Sales Tax Increment Revenue Bonds $24.5M (Flood Mitigation Program) Copyright 2014
City of Dubuque Public Hearings # 3.
ITEM TITLE: Sales Tax Increment Revenue Bonds (Flood Mitigation Program)
SUMMARY: City Manager recommending approval of the suggested proceedings for
public hearing on the issuance of Sales Tax Increment Revenue Bonds
(Flood Mitigation Program) Senior Bond Series 2015A.
RESOLUTION Instituting proceedings to take additional action for the
issuance of not to exceed $24,500,000 Sales Tax Increment Revenue
Bonds
RESOLUTION Approving form and distribution of Preliminary Official
Statement relating to the offering and sale of Sales Tax Increment
Revenue Bonds (Annual Appropriation Property Tax Supported), Senior
Bond Series 2015A
SUGGESTED DISPOSITION: Suggested Disposition: Receive and File; Adopt Resolution(s)
ATTACHMENTS:
Description Type
❑ MVM Memo City Manager Memo
❑ Staff Memo Staff Memo
❑ Take Additional Action Resolution Resolutions
❑ Preliminary Official Statement Supporting Documentation
❑ Approve Preliminary Official Statement Resolution Resolutions
❑ Bond Counsel Letter-Public Hearing Supporting Documentation
❑ Bond Counsel Letter-Preliminary Official Statement Supporting Documentation
❑ Proof of Publication Supporting Documentation
THE CITY OF Dubuque
UBE I
erica .i
Masterpiece on the Mississippi 2007-2012-2013
TO: The Honorable Mayor and City Council Members
FROM: Michael C. Van Milligen, City Manager
SUBJECT: Proceedings for Public Hearing on the Issuance of Not to Exceed
$24,500,000 Sales Tax Increment Revenue Bonds (Flood Mitigation
Program)
DATE: April 29, 2015
Budget Director Jennifer Larson is recommending City Council approval of the
suggested proceedings for the public hearing on the issuance of Sales Tax Increment
Revenue Bonds. The proceeds of which will be used to pay costs of the Bee Branch
Watershed Flood Mitigation Project.
The Bee Branch Watershed, which includes the City's most developed areas where
over 50% of city residents either live or work, has experienced repeated flooding
impacting thousands of properties and over seventy businesses. Six Presidential
Disaster Declarations have been issued since 1999 as a result of flood damage to
public and private property.
In 2012 the State of Iowa Flood Mitigation Program was created. It established a Sales
Tax Increment Fund. The Sales Tax Increment Fund is to consist of the increase in the
state share of the sales tax revenues from communities with qualifying applications. A
community is only eligible to receive up to 70% of the incremental increase in state
sales tax. Statewide, the maximum state share of sales tax increment that can be
diverted from the state and used instead for flood mitigation projects is $30 million per
year. The maximum award for any qualifying single community is $15 million per year.
To qualify for sales tax increment funding, federal financial assistance must have been
secured for the project. A local match is also required and the state sales tax increment
cannot exceed 50% of the total project cost. In April of 2013 the State Flood Mitigation
Program Board was established. And at its third meeting in July of 2013, the Board
adopted the administrative rules for the Program.
In 2013, the City Council adopted the Drainage Basin Master Plan authored by HDR
Engineering that outlines improvements to mitigate flooding. Collectively, the 12-phase
project is referred to as the Bee Branch Watershed Flood Mitigation Project.
On December 4, 2013, the Iowa Flood Mitigation Board approved the City's application
and use of$98,494,178.00 in state sales tax increment funds for the Bee Branch
Watershed Flood Mitigation Project.
Through the agreement with the Iowa Flood Mitigation Board, the City will receive up to
$98,494,178.00 in sales tax increment revenue over a twenty-year period per the
schedule outlined in the City's Project Plan.
In order to allow for constructing flood mitigation improvements as soon as possible, the
Iowa Flood Mitigation Program specifically allowed for communities to issue debt, build
the improvements, and abate the debt using the annual sales tax increment payments
from the State. This creates the opportunity for cities to sell Sales Tax Increment
Revenue Bonds.
The revenue bonds are payable from sales tax increment revenue and will have a bond
reserve fund to cover the highest year of debt service in the event that the sales tax
increment revenues are insufficient to pay principal and interest.
The City of Dubuque Series 2015A Sales Tax Increment Revenue Bonds are the first of
its kind being sold in the Iowa Market. Financing for the project was reviewed by the
City's financial advisor, Independent Public Advisors, LLC and the City's Bond Counsel,
Ahlers and Cooney. In addition, the bond structure, timing and marketing of the bonds
was reviewed by the City's underwriter, R.W. Baird.
These bonds will be rated by Moody's. It is important to remember these are not
General Obligation bonds, so they will be rated using additional criteria established by
Moody's.
The proceedings have been prepared on the basis that no objections or petitions calling
for an election on the bond proposal will be filed with the City Clerk. If there are
objections, we will need to summarize them. The Mayor will then declare the hearing on
the issuance of said bonds closed. Immediately following, and assuming no petitions
have been filed, a resolution is to be introduced and adopted entitled "Resolution
Instituting Proceedings to Take Additional Action for the Issuance of not to Exceed
$24,500,000 Sales Tax Increment Revenue Bonds."
In the event the Council decides to abandon the proposal to issue said bonds, then the
form of resolution included in said proceeding should not be adopted. In this event, a
motion needs to be adopted to the effect that such bond proposal is abandoned.
Section 384.83 of the Code of Iowa provides that any resident or property owner of the
City may appeal the decision to take additional action to issue the bonds, to the District
Court of a county in which any part of the City is located, within 15 days after such
additional action is taken, but that the additional action is final and conclusive unless the
court finds that the Council exceeded its authority.
A draft copy of the preliminary Official Statement prepared by Independent Public
Advisors and City staff is enclosed. Careful review of the draft Official Statement by
appropriate City staff and members of the City Council is an important step in the
offering of the Bonds for sale to the public. The U.S. Securities and Exchange
Commission (the "Commission") has stated that "issuers are primarily responsible for
the content of their disclosure documents and may be held liable under the federal
securities laws for misleading disclosure." In several recent enforcement proceedings,
the Commission has made clear that it expects public officials to generally review
disclosure documents in light of their unique knowledge and perspectives on the issuer
and its financial circumstances, or else to ensure that appropriate procedures are in
place to provide the necessary review.
Rule 15c2-12 of the Commission requires prospective purchasers of the Bonds to
obtain and review an official statement that has been "deemed final' by the City prior to
submitting a bid to purchase the Bonds. For this purpose, the Official Statement may
omit certain information that is dependent upon the pricing of the issue (such as interest
rates, bond maturities and redemption features), but should otherwise be accurate and
complete.
I concur with the recommendation and respectfully request Mayor and City Council
approval.
Michael C. Van Milligen
MCVM/jml
Attachment
cc: Barry Lindahl, City Attorney
Cindy Steinhauser, Assistant City Manager
Teri Goodmann, Assistant City Manager
Jennifer Larson, Budget Director
Kenneth TeKippe, Finance Director
Gus Psihoyos, City Engineer
THE CITY OF Dubuque
UBE I
erica .i
Masterpiece on the Mississippi 2007-2012-2013
TO: Michael C. Van Milligen, City Manager
FROM: Jennifer Larson, Budget Director
SUBJECT: Proceedings for the Public Hearing on the Issuance of Not to Exceed
$24,500,000 Sales Tax Increment Revenue Bonds (Flood Mitigation Program)
DATE: April 29, 2015
INTRODUCTION
The purpose of this memorandum is to provide the suggested proceedings for the public
hearing on the issuance Sales Tax Increment Revenue Bonds prepared by Bond Counsel and
to present a resolution for City Council to adopt entitled "Resolution Instituting Proceedings to
Take Additional Action for the Issuance Not to Exceed $24,500,000 Sales Tax Increment
Revenue Bonds." The proceeds of which will be used for the purpose of providing funds to pay
costs of carrying out the flood mitigation projects previously approved by the City Council. A
letter from attorney Bill Noth detailing information on the bond hearing is enclosed.
BACKGROUND
The Bee Branch Watershed, which includes the City's most developed areas where over 50% of
city residents either live or work, has experienced repeated flooding impacting thousands of
properties and over seventy businesses. Six Presidential Disaster Declarations have been
issued since 1999 as a result of flood damage to public and private property.
In 2012 the State of Iowa Flood Mitigation Program (Program) was created. It established two
possible funding sources for flood mitigation projects: a Flood Mitigation Fund and a Sales Tax
Increment Fund. To date, no funds have been appropriated for the Flood Mitigation Fund. The
Sales Tax Increment Fund is to consist of the increase in the state share of the sales tax
revenues from communities with qualifying applications. The maximum state share of sales tax
increment that can be diverted from the state and used instead for flood mitigation projects is
$30 million per year. The maximum award for any qualifying single community is $15 million per
year. To qualify for sales tax increment funding, federal financial assistance must have been
secured for the project. A local match is also required and the state sales tax increment cannot
exceed 50% of the total project cost. In April of 2013 the State Flood Mitigation Program Board
(the Board) was established. And at its third meeting in July of 2013, the Board adopted the
administrative rules for the Program.
In 2013, the City Council adopted the Drainage Basin Master Plan authored by HDR
Engineering that outlines improvements to mitigate flooding. Collectively, the 12-phase project is
referred to as the Bee Branch Watershed Flood Mitigation Project.
In November of 2013 the City Council adopted Resolution 336-13 authorizing the City's
application to the State for the use of up to $98,494,178.00 in sales tax increment funds for the
Bee Branch Watershed Flood Mitigation Project. The City's application included a Project Plan
that included information about the various phases of the project, the schedule for construction,
and a financing plan.
On December 4, 2013, the Iowa Flood Mitigation Board approved the City's application and use
of$98,494,178.00 in state sales tax increment funds for the Bee Branch Watershed Flood
Mitigation Project.
In February of 2014, the City Council adopted Resolution 31-14 authorizing the execution of an
agreement with the Iowa Flood Mitigation Board binding the City to the terms of the agreement
as required for the City's receipt of up to $98,494,178.00 in state sales tax increment funds for
the Bee Branch Watershed Flood Mitigation Project through the State Flood Mitigation Program.
The City's application (and associated Project Plan) was established as an integral part of the
agreement.
On April 13, 2015, the Iowa Flood Mitigation Board approved the City's requested funding
agreement amendment to provide an additional $5 million in sales tax increment in Fiscal Years
2014 through 2018 and remove $5 million in sales tax increment from Fiscal Years 2031
through 2033. This request was approved because the City's actual sales tax collection growth
in Fiscal Year 2014 was 5.20%, well above the projected growth of 1.97%. As a result, 70% of
the actual sales tax increment collected in Fiscal Year 2014 was $882,784. When the actual
Fiscal Year 2014 sales tax growth is considered, the ten year historic sales tax growth rate is
2.15%. As a result, the available sales tax increment funding is projected to be more in each
subsequent fiscal year than anticipated and what was reflected in the original funding
agreement.
The following table shows the projected uses of the sales tax increment revenue by the City:
Table 1
Bee Branch Watershed Flood Mitigation
Estimated Sales Tax Increment Uses
Estimated
Sales Tax
Project Funding Source Increment
U.S. EPA Clean Water SRF loan repayment $24,491,634
Sales Tax Increment Bond interest, issuance fees & reserve $21,880,000
Flood Gate Replacements $2,099,000
Lower Bee Branch $362,243
Upper Bee Branch & Culvert $20,680,809
Permeable Pavement Alleys $8,760,492
North End Storm Sewer Improvements $1,160,000
22"' Street Storm Sewer Improvements $3,380,000
Flood Control Maintenance Facility $4,360,000
Water Plant Flood Control $3,800,000
17`h Street Storm Sewer $7,520,000
Total Project Funding Source $98,494,178
Percent of Total Cost 49.02%
DISCUSSION
Through the agreement with the Iowa Flood Mitigation Board, the City will receive up to
$98,494,178.00 in sales tax increment revenue over a twenty-year period per the schedule
outlined in the City's Project Plan. There is a six month delay from the time sales tax quarterly
2
returns are submitted to the Iowa Department of Revenue and when the sales tax increment is
remitted to the City of Dubuque. The first sales tax increment revenue receipt was received on
September 2, 2014. Subsequent receipts will be received every three months. The estimated
sales tax increment revenue receipts for the City are shown in following table.
Table 2
Estimated Sales Tax Increment Revenue Receipts to
City of Dubuque
Estimated
Fiscal Year Sales Tax Increment
Revenue Receipts
2015 $1,784,299
2016 $3,084,781
2017 $3,915,672
2018 $4,764,427
2019 $4,764,911
2020 $4,801,918
2021 $5,593,037
2022 $6,399,662
2023 $6,869,796
2024 $6,956,900
2025 $6,956,900
2026 $6,952,300
2027 $6,952,300
2028 $6,947494
2029 $6,713,458
2030 $6,238,500
2031 $4,397,435
2032 $2,184,888
2033 $1,500,000
2034 $715,500
Total $98,494,178
In order to allow for constructing flood mitigation improvements as soon as possible, the Iowa
Flood Mitigation Program specifically allowed for communities to issue debt, build the
improvements, and abate the debt using the annual sales tax increment payments from the
State. This creates the opportunity for cities to sell Sales Tax Increment Revenue Bonds.
The City's Project Plan outlines issuing $90 million in debt in order to construct nine of the
twelve phases of the Bee Branch Watershed Flood Mitigation Project by 2020 with the debt to
be abated primarily with the State Sales Tax Increment Revenue. City Stormwater Management
Utility Fees will also be used to retire debt.
The project plan does allow the flexibility to adjust the project schedule and the need for debt.
Therefore, the City has been working with its bond counsel, financial advisor, and the
underwriter for the Sales Tax Increment Revenue Bond to establish the details of the first debt
issuances.
The first debt issuance for the Bee Branch Watershed Flood Mitigation Project was issued as a
Sales Tax Increment Revenue Bond backed by the full faith and credit of the City of Dubuque
for$7.2 million on May 19, 2014 (Series 2014A). The second Sales Tax Increment Revenue
3
bond issuance for an estimated $24.5 million will be sold on May 18, 2015 and will be subject to
annual appropriation by City Council and will not be backed by the full faith and credit of the City
of Dubuque. In addition, a $29 million U.S. EPA Clean Water SRF loan will also be issued with
the loan finalized on May 18, 2015. Collectively, the first three debt issuances will provide the
necessary funding to complete the Bee Branch Creek Restoration Project and the Flood
Mitigation Gate Replacement Project which involves the replacement of the gate structure
where the Bee Branch Creek flows into the Peosta Channel. The gate structure works in
conjunction with the John C. Culver Floodwall/Levee System that provides the City protection
from the Mississippi River when it is above flood stage. Consistent with the Project Plan, the
need for additional debt is anticipated in future years. This will likely be a combination of U.S.
EPA Clean Water SRF and General Obligation Bonds to be abated with revenue from the
Stormwater Management Utility Fee. However, the Project Plan allows the City the ability to
reduce the need for future debt should the initial debt financing have lower than anticipated
interest costs or project costs come in lower than estimated.
The following table shows that the State Sales Tax Increment Revenue will cover the principal
and interest payments for the first three debt issuances.
Table 3
Estimated Sales Tax Increment Revenues and Anticipated Debt Service Requirements
Estimated Cumulative
Sales Tax $29M Sales Tax Sales Tax
Fiscal Increment $7.2M $20.7M* Series 2015B Increment Increment
Year Revenue Series 2014A Series 2015A SRF Loan Balance after Balance after
Receipts Debt Service Debt Service Debt Service Debt Service Debt Service
2015 $1,784,299 $0 $0 ($1,517,265) $267,034 $267,034
2016 $3,084,781 $0 $0 ($1,517,265) $1,567,516 $1,834,550
2017 $3,915,672 ($323,100) $0 ($1,517,265) $2,075,307 $3,909,857
2018 $4,764,427 ($323,100) ($877,900) ($1,517,265) $2,046,162 $5,956,019
2019 $4,764,911 ($323,100) ($877,900) ($1,517,265) $2,046,646 $8,002,665
2020 $4,801,918 ($323,100) ($877,900) ($1,517,265) $2,083,653 $10,086,318
2021 $5,593,037 ($323,100) ($877,900) ($1,517,265) $2,874,772 $12,961,090
2022 $6,399,662 ($323,100) ($877,900) ($1,517,265) $3,681,397 $16,642,487
2023 $6,869,796 ($438,100) ($2,512,900) ($1,517,265) $2,401,531 $19,044,018
2024 $6,956,900 ($1,393,500) ($2,517,500) ($1,517,265) $1,528,635 $20,572,653
2025 $6,956,900 ($1,400,500) ($2,512,250) ($1,517,265) $1,526,885 $22,099,538
2026 $6,952,300 ($1,344,250) ($2,513,000) ($1,517,265) $1,577,785 $23,677,323
2027 $6,952,300 ($1,363,000) ($2,514,250) ($1,517,265) $1,557,785 $25,235,108
2028 $6,947,494 ($1,365,000) ($2,515,750) ($1,517,265) $1,549,479 $26,784,587
2029 $6,713,458 ($1,365,000) ($2,512,250) ($1,517,265) $1,318,943 $28,103,530
2030 $6,238,500 $0 ($2,513,750) ($1,517,265) $2,207,485 $30,311,015
2031 $4,397,435 $0 ($2,514,750) ($1,517,265) $365,420 $30,676,435
2032 $2,184,888 $0 $0 ($1,517,265) $667,623 $31,344,058
2033 $1,500,000 $0 $0 ($1,517,265) ($17,265) $31,326,793
2034 $715,500 $0 $0 ($1,517,265) ($801,765) $30,525,028
2035 $0 $0 $0 ($1,517,265) ($1,517,265) $29,007,763
2036 $0 $0 $0 ($1,517,265) ($1,517,265) $27,490,498
Total $98,494,178 ($10,607,950) ($27,015,900) ($33,379,830) $27,490,498
*Based on Al pricing provided by R.W. Baird
4
The US EPA SRF loan funding is administered by the Iowa Department of Natural Resources
(IDNR) with assistance from the Iowa Finance Authority (IFA). It carries a pre-established, low
interest rate and instead of being dispersed all up-front in a lump sum payment, the funds are
dispersed as expended. The US EPA SRF loans have an attractive interest rate of 2.00% for a
twenty year loan whereas a general obligation bond has an estimated interest rate of
approximately 3.50%. The City will issue as much of the necessary debt in the form of the US
EPA SRF loans instead of General Obligation Bonds. Not all project elements are eligible for
funding through US EPA SRF.
The City has instituted six measures to mitigate the risk that actual state sales tax increment
revenue is less than estimated.
First, the projected state sales tax growth was calculated using historic taxable retail sales for
the past ten years provided by the Iowa Department of Revenue. The rate of change each year
was calculated, and the ten year average growth rate of 1.97%was then used to project future
sales tax increment growth by year. The City's actual sales tax collection growth in Fiscal Year
2014 was 5.20%, well above the projected growth of 1.97%. As a result, 70% of the actual sales
tax increment collected in Fiscal Year 2014 was $882,784. When the actual Fiscal Year 2014
sales tax growth is considered, the ten year historic sales tax growth rate is 2.15%. The City
was advised that the use of historical sales tax growth average for purposes of projections is a
responsible basis for calculating the sales tax increment growth.
Second, the City minimized debt service payments until significant sales tax increment revenue
is available. The Sales Tax Increment Revenue Bonds issued in Fiscal Year 2014 and 2015 will
capitalize interest for the first two years and will have no principal payments until Fiscal Year
2023. The $29 million U.S. EPA SRF loan will have interest and principal payments beginning in
Fiscal Year 2015 based on how much has been drawn down from the loan.
Third, the Project Plan outlined that some project elements will be done on a pay-as-you-go
basis over a 20-year period to create more flexibility. The plan allows the City to adjust the
timing of the Bee Branch Watershed improvements and complete them as funding becomes
available.
5
The following table shows the amount of sales tax increment and stormwater user fees
committed to pay-as-you-go projects as part of the Bee Branch Watershed project. The
Estimated Sales Tax Increment after Debt Service column (column 2) is the same as the Sales
Tax Increment Balance after Debt Service (column 6) in Table 3.
