor adjustments have been made to bring the proposed plan to reflect updated project estimates and obligations of both HRTAC and VDOT

• June 2017 Smart Scale awards to two HRTAC projects• Reduction in total project costs• Return of the funding obligation by VDOT due to the use of federal funding to support total

project costs.

2

PROPOSEDHRTAC2040LONGRANGEPLANOFFINANCEUPDATE

HRBTfinishedin2024(withtollrevenuestoHRTAC)

3

RegionalProjects:Proposed2040LongRangePlan$8.5B

YEAR PROJECT YOE COST ($M)

2018‐2022 I‐64 Peninsula – Segments 1, 2, and 3 $645

2019‐2021 I‐64/I‐264 Interchange – Phases I & II $347

2020 I‐64 Southside/High‐Rise Bridge – Phase I $600

2020 Project Development $37

2024 HRBT $3,799

2037 I‐64 Southside/High‐Rise Bridge – Phase II $1,729

2037 Bowers Hill Interchange $659

2038 US 460/58/13 Connector $396

2038 I‐64/Fort Eustis Blvd Interchange $320

Vision PlanI‐564/I‐664 Connectors (Patriots)I‐664/MMMBTVA 164/164 Connector

4

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www.hrtac.org

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9/6/2017

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HRTACFinanceCommitteeMeeting│September6,2017│AgendaActionItem6C

AgendaItem6CActionItem

To: ChairWagnerandtheothermembersoftheFinanceCommitteeFrom:KevinB.Page,ExecutiveDirectorDate:September6,2017Re: HRTACProposedDebtManagementPlanRecommendation:HRTACStaffrecommendsthattheFinanceCommitteeendorsetheproposedHRTACDebtManagementPlanandauthorizetheFinanceCommitteeChairtocommunicatetheDebtManagementPlantotheCommissionatitsSeptember21,2017meeting.Background:HRTAC’sshortandlong‐rangefundingplansincludeassumptionsofdebtfinancingandtheuseoffederalTIFIAfundstosupportthedeliveryofthecontemplatedprojects.HRTAChasdevelopedaDebtManagementPlantoguidetheCommissionthroughthefundinganddeliveryofitsprogramofprojects.TheHRTACDebtManagementPlanhasbeendevelopedbasedontheassumptionsoftheHRTAC2040andSixYearOperatingandCapitalProgramofProjectsastheyalignwithprojectscurrentlyunderdevelopment/construction,oradvancingprocurementforfullprojectdelivery.FiscalImpact:ThefiscalimpacttotheHamptonRoadsTransportationFundinrelationtothisActionItemwillbedeterminedastheplanisadvancedandbondingoccurs.SuggestedMotion:Motion:TheFinanceCommitteeendorsestheHRTACDebtManagementPlanandauthorizestheFinanceCommitteeChairtocommunicatetheplantotheCommissionforconsiderationatitsSeptember21,2017RegularMeeting.

© PFM 1© PFM 1© PFM 1

Hampton Roads Transportation Accountability Commission

Finance Committee Presentation

Debt Management PlanSeptember 6, 2017

PFM Financial Advisors LLC

300 S. Orange Avenue Suite 1170Orlando, FL 32801

(407) 648-2208

pfm.com


Table of Contents

I. Introduction, Rationale, and Recommended Next Steps

II. Appendix A: Interest Rate Forecast

III. Appendix B: HRTF Credit Rating Considerations

IV. Appendix C: HRTF Debt Security & Issuance Assumptions

V. Appendix D: Initial Debt Management Plan Results

VI. Appendix E: Moody’s Credit Rating Scorecard & HRTF Evaluation


I. Introduction, Rationale, and Recommended Next Steps


Introduction & Rationale

The Six-Year Plan and 2040 LRTP that have been adopted include issuing $2,956M and $4,635M of HRTF revenue backed debt, respectively. Six-Year Plan did not include the final construction year of HRBT, which mostly needs to be debt financed.

If HRTF debt were not to be issued, the Approved Projects including High Rise Bridge I could still be completed on time. However, HRBT would be significantly delayed as would future projects such as High Rise Bridge Phase II.

VDOT has multiple Approved Projects under construction, and the targeted HRBT completion in 2024 is on the horizon, all of which are eligible for tax-exempt bond financing.

HRTAC has already adopted a master HRTF bond resolution, which has been validated, as well as a resolution to reimburse prior cash construction expenditures.

Long term tax-exempt interest rates remain at historically low levels but are expected to rise steadily in the future.

Therefore, HRTAC should consider a debt management plan that takes advantage of historically low interest rates to issue debt in an orderly and steady manner as construction progresses.


Debt Financing is Required to Fund Approved Projects through HRBT

HRTF Debt is Required


Historical Tax-Exempt Interest Rates

Current tax-exempt interest rates remain historically low.

Over the past 30 years, long term tax-exempt interest rates have been lower than the current level in only 3-4% of this time period.

However, US and global economic conditions have improved, and the Federal Reserve has ended – and is expected to begin reversing – the quantitative easing.


Introduction & Rationale (continued)

The HRTAC projects are good candidates for USDOT’s TIFIA Loan program. Given the multi-project and multi-year plan for HRTAC projects, a TIFIA Master Credit Agreement should be sought.

Credit markets and TIFIA both require credit ratings. Rating agencies prefer to see long term debt management plans, and TIFIA will require a robust debt & cash flow model.

Consistent with all of the above points, the appendices to this presentation set forth recommendations for a reasonable debt management plan to:

o Fully fund the Six-Year Plan including HRBT on the schedules anticipated by VDOT

o Issue debt as construction progresses, starting in calendar year 2018

Avoid massive amounts of debt sale in the years when annual costs spike to $700M - $1,000M per year

Manage interest rate risks as rates are expected to increase

o Focus on the funding plan through HRBT completion while establishing/maintaining a debt structure suited for subsequent debt issuances needed for the 2040 LRTP

o Initiate conversations with TIFIA regarding a HRTF backed Master Credit Agreement


Phased HRTF Debt Issuance Plan

Expenditures over $500 million annually for 6 consecutive years during HRBT

construction

Start issuing debt in CY 2018 based on VDOT construction

progress

Declining HRTF Fund Balance


Next Steps for Implementation

The following action items are necessary in order for HRTAC to begin implementation of this debt management plan in a timely and orderly manner:

Engage TIFIA in a program overview and lending discussions. Develop a TIFIA Letter of Interest.

Engage rating agencies for preliminary credit assessments.

Assemble all financial team members.

Begin drafting all needed bond documents, including a preliminary official statement.

Finalize initial HRTF bond issuance based on VDOT construction progress.

Be prepared for inaugural bond issuance in 2018 based on credit market conditions.

© PFM 10© PFM 10© PFM 10

II. Appendix A: Interest Rate Forecast

© PFM 11© PFM 11© PFM 11

Historical Tax-Exempt Interest Rates

Selected Maturities’ Historical Movements (from 1/1/1986 to 8/28/2017)

The 1986 tax act significantly changed municipal bond regulations.

For a variety of reasons, long term tax-exempt interest rates have generally trended lower for roughly 30 years, but they remain sensitive to economic conditions.

© PFM 12© PFM 12© PFM 12

SIFMA Swap Curve Interest Rate Forecast

One million dollar question; No long term future tax-exempt bond interest rate forecasts exist

Alternate approach is to use tax-exempt SIFMA forward swap curves as a proxy

Results show future yield curves flatten while 30-year rates increase only about 30 basis points

© PFM 13© PFM 13© PFM 13

Historical SIFMA SWAP and MMD

Differential (MMD-Swap Rate) Differential<AverageDifferential>AverageDifferential Average

• While SIFMA swap rate curves historically have tracked MMD yield curves, there have also been periods of relative volatility.

• Also SIFMA yield curves are based on a non-callable assumption.

© PFM 14© PFM 14© PFM 14

Credit Rating Spreads

MMD reflects the highest credit quality tax exempt municipal bonds

Most municipal bonds are in the A to AA credit rating range, and that is where we’d expect the HRTF revenue bonds to be rated

AA rating adds approximately 24 bps while a single A rating adds about 56 bps

© PFM 15© PFM 15© PFM 15

Interest Rate Assumptions for Debt Planning

Use the current tax-exempt market benchmark, MMD AAA, as a baseline. MMD incorporates typical call option flexibility.

Incorporate future forecasts of yield curve change per SIFMA swap curve

o Approximately 60 bps increase over 10 years for 10-year maturity, 6 bps/year forecast



Incorporate credit spread premium

o Approximately 24 bps increase for a AA-rated credit

o Approximately 56 bps increase for an A-rated credit

Incorporate additional reasonable cushion to reflect volatility

o Approximately 20 bps increase for bonds issued in 1-3 years



While interest rate forecasts have proven notoriously wrong, and we do not expect future conditions to exactly match our estimates, we believe this is a reasonable basis for planning.

Prior 2024 LRTP analyses actually used slightly more conservative interest rate assumptions, so PFM used those same assumptions for this Debt Management Plan.

© PFM 16© PFM 16© PFM 16

III. Appendix B: HRTF Credit Rating Considerations

© PFM 17© PFM 17© PFM 17

HRTF Revenue - Special Tax Revenue Credit

HRTF revenues are considered “special tax”:

• Not a state full faith & credit

• Subject to appropriation by the General Assembly

• Revenues are limited, i.e. they can not be raised without legislation, and subject to economic fluctuations

Special tax credits are common security for bonds in the US, e.g. Moody’s rates over 400 for local governments and over 150 for state governments

The rating agencies publish credit rating criteria and methodology for these types of bonds. Most recent criteria are:

• Moody’s: “US Public Finance Special Tax Methodology” (January 2014)

• S&P: “Public Finance Criteria: Special Tax Bonds” (June 2007)

• Fitch Ratings: “U.S. Tax-Supported Rating Criteria” (April 2016)

© PFM 18© PFM 18© PFM 18

Credit Rating Criteria Overview

Categories of Criteria include:• Tax base, economic strength, and nature of fees

• Legal Structure including additional bonds test (ABT) and debt service reserve fund (DSRF) requirements

• Financial metrics including projected debt service coverage and revenue trends/volatility

Basic legal protections for bondholders assume a lien on a defined revenue(s) stream and defined flow of funds

• The legislation define revenues/amounts available for debt service but do not create any legal structure

• HRTAC is best able to control the legal structure

The ABT and projected debt service coverage ratio (DSCR) are key criteria (40% of total credit score for Moody’s)

• ABT ranges: 1.76x to 2.99x equates to AA rating while 1.26x to 1.75x equates to A rating

• DSCR ranges: 2.51x to 4.5x equates to AA rating while 1.51x to 2.5x equates to A rating

The DSCR metric is best managed by the available revenue, timing & amount of borrowing needs, and amortization terms

• Moody’s and recently Fitch focus on coverage of maximum annual debt service (MADS), rather than on current coverage levels

© PFM 19© PFM 19© PFM 19

Legal Structure and Financial Metrics Considerations

Legal structure considerations

• Lower ABTs & projected DSCRs generate more bonding capacity but could result in lower ratings

• Lower ratings result in higher interest rates, all else equal

• Higher interest rates equal higher debt service costs and lower DSCRs, all else equal

• There can sometimes be a trade-of between more flexibility to access revenue for purposes other than debt service and lower credit ratings, and vice versa

Proposed legal structure example

• Senior lien: 2.0x or higher historical revenue/MADS, DSRF funded at 50% of the 3-prong test

• Junior lien: 1.35x or higher current year revenue/current year debt service, DSRF funded at the 3-prong test

Financial metrics – Debt service coverage ratios are results of financial planning driven by interest rates as well as two main factors: (1) construction cost schedule and issuance size, and (2) bond amortization term and structure. PFM recommends:

• Issue debt annually based upon construction progress and overall programmatic debt needed, with adjustments as interest rates may merit

• 30-35 year amortization for senior lien debt and 30-40 year amortization for junior lien debt

• Overall level debt service on senior lien

• Overall modestly ascending aggregate debt service

© PFM 20© PFM 20© PFM 20

Preliminary Credit Assessment – Senior Lien HRTF Aa Credit Rating4.4 weighted score could yield an Aa category rating

1 2-4 5-7 8-10 11-21Rating Factors Sub-Factors Aaa Aa A Baa SG Estimated

Numeric Value

Weighted Numeric

Value

Economic Strength

15% Very strong and very well diversified economic base with solid growth OR PCI/MFI is 200% or greater of national median for primarily residential bases

Strong and well diversified economic base with solid growth OR PCI/MFI is 125% - 200% of national median for primarily residential bases

Developed and reasonably diversified economic base with average growth OR PCI/MFI is 75% - 125% of national median for primarily

Small to evolving economy with modest diversification and some concentration with slow to declining growth OR PCI/MFI is 50% - 75% of national median for primarily residential bases

Deteriorating economic base with very little diversification or significant concentration with declining growth OR PCI/MFI is 50% or below of national median for primarily residential bases

2 0.3

Nature of the Special Tax Pledge

15% Very Broad (e.g. Sales, Utility, Income, and Gas Taxes, Motor Vehicle Registration Fees; Fixed Payments from the State depending on State's Rating)

Broad (e.g. Sales, Utility, Income, and Gas Taxes, Motor Vehicle Registration Fees; Fixed Payments from the State depending on State's Rating)

