Financial Strategies for Small Towns: Case Study of Town of Hillsville, Virginia
Davenport & Company LLC conducted a Comprehensive Financial Review for the Town of Hillsville focusing on its General Fund and Utility Enterprise Fund. The review includes historical financial data, peer comparisons, debt analysis, and recommendations for financial policies and investments. Peer comparatives with demographically similar towns in Virginia were used to provide insights for potential financial strategies. Examples of comparative per capita income among peer towns were also provided.
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Virginia Small Towns Conference - 2024 Financial Strategies for Small Towns Case Study: Town of Hillsville, Virginia June 11, 2024 Member NYSE|FINRA|SIPC
Background / Davenport Approach Davenport & Company LLC ( Davenport ) serves as Financial Advisor to towns, cities, counties, authorities, and other local governmental entities across the Commonwealth on Debt and Capital Funding, Investments, and strategic Multi- Year Financial planning. Davenport was tasked by the Town of Hillsville (the Town ) to provide a Comprehensive Financial Review with respect to the Town s General Fund General Fund and Utility (Water and Sewer) Enterprise Fund Utility (Water and Sewer) Enterprise Fund. The purpose of the Comprehensive Financial Review is to provide a financial framework for the Town as it plans for the FY 2025 Budget season. Based on the current economic environment (i.e. inflation, supply chain pressures, etc.), local governments are facing a series of challenges that have not been seen in well over a decade. As such, it continues to be critical to consistently monitor financial trends and the resulting impacts on the Town s long-term financial planning /strategy. The following pages contain excerpts from the Hillsville Financial Review prepared by Davenport and presented to the The following pages contain excerpts from the Hillsville Financial Review prepared by Davenport and presented to the Town Council on June 11, 2024. Town Council on June 11, 2024. June 11, 2024 Comprehensive Financial Review 1
Goals and Objectives As part of the discussion presented herein, Davenport intends to accomplish the following: 1. Review / update and provide perspective on the Town s General Fund and Water & Sewer Fund: a) Historical financial results (FY 2018 FY 2023); b) Peer Comparatives (key financial metrics, ratios, and rates); and c) Existing debt profile for FY 2024 and beyond. 2. Recommend / Enhance Financial Policies in-line with peers and local government financial best-practices , and 3. Present an investment analysis based on current market rates and possible future rate changes. June 11, 2024 Comprehensive Financial Review 2
1. Peer Group Overview Peer Comparatives allow the Town the ability to compare itself to other demographically similar and neighboring localities with respect to economic, financial, and debt metrics. The following slides show how the Town measures against the Peer Comparative Group to help give insight to potential Financial Policies. The Peer Group was selected from towns of similar size in Virginia. Town of Clifton Forge Town of Pulaski Town of Bluefield Town of Tazewell Town of Chilhowie Town of Amherst Town of Marion Town of Rocky Mount Town of Hillsville Town of Hillsville June 11, 2024 Comprehensive Financial Review 3
Per Capita Income | Comparative Per Capita Income Per Capita Income Town of Bluefield $34,090 Town of Amherst $32,241 Town of Pulaski $31,223 Town of Chilhowie $28,761 Town of Marion $26,766 Town of Tazewell $25,525 Town of Rocky Mount $24,271 Town of Clifton Forge $21,654 Peer Group Median $27,764 Town of Hillsville $25,426 $- $5,000 $10,000 $15,000 $20,000 $25,000 $30,000 $35,000 $40,000 Source: US Census Bureau. June 11, 2024 Comprehensive Financial Review 4