Table 4
Estimated Funding Available for Debt and Capital Improvements
Estimated Stormwater
Sales Tax Utility Total $$ Cumulative
Increment Committed to Available for Total $$ Available
Fiscal After Debt Bee Branch Capital for Capital
Year Service Watershed Projects Projects
2015 $267,034 $0 $267,034 $267,034
2016 $1,567,516 $8,050 $1,575,566 $1,842,600
2017 $2,075,307 $14,700 $2,090,007 $3,932,607
2018 $2,046,162 $194,139 $2,240,301 $6,172,908
2019 $2,046,646 $365,149 $2,411,795 $8,584,703
2020 $2,083,653 $35,660 $2,119,313 $10,704,016
2021 $2,874,772 $411,145 $3,285,917 $13,989,933
2022 $3,681,397 $545,124 $4,226,521 $18,216,454
2023 $2,401,531 $436,884 $2,838,415 $21,054,869
2024 $1,528,635 $643,107 $2,171,742 $23,226,611
2025 $1,526,885 $603,612 $2,130,497 $25,357,108
2026 $1,577,785 $1,111,961 $2,689,746 $28,046,854
2027 $1,557,785 $1,168,751 $2,726,536 $30,773,390
2028 $1,549,479 $894,424 $2,443,903 $33,217,293
2029 $1,318,943 $1,234,024 $2,552,967 $35,770,260
2030 $2,207,485 $997,837 $3,205,322 $38,975,582
2031 $365,420 $1,150,079 $1,515,499 $40,491,081
2032 $667,623 $1,412,710 $2,080,333 $42,571,414
2033 ($17,265) $1,184,946 $1,167,681 $43,739,095
2034 ($801,765) $1,453,698 $651,933 $44,391,028
2035 ($1,517,265) $0 ($1,517,265) $42,873,763
2036 ($1,517,265) $0 ($1,517,265) $41,356,498
Total $27,490,498 $13,866,000 $41,356,498
Fourth, there will be additional Stormwater Management Utility Fee Revenue, not specifically
identified for the Bee Branch Watershed Flood Mitigation Project, which could be used to make
debt payments. This would involve delaying or canceling other Stormwater Management capital
projects that would not be both time sensitive and critical in nature.
6
The following table shows the additional funding that would become available if other capital
projects are delayed or canceled due to actual project costs higher than projected or sales tax
increment revenue is lower than projected. The Funding Committed to Bee Branch Watershed
Available for Debt Service column (column 2) is the same as the Total $$Available for Capital
Projects column (column 4) in Table 4.
Table 5
Cumulative Sales Tax Increment Revenue & Stormwater Utility Fee Revenue
Available for Debt Service
Funding Committed to Non-Bee Branch
Bee Branch Watershed Watershed Capital Cumulative $
Fiscal Available for Debt Projects Funded By Available for Debt
Year Service Stormwater Service
2015 $267,034 $923,251 $1,190,285
2016 $1,575,566 $1,234,199 $4,000,050
2017 $2,090,007 $1,136,958 $7,227,015
2018 $2,240,301 $1,188,827 $10,656,143
2019 $2,411,795 $1,184,836 $14,252,774
2020 $2,119,313 $1,076,600 $17,448,687
2021 $3,285,917 $1,052,660 $21,787,264
2022 $4,226,521 $993,176 $27,006,961
2023 $2,838,415 $1,093,081 $30,938,457
2024 $2,171,742 $1,028,717 $34,138,916
2025 $2,130,497 $1,199,454 $37,468,867
2026 $2,689,746 $1,073,333 $41,231,946
2027 $2,726,536 $1,089,779 $45,048,261
2028 $2,443,903 $1,205,212 $48,697,376
2029 $2,552,967 $1,139,350 $52,389,693
2030 $3,205,322 $1,326,412 $56,921,427
2031 $1,515,499 $1,179,923 $59,616,849
2032 $2,080,333 $1,208,304 $62,905,486
2033 $1,167,681 $1,325,030 $65,398,197
2034 $651,933 $1,257,072 $67,307,202
2035 ($1,517,265) $1,457,280 $67,247,217
2036 ($1,517,265) $1,278,530 $67,008,482
Total $41,356,498 $25,651,984
Fifth, instead of issuing the $27.7 million Sales Tax Revenue Bond in one bond issuance as
originally planned, the City is issuing two separate Sales Tax Increment Revenue Bond
issuances. The first $7.2 million Sales Tax Increment Revenue Bond was sold in May 2014. The
second $24.5 million Sales Tax Increment Revenue Bond will be issued May 18, 2015.
Sixth, the first $7.2 million Series 2014A Sales Tax Increment Revenue Bonds are payable from
sales tax increment revenue and backed by the full faith and credit of the City. In the event that
the Sales Tax Increment Revenues are insufficient to pay principal and interest, the City has the
ability to use property tax to make future debt payments; however the previous five risk
mitigation factors would significantly reduce the likelihood of property tax dollars ever being
used to pay the debt payments on the sales tax increment debt. In addition, the second $20.5
7
million Series 2015A Sales Tax Increment Revenue bonds are payable from sales tax increment
revenue and will have a bond reserve fund to cover the highest year of debt service in the event
that the Sales Tax Increment Revenues are insufficient to pay principal and interest.
The Series 2015A Sales Tax Increment Revenue Bonds are the first of its kind being sold in the
Iowa Market. Financing for the project was reviewed by the City's financial advisor, Independent
Public Advisors, LLC and the City's Bond Counsel, Ahlers and Cooney. In addition, the bond
structure, timing and marketing of the bonds was reviewed by the City's underwriter, R.W. Baird.
The proceedings have been prepared on the basis that no objections or petitions calling for an
election on the bond proposal will be filed with the City Clerk. If there are objections, we will
need to summarize them. The Mayor will then declare the hearing on the issuance of said
bonds closed. Immediately following, and assuming no petitions have been filed, a resolution is
to be introduced and adopted entitled "Resolution Instituting Proceedings to Take Additional
Action for the Issuance of not to Exceed $24,500,000 Sales Tax Increment Revenue Bonds."
In the event the Council decides to abandon the proposal to issue said bonds, then the form of
resolution included in said proceeding should not be adopted. In this event, a motion needs to
be adopted to the effect that such bond proposal is abandoned.
Section 384.83 of the Code of Iowa provides that any resident or property owner of the City may
appeal the decision to take additional action to issue the bonds, to the District Court of a county
in which any part of the City is located, within 15 days after such additional action is taken, but
that the additional action is final and conclusive unless the court finds that the Council exceeded
its authority.
A draft copy of the preliminary Official Statement prepared by Independent Public Advisors and
City staff is enclosed. Careful review of the draft Official Statement by appropriate City staff and
members of the City Council is an important step in the offering of the Bonds for sale to the
public. The U.S. Securities and Exchange Commission (the "Commission") has stated that
"issuers are primarily responsible for the content of their disclosure documents and may be held
liable under the federal securities laws for misleading disclosure." In several recent enforcement
proceedings, the Commission has made clear that it expects public officials to generally review
disclosure documents in light of their unique knowledge and perspectives on the issuer and its
financial circumstances, or else to ensure that appropriate procedures are in place to provide
the necessary review.
Rule 15c2-12 of the Commission requires prospective purchasers of the Bonds to obtain and
review an official statement that has been "deemed final" by the City prior to submitting a bid to
purchase the Bonds. For this purpose, the Official Statement may omit certain information that
is dependent upon the pricing of the issue (such as interest rates, bond maturities and
redemption features), but should otherwise be accurate and complete.
RECOMMENDATION
I respectfully recommend the adoption of the enclosed resolutions instituting the proceedings to
take additional action and approving the preliminary Official Statement.
8
JML
Attachments
cc: Barry Lindahl, City Attorney
Cindy Steinhauser, Assistant City Manager
Teri Goodmann, Assistant City Manager
Ken Te Kipper, Finance Director
Gus Psihoyos, City Engineer
9
AHLERS &LOONEY, P.C.
100 COURT AVENUE,SUITE 600
DES MOINES,IOWA 50309-2231
PHONE:515-243-7611
FAX:515-243-2149
WWW.AHLERSLAW.COM
William J.Noth Direct Dial:
wnoth@ahlerslaw.com (515)246-0332
April 27, 2015
Ms. Jenny Larson
Budget Director
City of Dubuque
50 West 13th Street
Dubuque, Iowa 52001
RE: Not to exceed $24,500,000 Sales Tax Increment Revenue Bonds
(Flood Mitigation Program)
Dear Ms. Larson:
With this letter I am enclosing suggested proceedings to be acted upon by the
Council on the date fixed for the hearing on the issuance of the above mentioned Bonds,
pursuant to the provisions of Code Sections 418.14 and 384.83. A certificate to attest the
proceedings is also enclosed.
The proceedings are prepared to show as a first step the receipt of any oral or
written objections from any resident or property owner to the proposed action of the
Council to issue the Bonds. A summary of objections received or made, if any, should be
attached to the proceedings. After all objections have been received and considered if the
Council decides not to abandon the proposal to issue the Bonds, a form of resolution
follows that should be introduced and adopted, entitled "Resolution Instituting
Proceedings to Take Additional Action for the Issuance of not to exceed $24,500,000
Sales Tax Increment Revenue Bonds."
The Council is required by statute to adopt the resolution instituting proceedings to
issue the Bonds at the hearing -- or an adjournment thereof. If necessary to adjourn, the
minutes are written to accommodate that action.
In the event the Council decides to abandon the proposal to issue said Bonds, then
the form of resolution included in said proceedings should not be adopted. We would
suggest that, in this event, a motion merely be adopted to the effect that such bond
proposal is abandoned.
WISHARD&BAILY-1886;GUERNSEY&BAILY-1893;GAILY&STIPP-1901:STIPP,PERRY,BANNISTER&STARZINGER-1914:BANNISTER,CARPENTER,
AHLERS&COONEY-1950;AHLERS,COONEY,DORWEILER,ALLBEE,HAYNIE&SMITH-1974;AHLERS,COONEY,DORWEILER,HAYNIE,SMITH&ALLBEE,P.C.-1990
.pril 27, 2015
Page 2
Section 384.83 of the Code of Iowa provides that any resident or property owner
of the City may appeal the decision to take additional action to issue the Bonds, to the
District Court of a county in which any part of the City is located, within 15 days after
such additional action is taken, but that the additional action is final and conclusive
unless the court finds that the Council exceeded its authority.
In the event an appeal is filed by any resident or property owner, please see that
we are notified immediately; and, as soon as available, a copy of the notice of appeal
should be furnished our office for review.
Also enclosed is an extra copy of the proceedings to be filled in as the original and
certified back to this office. If you have any questions pertaining to the proceedings
enclosed or this letter, please do not hesitate to either write or call.
Very truly yours,
William J. Noth
WJN:dc
Encl.
cc: Barry Lindahl (w/encl.)
Ken TeKippe (w/encl.)
Tionna Pooler (w/encl.)
01092189-1\10422-162
AHL,ERS &LOONEY, P.C.
100 COURT AVENUE.SUITE 600
DES MOINES,IOWA 50309-2231
PHONE:515-243-7611
FAX:515-243-2149
WWW.AHLERSLAW.COM
William J.Noth Direct Dial:
wnoth@ahlerslaw.com (515)246-0332
April 27, 2015
Ms. Jenny Larson
Budget Director
City of Dubuque
50 West 13th Street
Dubuque, Iowa 52001-4864
RE: Sales Tax Increment Revenue Bonds (Annual Appropriation Property
Tax Supported), Senior Bond Series 2015A
Dear Ms. Larson:
With this letter I am enclosing suggested City Council proceedings to approve the
form and distribution of a preliminary Official Statement relating to the offering and sale
of the second series of Sales Tax Increment Revenue Bonds.
Careful review of the draft Official Statement by appropriate City staff and
members of the City Council is an important step in the offering of the Bonds for sale to
the public. The U.S. Securities and Exchange Commission (the "Commission") has
stated that "issuers are primarily responsible for the content of their disclosure documents
and may be held liable under the federal securities laws for misleading disclosure." In
several recent enforcement proceedings, the Commission has made clear that it expects
public officials to generally review disclosure documents in light of their unique
knowledge and perspectives on the issuer and its financial circumstances, or else to
ensure that appropriate procedures are in place to provide the necessary review.
As you know, Rule 15c2-12 of the Commission requires prospective purchasers of
the Bonds to obtain and review an official statement that has been "deemed final" by the
City prior to submitting a bid to purchase the Bonds. For this purpose, the official
statement may omit certain infonnation that is dependent upon the pricing of the issue
(such as interest rates, note maturities and redemption features), but should otherwise be
accurate and complete. The enclosed resolution authorizes the Budget Director to make
any necessary changes to the draft document, and thereafter authorizes its distribution in
connection with the offering of the Bonds to the public.
I pril 27, 2015
Page 2
As always, we would appreciate having the enclosed extra copy of the proceedings
completed and returned to us following the Council's action for our transcript of the
action taken.
Should you have any questions, please do not hesitate to contact me.
Very truly yours,
William J. Noth
WJN:dc
Enclosures
cc: Barry Lindahl (w/encl.)
Ken TeKippe (w/encl.)
Tionna Pooler (w/encl.)
01105900-1\10422-162
I
STATE OF IOWA {SS:
DUBUQUE COUNTY
CERTIFICATION OF PUBLICATION
I, Suzanne Pike, a Billing Clerk for Woodward Communications, Inc., an Iowa corporation,publisher
of the Telegraph Herald,a newspaper of general circulation published in the City of Dubuque, County
of Dubuque and State of Iowa; hereby certify that the attached notice was published in said newspaper
on the following dates: April 24, 2015, and for which the charge is $35.38.
'II
9
l
'i
'i
Subscribed to before me, a Notary Public in and for Dubuque County, Iowa,
this day of , 20 Z-,r .
III
Notary Public in and for Dubuque County, Iowa.
Gama fission I�umb�r f4Et�5
(tv Cot��Y. .rt�. F 1,20�?
�j
P
ig
1
'i
i
I
other-professional ser- d
CITY OF DUBUQUE, vices.Said.Bonds shall .I
IOWA be payable from the i
OFFICIAL NOTICE: City's Iflood project
NOTICE OF MEETING fund established under
OF THE COUNCIL OF Iowa Code Section
THE CITY.-OF DUBU- 418.12, into which
,QUE, IOWA,-ON THE there shall be
MATTER OF THE deposited sales tax
PROPOSED ISSUANCE increment revenues
OF NOT TO EXCEED received from the
$24,500,000 SALES State of Iowa as part of
TAX INCREMENT ,the award to the City
REVENUE(BONDS OF under the Flood Miti-
`SAID CITY, AND THE gation Program,and to
HEARINGON THE the extent necessary'
ISSUANCE.THEREOF and provided for in the J
PUBLIC NOTICE'is resolution authorizing
hereby given that the issbance of'said Bonds,
Council of the City of funds collected by the j' p
Dubuque, Iowa, will City from a supRlle- I
hold a public hearing mental levy of debt
on the 4th dayof May service taxes,
2015, at 6:30- o'clock At the above meeting
P.M., in the Historic the Council • shall
Federal Building, 350 receive oral'or written-
West 6th Street,Dubu- objections from any
que, Iowa, at which resident ,or property
meeting. the Council { owner of said City to
,proposes to take i the above action. After
additional' action for 1all•.objections have j
the issuance of not to been received and
exceed $24,500,000 considered,the Council
Sales Tax Increment i will at this meeting or
Revenue Bands, in at any adjournment
order to provide funds thereof,take additional.
to pay costs of.the I action for the issuance
acquisition, construc- of said Sales Tax
tion, installation and Increment Revenue. ( ;
equipping of the Bee Bonds or will abandon 11
Branch Watershed the proposal to issue
Flood Mitigation 'Pro- said Bonds. The hear-
ject, including those ing and appeals
Costs associated with therefrom shall be held
the Lower Bee Branch in accordance with and
Creek Restoration governed by -the
(Phase 4), the Upper provisions' of Section
Bee Branch Creek 384.83 of the Code of
Restoration (Phase 7), Iowa.
the Flood Mitigation This notice is given by
Gate Replacement order'of the council of
(Phase 5), the Flood Dubuque, -Iowa, as
Control Maintenance provided by Sections
Facility (Phase 9), and 418.14 and:'384.83 of
the North End Storm the Code of Iowa.
Sewers(Phase 10),the Dated this Nth day of
funding of a - debt April,2015.
service reserve for the Kevin S.Firnstahl
Bonds,and the related City Clerk of Dubuque,
costs for property Iowa
acquisition, engineer- It 4/24
ing and design and E
I
i
I
i
(This Notice to be posted)
NOTICE AND CALL OF PUBLIC MEETING
Governmental Body: The City Council of Dubuque, Iowa.
Date of Meeting: May 4 , 2015.
Time of Meeting: 6 : 30 o'clock P .M.
Place of Meeting: Historic Federal Building, 350 West 6th Street, Dubuque,
Iowa.
PUBLIC NOTICE IS HEREBY GIVEN that the above mentioned governmental
body will meet at the date, time and place above set out. The tentative agenda for said
meeting is as follows:
Not to exceed $24,500,000 Sales Tax Increment Revenue Bonds
•
Public hearing on the issuance.
• Resolution instituting proceedings to take additional action.
Such additional matters as are set forth on the additional 4 page(s) attached
hereto. (number)
This notice is given at the direction of the Mayor pursuant to Chapter 21, Code of
Iowa, and the local rules of said governmental body.
City Ci rk, Dubuque; Iow
May 4 , 2015
The City Council of Dubuque, Iowa, met in regular session, in the Historic
Federal Building, 350 West 6th Street, Dubuque, Iowa, at 6:30 o'clock P.M., on the
above date. There were present Mayor Roy D. Buol , in the chair, and
the following named Council Members:
Karla Braig, Joyce Connors, Ric Jones
Kevin Lynch, David Resnick, Lynn Sutton
Absent:
1
The Mayor announced that this was the time and place for the public hearing and
meeting on the matter of the issuance of not to exceed $24,500,000 Sales Tax Increment
Revenue Bonds in order to provide funds to pay costs of the acquisition, construction,
installation and equipping of the Bee Branch Watershed Flood Mitigation Project,
including those costs associated with the Lower Bee Branch Creek Restoration (Phase 4),
the Upper Bee Branch Creek Restoration (Phase 7), the Flood Mitigation Gate
Replacement (Phase 5), the Flood Control Maintenance Facility (Phase 9), and the North
End Storm Sewers (Phase 10), the funding of a debt service reserve for the Bonds, and
the related costs for property acquisition, engineering and design and other professional
services, and that notice of the proposed action by the Council to institute proceedings for
the issuance of said Sales Tax Increment Revenue Bonds had been published pursuant to
the provisions of Section 384.83 of the Code of Iowa.
The Mayor then asked the Clerk whether any written objections had been filed by
any City resident or property owner to the issuance of said Sales Tax Increment Revenue
Bonds. The Clerk advised the Mayor and the Council that -0- written objections
had been filed. The Mayor then called for oral objections to the issuance of said Sales
Tax Increment Revenue Bonds and -0- were made. Whereupon, the Mayor
declared the time for receiving oral and written objections to be closed.
(Attach here a summary of objections
received or made, if any)
2
The Council then considered the proposed action and the extent of objections
thereto.
Whereupon, Council Member Jones introduced and
delivered to the Clerk the Resolution hereinafter set out entitled "RESOLUTION
INSTITUTING PROCEEDINGS TO TAKE ADDITIONAL ACTION FOR THE
ISSUANCE OF NOT TO EXCEED $24,500,000 SALES TAX INCREMENT
REVENUE BONDS," and moved its adoption. Council Member
Connors seconded the motion to adopt. The roll was called and
the vote was,
AYES:
Jones, Braig, Lynch, Sutton
Resnick, Buol, Connors
NAYS:
Whereupon, the Mayor declared said Resolution duly _adopted as follows:
RESOLUTION NO.154-15
RESOLUTION INSTITUTING PROCEEDINGS TO TAKE ADDITIONAL
ACTION FOR THE ISSUANCE OF NOT TO EXCEED $24,500,000 SALES
TAX INCREMENT REVENUE BONDS
WHEREAS, pursuant to notice published as required by law, this Council has held
a public meeting and hearing upon the proposal to institute proceedings for the issuance
of not to exceed $24,500,000 Sales Tax Increment Revenue Bonds for the purpose of pay
costs of the acquisition, construction, installation and equipping of the Bee Branch
Watershed Flood Mitigation Project, including those costs associated with the Lower Bee
Branch Creek Restoration (Phase 4), the Upper Bee Branch Creek Restoration (Phase 7),
the Flood Mitigation Gate Replacement (Phase 5), the Flood Control Maintenance
Facility (Phase 9), and the North End Storm Sewers (Phase 10), the funding of a debt
service reserve for the Bonds, and the related costs for property acquisition, engineering
and design and other professional services, and has considered the extent of objections
received from residents or property owners as to said proposed issuance; and, accordingly
the following action is now considered to be in the best interests of the City and residents
thereof.
