Strictly Private and Confidential

$9,500,000 - General Obligation School Building Bonds, Series 2014

August 14, 2014

Gadsden Independent School District No. 16

2

Disclaimer

This presentation was prepared exclusively for the benefit of and internal use by the recipient for the purpose of considering the transaction or transactions contemplated herein. This presentation is confidential and proprietary to RBC Capital Markets, LLC (“RBC CM”) and may not be disclosed, reproduced, distributed or used for any other purpose by the recipient without RBC CM’s express written consent.

By acceptance of these materials, and notwithstanding any other express or implied agreement, arrangement, or understanding to the contrary, RBC CM, its affiliates and the recipient agree that the recipient (and its employees, representatives, and other agents) may disclose to any and all persons, without limitation of any kind from the commencement of discussions, the tax treatment, structure or strategy of the transaction and any fact that may be relevant to understanding such treatment, structure or strategy, and all materials of any kind (including opinions or other tax analyses) that are provided to the recipient relating to such tax treatment, structure, or strategy.

The information and any analyses contained in this presentation are taken from, or based upon, information obtained from the recipient or from publicly available sources, the completeness and accuracy of which has not been independently verified, and cannot be assured by RBC CM. The information and any analyses in these materials reflect prevailing conditions and RBC CM’s views as of this date, all of which are subject to change.

To the extent projections and financial analyses are set forth herein, they may be based on estimated financial performance prepared by or in consultation with the recipient and are intended only to suggest reasonable ranges of results. The printed presentation is incomplete without reference to the oral presentation or other written materials that supplement it.

Employees of RBC CM are expressly prohibited from directly or indirectly: (a) offering any company favorable research coverage as an inducement for the receipt of investment banking business; or (b) threatening to retaliate with adverse coverage or comments if such business is not awarded. All recommendations, ratings, price targets and opinions regarding a company are determined independently by RBC CM’s Research Department.

IRS Circular 230 Disclosure: RBC CM and its affiliates do not provide tax advice and nothing contained herein should be construed as tax advice. Any discussion of U.S. tax matters contained herein (including any attachments) (i) was not intended or written to be used, and cannot be used, by you for the purpose of avoiding tax penalties; and (ii) was written in connection with the promotion or marketing of the matters addressed herein. Accordingly, you should seek advice based upon your particular circumstances from an independent tax advisor.

3

History of Assessed Valuation

2010 2011 2012 2013 2014*

Residential $414,742,749 $418,843,096 $429,846,775 $444,769,473 $460,825,365

Non-Residential 334,064,333 338,275,688 370,439,960 378,480,422 406,913,945

Total $748,807,082 $757,118,784 $800,286,735 $823,249,895 $867,739,310

% Change Over Previous Year 5.7% 1.1% 5.7% 2.9% 5.4%

* Preliminary.Source: New Mexico Taxation & Revenue Department.

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

$0

$100,000,000

$200,000,000

$300,000,000

$400,000,000

$500,000,000

$600,000,000

$700,000,000

$800,000,000

$900,000,000

$1,000,000,000

2010 2011 2012 2013 2014*

History of Assessed Valuation

Residential Non-Residential % Change Over Previous Year

4

New vs. Re-Appraisal

TY2013 New Re-Appraisal TY2014

Protested

Property

Est. Protested Value

Back on Tax Roles

% of

Protested

Estimated Final

Value

%

Growth

Total Residential $444,261,425 $11,877,398 2.67% $4,686,542 1.05% $460,825,365 3.73% $2,792,322 $279,232 10.00% $461,104,597 3.79%

Total Non-Residential 219,097,911 7,971,938 3.64% (5,192,732) -2.37% 221,877,117 1.27% 11,969,082 3,590,725 30.00% 225,467,842 2.91%

Total Assessor's Valuation $663,359,336 0.00% 0.00% $682,702,482 2.92% $14,761,404 $3,869,957 20.00% $686,572,439 3.50%

Central Assesment 163,639,459 185,036,828 13.08% 7,988,750 - 0.00% 185,036,828 13.08%

