CITY OF LOS ANGELES Presented by Miguel A. Santana, City Administrative Officer February 26, 2014

This Investor Presentation is provided as of February 26, 2014 as part of the Los Angeles 2nd Regional Investor Conference 2014 organized by the City of Los Angeles (“City”) with respect to the City of Los Angeles. If you are viewing this presentation after February 26, 2014, there may have been events that occurred subsequent to such date that may have a material adverse effect on the financial information that is presented herein, and the City has not undertaken any obligation to update this Investor Presentation. All financial data and other information provided herein are not guaranteed as to completeness or accuracy and are subject to change without notice. This Investor Presentation does not constitute a recommendation or an offer or solicitation for the purchase or sale of any security or other financial instrument, or to adopt any investment strategy. Any offer or solicitation with respect to the purchase or sale of any security will be made solely by means of an Official Statement, which describes the actual terms of such securities. This Investor Presentation is not an Official Statement. In no event shall the City be liable for any use by any party of, for any decision made or action taken by any party in reliance upon, or for any inaccuracies or errors in, or omissions from, the information contained herein and such information may not be relied upon by you in evaluating the merits of participating in any transaction mentioned herein. The City makes no representations as to the legal, tax, credit or accounting treatment of any transaction mentioned herein, or any other effects such transactions may have on you and your affiliates or any other parties to such transactions and their respective affiliates. You should consult with your own advisors as to such matters and the consequences of the purchase and ownership of any security. Nothing in this Investor Presentation constitutes a commitment by the City. This Investor Presentation contains certain forward-looking statements. The achievement of certain results or other expectations contained in any forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause actual results, performance or achievements described to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Although the City believes that such expectations reflected in such forward-looking statements are reasonable, there can be no assurance that such expectations will prove to be correct. The City is not obligated and has not undertaken any obligation to issue any updates or revisions to the forward-looking statements if or when its expectations, or events, conditions or circumstances on which such statements are based occur.

1

Disclaimer

Credit Ratings

• Standard & Poor’s Credit Review of the City of Los Angeles affirmed its AA- (Stable) rating for General Obligation Bonds

• Current Ratings - Stable (Moody’s/S&P/Fitch) GOs: Aa2/AA-/AA- MICLA LRBs: Real Property: A2/A+/A+ Equipment: A3/A+/A+

Credit Ratings Affirmed

Source: City of Los Angeles, Office of the City Administrative Officer 2

Current 2013-14 Financial Status

Source: City of Los Angeles, Office of the City Administrative Officer 3

Fiscal Year 2013-14 Budget Component

Amount ($ Millions)

Authorized Positions

City Budget $7,686 31,880

General Fund $4,867

Special Funds $2,819

Proprietary Department Budgets

Airports $4,383 3,566

Harbor $1,071 994

Water and Power $7,200 9,986

Grants and Other Non-Budgeted $1,337

Total City Government $20,586 46,426

• Actual General Fund revenues in 2012-13 exceeded 2012-13 Budget by $116.7 million

• 2012-13 revenues have returned to pre-recession levels

-4.8%

0.8% 1.9%

7.0%

3.3%

1.5

2.0

2.5

3.0

3.5

4.0

-10%

-5%

0%

5%

10%

15%

90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18

$ Bi

llion

s

% C

hang

e fr

om Y

ear A

go

Fiscal Year Ending

Seven General Fund Taxes

% change -- Left Scale 7 General Fund Taxes ($Billions) -- Right Scale Pre-recession Level

Property (includes VLF and ex-CRA receipts), Utility, Business, Sales, Hotel, Documentary and Parking Taxes

Estimates Actuals

Major General Fund Revenues have Stabilized and are Diversified

7 Major General Fund Revenues, 72.0%

Licenses, Permits, Fees and Fines, 17.0%

Power Revenue Transfer, 5.0%

Parking Fines, 3.0% Miscellaneous Revenue, 2.0%

Transfers from Special Fund, 1.0%

Sources of General Fund Revenue for Fiscal Year 2013-14

4 Source: City of Los Angeles, Office of the City Administrative Officer

Record High Reserve Balances

In 2013-14, the Reserve Fund exceeded the City’s policy goal of 5% of General Fund revenues