NOW, THEREFORE; BE IT RESOLVED BY THE CITY COUNCIL OF THE
CITY OF DUBUQUE, IOWA:
Section 1. That this Council does hereby institute proceedings and takes
additional action for the sale and issuance in the manner required by law of not to exceed
$24,500,000 Sales Tax Increment Revenue Bonds for the foregoing purposes.
Section 2. The City Manager, Budget Director and Finance Director are
authorized and directed to proceed on behalf of the City with the negotiation of the terms
of said Bonds, to select a date for the Council's approval thereof, to cause to be prepared
such notice and sale information as may appear appropriate, to publish and distribute the
same on behalf of the City and this Council and otherwise to take all action necessary to
penult the sale of said Bonds on a basis favorable to the City and acceptable to the
Council.
PASSED AND APPROVED this 4th day of
May ,2015.
ATTEST:
A to
City lerk
4
STATE OF IOWA
COUNTY OF DUBUQUE
CERTIFICATE
)
)SS
I, the undersigned City Clerk of Dubuque, Iowa, do hereby certify that attached is
a true and complete copy of the portion of the corporate records of said Municipality
showing proceedings of the Council, and the same is a true and complete copy of the
action taken by said Council with respect to said matter at the meetingheld on the date
indicated in the attachment, which proceedings remain in full force and effect, and have
not been amended or rescinded in any way; that :meeting and all action thereat was duly
and publicly held in accordance with a notice of meeting and tentative agenda, a copy of
which was timely served on each member of the Council and posted on a bulletin board
or other prominent place easily accessible to-the.pablic and clearly designated for that
purpose at the principal office of the Council (a copy of the face sheet of said agenda
being attached hereto) pursuant to the local rules of the Council and the provisions of
Chapter 21, Code of Iowa, upon reasonable advance notice to the public and media at
least twenty-four hours prior to the commencement of the meeting as required by said
law and with members of the public present in attendance; I further .certify that_the
individuals named therein were on the date thereof duly and lawfully possessed of their
respective city offices as indicated therein, that no Council vacancy existed except as may
be stated in said proceedings, and that no controversy or litigation is pending, prayed or
threatened involving the incorporation, organization, existence or boundaries of the City
or the right of the individuals named therein as officers to their respective positions.
WITNESS my hand and the seal of said Municipality hereto affixed this 4 th
day of May , 2015.
City CFerk, Dubuque, o
SEAL •
01092192-1 \ 10422-162
(This Notice to be posted)
NOTICE AND CALL OF PUBLIC MEETING
Governmental Body: The City Council of the City of Dubuque, Iowa.
Date of Meeting: May 4 , 2015.
Time of Meeting: 6 : 30 o'clock P.M.
Place of Meeting: Historic Federal Building, 350 West 6th Street, Dubuque,
Iowa.
PUBLIC NOTICE IS HEREBY GIVEN that the above mentioned governmental
body will meet at the date, time and place above set out. The tentative agenda for the
meeting is as follows:
Sales Tax Increment Revenue Bonds (Annual Appropriation Property Tax Supported
Senior Bond Series 2015A
• Resolution approving form and distribution of Preliminary Official Statement.
Such additional matters as are set forth on the additional 3 page(s) attached hereto.
(number)
This notice is given at the direction of the Mayor pursuant to Chapter 21, Code of
Iowa, and the local rules of the governmental body.
City Cle k, City of Dubu
e, Iowa
May 4, 2015
The City Council of the City of Dubuque, State of Iowa, met in regular session, in the
Historic Federal Building, 350 West 6th Street, Dubuque, Iowa, at 6:30 o'clock P..M., on the
above date. There were present Mayor Roy D. Buol, in the chair, and the following named
Council Members:
Karla Braig, Joyce Connors, Ric Jones, Kevin Lynch
David Resnick, Lynn Sutton
Absent:
1
Council Member Jones introduced the following resolution
entitled "RESOLUTION APPROVING FORM AND DISTRIBUTION OF A
PRELIMINARY OFFICIAL STATEMENT RELATING TO THE OFFERING AND
SALE OF SALES TAX INCREMENT REVENUE BONDS (ANNUAL
APPROPRIATION PROPERTY TAX SUPPORTED), SENIOR BOND SERIES
2015A", and moved that the resolution be adopted. Council Member
Connors seconded the motion to adopt. The roll was called and the vote
was,
AYES:
NAYS:
Jones, Braig, Lynch, Sutton
Resnick, Buol, Connors
Whereupon, the Mayor declared the resolution duly adopted as follows:
RESOLUTION NO. 155-15
RESOLUTION APPROVING FORM AND
DISTRIBUTION OF A PRELIMINARY OFFICIAL
STATEMENT RELATING TO THE OFFERING AND
SALE OF SALES TAX INCREMENT REVENUE BONDS
(ANNUAL APPROPRIATION PROPERTY TAX
SUPPORTED), SENIOR BOND SERIES 2015A
WHEREAS, it is deemed necessary and advisable that the City of Dubuque, Iowa
should issue its Sales Tax Increment Revenue Bonds to the amount of not to exceed
$24,500,000, as authorized by Sections 418.14 and 384.83 of the Code of Iowa, for the
purpose of providing funds to pay costs of the acquisition, construction and installation
and equipping of the Bee Branch Watershed Flood Mitigation Project, including those
costs associated with the Lower Bee Branch Creek Restoration (Phase 4), the Upper Bee
Branch Creek Restoration (Phase 7), the Flood Mitigation Gate Replacement (Phase 5),
the Flood Control Maintenance Facility (Phase 9), and the North End Storm Sewers
(Phase 10), the funding of a debt service reserve for the Bonds, and the related costs for
property acquisition, engineering and design and other professional services; and
WHEREAS, pursuant to notice published as required by Sections 418.14 and
384.83 of the Code of Iowa, a public meeting and hearing was held on May 4, 2015, upon
the proposal to institute proceedings for the issuance of the above described Bonds, and
all objections, if any, to such action made by any resident or property owner of the City
-2
were received and considered; and, it is the decision of this governing body that
additional action be taken for the issuance of the Bonds, and that such action is
considered to be in the best interests of the City and the residents thereof; and
WHEREAS, a preliminary form of Official Statement has been prepared for the
purpose of offering the Bonds for sale to the public; and
WHEREAS, it is appropriate that the form of the preliminary Official Statement
be approved and deemed final and, upon completion of the same, that the preliminary
Official Statement be used in connection with the offering of the Bonds for sale to the
public.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE
CITY OF DUBUQUE, IOWA:
Section 1. That the preliminary Official Statement in the form presented to this
meeting be and the same hereby is approved as to form and deemed final for purposes of
Rule 15c2-12 of the Securities and Exchange Commission, subject to such revisions,
corrections or modifications as the Budget Director, upon the advice of disclosure
counsel and the City's financial advisor, shall determine to be appropriate, and is
authorized to be distributed in connection with the offering of the Bonds for sale.
PASSED AND APPROVED this 41-h day of May , 2015.
ATTEST:
STATE OF IOWA
COUNTY OF DUBUQUE
CERTIFICATE
) SS
I, the undersigned City Clerk of the City of Dubuque, State of Iowa, do hereby certify
that attached is a true and complete copy of the portion of the corporate records of the City
showing proceedings of the City Council, and the same is a true and complete copy of the action
taken by the Council with respect to the matter at the meeting held on the date indicated in the
attachment, which proceedings remain in full force and effect, and have not been amended or
rescinded in any way; that meeting and all action thereat was duly and publicly held in
accordance with a notice of public hearing and tentative agenda, a copy of which was timely
served on each member of the Council and posted on a bulletin board or other prominent place
easily accessible to the public and clearly designated for that purpose at the principal office of
the Council (a copy of the face sheet of the agenda being attached hereto) pursuant to the local
rules of the Council and the provisions of Chapter 21, Code of Iowa, upon reasonable advance
notice to the public and media at least twenty-four hours prior to the commencement of the
meeting as required by law and with members of the public present in attendance; I further
certify that the individuals named therein were on the date thereof duly and lawfully possessed of
their respective City offices as indicated therein, that no Council vacancy existed except as may
be stated in the proceedings, and that no controversy or litigation is pending, prayed or
threatened involving the incorporation, organization, existence or boundaries of the City or the
right of the individuals named therein as officers to their respective positions.
WITNESS my hand and the seal of the City hereto affixed this day of May, 2015.
City Clerk, ity of Dubuque, ktate of Iowa
(SEAL)
�s
E c OFFICIAL STATEMENT DATED.2015
w ° New Issue Moody's Investors Service
E : Assuming compliance with certain covenants,in the opinion ofAhlers&Cooney,P.C.,Bond Counsel, underpresent law and assuming continued compliance
with the requirements of the Internal Revenue Code of 1986,as amended(the "Code'),(i)interest on the Series 2015A Bonds is excludable from gross income
for federal income tax purposes,and(tt)interest on the Series 2015A Bonds is not an item of tax preference for purpose of the federal alternative minimum tax
'g .5 imposed on individuals and corporations under the Code;however, such interest will be taken into account in determining adjusted current earnings for the
c o purpose of computing the alternative minimum tax imposed on corporations as defined for federal income tax purposes. The Series 2015A Bonds will NOT be
.�Z designated as"qualified tax-exempt obligations".See `TAXEXEMPTIONAND RELATED TAXMATTERS"herein for a more detailed discussion.
o
m CITY OF DUBUQUE, IOWA
* Sales Tax Increment Revenue Bonds(Annual Appropriation Property Tax Supported),
Ss
Senior Bond Series 2015A
o _
E y
c Dated: Date of Delivery Principal Due: June 1 as shown on inside front cover
'oma
S The Sales Tax Increment Revenue Bonds(Annual Appropriation Property Tax Supported), Senior Bond Series 2015A described above
o (the "Series 2015A Bonds') are issuable by the City of Dubuque, Iowa (the "City" or the "Issuer') as fully registered bonds in the
denomination of$5,000 or any integral multiple thereof and,when issued,will be registered in the name of Cede&Co.,as Bondholder
E o and nominee of the Depository Trust Company, New York NY ("DTC'). DTC will act as securities depository for the Series 2015A
,6 o Bonds.Purchases of the Series 2015A Bonds will be made in book-entry form. See"BOOK-ENTRY ONLY ISSUANCE"herein.
Z ig
P .o The Series 2015A Bonds are being issued pursuant to the provisions of Section 418.14 of the Code of Iowa,as amended,for the purpose
a° of paying costs of the acquisition,construction and installation and equipping of the Bee Branch Watershed Flood Mitigation Project(the
'6 'Bee Branch Project'),including those costs associated with the Lower Bee Branch Creek Restoration(Phase 4),the Upper Bee Branch
c
c Creek Restoration(Phase 7), the Flood Mitigation Cate Replacement(Phase 5), the Flood Control Maintenance Facility(Phase 9), and
o the North End Storm Sewers (Phase 10), and the related costs for property acquisition, engineering and design and other professional
services(collectively,the 'Projects"),to fund a capitalized interest subaccount and a debt service reserve account for the Series 2015A
oBonds and to pay costs of issuance of the Series 2015A Bonds. For a more complete description of the Projects see "PLAN OF
w FINANCE"herein. The Series 2015A Bonds are revenue bonds secured by and payable as provided in the Master Resolution approved
.b A by the City Council of the Issuer on May 19, 2014(the "Master Resolution") and a Series Resolution approved by the City Council on
ov 2015 (the "Series 2015A Resolution") authorizing issuance of the Series 2015A Bonds from all Pledged Revenues (defined
herein),which are pledged under the Master Resolution and the Series 2015A Resolution to the payment of the principal of and interest
E 5 v on the Series 2015A Bonds. See"SECURITY AND SOURCES OF PAYMENT FOR THE SERIES 2015A BONDS"and"APPENDIX
D—DEFINITIONS AND SUMMARY OF MASTER RESOLUTION AND THE SERIES 2015A RESOLUTION"herein.
2
o a THE SERIES 2015A BONDS ARE SPECIAL LIMITED OBLIGATIONS OF THE CITY PAYABLE SOLELY FROM AND
" SECURED BY A PLEDGE OF CERTAIN PLEDGED REVENUES TO BE DEPOSITED AND HELD IN THE FLOOD PROJECT
d
o � b FUND (DEFINED HEREIN). THE PLEDGED REVENUES INCLUDE ALL SALES TAX INCREMENT REVENUES RECEIVED
5 " BY THE CITY UNDER THE AWARD AGREEMENT AND CERTAIN DEBT SERVICE TAXES (EACH AS DEFINED HEREIN)
o THAT MAY BE LEVIED AND DEPOSITED FROM TIME TO TIME INTO THE FLOOD PROJECT FUND IN THE EVENT OF A
wA SHORTFALL (DEFINED HEREIN). THE LEVY OF DEBT SERVICE TAXES BY THE CITY IS SUBJECT TO NON-
APPROPRIATION, AND SHALL NOT CONSTITUTE A MANDATORY PAYMENT OBLIGATION OF THE CITY IN ANY
c s ENSUING FISCAL YEAR BEYOND THE FISCAL YEAR FOR WHICH THE CITY MAY HAVE APPROPRIATED DEBT
„ 5 SERVICE TAXES FOR THE PAYMENT THEREOF. THE SERIES 2015A BONDS ARE NOT GENERAL OBLIGATIONS OF THE
.2 CITY OR AN INDEBTEDNESS WITHIN THE MEANING OF ANY PROVISION OF THE CONSTITUTION OR LAWS OF THE
g STATE OF IOWA, AND THE ISSUANCE OF THE SERIES 2015A BONDS SHALL NOT DIRECTLY OR INDIRECTLY
OBLIGATE THE CITY TO LEVY DEBT SERVICE TAXES OR TO MAKE ANY APPROPRIATION OF DEBT SERVICE TAXES
c S FOR THEIR PAYMENT,EXCEPT AS OTHERWISE DESCRIBED IN THE SERIES 2015A RESOLUTION.
C
a
2, Terms used in this Official Statement and not otherwise defined shall have the meanings as defined in the Master Resolution. See
o C
`! "APPENDIX D—DEFINITIONS AND SUMMARY OF MASTER RESOLUTION AND THE SERIES 2015A RESOLUTION."The
a Series 2015A Bonds involve certain investment risks. See"INVESTMENT CONSIDERATIONS"herein.
4c w
a The Series 2015A Bonds are offered when,as and if issued by the City and accepted by the Underwriter,subject to receipt of an opinion
5 c o
� . 3 as to legality,validity and tax exemption by Ahlers&Cooney,P.C.,Des Moines,Iowa,Bond Counsel. Itis expected that that the Series
2 2015A Bonds in the definitive form will be available for delivery through the facilities of DTC on or about 2015. The
o Underwriter expects to engage in secondary market trading of the Series 2015A Bonds subject to applicable securities laws. The
.5 a o Underwriter is not obligated,however,to repurchase any of the Series 2015A Bonds at the request of the holder thereof.
.4 .2
off `
.� *Subject to change.
E ti BAH?,D
� � o
H o ' THE SERIES 2015A BONDS WILL MATURE AS LISTED ON THE INSIDE FRONT COVER
CITY OF DUBUQUE, IOWA
$ *Sales Tax Increment Revenue Bonds(Annual Appropriation Propertv Tax Supported),
Senior Bond Series 2015A
Jae 11 Amount* Coupon Yield CUSIP Jae 11 Amount* Coupon Yield CUSIP
2023 2028
2024 2029
2025 2030
2026 2031
2027
*Subject to change.
THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE
COMMISSION BY REASON OF THE PROVISIONS OF SECTIONS 3(a)(2) OF THE SECURITIES
ACT OF 1933, AS AMENDED. THE REGISTRATION OR QUALIFICATIONS OF THESE
SECURITIES IN ACCORDANCE WITH APPLICABLE PROVISIONS OF SECURITIES LAWS OF
THE STATES IN WHICH THESE SECURITIES HAVE BEEN REGISTERED OR QUALIFIED AND
THE EXEMPTION FROM REGISTRATION OR QUALIFICATION IN OTHER STATES SHALL NOT
BE REGARDED AS A RECOMMENDATION THEREOF. NEITHER THESE STATES NOR ANY OF
THEIR AGENCIES HAVE PASSED UPON THE MERITS OF THE SECURITIES OR THE
ACCURACY OR COMPLETENESS OF THIS OFFICIAL STATEMENT. ANY REPRESENTATION
TO THE CONTRARY MAY BE A CRIMINAL OFFENSE.
This Official Statement contains statements which should be considered "forward-looking statements,"
meaning they refer to possible future events or conditions. Such statements are generally identifiable by the
words such as "plan," "expect," "estimate," "budget" or similar words. THE ACHIEVEMENT OF
CERTAIN RESULTS OR OTHER EXPECTATIONS CONTAINED IN SUCH FORWARD-LOOKING
STATEMENTS INVOLVE KNOWN AND UNKNOWN RISKS, UNCERTAINTIES AND OTHER
FACTORS WHICH MAY CAUSE ACTUAL RESULTS, PERFORMANCE OR ACHIEVEMENTS
EXPRESSED OR IMPLIED BY SUCH FORWARD-LOOKING STATEMENTS. THE CITY DOES
NOT EXPECT OR INTEND TO UPDATE OR REVISE ANY FORWARD-LOOKING STATEMENTS
CONTAINED HEREIN IF OR WHEN ITS EXPECTATIONS, OR EVENTS, CONDITIONS OR
CIRCUMSTANCES ON WHICH SUCH STATEMENTS ARE BASED OCCUR.
No dealer,broker, salesperson or other person has been authorized by the City to give any information or to
make any representations, other than those contained in the Official Statement. This Official Statement
does not constitute any offer to sell or the solicitation of an offer to buy, nor shall there be any sale of the
Series 2015A Bonds by any person, in any jurisdiction in which it is unlawful for such person to make such
offer, solicitation or sale. The information, estimates and expressions of opinion herein are subject to
change without notice and neither the delivery of this Official Statement nor any sale made hereunder,
shall, under any circumstances, create any implication that there has been no change in the affairs of the
City since the date hereof. This Official Statement is submitted in connection with the sale of the securities
referred to herein and may not be reproduced or used, in whole or in part, for any other purpose.
The Underwriter has reviewed the information in this Official Statement in accordance with, and as part of,
its responsibilities to investors under the federal securities laws as applied to the facts and circumstances of
this transaction,but the Underwriter does not guarantee the accuracy or completeness of such information.
This Official Statement and any addenda thereto were prepared relying on information from the City and
other sources,which are believed to be reliable.
Compensation of Independent Public Advisors, LLC (the "Financial Advisor") payable entirely by the
City, is contingent upon the sale of the issue.