TOTAL AV $826,998,795 $0 0.00% $0 0.00% $867,739,310 4.93% $22,750,154 $3,869,957 20.00% $871,609,267 5.39%

Protested Property/ Total AV $22,750,154 2.62%

TY2012 New Re-Appraisal TY2013

Protested

Property

Protested Value Back

on Tax Roles

% of

Protested

Actual Final

Value

%

Growth

Total Residential $429,846,775 $12,785,724 2.97% $2,771,995 0.64% $445,404,494 3.62% $1,175,314 ($1,143,069) -97.26% $444,261,425 3.35%

Total Non-Residential 228,548,616 3,011,334 1.32% (17,417,052) -7.62% 214,142,898 -6.30% 4,772,969 4,955,013 103.81% 219,097,911 -4.14%

Total Assessor's Valuation $658,395,391 $15,797,058 2.40% ($14,645,057) -2.22% $659,547,392 0.17% $5,948,283 $3,811,944 64.08% $663,359,336 0.75%

Central Assesment 141,891,344 163,639,459 15.33% 9,044,646 - 0.00% 163,639,459 15.33%

TOTAL AV $800,286,735 $15,797,058 1.97% ($14,645,057) -1.83% $823,186,851 2.86% $14,992,929 $3,811,944 25.42% $826,998,795 3.34%

Actual Protested Property/ Total AV $11,180,985 1.36%

TY2011 New Re-Appraisal TY2012

Protested

Property

Protested Value Back

on Tax Roles

% of

Protested

Actual Final

Value

%

Growth

Total Residential $418,843,096 $7,017,707 1.68% $1,276,550 0.30% $427,137,353 1.98% $2,676,584 $2,709,422 101.23% $429,846,775 2.63%

Total Non-Residential 207,279,605 5,052,499 2.44% 9,327,308 4.50% 221,659,412 6.94% 9,249,180 6,889,204 74.48% 228,548,616 10.26%

Total Assessor's Valuation $626,122,701 $12,070,206 1.93% $10,603,858 1.69% $648,796,765 3.62% $11,925,764 $9,598,626 80.49% $658,395,391 5.15%

Central Assesment 130,996,083 141,891,344 8.32% 965,549 - 0.00% 141,891,344 8.32%

TOTAL AV $757,118,784 $12,070,206 1.59% $10,603,858 1.40% $790,688,109 4.43% $12,891,313 $9,598,626 74.46% $800,286,735 5.70%

Actual Protested Property/ Total AV $3,292,687 0.42%

TY2010 New Re-Appraisal TY2011

Protested

Property

Protested Value Back

on Tax Roles

% of

Protested

Actual Final

Value

%

Growth

Total Residential $414,742,749 $9,539,915 2.30% ($5,097,867) -1.23% $419,184,797 1.07% $927,880 ($341,701) -36.83% $418,843,096 0.99%

Total Non-Residential 210,980,842 1,115,353 0.53% (12,168,192) -5.77% 199,928,003 -5.24% 13,010,716 7,351,602 56.50% 207,279,605 -1.75%

Total Assessor's Valuation $625,723,591 $10,655,268 1.70% ($17,266,059) -2.76% $619,112,800 -1.06% $13,938,596 $7,009,901 50.29% $626,122,701 0.06%

Central Assesment 123,083,491 130,996,083 6.43% 286,418 - 0.00% 130,996,083 6.43%

TOTAL AV $748,807,082 $10,655,268 1.42% ($17,266,059) -2.31% $750,108,883 0.17% $14,225,014 $7,009,901 49.28% $757,118,784 1.11%

Actual Protested Property/ Total AV $7,215,113 0.96%

Source: Dona Ana & Otero County Assessor's Office PTD-02 and PTD-03 Reports.

5

History of Tax Rates

0.322 0.322 0.317 0.308 0.298 0.276 0.268 0.267 0.265 0.256

2.000 2.000 2.000 2.000 2.000 2.000 2.000 2.000 2.000 1.936

2.238 1.926 1.756

3.858 4.044 3.676

2.587

0.827 1.198

12.076 12.400 12.575

10.480 10.308 10.676

11.752

14.345 13.515 13.150

0

2

4

6

8

10

12

14

16

18

2014* 2013 2012 2011 2010 2009 2008 2007 2006 2005

Operational Residential

Two Mill Levy Residential

ETN Debt Service

Bonds Debt Service

Total Residential Tax Rate 16.636 16.648 16.648 16.646 16.650 16.628 16.607 16.612 16.607 16.540

Operational Two Mill Levy Total TotalTax Year Resid. Non-Resid. Resid. Non-Resid. ETN Bonds Debt Service Resid. Non-Resid.