Average (e.g. Sales, Utility, Income, and Gas Taxes, Motor Vehicle Registration Fees)

Narrow (e.g. Hotel, Car Rental, Meals, Lottery, Liquor, and Cigarette Taxes)

Very Narrow (e.g. Document Stamp, Hotel, Car Rental, Meals, Lottery, Liquor, and Cigarette Taxes)

2 0.3

Additional Bonds Test (ABT)

20% 3.0x or higher OR a closed lien

1.76x to 2.99x 1.26x to 1.75x 1.0x to 1.25x No limit4 0.8

Debt Service Reserve Fund Requirement

10% DSRF funded at level greater than 1-year of MADS

DSRF funded at 1-year of MADS

DSRF funded at lesser of standard 3-prong test

DSRF funded at level less than 3-prong test or a springing DSRF

NO DSRF (or DSRF funded with low rated or speculative grade surety provider)

9 0.9

Maximum Annual Debt Service Coverage

20% Over 4.5x 2.51x to 4.5x 1.51x to 2.5x 1.1x to 1.5x Less than 1.1x

5 1.0

Revenue Trend

10% Significantly improving with one to no historic declines

Generally improving with few historic declines

Stable with some historic declines

Declining Rapidly Declining

4 0.4

Revenue Volatility

10% Has never declined Negative fluctuations generally within 0% to 5%

Negative fluctuations generally within 5% to 10%


Negative fluctuations greater than 15%

7 0.7

Total 4.4

1. Taxable Base and Pledge - 30%

2. Legal Structure - 30%

3. Financial Metrics - 40%

© PFM 21© PFM 21© PFM 21

Preliminary Credit Assessment – Junior Lien HRTF A Credit Rating6.3 weighted score would yield an A category rating

1 2-4 5-7 8-10 11-21Rating Factors Sub-Factors Aaa Aa A Baa SG Estimated

Numeric Value

Weighted Numeric

Value

Economic Strength



Developed and reasonably diversified economic base with average growth OR PCI/MFI is 75% - 125% of national median for primarily


Deteriorating economic base with very little diversification or significant concentration with declining growth OR PCI/MFI is 50% or below of national median for primarily residential bases

2 0.3







2 0.3



1.76x to 2.99x 1.26x to 1.75x 1.0x to 1.25x No limit7 1.4







6 0.6



13 2.6

Revenue Trend





4 0.4

Revenue Volatility





7 0.7

Total 6.3




© PFM 22© PFM 22© PFM 22

IV. Appendix C: HRTF Debt Security & Issuance Assumptions

© PFM 23© PFM 23© PFM 23

Pledged Revenues

HRTF revenues and toll revenues can be utilized to fund construction in two forms:

o Issue debt upfront: projected future receipts (up to 40 years) to pay debt service

o Pay-as-you-go during construction through 2024

* Toll revenues only include HRB I and HRBT – the two toll projects in the funding plan through 2024

© PFM 24© PFM 24© PFM 24

Proposed Flow of Funds and Lien Structure

Toll Revenues

Toll Collection Expenses

HRTF Revenues

HRTF RevenueSenior Lien BondsDebt Service Fund

Non-Recourse Toll RevenueTIFIA LoanDebt Service Fund

Non-Toll Revenue Junior Lien Bonds and TIFIA LoanDebt Service Fund

Non-Toll Revenue Junior Lien Common Debt Service Reserve Fund

Surplus HRTF Revenues

Non-Recourse Toll Revenue TIFIA LoanDebt Service Reserve Fund

Residual Revenues

General Fund Beginning Balance

Net Debt Proceeds(Deposit)

Residual HRTF & Toll Revenue

(Deposit)

State & Federal Funds

(Deposit)

Project Cost(Draw)

General Fund Ending Balance

Flow of Funds Capital Funding

HRTF revenue pledged debt and toll revenue pledged debt do not commingle.

HRTF debt has a senior lien and junior lieno Senior lien – tax-exempt bondso Junior lien – tax-exempt bonds and TIFIA loan

Toll revenue debt – TIFIA loan only

© PFM 25© PFM 25© PFM 25

HRTF Additional Bonds Test

Any additional debt issued on parity with existing debt will reduce repayment capacity cushion of the same pledged revenues – more debt has to be repaid.

To protect existing debt holders’ interest, a covenant test is typically instituted to ensure that upon issuance of the additional bonds, satisfactory repayment capacity cushion still exists.

ABT is a ratio of certain form of pledged revenues divided by certain form of debt service. For example, assuming the ABT requirement is 2.0x: o if the ratio result is greater than 2.0x, the ABT is passed, and HRTAC is allowed to

issue this debt;

o if lower than 2.0x, the ABT is failed, and HRTAC cannot issue more debt.

Assumed HRTF debt ABT: o Senior lien - 2.0x historical revenue over MADs

o Junior lien – 1.35x projected revenue over annual debt service

© PFM 26© PFM 26© PFM 26

Other Financing Assumptions

Debt Service Reserve Fundo Senior lien: funded at 50% of the 3-prong test

o Junior lien: DSRF funded at the 3-prong test

Senior lien HRTF bond profileo Up to 35-year termo Individual level debt service for the first several issuances, then aggregate level structure with the last

issuances

Subordinate lien HRTF bond profileo Up to 40-year termo Individual level debt service for the first several issuances, then aggregate level structure with the last

issuances

Subordinate lien TIFIA loan profileo Final maturity within 35 year post substantial completiono Average loan life shorter than 27.5 yearso Individual level debt service for the first several loans, then overall modestly ascending structure with

the last loans

50 bps flat interest rate cushion for all debt issuances across the curve – more conservative than the previous interest rate forecast suggests.

© PFM 27© PFM 27© PFM 27

V. Appendix D: Initial Debt Management Plan Results

© PFM 28© PFM 28© PFM 28

2024 Financial Plan Funding Mix – $5.5B Total

Projects through HRBT are fully funded with a well-balanced sources including HRTF Pay-go, HRTF Bonds, VDOT Funds, and TIFIA loans.

Assumes a HRTF junior lien TIFIA master credit agreement.

© PFM 29© PFM 29© PFM 29

Debt Issuance – Fund $3.6B of the $5.5B Total

HRTF debt is issued at a steady annual pace during project construction

Lower cost current interest bonds and TIFIA loans are emphasized

© PFM 30© PFM 30© PFM 30

HRTF Revenue Supported Debt Service Illustration

© PFM 31© PFM 31© PFM 31

VI. Appendix E:Moody’s Credit Rating Scorecard & HRTF Evaluation

© PFM 32© PFM 32© PFM 32

Moody’s Special Tax Scorecard

Indicated Rating

Overall Weighted Score

Aaa 0 to 1.9Aa 1.91 to 4.9A 4.91 to 7.9Baa 7.91 to 10.9Ba to C 10.91 to 21

Rating Category Aaa Aa A Baa SGScore 1 2-4 5-7 8-10 11-21

Rating Factors Sub-Factors Aaa Aa A Baa SG

Economic Strength



Developed and reasonably diversified economic base with average growth OR PCI/MFI is 75% - 125% of national median for


Deteriorating economic base with very little diversification or significant concentration with declining growth OR PCI/MFI is 50% or below of national median for primarily









1.76x to 2.99x 1.26x to 1.75x 1.0x to 1.25x No limit









Revenue Trend





Revenue Volatility








© PFM 33© PFM 33© PFM 33

Taxable Base and Pledge – Preliminary Evaluation

Among the 14 member jurisdictions, James City, Chesapeake, Hampton, Newport News, Norfolk, Suffolk and Virginia Beach contribute to 87% of FY 2016 revenues.

These 7 localities’ general obligation bonds are highly rated, reflecting a strong, growing, and diversified economic base.

As a proxy, it is reasonable to expect HRTAC will fall into the Aa category for Taxable Base and Pledge in Moody’s scorecard (detailed analyses with economic data for each member will be conducted)

Localities Sales and Use Tax Fuels Tax Total % Selected Localities RatingIsle of Wight 1,425,899 794,033 2,219,931 1.4%

James City 6,446,492 732,061 7,178,553 4.7% Aaa/AAA/AAASouthampton 313,684 344,398 658,082 0.4%York 5,735,733 1,244,720 6,980,452 4.6%Chesapeake 22,892,639 5,128,010 28,020,650 18.3% Aa1/AAA/AAAFranklin 953,188 275,363 1,228,551 0.8%Hampton 9,060,162 2,169,898 11,230,061 7.3% Aa1/AA+/AA+Newport News 13,703,842 2,694,253 16,398,094 10.7% Aa1/AA+/NRNorfolk 18,169,641 2,958,125 21,127,765 13.8% Aa2/AA+/AA+Poquoson 310,086 76,442 386,529 0.3%Portsmouth 4,128,359 1,353,317 5,481,676 3.6%Suffolk 5,353,651 1,916,442 7,270,093 4.7% Aa1/AAA/AAAVirginia Beach 35,225,995 6,466,139 41,692,134 27.2% Aaa/AAA/AAAWilliamsburg 2,817,406 501,272 3,318,678 2.2%Total 126,536,777 26,654,473 153,191,249 100.0%

FY 2016 HRTF Collection

© PFM 34© PFM 34© PFM 34

Taxable Base and Pledge - Population Growth

Population for the region has been steadily growing for the past 10 years and is projected to continue growing over the next 20 years.

Source: Weldon Cooper Center for Public Service,January 2017 (projections as of March 2017)

2016 PopulationChesapeake City 240,485Franklin City 8,597Hampton City 137,492Isle of Wight County 37,074James City County 73,615Newport News City 183,218Norfolk City 247,087Poquoson City 12,287Portsmouth City 96,179Southampton County 18,242Suffolk City 91,722Virginia Beach City 453,628Williamsburg City 15,429York County 68,585

0.4% 0.6% 0.2% 0.4%0.7%

1.1% 0.6% 0.4% 0.6%0.1%

3.1%

5.0%

3.3%

1,400,000

1,450,000

1,500,000

1,550,000

1,600,000

1,650,000

1,700,000

1,750,000

1,800,000

1,850,000

1,900,000

Agg

rega

te P

opul

atio

n

© PFM 35© PFM 35© PFM 35

Taxable Base and Pledge - Per Capita Personal Income

Per capita personal income has grown significantly over time with only 2 years of modest decline.

4.65% 1.15%4.77% 4.19% 2.38%

3.24%

$-

$100,000

$200,000

$300,000

$400,000

$500,000

$600,000

2007 2008 2009 2010 2011 2012 2013 2014 2015

Aggregate Per Capita Personal Income

-0.96%

-0.14%

2015 PCPIChesapeake City $ 46,769 Franklin City and Southampton County $ 34,987

Hampton City $ 40,759

Isle of Wight 50,643

James City County and Williamsburg City $ 58,504

Newport News City $ 40,453

Norfolk City $ 38,676

Poquoson City and York County $ 55,111

Portsmouth City $ 39,301

Suffolk City 47,533

Virginia Beach City $ 52,235

Source: Various 2016 Comprehensive Annual Financial Reports

© PFM 36© PFM 36© PFM 36

Taxable Base and Pledge - Total Assessed Value

Assessed values have remained relatively constant over the last 10 years, showing growth in the past 4 years.

2016 Assessed Value

Chesapeake City $ 26,496,419,433Franklin City $ 619,312,030 Hampton City $ 11,476,503,000 Isle of Wight County $ 4,579,015,110

James City County $ 12,511,337,556 Newport News City $ 16,716,737,000

Norfolk City $ 21,336,996,000 Poquoson City $ 1,540,287,555 Portsmouth City $ 7,172,538,000 Southampton County $ 1,834,732,674

Virginia Beach City $ 57,493,914,067 Williamsburg City $ 1,866,959,116 York County $ 10,040,644,661

Source: Localities’ 2016 Comprehensive Annual Financial Reports

15.08%3.72% 0.01%

-3.37% -2.13%-2.68% 0.19% 2.36%

2.24%

$-

$20,000,000,000

$40,000,000,000

$60,000,000,000

$80,000,000,000

$100,000,000,000

$120,000,000,000

$140,000,000,000

$160,000,000,000

$180,000,000,000

$200,000,000,000

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Aggregate Assessed Value

© PFM 37© PFM 37© PFM 37

Taxable Base and Pledge - Labor Force

The workforce is well diversified and has been making a strong recovery in recent years following a decline from 2009-2011.

Source: Virginia Labor Market Information Quarterly Reports, 2006-2016

0.72% 0.27% -2.67% -1.67% -0.33% 0.96% 0.62% -0.39% 1.43% 0.95%

-

100,000

200,000

300,000

400,000

500,000

600,000

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Tot

al N

umbe

r E

mpl

oyed

Utilities Construction

Manufacturing Wholesale Trade

Retail Trade Transportation and Warehousing

Information Finance and Insurance

Real Estate and Rental and Leasing Professional, Scientific, and Technical Services

Management of Companies and Enterprises Administrative and Support and Waste Management

Educational Services Health Care and Social Assistance

Arts, Entertainment, and Recreation Accommodation and Food Services

Other Services (except Public Administration)

© PFM 38© PFM 38© PFM 38

Thank You

© PFM 1


Economic Update and Quarterly Performance

PFM Asset Management LLC

4350 N. Fairfax DriveSuite 580

Arlington, VA 22203

(703) 741-0175pfm.com

Nelson L. Bush, Managing Director

September 6, 2017

© PFM 2

Agenda

I. Economic Update

II. Quarterly Performance Report - June 30, 2017

© PFM 3

Economic Update

© PFM 4

Gross Domestic Product

Gross domestic product increased at an annualized rate of 2.6% in the second quarter of 2017. Over the last year, GDP growth averaged 2.1%.