TABLE OF CONTENTS
INTRODUCTION.....................................................................................................................................1
THE SERIES 2015A BONDS...................................................................................................................3
AUTHORITY AND PURPOSE ................................................................................................................3
OPTIONAL REDEMPTION.....................................................................................................................3
BOOK-ENTRY-ONLY ISSUANCE.........................................................................................................4
SECURITY AND SOURCES OF PAYMENT FOR THE SERIES 2015A BONDS..........................7
GENERAL.................................................................................................................................................7
PLEDGED REVENUES............................................................................................................................8
SALES TAX INCREMENT REVENUES CALCULATION AND PAYMENT.....................................8
STAND-BY DEBT SERVICE LEVY, SUBJECT TO NON-APPROPRIATION....................................9
FUNDS AND ACCOUNTS.....................................................................................................................10
BOND PRINCIPAL AND INTEREST ACCOUNT...............................................................................11
DEBT SERVICE RESERVE ACCOUNT...............................................................................................12
REBATEFUND ......................................................................................................................................13
SECOND LIEN BOND ACCOUNT.......................................................................................................13
ADDITIONAL PROJECTS ACCOUNT.................................................................................................14
ADDITIONAL BONDS...........................................................................................................................14
PLAN OF FINANCE..............................................................................................................................17
FLOOD MITIGATION ACT...................................................................................................................17
AWARD AGREEMENT.........................................................................................................................18
OTHER ANTICIPATED FINANCINGS FOR THE BEE BRANCH PROJECT...................................20
SOURCES AND USES OF FUNDS .......................................................................................................22
HISTORICAL SALES TAX COLLECTIONS........................................................................................22
Source: The City.......................................................................................................................................22
ANTICIPATED RECEIPTS AND DEBT SERVICE COVERAGE.......................................................23
INVESTMENT CONSIDERATIONS.....................................................................................................25
VALUATION AND TAXATION..........................................................................................................28
IOWA PROPERTY VALUATIONS........................................................................................................28
1/1/2014 VALUATIONS (Taxes payable July 1, 2014 through June 30, 2015).....................................28
2014 GROSS TAXABLE VALUATION BY CLASS OF PROPERTY.................................................29
TREND OF VALUATIONS....................................................................................................................29
LEVIES AND TAX COLLECTIONS (000's).........................................................................................29
TAXRATES............................................................................................................................................30
LEVYLIMITS.........................................................................................................................................30
LARGER TAXPAYERS (000's).............................................................................................................30
RECENT PROPERTY TAX LEGISLATION.........................................................................................31
INDEBTEDNESS....................................................................................................................................32
DEBTLIMIT...........................................................................................................................................32
DIRECTDEBT........................................................................................................................................32
ANNUAL FISCAL YEAR DEBT SERVICE PAYMENTS...................................................................34
OTHERDEBT.........................................................................................................................................37
FUTURE FINANCING...........................................................................................................................38
DEBT PAYMENT HISTORY.................................................................................................................38
INDIRECTDEBT....................................................................................................................................38
DEBTRATIOS........................................................................................................................................38
FUNDS ON HAND (Cash and Investments as of March 30, 2015)........................................................38
THECITY................................................................................................................................................39
CITY GO V ERNMENT............................................................................................................................39
EMPLO YEES,PENSIONS AND OPEB.................................................................................................39
UNION CONTRACTS.............................................................................................................................40
INSURANCE...........................................................................................................................................41
GENERAL INFORMATION.................................................................................................................42
LOCATION AND TRANSPORTATION................................................................................................42
LARGER EMPLO YERS..........................................................................................................................42
BUILDING PERMITS.............................................................................................................................43
USCENSUS DATA ................................................................................................................................43
UNEMPLOYMENT RATES...................................................................................................................43
EDUCATION...........................................................................................................................................44
FINANCIAL STATEMENTS..................................................................................................................44
LEGAL AND TAX MATTERS.............................................................................................................45
LEGALMATTERS.................................................................................................................................45
LITIGATION...........................................................................................................................................45
TAX EXEMPTION AND RELATED TAX MATTERS........................................................................46
OTHER FINANCING INFORMATION..............................................................................................49
RATING...................................................................................................................................................49
UNDERWRITING...................................................................................................................................49
FINANCIAL ADVISOR..........................................................................................................................49
CONTINUING DISCLOSURE...............................................................................................................49
MISCELLANEOUS.................................................................................................................................50
CERTIFICATION....................................................................................................................................50
APPENDIX A: FORM OF LEGAL OPINION....................................................................................51
APPENDIX B: JUNE 30,2014 INDEPENDENT AUDITOR'S REPORTS......................................52
APPENDIX C: FORM OF CONTINUING DISCLOSURE CERTIFICATE...................................53
APPENDIX D: DEFINITIONS AND SUMMARY OF MASTER RESOLUTION AND THE
SERIES RESOLUTION.........................................................................................................................54
CITY OF DUBUQUE, IOWA
Mayor and City Council
Member Term Expiration
Roy D. Buol,Mayor 2017
Ric W. Jones-At Large 2017
David T. Resnick-At Large 2015
Kevin J. Lynch-Ward 1 2017
Karla A. Braig-Ward 2 2015
Joyce E. Connors-Ward 3 2017
Lynn V. Sutton-Ward 4 2015
Administration
Michael C. Van Milligen, City Manager
Cindy Steinhauser, Assistant City Manager
Teri Goodmann, Assistant City Manager
Ken TeKippe, Finance Director
Jenny Larson,Budget Director
Kevin Firnstahl, City Clerk
City Attorney
Barry A. Lindahl
Dubuque, Iowa
Bond Counsel
Alders &Cooney,P.C.
Des Moines,Iowa
Financial Advisor
Independent Public Advisors, LLC
Johnston,Iowa
PRELIMINARY OFFICIAL STATEMENT
CITY OF DUBUQUE, IOWA
$ * Sales Tax Increment Revenue Bonds (Annual Appropriation Property Tax Supported),
Senior Bond Series 2015A
INTRODUCTION
The following introductory statement is subject in all respects to more complete information contained elsewhere in
this Official Statement. The order and placement of materials in this Oficial Statement, including the Appendices, are
not to be deemed to be a determination of relevance, materiality or relative importance, and the Official Statement,
including the cover page and the Appendices, must be considered in its entirety. All capitalized terms used in this
Official Statement that are not otherwise defined herein shall have the meanings ascribed to them in Appendix D
hereto.
This Official Statement presents certain information relating to the City of Dubuque, Iowa (the "Issuer"or the "City'),
in connection with the sale of the Issuer's Sales Tax Increment Revenue Bonds (Annual Appropriation Property Tax
Supported), Senior Bond Series 2015A (the "Series 2015A Bonds'). The Series 2015A Bonds are being issued
pursuant to the provisions of Section 418.14 of the Code of Iowa, as amended, for the purpose of paying costs of the
acquisition, construction and installation and equipping of the Bee Branch Watershed Flood Mitigation Project (the
'Bee Branch Project"), including those costs associated with the Lower Bee Branch Creek Restoration (Phase 4), the
Upper Bee Branch Creek Restoration (Phase 7), the Flood Mitigation Gate Replacement(Phase 5), the Flood Control
Maintenance Facility (Phase 9), and the North End Storm Sewers (Phase 10), and the related costs for property
acquisition, engineering and design and other professional services (collectively, the 'Projects"), to fund a capitalized
interest subaccount and a debt service reserve account for the Series 2015A Bonds and to pay costs of issuance of the
Series 2015A Bonds. The Bee Branch Project is a multi-phase flood mitigation plan for the Bee Branch Watershed
area of the City. For a more complete description of the Bee Branch Project see`PLAN OF FINANCE"herein.
The Series 2015A Bonds are revenue bonds secured by and payable as provided in the Master Resolution approved by
the City Council of the Issuer on May 19, 2014, as amended (the "Master Resolution') and a Series Resolution
approved by the City Council on , 2015 (the "Series 2015A Resolution"), from all Pledged Revenues
(hereinafter defined), which are pledged to the prompt payment of the principal of and interest on all Senior Bonds
(hereinafter defined); provided, however, that the pledge of the Pledged Revenues to any Second Lien Bonds
(hereinafter defined) shall be junior and subordinate in lien and right of payment to the Series 2015A Bonds. See
"APPENDIX D — DEFINITIONS AND SUMMARY OF MASTER RESOLUTION AND THE SERIES 2015A
RESOLUTION." See also "SECURITY AND SOURCES OF PAYMENT FOR THE SERIES 2015A BONDS"
herein.
The Master Resolution authorizes the City to issue either "Senior Bonds" or "Second Lien Bonds" (collectively
referred to as 'Bonds"), subject to certain requirements of the Master Resolution. The Series 2015A Bonds are the first
series of Senior Bonds to be issued under the Master Resolution. See "APPENDIX D - DEFINITIONS AND
SUMMARY OF MASTER RESOLUTION AND THE SERIES 2015A RESOLUTION' and "SECURITY AND
SOURCES OF PAYMENT FOR THE SERIES 2015A BONDS" herein. The City previously has issued one series of
Second Lien Bonds, consisting of the $7,190,000 Sales Tax Increment Revenue Bonds (Unlimited Property Tax
Supported), Second Lien Series 2014 (the "Series 2014 Bonds"), under the Master Resolution for the Bee Branch
Project.
*Subject to change.
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The Series 2015A Bonds are special limited obligations of the City, payable solely from and secured by a pledge of
certain Pledged Revenues to be deposited and held in the Flood Project Fund of the Issuer. The Pledged Revenues
include all Sales Tax Increment Revenues received by the City under the Award Agreement and certain Debt Service
Taxes (each as defined herein) that may be levied and deposited from time to time into the Flood Project Fund in the
event of a Shortfall (defined herein). THE LEVY OF DEBT SERVICE TAXES BY THE CITY IS SUBJECT TO
NON-APPROPRIATION, AND SHALL NOT CONSTITUTE A MANDATORY PAYMENT OBLIGATION OF
THE CITY IN ANY ENSUING FISCAL YEAR BEYOND THE FISCAL YEAR FOR WHICH THE CITY MAY
HAVE APPROPRIATED DEBT SERVICE TAXES FOR THE PAYMENT THEREOF. The Series 2015A Bonds are
NOT general obligations of the City or an indebtedness within the meaning of any provision of the Constitution or
laws of the State of Iowa, and the issuance of the Series 2015A Bonds shall not directly or indirectly obligate the City
to levy Debt Service Taxes or to make any appropriation for their payment, except as described in the Series 2015A
Resolution. See "SECURITY AND SOURCES OF PAYMENT FOR THE SERIES 2015A BONDS"herein.
This Official Statement is deemed to be a final official statement within the meaning of Rule 15c2-12 of the Securities
and Exchange Commission, except for the omission of certain pricing and other information which is to be made
available through a final Official Statement.
This Introductory Statement is only a brief description of the Series 2015A Bonds, the Master Resolution and certain
other matters. Such description is qualified by reference to the entire Official Statement, including the appendices
attached hereto, and the documents summarized or described herein. This Official Statement should be reviewed in its
entirety.
All statements made in this Official Statement involving matters of opinion or of estimates, whether or not so expressly
stated, are set forth as such and not as representations of fact, and no representation is made that any of the estimates
will be realized.
Terms used in this Official Statement and not otherwise defined shall have the meanings as defined in "APPENDIX D
—DEFINITIONS AND SUMMARY OF MASTER RESOLUTION AND THE SERIES 2015A RESOLUTION'.
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THE SERIES 2015A BONDS
GENERAL
The Series 2015A Bonds will be issued as fully registered bonds without coupons and, when issued, will be registered
in the name of Cede & Co., as nominee of The Depository Trust Company (`DTC'). DTC will act as securities
depository for the Series 2015A Bonds. Individual purchases may be made in book-entry form only, in the principal
amount of$5,000 and integral multiples thereof Purchasers will not receive certificates representing their interest in
the Series 2015A Bonds purchased. Principal of the Series 2015A Bonds payable annually on each June 1, beginning
June 1, 20 and interest on the Series 2015A Bonds, payable initially on December 1, 2015 and thereafter on each
June 1 and December 1, will be paid to DTC by the City's Registrar/Paying Agent, Wells Fargo Bank, N.A., Des
Moines, Iowa (the "Registrar"). DTC will in turn remit such principal and interest to its participants for subsequent
disbursements to the beneficial owners of the Series 2015A Bonds as described herein. Interest and principal shall be
paid to the registered holder of a Series 2015A Bond as shown on the records of ownership maintained by the Registrar
on the 15th day of the month preceding said interest payment date (the "Record Date"). So long as any of the Series
2015A Bonds are in book-entry form, the principal, redemption premium, if any, and interest on such Series 2015A
Bonds are payable by check or draft mailed, or wire transfer, to Cede & Co., as nominee of DTC, and will be
redistributed by DTC as described below under `Book-Entry Only Issuance". See 'BOOK-ENTRY-ONLY
ISSUANCE"herein.
AUTHORITY AND PURPOSE
The Series 2015A Bonds are being issued under Chapter 418 of the Code of Iowa, as amended (the "Act"), and
resolutions to be adopted by the City Council of the City. Proceeds of the Series 2015A Bonds will be used to pay
costs of the acquisition, construction and installation and equipping of the Bee Branch Watershed Flood Mitigation
Project (the 'Bee Branch Project"), including those costs associated with the Lower Bee Branch Creek Restoration
(Phase 4), the Upper Bee Branch Creek Restoration (Phase 7), the Flood Mitigation Gate Replacement(Phase 5), the
Flood Control Maintenance Facility (Phase 9), and the North End Storm Sewers (Phase 10), and the related costs for
property acquisition, engineering and design and other professional services (collectively, the 'Projects"), to fund a
capitalized interest subaccount and debt service reserve account for the Series 2015A Bonds and to pay costs of
issuance of the Series 2015A Bonds. See 'PLAN OF FINANCE"herein.
OPTIONAL REDEMPTION
Redemption Generally:
The Bonds are subject to mandatory and optional redemption as provided in the Master Resolution and the Series
Resolution authorizing their issuance.
Mandatory Redemption of Series 2015A Bonds:
Optional Redemption of Series 2015A Bonds: The Series 2015A Bonds maturing on or after June 1, 20 , may be
called for redemption by the Issuer and paid before maturity on June 1, 20 or any date thereafter, from any funds
regardless of source, in whole or in part, in any order of maturity and within an annual maturity by lot. The terms of
any redemption shall be par, plus accrued interest to date of call.
Notice of Redemption:. Unless waived by any registered owner of the 2015A Bonds to be redeemed and except as
may be otherwise provided in the Master Resolution, official notice of any such redemption shall be given by the
Registrar of the Series 2015A Bonds to be redeemed on behalf of the Issuer by mailing a copy of an official
redemption notice by first class mail, at least 30 days prior to the date fixed for redemption to the registered owner of
the Series 2014 Bond or Bonds to be redeemed at the address shown on the Bond Register or at such other address as is
3
furnished in writing by such registered owner to the Registrar.
Any notice of an optional redemption of the Series 2015A Bonds (pursuant the Master Resolution) may specify that
the redemption is contingent upon the deposit of moneys with the Paying Agent in an amount sufficient to pay the
redemption price(which price shall include the redemption premium, if any) of all the Series 2015A Bonds or portions
of the Series 2015A Bonds which are to be redeemed on that date.
Prior to any redemption date, the Issuer shall deposit with the Paying Agent an amount of money sufficient to pay the
redemption price of all the Series 2015A Bonds or portions of the Series 2015A Bonds which are to be redeemed on
that date.
For so long as DTC is effecting book-entry transfers of the Series 2015A Bonds, the Registrar shall provide the notices
specified in this Section to DTC. It is expected that DTC shall, in turn,notify its Participants and that the Participants,
in turn, will notify or cause to be notified the Beneficial Owners. Any failure on the part of DTC or a Participant, or
failure on the part of a nominee of a Beneficial Owner of a Bond (having been mailed notice from the Registrar, a
Participant or otherwise) to notify the Beneficial Owner of the Bond so affected, shall not affect the validity of the
redemption of such Bond.
Any defect in any notice of redemption shall not affect the validity of proceedings for redemption of the Series 2015A
Bonds.
Selection of Bonds to be Redeemed: If less than all of the Series 2015A Bonds of like maturity shall be called for
redemption, the particular Series 2015A Bonds, or portions thereof, to be redeemed shall be selected by the Paying
Agent in such equitable manner as the Paying Agent may determine. The portion of any Series 2015A Bond of a
denomination of more than $5,000 to be redeemed shall be in the Principal amount of$5,000 or an integral multiple
thereof, and, in selecting portions of such Series 2015A Bonds for redemption, the Issuer shall treat each such Series
2015A Bond as representing that number of Series 2015A Bonds which is obtained by dividing the Principal of such
Series 2015A Bond to be redeemed in part by $5,000.
BOOK-ENTRY-ONLY ISSUANCE
The information contained in the following paragraphs of this subsection `Book-Entry-Only Issuance" has been
extracted from a schedule prepared by Depository Trust Company (`DTC') entitled "SAMPLE OFFERING
DOCUMENT LANGUAGE DESCRIBING DTC AND 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 Series 2015A Bonds
(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
4
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
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 highest 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
5
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.
A Beneficial Owner shall give notice to elect to have its Securities purchased or tendered, through its Participant, to
Tender/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 Tender/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 Tender/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.
6
SECURITY AND SOURCES OF PAYMENT FOR THE SERIES 2015A BONDS
GENERAL
The Series 2015A Bonds are revenue bonds secured by and payable as provided in the Master Resolution from all
Pledged Revenues (defined herein), which are pledged under the Master Resolution and the Series 2015A Resolution
to the payment of the principal of and interest on the Series 2015A Bonds.
"Pledged Revenues" means the Sales Tax Increment Revenues, Investment Earnings, any Debt Service Taxes levied
and collected as may be provided in a Series Resolution (but which shall only be pledged to the related series of
Bonds), including any Debt Service Taxes levied and collected in respect of the Series 2015A Bonds under the Series
2015A Resolution, any other lawfully available funds that the Issuer appropriates to the Flood Project Fund and
pledges to the payment of one or more series of Bonds in a Series Resolution or a Supplemental Resolution, and all
other moneys paid into, and all moneys and securities on deposit from time to time in, the funds and accounts specified
in Master Resolution, but excluding any amounts required to be set aside pending, or used for, rebate to the United
States governrnent pursuant to Section 148(f) of the Code, including, but not limited to, amounts in the Rebate Fund
(defined herein).
"Flood Project Fund" means the special fund established by the Issuer in the Master Resolution for the deposit of all
Sales Tax Increment Revenues and any Debt Service Taxes or other funds that may be pledged to the payment of one
or more series of Bonds.
"Debt Service Taxes"means the taxes which may be levied by the Issuer against all taxable property located with the
incorporated area of the Issuer in the event of a Shortfall and thereafter transferred from the debt service fund of the
Issuer established under Section 384.4 of the Code of Iowa, to the Flood Project Fund to pay the Issuer's costs related
to the Series 2015A Bonds. THE LEVY OF DEBT SERVICE TAXES BY THE CITY IS SUBJECT TO NON-
APPROPRIATION, AND SHALL NOT CONSTITUTE A MANDATORY PAYMENT OBLIGATION OF THE
CITY IN ANY ENSUING FISCAL YEAR BEYOND THE FISCAL YEAR FOR WHICH THE CITY MAY HAVE
APPROPRIATED DEBT SERVICE TAXES TO THE PAYMENT THEREOF.
"Sales Tax Increment Revenues" shall mean the increased sales tax revenues calculated and paid to the Issuer by the
Iowa Department of Revenue in accordance with Chapter 418 of the Code of Iowa (the "Act'), the regulations issued
thereunder, and the Award Agreement. See 'PLAN OF FINANCE" and "APPENDIX D — DEFINITIONS AND
SUMMARY OF MASTER RESOLUTION AND THE SERIES 2015A RESOLUTION"herein.
"Shortfall" means a determination by the Governing Body of the Issuer, made on or before March 15 of any year, that
the amounts on deposit in the Bond Principal and Interest Account, Debt Service Reserve Account and Additional
Projects Account of the Flood Project Fund are not sufficient to make the payments of the Principal of and interest due
on the Series 2015A Bonds on the following June 1 and during the following Fiscal Year.
THE SERIES 2015A BONDS ARE SPECIAL LIMITED OBLIGATIONS OF THE CITY PAYABLE SOLELY
FROM AND SECURED BY A PLEDGE OF CERTAIN PLEDGED REVENUES TO BE DEPOSITED AND HELD
IN THE FLOOD PROJECT FUND. THE PLEDGED REVENUES INCLUDE ALL SALES TAX INCREMENT
REVENUES RECEIVED BY THE CITY UNDER THE AWARD AGREEMENT AND CERTAIN DEBT SERVICE
TAXES THAT MAY BE LEVIED AND DEPOSITED FROM TIME TO TIME INTO THE FLOOD PROJECT
FUND IN THE EVENT OF A SHORTFALL. THE LEVY OF DEBT SERVICE TAXES IS SUBJECT TO NON-
APPROPRIATION, AND SHALL NOT CONSTITUTE A MANDATORY PAYMENT OBLIGATION OF THE
CITY IN ANY ENSUING FISCAL YEAR BEYOND THE FISCAL YEAR FOR WHICH THE CITY MAY HAVE
APPROPRIATED DEBT SERVICE TAXES TO THE PAYMENT THEREOF. THE SERIES 2015A BONDS ARE
NOT GENERAL OBLIGATIONS OF THE CITY OR AN INDEBTEDNESS WITHIN THE MEANING OF ANY
PROVISION OF THE CONSTITUTION OR LAWS OF THE STATE OF IOWA, AND THE ISSUANCE OF THE
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SERIES 2015A BONDS SHALL NOT DIRECTLY OR INDIRECTLY OBLIGATE THE CITY TO LEVY DEBT
SERVICE TAXES OR TO MAKE ANY APPROPRIATION OF DEBT SERVICE TAXES FOR THEIR PAYMENT,
EXCEPT AS OTHERWISE DESCRIBED IN THE SERIES 2015A RESOLUTION.