5 Source: City of Los Angeles, Office of the City Administrative Officer

$113 $145 $159 $179

$114 $166 $152 $171

$201 $233

$327

0%

1%

2%

3%

4%

5%

6%

7%

0

50

100

150

200

250

300

350

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

$Mill

ions

Fiscal Year

Reserve Fund Balances – Actual Balances ($ in millions)

Reserve Fund Balance Available, July 1st July 1 Balance as % of the General Fund

$785.4 $707.9

$597.9

$483.5 $437.2

$520.1 $571.7

$722.6*

0%

5%

10%

15%

20%

25%

0

100

200

300

400

500

600

700

800

900

2006 2007 2008 2009 2010 2011 2012 2013

$Mill

ions

Fiscal Year

GASB 54 General Fund Balance ($ in millions)

Unassigned - Reserve Fund Unassigned - Other Assigned Non-spendableTotal Fund Balance as % of GF Revenues Reserve Fund as % of GF Revenues

GASB 54 Reserve Balances

The City has restated prior year fund balances to conform with GASB 54 First implemented in

fiscal year 2011 CAFR

• For the third year in a row, Reserve balances based on GASB 54 have increased in dollars and as a percentage of revenues

6 Source: City of Los Angeles, Office of the City Administrative Officer

*Preliminary , subject to change

(14%)

Civilian workforce has been maintained near its lowest point in more than three decades

13,758 14,244 13,706

21,701 22,929 18,187

35,459 35,879 35,974 35,415 36,156 36,667 37,173 36,971 35,864 32,965 32,274 31,816 31,893

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014Fiscal Year

Authorized City Staffing (Not Including Proprietary Departments)

Police (Sworn and Civilian) Others

• Total staffing is currently 5,280 positions (14%) lower than its peak in 2007-08 • 2013-14 Adopted Budget maintains 2012-13 staffing levels for both sworn and

civilian employees

Authorized City Staffing

7 Source: City of Los Angeles, Office of the City Administrative Officer

Labor Relations

8 Source: City of Los Angeles, Office of the City Administrative Officer

City has taken significant actions to reduce its personnel-related expenditure pressures

• LACERS Tier 2 - Effective July 1, 2013

Defined benefit plan

Member contribution rate variable based on actuarial reports

Retirement factor reduced from 2.16% per year to 2.0% per year

Normal retirement age increased to 65

Final average salary based on 36 months rather than 12 months

Retiree health subsidy excludes dependents

• LAFPP Tier 6 - Effective July 1, 2011

Defined benefit plan

Member contribution rate increased to 11%, including 2% for retiree health

Retirement factor reduced to require longer service

Final average salary based on 24 months rather than 12 months

0%

25%

50%

75%

100%

2008-09 2009-10 2010-11 2011-12 2012-13

Other Post-Employment Benefits Funded Ratio

Fire and Police Pension Plan L.A. City Employees' Retirement System

Los Angeles Department of Water and Power

Pension and OPEB Funded Ratios

0%

25%

50%

75%

100%

2008-09 2009-10 2010-11 2011-12 2012-13

Pension Systems’ Funded Ratio

Fire and Police Pension Plan L.A. City Employees' Retirement System

Los Angeles Department of Water and Power

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• City fully funds both pension and OPEB Annual Required Contributions

• Funding for OPEB began in 1989-90

• Pension Systems’ 2012-13 Funded Ratios: 69% to 83%

• OPEB 2012-13 Funded Ratios: 39% to 72%

Source: City of Los Angeles, Office of the City Administrative Officer; Los Angeles Department of Water and Power

Pension Contributions

411 382 424 468 486

537 617 670

745 789

342 367 403 444 469

506 576

643 683 721

948 999

1,094 1,213

1,275

848 943

1,046 1,127

1,190

$0

$200

$400

$600

$800

$1,000

$1,200

$1,400

2012 - 2013 2013 - 2014 2014 - 2015 2015 - 2016 2016 - 2017

Estimated Future City Contributions to Pensions ($ in millions)

LACERS Pre-Pension Reform Forecast FPPS Pre-Pension Reform ForecastLACERS Current Forecast (7/1/13) FPPS Current Forecast (7/1/13)

