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HomeMy WebLinkAboutA034 - Official Statement - $23,365,000 General Obligation Corporation Purpose and Refunding Bonds, Series 2013 OFFICIAL STATEMENT CITY OF AMES,IOWA $23,365,000* General Obligation Corporate Purpose and Refunding Bonds, Series 2013 INTRODUCTION This Preliminary Official Statement contains information relating to the City of Ames, Iowa (the "City") and its issuance of$23,365,000* General Obligation Corporate Purpose and Refunding Bonds, Series 2013 (the "Bonds"). This Preliminary Official Statement has been authorized by the City and may be distributed in connection with the sale of the Bonds authorized therein. Inquiries may be made to the City's Financial Advisor, Public Financial Management, Inc., 801 Grand Avenue, Suite 3300, Des Moines, Iowa, 50309, or by telephoning 515-243-2600. Information can also be obtained from Mr. Duane Pitcher, Director of Finance, City of Ames, 515 Clark Avenue, Ames,Iowa, 50010, or by telephoning 515-239-5114. AUTHORITY AND PURPOSE The Bonds are being issued for the purpose of paying the cost of constructing improvements to streets, solid waste disposal facilities and to pay the costs to expand the Ames Public Library in accordance with a referendum passed by voters on November 8,2011. In addition, a portion of the Bonds are being issued to provide funds to pay costs to current refund on June 14, 2013, $690,000 of the City's outstanding General Obligation Corporate Purpose Bonds, Series 2004 dated October 15, 2004 (the "Series 2004 Bonds") and $1,440,000 of the City's outstanding General Obligation Corporate Purpose and Refunding Bonds, Series 2005A dated September 13, 2005 (the "Series 2005A Bonds"). The Purchaser of the Bonds agrees to enter into a loan agreement (the "Loan Agreement") with the City pursuant to authority contained in Section 384.24A of the Code of Iowa. The Bonds are issued in evidence of the City's obligations under the Loan Agreement. Name of Issue Maturities to Principal to be Refunded Call Date Call Price be Refunded Amount Coupon Series 2004 Bonds June 14,2013 100% June 1,2014 $690,000 3.250% Name of Issue Maturities to Principal to be Refunded Call Date Call Price be Refunded Amount Coupon Series 2005A Bonds June 14,2013 100% June 1,2014 $340,000 3.500% June 1,2015 355,000 3.550% June 1,2016 365,000 3.550% June 1,2017 380,000 3.650% $1,440,000 The estimated Sources and Uses of the Bonds are as follows: Sources of Funds Par Amount of Bonds $23,365,000.00* Uses of Funds Deposit to Project Fund $20,905,370.00 Redemption of Series 2004 Bonds and Series 2005A Bonds 2,132,656.97 Underwriter's Discount 240,927.50 Cost of Issuance 86,045.53 Total Uses $23,365,000.00* *Preliminary;subject to change. I OPTIONAL REDEMPTION Bonds due after June 1, 2021 will be subject to call prior to maturity in whole, or from time to time in part, in any order of maturity and within a maturity by lot on said date or on any date thereafter at the option of the City, upon terms of par plus accrued interest to date of call. Written notice of such call shall be given at least thirty (30) days prior to the date fixed for redemption to the registered owners of the Bonds to be redeemed at the address shown on the registration books. INTEREST ON THE BONDS Interest on the Bonds will be payable on December 1, 2013 and semiannually on the 1" day of June and December thereafter. Principal and interest shall be paid to the registered holder of a bond as shown on the records of ownership maintained by the Registrar as of the 15'h day of the month preceding the interest payment date (the "Record Date"). Interest will be computed on the basis of a 360-day year of twelve 30-day months and will be rounded pursuant to rules of the Municipal Securities Rulemaking Board. PAYMENT OF AND SECURITY FOR THE BONDS The Bonds constitute valid and binding general obligations of the City, and all taxable property within the corporate boundaries of the City is subject to the levy of taxes to pay the principal of and interest on the Bonds. If the amount credited to the debt service fund for payment of the Bonds is insufficient to pay principal and interest, whether from transfers or from original levies, the City must use funds in its treasury and is required to levy ad valorem taxes upon all taxable property in the City sufficient to pay the debt service deficiency without limit as to rate or amount. BOOK-ENTRY-ONLY ISSUANCE The information contained in the following paragraphs of this subsection "Book-Entry-Only System" has been extracted from a schedule prepared by Depository Trust Company ("DTC") entitled "SAMPLE OFFERING DOCUMENT LANGUAGE DESCRIBING BOOK-ENTRY-ONLY ISSUANCE." The information in this section concerning DTC and DTC's book-entry system has been obtained from sources that the City believes to be reliable, but the City takes no responsibility for the accuracy thereof. The Depository Trust Company ("DTC"), New York, NY, will act as securities depository for the securities (the "Securities"). The Securities will be issued as fully-registered securities registered in the name of Cede & Co. (DTC's partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully- registered Security certificate will be issued for each issue of the Securities, each in the aggregate principal amount of such issue, and will be deposited with DTC. If, however, the aggregate principal amount of any issue exceeds $500 million, one certificate will be issued with respect to each $500 million of principal amount, and an additional certificate will be issued with respect to any remaining principal amount of such issue. DTC, the world's largest securities depository, is a limited-purpose trust company organized under the New York Banking Law, a "banking organization" within the meaning of the New York Banking Law, a member of the Federal Reserve System, a "clearing corporation" within the meaning of the New York Uniform Commercial Code, and a "clearing agency"registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non-U.S. equity issues, corporate and municipal debt issues, and money market instruments from over 100 countries that DTC's participants (the "Direct Participants") deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book-entry transfers and pledges between Direct Participants' accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust& Clearing Corporation ("DTCC"). DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non-U.S. securities 2 brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly (the "Indirect Participants"). DTC has Standard & Poor's rating: AA+. The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at www.dtcc.com and www.dtc.org. Purchases of Securities under the DTC system must be made by or through Direct Participants, which will receive a credit for the Securities on DTC's records. The ownership interest of each actual purchaser of each Security (the "Beneficial Owner") is in turn to be recorded on the Direct and Indirect Participants' records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Securities are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in Securities, except in the event that use of the book-entry system for the Securities is discontinued. To facilitate subsequent transfers, all Securities deposited by Direct Participants with DTC are registered in the name of DTC's partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of DTC. The deposit of Securities with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not affect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Securities; DTC's records reflect only the identity of the Direct Participants to whose accounts such Securities are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers. Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Beneficial Owners of Securities may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the Securities, such as redemptions, tenders, defaults, and proposed amendments to the Security documents. For example, Beneficial Owners of Securities may wish to ascertain that the nominee holding the Securities for their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names and addresses to the registrar and request that copies of notices be provided directly to them. Redemption notices shall be sent to DTC. If less than all of the Securities within an issue are being redeemed, DTC's practice is to determine by lot the amount of the interest of each Direct Participant in such issue to be redeemed. Neither DTC nor Cede & Co., nor any other DTC nominee, will consent or vote with respect to Securities unless authorized by a Direct Participant in accordance with DTC's MMI Procedures. Under its usual procedures,DTC mails an Omnibus Proxy to the City as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.'s consenting or voting rights to those Direct Participants to whose accounts Securities are credited on the record date identified in a listing attached to the Omnibus Proxy. Redemption proceeds, distributions, and dividend payments on the Securities will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC's practice is to credit Direct Participants' accounts upon DTC's receipt of funds and corresponding detail information from the City or Agent, on payable date in accordance with their respective holdings shown on DTC's records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in "street name," and will be the responsibility of such Participant and not of DTC, Agent, or the City, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of redemption proceeds, distributions, and dividend payments to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC, is the responsibility of the City or Agent, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants. 3 A Beneficial Owner shall give notice to elect to have its Securities purchased or tendered, through its Participant, to Remarketing Agent, and shall effect delivery of such Securities by causing the Direct Participant to transfer the Participant's interest in the Securities, on DTC's records, to Remarketing Agent. The requirement for physical delivery of Securities in connection with an optional tender or a mandatory purchase will be deemed satisfied when the ownership rights in the Securities are transferred by Direct Participants on DTC's records and followed by a book- entry credit of tendered Securities to Remarketing Agent's DTC account. DTC may discontinue providing its services as depository with respect to the Securities at any time by giving reasonable notice to the City or Agent. Under such circumstances, in the event that a successor depository is not obtained, Security certificates are required to be printed and delivered. The City may decide to discontinue use of the system of book-entry-only transfers through DTC (or a successor securities depository). In that event, Security certificates will be printed and delivered to DTC. The information in this section concerning DTC and DTC's book-entry system has been obtained from sources that the City believes to be reliable,but the City takes no responsibility for the accuracy thereof. FUTURE FINANCING The City does not anticipate any additional general obligation bonding needs within 90 days of the date of this Preliminary Official Statement. However, the City is participating in the State Revolving Loan Programs to fund improvements to its water and sewer plants. Repayment will be made solely from water and sewer revenues and no pledge of property tax revenue is made for participating in the programs. LITIGATION The City is not aware of any threatened or pending litigation affecting the validity of the Bonds or the City's ability to meet its financial obligations. DEBT PAYMENT HISTORY The City knows of no instance in which they have defaulted in the payment of principal and interest on its debt. LEGALITY The Bonds are subject to approval as to certain matters by Dorsey & Whitney LLP of Des Moines, Iowa as Bond Counsel. Bond Counsel has not participated in the preparation of this Preliminary Official Statement and will not pass upon its accuracy, completeness, or sufficiency. Bond Counsel has not examined nor attempted to examine or verify, any of the financial or statistical statements, or data contained in this Preliminary Official Statement and will express no opinion with respect thereto. A legal opinion in substantially the form set out as Appendix A to this Preliminary Official Statement,will be delivered at closing. TAX EXEMPTION AND RELATED CONSIDERATIONS Federal Income Tax Exem tion: The opinion of Bond Counsel will state that under resent laws and rulings, the P P P g , interest on the Bonds (including any original issue discount properly allocable to an owner thereof) is excluded from gross income for federal income tax purposes and is not an item of tax preference for purpose of the federal alternative minimum tax imposed on individuals and corporations under the Internal Revenue Code of 1986 (the "Code") provided, however, that such interest must be taken into account in determining adjusted current earnings for the purpose of computing the alternative minimum tax imposed on corporations (as defined for federal income tax purposes). The opinion set forth in the preceding sentence will be subject to the condition that the City comply with all requirements of the Code that must be satisfied subsequent to the issuance of the Bonds in order that interest thereon be, or continue to be, excluded from gross income for federal income tax purposes. Failure to comply with certain of 4 such requirements may cause the inclusion of interest on the Bonds in gross income for federal income tax purposes to be retroactive to the date of issuance of the Bonds. In the resolution for the Bonds, the City will covenant to comply with all such requirements. There may be certain other federal tax consequences to the ownership of the Bonds by certain taxpayers, including without limitation, corporations subject to the branch profits tax, financial institutions, certain insurance companies, certain S corporations, individual recipients of Social Security and Railroad Retirement benefits and taxpayers who may be deemed to have incurred (or continued) indebtedness to purchase or carry tax-exempt obligations. Bond Counsel will express no opinion with respect to other federal tax consequences to owners of the Bonds. Prospective purchasers of such bonds should consult with their tax advisors as to such matters. Not Qualified Tax-Exempt Obligations: The City will NOT designate the Bonds as qualified tax-exempt obligations under Section 265(b)(3)of the Code;therefore the Bonds will NOT be bank qualified. Tax Accounting; Treatment of Original Issue Discount (OID): The Bonds maturing in the years (collectively, the "Discount Bonds") are being sold at a discount from the principal amount payable on such Bonds at maturity. The difference between the price at which a