The Master Resolution authorizes the Issuer to issue additional bonds thereunder, pursuant to a Series Resolution,
which bonds may be either "Senior Bonds" or "Second Lien Bonds" (collectively referred to herein as `Bonds'),
subject to certain requirements of the Master Resolution. See "SECURITY AND SOURCES OF PAYMENT FOR
THE SERIES 2015A BONDS —Additional Bonds"herein and "APPENDIX D—DEFINITIONS AND SUMMARY
OF MASTER RESOLUTION AND THE SERIES 2015A RESOLUTION - Senior Bonds and Second Lien Bonds"
attached hereto. The Series 2015A Bonds are the first series of Senior Bonds to be issued under the Master Resolution.
The City previously has issued one series of Second Lien Bonds, consisting of the $7,190,000 Sales Tax Increment
Revenue Bonds (Unlimited Property Tax Supported), Second Lien Series 2014 (the "Series 2014 Bonds"). The Issuer
may also issue additional Senior Bonds and/or Second Lien Bonds if the conditions of the Master Resolution are met.
See "SECURITY AND SOURCES OF PAYMENT FOR THE SERIES 2015A BONDS - Senior Bonds and Second
Lien Bonds" herein and "APPENDIX D — DEFINITIONS AND SUMMARY OF MASTER RESOLUTION AND
THE SERIES 2015A RESOLUTION - Senior Bonds and Second Lien Bonds" attached hereto for a discussion of the
requirements that must be satisfied under the Master Resolution prior to the issuance of additional Bonds thereunder.
PLEDGED REVENUES
The Series 2015A Bonds are revenue bonds secured by and payable as provided in the Master Resolution from all
Pledged Revenues which are pledged under the Master Resolution to the payment of the principal and interest on the
Series 2015A Bonds; provided, however, that the pledge of the Pledged Revenues to any Second Lien Bonds shall be
junior and subordinate in lien and right of payment to all Senior Bonds outstanding at any time, except with respect to
any Credit Facility or Debt Service Taxes. See "SECURITY AND SOURCE OF PAYMENT FOR THE SERIES
2015A BONDS—Stand-by Debt Service Tax Levy; Subject to Non-Appropriation"herein.
SALES TAX INCREMENT REVENUES CALCULATION AND PAYMENT
The Sales Tax Increment Revenues that will be distributed to the Issuer for deposit in the Flood Project Fund will be
calculated under the Act by the Iowa Department of Revenue ('DOR"). DOR is required under the Act to calculate
quarterly the amount of increased sales tax revenues for each governmental entity that has been approved to use sales
tax increment revenues and of the amount of such revenues to be transferred to the sales tax increment fund created
under the Act and administered by DOR. DOR will calculate the amount of sales tax increment to be paid to the Issuer
as follows:
a. Determine the amount of sales subject to the tax under Iowa Code Section 423.2 in the incorporated area of the
City during the corresponding quarter in the base year from retail establishments in such area. The base year for
the Issuer has been determined to be the fiscal year ended June 30, 2013.
b. Determine the amount of sales subject to the tax under Iowa Code Section 423.2 in the incorporated area of the
City during the corresponding quarter in each subsequent calendar year from retail establishments in such area.
C. Subtract the base year quarterly amount (determined under (a) above) from the subsequent calendar year
quarterly amount(determined under(b) above).
d. If the amount determined under (c) above is positive, the product of such amount multiplied by the tax rate
imposed under Iowa Code Section 423.2 (currently 5%) shall constitute the amount of the increased sales tax
revenue.
Under the Act, a sales tax increment fund is established as a separate and distinct fund in the State Treasury under the
control of the DOR, consisting of the amount of the increased state sales and services tax revenues collected by DOR
within the applicable area of each governmental entity authorized to receive sales tax increment revenues under the Act.
In the case of the Issuer, DOR made its first deposit of sales tax increment revenue in the fund for the Issuer in
December 2014, representing the collection of Sales Tax Increment Revenues through June 30, 2014. Upon request by
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the City, DOR shall remit the moneys in the City's account within the fund to the City's Flood Project Fund, but such
requests by the City shall be made not more often than quarterly. In lieu of quarterly requests, the City may submit a
certified schedule of principal and interest payments on the Series 2015A Bonds and if such a certified schedule is
submitted, DOR shall, subject to the remittance limitations of the Act, remit from the City's account for deposit in the
City's Flood Project Fund the amounts necessary for such principal and interest payments in accordance with the
certified schedule. Requests for remittance shall be made for the amount of moneys in the City's account necessary to
pay the City's costs or obligations related to the Bee Branch Project, according to the sales tax revenue funding needs
specified in the approved project plan. If the City has unused funds from a prior quarter in its account within the DOR's
sales tax increment fund, subject to the funding limitations of the Act, those funds will be available in subsequent
quarters so long as the amount is necessary for purposes of the Act Under the Act, no governmental entity may receive
remittances during any fiscal year exceeding $15 million dollars or 70%of the total yearly amount of increased sales tax
increment revenue collected in the applicable area and deposited in the governmental entity's account, whichever is less.
See "AWARD AGREEMENT"herein for a description of the annual amounts of Sales Tax Increment Revenues that are
to be paid to the Issuer under the Award Agreement. See also "PLAN OF FINANCE" herein for information
concerning the historical collections of sales taxes within the incorporated area of the City and the prior disbursements
of Sales Tax Increment Revenues received by the City under the Award Agreement.
STAND-BY DEBT SERVICE LEVY; SUBJECT TO NON-APPROPRIATION
Under the Act, if the moneys in a governmental entity's flood project fund are insufficient to pay the governmental
entity's costs related to bonds, notes or other obligations issued under the Act, the amounts necessary to pay such costs
may be levied and transferred for deposit in the governmental entity's flood project fund from the debt service fund of
the governmental entity, but only if and to the extent provided in the resolution authorizing the issuance of the bonds.
The levy of such debt service taxes is made upon all taxable property within the corporate limits of a city, without
limitation as to rate or amount.
As allowed under the Act, therefore, the Issuer has covenanted and agreed in the Series 2015A Resolution that, in the
event the amounts on deposit in the Bond Principal and Interest Account, Debt Service Reserve Account and Additional
Projects Account (each as described herein) on March 15 of any year are not sufficient to make the payments of the
principal of and interest due on the Series 2015A Bonds on the following June 1 and during the following Fiscal Year
(the difference between such available amounts and the amounts due on the Series 2015A Bonds on such dates being
referred to as a "Shortfall"), the Issuer presently intends to include within its budget for that Fiscal Year a levy of Debt
Service Taxes in such amount as may be necessary to make up the Shortfall and timely pay the full amount of the
principal of and interest due on the Series 2015A Bonds during such Fiscal Year, and for that purpose the Issuer has
authorized a stand-by levy of Debt Service Taxes in the Series 2015A Resolution; provided however, that this stand-by
levy and expression of current intent does not create and shall not be construed as creating a general, legal or
enforceable obligation of the Issuer to levy such taxes and appropriate such funds for any Fiscal Year, and the decision
to levy such taxes and appropriate such funds for a Fiscal Year to make up a Shortfall shall be made in the sole
discretion of the then current Governing Body of the Issuer.
On or before March 15 of each year the Governing Body by resolution shall determine whether or not a Shortfall will
occur and whether to include within its budget a levy of Debt Service Taxes for the next succeeding Fiscal Year for the
purpose of making up the Shortfall. If the Governing Body determines to budget for such a levy and appropriate Debt
Service Taxes for the foregoing purposes for such Fiscal Year,the Issuer shall collect such amounts into the debt service
fund of the Issuer and thereafter transfer the same to the Bond Principal and Interest Account for application to the
payment of principal of and interest on the Series 2015A Bonds during such Fiscal Year and/or to the Debt Service
Reserve Account to replenish the same.
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Notwithstanding anything in the Series 2015A Resolution to the contrary, the levy, collection and transfer of Debt
Service Taxes for the payments of any portion of the Principal and interest due on the Series 2015A Bonds
permitted under the Series 2015A Resolution shall not constitute a mandatory charge or a requirement in any
ensuing Fiscal Year beyond the then current Fiscal Year for which the Issuer has determined to make such a levy
and appropriated the funds thereby received as described therein, and the Issuer shall have no continuing
obligation to budget for, levy, collect or transfer Debt Service Taxes to the Flood Project Fund for the payment of
any portion of the Principal of or interest due on the Series 2015A Bonds, and no provision of the Series 2015A
Resolution or the Series 2015A Bonds shall be construed or interpreted as creating a general obligation of the
Issuer or other financial obligation of the Issuer for any future Fiscal Year or a debt within the meaning of any
constitutional or statutory debt limitation. The right reserved to the Issuer to levy Debt Service Taxes for the
payments of Principal of and interest on the Series 2015A Bonds shall be subject at all times to Non-
Appropriation by the Governing Body. If a Shortfall will occur in any Fiscal Year, and in the event the
Governing Body does not budget for, levy and appropriate Debt Service Taxes for such Fiscal Year in amounts
sufficient to meet the payments of Principal of and interest due on the Series 2015A Bonds during such Fiscal
Year, the Issuer's obligations under the Series 2015A Bonds shall be limited to the funds held on deposit from
time to time in the Flood Project Fund. The Issuer shall give notice to the Original Purchaser of any Non-
Appropriation. Upon the occurrence of any such Non-Appropriation, the Issuer shall not be obligated to make
payment from any source of any amounts in respect of Principal and interest due on the Series 2015A Bonds
beyond those amounts otherwise held on deposit from time to time in the Flood Project Fund, and no Event of
Default shall be deemed to have occurred under Section 10.1 of the Master Resolution, and the Issuer shall not be
liable to the holders of the Series 2015A Bonds for any remaining amounts due on the Series 2015A Bonds or for
any costs, damages (including but not limited to consequential damages) or expenses incurred by the holders of
the Series 2015A Bonds as a result of the exercise by the Issuer of the foregoing right of Non-Appropriation, so
long as the Issuer otherwise applies the amounts held on deposit from time to time in the Flood Project Fund for
that purpose.
A certified copy of the Series 2015A Resolution will be filed with the County Auditor to evidence the Issuer's stand-by
levy(subject to non-appropriation) of the Debt Service Taxes described therein.
MASTER RESOLUTION
The City Council has approved the Master Resolution and the Series 2015A Resolution providing for the issuance of the
Series 2015A Bonds, the pledge of the Pledged Revenues and creating the funds and accounts related to the Series
2015A Bonds. Pursuant to the Master Resolution, Sales Tax Increment Revenues received as a result of the Flood
Mitigation Program under the Award Agreement shall be applied solely for the benefit of the holders of the Series
2015A Bonds Outstanding from time to time, any other Senior Bonds,the Series 2014 Bonds and any other Second Lien
Bonds that may be issued in the future under the Master Resolution. See" APPENDIX D - "DEFINITIONS AND
SUMMARY OF MASTER RESOLUTION AND TIIE SERIES 2015A RESOLUTION"herein.
FUNDS AND ACCOUNTS
The following special funds and accounts have been established in the Master Resolution so long as any of the Bonds
remain Outstanding:
(a) Flood Project Fund;
(b) Bond Principal and Interest Account;
(c) Debt Service Reserve Account;
(d) Rebate Fund;
(e) Second Lien Bond Account(while Second Lien Bonds are Outstanding);
(f) Additional Projects Account; and
(g) Project Construction Fund.
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The Bond Principal and Interest Account, Debt Service Reserve Account, Second Lien Bond Account and Additional
Projects Account shall be held within the Flood Project Fund. The Issuer shall have the right to create special accounts
or sub-accounts, from time to time, in each of the foregoing funds and accounts as the Governing Body determines to be
desirable.
All Pledged Revenues shall be deposited as received into the Flood Project Fund. Moneys from time to time credited
to the Flood Project Fund shall be applied on the first day of each fiscal quarter to the funds and accounts hereby
established in the following order of priority:
(a) First, to transfer all amounts to the Bond Principal and Interest Account as required by the Master
Resolution(see`Bond Principal and Interest Accounf'description below).
(b) Second, to transfer all amounts to the Debt Service Reserve Account as required by the Master
Resolution(see"Debt Service Reserve Account"description below).
(c) Third, to transfer all amounts to the Rebate Fund as required by the Master Resolution (see "Rebate
Fund"description below).
(d) Fourth, to transfer all amounts to the Second Lien Bond Account as required by the Master Resolution
(see"Second Lien Bond Accounf'description below).
(e) Fifth, to make deposits to the Additional Projects Account as required by the Master Resolution (see
"Additional Projects Account"description below).
BOND PRINCIPAL AND INTEREST ACCOUNT
Sufficient moneys shall be paid in periodic installments from the Flood Project Fund into the Bond Principal and
Interest Account(also called the "Sinking Fund"under the Master Resolution)for the purpose of paying the principal
of and interest on the Senior Bonds as they become due and payable; provided, however, that if the Issuer has levied
and collected any Debt Service Taxes to pay a portion of the principal of or interest on any series of Bonds, such Debt
Service Taxes shall be allocated only to the (i) Sinking Fund accounts related to such series of Senior Bonds or (ii)the
Second Lien Bond Account for such series of Second Lien Bonds, as applicable. Amounts held in the Sinking Fund
shall be used solely to pay interest and principal of the Senior Bonds as the same become due and payable (whether at
maturity or upon redemption).
On or before the 30th day preceding each Interest Payment Date for Senior Bonds, the Issuer shall deposit in the
Sinking Fund an amount which,together with any other moneys already on deposit therein and available to make such
payment, is not less than the interest coming due on such Senior Bonds on such Interest Payment Date. On or before
the 30th day preceding each Principal Maturity Date for Senior Bonds, the Issuer shall deposit in the Sinking Fund an
amount which, together with any other moneys already on deposit therein and available to make such payment, is not
less than the Principal coming due on such Senior Bonds on such Principal Maturity Date.
A separate subaccount shall be established for each series of Bonds that are to be paid in part with capitalized interest.
In the case of the Series 2015A Bonds, the Issuer shall, not less than 5 business days prior to each Interest Payment
Date in the period until June 1, 2017 (the "Capitalized Interest Period'), transfer to the interest subaccount of the
Sinking Fund from the Capitalized Interest Subaccount an amount sufficient to pay interest on the Series 2015A Bonds
on such Interest Payment Date. Any amounts remaining in the Capitalized Interest Subaccount after the Capitalized
Interest Period shall be transferred to the Project Construction Fund, and the Capitalized Interest Subaccount for the
Series 2015A Bonds shall be closed.
If at any time the amounts in any account of the Sinking Fund are less than the amounts required by the Master
Resolution, and there are not on deposit in the Additional Projects Account available moneys sufficient to cure any
such deficiency, then the Issuer shall withdraw from the funds and accounts relating to Second Lien Bonds and deposit
in such account of the Sinking Fund, as the case may be, the amount necessary (or all the moneys in such funds and
accounts, if less than the amount required)to make up such deficiency.
No further payments need be made into the Sinking Fund for a series of Senior Bonds whenever the amount available
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in the Sinking Fund, if added to the amount then in the Debt Service Reserve Account for such series of Senior Bonds,
is sufficient to retire all such Senior Bonds then Outstanding and to pay all unpaid interest accrued and to accrue prior
to such retirement. No moneys in the Sinking Fund shall be used or applied to the optional purchase or redemption of
Senior Bonds prior to maturity unless: (i) provision shall have been made for the payment of all of the Senior Bonds;
or (ii) such moneys are applied to the purchase and cancellation of Senior Bonds which are subject to mandatory
redemption on the next mandatory redemption date, which falls due within 12 months, such Senior Bonds are
purchased at a price not more than would be required for mandatory redemption, and such Senior Bonds are cancelled
upon purchase; or (iii) such moneys are in excess of the then required balance of the Sinking Fund and are applied to
redeem a part of the Senior Bonds Outstanding on the next succeeding redemption date for which the required notice
of redemption may be given.
Whenever at the end of each Fiscal Year the amount of moneys in any account of the Sinking Fund exceeds the amount
then currently required to be held therein,the excess shall be transferred to the Flood Project Fund.
DEBT SERVICE RESERVE ACCOUNT
The Master Resolution establishes a Debt Service Reserve Account that may secure one or more series of Bonds.
Upon the issuance of the Series 2015A Bonds, there shall be deposited S into the Debt Service
Reserve Account, and the Series 2015A Bonds shall be secured by amounts held in the Debt Service Reserve Account.
The foregoing amount shall be the Debt Service Reserve Requirement applicable to the Series 2015A Bonds. There
also shall be deposited into the Debt Service Reserve Account the amounts specified in Series Resolutions with respect
to any other Senior Bonds, and the Issuer shall establish a separate subaccount within the Debt Service Reserve
Account for each series of Senior Bonds to be secured thereby.
After the issuance of any Senior Bonds, the increase in the amount of the Debt Service Reserve Requirement, if any,
resulting from the issuance of such Senior Bonds shall be accumulated, to the extent not covered by deposits from Bond
proceeds or funds on hand, over a period not exceeding 5 calendar years from the date of delivery of such Senior Bonds
in quarterly deposits ("Accumulation Payments"), none of which is less than 1/20 of the amount to be accumulated. The
balance of the Debt Service Reserve Account shall be maintained at an amount equal to the Debt Service Reserve
Requirement (or such lesser amount that is required to be accumulated in the Debt Service Reserve Account in
connection with the periodic accumulation to the Debt Service Reserve Requirement after the issuance of Senior Bonds
or upon the failure of the Issuer to provide a substitute Reserve Account Credit Facility in certain events).
There shall be transferred from the Flood Project Fund on a pro rata basis (1) to the Debt Service Reserve Account the
amount necessary to restore, as further described below, the amount of cash and securities in the Debt Service Reserve
Account to an amount equal to the difference between (a) the Debt Service Reserve Requirement (or such lesser
quarterly amount that is required to be deposited into the Debt Service Reserve Account after the issuance of Senior
Bonds or upon the failure of the Issuer to provide a substitute Reserve Account Credit Facility in certain events) and (b)
the portion of the required balance of the Debt Service Reserve Account satisfied by means of a Reserve Account Credit
Facility, and(2)to any Reserve Account Credit Facility Provider the amount necessary to reinstate any Reserve Account
Credit Facility which has been drawn down. Whenever for any reason the amount in the Sinking Fund is insufficient to
pay all interest or Principal becoming due on the Senior Bonds within the next seven days, the Issuer shall make up any
deficiency by transfers from the following funds and amounts, in the following order of priority: first, from the
Additional Projects Account; and second, from the funds and accounts of the Issuer relating to Second Lien Bonds.
Whenever, on the date that such interest or Principal is due, there are insufficient moneys in the Sinking Fund available
to make such payment, the Issuer shall, without further instructions, apply so much as may be needed of the moneys in
the Debt Service Reserve Account to prevent default in the payment of such interest or Principal,with priority to interest
payments, but only on Senior Bonds that are secured by amounts on deposit in the Debt Service Reserve Account.
Whenever by reason of any such application or otherwise (other than required Accumulation Payments), the amount
remaining to the credit of the Debt Service Reserve Account is less than the amount then required to be in the Debt
Service Reserve Account, such deficiency shall be remedied by quarterly deposits from the Flood Project Fund over a
period not exceeding 5 calendar years,none of which deposits shall be less than 1/20 of the amount to be so replenished,
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as provided in Section 6.3 of the Master Resolution.
There was no deposit made into the Debt Service Reserve Account upon the issuance of the Series 2014 Bonds, and the
Series 2014 Bonds are not secured by any amounts held in the Debt Service Reserve Account.
REBATE FUND
The Issuer shall calculate,from time to time, as required in order to comply with the provisions of Section 148(f) of the
Code, the amounts required to be rebated (including penalties) to the United States and shall deposit or cause to be
deposited into the Rebate Fund any and all of such amounts promptly following a determination of any such amount
To the extent amounts on deposit in the Additional Projects Account are not available for such purposes, the Issuer
shall budget for, levy and collect Debt Service Taxes sufficient in an amount to make any required rebate payments to
the United States.
To the extent and at the times required in order to comply with Section 148(f) of the Code, the Issuer may withdraw
funds from the Rebate Fund for the purpose of making rebate payments (including penalties) to the United States as
required by Section 148(f) of the Code. Except as otherwise specifically provided in the Master Resolution,moneys in
the Rebate Fund may not be withdrawn from the Rebate Fund for any other purpose.
Moneys held in the Rebate Fund, including the Investment Earnings thereon, if any, shall not be subject to a pledge in
favor of the owners of the Series 2015A Bonds, including the Series 2015A Bonds, and may not be used to pay
amounts due on the Series 2015A Bonds or other Project Costs.