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LA City Employees’ Retirement Fund (LACERS) Fire and Police Pension Fund (FPPS)

Source: City of Los Angeles, Office of the City Administrative Officer

• Pension reform has lowered pension and OPEB liabilities from prior forecasts

• Increased employee contribution towards retirement health benefits from 0% to 2% (sworn) and 4% (civilian)

Illustrations of Pension and OPEB Contribution Rates (Assuming Contributions Made on 7/15)

2013-14 2014-15 2015-16 2016-17 2017-18

LA City Employees’ Retirement Fund 25.33% 26.56% 28.57% 29.65% 28.73%

Fire and Police Pension Fund 44.40% 47.94% 50.17% 52.27% 51.35%

Source: Segal Consulting, January 2014, as commissioned by the City Administrative Officer (assumed market return of 7.75%)

Multi-Year Budget Outlook

Four-year 2013-14 General Fund Budget Outlook

$4,879

$5,014

$5,156

$5,285

$4,550

$4,867

$5,120

$5,216

$5,341 $5,368

4,400

4,500

4,600

4,700

4,800

4,900

5,000

5,100

5,200

5,300

5,400

2012-13 2013-14 2014-15 2015-16 2016-17 2017-18

$Mill

ions

Fiscal Year

Four Year Budget Outlook 2013-14 to 2017-18

Revenues Expenditures

($242)

($201)

($184) ($83)

11 Source: City of Los Angeles, Office of the City Administrative Officer

• Retiree Health Subsidy Case (Los Angeles City Attorney Association v. City)

• Furlough Case (Los Angeles City Attorney Association v. City)

• Telephone Users’ Tax Case (Ardon v. City)

• Sidewalks Case (Wilits v. City)

Update on Litigation

Resolution of major lawsuits but other large potential liabilities remain

12 Source: City of Los Angeles, Office of the City Administrative Officer

Outstanding Direct Debt as of January 1, 2014 Total: $2.78 Billion

(Voter-Approved in Blue)

General Obligation Bonds , 35.7%

Landscaping Assessment Bonds, 0.7%

Equipment Leases, 11.5% Convention Center,

12.6%

Other Real Property Leases, 37.6%

Judgment Obligation Bonds, 1.8%

Disciplined, Policy-Driven Debt Management

Debt Issuance Calendar* Estimated Amount* Estimated Date*

Municipal Improvement Corporation of Los Angeles Lease Revenue Bonds (New Money and Refunding) $91 Million March 2014

Landscape and Lighting District 96-1 Assessment Refunding Bonds $18 Million May 2014

TRANs 2014 $1.4 Billion June 2014

General Obligation Bonds 2014A $60.5 Million August 2014

General Obligation Refunding Bonds 2014B $50 Million August 2014

*Subject to change

• By policy, debt service is limited to 15% of revenues for all direct debt and 6% for non-voted debt

• Over a third of the City’s direct debt is supported by property and special tax receipts

• 68% of the City’s net direct debt will be retired over the next ten years

13 Source: City of Los Angeles, Office of the City Administrative Officer

Investor Relations

The City Administrative Officer’s investor relations website is a centralized source of information

Aggregates useful materials for ease of access, including links to:

Financial disclosures (CAFR, Appendix A) Financial policies Various presentations (including investor and credit presentations) Continuing Disclosure documents; CUSIP numbers for use on EMMA Adopted budget, budget memo and current/completed budget deliberations Financial Status Reports Upcoming issuance calendar Rating summary and relevant recent rating reports Remainder of CAO’s website for additional information

Source: City of Los Angeles, Office of the City Administrative Officer 14

• The City’s Adopted Budget is based on conservative revenue assumptions

• The City addressed budget gaps primarily through ongoing solutions

• The City has implemented pension reform

• The 2013-14 Adopted Budget provides flexibility for uncertainties

• Reserve balances of over $400 million (8.2% of general fund revenues)

• Solve problems each quarter

Challenges

• Projected future gaps

• Pension and OPEB cost mitigation

• Focus on service restoration needs to be balanced with resources

• External factors’ (i.e. federal government) impact on economy

Strengths and Challenges

Strengths

15 Source: City of Los Angeles, Office of the City Administrative Officer