substantial amount of the Discount Bonds of a given maturity is first sold to the public (the "Issue Price") and the principal amount payable at maturity constitutes "original issue discount" under the Code. The amount of original issue discount that accrues to a holder of a Discount Bond under section 1288 of the Code is excluded from federal gross income to the same extent that stated interest on such Discount Bond would be so excluded. The amount of the original issue discount that accrues with respect to a Discount Bond under section 1288 is added to the owner's federal tax basis in determining gain or loss upon disposition of such Discount Bond(whether by sale,exchange,redemption or payment at maturity). Interest in the form of original issue discount accrues under section 1288 pursuant to a constant yield method that reflects semiannual compounding on dates that are determined by reference to the maturity date of the Discount Bond. The amount of original issue discount that accrues for any particular semiannual accrual period generally is equal to the excess of(1) the product of(a) one-half of the yield on such Discount Bonds (adjusted as necessary for an initial short period) and (b) the adjusted issue price of such Discount Bonds, over (2) the amount of stated interest actually For purposes o h preceding en the d issue rice is determined b adding to the Issue Price for payable. purpo f the p ed g sentence, e adjusted iss p y g such Discount Bonds the original issue discount that is treated as having accrued during all prior semiannual accrual periods. If a Discount Bond is sold or otherwise disposed of between semiannual compounding dates,then the original issue discount that would have accrued for that semiannual accrual period for federal income tax purposes is allocated ratably to the days in such accrual period. An owner of an Discount Bond who disposes of such Discount Bond prior to maturity should consult owner's tax advisor as to the amount of original issue discount accrued over the period held and the amount of taxable gain or loss upon the sale or other disposition of such Discount Bond prior to maturity. Owners who purchase Discount Bonds in the initial public offering but at a price different than the Issue Price should consult their own tax advisors with respect to the tax consequences of the ownership of Discount Bonds. The Code contains provisions relating to the accrual of original issue discount in the case of subsequent purchasers of bonds such as the Discount Bonds. Owners who do not purchase Discount Bonds in the initial offering should consult their own tax advisors with respect to the tax consequences of the ownership of the Discount Bonds. Original issue discount that accrues in each year to an owner of a Discount Bond may result in collateral federal income tax consequences to certain taxpayers. No opinion is expressed as to state and local income tax treatment of original issue discount. All owners of Discount Bonds should consult their own tax advisors with respect to the federal, state, local and foreign tax consequences associated with the purchase, ownership, redemption, sale or other disposition of Discount Bonds. 5 Tax Accounting Treatment of Original Issue Premium: The Bonds maturing in the years through are being issued at a premium to the principal amount payable at maturity. Except in the case of dealers, which are subject to special rules,bondholders who acquire Bonds at a premium must, from time to time,reduce their federal tax bases for the Bonds for purposes of determining gain or loss on the sale or payment of such Bonds. Premium generally is amortized for federal income tax purposes on the basis of a bondholder's constant yield to maturity or to certain call dates with semiannual compounding. Bondholders who acquire any Bonds at a premium might recognize taxable gain upon sale of the Bonds, even if such Bonds are sold for an amount equal to or less than their any original cost. Amortized premium is not deductible for federal income tax purposes. Bondholders who acquire any Bonds at a premium should consult their tax advisors concerning the calculation of bond premium and the timing and rate of premium amortization, as well as the state and local tax consequences of owning and selling the Bonds acquired at a premium. Information Reporting and Back-up Withholding: In general, information reporting requirements will apply with respect to payments to an owner of principal and interest (and with respect to annual accruals of OID) on the Bonds and with respect to payments to an owner of any proceeds from a disposition of the Bonds. This information reporting obligation, however, does not apply with respect to certain owners including corporations, tax-exempt organizations, qualified pension and profit sharing trusts, and individual retirement accounts. In the event that an owner subject to the reporting requirements described above fails to supply its correct taxpayer identification number in the manner required by applicable law or is notified by the Internal Revenue Service (the "Service") that it has failed to properly report payments of interest and dividends, a backup withholding tax (currently at a rate of 28%) generally will be imposed on the amount of any interest and principal and the amount of any sales proceeds received by the owner on or with respect to the Bonds. Any amounts withheld under the backup withholding provisions may be credited against the United States federal income tax liability of the beneficial owner, and may entitle the beneficial owner to a refund, provided that the required information is furnished to the Service. Disclaimer Regarding Federal Tax Discussion: The federal income tax discussion set forth above is included for general information only and may not be applicable depending upon a beneficial owner's particular situation. Beneficial owners should consult their tax advisors with respect to the tax consequences to them of the purchase, ownership, and disposition of the Bonds,including the tax consequences under state, local, foreign, and other tax laws and the possible effects of changes in federal or other tax laws. State Tax Considerations: In addition to the federal income tax consequences described above, potential investors should consider the state income tax consequences of the acquisition, ownership, and disposition of the Bonds. State income tax law may differ substantially from the corresponding federal law, and the foregoing is not intended to describe any aspect of the income tax laws of any state. Therefore, potential investors should consult their own tax advisors with respect to the various state tax consequences of an investment in Bonds. CHANGES IN FEDERAL AND STATE TAX LAW From time to time, there are Presidential proposals,proposals of various federal committees, and legislative proposals in the Congress and in the states that, if enacted, could alter or amend the federal and state tax matters referred to herein or adversely affect the marketability or market value of the Bonds or otherwise prevent holders of the Bonds from realizing the full benefit of the tax exemption of interest on the Bonds. Further, such proposals may impact the marketability or market value of the Bonds simply by being proposed. No prediction is made whether such provisions will be enacted as proposed or concerning other future legislation affecting the tax treatment of interest on the Bonds. In addition, regulatory actions are from time to time announced or proposed and litigation is threatened or commenced which, if implemented or concluded in a particular manner, could adversely affect the market value, marketability or tax status of the Bonds. It cannot be predicted whether any such regulatory action will be implemented, how any particular litigation or judicial action will be resolved,or whether the Bonds would be impacted thereby. 