Whenever the Issuer has filed all reports required to be filed with the United States pursuant to Section 148(f) of the
Code with respect to any series of Bonds and has made all payments required to be made to the United States pursuant
to Section 148(f) of the Code relating thereto, all moneys or investments remaining in the Rebate Fund may be
transferred to the Additional Projects Account, and such moneys and investments may be used by the Issuer for any
lawful purpose.
SECOND LIEN BOND ACCOUNT
So long as any Second Lien Bonds remain Outstanding, there shall be transferred into the Second Lien Bond Account
from the Flood Project Fund such amounts as may be required to be deposited into the funds and accounts created by
any Series Resolution authorizing the issuance of Second Lien Bonds, for the purpose of paying principal of and
interest on Second Lien Bonds, and accumulating reserves for such payments. Except as provided in the Master
Resolution, moneys credited to the Second Lien Bond Account shall be used solely for the purpose provided in the
Series Resolutions authorizing the Second Lien Bonds.
On or before the 30th day preceding each Interest Payment Date for the Series 2014 Bonds, the Issuer shall deposit in
the interest subaccount of the Second Lien Bond Account an amount which,together with any other moneys already on
deposit therein and available to make such payment and any amounts available in the Capitalized Interest Subaccount
for the Series 2014 Bonds, is not less than the amount coming due on the Series 2014 Bonds on such Interest Payment
Date.
On or before the 30th day preceding each Principal Maturity Date for the Second Lien Bonds, the Issuer shall deposit
in the Principal subaccount of the Second Lien Bond Account an amount which, together with any other moneys
already on deposit therein and available to make such payment, is not less than the principal coming due on the Second
Lien Bonds on such Principal Maturity Date.
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All Debt Service Taxes levied and collected under the provisions of the Master Resolution securing the Series 2014
Bonds shall be deposited in the Second Lien Bond Account for the Series 2014 Bonds and used exclusively for the
payment of the principal of and interest on the Series 2014 Bonds.
ADDITIONAL PROJECTS ACCOUNT
The Master Resolution establishes an Additional Projects Account for the purpose of paying Project Costs of the Bee
Branch Project beyond those being financed with the Series 2015A Bonds. All sums accumulated and retained in the
Additional Projects Account shall be used first to prevent default in the payment of interest on or principal of the
Senior Bonds when due and then shall be applied by the Issuer from time to time, as and when the Issuer shall
determine, to the following purposes and, in the order of priority determined by the Issuer in its sole discretion: (a)for
the purposes for which moneys held in the Flood Project Fund may be applied under the Master Resolution, (b)to pay
the Project Costs of any other phases of the Bee Branch Project deemed necessary by the Issuer (including payments
under contracts with vendors, suppliers, and contractors for the foregoing purposes), (c) to acquire any Senior Bonds
by redemption or by purchase in the open market at a price not exceeding the callable price as provided and in
accordance with the terms and conditions of the Master Resolution, prior to their respective maturities, and when so
used for such purposes the moneys shall be withdrawn from the Additional Projects Account and deposited into the
Sinking Fund or Second Lien Bond Account, as applicable, for the Bonds to be so redeemed or purchased and (d) for
any other purpose of the Issuer allowed under the Award Agreement, including but not limited to, the payment of debt
service on other obligations of the Issuer, not secured by the Pledged Revenues, that have been issued to pay Project
Costs of the Bee Branch Project.
ADDITIONAL BONDS
Senior Bonds: Additional Bonds (including refunding bonds) may be issued pursuant to a Series Resolution adopted
under the Master Resolution, and such bonds so issued shall constitute Senior Bonds, if all of the following conditions
are satisfied:
(a) The principal amount of the proposed Senior Bonds, when added to the principal amount of any other
Senior Bonds then outstanding, does not exceed the aggregate of$58,400,000.
(b) If the proposed Senior Bonds will not be secured by a stand-by levy of Debt Service Taxes
(disregarding for this purpose any right of non-appropriation that may apply to the stand-by levy
securing such Senior Bonds), (i) the Sales Tax Increment Revenues collected by the Issuer during the
most recently completed Fiscal Year prior to the issuance of the proposed Senior Bonds were at least
equal to 100% of the annual Debt Services Requirement for such Fiscal Year on all Bonds then
Outstanding, subject, however, to adjustment as described in clause (d), and (ii) the Issuer shall have
received a projection meeting the requirements of the Master Resolution described in paragraph (c)
below, which projects that the future collections of Sales Tax Increment Revenues will be at least equal
to 100% of the projected Debt Service Requirements on all Bonds, taking into account all Outstanding
Bonds and the Senior Bonds proposed to be issued.
(c) The projection of Sales Tax Increment Revenues required as described in paragraph (b) above must be
prepared by a Financial Advisor selected by the Issuer. In projecting Sales Tax Increment Revenues,
the Financial Advisor shall assume that the amounts collected by the Issuer under the Award
Agreement during the most recent quarter for which Sales Tax Increment Revenues were distributed to
the Issuer will continue to be collected during each succeeding quarter for the remainder of that Fiscal
Year, and that the annual amount so determined would thereafter increase at an annual rate of not more
than one and one-half percent(1.5%).
(d) For purposes of clause (i) of paragraph(b) above, if the Issuer has not received collections of Sales Tax
Increment Revenues for a full Fiscal Year prior to the issuance of the proposed Senior Bonds, it shall be
presumed that the amounts collected by the Issuer under the Award Agreement during the most recent
quarter for which Sales Tax Increment Revenues were distributed to the Issuer will continue to be
collected during each succeeding quarter for the remainder of that Fiscal Year, and such calculation
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shall be included in the projection required as described in paragraph(b) above.
(e) The Issuer shall have received, at or before issuance of the Senior Bonds, a report from an Independent
Auditor to the effect that the payments required to be made into each account of the Sinking Fund, the
Debt Service Reserve Account and the Second Lien Bond Account have been made and the balance in
each account of each such Fund is not less than the balance required by the Master Resolution as of the
last day of the month preceding the date of issuance of the proposed Senior Bonds.
(f) If the proposed Senior Bonds will be secured by amounts held in the Debt Service Reserve Account,the
Series Resolution authorizing the proposed Senior Bonds must require (i) that the amount to be
accumulated and maintained in the Debt Service Reserve Account be increased to not less than 100%of
the Debt Service Reserve Requirement computed on a basis which includes all Senior Bonds which will
be Outstanding immediately after issuance of the proposed Senior Bonds and (ii) that the amount of
such increase be deposited in the Debt Service Reserve Account on or before the date and at least as
fast as specified in the Master Resolution.
(g) The Series Resolution authorizing the proposed Senior Bonds must require the proceeds of such
proposed Senior Bonds to be used solely to pay Project Costs of the Bee Branch Project,to fund interest
on the proposed Senior Bonds, to refund other obligations issued for such purposes, and to pay
expenses incidental thereto and to the issuance of the proposed Senior Bonds.
(h) The Issuer shall have received an opinion of bond counsel, dated as of the date of issuance of the Senior
Bonds, to the effect that the Series Resolution authorizing issuance of the Senior Bonds has been duly
adopted by the Issuer and is in compliance with the terms of this Resolution.
Second Lien Bonds: Additional Bonds may also be issued on a second lien basis on a parity with the Series 2014
Bonds and any other Second Lien Bonds pursuant to a Series Resolution, and the bonds so issued shall constitute
Second Lien Bonds, if all of the following conditions are satisfied:
(a) The Series Resolution authorizing the Second Lien Bonds shall provide that such Second Lien Bonds
shall be junior and subordinate in lien and right of payment to all Senior Bonds Outstanding at any time
(except with respect to any Debt Service Taxes that may be levied and collected under the provisions of
the related Series Resolution).
(b) The Series Resolution authorizing the Second Lien Bonds shall establish funds and accounts for the
moneys to be used to pay debt service on the Second Lien Bonds, and to provide reserves therefor.
(c) The requirements in subparagraphs (b), (c), (d), (e) (g) and (h) above under "Senior Bonds" are met
with respect to such Second Lien Bonds (as if such bonds constituted Senior Bonds).
In the event of any insolvency or bankruptcy proceedings, and any receivership, liquidation, reorganization, or other
similar proceedings in connection therewith, relative to the Issuer or to its creditors, as such, or to its property, and in
the event of any proceedings for voluntary liquidation, dissolution, or other winding up of the Issuer, whether or not
involving insolvency or bankruptcy, the owners of all Senior Bonds then Outstanding shall be entitled to receive
payment in full of all principal and interest due on all such Senior Bonds in accordance with the provisions of the
Series Resolution before the owners of the Second Lien Bonds are entitled to receive any payment from the Pledged
Revenues or the amounts held in the funds and accounts created under the Series Resolution on account of Principal of,
premium, if any, or interest on the Second Lien Bonds.
If any Event of Default shall have occurred and be continuing (under circumstances when the provisions of the
previous paragraph are not applicable), the owners of all Senior Bonds then Outstanding shall be entitled to receive
payment in full of all principal and interest then due on all such Senior Bonds before the owners of the Second Lien
Bonds are entitled to receive any payment from the Pledged Revenues or the amounts held in the funds and accounts
created under the Series Resolution of principal of,premium, if any, or interest on the Second Lien Bonds.
The obligation of the Issuer to pay to the owners of the Second Lien Bonds the principal of, premium, if any, and
interest thereon in accordance with their terms shall be unconditional and absolute. Nothing in this Resolution shall
prevent the owners of the Second Lien Bonds from exercising all other remedies otherwise permitted by applicable law
15
or under the Resolution upon default thereunder, subject to the rights of the owners of Senior Bonds contained in the
Master Resolution.
Any series of Second Lien Bonds may have such rank or priority with respect to any other series of Second Lien Bonds
as may be provided in the Series Resolution authorizing such series of Second Lien Bonds and may contain such other
provisions as are not in conflict with the provisions of the Series Resolution.
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PLAN OF FINANCE
Between 1999 and 2011, six Presidential disaster declarations were issued as a result of flash flooding occurring in an
area of the City known as the Bee Branch Watershed. The area includes approximately 1,373 properties, including
approximately 70 businesses employing over 1,600 people. Building on a Drainage Basin Master Plan first approved
in 2001, the City is acquiring and constructing each of the different phases of what is now referred to as the Bee
Branch Watershed Flood Mitigation Project, a multi-phased approach to address the severe and frequent flash flooding
experienced in the Bee Branch Watershed. As outlined in the Drainage Basin Master Plan and an engineering report
by HDR Engineering of Omaha, Nebraska, the improvements associated with the Bee Branch Watershed Flood
Mitigation Project will mitigate the flooding experienced in recent years in four ways: reduce the volume of
floodwaters, reduce the flow of floodwaters, increase floodwater conveyance capacity through watershed, and provide
barriers between critical facilities and floodwaters. This multi-faceted, holistic approach includes the phases detailed
below. The proceeds of the Series 2015A Bonds will fund costs associated with Phases 4, 5, 7, 9 and 10 of the Bee
Branch Project.
Phase Description Status Cost
1 Carter Road Detention Basin Completed in 2003 $1,076.315
2 West 32nd Street Detention Basin Completed in 2009 4,158,589
3 Historic Millwork District Complete Streets Completed in 2012 7,977,311
4 Lower Bee Branch Creek Restoration Est. Completion-2014 21,274,685
5 Flood Mitigation Gate Replacement Est. Completion-2015 2,099,000
6 Impervious Surface Reduction(Alley Reconstruction) Est. Completion-2033 57,420,000
7 Upper Bee Branch Creek Restoration Est. Completion-2016 64,823,636
8 22nd Street Storm Sewer Capacity Improvements Est. Completion-2020 3,380,000
9 Flood Mitigation Maintenance Facility Est. Completion-2020 4,360,000
10 North End Storm Sewer Capacity Improvements Est. Completion-2019 1,160,000
11 Water Plant Flood Protection Est. Completion-2020 3,800,000
12 17th Street Storm Sewer Capacity Improvements Est. Completion-2020 7,520,000
Total Cost Excluding $179.049.536
Interest on Debt
FLOOD MITIGATION ACT
Chapter 418 of the Code of Iowa (the "Act') was approved by the Iowa Legislature in 2012 to support community
projects for the construction and reconstruction of levees, embankments, impounding reservoirs or conduits that are
necessary for the protection of property from the effects of floodwaters, and may include the deepening, widening,
alteration, diversion or other improvement of watercourses if necessary for the protection of such property from the
effects of floodwaters. The Act establishes a Flood Mitigation Program and a Flood Mitigation Board (the "Flood
Mitigation Board') to review proposed flood mitigation projects and authorize funding for approved projects. Two
funding sources, a Flood Mitigation Fund and a Sales Tax Increment Fund, were established to provide funding for
flood mitigation projects. The Flood Mitigation Fund will consist of State appropriations and other moneys. The Sales
Tax Increment Fund will receive deposits of increased sales tax revenues from impacted areas, as calculated by the
Iowa Department of Revenue ("DOR'). A Flood Mitigation Board is established under the Act to determine the
funding source and amounts allocated to applicants for approved projects. A project may consist of one or more
phases of construction or reconstruction that are contracted for separately if the larger project meets the requirements
of the Act.
The Act requires the Homeland Security and Emergency Management Division of the Department of Public Defense
to administer the Flood Mitigation Program and the Flood Mitigation Board. This includes the adoption of
administrative rules and providing technical assistance to Program applicants.
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A governmental entity can apply for project funding from either the Flood Mitigation Fund or from the Sales Tax
Increment Fund. To obtain funding a project must be approved by the Flood Mitigation Board. For the project to be
eligible for sales tax increment funding, it must have received federal financial assistance under the Water Resources
Development Act, Environmental Protection Agency or other federal program providing assistance specifically for
hazard mitigation. The federal award must be in an amount equal to at least 20% of the total project cost or $30
million dollars,whichever is less. The governmental entity must provide a local match of at least 50%of the total cost
of the project less any federal financial assistance. The project must result in nonpublic investment in the
governmental entity's area of an amount equal to 50%of the total cost of the project.
The Flood Mitigation Program is administered by the Flood Mitigation Board. The Board has adopted administrative
rules detailing the application process,forms used, and other requirements. All projects will be reviewed and approved
by the Flood Mitigation Board and all projects must be approved by January 1, 2016. To date, the Flood Mitigation
Board has made awards to a total of 8 governmental entities, including the Issuer.
The Act establishes a Sales Tax Increment Fund and authorizes sales tax increases for impacted areas, as calculated by
the DOR, to be deposited in the fund. The DOR will calculate, on a quarterly basis, the sales tax increases to be
credited to the fund. This consists generally of calculating the amount of sales tax revenues collected during a quarter
in the base year and subtracting that amount from the sales tax collected during that same quarter in a subsequent year
to determine if there is an increase. If revenue in the Sales Tax Increment Fund exceeds $30.0 million or the awarded
amount needed, then the excess funds will be deposited in the General Fund of the State. See "SECURITY AND
SOURCES OF PAYMENT FOR THE BONDS —Sales Tax Increment Revenue Calculation and Payment"herein.
The Act permits a governmental entity with funds in an approved Flood Project Fund account from the Sales Tax
Increment Fund to issue bonds using the procedures outlined in Iowa Code. The governmental entity is responsible for
bond payments from the approved Flood Project Fund account and the bonds are not an obligation of the State of Iowa.
The Act further specifies if the approved Flood Project Fund account does not have sufficient funds to pay for costs
related to the issuance of bonds,payments may be made from the governmental entity's debt service fund.
The maximum time limit for an approved project funded from the Sales Tax Increment Fund is 20 years. When a
project no longer needs funding, the governmental entity must notify the DOR and funding will stop. Future project
costs for support and maintenance of the project must be paid by the governmental entity.
AWARD AGREEMENT
On December 4, 2013, the Flood Mitigation Board voted to approve the City's application for sales tax increment
revenue funding for construction of the Bee Branch Project in the amount of$98,494,178. Shortly thereafter, the City
entered into an Agreement Approving the Application of the City of Dubuque For the Use of Sales Tax Increment
Revenues from the State of Iowa Flood Mitigation Program for the Bee Branch Watershed Flood Mitigation Project,
Number 2013-0 (the "Award Agreement') with the Board, which was signed by the City on February 3, 2014 and by
the Board on February 10, 2014. The Award Agreement shall be in effect through December 31, 2033.
The disbursement or remittance of funds from the sales tax incremental fund by the DOR is governed by Iowa Code
Section 418.12 and Iowa Administrative Code chapter 701-238. See "SECURITY AND SOURCES OF PAYMENT
FOR THE SERIES 2015A BONDS" for a description of how the Sales Tax Increment Revenues are expected to be
calculated and paid to the City.
In the Award Agreement, the City agreed to cause the Bee Branch Project to be constructed, operated and maintained
in accordance with the representations made in the Award Agreement. In addition, the City is required to submit
reports to the Board, including the following:
1. On or before December 15 of each year for the duration of the Award Agreement,the City shall submit to the
Board a report detailing all of the following:
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a. The total expenditures and types of expenditures that have been made related to the project;
b. The amount of the total project cost remaining as of the date the report was submitted;
c. The amounts,types, and sources of funding being used; and
d. The amount of bonds issued, if any, or other indebtedness incurred for the project, including
information related to the rate of interest, length of term, costs of issuance, and net proceeds. The
report shall also include the amounts and types of moneys used for payment of such bonds or
indebtedness.
2. No later than five(5)years from the date the Board approved the City's application,the City shall submit a report
to the Board certifying the total amount of non-public investment, as defined in Iowa Code Section 418.9(2)(d)
that has occurred in the City's area as defined in Iowa Code Section 418.11(3).
3. No later than ten (10) years from the date the Board approved the City's application, the City shall submit a
second report to the Board certifying the total amount of non-public investment, as defined in Iowa Code
section 418.9(2)(d)that has occurred in the City's area as defined in Iowa Code Section 418.11(3).
4. Upon the completion of the Project,the City shall submit a final accounting and project report to the Board.
Pursuant to the Award Agreement the City also agreed to: (i) complete the Bee Branch Watershed Flood Mitigation
Project by December 31, 2033; (ii) operate, maintain, and support the Bee Branch Watershed Flood Mitigation Project
at a professional level consistent with applicable industry standards; (iii) comply with Iowa Code Section 418.14 and
all applicable administrative rules with respect to bond issuance; (iv) not, without prior written disclosure to the Board
and prior written consent of the Board, directly or indirectly materially change the scope or use of the Bee Branch
Watershed Flood Mitigation Project.
The City shall promptly notify the Board upon becoming aware of an actual or imminent Event of Noncompliance by
the City. An Event of Noncompliance shall include the following: (i) any time the Board determines, after the City is
given notice and opportunity to be heard, that any representation, warranty, or statement made or furnished to the
Board by, or on behalf of the City in connection with the Award Agreement or the Application was incorrect, false,
misleading, or erroneous in any material respect when made or furnished, or if it becomes untrue due to some later
occurrence, act, or omission following the Board's approval of the City's Application; (ii) if the City fails to comply
with all applicable federal, state, and local laws, rules, ordinances, regulations, and orders when performing within the
scope of the Award Agreement and the Bee Branch Watershed Flood Mitigation Project, including, without limitation,
the provisions of the Act, and the administrative rules promulgated under it; (iii) if the City fails to materially comply
with the Award Agreement and its Exhibits; (iv) if the City, directly or indirectly, materially changes the scope or use
of the Bee Branch Watershed Flood Mitigation Project, or the milestones, or the nature of the business and activities
being conducted, or proposed to be conducted, all as described in Exhibit A of the Award Agreement, unless the City
first obtains Board approval to amend or modify the Bee Branch Watershed Flood Mitigation Project; (v) if the City
expends funds in contravention of the laws or rules restricting the use of Flood Mitigation funds or if the City expends
such funds for purposes not described in the Award Agreement unless the City first obtains Board approval to amend
or modify the Bee Branch Watershed Flood Mitigation Project; (vi) if the Scope of Project, as approved and/or
amended by the Board, is not completed on or before December 31, 2033; (vii) if the City fails to operate, maintain,
and support all property and improvements relating to the Bee Branch Watershed Flood Mitigation Project as set forth
in Iowa Code Section 418.15
Upon the occurrence of an event of noncompliance, the Board may, after providing notice and an opportunity to be
heard by the City, take any action in its sole discretion authorized by law, including, but not limited to rescinding its
approval to the City's Application, terminating the Award Agreement, suspending further remittances to the City, or
ordering the City to file with the Board a request to amend its Application and/or project. The Board may, at its
discretion, transmit a copy of such action to the Iowa Department of Revenue, which shall result in the suspension or
termination of the City's right to receive any further remittances under the Act
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On April 13, 2015, the Flood Mitigation Board voted to approve Amendment Number One (the "Amendment") to the
Award Agreement, which the City Council approved on April 20, 2015. The Amendment revises the schedule of the
amounts of Sales Tax Increment Revenues that are to be paid to the City under the Award Agreement, and brings
forward approximately $5.6 million of the total awarded amount into fiscal years 2014-18 and reduces the amounts
that were to be paid in fiscal years 2031-2033 by the same aggregate amount. This request was approved because the
City's actual sales tax collection growth in Fiscal Year 2014 was 5.20%, well above the projected growth of 1.97%
assumed at the time of the initial application. The revised schedule of payments to be made to the City under the
Amendment to the Award Agreement is as follows:
Original Estimated Amended Estimated Change in Estimated
Sales Tax Increment Sales Tax Increment Sales Tax Increment
Fiscal Year Revenue Receipts Revenue Receipts Revenue Receipts
2015 $1,068,677 $1,784,299 $715,622
2016 1,786,625 3,084,781 1,298,156
2017 2,518,644 3,915,672 1,397,028
2018 3,265,011 4,764,427 1,499,416
2019 4,026,006 4,764,911 738,905
2020 4,801,918 4,801,918 0
2021 5,593,037 5,593,037 0
2022 6,399,662 6,399,662 0
2023 6,869,796 6,869,796 0
2024 6,956,900 6,956,900 0
2025 6,956,900 6,956,900 0
2026 6,952,300 6,952,300 0
2027 6,952,300 6,952,300 0
2028 6,947494 6,947,494 0
2029 6,713,458 6,713,458 0
2030 6,238,500 6,238,500 0
2031 5,738,500 5,797,823 59,323
2032 4,328,480 1,500,000 (2,828,480)
2033 4,379,971 1,500,000 (2,879,971)
Total $98,494,179 $98,494,179 $0.00
The following table provides a history of actual disbursements' made to the City under the Award Agreement.