2. Tax Base Trends Historical Assessed Value Historical Assessed Value $350 Millions $300 $250 $200 $150 $100 $50 $0 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 FY 2022 FY 2023 Real Estate Personal Property Machinery and Tools Public Utility Machinery and Machinery and Tools Tools $9,397,920 10,443,835 10,703,335 12,201,370 9,399,100 8,795,625 11,755,625 15,576,930 15,346,500 21,115,210 Abatements/ Abatements/ Exemptions Exemptions ($2,179,421) (4,329,577) (4,228,615) (3,715,054) (4,413,723) (4,794,768) (4,858,421) (5,632,665) (7,595,066) (10,191,603) Fiscal Year Fiscal Year Real Estate Real Estate Personal Property Personal Property Public Utility Public Utility TOTAL TOTAL Growth Growth FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 FY 2022 FY 2023 $199,185,900 200,170,800 200,585,742 200,763,800 202,400,300 203,068,100 203,941,900 203,951,000 222,501,200 218,813,800 $26,094,190 26,286,600 25,441,920 26,070,880 27,170,265 28,051,420 28,893,305 29,592,015 30,304,815 38,173,940 $9,754,746 10,252,471 10,080,624 10,502,325 10,180,771 10,700,644 10,895,935 12,949,270 13,906,521 12,570,326 $242,253,335 242,824,129 242,583,006 245,823,321 244,736,713 245,821,021 250,628,344 256,436,550 274,463,970 280,481,673 0.2% -0.1% 1.3% -0.4% 0.4% 2.0% 2.3% 7.0% 2.2% 5 Year CAGR 5 Year CAGR 10 Year CAGR 10 Year CAGR 1.9% 1.9% 1.0% 1.0% 8.0% 8.0% 4.3% 4.3% 24.5% 24.5% 9.4% 9.4% 4.1% 4.1% 2.9% 2.9% 20.7% 20.7% 18.7% 18.7% 3.4% 3.4% 1.6% 1.6% Note: CAGR is compounded annual growth rate. Source: Town Audits, FY 2023 Draft Audit. June 11, 2024 Comprehensive Financial Review 5
Real Estate Tax Rate Trends Real Estate Tax Rate Real Estate Tax Rate (per $100 of Assessed Value) (per $100 of Assessed Value) Real Estate Tax Rate Real Estate Tax Rate (per $100 of Assessed Value) (per $100 of Assessed Value) $1.00 $0.90 FY FY Town of Hillsville Town of Hillsville Carroll County Carroll County $0.80 2017 2018 2019 2020 2021 2022 2023 2024 $0.220 0.220 0.220 0.220 0.220 0.210 0.210 0.210 $0.660 0.695 0.695 0.730 0.640 0.640 0.590 0.590 $0.70 $0.60 $0.50 $0.40 $0.30 $0.20 $0.10 $0.00 FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 FY 2022 FY 2023 FY 2024 Town of Hillsville Carroll County Source: Locality Websites, Locality Audits, Town Staff. June 11, 2024 Comprehensive Financial Review 6
3. Annual General Fund Surplus / Deficit The General Fund has produced a net surplus the past six years. This has been driven at least in part by one- time federal stimulus related revenues (i.e. ARPA). General Fund General Fund $8 Millions Reflects $2.8 Reflects $2.8 million allocation million allocation of stimulus funds. of stimulus funds. $7 $6 $5 $4 $3 $2 $1 $- FY 2018 FY 2019 FY 2020 FY 2021 FY 2022 FY 2023 General Fund Revenues Other Sources (Uses) General Fund Expenditures General Fund General Fund FY 2018 FY 2018 FY 2019 FY 2019 FY 2020 FY 2020 FY 2021 FY 2021 FY 2022 FY 2022 FY 2023 FY 2023 General Fund Revenues General Fund Expenditures Other Sources (Uses) Change in Fund Balance Change in Fund Balance $ $ $ 3,699,221 (2,968,627) 148,134 878,728 878,728 $ $ $ 3,529,863 (2,914,159) 22,950 638,654 638,654 $ $ $ 3,364,930 (2,863,684) (64,848) 436,398 436,398 $ $ $ 4,264,666 (3,348,183) $ $ $ 4,367,227 (3,935,804) 114,400 545,823 545,823 $ 3,050,836 3,050,836 $ $ 7,599,158 (4,548,322) 18 - 916,501 916,501 Source: FY 2018 - FY 2022 Audits, FY 2023 Draft Audit. June 11, 2024 Comprehensive Financial Review 7
Historical Trend Analysis | General Fund Balance Fund Balance shows steady growth over the past six years. Fund Balance Fund Balance $10 Millions $9 $8 $7 $6 $5 $4 $3 $2 $1 $- FY 2018 FY 2019 FY 2020 FY 2021 FY 2022 FY 2023 Fund Balance Fund Balance FY 2018 FY 2018 FY 2019 FY 2019 FY 2020 FY 2020 FY 2021 FY 2021 FY 2022 FY 2022 FY 2023 FY 2023 Assigned Unassigned Total Fund Balances Total Fund Balances $ $ 88,600 3,700,261 3,788,861 3,788,861 $ $ 631,100 3,796,415 4,427,515 4,427,515 $ $ 635,100 4,228,813 4,863,913 4,863,913 $ $ 631,600 5,148,814 5,780,414 5,780,414 $ $ 1,080,793 5,245,444 6,326,237 6,326,237 $ $ 98,233 9,278,840 9,377,073 9,377,073 Source: FY 2018 - FY 2022 Audits, FY 2023 Draft Audit. June 11, 2024 Comprehensive Financial Review 8