6 RATING The City has requested a rating on the Bonds from Moody's Investors Service("Moody's"). Currently,Moody's rates the City's outstanding General Obligation long-term debt `Aaa'. The existing rating on long-term debt reflects only the view of the rating agency and with any explanation of the significance of such rating may only be obtained from Moody's. There is no assurance that such rating will continue for any period of time or that it will not be revised or withdrawn. Any revision or withdrawal of the rating may have an effect on the market price of the Bonds. FINANCIAL ADVISOR The City has retained Public Financial Management, Inc., Des Moines, Iowa as financial advisor (the "Financial Advisor") in connection with the preparation of the issuance of the Bonds. In preparing the Preliminary Official Statement, the Financial Advisor has relied on government officials, and other sources to provide accurate information for disclosure purposes. The Financial Advisor is not obligated to undertake, and has not undertaken, an independent verification of the accuracy, completeness, or fairness of the information contained in this Preliminary Official Statement. Public Financial Management, Inc. is an independent advisory firm and is not engaged in the business of underwriting,trading or distributing municipal securities or other public securities. CONTINUING DISCLOSURE In order to permit bidders for the Bonds and other Participating Underwriters in the primary offering of the Bonds to comply with paragraph (b)(5) of Rule 15c2-12 promulgated by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended (the "Rule"), the City will covenant and agree, for the benefit of the registered holders or beneficial owners from time to time of the outstanding Bonds,in the resolution of the Bonds and the Continuing Disclosure Certificate, to provide annual reports of specified information and notice of the occurrence of certain material events as hereinafter described(the"Disclosure Covenants"). The information to be provided on an annual basis, the events as to which notice is to be given, and a summary of other provisions of the Disclosure Covenants,including termination, amendment and remedies, are set forth as APPENDIX C to this Preliminary Official Statement. The City has complied in all material respects with its previous Disclosure Covenants under the Rule. Breach of the Disclosure Covenants will not constitute a default or an "Event of Default" under the Bonds or the resolution for the Bonds. A broker or dealer is to consider a known breach of the Disclosure Covenants, however, before recommending the purchase or sale of the Bonds in the secondary market. Thus,a failure on the part of the City to observe the Disclosure Covenants may adversely affect the transferability and liquidity of the Bonds and their market price. CERTIFICATION The City has authorized the distribution of this Preliminary Official Statement for use in connection with the initial sale of the Bonds. I have reviewed the information contained within the Preliminary Official Statement prepared on behalf of the City of Ames, Iowa, by Public Financial Management, Inc., Des Moines, Iowa, and said Preliminary Official Statement does not contain any material misstatements of fact nor omission of any material fact regarding the issuance of$23,365,000* General Obligation Corporate Purpose and Refunding Bonds, Series 2013. CITY OF AMES,IOWA /s/Duane Pitcher,Director of Finance *Preliminary;subject to change. 7 CITY PROPERTY VALUATIONS IOWA PROPERTY VALUATIONS In compliance with Section 441.21 of the Code of Iowa, the State Director of Revenue annually directs the county auditors to apply prescribed statutory percentages to the assessments of certain categories of real property. The 2012 final Actual 100% Valuations were adjusted by the Story County Auditor. The reduced values, determined after the application of rollback percentages, are the Taxable Valuations subject to tax levy. For assessment year 2012, the Taxable Valuations rollback rate was 52.8166% of Actual 100% Valuation for residential property; 59.9334% of Actual 100% Valuation for agricultural property; and 100% of Actual 100% Valuation for commercial, industrial, railroad and utility property. The Legislature's intent has been to limit the growth of statewide taxable valuations for the specific classes of property to 4% annually. Political subdivisions whose taxable values are thus reduced or are unusually low in growth are allowed to appeal the valuations to the State Appeal Board,in order to continue to fund present services. 1/1/2012 VALUATIONS (Taxes Payable July 1,2013 through June 30,2014)1) Taxable Value 100%Actual Value (With Rollback) Residential $2,543,682,613 $1,343,486,699 Commercial 836,448,468 836,448,468 Industrial 130,392,785 130,392,785 Railroads 5,146,404 5,146,404 Utilities w/o Gas&Electric 7,502,477 7,502,477 Gross valuation $3,523,172,747 $2,322,976,833 Less military exemption (2,667,806) (2,667,806) Net valuation $3,520,504,941 $2,320,309,027 Taxed separately Ag.Land&Building $2,728,775 2) $1,635,448 1� Gas&Electric Utilities $15,782,757 $5,660,624 1)The City's 1/1/2012 valuations are now available from the State of Iowa and become effective July 1,2013. 2)Does not include$447,669 of TIF in Ag Land. 2012 GROSS TAXABLE VALUATION BY CLASS OF PROPERTY 1)2) Taxable Valuation Percent of Total Residential $1,343,486,699 57.70% Gas&Electric Utilities 5,660,624 0.24% Commercial,Industrial,Railroads and Utility 979,490,134 42.06% Total Gross Taxable Valuation $2,328,637,457 100.00% 1)The City's I/1/2012 valuations are now available from the State of Iowa and become effective July 1,2013. 2)Excludes Taxable TIF Increment and Ag.Land&Buildings. 8 TREND OF VALUATIONS Assessment Payable 100% Taxable Valuation Taxable Year Fiscal Year Actual Valuation (With Rollback) TIF Increment 2008 2009-10 $3,329,113,783 $2,030,775,716 $0 2009 2010-11 3,433,705,284 2,126,174,883 0 2010 2011-12 3,455,460,220 2,168,260,590 7,370 2011 2012-13 3,488,267,332 2,239,846,934 7,370 2012 2013-14 3,539,464,142 2,325,969,651 447,669 1)The City's I/1/2012 valuations are now available from the State of Iowa and becomes effective July 1,2013. The 100% Actual Valuation, before rollback and after the reduction of military exemption, includes Ag. Land & Buildings, Taxable TIF Increment and Gas &Electric Utilities. The Taxable Valuation, with the rollback and after the reduction of military exemption, includes Gas & Electric Utilities and excludes Ag. Land & Buildings and Taxable TIF Increment. Iowa cities certify operating levies against Taxable Valuation excluding Taxable TIF Increment and debt service levies are certified against Taxable Valuation including the Taxable TIF Increment. LARGER TAXPAYERS Set forth in the following table are the persons or entities which represent larger taxpayers within the boundaries of the City, as provided by the City Assessor's Office. No independent investigation has been made of and no representation is made herein as to the financial condition of any of the taxpayers listed below or that such taxpayers will continue to maintain their status as major taxpayers in the City. With the exception of the electric and natural gas provider noted below(which is subject to an excise tax in accordance with Iowa Code chapter 437A),the City's mill levy is uniformly applicable to all of the properties included in the table, and thus taxes expected to be received by the City from such taxpayers will be in proportion to the assessed valuations of the properties. The total tax bill for each of the properties is dependent upon the mill levies of the other taxing entities which overlap the properties. 