2014* $0.322 $0.500 $2.000 $2.000 $2.238 $12.076 $14.314 $16.636 $16.814

2013 0.322 0.500 2.000 2.000 1.926 12.400 14.326 16.648 16.826

2012 0.317 0.500 2.000 2.000 1.756 12.575 14.331 16.648 16.831

2011 0.308 0.500 2.000 2.000 3.858 10.480 14.338 16.646 16.838

2010 0.298 0.500 2.000 2.000 4.044 10.308 14.352 16.650 16.852

2009 0.276 0.500 2.000 2.000 3.676 10.676 14.352 16.628 16.852

2008 0.268 0.500 2.000 2.000 2.587 11.752 14.339 16.607 16.839

2007 0.267 0.500 2.000 2.000 - 14.345 14.345 16.612 16.845

2006 0.265 0.500 2.000 2.000 0.827 13.515 14.342 16.607 16.842

2005 0.256 0.500 1.936 2.000 1.198 13.150 14.348 16.540 16.848

*Estimated

Debt Service

Source: New Mexico Public Education Department

*Estimated

History of Total Residential Tax Rates

6

Debt Management Plan Overview

Bond Election Timing

Every four years

– $38,000,000 bond election approved by voters on February 4, 2014 with bonds to be sold as follows:

• $9,500,000 to be sold on September 25, 2014

• $9,500,000 to be sold in 2015, 2016 and 2017 or as directed by the District

– Next bond election – February 2018 for approximately $37,000,000

– Next two mill levy election – February 2018

Bond Maturity Schedule

Declining debt service to permit new bonds in future without tax increase

10 final maturity (20-year maximum maturity pursuant to State law)

Create capacity by retiring debt as quickly as cashflow from tax levy will permit

G/O Education Technology Lease Purchase Certificates of Participation (COPs)

Sold annually or biannually (or as directed by the District) to pay for technology equipment, software, hardware, tech support and maintenance

Notes will be retired within two years

Bond & COP Tax Rate

Maintain a combined GOB & COP debt service tax rate at or below $14.35 level

Maintain SB9 levy @ $2.00

7

Bonding Capacity

14-Aug-14

2014 Preliminary Assessed Valuation $867,739,310

6% of Assessed Valuation $52,064,359

Less Outstanding Debt (As of August 14, 2014) 36,205,000

Less General Obligation Bonds, Series 2014 9,500,000

Total Debt Outstanding 45,705,000

Debt Capacity $6,359,359

% Bonded to Capacity 87.79%

BONDING CAPACITY

8

Outstanding and New Issue Debt Service

Tax Year Current GOB Requirements Total Total TotalEnding Principal Interest Total Principal Coupon Interest Principal Interest Requirements2014 10,705,000.00$ 1,249,458.10$ 11,954,458.10$ - - - 10,705,000.00$ 1,249,458.10$ 11,954,458.10$

2015 6,005,000.00 1,087,573.00 7,092,573.00 3,350,000.00$ 4.000% 301,888.89$ 9,355,000.00 1,389,461.89 10,744,461.89

2016 6,350,000.00 912,415.00 7,262,415.00 575,000.00 4.000% 246,000.00 6,925,000.00 1,158,415.00 8,083,415.00

2017 6,600,000.00 718,867.00 7,318,867.00 600,000.00 4.000% 223,000.00 7,200,000.00 941,867.00 8,141,867.00

2018 5,125,000.00 502,439.00 5,627,439.00 925,000.00 4.000% 199,000.00 6,050,000.00 701,439.00 6,751,439.00

2019 4,125,000.00 351,491.00 4,476,491.00 500,000.00 4.000% 162,000.00 4,625,000.00 513,491.00 5,138,491.00

2020 3,025,000.00 231,715.50 3,256,715.50 500,000.00 4.000% 142,000.00 3,525,000.00 373,715.50 3,898,715.50