The ISM manufacturing index decreased from 57.8 in June to 56.3 in July, but still shows strength in the manufacturing sector.

-10%

-8%

-6%

-4%

-2%

0%

2%

4%

6%

1Q20

08

1Q20

09

1Q20

10

1Q20

11

1Q20

12

1Q20

13

1Q20

14

1Q20

15

1Q20

16

1Q20

17

1Q20

18

30

35

40

45

50

55

60

65

Jul-0

9

Jul-1

0

Jul-1

1

Jul-1

2

Jul-1

3

Jul-1

4

Jul-1

5

Jul-1

6

Jul-1

7

ISM Manufacturing IndexJuly 2009 – July 2017

Gross Domestic ProductJanuary 2008 – June 2018 (Projected)

Source: Bloomberg

August 2017 Bloomberg

Survey of Economists

© PFM 5

The U.S. economy has added more than 2.1 million jobs during the last 12 months.

Since January 2017, the unemployment rate declined from 4.8% to 4.3%. The Virginia unemployment rate is 3.7%

Source: Bloomberg, Bureau of Labor Statistics

-400

-300

-200

-100

0

100

200

300

400

500

600

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

16.0%

18.0%

20.0%

Jul 09 Jul 10 Jul 11 Jul 12 Jul 13 Jul 14 Jul 15 Jul 16 Jul 17

U-6 Unemployment Rate 8.6%

Virginia Unemployment Rate 3.7%

U-3 Unemployment Rate 4.3%

Change in Nonfarm PayrollsJuly 2009 – July 2017

Labor Market is Approaching Full Employment

© PFM 6

Robust Consumer Confidence & Potential Wage Pressures

Current U.S. economic conditions are characterized by strong “soft data” on consumer and business optimism.

Average hourly earnings – an important gauge of wage growth – grew 2.5% over the past 12 months.

Source: Bloomberg, Bureau of Labor Statistics

50

70

90

110

130

Jul '12 Jul '13 Jul '14 Jul '15 Jul '16 Jul '17

Consumer ConfidenceJuly 2012 – July 2017

1.0%

1.5%

2.0%

2.5%

3.0%

Jul '12 Jul '13 Jul '14 Jul '15 Jul '16 Jul '17

Average Hourly Earnings(YoY) July 2012 – July 2017

© PFM 7

0%

1%

2%

3%

4%

5%

Fed Participants’ Assessments of ‘Appropriate’ Monetary Policy

Jun-17 FOMC Projections

Jun-17 Median

Fed Funds Futures

2017 2018 2019 Longer Term

The data suggests that the Fed still expects one

more rate hike in 2017Dec ’08:

Dec ’15:

Dec ’16:

Mar ’17:

Jun ’17:

Historical Fed Funds

Jun ’17 1.00 - 1.25%

Mar ’17 0.75 - 1.00%

Dec ’16 0.50 - 0.75%

Dec ’15 0.25 - 0.50%

Source: Federal Reserve and Bloomberg. Individual dots represent each Fed members’ judgement of the midpoint of the appropriate target range for the federal funds rate at each year-end. Fed funds futures as of 06/30/17.

Federal Open Market Committee (FOMC) “Dot” Plot

© PFM 8

Interest Rates Are Significantly Higher Than Last Year

Yields on short-term securities moved higher as markets reacted to FOMC rate hikes in December 2016, March 2017 and June 2017.

U.S Treasury Yield Curve Term 6/30/16 6/30/17 Change 8/29/17

3-Mo. 0.26% 1.01% 0.75% 1.03%

6-Mo. 0.35% 1.13% 0.78% 1.11%

1-Yr. 0.44% 1.23% 0.79% 1.22%

2-Yr. 0.58% 1.38% 0.80% 1.31%

3-Yr. 0.76% 1.58% 0.82% 1.48%

5-Yr. 1.03% 1.90% 0.87% 1.76%

10-Yr. 1.47% 2.31% 0.84% 2.11%

30-Yr. 2.29% 2.84% 0.55% 2.71%0.00

0.50

1.00

1.50

2.00

2.50

3.00

Maturity

August 29, 2017 June 30, 2017 June 30, 2016

Source: Bloomberg

© PFM 9

Quarterly Performance ReportJune 30, 2017


Core Portfolio

10

HRTAC CORE

For the Quarter Ended June 30, 2017

Portfolio Snapshot

Portfolio Statistics

As of June 30, 2017

$124,775,000

$124,528,902

$124,158,063

$321,694

$49,145

Accrued Interest:

Cash:

Par Value:

Total Market Value:

Security Market Value:

$124,762,627

1.38%

1.10%

AAAverage Credit: **

Yield at Cost:

Amortized Cost:

Yield at Market:

Effective Duration: 1.60 Years

Duration to Worst: 1.60 Years

Average Maturity: 1.63 Years

Credit Quality (S&P Ratings)

2.9%

A-1

1.8%

AA-

95.3%

AA+

0%

10%

20%

30%

40%

50%

60%

0 - 1 Year 1 - 2 Years 2 - 3 Years 3 - 4 Years 4 - 5 Years > 5 Years

17.3%

55.3%

27.4%

0.0% 0.0% 0.0%

Maturity Distribution

Sector Allocation

2.9%

Commercial

Paper

4.2%

Corporate

46.1%

Federal

Agency/GSE

46.8%

U.S.

Treasury


* An average of each security’s credit rating assigned a numeric value and adjusted for its relative weighting in the portfolio.

Account 37760200

11

HRTAC CORE


Portfolio Composition

Sector Allocation

June 30, 2017 March 31, 2017 December 31, 2016 September 30, 2016

% of TotalMV ($MM)Sector % of Total% of Total% of Total MV ($MM)MV ($MM)MV ($MM)

U.S. Treasury 58.1 46.8% 154.1 48.0% 152.0 47.4% 0.0 0.0%

Federal Agency/GSE 57.2 46.1% 149.8 46.6% 151.1 47.2% 0.0 0.0%

Corporate 5.3 4.2% 17.3 5.4% 17.4 5.4% 0.0 0.0%

Commercial Paper 3.5 2.9% 0.0 0.0% 0.0 0.0% 0.0 0.0%

$124.2 100.0% $321.3 100.0% $320.5 100.0% $0.0 0.0%Total

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

June 2017 March 2017 December 2016

Commercial Paper

Corporate

Federal Agency/GSE

U.S. Treasury


Detail may not add to total due to rounding.

Account 37760200

12

HRTAC CORE




As of June 30, 2017

>5

Years

4-5

Years

3-4

Years

2-3

Years

1-2

Years

0-1

YearsYield

at MarketPortfolio/Benchmark

Average

Maturity

HRTAC CORE 1.38% 17.3% 55.3% 27.4% 0.0% 0.0% 0.0%1.63 yrs

BofA ML 1-3 Year U.S. Treasury Index 1.40% 3.1% 53.5% 43.4% 0.0% 0.0% 0.0%1.94 yrs

0%

10%

20%

30%

40%

50%

60%

0-1 Years 1-2 Years 2-3 Years 3-4 Years 4-5 Years > 5 Years

17.3%

55.3%

27.4%

0.0% 0.0% 0.0%3.1%

53.5%

43.4%

0.0% 0.0% 0.0%

HRTAC CORE BofA ML 1-3 Year U.S. Treasury Index

PFM Asset Management LLC Account 37760200

13

HRTAC CORE



Issuer Distribution

As of June 30, 2017

Market Value ($) % of PortfolioIssuer

UNITED STATES TREASURY 58,131,665 46.8%

FEDERAL HOME LOAN BANKS 29,428,729 23.7%

FANNIE MAE 17,582,952 14.2%

FREDDIE MAC 10,220,506 8.2%

BNP PARIBAS 1,770,953 1.4%

MITSUBISHI UFJ FINANCIAL GROUP INC 1,770,941 1.4%

EXXON MOBIL CORP 1,501,376 1.2%

APPLE INC 1,496,845 1.2%

CHEVRON CORPORATION 752,275 0.6%

COLGATE-PALMOLIVE COMPANY 752,053 0.6%

TOYOTA MOTOR CORP 749,768 0.6%

124,158,063 100.0%Grand Total:

To

p 5

= 9

4.3

%

To

p 1

0 =

99.4

%


14

HRTAC CORE


Portfolio Activity

Quarterly Portfolio Transactions

Trade

Date

Settle

Date

Maturity

DatePar ($) CUSIP Security Description

Transact

Amt ($)

Yield

at Market

Realized

G/L (BV)Coupon

BUY

4/20/17 4/20/17 1,875,000 3137EAEF2 FHLMC AGENCY NOTES 4/20/20 1,867,406.25 1.51%1.37%

4/20/17 4/25/17 750,000 89236TDU6 TOYOTA MOTOR CREDIT CORP 4/17/20 751,360.00 1.90%1.95%

4/20/17 4/25/17 750,000 166764AR1 CHEVRON CORP NOTES 3/3/20 754,786.92 1.83%1.96%

4/24/17 4/24/17 1,875,000 3135G0ZY2 FNMA BENCHMARK NOTE 11/26/19 1,903,058.33 1.44%1.75%

4/24/17 4/24/17 1,875,000 3137EAEE5 FREDDIE MAC AGENCY NOTE 1/17/20 1,882,765.63 1.50%1.50%

4/26/17 4/28/17 750,000 30231GAG7 EXXON MOBIL CORP NOTE 3/6/20 755,018.83 1.77%1.91%

4/26/17 5/1/17 750,000 19416QEF3 COLGATE-PALMOLIVE COMPANY CORP NOTES 3/15/19 754,459.58 1.55%1.75%

5/4/17 5/5/17 3,750,000 3135G0T29 FNMA NOTES 2/28/20 3,753,831.25 1.56%1.50%

5/11/17 5/16/17 750,000 037833CS7 APPLE INC BONDS 5/11/20 749,212.50 1.84%1.80%

5/22/17 5/22/17 1,775,000 09659BT59 BNP PARIBAS NY BRANCH COMM PAPER 6/5/17 1,774,378.75 0.90%0.00%

5/22/17 5/22/17 1,775,000 06538BT52 BANK TOKYO-MIT UFJ NY COMM PAPER 6/5/17 1,774,344.24 0.95%0.00%

6/5/17 6/5/17 1,775,000 09659BW55 BNP PARIBAS NY BRANCH COMM PAPER 9/5/17 1,769,828.83 1.14%0.00%

6/5/17 6/5/17 1,775,000 06538BW58 BANK TOKYO-MIT UFJ NY 9/5/17 1,769,602.03 1.19%0.00%

20,225,000 20,260,053.14Total BUY

INTEREST

4/3/17 4/3/17 0 MONEY0002 MONEY MARKET FUND 480.59

4/11/17 4/11/17 2,500,000 931142DF7 WAL-MART STORES INC GLOBAL NOTES 4/11/18 14,062.50 1.12%

4/11/17 4/11/17 750,000 931142DF7 WAL-MART STORES INC GLOBAL NOTES 4/11/18 4,218.75 1.12%

4/15/17 4/15/17 10,000,000 3137EADZ9 FREDDIE MAC NOTES 4/15/19 56,250.00 1.12%

4/25/17 4/25/17 10,000,000 3130A4GJ5 FHLB NOTES 4/25/18 56,250.00 1.12%


5/3/17 5/3/17 500,000 037833AJ9 APPLE INC GLOBAL NOTES 5/3/18 2,500.00 1.00%

5/3/17 5/3/17 1,000,000 037833AJ9 APPLE INC GLOBAL NOTES 5/3/18 5,000.00 1.00%


15

HRTAC CORE


Portfolio Activity

Trade

Date

Settle

Date

Maturity


Transact

Amt ($)

