NYC-WTC_000195490

NYC 9/11 Public Portal Document

sd shortly TSASC has acquired the City’s 3.4% share of the national total TSRs payable under the Master Settlement ds. These Agreement (MSA) entered into between 46 States and the manufacturers of over 97 percent of cigarettes sold in sent value the US. After TSASC retains sufficient TSRs to pay for its debt service and operating expenses, the excess TSRs d a single flow to the City through ownership of a residual certificate. The MSA provides for an upfront payment, four Initial :s over the Payments payable on each January 10, beginning in 2000 and continuing through 2003 and an Annual Payment payable on every April l5, beginning in 2000. TSASC received the upfront payment of $84 million in December 1999. The first two Initial Payments in amounts of $73 million and $66 million were also deposited into the ion bridge Collection Account on January 6, 2000 and January 8, 2001, respectively. The 2001 Initial Payment was about 5rtizations $10 million less than what was originally forecasted. This is largely due to an $8 million adjustment for an Proceeds overpayment of the Annual Payment made in April 2000. The remaining $2 million shortfall is attributable to jr projects lower than anticipated cigarette shipments in the US in calendar year 2000 by the four largest cigarette jreviously manufacturers, referred to in the MSA as the Original Participating Manufacturers (OPMs). The Initial Payments vas a very are based solely on cigarette shipments by the OPMs. EFC with In addition, TS ASC also received the first two Annual Payments of $11 million and $136.5 million in April 15, 2000 and April 16, 2001, respectively. All planned debt service due inj2001 and 2002 was fully funded by ds as well January of each fiscal year upon receipt of the Initial Payment. The 2000 Annual Payment was'about $4 million allow for less than originally forecast in TSASC’s 1999 Official Statement due to a Non Participatin'g Manufacturer •ity’s debt adjustment. The 2001 Annual Payment received to date was about $1 million less than projected, largely due to delayed payments by some Participating Manufacturers. In general, the Annual Payments vary according to an inflation factor and the annual amount of cigarettes shipped in the US by tobacco manufacturers participating in 1.8 billion the MSA, among other factors. Also, the amounts of TSRs received to date are subject to modification as the ugjrEpC, Independent Auditor receives updated cigarette shipment information from various sources. The adjustments were inimizing land will be made against subsequent TSRs.

Recognizing the lower-than-expected receipt from the actual January 2001 Initial Payment and the April 2001 Annual Payment, the City is revising downward its estimate of residual from the 2001 TSRs by $13 million. However, at'this time, the City is not adjusting the original TSASC forecast for future TSRs assuming the average Is secured annual cigarette consumption decline of approximately 2 percent contained in the original forecast will be the Settlement longterm trend. In addition, with the postponement of the TSASC 2001 series, the City expects to realize additional (Tobacco residual revenue, resulting from reduced debt service retention. ted bonds onds with MAYOR’S NEW ANNUAL STATEMENT 6f DEBT POLICY -payment igs which Mayor Rudolph Giuliani has established a procedure, set forth in an Executive Order, by which in each fiscal year, at the’Ume Of submission of the Executive Budget in April, the Mayor shall review the City’s Debt Policies. The first statement of debt policy is included herein. The City’s Debt Policy shall include at a minimum the nd fourth following: ; sgotiating istructure • The maximum debt burden and debt affordability levels deemed desirable as a matter of policy, considering is in each the City’s capital investnient needs and the cost for financing that investment; Recommended changes in /liquidity Local Finance Law constraints on issuance by the City and its public finaiicing authorities and )ximately recommended changes in (he limitations on the issuance of short-term debt as contained in state law; ; Federal vith other • The form and structure of borrowing by the City whether directly, through its financing authorities, or by ligations. means of subject-to-appropriation borrowings. Such policies should deal at a minimum with thie use of t, George competitive versus negotiated sales, fixed versus floating rate debt and the extent of use of swaps or other derivative instruments. \ ;

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NYC-WTC_000195606