Franchise Opportunities in Phoenix, AZ

Fitch Ratings - Austin - 22 Jun 2022: Fitch Ratings has assigned a 'AA+' rating to the City of Phoenix Civic Improvement Corporation, Arizona's $142.275 million subordinated excised tax revenue bonds, series 2022.

The bonds will be sold via negotiated sale the week of July 11, 2022. Proceeds will be used to fund or reimburse the City of Phoenix for the costs of certain projects, property and equipment and to acquire, construct, equip and improve real and personal property for the city.

Fitch also has affirmed the 'AA+' rating on the outstanding $528.9 million civic improvement corporation subordinated excise tax revenue bonds series 2017A, B and C and series 2020A, B and C.

The Rating Outlook is Stable.

Excise Tax Revenues

The 'AA+' excise tax bond rating reflects both solid post-pandemic growth prospects for pledged revenues and robust resilience. Any additional leveraging is not expected to materially reduce the current healthy debt service cushion given the application of surplus pledged revenues to support general fund operations.

Solid Growth Prospects for Pledged Revenues: The basket of pledged revenues is expected to increase at a solid pace--above inflation but below U.S. GDP growth, given ongoing and anticipated economic expansion in both the city and metro region.

Sound Resiliency: While volatile by nature, the pledged revenues generate a sufficiently strong debt service cushion to handily withstand any pressure experienced in future economic contractions--resulting in a 'aaa' resilience assessment. The excise tax revenue bond rating is capped at the city's Issuer Default Rating (IDR).

Factors that could, individually or collectively, lead to positive rating action/upgrade:

--An upgrade of the city's IDR to 'AAA'.

Factors that could, individually or collectively, lead to negative rating action/downgrade:

--While not anticipated, sizable additional leveraging and/or sharp declines in pledged excise tax revenues that erode the currently strong debt service cushion to a level inconsistent with current robust sensitivity and resilience assessment.

--A downgrade of the city's IDR.

International scale credit ratings of Sovereigns, Public Finance and Infrastructure issuers have a best-case rating upgrade scenario (defined as the 99th percentile of rating transitions, measured in a positive direction) of three notches over a three-year rating horizon; and a worst-case rating downgrade scenario (defined as the 99th percentile of rating transitions, measured in a negative direction) of three notches over three years. The complete span of best- and worst-case scenario credit ratings for all rating categories ranges from 'AAA' to 'D'. Best- and worst-case scenario credit ratings are based on historical performance. For more information about the methodology used to determine sector-specific best- and worst-case scenario credit ratings, visit https://www.fitchratings.com/site/re/10111579.

Phoenix and the surrounding metro area are again growing economically at a healthy pace, and both saw little sustained negative effect from the pandemic. City staff reports positive activity in both residential and commercial sectors. Provisional residential permits were up nearly 8% in 2021 from the prior year and starts were down only slightly at 11,492 versus 11,647 in 2020 (a recent high). The retail sector vacancy rate has been trending steadily lower and was at 6.7% in 2021, with nearly one million square feet absorbed during the year. The industrial sector reported 21 million square feet absorbed during the year, with 14 million square feet of new supply added.

Economic diversification has been a major emphasis of local leaders, and the success of those efforts is evidenced by notable growth in technology, healthcare and bio/life sciences, advanced business services and manufacturing. Arizona State University and the University of Arizona facilities in downtown Phoenix headline growth in higher education locally. Construction continues at Sonoran Oasis Technology Park at the northern intersection of I-17 and Loop 303, where Taiwan Semiconductor Manufacturing Corp. is building an advanced chip manufacturing facility. The project is expected to employ 1,900 workers upon completion and is projected to have a $16 billion economic impact over the next 20 years.

The dedicated taxes pledged to the bonds do not meet the requirements set out in Fitch criteria for treatment as "pledged special revenue" under Section 902(2) of the bankruptcy code and are not otherwise insulated from the operating risk of the city. Therefore, the rating of the debt is capped at the IDR.

The outstanding parity bonds are payable from payments made by the city to the corporation, to which a junior and subordinate lien on the city's excise taxes is pledged. Excise taxes are comprised of local transaction privilege (sales) taxes and fees (excluding certain portions of the local sales tax approved by voters for specific purposes), utility and franchise fees, licenses and permits, and the state-shared sales and income tax revenues.