Yield

at Market

Realized

G/L (BV)Coupon

5/15/17 5/15/17 850,000 912828M64 US TREASURY NOTES 11/15/18 5,312.50 1.25%

5/15/17 5/15/17 300,000 912828M64 US TREASURY NOTES 11/15/18 1,875.00 1.25%

5/15/17 5/15/17 5,750,000 912828M64 US TREASURY NOTES 11/15/18 35,937.50 1.25%

5/22/17 5/22/17 3,500,000 3133EEN48 FFCB NOTES 5/22/17 10,937.50 0.62%

5/26/17 5/26/17 1,875,000 3135G0ZY2 FNMA BENCHMARK NOTE 11/26/19 16,406.25 1.75%


6/14/17 6/14/17 2,000,000 3135G0G72 FNMA NOTES 12/14/18 11,250.00 1.12%

6/14/17 6/14/17 10,000,000 3135G0G72 FNMA NOTES 12/14/18 56,250.00 1.12%

6/15/17 6/15/17 3,000,000 912828R85 US TREASURY NOTES 6/15/19 13,125.00 0.87%


6/21/17 6/21/17 10,000,000 3130A8DB6 FHLB GLOBAL NOTE 6/21/19 56,250.00 1.12%

65,275,000 360,630.16Total INTEREST

MATURITY

5/22/17 5/22/17 3,500,000 3133EEN48 FFCB NOTES 5/22/17 3,500,000.00 0.00 0.62%

6/5/17 6/5/17 1,775,000 09659BT59 BNP PARIBAS NY BRANCH COMM PAPER 6/5/17 1,775,000.00 0.00 0.00%

6/5/17 6/5/17 1,775,000 06538BT52 BANK TOKYO-MIT UFJ NY COMM PAPER 6/5/17 1,775,000.00 0.00 0.00%

7,050,000 7,050,000.00 0.00Total MATURITY

SELL

4/20/17 4/20/17 850,000 912828M64 US TREASURY NOTES 11/15/18 855,707.64 1.16% 1,870.40 1.25%

4/20/17 4/20/17 800,000 912828M64 US TREASURY NOTES 11/15/18 805,371.89 1.16% 804.86 1.25%

4/20/17 4/25/17 750,000 912828M64 US TREASURY NOTES 11/15/18 755,107.04 1.17% 1,586.07 1.25%

4/20/17 4/25/17 700,000 912828M64 US TREASURY NOTES 11/15/18 704,793.91 1.17% 678.86 1.25%

4/24/17 4/24/17 3,750,000 3133EEN48 FFCB NOTES 5/22/17 3,759,370.83 0.80% (230.66)0.62%

4/26/17 5/1/17 750,000 3130AAXX1 FEDERAL HOME LOAN BANK AGENCY 3/18/19 751,670.94 1.36% 1,829.28 1.37%


16

HRTAC CORE


Portfolio Activity

Trade

Date

Settle

Date

Maturity


Transact

Amt ($)

Yield

at Market

Realized

G/L (BV)Coupon

4/26/17 4/28/17 250,000 30231GAL6 EXXON MOBIL CORP NOTES 3/6/18 250,416.25 1.33% (255.11)1.30%

4/26/17 4/28/17 500,000 30231GAL6 EXXON MOBIL CORP NOTES 3/6/18 500,832.50 1.33% (187.43)1.30%

5/4/17 5/5/17 3,500,000 3137EADP1 FREDDIE MAC GLOBAL NOTES 3/7/18 3,496,114.03 1.18% (3,724.98)0.87%

5/11/17 5/16/17 250,000 037833AJ9 APPLE INC GLOBAL NOTES 5/3/18 249,432.78 1.28% (211.15)1.00%

5/11/17 5/16/17 500,000 037833AJ9 APPLE INC GLOBAL NOTES 5/3/18 498,865.55 1.28% 57.64 1.00%

12,600,000 12,627,683.36 2,217.78Total SELL

TRANSFER OUT

4/17/17 4/17/17 10,000,000 3137EADZ9 FREDDIE MAC NOTES 4/15/19 9,967,855.00 1.29% 0.00 1.12%

4/17/17 4/17/17 2,300,000 478160AQ7 JOHNSON & JOHNSON CORP NOTE 8/15/17 2,355,147.87 1.12% 0.00 5.55%

4/17/17 4/17/17 750,000 478160AQ7 JOHNSON & JOHNSON CORP NOTE 8/15/17 767,983.00 1.12% 0.00 5.55%

4/17/17 4/17/17 2,000,000 594918AS3 MICROSOFT CORP GLOBAL NOTES 5/1/18 2,004,246.22 1.24% 0.00 1.00%

4/17/17 4/17/17 529,000 594918AS3 MICROSOFT CORP GLOBAL NOTES 5/1/18 530,123.13 1.24% 0.00 1.00%

4/17/17 4/17/17 5,000,000 880591EA6 TENNESSEE VALLEY AUTHORITY NOTES 7/18/17 5,127,741.11 0.75% 0.00 5.50%

4/17/17 4/17/17 725,000 880591EA6 TENNESSEE VALLEY AUTHORITY NOTES 7/18/17 743,522.47 0.75% 0.00 5.50%

4/17/17 4/17/17 13,000,000 912828P95 US TREASURY NOTES 3/15/19 12,960,372.61 1.21% 0.00 1.00%

4/17/17 4/17/17 12,000,000 912828N63 US TREASURY N/B 1/15/19 12,021,649.39 1.19% 0.00 1.12%

4/17/17 4/17/17 2,500,000 037833AJ9 APPLE INC GLOBAL NOTES 5/3/18 2,502,818.89 1.33% 0.00 1.00%


4/17/17 4/17/17 850,000 3130AAE46 FHLB NOTES 1/16/19 852,472.41 1.26% 0.00 1.25%

4/17/17 4/17/17 10,000,000 3135G0PQ0 FANNIE MAE GLOBAL NOTES 10/26/17 10,035,852.50 0.98% 0.00 0.87%

4/17/17 4/17/17 10,000,000 3135G0RT2 FANNIE MAE GLOBAL NOTES 12/20/17 10,018,437.50 1.02% 0.00 0.87%

4/17/17 4/17/17 9,000,000 3135G0TG8 FANNIE MAE GLOBAL NOTES 2/8/18 8,998,209.75 1.11% 0.00 0.87%

4/17/17 4/17/17 1,000,000 3135G0TG8 FANNIE MAE GLOBAL NOTES 2/8/18 999,801.08 1.11% 0.00 0.87%

4/17/17 4/17/17 1,700,000 912828B33 US TREASURY NOTES 1/31/19 1,714,251.39 1.20% 0.00 1.50%

4/17/17 4/17/17 400,000 912828B33 US TREASURY NOTES 1/31/19 403,353.27 1.20% 0.00 1.50%

4/17/17 4/17/17 2,750,000 912828R44 US TREASURY NOTES 5/15/19 2,739,116.06 1.25% 0.00 0.87%



17

HRTAC CORE


Portfolio Activity

Trade

Date

Settle

Date

Maturity


Transact

Amt ($)

Yield

at Market

Realized

G/L (BV)Coupon

4/17/17 4/17/17 11,500,000 912828XK1 US TREASURY NOTES 7/15/18 11,492,326.70 1.11% 0.00 0.87%

4/17/17 4/17/17 3,000,000 912828L40 US TREASURY NOTES 9/15/18 2,996,948.22 1.14% 0.00 1.00%


4/17/17 4/17/17 10,000,000 3135G0E58 FNMA BENCHMARK NOTE 10/19/18 10,049,035.00 1.17% 0.00 1.12%


4/17/17 4/17/17 10,000,000 3135G0ZL0 FNMA NOTES 9/27/17 10,006,625.56 0.98% 0.00 1.00%

4/17/17 4/17/17 4,500,000 3135G0J53 FNMA BENCHMARK NOTE 2/26/19 4,483,767.00 1.27% 0.00 1.00%


4/17/17 4/17/17 10,000,000 3137EADN6 FHLMC NOTES 1/12/18 9,995,771.67 1.08% 0.00 0.75%

4/17/17 4/17/17 2,500,000 30231GAL6 EXXON MOBIL CORP NOTES 3/6/18 2,503,333.13 1.32% 0.00 1.30%

4/17/17 4/17/17 250,000 30231GAL6 EXXON MOBIL CORP NOTES 3/6/18 250,333.31 1.32% 0.00 1.30%

4/17/17 4/17/17 2,500,000 931142DF7 WAL-MART STORES INC GLOBAL NOTES 4/11/18 2,498,148.75 1.22% 0.00 1.12%

4/17/17 4/17/17 750,000 931142DF7 WAL-MART STORES INC GLOBAL NOTES 4/11/18 749,444.63 1.22% 0.00 1.12%

4/17/17 4/17/17 12,500,000 912828UZ1 US TREASURY NOTES 4/30/18 12,477,169.41 1.09% 0.00 0.62%

4/17/17 4/17/17 10,000,000 912828G20 US TREASURY NOTES 11/15/17 10,033,072.04 0.94% 0.00 0.87%

4/17/17 4/17/17 12,000,000 912828N22 US TREASURY NOTES 12/15/18 12,064,282.81 1.18% 0.00 1.25%

198,004,000 198,290,430.92 0.00Total TRANSFER OUT


18

HRTAC CORE


Portfolio Activity


Security DescriptionCUSIPPar ($) Settle

Date

Trade

Date

Tran.

Type

Maturity

Date Transact

Amt ($)Yield

Realized

G/L (BV)Coupon

4/3/17 4/3/17 0.00 MONEY0002 MONEY MARKET FUNDINTEREST 480.59

4/11/17 4/11/17 2,500,000.00 931142DF7 WAL-MART STORES INC GLOBAL NOTESINTEREST 4/11/18 14,062.50 1.12%

4/11/17 4/11/17 750,000.00 931142DF7 WAL-MART STORES INC GLOBAL NOTESINTEREST 4/11/18 4,218.75 1.12%

4/15/17 4/15/17 10,000,000.00 3137EADZ9 FREDDIE MAC NOTESINTEREST 4/15/19 56,250.00 1.12%

4/17/17 4/17/17 10,000,000.00 3137EADZ9 FREDDIE MAC NOTESTRANSFER OUT 4/15/19 9,967,855.00 1.29% 0.00 1.12%

4/17/17 4/17/17 2,300,000.00 478160AQ7 JOHNSON & JOHNSON CORP NOTETRANSFER OUT 8/15/17 2,355,147.87 1.12% 0.00 5.55%

4/17/17 4/17/17 750,000.00 478160AQ7 JOHNSON & JOHNSON CORP NOTETRANSFER OUT 8/15/17 767,983.00 1.12% 0.00 5.55%

4/17/17 4/17/17 2,000,000.00 594918AS3 MICROSOFT CORP GLOBAL NOTESTRANSFER OUT 5/1/18 2,004,246.22 1.24% 0.00 1.00%

4/17/17 4/17/17 529,000.00 594918AS3 MICROSOFT CORP GLOBAL NOTESTRANSFER OUT 5/1/18 530,123.13 1.24% 0.00 1.00%

4/17/17 4/17/17 5,000,000.00 880591EA6 TENNESSEE VALLEY AUTHORITY NOTESTRANSFER OUT 7/18/17 5,127,741.11 0.75% 0.00 5.50%

4/17/17 4/17/17 725,000.00 880591EA6 TENNESSEE VALLEY AUTHORITY NOTESTRANSFER OUT 7/18/17 743,522.47 0.75% 0.00 5.50%

4/17/17 4/17/17 13,000,000.00 912828P95 US TREASURY NOTESTRANSFER OUT 3/15/19 12,960,372.61 1.21% 0.00 1.00%

4/17/17 4/17/17 12,000,000.00 912828N63 US TREASURY N/BTRANSFER OUT 1/15/19 12,021,649.39 1.19% 0.00 1.12%

4/17/17 4/17/17 2,500,000.00 037833AJ9 APPLE INC GLOBAL NOTESTRANSFER OUT 5/3/18 2,502,818.89 1.33% 0.00 1.00%

4/17/17 4/17/17 250,000.00 037833AJ9 APPLE INC GLOBAL NOTESTRANSFER OUT 5/3/18 250,281.89 1.33% 0.00 1.00%

4/17/17 4/17/17 850,000.00 3130AAE46 FHLB NOTESTRANSFER OUT 1/16/19 852,472.41 1.26% 0.00 1.25%

4/17/17 4/17/17 10,000,000.00 3135G0PQ0 FANNIE MAE GLOBAL NOTESTRANSFER OUT 10/26/17 10,035,852.50 0.98% 0.00 0.87%

4/17/17 4/17/17 10,000,000.00 3135G0RT2 FANNIE MAE GLOBAL NOTESTRANSFER OUT 12/20/17 10,018,437.50 1.02% 0.00 0.87%

4/17/17 4/17/17 9,000,000.00 3135G0TG8 FANNIE MAE GLOBAL NOTESTRANSFER OUT 2/8/18 8,998,209.75 1.11% 0.00 0.87%

4/17/17 4/17/17 1,000,000.00 3135G0TG8 FANNIE MAE GLOBAL NOTESTRANSFER OUT 2/8/18 999,801.08 1.11% 0.00 0.87%


19

HRTAC CORE


Portfolio Activity


Date

Trade

Date

Tran.