Unassigned Fund Balance Unassigned Fund Balance as a % of Expenditures Unassigned Fund Balance as a % of Expenditures General Fund Unassigned Fund Balance General Fund Unassigned Fund Balance $10,000,000 200% $9,000,000 $8,000,000 150% $7,000,000 $6,000,000 $5,000,000 100% $4,000,000 $3,000,000 50% $2,000,000 $1,000,000 $- 0% FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 FY 2022 FY 2023 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 FY 2022 FY 2023 Potential Policy General Fund General Fund Unassigned Fund Unassigned Fund Balance Balance $ 1,314,986 1,711,293 2,319,905 2,840,033 3,700,261 3,796,415 4,228,813 5,148,814 5,245,444 9,278,840 Unassigned Fund Unassigned Fund Balance as a % of Balance as a % of Expenditures Expenditures 33.0% 55.8% 72.6% 90.8% 93.7% 124.6% 130.3% 147.7% 153.8% 133.3% 204.0% General Fund General Fund Expenditures Expenditures Fiscal Year Fiscal Year Potential Policy Potential Policy 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 870,296 $ 2,638,412 2,358,263 2,358,409 2,555,495 3,029,634 2,968,627 2,914,159 2,863,684 3,348,183 3,935,804 4,548,322 50% 50% 50% 50% 50% 50% 50% 50% 50% 50% 50% Source: Town Audits, FY 2023 Draft Audit. June 11, 2024 Comprehensive Financial Review 9
4. Total Outstanding General Fund Debt (i.e. Tax Supported) The Town has approximately $475 thousand of outstanding debt in the General Fund. General Fund Debt General Fund Debt Outstanding General Fund Debt Outstanding General Fund Debt FY FY Principal Principal 475,496 475,496 $ $ 58,417 $ 60,185 61,996 63,014 52,232 42,787 43,944 45,129 34,974 12,820 Interest Interest 54,324 54,324 $ $ 12,640 $ 10,872 Total Total 529,820 529,820 $ 71,056 $ 71,057 71,056 70,212 57,679 46,818 46,818 46,818 35,485 12,820 $80,000 Total Total 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 $ $70,000 $60,000 $50,000 9,061 7,198 5,447 4,031 2,874 1,689 512 - $40,000 $30,000 $20,000 $10,000 $- 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 Principal Interest Source: 2023 Draft Audit, Town Finance Department. June 11, 2024 Comprehensive Financial Review 10
Tax-Supported Debt vs. Assessed Value As introduced previously, Debt vs. Assessed Value is often referred to as a Key Ratio because it measures Debt Capacity, or the ability to issue debt and remain below policy levels. Debt Capacity, The Town s Tax-Supported Debt vs. Assessed Value (in green) is below what might be considered a solid financial policy level (see below). The Town s Water and Sewer Utility Debt, which is historically self-supporting, is also included (in gray) for reference. To the extent the Utility Funds are not self-supporting (i.e. reliant on General Fund), the Debt on the Water and Sewer Funds would count against these ratios. Tax Tax- -Supported Debt vs. Assessed Value Supported Debt vs. Assessed Value 6.00% 5.00% Potential Policy Range (4% Potential Policy Range (4% - - 5%) 5%) 4.00% 3.00% 2.00% 1.00% 0.00% GF Debt vs. AV Utility Debt vs. AV Note: Assessed Value assumed to grow at 0%. Source: 2023 Draft Audit, Town Finance Department. June 11, 2024 Comprehensive Financial Review 11
Tax-Supported Debt Service vs. GF Expenditures As introduced previously, Debt Service vs. Expenditures is often referred to as a Key Ratio because it measures Budget Flexibility. Flexibility. Budget The Town s Tax-Supported Debt Service vs. General Fund Expenditures (in green) is below what might be considered for a financial policy. The Town s Water and Sewer Utility Debt, which is historically self-supporting, is also included (in gray) for reference. To the extent the Utility Funds are not self-supporting (i.e. reliant on General Fund), the Debt on the Water and Sewer Funds would count against these ratios. Tax Tax- -Supported Debt Service vs. General Fund Expenditures Supported Debt Service vs. General Fund Expenditures 24.00% 22.00% 20.00% 18.00% 16.00% 14.00% 12.00% 10.00% Potential Policy Range (8% Potential Policy Range (8% - - 10%) 10%) 8.00% 6.00% 4.00% 2.00% 0.00% 2030 2047 2024 2025 2026 2027 2028 2029 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 2043 2044 2045 2046 2048 2049 2050 2051 2052 2053 2054 2055 2056 2057 2058 2059 2060 2061 2062 2063 2064 Tax-Supported Debt vs. GF Expenditures Utility Debt vs. GF Expenditures Note: Expenditures are based on FY 2023 Draft Audit expenditures with 0% growth. Source: 2023 Draft Audit, Town Finance Department. June 11, 2024 Comprehensive Financial Review 12