Pledged Revenue Growth Prospects

The 10-year CAGR of pledged excise tax revenues through fiscal 2021 (FYE June 30) is 4.8%. The CAGR received a boost from fiscal 2021 results, which registered a strong 11% increase from the prior year, driven partly by nationwide economic support provided by the federal government during the pandemic. Ongoing economic expansion in recent years also contributed to the gain. Fiscal 2021 revenues totaled more than $1.1 billion, providing a projected maximum annual debt service (MADS) coverage cushion (including projected debt service of the series 2022 bonds) of more than 11x. The current fiscal 2022 revenue estimate of more than $1.19 billion represents a 7.5% increase from the fiscal 2021 total. The 'aa' revenue growth prospects assessment reflects our expectation for a solid growth rate over the near to medium term.

Sensitivity and Resilience

To evaluate the sensitivity of pledged excise tax revenues to cyclical declines, Fitch considers both (1) the revenue sensitivity results produced by FAST assuming a recessionary 1% decline in U.S. GDP, and (2) the largest cumulative decline in revenues over the data series examined (dating back to fiscal 2000). The FAST analysis generated a 5.6% revenue decline in a typical downturn, and the largest cumulative revenue decline for this period was 21% (fiscal 2009-2011).

Fitch considers additional leveraging to the 2x ABT highly unlikely given the use of surplus revenues to support general fund operations. Assuming additional leveraging to 8x MADS (versus the current 11x coverage), revenues could withstand an 88% drop and still generate 1x MADS coverage. This cushion is more than 15x the recessionary revenue dip produced by FAST and 4x the largest cumulative decline. These projected cushions exceed the 'aaa' financial resilience threshold. Even if the city fully leveraged the security to the 2x ABT, a severe revenue decline of 50% would still allow for payment of debt service; this cushion is healthy at 9x the revenue decline produced by FAST in a 1% U.S. GDP decline scenario and 2.4x the largest cumulative decline.

In addition to the sources of information identified in Fitch's applicable criteria specified below, this action was informed by information from Lumesis.

The principal sources of information used in the analysis are described in the Applicable Criteria.

Unless otherwise disclosed in this section, the highest level of ESG credit relevance is a score of '3'. This means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. For more information on Fitch's ESG Relevance Scores, visit www.fitchratings.com/esg.

The rated entity (and/or its agents) or, in the case of structured finance, one or more of the transaction parties participated in the rating process except that the following issuer(s), if any, did not participate in the rating process, or provide additional information, beyond the issuer’s available public disclosure.

Numbers in parentheses accompanying applicable model(s) contain hyperlinks to criteria providing description of model(s).

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PHOENIX — The timing of JaVale McGee’s sixth annual Water For Life Charity Softball Game on Wednesday opened the opportunity for us to hear from him and his Phoenix Suns teammates a few weeks after the season had ended.

The number one topic, of course, a day before the NBA Draft and two weeks before free agency is restricted free agent Deandre Ayton and the uncertainty surrounding his future in Phoenix.

Ayton, who was not one of the handful of Suns players at the event, clearly has the support of his teammates but they all know it’s out of their hands.

“Things are going to play out over time,” Suns forward Cam Johnson said of the process. “Obviously, that’s our guy and we love having him around but the future will play out how it plays out. I wish I had more of a say in what happens. We all wish we could just puppet master everything sometimes. We’ll see in a couple of weeks, couple days what happens.”

Point guard Chris Paul was asked what advice he would offer, as well as his own general thoughts on the situation.

“Control what you can control,” he said. “It’s summertime. It’s a good problem to have, if it is a problem. For me, during all those stressful situations and whatnot, going to try to spend as much time with my family as possible.”

Paul was also asked about how great it feels to see his teammates get rewarded with a new contract after all the work that is put in.

“It’s great for any of ’em,” Paul said. “All of our teammates. We try to celebrate everything. But it’s a business. What’s good for you may not be good for the next person or whatnot.”

Ayton is close with Suns forward Mikal Bridges, his fellow 2018 NBA Draft selection that called Ayton his best friend.

Bridges and Johnson have referred to each other as “twin” and this year that group became “the triplets” with Ayton.

Bridges said Ayton’s future and basketball, in general, hasn’t come up much when they’ve been around each other since the end of the season.

“When we talk and hang out, it’s just about life and just chilling, geeking around,” Bridges said. “We don’t really talk about none of that’s stuff. We just kind of talk about life and have fun.”

As Johnson said, we’ll just see how things shake out.

“Obviously, I got no control,” Bridges said. “Just watch and see what happens and hoping he stays.”

The owners of a gas station in Phoenix are doing their bit to help their customers who are struggling with soaring gas prices.

Runaway gas prices have left Americans struggling to fill their tanks but many drivers pulling into C K Food Mart on Osborn Road and 20th Street have been pleasantly surprised at a special deal.

The gas station's owners, Jaswinder Singh and Ramandeep Kaur, have slashed the cost of unleaded gas per gallon to $4.99. This is around 70 cents cheaper than the average gallon price of $5.68 in the city, according to GasBuddy.com.