Type

Maturity

Date Transact

Amt ($)Yield

Realized

G/L (BV)Coupon

4/17/17 4/17/17 1,700,000.00 912828B33 US TREASURY NOTESTRANSFER OUT 1/31/19 1,714,251.39 1.20% 0.00 1.50%

4/17/17 4/17/17 400,000.00 912828B33 US TREASURY NOTESTRANSFER OUT 1/31/19 403,353.27 1.20% 0.00 1.50%

4/17/17 4/17/17 2,750,000.00 912828R44 US TREASURY NOTESTRANSFER OUT 5/15/19 2,739,116.06 1.25% 0.00 0.87%

4/17/17 4/17/17 7,250,000.00 912828R44 US TREASURY NOTESTRANSFER OUT 5/15/19 7,221,305.98 1.25% 0.00 0.87%

4/17/17 4/17/17 11,500,000.00 912828XK1 US TREASURY NOTESTRANSFER OUT 7/15/18 11,492,326.70 1.11% 0.00 0.87%

4/17/17 4/17/17 3,000,000.00 912828L40 US TREASURY NOTESTRANSFER OUT 9/15/18 2,996,948.22 1.14% 0.00 1.00%

4/17/17 4/17/17 7,000,000.00 912828L40 US TREASURY NOTESTRANSFER OUT 9/15/18 6,992,879.17 1.14% 0.00 1.00%

4/17/17 4/17/17 10,000,000.00 3135G0E58 FNMA BENCHMARK NOTETRANSFER OUT 10/19/18 10,049,035.00 1.17% 0.00 1.12%

4/17/17 4/17/17 2,000,000.00 3135G0E58 FNMA BENCHMARK NOTETRANSFER OUT 10/19/18 2,009,807.00 1.17% 0.00 1.12%

4/17/17 4/17/17 10,000,000.00 3135G0ZL0 FNMA NOTESTRANSFER OUT 9/27/17 10,006,625.56 0.98% 0.00 1.00%

4/17/17 4/17/17 4,500,000.00 3135G0J53 FNMA BENCHMARK NOTETRANSFER OUT 2/26/19 4,483,767.00 1.27% 0.00 1.00%

4/17/17 4/17/17 7,500,000.00 3135G0J53 FNMA BENCHMARK NOTETRANSFER OUT 2/26/19 7,472,945.00 1.27% 0.00 1.00%

4/17/17 4/17/17 10,000,000.00 3137EADN6 FHLMC NOTESTRANSFER OUT 1/12/18 9,995,771.67 1.08% 0.00 0.75%

4/17/17 4/17/17 2,500,000.00 30231GAL6 EXXON MOBIL CORP NOTESTRANSFER OUT 3/6/18 2,503,333.13 1.32% 0.00 1.30%

4/17/17 4/17/17 250,000.00 30231GAL6 EXXON MOBIL CORP NOTESTRANSFER OUT 3/6/18 250,333.31 1.32% 0.00 1.30%

4/17/17 4/17/17 2,500,000.00 931142DF7 WAL-MART STORES INC GLOBAL NOTESTRANSFER OUT 4/11/18 2,498,148.75 1.22% 0.00 1.12%

4/17/17 4/17/17 750,000.00 931142DF7 WAL-MART STORES INC GLOBAL NOTESTRANSFER OUT 4/11/18 749,444.63 1.22% 0.00 1.12%

4/17/17 4/17/17 12,500,000.00 912828UZ1 US TREASURY NOTESTRANSFER OUT 4/30/18 12,477,169.41 1.09% 0.00 0.62%

4/17/17 4/17/17 10,000,000.00 912828G20 US TREASURY NOTESTRANSFER OUT 11/15/17 10,033,072.04 0.94% 0.00 0.87%

4/17/17 4/17/17 12,000,000.00 912828N22 US TREASURY NOTESTRANSFER OUT 12/15/18 12,064,282.81 1.18% 0.00 1.25%

4/20/17 4/20/17 1,875,000.00 3137EAEF2 FHLMC AGENCY NOTESBUY 4/20/20 (1,867,406.25) 1.51%1.37%

4/20/17 4/20/17 850,000.00 912828M64 US TREASURY NOTESSELL 11/15/18 855,707.64 1.16% 1,870.40 1.25%


20

HRTAC CORE


Portfolio Activity


Date

Trade

Date

Tran.

Type

Maturity

Date Transact

Amt ($)Yield

Realized

G/L (BV)Coupon

4/20/17 4/20/17 800,000.00 912828M64 US TREASURY NOTESSELL 11/15/18 805,371.89 1.16% 804.86 1.25%

4/20/17 4/25/17 750,000.00 89236TDU6 TOYOTA MOTOR CREDIT CORPBUY 4/17/20 (751,360.00) 1.90%1.95%

4/20/17 4/25/17 750,000.00 166764AR1 CHEVRON CORP NOTESBUY 3/3/20 (754,786.92) 1.83%1.96%

4/20/17 4/25/17 750,000.00 912828M64 US TREASURY NOTESSELL 11/15/18 755,107.04 1.17% 1,586.07 1.25%

4/20/17 4/25/17 700,000.00 912828M64 US TREASURY NOTESSELL 11/15/18 704,793.91 1.17% 678.86 1.25%

4/24/17 4/24/17 1,875,000.00 3135G0ZY2 FNMA BENCHMARK NOTEBUY 11/26/19 (1,903,058.33) 1.44%1.75%

4/24/17 4/24/17 1,875,000.00 3137EAEE5 FREDDIE MAC AGENCY NOTEBUY 1/17/20 (1,882,765.63) 1.50%1.50%

4/24/17 4/24/17 3,750,000.00 3133EEN48 FFCB NOTESSELL 5/22/17 3,759,370.83 0.80% (230.66)0.62%

4/25/17 4/25/17 10,000,000.00 3130A4GJ5 FHLB NOTESINTEREST 4/25/18 56,250.00 1.12%

4/26/17 4/28/17 750,000.00 30231GAG7 EXXON MOBIL CORP NOTEBUY 3/6/20 (755,018.83) 1.77%1.91%

4/26/17 4/28/17 250,000.00 30231GAL6 EXXON MOBIL CORP NOTESSELL 3/6/18 250,416.25 1.33% (255.11)1.30%

4/26/17 4/28/17 500,000.00 30231GAL6 EXXON MOBIL CORP NOTESSELL 3/6/18 500,832.50 1.33% (187.43)1.30%

4/26/17 5/1/17 750,000.00 19416QEF3 COLGATE-PALMOLIVE COMPANY CORP NOTESBUY 3/15/19 (754,459.58) 1.55%1.75%

4/26/17 5/1/17 750,000.00 3130AAXX1 FEDERAL HOME LOAN BANK AGENCYSELL 3/18/19 751,670.94 1.36% 1,829.28 1.37%


5/3/17 5/3/17 500,000.00 037833AJ9 APPLE INC GLOBAL NOTESINTEREST 5/3/18 2,500.00 1.00%

5/3/17 5/3/17 1,000,000.00 037833AJ9 APPLE INC GLOBAL NOTESINTEREST 5/3/18 5,000.00 1.00%

5/4/17 5/5/17 3,750,000.00 3135G0T29 FNMA NOTESBUY 2/28/20 (3,753,831.25) 1.56%1.50%

5/4/17 5/5/17 3,500,000.00 3137EADP1 FREDDIE MAC GLOBAL NOTESSELL 3/7/18 3,496,114.03 1.18% (3,724.98)0.87%

5/11/17 5/16/17 750,000.00 037833CS7 APPLE INC BONDSBUY 5/11/20 (749,212.50) 1.84%1.80%

5/11/17 5/16/17 250,000.00 037833AJ9 APPLE INC GLOBAL NOTESSELL 5/3/18 249,432.78 1.28% (211.15)1.00%

5/11/17 5/16/17 500,000.00 037833AJ9 APPLE INC GLOBAL NOTESSELL 5/3/18 498,865.55 1.28% 57.64 1.00%


21

HRTAC CORE


Portfolio Activity


Date

Trade

Date

Tran.

Type

Maturity

Date Transact

Amt ($)Yield

Realized

G/L (BV)Coupon

5/15/17 5/15/17 850,000.00 912828M64 US TREASURY NOTESINTEREST 11/15/18 5,312.50 1.25%

5/15/17 5/15/17 300,000.00 912828M64 US TREASURY NOTESINTEREST 11/15/18 1,875.00 1.25%

5/15/17 5/15/17 5,750,000.00 912828M64 US TREASURY NOTESINTEREST 11/15/18 35,937.50 1.25%

5/22/17 5/22/17 1,775,000.00 09659BT59 BNP PARIBAS NY BRANCH COMM PAPERBUY 6/5/17 (1,774,378.75) 0.90%0.00%

5/22/17 5/22/17 1,775,000.00 06538BT52 BANK TOKYO-MIT UFJ NY COMM PAPERBUY 6/5/17 (1,774,344.24) 0.95%0.00%

5/22/17 5/22/17 3,500,000.00 3133EEN48 FFCB NOTESINTEREST 5/22/17 10,937.50 0.62%

5/22/17 5/22/17 3,500,000.00 3133EEN48 FFCB NOTESMATURITY 5/22/17 3,500,000.00 0.00 0.62%

5/26/17 5/26/17 1,875,000.00 3135G0ZY2 FNMA BENCHMARK NOTEINTEREST 11/26/19 16,406.25 1.75%


6/5/17 6/5/17 1,775,000.00 09659BW55 BNP PARIBAS NY BRANCH COMM PAPERBUY 9/5/17 (1,769,828.83) 1.14%0.00%

6/5/17 6/5/17 1,775,000.00 06538BW58 BANK TOKYO-MIT UFJ NYBUY 9/5/17 (1,769,602.03) 1.19%0.00%

6/5/17 6/5/17 1,775,000.00 09659BT59 BNP PARIBAS NY BRANCH COMM PAPERMATURITY 6/5/17 1,775,000.00 0.00 0.00%

6/5/17 6/5/17 1,775,000.00 06538BT52 BANK TOKYO-MIT UFJ NY COMM PAPERMATURITY 6/5/17 1,775,000.00 0.00 0.00%

6/14/17 6/14/17 2,000,000.00 3135G0G72 FNMA NOTESINTEREST 12/14/18 11,250.00 1.12%

6/14/17 6/14/17 10,000,000.00 3135G0G72 FNMA NOTESINTEREST 12/14/18 56,250.00 1.12%

6/15/17 6/15/17 3,000,000.00 912828R85 US TREASURY NOTESINTEREST 6/15/19 13,125.00 0.87%


6/21/17 6/21/17 10,000,000.00 3130A8DB6 FHLB GLOBAL NOTEINTEREST 6/21/19 56,250.00 1.12%

TOTALS 198,068,691.30 2,217.78


22

HRTAC CORE


Portfolio Performance

Portfolio Performance (Total Return)

Effective

DurationPortfolio/Benchmark

Annualized Return

10 Year1 Year 3 Year 5 YearSince Inception

(12/31/16) **

Current

Quarter

HRTAC CORE 1.60 0.25% -- - - -

BofA ML 1-3 Year U.S. Treasury Index 1.82 0.17% -- - - -

Difference - 0.08% - - - -

0.00%

0.04%

0.08%

0.12%

0.16%

0.20%

0.24%

0.28%

Current Quarter 1 Year 3 Year 5 Year 10 Year Since Inception

0.25%

0.17%

To

tal R

etu

rn



Portfolio performance is gross of fees unless otherwise indicated. **Since Inception performance is not shown for periods less than one year.

Account 37760200

23

HRTAC CORE


Portfolio Performance

Portfolio Performance (Total Return)

03/31/17 09/30/1606/30/17 12/31/16

Quarter Ended Annualized Return

5 Year1 Year 3 YearPortfolio/Benchmark

Effective

Duration

- - -0.23% - -HRTAC CORE 0.25% 1.60

- - -0.21% - - Net of Fees ** 0.23% 0.00

- - -0.26% - -BofA ML 1-3 Year U.S. Treasury Index 0.17% 1.82

- 0.08% - --0.03% - -Difference (Gross)

Difference (Net) 0.06% -0.05% - - - - -

0.00%

0.04%

0.08%

0.12%

0.16%

0.20%

0.24%

0.28%

06/30/17 03/31/17 12/31/16 09/30/16 1 Year 3 Year 5 Year

0.25%

0.23%

0.17%

0.26%

To

tal

Re

turn



Portfolio performance is gross of fees unless otherwise indicated. ** Fees were calculated based on average assets during the period at the contractual rate.

Account 37760200

24


Enhanced Cash Portfolio

25

HRTAC ENHANCED CASH


Portfolio Snapshot

Portfolio Statistics

As of June 30, 2017

$198,454,000

$198,420,854

$197,752,682

$668,172

-

Accrued Interest:

Cash:

Par Value:

Total Market Value:

Security Market Value:

$198,393,264

1.38%

1.19%

AAAverage Credit: **

Yield at Cost:

Amortized Cost:

Yield at Market:

Effective Duration: 1.03 Years

Duration to Worst: 1.03 Years

Average Maturity: 1.05 Years

Credit Quality (S&P Ratings)

22.7%

A-1

1.6%

AA

3.0%

AA-

69.8%

AA+

2.8%

AAA

0%

10%

20%

30%

40%

50%

60%

0 - 1 Year 1 - 2 Years 2 - 3 Years 3 - 4 Years 4 - 5 Years > 5 Years

45.9%

54.1%

0.0% 0.0% 0.0% 0.0%


Sector Allocation

7.6%

Certificate

of Deposit

15.1%

Commercial

Paper

10.3%

Corporate

28.5%

Federal

Agency/GSE

38.5%

U.S.

Treasury


* An average of each security’s credit rating assigned a numeric value and adjusted for its relative weighting in the portfolio.

Account 37760400

26

HRTAC ENHANCED CASH



Sector Allocation

June 30, 2017 March 31, 2017 December 31, 2016 September 30, 2016

% of TotalMV ($MM)Sector % of Total% of Total% of Total MV ($MM)MV ($MM)MV ($MM)

U.S. Treasury 76.2 38.5% 0.0 0.0% 0.0 0.0% 0.0 0.0%

Federal Agency/GSE 56.4 28.5% 0.0 0.0% 0.0 0.0% 0.0 0.0%

Commercial Paper 29.8 15.1% 0.0 0.0% 0.0 0.0% 0.0 0.0%

Corporate 20.3 10.3% 0.0 0.0% 0.0 0.0% 0.0 0.0%

Certificate of Deposit 15.0 7.6% 0.0 0.0% 0.0 0.0% 0.0 0.0%

$197.8 100.0% $0.0 0.0% $0.0 0.0% $0.0 0.0%Total

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

June 2017

Certif icate of Deposit

Corporate

Commercial Paper

Federal Agency/GSE

U.S. Treasury


Detail may not add to total due to rounding.