5. Historical Water & Sewer Revenues & Operating Expenditures Historical Revenues & Expenditures Historical Revenues & Expenditures (3) (3) $2,500,000 $2,000,000 $1,500,000 $1,000,000 $500,000 $- FY 2018 FY 2019 FY 2020 FY 2021 FY 2022 FY 2023 Water Charges for Services Miscellaneous Other Revenues Total Expenditures Sewer Charges for Services Non Operating Revenues Water and Sewer Fund Revenues & Operating Exp. Water and Sewer Fund Revenues & Operating Exp. Revenues Revenues Water Charges for Services Sewer Charges for Services Miscellaneous Other Revenues Non Operating Revenues A A Total Revenues Total Revenues FY 2018 FY 2018 FY 2019 FY 2019 FY 2020 FY 2020 FY 2021 FY 2021 FY 2022 FY 2022 FY 2023 FY 2023 $ $ 604,984 860,176 2,812 48,401 1,516,373 1,516,373 $ $ $ 676,326 878,668 1,337 61,469 1,617,800 1,617,800 $ $ $ 659,645 888,648 7,685 278,817 1,834,795 1,834,795 $ $ $ 735,228 956,426 5,451 59,900 1,757,005 1,757,005 $ $ $ 756,024 978,756 3,351 133,355 1,871,486 1,871,486 $ 779,302 1,078,196 1,910,326 1,910,326 $ $ $ 15,790 37,038 5-Yr Avg. 5-Yr Avg. 3.4% 3.4% Growth Growth N/A N/A 6.7% 6.7% 13.4% 13.4% -4.2% -4.2% 6.5% 6.5% 2.1% 2.1% B B Operating Expenses Operating Expenses (1) (1) $ $ 867,655 867,655 $ $ 925,612 925,612 6.7% 6.7% $ 1,025,383 1,025,383 $ $ $ 910,829 910,829 -11.2% -11.2% $ 1,160,791 1,160,791 $ $ 1,285,209 1,285,209 $ 6.8% 6.8% Growth Growth N/A N/A 10.8% 10.8% 27.4% 27.4% 10.7% 10.7% A-B=C A-B=C Net Revenue Available for Debt Service Net Revenue Available for Debt Service $ $ 648,718 648,718 $ $ 692,188 692,188 $ $ 809,412 809,412 $ $ 846,176 846,176 $ $ 710,695 710,695 $ $ 625,117 625,117 Debt Service Debt Service (2) (2) $ $ 255,650 255,650 $ $ 339,911 339,911 $ $ 530,090 530,090 $ $ 532,349 532,349 $ $ 554,486 554,486 $ $ 519,546 519,546 (1) Operating Expenses exclude depreciation. (2) Debt Service adjusted to reflect projected annual payments per prior year s audit. Debt Service does not include the issuance of new bonds or the redemption of principal for refunding transactions. (3) Expenditures exclude depreciation and include debt service. Source: FY 2018 - FY 2022 Audits, FY 2023 Draft Audit. June 11, 2024 Comprehensive Financial Review 13
Water and Sewer Fund Policies The Town should consider adopting the following two key critical financial policies related to the Water and Sewer Utility Fund: 1) 1) Days Cash on Hand: Days Cash on Hand: Maintain at least 200 Days Cash on Hand. This policy is a measurement of the Water & Sewer Fund s cash reserves in proportion to operating expenses and debt service. 200 Days Cash on Hand translates to roughly $703K based upon FY 2023 Audited numbers. 2) 2) Debt Service Coverage: Debt Service Coverage: Maintain at least 1.0x the annual debt service in Net Revenues with a target of 1.15x the annual debt service. This policy is a measurement of annual cash-flow and budgetary flexibility. It compares revenues after the payment of operating expenditures vs. annual debt service. At 1.15x Debt Service Coverage, the Water & Sewer Fund has $1.15 for every $1.00 of debt service for the current fiscal year. June 11, 2024 Comprehensive Financial Review 14