Anticipated receipts for the balance of the fiscal year exceed the amended estimate due to further increases in sales tax
activity.
Disbursement Actual
Date Disbursement
12/2014 $395,704
03/2015 834,054
Source:The City.
OTHER ANTICIPATED FINANCINGS FOR THE BEE BRANCH PROJECT
Receipts are based on retail sales from the quarter ended six months previously. See "SALES TAX INCREMENT
REVENUES CALCULATION AND PAYMENT"for a description of the calculation.
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During the next several months, the Issuer expects to issue one or more stormwater utility revenue loan agreements in
the aggregate amount of not to exceed $34 million to complete additional phases of the Bee Branch Project The loans
are expected to be issued to the Iowa Finance Authority under its SRF loan program. The Issuer also expects to issue its
general obligation bonds in the future to pay for selected phases of portions of the Bee Branch Project. Although such
obligations will not be secured by the Pledged Revenues, the Issuer expects to use available funds on deposit in the
Additional Projects Account of the Flood Project Fund to pay portions of the debt service on such obligations. The
Issuer also may determine in the future to issue other Bonds under the Master Resolution for costs associated with the
Bee Branch Project. See "SECURITY AND SOURCES OF PAYMENT FOR THE SERIES 2015A BONDS —
ADDITIONAL BONDS" herein for a description of the requirements for issuing additional Bonds under the Master
Resolution.
The following table provides in greater detail the projected uses of the Sales Tax Increment Revenues by the Issuer:
Bee Branch Watershed Flood Mitigation
Sales Tax Increment Uses
Sales Tax
Project Funding Source Increment
U.S. EPA Clean Water SRF loan repayment $24,491,634
Sales Tax Increment Bond interest, issuance fees &reserve $21,880,000
Flood Gate Replacements (Sales Tax Bond) $2,099,000
Lower Bee Branch(Sales Tax Bond) $362,243
Upper Bee Branch&Culvert(Sales Tax Bond) $20,680,809
Permeable Pavement Alleys (Pay-as-you-go) $8,760,492
North End Storm Sewer Improvements (Pay-as-you-go) $1,160,000
22°" Street Storm Sewer Improvements (Pay-as-you-go) $3,380,000
Flood Control Maintenance Facility(Pay-as-you-go) $4,360,000
Water Plant Flood Control(Pay-as-you-go) $3,800,000
17" Street Storm Sewer(Pay-as-you-go) $7,520,000
Total Project Funding Source $98,494,178
Percent of Total Cost 49.02%
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SOURCES AND USES OF FUNDS
The estimated Sources and Uses of the Series 2015A Bonds are as follows:
Sources of Funds
Par Amount
Uses of Funds
Project Fund
Debt Service Reserve
Capitalized Interest
Underwriter's Discount
Cost of Issuance &Rounding
Total
HISTORICAL SALES TAX COLLECTIONS
The following table shows the historical retail sales and sales tax collections within the incorporated area of the City
during the past ten fiscal years. During this period, the State sales tax was imposed at a constant rate of 5%. The
average growth in receipts during the ten year period was 2.15%.
Historical Retail Historical Sales
Sales Tax Revenue
FY 2005 $900,625,915 $45,031,296
FY 2006 948,460,852 47,423,043
FY 2007 970,039,446 48,501,972
FY 2008 988,428,418 49,421,421
FY 2009 961,287,890 48,064,395
FY2010 946,963,061 47,348,153
FY 2011 961,477,950 48,073,898
FY 2012 1,000,299,252 50,014,963
FY 2013 1,016,036,855 50,801,843
FY 2014 1,068,914,000 53,445,700
Source: The City.
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ANTICIPATED RECEIPTS AND DEBT SERVICE COVERAGE
The following table shows estimated Sales Tax Increment Revenues and anticipated senior lien debt service coverage.
Growth reflects an assumed annual growth rate of 2.15%, as well as the accelerated receipts authorized under the
Amendment.
Estimated Estimated
Sales Tax Senior Lien Series Estimated
Increment 2015A Senior Lien Debt
Revenue Receipts Nett Debt Service Service Coverage
FY 2015 $1,784,299 N/A
FY 2016 3,084,781 N/A
FY 2017 3,915,672 N/A
FY 2018 4,764,427 $877,900 5.43 X
FY 2019 4,764,911 877,900 5.43 X
FY 2020 4,801,918 877,900 5.47 X
FY 2021 5,593,037 877,900 6.37 X
FY 2022 6,399,662 877,900 7.29 X
FY 2023 6,869,796 2,512,900 2.73 X
FY 2024 6,956,900 2,517,500 2.76 X
FY 2025 6,956,900 2,512,250 2.77 X
FY 2026 6,952,300 2,513,000 2.77 X
FY 2027 6,952,300 2,514,250 2.77 X
FY 2028 6,947,494 2,515,750 2.76 X
FY 2029 6,713,458 2,512,250 2.67 X
FY 2030 6,238,500 2,513,750 2.48 X
FY 2031 5,797,823 726,250 7.98 X
Source: The City
2 Net of capitalized interest and the debt service reserve fund.
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The following table shows estimated Sales Tax Increment Revenues and estimated amounts remaining after payment of
the Series 2015A Bonds and the Series 2014 Bonds:
Anticipated Remaining
Series Revenues Remaining
Estimated 2015A after Revenues
Sales Tax Senior Senior Second Lien after Second
Increment Debt Lien Debt Series 2014A Lien Debt
Revenue Receipts Service Service Debt Service3 Service
FY 2015 $1,784,299 $0 $1,784,299 $0 $1,784,299
FY 2016 3,084,781 0 3,084,781 0 3,084,781
FY 2017 3,915,672 0 3,915,672 (323,100) 3,592,572
FY 2018 4,764,427 (877,900) 3,886,527 (323,100) 3,563,427
FY 2019 4,764,911 (877,900) 3,887,011 (323,100) 3,563,911
FY 2020 4,801,918 (877,900) 3,924,018 (323,100) 3,600,918
FY 2021 5,593,037 (877,900) 4,715,137 (323,100) 4,392,037
FY 2022 6,399,662 (877,900) 5,521,762 (323,100) 5,198,662
FY 2023 6,869,796 (2,512,900) 4,356,896 (438,100) 3,918,796
FY 2024 6,956,900 (2,517,500) 4,439,400 (1,393,500) 3,045,900
FY 2025 6,956,900 (2,512,250) 4,444,650 (1,400,500) 3,044,150
FY 2026 6,952,300 (2,513,000) 4,439,300 (1,344,250) 3,095,050
FY 2027 6,952,300 (2,514,250) 4,438,050 (1,363,000) 3,075,050
FY 2028 6,947,494 (2,515,750) 4,431,744 (1,365,000) 3,066,744
FY 2029 6,713,458 (2,512,250) 4,201,208 (1,365,000) 2,836,208
FY 2030 6,238,500 (2,513,750) 3,724,750 0 3,724,750
FY 2031 5,797,823 (726,250) 5,071,573 0 5,071,573
FY 2032 1,500,000 0 1,500,000 0 1,500,000
FY 2033 1,500,000 0 1,500,000 0 1,500,000
Consisting of the Sales Tax Increment Revenue Bonds (Unlimited Property Tax Supported), Second Lien Series 2014,
dated June 16, 2014, issued under the Master Resolution. Net of capitalized interest.
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INVESTMENT CONSIDERATIONS
A PROSPECTIVE PURCHASER OF THE SERIES 2015A BONDS SHOULD BE AWARE THAT THERE
ARE CERTAIN INVESTMENT CONSIDERATIONS ASSOCIATED WITH THE SERIES 2015A BONDS.
EACH PROSPECTIVE PURCHASER OF THE SERIES 2015A BONDS IS ENCOURAGED TO READ THIS
PRELIMINARY OFFICIAL STATEMENT IN ITS ENTIRETY, AND TO GIVE PARTICULAR
ATTENTION TO THE CONSIDERATIONS DESCRIBED BELOW WHICH, AMONG OTHERS, COULD
AFFECT THE PAYMENT OF DEBT SERVICE AND THE MARKET PRICE ON THE SERIES 2015A
BONDS. THE FOLLOWING STATEMENTS REGARDING CERTAIN INVESTMENT CONSIDERATIONS
SHOULD NOT BE CONSIDERED A COMPLETE DESCRIPTION OF ALL CONSIDERATIONS IN THE
DECISION TO PURCHASE THE SERIES 2015A BONDS.
Special Limited Obligations: The Series 2015A Bonds are special limited obligations of the City payable solely from
and secured by a pledge of the Pledged Revenues to be deposited and held in the Flood Project Fund. The Pledged
Revenues include Sales Tax Increment Revenues, the collection of which is dependent upon the future growth of taxable
retail sales transactions within the City. The City is not obligated to levy Debt Service Taxes to pay the Series 2015A
Bonds, and there can be no assurance that Sales Tax Increment Revenues will be collected by the City in the future in
amounts sufficient to fully pay the principal of and interest on the Series 2015A Bonds as the same shall become due.
Non-Appropriation: Although the City has represented its present intention to appropriate Debt Service Taxes in an
amount sufficient to make up any Shortfall in future fiscal years (in the event the Sales Tax Increment Revenues and
other amounts on deposit in the Flood Project Fund are insufficient to fully pay the principal of and interest on the Series
2015A Bonds), the City has no legal obligation to make such an appropriation or to continue doing so in any future
fiscal year. If there is a Shortfall and the City fails to appropriate Debt Service Taxes in amounts sufficient to pay the
Series 2015A Bonds in any fiscal year, no other funds will be available to pay such principal and interest other than
moneys which may be held on deposit from time to time in the Flood Project Fund. In the event of a Non-
Appropriation, no Event of Default shall be deemed to have occurred under the Master Resolution, and the Issuer shall
not be liable to the holders of the Series 2015A Bonds for any remaining amounts due on the Series 2015A Bonds or for
any costs, damages (including but not limited to consequential damages) or expenses incurred by such holders as a result
of the Issuer's exercise of the right of Non-Appropriation, so long as the Issuer otherwise applies the amounts held on
deposit from time to time in the Flood Project Fund for that purpose.
Payments Under the Award Agreement: Payments of the Sales Tax Increment Revenues to the City under the Award
Agreement may be subject in the future to administrative delays affecting the timely calculation and payment of the
same by the DOR, and/or legislative actions by the Iowa General Assembly affecting the Flood Mitigation Program or
the collection of sales and use taxes within the City. Any such delays or subsequent actions could materially adversely
affect the funds available to the City to make timely payment of the Principal of and interest on the Series 2015A Bonds.
Noncompliance with the Award Agreement: Any failure by the City to comply with the Award Agreement in the future
could result in a suspension or withdrawal of the right to receive Sales Tax Increment Revenues under the Flood
Mitigation Program, which in turn may materially adversely affect the City's ability to pay the Principal of and interest
on the Series 2015A Bonds as the same shall become due.
Additional Indebtedness: The City reserves the right to issue additional bonds payable from the same sources and
ranking on a parity with the Series 2015A Bonds.
Investment Rating: The rating assigned to the Series 2015A Bonds by Moody's Investors Service, Inc. (the "Rating
Agency") reflects only the Rating Agency's view of the likelihood the holders will receive payments of interest when
due and principal on the Series 2015A Bonds on their respective maturity dates. There is no assurance that the rating
will remain for any given period of time or that the rating will not be lowered, suspended or withdrawn by the Rating
Agency if, in the Rating Agency's judgment, circumstances so warrant based upon factors prevailing at the time. The
25
lowering, suspension or withdrawal of the investment rating initially assigned to the Series 2015A Bonds could
materially adversely affect the market price and the market for the Series 2015A Bonds.
Secondary Market: Although the City anticipates that the Underwriter will make a market for the Series 2015A Bonds,
such market making may be discontinued at any time. There can be no assurance that there will be a secondary market
for the Series 2015A Bonds, and the absence of such could result in investors not being able to resell their Series 2015A
Bonds should they need or wish to do so.
Redemption of Bonds: The Series 2015A Bonds due after June 1, 20 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. The redemption of the Series 2015A Bonds
prior to their stated maturity may subject holders to the risk of reinvestment at a time when comparable returns are not
available.
Loss or Adverse Impact on Tax Exemption: As discussed under the heading "TAX EXEMPTION AND RELATED
TAX MATTERS"herein,the interest on the Series 2015A Bonds could become includable in gross income for purposes
of federal income taxation retroactive to the date of delivery of the Series 2015A Bonds, as a result of acts or omissions
of the Issuer in violation of its covenants in the Series 2015A Resolution. Should such an event of taxability occur, the
Series 2015A Bonds would not be subject to a special prepayment and would remain outstanding until maturity or until
prepaid under the prepayment provisions contained in the Series 2015A Bonds, and there is no provision for an
adjustment of the interest rate on the Series 2015A Bonds.
In addition,from time to time, there are legislative proposals that, if enacted, could adversely affect the federal and state
tax matters referred to herein, adversely affect the marketability or market value of the Series 2015A Bonds, or
otherwise prevent holders of the Series 2015A Bonds from realizing the full benefit of the tax exemption of interest on
the Series 2015A Bonds. For example, both President Obama and the Chairman of the Committee on Ways and Means
of the U.S. House of Representative have proposed legislation that effectively would impose a partial tax on otherwise
tax exempt interest for certain higher income taxpayers. In addition, regulatory and administrative actions may from
time to time be announced that could adversely affect the market value, marketability or tax status of the Series 2015A
Bonds. No prediction is made concerning future events. Purchasers of the Series 2015A Bonds should consult their
own tax advisors regarding any pending or proposed legislation,regulatory actions, or litigation.
Forward-Looking Statements: This Official Statement contains statements relating to future results that are "forward-
looking statements" as defined in the Private Securities Litigation Reform Act of 1995. When used in this Official
Statement, the words "estimate," "forecast," "intend," "expect' and similar expressions identify forward-looking
statements. Any forward-looking statement is subject to uncertainty. Accordingly, such statements are subject to risks
that could cause actual results to differ, possibly materially, from those contemplated in such forward-looking
statements. Inevitably, some assumptions used to develop forward-looking statements will not be realized or
unanticipated events and circumstances may occur. Therefore, investors should be aware that there are likely to be
differences between forward looking statements and the actual results. These differences could be material and could
impact the availability of funds of the Issuer to pay debt service when due on the Series 2015A Bonds.
DTC-Beneficial Owners: Beneficial Owners of the Series 2015A Bonds may experience some delay in the receipt of
distributions of principal of and interest on the Series 2015A Bonds since such distributions will be forwarded by the
Paying Agent to DTC and DTC will credit such distributions to the accounts of the Participants which will thereafter
credit them to the accounts of the Beneficial Owner either directly or indirectly through indirect Participants. Neither
the Issuer nor the Paying Agent will have any responsibility or obligation to assure that any such notice or payment is
forwarded by DTC to any Participants or by any Participant to any Beneficial Owner. In addition, since transactions in
the Series 2015A Bonds can be effected only through DTC Participants, indirect participants and certain banks, the
ability of a Beneficial Owner to pledge the Series 2015A Bonds to persons or entities that do not participate in the DTC
system, or otherwise to take actions in respect of such Series 2015A Bonds, may be limited due to lack of a physical
certificate. Beneficial Owners will be permitted to exercise the rights of registered Owners only indirectly through DTC
26
and the Participants. See `FHE SERIES 2015A BONDS Book-Entry Only System."
27
VALUATION AND TAXATION
IOWA PROPERTY VALUATIONS
In compliance with Section 441.21 of the Code of Iowa, the State Director of Revenue annually directs all County
Auditors to apply prescribed statutory percentages to the assessments of certain categories of real property. The
assessments finalized as of January 1 of each year are applied to the following fiscal year. The 2013 final Actual
Values were adjusted by the Dubuque County Auditor. The reduced values, determined after the application of
rollback percentages, are the Taxable Values subject to tax levy. For assessment year 2013, the Taxable Value
rollback rate was 54.4002% of Actual Value for residential property; 43.3997% of Actual Value for agricultural
property; 95% of Actual Value for commercial, industrial, and railroad property, and 100%of Actual Value for utility
property.
The Legislature's intent has been to limit the growth of statewide taxable valuations for most classes of property to 3%
annually; utility taxable valuation growth is limited to 8%. 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.
1/1/2014 VALUATIONS (Taxes payable July 1,2014 through June 30,2015)
100% Taxable Value
Actual Value (With Rollback)
Residential $2,428,996,644 $1,353,775,147
Commercial 836,162,146 752,546,128
Industrial 75,656,436 68,090,792
Railroad 3,074,998 2,767,498
Utilities w/o Gas &Electric 7,679,090 7,679,090
Other 687,870 619,083
Gross valuation $3,352,257,184 $2,185,477,738
Less military exemption (5,478,214) (5,478,214)
Net valuation $3,346,778,970 $2,179,999,524
TIF increment(used to compute debt
service levies and constitutional debt limit) $371,372,295 $327,982,095
Taxed separately
Ag. Land&Buildings $7,052,245° $3,152,505
Utilities—Gas &Electric 195,417,962 $75,563,469
Source: Iowa Department of Management
4 Excludes $415 of TIF ag land.
28
2014 GROSS TAXABLE VALUATION BY CLASS OF PROPERTY5
Taxable Percent
Valuation Total
Residential $1,353,775,147 59.791%
Ag. Land& Ag. Buildings 3,152,505 0.139%
Commercial,Industrial, Other,Railroad&Utility 831,702,591 36.733%
Utilities—Gas &Electric 75,563,469 3.337%
Total Gross Taxable Valuation $2,264,193,712 100.00%
Source: Iowa Department of Management
TREND OF VALUATIONS
The 100% Actual Valuations, before rollback and after reduction of military exemption, include Ag. Land, Ag.
Buildings, TIF Increment, and Gas & Electric Utilities. The Taxable Valuations, with the rollback and after the
reduction of military exemption, exclude the Taxable TIF Increment, Ag. Land and Ag Buildings. Iowa cities certify
operating levies against Taxable Valuation excluding the Taxable TIF Increment and debt service levies are certified
against Taxable Valuations including the Taxable TIF Increment.