2021 2,425,000.00 149,250.00 2,574,250.00 500,000.00 4.000% 122,000.00 2,925,000.00 271,250.00 3,196,250.00

2022 1,575,000.00 76,500.00 1,651,500.00 800,000.00 4.000% 102,000.00 2,375,000.00 178,500.00 2,553,500.00

2023 975,000.00 29,250.00 1,004,250.00 850,000.00 4.000% 70,000.00 1,825,000.00 99,250.00 1,924,250.00

2024 900,000.00 4.000% 36,000.00 900,000.00 36,000.00 936,000.00

TOTAL 46,910,000.00$ 5,308,958.60$ 52,218,958.60$ 9,500,000.00$ 1,603,888.89$ 56,410,000.00$ 6,912,847.49$ 63,322,847.49$

G/O Bonds, Series 2014

9

Bond Sale Calendar

GADSDEN INDEPENDENT SCHOOL DISTRICT NO. 16

$9,500,000 - General Obligation School Building Bonds, Series 2014

Preliminary Financing Schedule (As of July 16, 2014)

Date Activity Responsibility

Thurs., Aug 14 Regular Board meeting to adopt Blanket Notice of Sale Resolution for G/O Bonds at 5:00pm

SD, RBC, BC

Fri., Sep. 5 Rating visit with Moody’s in Dallas at 9:30 AM (Central Time) SD, RBC

Thurs., Sep. 18 Post Preliminary Official Statement on i-dealprospectus.com RBC

Thurs., Sep. 18 Publish Notice of Sale for G/O Bonds BC

Thurs., Sep. 25 Public sale for Series 2014 G/O Bonds at 10:00 AM SD, RBC, BC

Thurs., Sep. 25 Regular Board meeting to adopt final G/O Bond Resolution at 5:00pm SD, RBC, BC

Fri., Sep. 26 Notice of Adoption for G/O Bonds published in paper of local circulation BC

Thur., Oct. 23 Executed closing documents returned to bond counsel SD, RBC, BC

Mon., Oct. 27 Thirty day limitation of action period expires

Wed., Oct. 29 Bond Closing SD, RBC, BC

Working Group Key

Code Participant Role SD Gadsden Independent School District No. 16 Issuer

RBC RBC Capital Markets Financial Advisor

BC Cuddy & McCarthy Bond Counsel

Note 1: School Board meets 2nd and 4th Thursday of every month Note 2: Publications in Las Cruces Sun News

Weekly Municipal Market UpdateAugust 11, 2014

11

Short-Term Market

Market Overview

SIFMA vs. LIBOR

Source: Bloomberg

Yields in the short-term tax-exempt variable rate demand note (VRDN) market moved higher last week, particularly in the second half of the week. As the demand from August coupon reinvestments waned, yields were pushed higher, although in a controlled fashion of roughly 1 bps per day.

The SIFMA Index was reset at 0.05%, down 1bps on the week.