Account 37760400

27

HRTAC ENHANCED CASH




As of June 30, 2017

>5

Years

4-5

Years

3-4

Years

2-3

Years

1-2

Years

0-1

YearsYield

at MarketPortfolio/Benchmark

Average

Maturity

HRTAC ENHANCED CASH 1.38% 45.9% 54.1% 0.0% 0.0% 0.0% 0.0%1.05 yrs

BofA ML 1 Year U.S. Treasury Note Index 1.26% 100.0% 0.0% 0.0% 0.0% 0.0% 0.0%1.00 yrs

0%

20%

40%

60%

80%

100%

0-1 Years 1-2 Years 2-3 Years 3-4 Years 4-5 Years > 5 Years

45.9%

54.1%

0.0% 0.0% 0.0% 0.0%

100.0%

0.0% 0.0% 0.0% 0.0% 0.0%

HRTAC ENHANCED CASH BofA ML 1 Year U.S. Treasury Note Index


28

HRTAC ENHANCED CASH



Issuer Distribution

As of June 30, 2017


UNITED STATES TREASURY 76,216,137 38.5%

FANNIE MAE 33,863,070 17.1%

FREDDIE MAC 15,018,301 7.6%

TENNESSEE VALLEY AUTHORITY 5,734,956 2.9%

THE NORINCHUKIN BANK 5,000,949 2.5%

CREDIT SUISSE GROUP 5,000,387 2.5%

CITIGROUP INC 4,997,871 2.5%

CREDIT AGRICOLE SA 4,983,460 2.5%

BANK OF MONTREAL 4,981,310 2.5%

ING GROUP NV 4,974,370 2.5%

BNP PARIBAS 4,960,910 2.5%

JP MORGAN CHASE & CO 4,960,670 2.5%

MITSUBISHI UFJ FINANCIAL GROUP INC 4,958,380 2.5%

WAL-MART STORES INC 3,243,263 1.6%

JOHNSON & JOHNSON 3,064,689 1.6%

EXXON MOBIL CORP 2,757,438 1.4%

APPLE INC 2,740,031 1.4%

MICROSOFT CORP 2,521,499 1.3%

To

p 5

= 6

8.7

%

To

p 1

0 =

81.3

%


29

HRTAC ENHANCED CASH




TOYOTA MOTOR CORP 2,012,290 1.0%

COLGATE-PALMOLIVE COMPANY 2,005,474 1.0%

WESTPAC BANKING CORP 1,984,948 1.0%

FEDERAL HOME LOAN BANKS 1,772,281 0.9%

197,752,682 100.0%Grand Total:


30

HRTAC ENHANCED CASH


Portfolio Activity


Trade

Date

Settle

Date

Maturity


Transact

Amt ($)

Yield

at Market

Realized

G/L (BV)Coupon

BUY

4/17/17 4/18/17 5,000,000 22533TX27 CREDIT AGRICOLE CIB NY COMM PAPER 10/2/17 4,969,151.39 1.34%0.00%

4/18/17 4/18/17 5,000,000 17305TLR1 CITIBANK NA CERT DEPOS 9/12/17 5,000,000.00 1.18%1.18%

4/19/17 4/19/17 5,000,000 09659CAC2 BNP PARIBAS NY BRANCH COMM PAPER 1/12/18 4,948,261.11 1.40%0.00%

4/20/17 4/20/17 5,000,000 22549VX57 CREDIT SUISSE NEW YORK CERT DEPOS 11/21/17 5,000,000.00 1.41%1.41%

4/20/17 4/25/17 2,000,000 89236TBB0 TOYOTA MOTOR CREDIT CORP CORP NOTES 1/17/19 2,029,473.33 1.57%2.10%

4/20/17 4/25/17 1,975,000 961214CF8 WESTPAC BANKING CORP NOTES 1/17/19 2,001,751.38 1.81%2.25%

4/24/17 4/24/17 5,000,000 46640QAK7 JP MORGAN SECURITIES LLC COMM PAPER 1/19/18 4,948,625.00 1.38%0.00%

4/26/17 5/1/17 2,000,000 19416QEF3 COLGATE-PALMOLIVE COMPANY CORP NOTES 3/15/19 2,011,892.22 1.55%1.75%

4/28/17 5/3/17 2,000,000 30231GAD4 EXXON MOBIL CORP NOTE (CALLABLE) 3/15/19 2,014,550.67 1.55%1.81%

5/1/17 5/2/17 5,000,000 06538CAS0 BANK OF TOKYO MITSUBISHI UFJ COMM PAPER 1/26/18 4,943,211.11 1.54%0.00%

5/8/17 5/10/17 5,000,000 65602USD1 NORINCHUKIN BANK NY CERT DEPOS 11/10/17 5,000,000.00 1.40%1.40%

5/11/17 5/12/17 925,000 3130ABF92 FEDERAL HOME LOAN BANK AGENCY NOTES 5/28/19 923,251.75 1.47%1.37%

5/15/17 5/15/17 5,000,000 4497W0YD4 ING (US) FUNDING LLC COMM PAPER 11/13/17 4,966,633.33 1.33%0.00%

6/28/17 6/28/17 5,000,000 06366GXC8 BANK OF MONTREAL CHICAGO COMM PAPER 10/12/17 4,980,641.91 1.32%0.00%

53,900,000 53,737,443.20Total BUY

INTEREST

4/19/17 4/19/17 10,000,000 3135G0E58 FNMA BENCHMARK NOTE 10/19/18 56,250.00 1.12%

4/19/17 4/19/17 2,000,000 3135G0E58 FNMA BENCHMARK NOTE 10/19/18 11,250.00 1.12%

4/26/17 4/26/17 10,000,000 3135G0PQ0 FANNIE MAE GLOBAL NOTES 10/26/17 43,750.00 0.87%

4/30/17 4/30/17 12,500,000 912828UZ1 US TREASURY NOTES 4/30/18 39,062.50 0.62%

5/1/17 5/1/17 2,000,000 594918AS3 MICROSOFT CORP GLOBAL NOTES 5/1/18 10,000.00 1.00%

5/1/17 5/1/17 529,000 594918AS3 MICROSOFT CORP GLOBAL NOTES 5/1/18 2,645.00 1.00%

5/3/17 5/3/17 2,500,000 037833AJ9 APPLE INC GLOBAL NOTES 5/3/18 12,500.00 1.00%


31

HRTAC ENHANCED CASH


Portfolio Activity

Trade

Date

Settle

Date

Maturity


Transact

Amt ($)

Yield

at Market

Realized

G/L (BV)Coupon

5/3/17 5/3/17 250,000 037833AJ9 APPLE INC GLOBAL NOTES 5/3/18 1,250.00 1.00%


5/15/17 5/15/17 10,000,000 912828G20 US TREASURY NOTES 11/15/17 43,750.00 0.87%


6/15/17 6/15/17 12,000,000 912828N22 US TREASURY NOTES 12/15/18 75,000.00 1.25%

71,779,000 339,207.50Total INTEREST

SELL

4/18/17 4/18/17 5,000,000 3135G0ZL0 FNMA NOTES 9/27/17 5,003,616.67 0.97% (671.05)1.00%

4/18/17 4/18/17 5,000,000 3135G0ZL0 FNMA NOTES 9/27/17 5,003,566.67 0.97% (721.05)1.00%

4/19/17 4/19/17 4,925,000 3137EADN6 FHLMC NOTES 1/12/18 4,923,181.85 1.08% (5,546.73)0.75%

4/20/17 4/20/17 5,000,000 3135G0RT2 FANNIE MAE GLOBAL NOTES 12/20/17 5,009,083.33 1.04% (3,916.00)0.87%



4/20/17 4/25/17 1,900,000 912828P95 US TREASURY NOTES 3/15/19 1,894,991.85 1.20% (6,846.65)1.00%

4/24/17 4/24/17 5,000,000 3135G0RT2 FANNIE MAE GLOBAL NOTES 12/20/17 5,008,819.44 1.07% (4,692.35)0.87%

4/26/17 5/1/17 2,000,000 912828P95 US TREASURY NOTES 3/15/19 1,992,476.23 1.27% (9,787.64)1.00%

4/28/17 5/3/17 2,000,000 30231GAL6 EXXON MOBIL CORP NOTES 3/6/18 2,003,712.50 1.33% (1,778.08)1.30%

5/1/17 5/2/17 4,950,000 3135G0PQ0 FANNIE MAE GLOBAL NOTES 10/26/17 4,948,543.88 0.97% (2,099.05)0.87%

5/8/17 5/10/17 5,050,000 3135G0PQ0 FANNIE MAE GLOBAL NOTES 10/26/17 5,047,577.40 1.05% (4,064.19)0.87%

5/11/17 5/12/17 925,000 912828P95 US TREASURY NOTES 3/15/19 920,821.16 1.34% (5,504.50)1.00%

5/15/17 5/15/17 4,875,000 912828G20 US TREASURY NOTES 11/15/17 4,871,381.84 1.02% (6,323.20)0.87%

6/28/17 6/28/17 4,725,000 912828G20 US TREASURY NOTES 11/15/17 4,726,436.43 1.07% (5,501.69)0.87%

53,450,000 53,472,756.92 -56,695.64Total SELL

TRANSFER IN


32

HRTAC ENHANCED CASH


Portfolio Activity

Trade

Date

Settle

Date

Maturity


Transact

Amt ($)

Yield

at Market

Realized

G/L (BV)Coupon

4/17/17 4/17/17 850,000 3130AAE46 FHLB NOTES 1/16/19 852,472.41 1.26% 0.00 1.25%

4/17/17 4/17/17 2,500,000 037833AJ9 APPLE INC GLOBAL NOTES 5/3/18 2,502,818.89 1.33% 0.00 1.00%


4/17/17 4/17/17 250,000 30231GAL6 EXXON MOBIL CORP NOTES 3/6/18 250,333.31 1.32% 0.00 1.30%

4/17/17 4/17/17 2,500,000 30231GAL6 EXXON MOBIL CORP NOTES 3/6/18 2,503,333.13 1.32% 0.00 1.30%



4/17/17 4/17/17 2,500,000 931142DF7 WAL-MART STORES INC GLOBAL NOTES 4/11/18 2,498,148.75 1.22% 0.00 1.12%

4/17/17 4/17/17 750,000 931142DF7 WAL-MART STORES INC GLOBAL NOTES 4/11/18 749,444.63 1.22% 0.00 1.12%

4/17/17 4/17/17 10,000,000 3137EADN6 FHLMC NOTES 1/12/18 9,995,771.67 1.08% 0.00 0.75%

4/17/17 4/17/17 10,000,000 3137EADZ9 FREDDIE MAC NOTES 4/15/19 9,967,855.00 1.29% 0.00 1.12%





4/17/17 4/17/17 10,000,000 3135G0PQ0 FANNIE MAE GLOBAL NOTES 10/26/17 10,035,852.50 0.98% 0.00 0.87%

4/17/17 4/17/17 10,000,000 3135G0ZL0 FNMA NOTES 9/27/17 10,006,625.56 0.98% 0.00 1.00%

4/17/17 4/17/17 9,000,000 3135G0TG8 FANNIE MAE GLOBAL NOTES 2/8/18 8,998,209.75 1.11% 0.00 0.87%

4/17/17 4/17/17 1,000,000 3135G0TG8 FANNIE MAE GLOBAL NOTES 2/8/18 999,801.08 1.11% 0.00 0.87%

4/17/17 4/17/17 10,000,000 3135G0RT2 FANNIE MAE GLOBAL NOTES 12/20/17 10,018,437.50 1.02% 0.00 0.87%

4/17/17 4/17/17 10,000,000 912828G20 US TREASURY NOTES 11/15/17 10,033,072.04 0.94% 0.00 0.87%

4/17/17 4/17/17 13,000,000 912828P95 US TREASURY NOTES 3/15/19 12,960,372.61 1.21% 0.00 1.00%

4/17/17 4/17/17 12,000,000 912828N63 US TREASURY N/B 1/15/19 12,021,649.39 1.19% 0.00 1.12%

4/17/17 4/17/17 725,000 880591EA6 TENNESSEE VALLEY AUTHORITY NOTES 7/18/17 743,522.47 0.75% 0.00 5.50%

4/17/17 4/17/17 5,000,000 880591EA6 TENNESSEE VALLEY AUTHORITY NOTES 7/18/17 5,127,741.11 0.75% 0.00 5.50%



4/17/17 4/17/17 2,300,000 478160AQ7 JOHNSON & JOHNSON CORP NOTE 8/15/17 2,355,147.87 1.12% 0.00 5.55%

4/17/17 4/17/17 750,000 478160AQ7 JOHNSON & JOHNSON CORP NOTE 8/15/17 767,983.00 1.12% 0.00 5.55%

4/17/17 4/17/17 12,000,000 912828N22 US TREASURY NOTES 12/15/18 12,064,282.81 1.18% 0.00 1.25%


33

HRTAC ENHANCED CASH


Portfolio Activity

Trade

Date

Settle

Date

Maturity


Transact

Amt ($)

Yield

at Market

Realized

G/L (BV)Coupon

4/17/17 4/17/17 12,500,000 912828UZ1 US TREASURY NOTES 4/30/18 12,477,169.41 1.09% 0.00 0.62%



4/17/17 4/17/17 529,000 594918AS3 MICROSOFT CORP GLOBAL NOTES 5/1/18 530,123.13 1.24% 0.00 1.00%

4/17/17 4/17/17 2,000,000 594918AS3 MICROSOFT CORP GLOBAL NOTES 5/1/18 2,004,246.22 1.24% 0.00 1.00%

4/17/17 4/17/17 11,500,000 912828XK1 US TREASURY NOTES 7/15/18 11,492,326.70 1.11% 0.00 0.87%

198,004,000 198,290,430.92 0.00Total TRANSFER IN


34

HRTAC ENHANCED CASH


Portfolio Activity



Date

Trade

Date

Tran.