1/1/2012 Taxpayer Type of Property/Business Taxable Valuation Campus Investors IS LLC Commercial $48,098,010 Barilla America Inc. Industrial 36,199,000 Jensen Development Corporation Residential 33,076,100 Iowa State University Research Commercial 30,786,100 Campus Crest at Ames LLC Residential 28,168,375 University West Property Owner Residential 27,617,600 Haverkamp Properties,Inc. Commercial 25,828,300 North Grand Mall Partners LLC Commercial 24,535,400 Clinic Building Company,Inc. Commercial 22,055,300 Wessex LLC Residential 21,078,800 9 LEGISLATION From time to time, legislative proposals are pending in Congress and the Iowa General Assembly that would, if enacted, alter or amend one or more of the property tax matters described herein. It cannot be predicted whether or in what forms any of such proposals, either pending or that may be introduced, may be enacted, and there can be no assurance that such proposals will not apply to valuation, assessment or levy procedures for taxes levied by the City or have an adverse impact on the future tax collections of the City. Purchasers of the Bonds should consult their tax advisors regarding any pending or proposed federal or state tax legislation. The opinions expressed by Bond Counsel are based upon existing legislation as of the date of issuance and delivery of the Bonds and Bond Counsel has expressed no opinion as of any date subsequent thereto or with respect to any pending federal or state tax legislation. Iowa Code section 76.2 provides that when an Iowa political subdivision issues general obligation debt: "The governing authority of these political subdivisions before issuing bonds shall,by resolution,provide for the assessment of an annual levy upon all the taxable property in the political subdivision sufficient to pay the interest and principal of the bonds within a period named not exceeding the applicable period of time specified in section 76.1. A certified copy of this resolution shall be filed with the county auditor or the auditors of the counties in which the political subdivision is located; and the filing shall make it a duty of the auditors to enter annually this levy for collection from the taxable property within the boundaries of the political subdivision until funds are realized to pay the bonds in full." Iowa Code section 76.1 provides that the annual levy shall be sufficient to pay the interest and approximately such portion of the principal of the bonds as will retire them in a period not exceeding twenty years from the date of issue, except for certain bonds issued for disaster purposes and bonds issued to refund or refinance bonds issued for such disaster purposes which may mature and be retired in a period not exceeding thirty years from date of issue. (The remainder of this page has been left blank intentionally) 10 CITY INDEBTEDNESS DEBT LIMIT Article XI, Section 3 of the State of Iowa Constitution limits the amount of debt outstanding at any time of any county, municipality or other political subdivision to no more than 5% of the Actual Value of all taxable property within the corporate limits, as taken from the last state and county tax list. The debt limit for the City,based on its 2011 Actual Valuation currently applicable to the fiscal year 2012-13,is as follows: 2011 Gross Actual Valuation of Property $3,490,994,402 Less: Military Exemption (2,727,070) Subtotal $3,488,267,332 Legal Debt Limit of 5% 0.05 Legal Debt Limit $174,413,367 Less: G.O. Debt Subject to Debt Limit (79,135,000)* Net Debt Limit $95,278,367* DIRECT DEBT The City has general obligation debt payable from taxes,tax increment,water, sewer and other revenues as follows: (Includes the Bonds) Principal Date Original Final Outstanding of Issue Amount Purpose Maturity As of 5/30/13 10/04 $6,030,000 Capital Improvement Plan 6/13 $665,000 ') 9/05 5,495,000 Street Improvements,Fire Equipment&Refunding Series 1997A 6/13 325'000 2) 10/06 5,285,000 Street and Storm Sewer Improvements 6/18 3,020,000 11/07A 9,630,000 Street Improvements&Aquatic Center 6/19 6,465,000 10/08A 8,355,000 Street Improvements&Aquatic Center 6/20 6,100,000 4/09A 6,995,000 Refunding Series 1998A, 1999,2000,2001A&2001B 6/13 980,000 10/09B 11,165,000 Capital Improvement Projects 6/21 8,935,000 9/10A 6,690,000 Capital Improvement Projects 6/22 5,795,000 5111A 5,980,000 Refunding Series 2002A,2002B and 2003 6/21 4,720,000 11/11B 6,675,000 Corporate Purpose Improvements 6/23 6,105,000 10/12 12,660,000 Corporate Purpose Improvements 6/32 12,660,000 5/13 23,365,000* Corporate Purpose Improvements/Refunding 6/32 23,365,000 * Total $79,135,000 * 1)The 2014 maturity will be current refunded on June, 14,2013 by the Bonds. 2)The 2014-2017 maturities will be current refunded on June,8,2013 by the Bonds. *Preliminary;subject to change. 11 Annual Fiscal Year Debt Service Payments(Includes the Bonds) Existing Debt Bonds Total Outstanding Fiscal Principal Principal Principal Year Principal and Interest Principal* and Interest* Principal* and Interest* 2012-13 $ 7,925,000 $ 8,755,759 $7,925,000 $8,755,759 2013-14 6,005,000 7,387,433 $ 2,140,000 $2,709,911 8,145,000 10,097,344 2014-15 5,585,000 6,814,828 1,550,000 2,083,023 7,135,000 8,897,851 2015-16 5,230,000 6,310,368 1,580,000 2,087,448 6,810,000 8,397,816 2016-17 5,400,000 6,335,010 1,600,000 2,081,378 7,000,000 8,416,388 2017-18 5,580,000 6,353,238 1,245,000 1,699,978 6,825,000 8,053,216 2018-19 5,200,000 5,799,538 1,270,000 1,704,435 6,470,000 7,503,973 2019-20 4,290,000 4,727,568 1,285,000 1,697,210 5,575,000 6,424,778 2020-21 3,530,000 3,833,105 1,310,000 1,696,510 4,840,000 5,529,615 2021-22 2,270,000 2,469,400 1,340,000 1,697,035 3,610,000 4,166,435 2022-23 1,630,000 1,768,870 1,380,000 1,704,205 3,010,000 3,473,075 2023-24 1,000,000 1,093,750 1,405,000 1,693,325 2,405,000 2,787,075 2024-25 240,000 303,750 1,450,000 1,698,985 1,690,000 2,002,735 2025-26 245,000 301,550 750,000 955,485 995,000 1,257,035 2026-27 255,000 304,200 775,000 955,360 1,030,000 1,259,560 2027-28 260,000 301,550 800,000 954,010 1,060,000 1,255,560 2028-29 270,000 303,750 825,000 951,410 1,095,000 1,255,160 2029-30 275,000 300,650 855,000 952,123 1,130,000 1,252,773 2030-31 285,000 302,400 885,000 951,343 1,170,000 1,253,743 2031-32 295,000 303,850 920,000 954,040 1,215,000 1,257,890 Total $55,770,000 $23,365,000 $79,135,000 *Preliminary;subject to change. OTHER DEBT The City has outstanding revenue debt payable from various revenue sources as follows: Principal Date Original Final Outstanding of Issue Amount Purpose Maturi1y As of 5/30/13 6/03 $29,385,000 Mary Greeley Medical Center 6/13 $1,420,000 4/08 825,000 Iowa DNR Solid Waste Alternatives Program 7/15 326,831 3/11 87,500 Iowa Department of Transportation Loan 12/15 52,500 10/11 65,000,000 Mary Greeley Medical Center 6/36 65,000,000 11/12 26,000,000 Mary Greeley Medical Center 6/27 26,000,000 Total $92,799,331 1)The 2014-2022 maturities were advance refunded by the Mary Greeley Medical Center's Series 2012 Bonds. 