The average car has a 12-gallon gas tank, with larger cars holding up to 16 gallons, and the smallest tanks around 9 gallons. It means that those pulling up to the pumps at the C K Food Mart can save up to $12 per fill-up.

"We are trying to help our customers, our neighborhood, our community so they can save some money so they can spend that money on something else, like food, lunch, dinner," Kaur told Phoenix's Fox 10.

The husband and wife team, who are practicing Sikhs, had kept prices lower than their competitors for several months and while not losing money, they were not making a profit on the fuel either.

They have also stopped accepting credit cards at the pump after getting calls from banks after people claimed they never filled up their tanks, leaving the couple to cover the cost.

One customer, Cher Lindsey, who this week drove 95 miles in a day for her work said, "this was just an opportunity I could not pass up. I'm just grateful for it."

"My community, my neighborhood, needs help. We are helping them," Singh told Phoenix's ABC 15. Motorists interviewed by the news outlet expressed their appreciation, with one saying, "I drive for a living so every little bit helps."

ABC 15 also reported cheap deals at the Mobil Food Mart off Hayden and McKellips in Scottsdale, where the cash price for unleaded is $5.19, which is much cheaper than the average in Maricopa County.

It comes as President Joe Biden said a decision on a federal gas tax holiday could be made this week, as galloping inflation hits Americans in their pockets hard.

The gas tax is currently 18.4 cents a gallon, and suspending it would help lower the price at the pump, which on Monday sat at a nationwide average of $4.96 a gallon.

There are higher prices elsewhere, such as in California, where the average price for a gallon is $6.39.

Costs at the pump have continued to soar this year, despite Biden ordering the release of millions of barrels of oil from the nation's Strategic Petroleum Reserve and the government increasing the amount of ethanol blended into fuel.

Arizona teachers are the targets of recruiting from Texas as state Legislators discuss Arizona's budget and education funding.

PHOENIX (3TV/CBS 5) — As legislators discuss Arizona’s budget, educators are hoping for a bump in pay and investments. “So far, from what we’ve seen, is not a huge investment in school. There’s a huge investment in rainy day for what might happen,” said Marisol Garcia, the president-elect for the Arizona Education Association.

Garcia said some money seems to be allocated into programs going into schools. “There’s some to the base--so some to help with a little bit of raise--and then there’s some investment into our actual structures that have been neglected for years and years,” said Garcia.

Garcia says the starting salary for new teachers is around $42,000. TAs a result, they’re finding it hard to compete with other states. “If I’m a family, a young family wanting to invest, figure out where we’re going to be. There’s a real close state across the way that’s willing to pay me more where I can buy a home and have a backyard and have a family,” Garcia said.

“I went to school in Illinois and my colleagues that I went to school with who are teaching in Illinois are making almost double what I make, so imagine what their starting salary is compared to what we’re seeing here,” said kindergarten teacher Kelley Fisher with 23 years of experience. “It’s no wonder that our college students who graduate with degrees in education immediately leave the state.”

Drivers around the Valley are seeing more billboards from the Dallas Independent School District, which is trying to recruit Arizona teachers. The billboard lists their salary range from $60,000 to $102,000. “We have competitive starting salaries of $60,000--not including our incentives that we have: $2,000 signing bonus, if you’re a math or science teacher, you’ll get a $3,000 incentive on top of that $2,000. If you’re bilingual, you’ll get another $5,00 incentive plus a $4,000 stipend,” said Steven Jackson, the director of recruitment at Dallas Independent School District. “We give a lot of financial things for teachers to be able to help them because we know the world we’re living in now and where the economy things are very high and expensive that we’re able to provide a competitive salary for our teachers to be able to have a living wage.”

Jackson says they’re targeting Arizona because they’ve noticed more teachers from the Phoenix area applying to Dallas ISD. “This is our first year we’re putting our efforts specifically on Arizona. When we look at our efforts, we look at historical data basically off of applications that we have as well as job fairs we attend and conferences as well,” Jackson explained. “We look at that data and we pinpoint, OK, we’re seeing that we have an influx of applicants from this area so we’ll go ahead and use of some of our recruitment efforts in those areas.”

Jackson said Dallas ISD will be holding a recruitment event in Phoenix on Friday and Saturday. More information can be found here.

“I guess I shouldn’t be surprised. If anyone who pays more than we do, especially at a starting teacher’s salary, should probably come here and advertise because regardless of all of the other things, it does come down to pay,” said Fisher. “We can complain about our workload issues, we can complain about our class sizes, but a lot of it comes down to--are we paid for our worth?”