Selected Historical Financial Metrics (Water/Sewer) Unrestricted Cash Balance Unrestricted Cash Balance Days Cash on Hand Days Cash on Hand $1,200,000 450 400 $1,000,000 350 $800,000 300 250 $600,000 200 150 $400,000 100 $200,000 50 0 $- FY 2018 FY 2019 FY 2020 FY 2021 FY 2022 FY 2023 FY 2018 FY 2019 FY 2020 FY 2021 FY 2022 FY 2023 Days Cash on Hand Potential Policy Minimum - 200 Days Unrestricted Cash Balance Select Water & Sewer Select Water & Sewer Utility System Financial Metrics Utility System Financial Metrics Ending Unrestricted Cash Balance Ending Unrestricted Cash Balance Days Cash on Hand Days Cash on Hand Potential Policy Minimum - 200 Days Potential Policy Minimum - 200 Days FY FY FY FY FY FY FY FY FY FY FY FY 2018 2018 837,279 837,279 $ $ 2019 2019 1,123,861 1,123,861 $ 2020 2020 1,069,102 1,069,102 $ 2021 2021 888,013 888,013 $ $ 2022 2022 665,505 665,505 $ $ 2023 2023 953,120 953,120 $ $ $ $ 352 352 200 200 443 443 200 200 381 381 200 200 356 356 200 200 209 209 200 200 271 271 200 200 Source: FY 2018 - FY 2022 Audits, FY 2023 Draft Audit. June 11, 2024 Comprehensive Financial Review 15
Selected Historical Financial Metrics (Water/Sewer - Cont.) Debt Service Coverage w/o Non Debt Service Coverage w/o Non- -Operating Revs Operating Revs Debt Service Coverage w/ Non Debt Service Coverage w/ Non- -Operating Revs Operating Revs 2.50x 2.50x 2.00x 2.00x 1.50x 1.50x 1.00x 1.00x 0.50x 0.50x - - 2018 2019 2020 2021 2022 2023 2018 2019 2020 2021 2022 2023 Debt Service Coverage w/o Non-Operating Revs Debt Service Coverage w/ Non-Operating Revs Potential Policy Target - 1.15x Potential Policy Target - 1.15x Potential Policy Minimum - 1.00x Potential Policy Minimum - 1.00x Select Water & Sewer Select Water & Sewer Utility System Financial Metrics Utility System Financial Metrics Debt Service Coverage w/o Non-Operating Revs Debt Service Coverage w/o Non-Operating Revs Debt Service Coverage w/ Non-Operating Revs Debt Service Coverage w/ Non-Operating Revs Potential Policy Minimum - 1.00x Potential Policy Minimum - 1.00x Potential Policy Target - 1.15x Potential Policy Target - 1.15x FY FY FY FY FY FY FY FY FY FY FY FY 2018 2018 2019 2019 2020 2020 2021 2021 2022 2022 2023 2023 2.35x 2.35x 2.54x 2.54x 1.00x 1.00x 1.15x 1.15x 1.86x 1.86x 2.04x 2.04x 1.00x 1.00x 1.15x 1.15x 1.00x 1.00x 1.53x 1.53x 1.00x 1.00x 1.15x 1.15x 1.48x 1.48x 1.59x 1.59x 1.00x 1.00x 1.15x 1.15x 1.04x 1.04x 1.28x 1.28x 1.00x 1.00x 1.15x 1.15x 1.13x 1.13x 1.20x 1.20x 1.00x 1.00x 1.15x 1.15x Note: Debt Service adjusted to reflect projected annual payments per prior year s audit. Debt Service does not include the issuance of new bonds or the redemption of principal for refunding transactions. Source: FY 2018 - FY 2022 Audits, FY 2023 Draft Audit. June 11, 2024 Comprehensive Financial Review 16
Existing Water/Sewer System Debt Service Utility Debt Service is not counted against the Town s proposed Tax-Supported Debt Policy, so long as the Water and Sewer Fund is self-supporting and not reliant on the General Fund. Utility Debt Service Utility Debt Service $1,000,000 $900,000 $800,000 2019 Loan 2019 Loan Balloon Maturity Balloon Maturity $700,000 $600,000 $500,000 $400,000 $300,000 $200,000 $100,000 $- 2064 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 2043 2044 2045 2046 2047 2048 2049 2050 2051 2052 2053 2054 2055 2056 2057 2058 2059 2060 2061 2062 2063 Principal Interest Source: FY 2023 Draft Audit, Town Finance Department. June 11, 2024 Comprehensive Financial Review 17
Projected Utility System Debt Service Post DEQ and Rural Development Issuances The Utility System s Debt Profile, including approved but not yet closed DEQ and Rural Development Loans, is shown below, comparing projected Utility Debt Service to current Utility Debt Service. Projected Utility Debt Service Projected Utility Debt Service $1,000,000 $900,000 $800,000 $700,000 $600,000 $500,000 $400,000 $300,000 $200,000 $100,000 $- 2036 2053 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2037 2038 2039 2040 2041 2042 2043 2044 2045 2046 2047 2048 2049 2050 2051 2052 2054 2055 2056 2057 2058 2059 2060 2061 2062 2063 2064 2065 Existing Principal Existing Interest Projected Debt Service Notes: 1. 2. 3. Projected Utility Debt Service includes approved DEQ Loan in the amount of $759,000 with 0% interest rate over 30 years beginning in FY 2026. Projected Utility Debt Service includes approved Rural Development Loan in the amount of $3,121,000 with 1.25% interest rate over 40 years beginning in FY 2025. Projected Utility Debt Service in FY 2024 and 2025 include payments from 2019 Skyline National Bank Loan, which is then refunded on 1/1/2025 by the approved Rural Development Loan. Source: FY 2023 Draft Audit, Town Finance Department. June 11, 2024 Comprehensive Financial Review 18