12 Water Revenue Debt Principal Date Original Final Outstanding of Issue Amount Pumose Maturily As of 5/30/13 3/12 $11,425,000 Planning and Design SRF Loan 3115 $1,746,555 '� 11/12 3,121,000 Clean Water SRF Loan 6/33 350,884 2) Total $2,097,439 1)As of the date of this Official statement,the City has drawn$1,746,555 on the planning and design loan. 2)As of the date of this Official statement,the City has drawn$350,884 on the Clean Water SRF Loan. OVERLAPPING DEBT City's 1/1/2012 Valuation Within Percent Proportionate Taxing District Taxable Valuation the City Applicable G.O. Debt Share Story County $3,868,587,381 $2,328,052,768 60.18% $7,300,000 $4,393,140 Ames CSD 2,182,138,227 2,138,277,536 97.99% 10,220,000 10,014,578 Gilbert CSD 384,409,627 188,486,213 49.03% 17,725,000 8,690,568 Nevada CSD 387,698,970 447,815 0.12% 9,490,000 11,388 United CSD 239,127,545 841,204 0.35% 25,018 88 DMACC 38,538,891,860 2,328,038,564 6,04% 83,595,000 5,049,138 City's share of total overlapping debt: $28,158,900 1)Taxable Valuation includes Ag.Land&Buildings,all Utilities and Taxable TIF Increment. DEBT RATIOS Debt/Actual Market Value Debt/58,965 G.O.Debt ($3,539,464,142) 1) Population 2) Total General Obligation Debt $79,135,000* 2.24%* $1,342.07* City's Share of Overlapping Debt $28,158,900 0.80% $477.55 1)Based on the City's 2012 Actual Valuation;includes Ag.Land&Buildings,all Utilities and Taxable TIF Increment. 2)Based on the City's 2010 U.S.Census. *Preliminary;subject to change. 13 LEVIES AND TAX COLLECTIONS Collected During Percent Fiscal Year Levy Collection Year Collected 2008/09 $21,484,466 $21,125,479 98.33% 2009/10 22,054,085 21,908,298 99.34% 2010/11 23,064,211 22,546,083 97.75% 2011/12 23,516,201 23,211,397 98.70% 2012/13 24,018,714 --------In Process of Collection-------- Collectionsinclude delinquent taxes from all prior years. Taxes in Iowa are delinquent each October 1 and April 1 and a late payment penalty of 1%per month of delinquency is enforced as of those dates. If delinquent taxes are not paid, the property may be offered at the regular tax sale on the third Monday of June following the delinquency date. Purchasers at the tax sale must pay an amount equal to the taxes, special assessments, interest and penalties due on the property and funds so received are applied to taxes. A property owner may redeem from the regular tax sale but, failing redemption within three years,the tax sale purchaser is entitled to a deed,which in general conveys the title free and clear of all liens except future tax installments. Source: The City and the City's June 30,2012 Comprehensive Annual Financial Report. TAX RATES FY 2008/09 FY 2009/10 FY 2010/11 FY 2011/12 FY 2012/13 / 1000 $/$1,000 $/$1,000 /$1000 $/$1,000 Story County 5.59701 5.81536 5.64515 5.49074 5.52837 Story County Hospital 0.42050 0.42050 0.42050 0.42050 0.57240 County Ag. Extension 0.08904 0.09053 0.08609 0.08340 0.08100 City of Ames 11.06239 10.85819 10.84579 10.84365 10.72125 City Assessor 0.41661 0.34391 0.41785 0.35075 0.39685 Ames Comm. School District 13.62557 13.58764 14.65339 14.51772 14.47262 Gilbert Comm. School District 19.79131 19.83048 19.99688 19.98282 17.98747 Nevada Comm. School District 16.43213 16.45943 17.03265 15.61389 15.61527 United Comm. School District 10.06277 9.68981 10.93599 11.72302 13.77425 Des Moines Area Comm. College 0.56386 0.56778 0.56008 0.59018 0.58466 State of Iowa 0.00350 0.00300 0.00340 0.00320 0.00330 Total Tax Rate: Ames CSD Resident 31.77848 31.68691 32.63225 32.30014 32.36045 Gilbert CSD Resident 37.94422 37.92975 37.97574 37.76524 35.87530 Nevada CSD Resident 34.58504 34.55870 35.01151 33.39631 33.50310 United CSD Resident 28.21568 27.78908 28.91485 29.50544 31.66208 LEVY LIMITS A city's general fund tax levy is limited to $8.10 per $1,000 of taxable value, with provision for an additional $0.27 per $1,000 levy for an emergency fund which can be used for general fund purposes (Code of Iowa, Chapter 384, Division I). Cities may exceed the $8.10 limitation upon authorization by a special levy election. Further, there are limited special purpose levies, which may be certified outside of the above-described levy limits (Code of Iowa, Section 384.12). The amount of the City's general fund levy subject to the $8.10 limitation is $5.83418 for FY 2012/13, and the City has levied no emergency levy. The City has certified special purpose levies outside of the above described levy limits as follows: $0.70627 for police and fire retirement and $0.65737 for the operation and maintenance of a public transit system. Debt service levies are not limited. 14 FUNDS ON HAND (CASH AND INVESTMENTS AS OF February 28,2013) Governmental General Fund $5,296,871 Debt Service Fund 5,529,739 Capital Projects Fund 18,475,666 Other Governmental Funds 15,806,640 Business-type Mary Greeley Medical Center 244,038,992 Electric Utility 44,796,214 Sewer Utility 4,338,676 Water Utility 10,086,746 Other Enterprise Funds 8,166,757 Internal Service Funds 14,770,836 Total all funds 371.307.137 GENERAL FUND BUDGETS (ACCRUAL BASIS) The table below represents a comparison between the final 2011/12 actual financial performance, the amended 2012/13 budget and the adopted 2013/14 budget on an accrual basis. 2011/12 Actual 2012/13 Amended 2013/14 Adogted Revenues: Property taxes $14,320,851 $14,504,525 $15,098,244 Other City taxes 1,548,002 1,559,271 1,600,812 Licenses and permits 1,292,368 1,450,153 1,305,400 Use of money and property 402,703 422,668 429,950 Intergovernmental 317,950 334,997 321,374 Charges for fees and services 4,019,534 4,204,958 4,319,067 Miscellaneous 518,627 263,125 249,793 Transfers in 7,616,489 7,830,521 8,487,818 Total revenues $30,036,524 $30,570,218 $31,812,458 Expenditures: Public safety $14,861,727 $15,571,817 $16,329,552 Public works 1,678,384 1,876,313 1,759,543 Health and social services 0 0 0 Culture and recreation 6,830,773 6,841,178 6,920,380 Community&economic development 667,608 850,271 903,408 General government 2,302,576 2,471,212 2,293,022 Capital projects 0 947,466 0 Transfers out 3,537,022 3,581,679 3,606,553 Total expenditures $29,878,090 $32,139,936 $31,812,458 Excess(deficiency)of revenues over $158,434 ($1,569,718) $0 (under)expenditures Fund balance at beginning of year $8,623,818 $8,782,252 $7,212,534 Fund balance at end of year $8,782,252 $7,212,534 $7,212,534 15 THE CITY CITY GOVERNMENT The City of Ames, Iowa(the"City") is governed under and operates under a Mayor-Council form of government with a City Manager. The principle of this type of government is that the Council sets policy and the City Manager carries it out. The six members of the Council are elected for staggered four-year terms. One member is elected from each of the four wards and two are elected at large. The Council appoints the City Manager as well as the City Attorney. The City Manager is the chief administrative officer of the City. The Mayor is elected for a four-year term, presides at council meetings and appoints members of various City boards, commissions and committees with the approval of the Council. EMPLOYEES AND PENSIONS The City has 1,344 full-time employees of which 485 are governmental employees and 859 are employees of the Mary Greeley Medical Center and 1,193 part-time employees (including seasonal employees) of