0%

50%

100%

150%

200%

250%

300%

10/

06

/20

08

01/

06

/20

09

04/

06

/20

09

07/

06

/20

09

10/

06

/20

09

01/

06

/20

10

04/

06

/20

10

07/

06

/20

10

10/

06

/20

10

01/

06

/20

11

04/

06

/20

11

07/

06

/20

11

10/

06

/20

11

01/

06

/20

12

04/

06

/20

12

07/

06

/20

12

10/

06

/20

12

01/

06

/20

13

04/

06

/20

13

07/

06

/20

13

10/

06

/20

13

01/

06

/20

14

04/

06

/20

14

07/

06

/20

14

%

SIFMA vs LIBOR Average

12

Long-Term Market

Market Overview

U.S. Treasury Yield Curve Changes

Municipal GO “AAA” MMD Yield Curve Changes

Source: Bloomberg and Thomson Municipal Market Data

The weakness in equity markets in the previous week spilled over to early last week, as the S&P 500 Index was down nearly 1% through Thursday’s close. However, news reports on Friday that Russian President Putin was pulling back, at least temporarily, from what looked to be an imminent invasion of Ukraine, appeared to be the spark for a sharp snapback in stocks. By Friday’s close, equities had recovered their losses from early in the week to finish up fractionally. The “risk off” weakness in equities early in the week provided a good backdrop for Treasury bonds, which traded to their low yield levels for the year. Treasuries were also able to hold on to the majority of their gains on Friday when stocks were rallying. For the week as a whole, the yield on the 30-yr Treasury declined by 5bps to 3.23% and the yield on the 10-yr was down by 7bps to 2.42%. Readers will recall that we started 2014 with yields of roughly 3% on the 10-yr and 4% on the 30-yr, with many analysts predicting that yields would head higher as the Fed began its tapering of quantitative easing (QE) purchases of Treasuries and agency securities. Now, as we near the end of QE, we are sharply lower in yield than we were when we began the year, even as the unemployment rate has dropped and there are some signs that inflation may be picking up.

The muni market gained along with Treasuries last week, outperforming the Treasury market by declining in yield more. Yields on the Municipal Market Data (MMD) AAA GO curve decreased by between 10bps and 12bps for maturities of 10-yrs and longer, with the larger declines in the middle of the yield curve. The outperformance for munis on the week was due to yields declining on Friday even as Treasury yields increased slightly after the equity market recorded its large gains on the day. It will be interesting to see if munis can maintain those gains in the upcoming week, especially as we will see one of the heavier new issue calendars of the summer (more than $6bn) that includes three large issues, each of more than $800mm – Minnesota GO’s, New York City GO’s, and the Port Authority of New York and New Jersey. This upcoming week also sees the expiration of the short extension given to the Puerto Rico Electric Power Authority (PREPA) to repay two letters of credit (LOC) totaling nearly $675mm. Those LOCs originally were scheduled to expire on July 7th, but were extended first until July 31st and then to August 14th. According to data from Lipper, municipal bond mutual funds saw inflows of $17mm last week – this was a decline from the $17mm of inflows in the preceding week. High yield funds again saw inflows of $60mm as they continued to recover some funds lost earlier that coincided with some of the most negative headlines coming out of Puerto Rico.

0.00%

0.50%

1.00%

1.50%

2.00%

2.50%

3.00%

3.50%

4.00%

4.50%

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29

Year

08/08/2014 08/08/2013

0.00%

0.50%

1.00%

1.50%

2.00%

2.50%

3.00%

3.50%

4.00%

3 mo 6 mo 1 yr 2 yr 3 yr 5 yr 7 yr 10 yr 15 yr 20 yr 30 yr

08/08/2014 08/08/2013

13

Municipal Market Fund Flows

According to data from Lipper, for the week ended August 06, 2014, weekly municipal bond funds reported $17 million in inflows, down from previous week’s $419 million of inflows

- For the year, weekly and monthly municipal funds have recorded $11.155 billion in net inflows and have only recorded net weekly outflows 6 times (31 reporting weeks thus far)

- For the third consecutive week, high yield municipal funds experienced modest inflows, recording $60 million in net inflows.

Lipper Municipal Fund Flows

Period ended August 06, 2014

Until Fund Flows stabilize, trading in the municipal market will remain volatile

($5,000)

($4,000)

($3,000)

($2,000)

($1,000)

$0

$1,000

$2,000

Dec-10 Apr-11 Aug-11 Dec-11 Apr-12 Aug-12 Dec-12 Apr-13 Sep-13 Jan-14 May-14

Fun

d F

low

($

mill

ions

)

Flow Change

4-Wk Moving Avg

($5,000)

($4,000)

($3,000)

($2,000)

($1,000)

$0

$1,000

$2,000

7/2 7/9 7/16 7/23 7/30 8/6

14

Tax-Exempt Market Dynamics

Muni Bonds: 2014 Issuance versus Redemptions Net Inflows in 24 of the First 31 Weeks of the Year

2013 & 2014 Municipal Weekly Volume Credit Spreads Remain Tight for Highly Rated Issuers

Source: Bloomberg, Lipper and Thomson Municipal Market Data

$0

$10

$20

$30

$40

$50

Pa

r Am

oun

t ($

BN

)