Disclaimer The U.S. Securities and Exchange Commission (the SEC ) has clarified that a broker, dealer or municipal securities dealer engaging in municipal advisory activities outside the scope of underwriting a particular issuance of municipal securities should be subject to municipal advisor registration. Davenport & Company LLC ( Davenport ) has registered as a municipal advisor with the SEC. As a registered municipal advisor Davenport may provide advice to a municipal entity or obligated person. An obligated person is an entity other than a municipal entity, such as a not for profit corporation, that has commenced an application or negotiation with an entity to issue municipal securities on its behalf and for which it will provide support. If and when an issuer engages Davenport to provide financial advisory or consultant services with respect to the issuance of municipal securities, Davenport is obligated to evidence such a financial advisory relationship with a written agreement. When acting as a registered municipal advisor Davenport is a fiduciary required by federal law to act in the best interest of a municipal entity without regard to its own financial or other interests. Davenport is not a fiduciary when it acts as a registered investment advisor, when advising an obligated person, or when acting as an underwriter, though it is required to deal fairly with such persons, This material was prepared by public finance, or other non-research personnel of Davenport. This material was not produced by a research analyst, although it may refer to a Davenport research analyst or research report. Unless otherwise indicated, these views (if any) are the author s and may differ from those of the Davenport fixed income or research department or others in the firm. Davenport may perform or seek to perform financial advisory services for the issuers of the securities and instruments mentioned herein. 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You should consider this material as only a single factor in making an investment decision. The value of and income from investments and the cost of borrowing may vary because of changes in interest rates, foreign exchange rates, default rates, prepayment rates, securities/instruments prices, market indexes, operational or financial conditions or companies or other factors. There may be time limitations on the exercise of options or other rights in securities/instruments transactions. Past performance is not necessarily a guide to future performance and estimates of future performance are based on assumptions that may not be realized. Actual events may differ from those assumed and changes to any assumptions may have a material impact on any projections or estimates. Other events not taken into account may occur and may significantly affect the projections or estimates. Certain assumptions may have been made for modeling purposes or to simplify the presentation and/or calculation of any projections or estimates, and Davenport does not represent that any such assumptions will reflect actual future events. Accordingly, there can be no assurance that estimated returns or projections will be realized or that actual returns or performance results will not materially differ from those estimated herein. This material may not be sold or redistributed without the prior written consent of Davenport. Version 01/01/2024 GC/GB/AS/KL June 11, 2024 Comprehensive Financial Review 19