which 676 are governmental employees and 517 are employees of the Mary Greeley Medical Center. Included in the City's full-time employees are 52 sworn police officers and 54 firefighters. The City contributes to the Iowa Public Employees Retirement System (IPERS), a cost sharing multiple-employer public employees' retirement system designed as a supplement to Social Security. The pension plan provides retirement and death benefits, which are established by State statute. The City is current in its obligation to IPERS, which has been as follows: $4,965,440 in FY 2009-10, $5,240,892 in FY 2010-11 and$6,211,558 in FY 2011-12. The City also contributes to the Municipal Fire and Police Retirement System of Iowa (MFPRSI), a benefit plan administered by a Board of Trustees. MFPRSI provides retirement, disability and death benefits that are established by State statute to plan members and beneficiaries. Plan members are required to contribute 9.4% of their earnable compensation and the City's contribution rate is 26.12% of earnable compensation. The City is current in its obligation to MFPRSI, which has been as follows: $1,024,282 in FY 2009-10, $1,253,345 in FY 2010-11, and $1,630,807 in FY 2011-12. UNION CONTRACTS City employees are represented by the following five bargaining units: Bargaining Unit Contract Expiration Date International Association of Firefighters June 30,2014 Public,Professional and Maintenance Employees June 30,2016 International Brotherhood of Electrical Workers June 30,2016 International Union of Operating Engineers(Local 234C) June 30,2014 International Union of Operating Engineers (Local 234D) June 30, 2014 OTHER POST EMPLOYMENT BENEFITS Plan description: The City and hospital provide health and dental care benefits for retired employees and their beneficiaries through a single-employer, defined benefit plan. The hospital also provides a life insurance benefit. The City has the authority to establish and amend benefit provisions of the plan. Funding policy: Participants must be at least 55 years old, have been employed by the City for the preceding four years, and be enrolled in a sponsored insurance plan at the time of retirement. Benefits terminate upon attaining Medicare eligibility. The contribution requirements of the City are established and may be amended by the City. Plan members are currently not required to contribute.The City funds on a pay-as-you go basis. 16 Annual OPEB cost and net OPEB obligation: The net OPEB obligation as of June 30,2012,is determined as follows: Medical City Center Total Annual required contribution $172,000 $375,334 $547,334 Interest on net OPEB obligation 16,000 114,869 130,869 Adjustment to annual required contribution (14,000) (92,061) (106,061) Annual OPEB cost/expense $174,000 $398,142 $572,142 Contributions and payments made (214,985) (276,411) (491,396) Decrease in net OPEB obligation ($40,985) $121,731 $80,746 Net OPEB obligation,July 1,2011 $2,297,386 2 855 343 Net OPEB obligation,June 30,2012 $2,419,117 2 9 089 The City's annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the net OPEB obligation for fiscal years 2010,2011, and 2012: Percentage of Annual Annual OPEB Net OPEB Fiscal Year Ended OPEB Cost Cost Contributed Obligation June 30,2010 $610,831 25.9% $2,277,363 June 30,2011 $614,595 5.9% $2,855,343 June 30,2012 $572,142 85.89% $2,936,089 Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions about the probability of occurrence of events far into the future. Examples include assumptions about future employment, mortality, and the healthcare cost trend. Amounts determined regarding the funded status of the plan and the annual required contributions of the employer are subject to continual revision as actual results are compared with past expectations and new estimates are made about the future. A schedule of funding progress is required to be presented as supplementary information following the notes to the financial statements. (The remainder of this page has been left blank intentionally) 17 INSURANCE The City's insurance coverage is as follows: Type of Insurance All Limits General Liability $12,000,000 Auto Liability $12,000,000 Wrongful Acts $12,000,000 Excess(over all other coverage except Iowa liquor liability) $12,000,000 Law Enforcement $12,000,000 Public Official $12,000,000 Employee Benefit $1,000,000 Medical Malpractice $12,000,000 Underinsured Motorist $1,000,000 Uninsured Motorist $1,000,000 Commercial Property Commercial Property&Boiler and Machinery, Power Generation related $200,000,000 Municipal Properties&Boiler and Machinery, Non-Power Generation $144,698,842 Terrorism—TRIA(Federally defined terrorist acts) Included in both of above Commercial Property Flood Insurance Non-flood Plain Facilities $100,000,000 Flood Plain Facilities: Transit $6,000,000 Water Pollution Control $6,000,000 Airport $7,500,000 Intermodal Facility $10,000,000 Airport Liability 3,000,000 18 GENERAL INFORMATION LOCATION AND TRANSPORTATION The City is located in Story County in central Iowa. It is approximately thirty miles north of Des Moines, Iowa, the State capital and largest city in the state. The City is located on Interstate Highways 35 and 30. The City was incorporated in 1869 under the laws of the State of Iowa, later amended in July, 1975 under the Home Rule City Act. The City, with a United States Census Bureau 2010 population of 58,965, is known for its excellent quality of life which includes a relatively crime-free environment, an extensive park system, superior cultural/recreations facilities and a nationally recognized school system. The City is the home of Iowa State University ("ISU"). ISU was established in 1859 and is an integral part of the community. The City operates a mass transit system to provide efficient and economical transportation to all members of the community. A fixed routing service is available on a daily basis to most residents and a Dial-A-Ride service is available for elderly or handicapped residents. The City operates a municipal airport, which handles primarily charter services. National air service is available at the Des Moines International Airport, approximately thirty miles south of the City. The City is also provided freight services through the Union Pacific Railroad line. LARGER EMPLOYERS A representative list of larger employers in the City is as follows: Employer Type of Business Number of Employees 1� Iowa State University Higher Education 15,211 Mary Greeley Medical Center Health Care 1,376 City of Ames Municipal Government 1,161 Iowa Department of Transportation Public Transportation 962 McFarland Clinic,P.C. Health Care 925 Hy-Vee Food Stores Grocery 725 Sauer-Danfoss Company Hydro-Transmissions 650 Ames Community School District Education 650 Wal-Mart Retail 435 Ames Laboratories Research 432 3M Company Manufacturing 400 AG. Research Research 400 National Veterinary Service Lab USDA Veterinary Research 380 Hach Company Water Analysis Equipment 308 National Animal Disease Center USDA Research 250 WebFilings Software 200 1)Includes full-time,part-time and seasonal employees. Source: The City and phone interviews conducted in February 2013. 19 BUILDING PERMITS Permits for the City are reported on a calendar year basis. City officials reported most recently available construction activity for a portion of the current calendar year, as of February 28, 2013. The figures below include both new construction and remodeling. 