Actual Supply RBC Forecast Supply Redemptions

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

Jan

-13

Feb

-13

Mar

-13

May

-13

Jun

-13

Au

g-13

Se

p-13

Oct

-13

Dec

-13

Jan

-14

Mar

-14

Ap

r-14

May

-14

Jul-1

4

$ m

illio

ns

CompetitiveNegotiatedAverage

0

50

100

150

200

250

Au

g-09

Au

g-10

Au

g-11

Au

g-12

Au

g-13

Au

g-14

Bas

is P

oint

Spr

ead

to A

AA

MM

D

AA Spread

A Spread

BBB Spread

($5,000)

($4,000)

($3,000)

($2,000)

($1,000)

$0

$1,000

$2,000

Dec-10 Apr-11 Aug-11 Dec-11 Apr-12 Aug-12 Dec-12 Apr-13 Sep-13 Jan-14 May-14

Fun

d F

low

($

mill

ions

)

Flow Change

4-Wk Moving Avg

15

Comparison of Minimum vs. Current vs. Maximum AAA MMD

2013 & 2014 Comparison Historical Ten Year Comparison

Source: Thomson Municipal Market Data

0.00

1.00

2.00

3.00

4.00

5.00

6.00

7.00

5 10 15 20 25 30

%

Min

08/08/2014

Max

0.00

1.00

2.00

3.00

4.00

5.00

6.00

7.00

5 10 15 20 25 30

%

Min

08/08/2014

Max

Current 2013 & 2014 10 Year08/08/2014 Min Max Min Max

5 1.18 0.72 1.60 0.62 3.9710 2.15 1.65 3.04 1.47 4.8615 2.63 2.05 3.82 1.80 5.4720 2.95 2.35 4.27 2.10 5.7425 3.15 2.63 4.44 2.42 5.8830 3.20 2.69 4.51 2.47 5.94

1.000%

2.000%

3.000%

4.000%

5.000%

6.000%

Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14

10 Yr 20 Yr 30 Yr

16

Current Municipal Market Conditions: “AAA” MMD

“AAA” MMD January 1, 2007 to Present Shift in “AAA” MMD Since July 2013

Source: TM3, Thomson Reuters10, 20, and 30 year “AAA” MMD shown to represent different average lives of municipal transactionsRates as of August 8, 2014

Maximum

Minimum

Current

2007 2008 2009 2010 2011 2012 20130.250% 0.790% -0.900% 0.520% -1.130% -0.740% +1.330%

January 1, 2007 to Present

Shift in 30-year "AAA" MMD

10 Year 20 Year 30 Year

4.860% 5.740% 5.940%

1.470% 2.100% 2.470%

2.150% 2.950% 3.200% 3.457%3.121%2.152%Average

3.220%2.990%2.140%Minimum

4.510%4.270%3.040%Maximum

30 Year20 Year10 Year

July 1, 2013 to Present

After closing at 3.30% the previous week, the 30-year “AAA” MMD decreased by 10 bps from August 1 – August 8 to a current rate of 3.20%

1.500%

2.000%

2.500%

3.000%

3.500%

4.000%

4.500%

5.000%

Jul Aug Sep Oct Nov Dec Jan FebMar Apr May Jun Jul Aug

17

Bond Buyer 20 General Obligation Bond Index

Bond Buyer 20 GO Index since January 1961

Today’s 4.33% level is lower than 79.51% of historical rates since January 1961

Source: Bloomberg as of July 31, 2014 {Bond Buyer Index unavailable at time of distribution}Weekly yields and indexes released by the Bond Buyer. Updated every Thursday at approximately 6:00pm EST. 20 Bond General Obligation Yield with 20 year maturity, rated AA2 by Moody's Arithmetic Average of 20 bonds' yield to maturity.

53 Year Historical Perspective

% of Time in Each Range Since 1961

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0% Bond Buyer 20 GO Bond Index

Today's Rate at 4.33%

Yield Range

Less than 3.50% 8.76%

3.50% - 4.00% 6.44%

4.01% - 4.50% 11.12%

4.51% - 5.00% 10.80%

5.01% - 5.50% 15.06%

5.51% - 6.00% 10.48%

6.01% - 6.50% 8.12%

6.51% - 7.00% 7.40%

7.01% - 7.50% 6.69%

7.51% - 8.00% 3.93%

Greater than 8.00% 11.19%

Total 100.00%