Garcia hopes legislators see the need for a change and more focus on the education budget. “The fact that we have not made this a priority in this state and we’re not looking at it in the same way we should be looking at any other market. This is a professional market, people should be able to get paid what they deserve,” Garcia said. “Texas is not that much different than Arizona when it comes to housing prices so there is no reason, there’s no excuse for us to not be investing in schools in this state.”

The Arizona Department of Education said last school year, they had 1,700 teacher openings, about 25% of which are still unfilled. About 55% of the filled positions, however, are filled by teachers who do not meet the state’s standard certification requirements.

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?Water Conservation Media Day | Monday, June 6 @ 9 a.m.| 4106 W. La Mirada Drive, Phoenix, AZ

Due to the shortage of water on the Colorado River caused by overallocation, prolonged drought, and climate change, the City of Phoenix has declared a Stage 1 Water Alert and activated its Drought Management Plan. City of Phoenix Water Services Department Director Troy Hayes made the announcement during a City Council subcommittee presentation? on Wednesday, June 1.

The City is taking this action to address the mandatory reduction of Colorado River water and deeper cuts that are likely to occur in the future. The U.S. Bureau of Reclamation has been working with the seven Colorado River Basin states to manage the changing conditions. However, the levels of Lake Powell and Lake Mead continue to fall precipitously, and the projections show conditions will worsen significantly.

A Stage 1 Water Alert occurs when an insufficient supply of water appears likely due to water system or supply limitations. As a result of the declaration, the City will begin an intensive public education and information program to assist all customers in understanding the state of the emergency and the need for voluntary conservation.

During the early stages of stressed water supplies, the City will ask customers to voluntarily reduce their water use in ways that will have minimal impact on their lifestyles. Since most of our water use is outdoors, watering landscape correctly is one of the easiest and most effective ways to conserve water. Finding and fixing leaking faucets and toilets is the simplest way to reduce indoor water use. Voluntary reductions do not require enforcement, and the primary cost to the City will be associated with customer outreach and education. Any costs incurred by customers due to voluntary reductions will be at the customer's discretion and may be offset by lower water bills.

"The situation on the Colorado River is unprecedented, and we are taking it very seriously," said Mayor Kate Gallego. "Each of us is responsible for making simple changes to live more sustainably in the desert environment we call home. The City of Phoenix is committed to reducing water use in city operations and providing the tools residents and businesses need to use this precious resource efficiently."

At a briefing on Friday, May 6, officials with the U.S. Department of the Interior, Arizona Department of Water Resources, and Central Arizona Project delivered a stark assessment of the Colorado River. Colorado River water supplies roughly 40% of the City's water.

"As the drought intensifies, the City continues to innovate new, proactive actions to prepare for even deeper shortages on the Colorado River, which is over-allocated and in decline due to climate change," said Phoenix Water Services Director Troy Hayes. "The City is prepared to implement additional actions, including those described in our Drought Management Plan."

The City has worked hard to develop a sustainable water supply and has been designated by the State as having a 100-year assured water supply. In addition, Phoenix recycles nearly all its wastewater, delivering it for use in agriculture, energy production, urban irrigation, aquifer recharge, and riparian wetland maintenance.

"Our customers have always been our partners in conservation, and we need that more than ever now," said City of Phoenix Water Resources Management Advisor Cynthia Campbell. "We want them to understand what it means to live in a desert and how to use water as efficiently as possible."

Phoenix will continue to plan, invest and conserve to ensure a sustainable future while providing safe, clean, and reliable water to its customers without interruption. Additionally, the City will continue to take proactive actions to prepare for even deeper shortages on the Colorado River as we strive to become the most sustainable desert city in the world.

Colorado River Water Shortage Caused by Climate Change will require Phoenix and Phoenicians to adapt

Phoenix to Host Water Conservation Media Day

Now that the City of Phoenix has activated its Drought Management Plan and declared a Stage 1 Water Alert, everyone in Phoenix should take action to conserve water. Conservation experts from the City of Phoenix will be available to discuss simple things people can do in their own homes to reduce water use. They will also demonstrate some of the latest technology for water conservation.

WHO: City of Phoenix water conservation experts

WHAT: Interviews and demonstrations about water conservation

WHEN: Monday, June 6 @ 9 a.m.

WHERE: 4106 W. La Mirada Drive, Phoenix, AZ

Please RSVP to Michael Gertzman at [email protected]

Media Contact:

Michael Gertzman

Water ServicesCell: 602-245-4143 (call or text) E-mail: [email protected]

Athena SanchezWater ServicesCell: 602-621-0507 (call or text) E-mail: [email protected]?