2009 2010 2011 2012 2013 Residential Construction: Number of units: 466 487 451 444 57 Valuation: $20,084,857 $22,855,260 $19,710,497 $25,601,674 $3,286,264 Commercial Construction: Number of units: 173 175 224 233 24 Valuation: $24,655,737 $32,918,202 $59,896,534 $140,814,521 $1,225,830 Total Permits 639 662 675 677 81 Total Valuations $44,740,594 $55,773,462 $79,607,031 $166,416,195 $4,512,094 U.S.CENSUS DATA Population Trend 1980 U.S. Census 43,775 1990 U.S. Census 47,198 2000 U.S. Census 50,731 2010 U.S. Census 58,965 Source: U.S.Census Bureau website. UNEMPLOYMENT RATES City of Story State of Ames County Iowa Annual Averages: 2009 4.1% 4.6% 6.2% 2010 4.2% 4.8% 6.3% 2011 4.1% 4.5% 5.9% 2012 3.6% 3.9% 5.2% 2013 (Feb) 3.3% 4.0% 5.0% Source: Iowa Workforce Development Center website. EDUCATION Public education is provided by the Ames Community School District, with a certified enrollment for the school year 2012-13 school year of 4,228.7. The district, with approximately 650 employees, owns and operates one early childhood center, seven elementary schools, one middle school and one high school. Nevada Community School District,Gilbert Community School District and United Community School District all lie partially within the City and provide public education to portions of the City. The Iowa State University ("ISU") 2012-2013 spring term enrollment was 30,748. ISU is the City's largest employer with faculty and staff totaling approximately 15,211, including teaching assistants and hourly part-time employees. ISU, in addition to its educational function,is a leading agricultural research and experimental institution. 20 The Iowa State Center, which is the cultural and athletic center of ISU and City, is a complex of five structures, all completed since 1969. It consists of two theaters, a football stadium, a coliseum and a continuing education building which attract major athletic,dramatic and musical events,as well as seminars and conferences to the City. In addition to ISU located in the City, the following institutions provide higher education within 30 miles of the City: Des Moines Area Community College, Upper Iowa University, Simpson College, Hamilton College, Grand View College and Drake University. FINANCIAL SERVICES Financial services for the residents of the City are provided by First National Bank Ames, Iowa and Ames Community Bank, Ames, Iowa. In addition, the City is served by branch offices of Bank of the West, Bankers Trust Company, CoBank ACB, Exchange State Bank, Great Western, First American Bank, First Federal Savings Bank of Iowa, Midwest Heritage Bank, F.S.B., US Bank, N.A., Valley Bank and Wells Fargo Bank as well as by several credit unions. First National Bank and Ames Community Bank report the following deposits as of June 30''for each year: Year First National Bank Ames Community Bank') 2008 $366,688,000 $132,473,000 2009 365,058,000 279,468,000 2010 393,145,000 350,648,000 2011 427,328,000 356,457,000 2012 471,076,000 342,594,000 1)Ames Community Bank was acquired by City State Bank in January 2009. Source: Federal Deposit Insurance Corporation(FDIC)website. FINANCIAL STATEMENTS The City's June 30, 2012 Comprehensive Annual Financial Report, as prepared by City management and audited by a certified public accountant, is reproduced as APPENDIX B. The City's certified public accountant has not consented to distribution of the audited financial statements and has not undertaken added review of their presentation. Further information regarding financial performance and copies of the City's prior Comprehensive Annual Financial Report may be obtained from Public Financial Management,Inc. 21 (This page has been left blank intentionally.) APPENDIX A FORM OF LEGAL OPINION (This page has been left blank intentionally.) *[Form of Bond Counsel Opinion] We hereby certify that we have examined certified copies of the proceedings (the "Proceedings") of the City Council of the City of Ames (the "Issuer"), in Story County, Iowa, passed preliminary to the issue by the Issuer of its General Obligation Corporate Purpose and Refunding Bonds, Series 2013 (the "Bonds") in the amount of$23,365,000, dated May 30, 2013, in the denomination of$5,000 each, or any integral multiple thereof, in evidence of the Issuer's obligation under a certain loan agreement (the "Loan Agreement"), dated as of May 30, 2013. The Bonds mature on June 1 in each of the respective years and in the principal amounts and bear interest payable semiannually, commencing December 1, 2013, at the respective rates as follows: Principal Interest Rate Principal Interest Rate Year Amount Per Annum Year Amount Per Annum 2014 $2,140,000 % 2024 $1,405,000 % 2015 $1,550,000 % 2025 $1,450,000 % 2016 $1,580,000 % 2026 $750,000 % 2017 $1,600,000 % 2027 $775,000 % 2018 $1,245,000 % 2028 $800,000 % 2019 $1,270,000 % 2029 $825,000 % 2020 $1,285,000 % 2030 $855,000 % 2021 $1,310,000 % 2031 $885,000 % 2022 $1,340,000 % 2032 $920,000 % 2023 $1,380,000 % but the Bonds maturing in each of the years 2022 to 2032, inclusive, are subject to redemption prior to maturity on June 1, 2021 or any date thereafter, upon terms of par and accrued interest. Based upon our examination,we are of the opinion, as of the date hereof, that: 1. The Proceedings show lawful authority for such issue under the laws of the State of Iowa. 2. The Bonds and the Loan Agreement are valid and binding general obligations of the Issuer. 3. All taxable property within the corporate boundaries of the Issuer is subject to the levy of taxes to pay the principal of and interest on the Bonds without constitutional or statutory limitation as to rate or amount. 4. The interest on the Bonds (including any original issue discount properly allocable to an owner thereof) is excluded from gross income for federal income tax purposes and is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations; it should be noted, however, that for the purpose of computing Page 2 the alternative minimum tax imposed on corporations (as defined for federal income tax purposes), such interest is taken into account in determining adjusted current earnings. The opinions set forth in the preceding sentence are subject to the condition that the Issuer comply with all requirements of the Internal Revenue Code of 1986 (the "Code") that must be satisfied subsequent to the issuance of the Bonds in order that interest thereon be, or continue to be, excluded from gross income for federal income tax purposes. The Issuer has covenanted to comply with each such requirement. Failure to comply with certain of such requirements may cause the inclusion of interest on the Bonds in gross income for federal income tax purposes to be retroactive to the date of issuance of the Bonds. We express no opinion regarding other federal tax consequences arising with respect to the Bonds. The rights of the owners of the Bonds and the enforceability thereof may be subject to bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors' rights heretofore or hereafter enacted to the extent constitutionally applicable, and their enforcement may also be subject to the exercise of judicial discretion in appropriate cases. DORSEY&WHITNEY LLP *This form of bond counsel opinion is subject to change pending the results of the sale of the Bonds contemplated herein. APPENDIX B JUNE 30, 2012 COMPREHENSIVE ANNUAL FINANCIAL REPORT (This page has been left blank intentionally.) APPENDIX C FORM OF CONTINUING DISCLOSURE CERTIFICATE (This page has been left blank intentionally.)