Eagle Point Tax Appeals 1988-2012 1 Committeeman Cianfarini 4/3/2012
Background Financial Exposure Debt Amortization Budget Impact Professional Findings 2 Committeeman Cianfarini 4/3/2012
Background 24 Years of Litigation Spent more than $3 million over last 10 years (legal and expert fees) Nothing reserved for settlement Multiple opportunities to settle over the years not pursued West Deptford vs. Coastal /El Paso 1988-2003 West Deptford vs. Sunoco 2004-2011-2012 Refining operations shut down 2010 On January 6th 2012 new committee was confronted with a firm Feb.14th trial date 3 Committeeman Cianfarini 4/3/2012
Background WD Trial history in 1985 thru 1987 tax appeal with Coastal resulted in 5 million ruling against WD. Ruling demonstrates that sale of a refinery will be a strong factor in court s determination of value. Assessment on CoGen facility located on Eagle Point is clearly vulnerable to drastic reduction. 2011 assessment is extremely difficult to defend because of the closure of the refinery. 4 Committeeman Cianfarini 4/3/2012
Trial - Financial Exposure Worst Case Scenario Up to $47.5 million Sunoco refund Up to $42.5 million El Paso refund Likely Bond rating drop to near junk status Sunoco 2012 assessment drop to $50 million, down from 2011assessment of $313 million Trial outcome payment would be due 60 days from judgement 5 Committeeman Cianfarini 4/3/2012
Trial -Financial Exposure Best Guess Scenario Up to $28.5 million Sunoco refund Up to $26.5 million El Paso refund Likely Bond rating drop to near junk status Sunoco 2012 assessment drop to $50 million down from 2011 assessment of $313 million Trial outcome payment would be due 60 days from judgement 6 Committeeman Cianfarini 4/3/2012
Settlement without Trial Financial Exposure $13.9 million Sunoco refund $18.5 million El Paso refund Bond rating preservation very possible Sunoco 2012 assessment drop to $100 million, down from 2011 assessment of $313 million Tailored financing, reasonable market rate bond funding, minimized budget impact, environmental cleanup addressed 7 Committeeman Cianfarini 4/3/2012
Trial Debt Amortization - Worst Case West Deptford Township Tax Appeal Refunding Bonds, Series 2012 Preliminary Analysis of Tax Impact - SUMMARY Sunoco Scenario I: $47.5M Appeal, 10 Years Level Debt Service Schedule at 3.50% West Deptford Township Tax Appeal Refunding Bonds, Series 2012 Preliminary Analysis of Tax Impact - SUMMARY Combined Scenario I: $90M Appeal, 10 Years Level Debt Service Schedule at 3.50% Assumptions/Inputs Assumptions/Inputs Par Amount of Bonds: Bond Term & Structure: Borrowing Rate: $47,915,000 10 Years Level 3.50% Par Amount of Bonds: Bond Term & Structure: Borrowing Rate: $90,800,000 10 Years Level 3.50% $16,000,000 $1,400 $25,000,000 $1,800 $14,000,000 $12,000,000 $10,000,000 $8,000,000 $6,000,000 $4,000,000 $2,000,000 $1,200 $1,000 $800 $600 $400 $200 $20,000,000 $15,000,000 $10,000,000 $5,000,000 $1,600 $1,400 $1,200 $1,000 $800 $600 $400 $200 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030 Existing D/S New D/S Impact on Avg Home Increase over 2012 Total Tax Impact on Avg Home 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030 Existing D/S New D/S Impact on Avg Home Increase over 2012 Total Tax Impact on Avg Home Phoenix Advisors, LLC Phoenix Advisors, LLC3/1/2012 3 Sunoco Sunoco & El Paso 8 Committeeman Cianfarini 4/3/2012