Type

Maturity

Date Transact

Amt ($)Yield

Realized

G/L (BV)Coupon

4/17/17 4/17/17 850,000.00 3130AAE46 FHLB NOTESTRANSFER IN 1/16/19 (852,472.41) 1.26% 0.00 1.25%

4/17/17 4/17/17 2,500,000.00 037833AJ9 APPLE INC GLOBAL NOTESTRANSFER IN 5/3/18 (2,502,818.89) 1.33% 0.00 1.00%

4/17/17 4/17/17 250,000.00 037833AJ9 APPLE INC GLOBAL NOTESTRANSFER IN 5/3/18 (250,281.89) 1.33% 0.00 1.00%

4/17/17 4/17/17 250,000.00 30231GAL6 EXXON MOBIL CORP NOTESTRANSFER IN 3/6/18 (250,333.31) 1.32% 0.00 1.30%

4/17/17 4/17/17 2,500,000.00 30231GAL6 EXXON MOBIL CORP NOTESTRANSFER IN 3/6/18 (2,503,333.13) 1.32% 0.00 1.30%

4/17/17 4/17/17 1,700,000.00 912828B33 US TREASURY NOTESTRANSFER IN 1/31/19 (1,714,251.39) 1.20% 0.00 1.50%

4/17/17 4/17/17 400,000.00 912828B33 US TREASURY NOTESTRANSFER IN 1/31/19 (403,353.27) 1.20% 0.00 1.50%

4/17/17 4/17/17 2,500,000.00 931142DF7 WAL-MART STORES INC GLOBAL NOTESTRANSFER IN 4/11/18 (2,498,148.75) 1.22% 0.00 1.12%

4/17/17 4/17/17 750,000.00 931142DF7 WAL-MART STORES INC GLOBAL NOTESTRANSFER IN 4/11/18 (749,444.63) 1.22% 0.00 1.12%

4/17/17 4/17/17 10,000,000.00 3137EADN6 FHLMC NOTESTRANSFER IN 1/12/18 (9,995,771.67) 1.08% 0.00 0.75%

4/17/17 4/17/17 10,000,000.00 3137EADZ9 FREDDIE MAC NOTESTRANSFER IN 4/15/19 (9,967,855.00) 1.29% 0.00 1.12%

4/17/17 4/17/17 4,500,000.00 3135G0J53 FNMA BENCHMARK NOTETRANSFER IN 2/26/19 (4,483,767.00) 1.27% 0.00 1.00%

4/17/17 4/17/17 7,500,000.00 3135G0J53 FNMA BENCHMARK NOTETRANSFER IN 2/26/19 (7,472,945.00) 1.27% 0.00 1.00%

4/17/17 4/17/17 10,000,000.00 3135G0E58 FNMA BENCHMARK NOTETRANSFER IN 10/19/18 (10,049,035.00) 1.17% 0.00 1.12%

4/17/17 4/17/17 2,000,000.00 3135G0E58 FNMA BENCHMARK NOTETRANSFER IN 10/19/18 (2,009,807.00) 1.17% 0.00 1.12%

4/17/17 4/17/17 10,000,000.00 3135G0PQ0 FANNIE MAE GLOBAL NOTESTRANSFER IN 10/26/17 (10,035,852.50) 0.98% 0.00 0.87%

4/17/17 4/17/17 10,000,000.00 3135G0ZL0 FNMA NOTESTRANSFER IN 9/27/17 (10,006,625.56) 0.98% 0.00 1.00%

4/17/17 4/17/17 9,000,000.00 3135G0TG8 FANNIE MAE GLOBAL NOTESTRANSFER IN 2/8/18 (8,998,209.75) 1.11% 0.00 0.87%

4/17/17 4/17/17 1,000,000.00 3135G0TG8 FANNIE MAE GLOBAL NOTESTRANSFER IN 2/8/18 (999,801.08) 1.11% 0.00 0.87%

4/17/17 4/17/17 10,000,000.00 3135G0RT2 FANNIE MAE GLOBAL NOTESTRANSFER IN 12/20/17 (10,018,437.50) 1.02% 0.00 0.87%


35

HRTAC ENHANCED CASH


Portfolio Activity


Date

Trade

Date

Tran.

Type

Maturity

Date Transact

Amt ($)Yield

Realized

G/L (BV)Coupon

4/17/17 4/17/17 10,000,000.00 912828G20 US TREASURY NOTESTRANSFER IN 11/15/17 (10,033,072.04) 0.94% 0.00 0.87%

4/17/17 4/17/17 13,000,000.00 912828P95 US TREASURY NOTESTRANSFER IN 3/15/19 (12,960,372.61) 1.21% 0.00 1.00%

4/17/17 4/17/17 12,000,000.00 912828N63 US TREASURY N/BTRANSFER IN 1/15/19 (12,021,649.39) 1.19% 0.00 1.12%

4/17/17 4/17/17 725,000.00 880591EA6 TENNESSEE VALLEY AUTHORITY NOTESTRANSFER IN 7/18/17 (743,522.47) 0.75% 0.00 5.50%

4/17/17 4/17/17 5,000,000.00 880591EA6 TENNESSEE VALLEY AUTHORITY NOTESTRANSFER IN 7/18/17 (5,127,741.11) 0.75% 0.00 5.50%

4/17/17 4/17/17 3,000,000.00 912828L40 US TREASURY NOTESTRANSFER IN 9/15/18 (2,996,948.22) 1.14% 0.00 1.00%

4/17/17 4/17/17 7,000,000.00 912828L40 US TREASURY NOTESTRANSFER IN 9/15/18 (6,992,879.17) 1.14% 0.00 1.00%

4/17/17 4/17/17 2,300,000.00 478160AQ7 JOHNSON & JOHNSON CORP NOTETRANSFER IN 8/15/17 (2,355,147.87) 1.12% 0.00 5.55%

4/17/17 4/17/17 750,000.00 478160AQ7 JOHNSON & JOHNSON CORP NOTETRANSFER IN 8/15/17 (767,983.00) 1.12% 0.00 5.55%

4/17/17 4/17/17 12,000,000.00 912828N22 US TREASURY NOTESTRANSFER IN 12/15/18 (12,064,282.81) 1.18% 0.00 1.25%

4/17/17 4/17/17 12,500,000.00 912828UZ1 US TREASURY NOTESTRANSFER IN 4/30/18 (12,477,169.41) 1.09% 0.00 0.62%

4/17/17 4/17/17 2,750,000.00 912828R44 US TREASURY NOTESTRANSFER IN 5/15/19 (2,739,116.06) 1.25% 0.00 0.87%

4/17/17 4/17/17 7,250,000.00 912828R44 US TREASURY NOTESTRANSFER IN 5/15/19 (7,221,305.98) 1.25% 0.00 0.87%

4/17/17 4/17/17 529,000.00 594918AS3 MICROSOFT CORP GLOBAL NOTESTRANSFER IN 5/1/18 (530,123.13) 1.24% 0.00 1.00%

4/17/17 4/17/17 2,000,000.00 594918AS3 MICROSOFT CORP GLOBAL NOTESTRANSFER IN 5/1/18 (2,004,246.22) 1.24% 0.00 1.00%

4/17/17 4/17/17 11,500,000.00 912828XK1 US TREASURY NOTESTRANSFER IN 7/15/18 (11,492,326.70) 1.11% 0.00 0.87%

4/17/17 4/18/17 5,000,000.00 22533TX27 CREDIT AGRICOLE CIB NY COMM PAPERBUY 10/2/17 (4,969,151.39) 1.34%0.00%

4/18/17 4/18/17 5,000,000.00 17305TLR1 CITIBANK NA CERT DEPOSBUY 9/12/17 (5,000,000.00) 1.18%1.18%

4/18/17 4/18/17 5,000,000.00 3135G0ZL0 FNMA NOTESSELL 9/27/17 5,003,616.67 0.97% (671.05)1.00%

4/18/17 4/18/17 5,000,000.00 3135G0ZL0 FNMA NOTESSELL 9/27/17 5,003,566.67 0.97% (721.05)1.00%

4/19/17 4/19/17 5,000,000.00 09659CAC2 BNP PARIBAS NY BRANCH COMM PAPERBUY 1/12/18 (4,948,261.11) 1.40%0.00%

4/19/17 4/19/17 10,000,000.00 3135G0E58 FNMA BENCHMARK NOTEINTEREST 10/19/18 56,250.00 1.12%


36

HRTAC ENHANCED CASH


Portfolio Activity


Date

Trade

Date

Tran.

Type

Maturity

Date Transact

Amt ($)Yield

Realized

G/L (BV)Coupon

4/19/17 4/19/17 2,000,000.00 3135G0E58 FNMA BENCHMARK NOTEINTEREST 10/19/18 11,250.00 1.12%

4/19/17 4/19/17 4,925,000.00 3137EADN6 FHLMC NOTESSELL 1/12/18 4,923,181.85 1.08% (5,546.73)0.75%

4/20/17 4/20/17 5,000,000.00 22549VX57 CREDIT SUISSE NEW YORK CERT DEPOSBUY 11/21/17 (5,000,000.00) 1.41%1.41%

4/20/17 4/20/17 5,000,000.00 3135G0RT2 FANNIE MAE GLOBAL NOTESSELL 12/20/17 5,009,083.33 1.04% (3,916.00)0.87%

4/20/17 4/25/17 2,000,000.00 89236TBB0 TOYOTA MOTOR CREDIT CORP CORP NOTESBUY 1/17/19 (2,029,473.33) 1.57%2.10%

4/20/17 4/25/17 1,975,000.00 961214CF8 WESTPAC BANKING CORP NOTESBUY 1/17/19 (2,001,751.38) 1.81%2.25%

4/20/17 4/25/17 1,700,000.00 912828B33 US TREASURY NOTESSELL 1/31/19 1,715,014.79 1.19% 211.57 1.50%

4/20/17 4/25/17 400,000.00 912828B33 US TREASURY NOTESSELL 1/31/19 403,532.88 1.19% 544.97 1.50%

4/20/17 4/25/17 1,900,000.00 912828P95 US TREASURY NOTESSELL 3/15/19 1,894,991.85 1.20% (6,846.65)1.00%

4/24/17 4/24/17 5,000,000.00 46640QAK7 JP MORGAN SECURITIES LLC COMM PAPERBUY 1/19/18 (4,948,625.00) 1.38%0.00%

4/24/17 4/24/17 5,000,000.00 3135G0RT2 FANNIE MAE GLOBAL NOTESSELL 12/20/17 5,008,819.44 1.07% (4,692.35)0.87%

4/26/17 4/26/17 10,000,000.00 3135G0PQ0 FANNIE MAE GLOBAL NOTESINTEREST 10/26/17 43,750.00 0.87%

4/26/17 5/1/17 2,000,000.00 19416QEF3 COLGATE-PALMOLIVE COMPANY CORP NOTESBUY 3/15/19 (2,011,892.22) 1.55%1.75%

4/26/17 5/1/17 2,000,000.00 912828P95 US TREASURY NOTESSELL 3/15/19 1,992,476.23 1.27% (9,787.64)1.00%

4/28/17 5/3/17 2,000,000.00 30231GAD4 EXXON MOBIL CORP NOTE (CALLABLE)BUY 3/15/19 (2,014,550.67) 1.55%1.81%

4/28/17 5/3/17 2,000,000.00 30231GAL6 EXXON MOBIL CORP NOTESSELL 3/6/18 2,003,712.50 1.33% (1,778.08)1.30%

4/30/17 4/30/17 12,500,000.00 912828UZ1 US TREASURY NOTESINTEREST 4/30/18 39,062.50 0.62%

5/1/17 5/1/17 2,000,000.00 594918AS3 MICROSOFT CORP GLOBAL NOTESINTEREST 5/1/18 10,000.00 1.00%

5/1/17 5/1/17 529,000.00 594918AS3 MICROSOFT CORP GLOBAL NOTESINTEREST 5/1/18 2,645.00 1.00%

5/1/17 5/2/17 5,000,000.00 06538CAS0 BANK OF TOKYO MITSUBISHI UFJ COMM PAPERBUY 1/26/18 (4,943,211.11) 1.54%0.00%

5/1/17 5/2/17 4,950,000.00 3135G0PQ0 FANNIE MAE GLOBAL NOTESSELL 10/26/17 4,948,543.88 0.97% (2,099.05)0.87%

5/3/17 5/3/17 2,500,000.00 037833AJ9 APPLE INC GLOBAL NOTESINTEREST 5/3/18 12,500.00 1.00%


37

HRTAC ENHANCED CASH


Portfolio Activity


Date

Trade

Date

Tran.