Trial Debt Amortization - Best Guess West Deptford Township Tax Appeal Refunding Bonds, Series 2012 Preliminary Analysis of Tax Impact - SUMMARY Sunoco Scenario II: $28.5M Appeal, 10 Years Level Debt Service Schedule at 3.50% West Deptford Township Tax Appeal Refunding Bonds, Series 2012 Preliminary Analysis of Tax Impact - SUMMARY Combined Scenario II: $55.59M Appeal, 10 Years Level Debt Service Schedule at 3.50% Assumptions/Inputs Assumptions/Inputs Par Amount of Bonds: Bond Term & Structure: Borrowing Rate: $28,800,000 10 Years Level 3.50% Par Amount of Bonds: Bond Term & Structure: Borrowing Rate: $55,590,000 10 Years Level 3.50% $14,000,000 $1,200 $18,000,000 $1,400 $12,000,000 $10,000,000 $1,000 $800 $16,000,000 $14,000,000 $12,000,000 $1,200 $1,000 $8,000,000 $10,000,000 $800 $6,000,000 $600 $8,000,000 $600 $4,000,000 $400 $6,000,000 $4,000,000 $400 $2,000,000 $200 $2,000,000 $200 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030 Existing D/S New D/S Impact on Avg Home Increase over 2012 Total Tax Impact on Avg Home 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030 Existing D/S New D/S Impact on Avg Home Increase over 2012 Total Tax Impact on Avg Home Phoenix Advisors, LLC 3/1/ enix Advisors, LLC 3/1/2012 Sunoco Sunoco & El Paso 9 Committeeman Cianfarini 4/3/2012
Settlement - Debt Amortization West Deptford Township Sunoco - Tax Appeal Refunding Bonds, Series 2012 Preliminary Analysis of Budget Impact - SUMMARY 20 Years Wrap Debt Service Schedule at 3.842% With Growth @ 1.00% West Deptford Township Combined Sunoco & El Paso/Coastal - Tax Appeal Refunding Bonds, Series 2012 Preliminary Analysis of Budget Impact - SUMMARY 20 Years Wrap Debt Service Schedule at 3.842% With Growth @ 1.00% Assumptions/Inputs Assumptions/Inputs Par Amount of Bonds: Bond Term & Structure: Borrowing Rate: $13,900,000 20 Years Wrap 3.842% Par Amount of Bonds: Bond Term & Structure: Borrowing Rate: $32,400,000 20 Years Wrap 3.842% 2012 Assessed Valuation: $2,493,769,515 Assessed Valuation Growth: 1.00% Growth Rate 1: 1.00% Final Year: 2023 2012 Assessed Valuation: $2,493,769,515 Assessed Valuation Growth: 1.00% Growth Rate 1: 1.00% Final Year: 2023 $12,000,000 $1,000 $12,000,000 $900 $10,000,000 $800 $10,000,000 $800 $700 $8,000,000 $6,000,000 $600 $400 $200 $8,000,000 $6,000,000 $600 $500 $400 $300 $4,000,000 $4,000,000 $200 $100 $2,000,000!$200 $2,000,000!$100!$400!$200 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030 2032 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030 2032 Existing2D/S New2D/S Impact2on2Avg2Home2Increase2over22012 Total2Tax2Impact2on2Avg2Home Existing5D/S New5D/S Impact5on5Avg5Home5Increase5over52012 Total5Tax5Impact5on5Avg5Home Sunoco x Advisors, LLC Phoenix Advisors, LLC 4/3/2012 Sunoco & El Paso 10 Committeeman Cianfarini 4/3/2012
Total Settlement Sunoco El Paso Maximum Budget Impact/ Avg. Assessment Projected Bond Rating Ongoing Sunoco Property Tax Income Carried Debt after 2013 County Credit Budget Impact Trial Settlement Worst Case Best Guess Without Trial $90 M $55 M $32.4 M $47.5 M $28.5 M $13.9 M $42.5 M $26.5 M $18.5 M $913.76 / 43.9 $566.15 / 27.2 $87.35 / 4.2 BBB BBB A- $1.26 M $1.26 M $2.55 M $83 M $50.6 M $26.6 M 11 Committeeman Cianfarini 4/3/2012
Our Professionals Find Settlement Without Trial to be Prudent Special Tax Counsel - John Lloyd Solicitor - Anthony Ogozalek Financial Advisor - Dave Thompson Business Administrator - Eric Campo 12 Committeeman Cianfarini 4/3/2012
Our Professionals Recommending Go To Trial 13 Committeeman Cianfarini 4/3/2012
Summary The day of reckoning has come. WD is exposed, unprepared, and spent millions by kicking this can down the road. Imminent trial date mandates that action must be taken now. Sunoco has simply moved our cheese. The refinery is shut down, but the logistics operation can grow if we are business friendly and reasonable. Trial will waste another potential $1 to $1.5 million dollars and leave us without viable financing options. Sunoco s going forward property assessment will be far below what is being offered in settlement. Our budget, bond rating and our schools will suffer greatly. 100% of our professionals agree - This settlement is a prudent choice. The settlement minimizes budget impact and smooths out debt amortization. Budget impact does not necessarily equate to a tax increase. We still have much work to do on the budget. 14 Committeeman Cianfarini 4/3/2012