Type

Maturity

Date Transact

Amt ($)Yield

Realized

G/L (BV)Coupon

5/3/17 5/3/17 250,000.00 037833AJ9 APPLE INC GLOBAL NOTESINTEREST 5/3/18 1,250.00 1.00%

5/8/17 5/10/17 5,000,000.00 65602USD1 NORINCHUKIN BANK NY CERT DEPOSBUY 11/10/17 (5,000,000.00) 1.40%1.40%

5/8/17 5/10/17 5,050,000.00 3135G0PQ0 FANNIE MAE GLOBAL NOTESSELL 10/26/17 5,047,577.40 1.05% (4,064.19)0.87%

5/11/17 5/12/17 925,000.00 3130ABF92 FEDERAL HOME LOAN BANK AGENCY NOTESBUY 5/28/19 (923,251.75) 1.47%1.37%

5/11/17 5/12/17 925,000.00 912828P95 US TREASURY NOTESSELL 3/15/19 920,821.16 1.34% (5,504.50)1.00%

5/15/17 5/15/17 5,000,000.00 4497W0YD4 ING (US) FUNDING LLC COMM PAPERBUY 11/13/17 (4,966,633.33) 1.33%0.00%


5/15/17 5/15/17 10,000,000.00 912828G20 US TREASURY NOTESINTEREST 11/15/17 43,750.00 0.87%


5/15/17 5/15/17 4,875,000.00 912828G20 US TREASURY NOTESSELL 11/15/17 4,871,381.84 1.02% (6,323.20)0.87%

6/15/17 6/15/17 12,000,000.00 912828N22 US TREASURY NOTESINTEREST 12/15/18 75,000.00 1.25%

6/28/17 6/28/17 5,000,000.00 06366GXC8 BANK OF MONTREAL CHICAGO COMM PAPERBUY 10/12/17 (4,980,641.91) 1.32%0.00%

6/28/17 6/28/17 4,725,000.00 912828G20 US TREASURY NOTESSELL 11/15/17 4,726,436.43 1.07% (5,501.69)0.87%

TOTALS (198,215,909.70) (56,695.64)


38

HRTAC ENHANCED CASH


Portfolio Activity

IMPORTANT DISCLOSURES

This material is based on information obtained from sources generally believed to be reliable and available to the public; however, PFM Asset Management LLC cannot guarantee its

accuracy, completeness or suitability. This material is for general information purposes only and is not intended to provide specific advice or a specific recommendation. All statements as

to what will or may happen under certain circumstances are based on assumptions, some, but not all of which, are noted in the presentation. Assumptions may or may not be proven

correct as actual events occur, and results may depend on events outside of your or our control. Changes in assumptions may have a material effect on results. Past performance does

not necessarily reflect and is not a guaranty of future results.The information contained in this presentation is not an offer to purchase or sell any securities.

Dime

Ã Market values that include accrued interest are derived from closing bid prices as of the last business day of the month as supplied by Interactive Data, Bloomberg, or Telerate.

Where prices are not available from generally recognized sources, the securities are priced using a yield based matrix system to arrive at an estimated market value.

Ã In accordance with generally accepted accounting principles, information is presented on a trade date basis; forward settling purchases are included in the monthly balances, and

forward settling sales are excluded.

Ã Performance is presented in accordance with the CFA Institute ’s Global Investment Performance Standards (GIPS). Unless otherwise noted, performance is shown gross of fees.

Quarterly returns are presented on an unannualized basis. Returns for periods greater than one year are presented on an annualized basis.Past performance is not indicative of

future returns.

Ã Bank of America/Merrill Lynch Indices provided by Bloomberg Financial Markets.

Ã Money market fund/cash balances are included in performance and duration computations.

Ã Standard & Poorʼs is the source of the credit ratings. Distribution of credit rating is exclusive of money market fund/LGIP holdings.

Ã Callable securities in the portfolio are included in the maturity distribution analysis to their stated maturity date, although, they may be called prior to maturity.

Ã MBS maturities are represented by expected average life.

PFM Asset Management LLC Account 37760400 39

HRTAC ENHANCED CASH


Appendix

GLOSSARY

Ã ACCRUED INTEREST: Interest that is due on a bond or other fixed income security since the last interest payment was made.

Ã AGENCIES: Federal agency securities and/or Government-sponsored enterprises.

Ã AMORTIZED COST: The original cost of the principal of the security is adjusted for the amount of the periodic reduction of any discount or premium from the purchase date until

the date of the report. Discount or premium with respect to short-term securities (those with less than one year to maturity at time of issuance) is amortized on a straight line basis.

Such discount or premium with respect to longer-term securities is amortized using the constant yield basis.

Ã BANKERS’ ACCEPTANCE: A draft or bill or exchange accepted by a bank or trust company. The accepting institution guarantees payment of the bill as well as the insurer.

Ã COMMERCIAL PAPER: An unsecured obligation issued by a corporation or bank to finance its short-term credit needs, such as accounts receivable and inventory.

Ã CONTRIBUTION TO DURATION: Represents each sector or maturity range ’s relative contribution to the overall duration of the portfolio measured as a percentage weighting.

Since duration is a key measure of interest rate sensitivity, the contribution to duration measures the relative amount or contribution of that sector or maturity range to the total

rate sensitivity of the portfolio.

Ã DURATION TO WORST: A measure of the sensitivity of a security ’s price to a change in interest rates, stated in years, computed from cash flows to the maturity date or to the put

date, whichever results in the highest yield to the investor.

Ã EFFECTIVE DURATION: A measure of the sensitivity of a security’s price to a change in interest rates, stated in years.

Ã EFFECTIVE YIELD: The total yield an investor receives in relation to the nominal yield or coupon of a bond. Effective yield takes into account the power of compounding on

investment returns, while ominal yield does not.

Ã FDIC: Federal Deposit Insurance Corporation. A federal agency that insures bank deposits to a specified amount.

Ã INTEREST RATE: Interest per year divided by principal amount and expressed as a percentage.

Ã MARKET VALUE: The value that would be received or paid for an investment in an orderly transaction between market participants at the measurement date.

Ã MATURITY: The date upon which the principal or stated value of an investment becomes due and payable.

Ã NEGOTIABLE CERTIFICATES OF DEPOSIT: A CD with a very large denomination, usually $1 million or more, that can be traded in secondary markets.

Ã PAR VALUE: The nominal dollar face amount of a security.


HRTAC ENHANCED CASH


Appendix

GLOSSARY

Ã PASS THROUGH SECURITY: A security representing pooled debt obligations that passes income from debtors to its shareholders. The most common type is the

mortgage-backed security.

Ã REPURCHASE AGREEMENTS: A holder of securities sells these securities to an investor with an agreement to repurchase them at a fixed price on a fixed date.

Ã SETTLE DATE: The date on which the transaction is settled and monies/securities are exchanged. If the settle date of the transaction (i.e., coupon payments and maturity

proceeds) occurs on a non-business day, the funds are exchanged on the next business day.

Ã TRADE DATE: The date on which the transaction occurred; however, the final consummation of the security transaction and payment has not yet taken place.

Ã UNSETTLED TRADE: A trade which has been executed; however, the final consummation of the security transaction and payment has not yet taken place.

Ã U.S. TREASURY: The department of the U.S. government that issues Treasury securities.

Ã YIELD: The rate of return based on the current market value, the annual interest receipts, maturity value, and the time period remaining until maturity, stated as a percentage on

an annualized basis.

Ã YTM AT COST: The yield to maturity at cost is the expected rate of return based on the original cost, the annual interest receipts, maturity value, and the time period from

purchase date to maturity, stated as a percentage on an annualized basis.

Ã YTM AT MARKET: The yield to maturity at market is the rate of return, based on the current market value, the annual interest receipts, maturity value and the time period

remaining until maturity, stated as a percentage, on an annualized basis.


The Regional Building 723 Woodlake Drive Chesapeake, Virginia 23320 757-420-8300

Linda T. Johnson, Chair Michael J. Hipple, Jr., Chair Thomas G. Shepperd, Jr., Vice-Chair Linda T. Johnson, Vice-Chair August 1, 2017 The Honorable Aubrey L. Layne, Jr. Virginia Secretary of Transportation/ Commonwealth Transportation Board Chair 1111 E. Broad Street Richmond, Virginia 23219 RE: Comments on Proposed Changes to the SMART SCALE Policy and Process Dear Secretary Layne: The Hampton Roads Transportation Planning Organization (HRTPO) and the Hampton Roads Transportation Accountability Commission (HRTAC) strongly believe that the SMART SCALE (formerly House Bill 2, or HB2) project prioritization process, implemented in 2015, has demonstrated a significant improvement in how projects are selected by the Commonwealth Transportation Board (CTB) to receive allocations of precious transportation dollars. The SMART SCALE method of scoring projects based on an objective, outcome-based process that is transparent to the public and holds decision-makers accountable to taxpayers was a game-changer when it was adopted by the CTB. The HRTPO and HRTAC understand that the CTB is currently considering changes proposed by staff to the SMART SCALE policy and process and appreciate this opportunity to submit comments for your consideration. After careful review of the current SMART SCALE policy and process, as well as the proposed changes presented by SMART SCALE staff to the CTB on June 21, 2017, it is apparent that adoption and implementation of some of the proposed changes could adversely affect the ability of the HRTAC and VDOT to accelerate and deliver Hampton Roads Regional Priority Projects. The HRTPO and HRTAC offer the following comments for consideration by the CTB:

• With regard to Slides 45 and 47 of the June 21, 2017 “SMART SCALE Staff recommendations for improving the process for Round 3” presentation to the CTB, which refer to a Need to define clear rules regarding projects that are fully funded or committed and a proposed Project Eligibility change to Clarify in the policy that SMART SCALE funding is not intended to replace other committed funding sources such as local/regional funding, proffers, and/or other committed state or federal funding resources: o The HRTPO and HRTAC respectfully request that it be made clear in any such policy

change regarding fully funded projects that the policy does not apply to the projects having Hampton Roads Transportation Fund (HRTF) allocations administered by the HRTAC. There are several reasons for our request, including the following:

The Honorable Aubrey L. Layne, Jr. August 1, 2017 Page 2

As you know, the HRTF is generated by additional fuels and sales taxes paid in

Hampton Roads, the majority paid by residents of the region. Virginia law does not allow the HRTF to be taken into consideration when determining the amount of other funding to be made available to Hampton Roads. Referring to the HRTF as the “Fund”, §33.2-2600 of the Code of Virginia states that The amounts deposited into the Fund and the distribution and expenditure of such amounts shall not be used to calculate or reduce the share of federal, state, or local revenues otherwise available to participating localities.

By law, the HRTAC must use HRTF monies to build large-scale, regionally-significant projects. Referring to the HRTAC as the “Commission”, §33.2-2600 of the Code of Virginia states that The Commission shall give priority to those projects that are expected to provide the greatest impact on reducing congestion for the greatest number of citizens residing within Planning District 23 and shall ensure that the moneys shall be used for such construction projects. As a result, nearly all of the Hampton Roads Regional Priority Projects – the projects on which HRTAC is allocating HRTF moneys – are on the Interstate system. It is neither fair nor appropriate to expect that such projects should be carried out without significant state and federal funding participation.

In order for HRTAC and VDOT to receive CTB approval to enter into a project agreement, the agreement must include a detailed plan showing that all necessary funds are available to allow completion of the project. To maintain the aggressive schedules associated with the Regional Priority Projects, the HRTAC has allocated HRTF moneys to fully fund projects that the HRTAC and HRTPO believe would be very competitive under SMART SCALE – with the expectation that some HRTF allocations may be replaced with state and/or federal funding received as a result of a successful SMART SCALE application. Taking into account the HRTAC, HRTPO, VDOT, and CTB processes and schedules, as well as the two-year cycle to apply for funding via SMART SCALE, it would be impossible to maintain the successful and aggressive schedules without fully funding the projects with large allocations from the HRTF. The Standard Project Agreements between the HRTAC and VDOT currently address the possibility of allocation of additional federal and/or state funds to the project – such as resulting from the SMART SCALE process – following execution of the agreements.

The Honorable Aubrey L. Layne, Jr. August 1, 2017 Page 3

• With regard to the Project Eligibility requirements included in the SMART SCALE Policy Guide,

we respectfully request that the policy be changed to require that localities obtain a resolution of support from the relevant regional entity regardless of whether they are applying for a Corridor of Statewide Significance or Regional Networks project type. This would provide MPOs the opportunity to ensure that projects being submitted under SMART SCALE were consistent with the MPO’s Fiscally-Constrained Long-Range Transportation Plan (LRTP). As a result of SMART SCALE Rounds 1 and 2, a number of projects that were not consistent with the HRTPO LRTP received funding. That made it necessary to add the projects to the LRTP and remove other projects in order to maintain fiscal-constraint. The HRTPO and HRTAC believe that was an unintended consequence of the SMART SCALE process.

The HRTPO and HRTAC appreciate the work of the CTB and all involved with the SMART SCALE process. We firmly believe the process works and appreciate this opportunity to provide input as you work to make the process even better. Sincerely,

Linda T. Johnson Chair

Hampton Roads Transportation Planning Organization

Michael J. Hipple Chair


MK/sc Copy: HRTPO Board Members HRTAC Board Members John F. Malbon, CTB – Hampton Roads Representative

chair, michael j. hipple vice chair, linda t. johnson · pdf filepublic comment period ......

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