Taxable
Assessment Payable 100% Valuation Taxable
Year Fiscal Year Actual Valuation (With Rollback) TIF Increment
2010 2011-12 $3,553,386,961 $2,034,470,780 $279,611,679
2011 2012-13 3,633,462,506 2,108,760,803 299,591,318
2012 2013-14 3,672,620,304 2,171,073,899 300,503,112
2013 2014-15 3,862,426,062 2,250,099,910 346,925,191
20146 2015-16 3,920,621,887 2,255,562,993 327,982,095
Source: Iowa Department of Management
LEVIES AND TAX COLLECTIONS(000's)
Taxes Current %of
Year Levied Collections Taxes Levied
2010-11 $19,906 $19,793 99.43%
2011-12 21,313 21,339 100.12%
2012-13 22,789 22,749 99.82%
2013-14 23,993 23,907 99.64%
2014-15 24,866 In process of collection
2015-16 Collection begins July 1, 2015
Source:
After the assessment of property in a calendar year, taxes are levied for collection in the following fiscal year. Taxes are
certified to the County Auditor in March. The County Treasurer collects taxes for all taxing entities in the County.
Statutory dates for payment without penalty are September 30 for the first installment and March 31 for the second
installment. Penalty rates are established by State law at 1%per month.
5 Before military exemption, and exclusive of taxable TIF increment.
6 1/1/2014 valuations are effective in fiscal year 2016,beginning July 1, 2015.
29
TAX RATES
Taxing FY2010/11 FY2011/12 FY2012/13 FY2013/14 FY2014/15
District $/$1,000 $/$1,000 $/$1,000 $/$1,000 $/$1,000
City of Dubuque 10.02741 10.45111 10.78477 11.02586 11.02588
Dubuque County 6.50193 6.49167 6.43124 6.43124 6.43124
Dubuque CSD 16.88349 16.87685 15.40388 14.60281 13.99630
County Hospital 0.26409 0.26040 0.26961 0.26975 0.26974
City Assessor 0.25772 0.33842 0.36188 0.39028 0.29320
Ag. Extension 0.03219 0.07564 0.08174 0.08941 0.09731
Northeast Iowa CC 1.03532 1.07379 0.98407 0.90455 0.90807
State of Iowa 0.00340 0.00320 0.00330 0.00330 0.00330
Consolidated Rate 35.00555 35.57108 34.32049 33.71720 33.02504
Source: Iowa Department of Management
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 $8.10 for FY 2015-16. In
addition, the City has certified special purpose levies outside of the above described levy limits for liability, property
and self-insurance costs, as well as debt service. The City did not use the emergency levy in FY 2015-16. Debt service
levies are not limited.
LARGER TAXPAYERS(000's)
Property 1/1/2014
Taxpayer Type Taxable Valuation
Peninsula Gaming Company LLC Commercial 61,326
Interstate Power&Light CO Utility 39,483
Kennedy Mall Inc Commercial 35,312
Black Hills Energy Corp. Utility 26,726
Progressive Processing LLC Industrial 21,397
Medical Associates Realty LLC Commercial 21,307
Nordstrom,Inc Commercial 18,599
Walter Development LLC Commercial 16,639
McGraw-Hill Global Education LLC Commercial 15,907
Otto A LLC Commercial 14,100
Platinum Holdings LLC Commercial 11,817
Source the City.
30
RECENT PROPERTY TAX LEGISLATION
During the 2013 legislative session, the Iowa General Assembly enacted Senate File 295 ("SF 295"), which the
Governor signed into law on June 12, 2013. Among other things, SF 295 (i) reduces the maximum annual
taxable value growth percent, due to revaluation of existing residential and agricultural property, from 4% to 39/o,
(ii) assigns a "rollback" (the percentage of a property's value that is subject to tax) to commercial, industrial and
railroad property of 95%for the 2013 assessment year and 90%for the 2014 assessment year and all years thereafter,
(iii) creates a new property tax classification for multi-residential properties (mobile home parks, manufactured home
communities, land-lease communities, assisted living facilities and property primarily used or intended for human
habitation containing three or more separate dwelling units) ("Multi-residential Property") that begins in the 2015
assessment year, and assigns a declining rollback percentage of 3.75 percent to such properties for each subsequent
year until 2021 assessment year (the rollback percentage for Multi-residential Properties will be equal to the
residential rollback percentage in 2022 assessment year and thereafter) and (iv) exempts a specified portion of the
assessedvalue of telecommunication properties.
SF 295 includes a standing appropriation to replace some of the tax revenues lost by local governments, including
tax increment districts, resulting from the new rollback for commercial and industrial property. Prior to fiscal year
2017-18, the appropriation is a standing unlimited appropriation, but beginning in fiscal year 2017-18 the standing
appropriation cannot exceed the actual fiscal year 2016-17 appropriation amount. The appropriation does not
replace losses to local governments resulting from the Act's provisions that reduce the annual revaluation growth
limit for residential and agricultural properties to 3% from 4%, the gradual transition for Multi-residential Property
from the commercial rollback percentage (100% of Actual Value) to the residential rollback percentage (currently
54.4002% of Actual Valuation), or the reduction in the percentage of telecommunications property that is subject to
taxation.
Given the wide scope of the statutory changes, and the State of Iowa's discretion in establishing the annual
replacement amount that is appropriated each year commencing in fiscal year 2017-18, the impact of SF 295 on the
City's future property tax collections is uncertain and the City is unable to accurately assess the financial impact of
its provisions on the City's future operations.
In Moody's Investor Service US Public Finance Weekly Credit Outlook, dated May 30, 2013, Moody's Investor
Service ("Moody's") projected that local governments in the State of Iowa are likely to experience modest reductions
in property tax revenues starting in fiscal year 2014-15 as a result of S F 2 9 5, with sizeable reductions
possible starting in fiscal year 2017-18. According to Moody's, local governments that may experience
disproportionately higher revenue losses include regions that have a substantial commercial base, a large share
of Multi-residential Property(such as college towns),or significant amounts of telecommunications property.
Notwithstanding any decrease in property tax revenues that may result from S F 2 9 5 , Iowa Code section
76.2 provides that when an Iowa political subdivision issues general obligation bonds, "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 twenty years. 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."
From time to time, other legislative proposals may be considered by the Iowa General Assembly that would, if
enacted, alter or amend one or more of the property tax matters described in this Preliminary Official
Statement. It cannot be predicted whether or in what forms any of such proposals may be enacted, and there can be
no assurance that such proposals will not apply to valuation,assessment or levy procedures for the levy of taxes by the
City.
31
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 2013 Actual
Valuations applicable to fiscal year 2014-15 is as follows:
1/1/2013
(Fiscal Year 2014-15)
Actual Valuation of Property $3,868,180,224
Less Military Exemption (5,754,162)
Net Valuation $3,862,426,062
Constitutional Debt Percentage 5.00%
Constitutional Debt Limit $193,121,303
Less: Applicable General Obligation Debt (118,625,000)
Less: Urban Renewal Debt (22,799,396)
Less: Rebate Agreements (22,081,105)
Less: Other Obligations' (4,729,285)
Constitutional Debt Margin $24,886,517
DIRECT DEBT
Sales Tax Increment(Unlimited Property Tax Supported)Debts
Principal
Date Original Final Outstanding
of Issue Amount Purpose Maturity As of 05/01/15
06/14 $7,190,000 Flood Mitigation 06/29 $7,190,000
Consisting of a loan guarantee for a City development project and a 0% interest installment loan for a building
purchase.
s The Series 2015A Bonds are not included as an unlimited property tax supported debt because the property tax pledge is
subject to annual appropriation, Per State law, only payments that have been appropriated by Council action constitute
indebtedness.
32
General Obligation Debt
Principal
Date Original Final Outstanding
of Issue Amount Purpose Maturity As of 05/01/15
10/03 $2,110,000 Corporate Purpose 06/23 $1,130,000
04/05A 1,750,000 Corporate Purpose 06/24 1,080,000
04/05B 4,270,000 Urban Renewal 06/21 3,195,000
05/06A 2,900,000 Corporate Purpose 06/25 1,970,000
11/07A 1,055,000 General Obligation Sewer 06/17 390,000
10/08A 3,885,000 General Obligation Stormwater 06/28 3,040,000
10/08B 3,290,000 Urban Renewal 06/23 2,215,000
10/08C 2,465,000 Taxable Urban Renewal 06/18 1,560,000
11/09A 2,935,000 Corporate Purpose 06/29 2,430,000
11/09B 11,175,000 Corporate Purpose 06/29 9,330,000
11/09C 8,885,000 Refunding 06/21 5,500,000
08/10A 4,470,000 Corporate Purpose&Refunding 06/30 3,780,000
08/10B 2,675,000 Taxable Urban Renewal 06/30 2,400,000
08/10C 2,825,000 Urban Renewal 06/30 2,480,000
09/11A 6,330,000 Corporate Purpose 06/31 5,805,000
09/11B 1,590,000 Corporate Purpose 06/26 1,390,000
03/12A 4,380,000 Urban Renewal 06/31 4,175,000
03/12B 7,495,000 Corporate Purpose 06/31 7,075,000
06/12C 6,965,000 Taxable Urban Renewal 06/32 6,700,000
06/12D 7,175,000 Corporate Purpose 06/32 6,705,000
12/12E 3,640,000 Corporate Purpose 06/32 3,445,000
12/12F 1,035,000 Taxable Urban Renewal 06/22 1,035,000
11/12G 950,000 Refunding 06/17 575,000
12/12H 2,385,000 Urban Renewal 06/32 2,385,000
12/12I 7,285,000 Taxable Refunding 06/21 5,195,000
12/14B 18,835,000 Corporate Purpose 06/34 18,835,000
12/14C 7,615,000 Taxable Corporate Purpose 06/34 7,615,000
Total $111,435,000
Total General Obligation/Tax Supported Debt Subject to the Debt Limit $118,625,000
33
ANNUAL FISCAL YEAR DEBT SERVICE PAYMENTS
Sales Tax Increment Debt'
Total Sales Tax Increment Debt
Fiscal Principal and
Year Principal Interest
FY 2014-15 $309,638
FY 2015-16 323,100
FY 2016-17 323,100
FY 2017-18 323,100
FY 2018-19 323,100
FY 2019-20 323,100
FY 2020-21 323,100
FY 2021-22 323,100
FY 2022-23 $115,000 438,100
FY 2023-24 1,075,000 1,393,500
FY 2024-25 1,125,000 1,400,500
FY 2025-26 1,125,000 1,344,250
FY 2026-27 1,200,000 1,363,000
FY 2027-28 1,250,000 1,365,000
FY 2028-29 1,300,000 1,365,000
Total $7,190,000 $8,495,062
9 Consisting of the Sales Tax Increment Revenue Bonds (Unlimited Property Tax Supported), Second Lien Series 2014,
dated June 16, 2014, issued under the Master Resolution.
34
General Obligation Debt10
Total G.O. Debt
Fiscal Principal and
Year Principal Interest
FY 2014-15 $6,560,000 $9,833,861
FY 2015-16 7,015,000 10,576,920
FY 2016-17 7,255,000 10,619,690
FY 2017-18 7,410,000 10,554,413
FY 2018-19 7,420,000 10,329,794
FY 2019-20 7,505,000 10,183,924
FY 2020-21 7,135,000 9,570,116
FY 2021-22 5,965,000 8,155,935
FY 2022-23 5,915,000 7,907,584
FY 2023-24 5,585,000 7,375,683
FY 2024-25 5,640,000 7,239,921
FY 2025-26 5,540,000 6,943,145
FY 2026-27 5,575,000 6,780,183
FY 2027-28 5,635,000 6,634,416
FY 2028-29 5,550,000 6,335,004
FY 2029-30 4,720,000 5,289,016
FY 2030-31 4,145,000 4,544,149
FY 2031-32 2,960,000 3,213,015
FY 2032-33 1,920,000 2,066,425
FY 2033-34 1.985.000 2,060,256
Total $111,435,000 $146,213,450
10 The majority of the City's general obligation debt is supported by the following non-property tax revenues: tax
increment, water, sewer,parking, airport rentals, local option sales tax,road use tax, and refuse fees.
35
Urban Renewal Revenue Debt
Principal
Date Original Final Outstanding
of Issue Amount Purpose Maturity As of 05/01/15
12/03 $140,000 Vessel Systems 06/15 $19,361
02/04 500,000 Adams Company 06/15 45,455
06/04 182,000 Lower Main Development 06/16 48,250
11/06 810,323 Thiesen Supply 06/18 408,250
10/07 23,025,000 Port of Dubuque Parking Ramp 06/37 21,750,000
08/09 690,529 40 Main LLC 06/21 528,080
Total $22,799,396
Current Outstanding
Urban Renewal Revenue Debt
Fiscal Principal and
Year Principal Interest
FY 2014-15 $618,395 $2,321,272
FY 2015-16 596,838 2,254,676
FY 2016-17 614,380 2,227,409
FY 2017-18 668,900 2,228,496
FY 2018-19 589,827 2,108,784
FY 2019-20 635,176 2,110,534
FY 2020-21 680,880 2,109,284
FY 2021-22 635,000 2,014,625
FY 2022-23 680,000 2,012,000
FY 2023-24 730,000 2,011,000
FY 2024-25 785,000 2,011,250
FY 2025-26 845,000 2,012,375
FY 2026-27 910,000 2,014,000
FY 2027-28 975,000 2,010,750
FY 2028-29 1,050,000 2,012,625
FY 2029-30 1,130,000 2,013,875
FY 2030-31 1,215,000 2,014,125
FY 2031-32 1,305,000 2,013,000
FY 2032-33 1,400,000 2,010,125
FY 2033-34 1,505,000 2,010,125
FY 2034-35 1,620,000 2,012,250
FY 2035-36 1,740,000 2,010,750
FY 2036-37 1,870,000 2,010,250
Total $22,799,396 $47,553,580
36
OTHER DEBT
The City has debt payable solely from the net water revenues of the City's water system as follows:
Water Revenue Debt
Principal
Date Original Final Outstanding
of Issue Amount Purpose Maturitv As of 05/01/15
10/07 $915,000 Water Improvements (SRF) 06/28 $695,000
11/08D 1,195,000 Water Improvements 06/23 835,000
11/09 6,394,000 Water Improvements (SRF) 06/31 5,633,000
09/10D 5,700,000 Water Improvements 06/30 5,135,000
Total $12,298,000
The City has debt payable solely from the net sewer revenues of the City's sewer system as follows:
Sewer Revenue Debt
Principal
Date Original Final Outstanding
of Issue Amount Purpose Maturity As of 05/01/15
12/06 $688,371 Sewer Improvements (SRF) 06/31 $581,879
08/10 74,285,000 Sewer Improvements (SRF) 06/29 67,853,578
05/13 3,051,000 Sewer Improvements (SRF) 06/33 2,926,000
Total $71,361,457
The City has debt payable solely from the net sewer revenues of the City's stormwater system as follows:
Stormwater Revenue Debt
Principal
Date Original Final Outstanding
of Issue Amount Purpose Maturity As of 05/01/15
01/09 1,847,000 Stormwater Improvements (SRF) 06/28 1,402,000
01/10B 800,000 Stormwater Improvements (SRF) 06/30 678,000
10/10B 7,850,000 Stormwater Improvements (SRF) 06/41 7.359.0
02/14 $1,029,000 Stormwater Improvements (SRF) 06/33 274,721"
Total $7,241,145
" Only 274,721 has been drawn to date.
37
FUTURE FINANCING
The City does not anticipate any additional borrowing needs within 90 days of the date of this Official Statement
DEBT PAYMENT HISTORY
The City knows of no instance in which it has defaulted in the payment of principal or interest on its debt.
INDIRECT DEBT
1/1/2013 Portion of GO Debt City's
Taxable Taxable Value Percent as of Indirect
Taxing District Valuation In the City Applicable 05/01/1512 Portion
Dubuque CSD $3,569,718,086 $2,597,025,101 72.75% $0 $0
Dubuque County 4,563,534,916 2,597,025,101 56.91% 6,183,500 3,518,918
Northeast Iowa Comm College 10,699,385,455 2,597,025,101 24.27% 57,245,000 13,894,882
TOTAL $17,413,800
DEBT RATIOS
Debt/2013 Actual
Market Value Debt/57,532
G.O. Debt $3,862,426,062 Population
Direct General Obligation Debt $118,625,000 3.07% $2,061.90
Indirect General Obligation Debt 17,413,800 0.45% 302.68
Combined Debt $136,038,800 3.52% $2,364.58
FUNDS ON HAND(Cash and Investments as of March 30,2015)
Agency $1,240,552
Capital 36,982,126
Component Unit 10,532,268
Debt Service 69,973
Enterprise 30,102,255
General 321,519
Internal Service 2,891,477
Permanent 77,718
Special 16,372,706
Total Cash and Investments $98,590,477
12 School district figures exclude Sale and Service Tax Revenue Bonds.
38
THE CITY
CITY GOVERNMENT
The City has been governed by a Council-Manager-Ward form of government since 1920. Policy is established by a
Mayor and six council members, the mayor and two of the council members being elected at large and four
members elected from wards. City Council members hold four year staggered terms. The City Clerk, City Manager
and City Attorney are appointed by the City Council.
EMPLOYEES,PENSIONS AND OPEB
The City has 568.42 full and 82.3 full time equivalent part-time employees and 55.22 full time equivalent seasonal
employees, including a police force of 109 sworn personnel and a fire department of 89 fire fighters. Of the City's
706 employees, 552are currently enrolled in the Iowa Public Employees Retirement System (the "IPERS') pension
plan administered by the State of Iowa.
The City contributes to the Iowa Public Employees' Retirement System ("IPERS'), which is a state-wide multiple-
employer cost-sharing defined benefit pension plan administered by the State of Iowa. IPERS provides retirement
and death benefits which are established by State statute to plan members and beneficiaries. All full-time employees
of the Issuer are required to participate in IPERS. IPERS plan members are required to contribute a percentage of
their annual salary, in addition to the Issuer being required to make annual contributions to IPERS. Contribution
amounts are set by State statute. The IPERS Comprehensive Annual Financial Report for its fiscal year ended June
30, 2014 (the "IPERS CAFR') indicates that as of June 30, 2014, the date of the most recent actuarial valuation for
IPERS, the funded ratio of IPERS was 82.7%, and the unfunded actuarial liability was $5.544 billion. The IPERS
CAFR is available on the IPERS website, or by contacting IPERS at 7401 Register Drive,Des Moines,IA 50321.
See"APPENDIX B INDEPENDENT AUDITOR'S STATEMENTS"for additional information on IPERS.
In fiscal year 2014,the Issuer's IPERS contribution totaled approximately $2,352,312, compared to a contribution in
fiscal year 2013 of$2,197,655. See note 11 of the audited financial statements of the City attached as Appendix B
for further information.
The following table sets forth certain information about the funding status of IPERS that has been extracted from the
IPERS CAFR. According to IPERS, as of the end of fiscal year 2014, there were approximately 346,413 total
members participating in IPERS, including Issuer employees.
Unfunded UAAL as a
Actuarial %of
Accrued Covered
Liability Funded Payroll
Fiscal Year Actuarial Value Actuarial Accrued (UAAL) Ratio Covered Payroll ([b]-[a])
Ended June 30 of Assets [a] Liability[b] fbl_[a] of 1/[b] [c] Lei
2011 $22,575,309,199 $28,257,080,114 $5,681,770,915 79.89% $6,574,872,719 86.42%
2012 23,530,094,461 29,446,197,486 5,916,103,025 79.91% 6,786,158,720 87.18%
2013 24,711,096,187 30,498,342,320 5,787,246,133 81.02% 6,880,131,134 84.12%
2014 26,460,428,085 32,004,456,088 5,544,028,003 82.68% 7,099,277,280 78.09%
Source: IPERS Comprehensive Annual Financial Report(Fiscal Year 2014)
39
When calculating the funding status of IPERS for fiscal year 2013, the following assumptions were used: (1) the
amortization period for the total unfunded actuarial liability is 30 years (which is consistent with the maximum
acceptable amortization period set forth by the Governmental Accounting Standards Board ("GASB') in GASB
Statement No. 25); (2) the rate of return on investments is assumed to be 7.5%; (3) salaries are projected to increase
4.0-17%for IPERS, depending on years of service; and (4) the rate of inflation is assumed to be 3.25%for prices and
4.0%for wages.
Bond Counsel, the City, and the Financial Advisor undertake no responsibility for and make no representations as to
the accuracy or completeness of the information available from the IPERS discussed above or included on the IPERS
website, including, but not limited to, updates of such information on the State Auditor's website or links to other
Internet sites accessed through the IPERS website.
Consistent with Iowa Code section 509A.13, the Issuer offers post-retirement health and dental benefits ("OPEB") to
all full-time employees of the Issuer who retire before attaining age 65. The group health insurance plan provided to
full-time Issuer employees allows retirees to continue medical coverage until they reach age 65. Although retirees pay
100% of the "cost of coverage", the pre-age 65 group of retirees is grouped with the active employees when
determining the cost of coverage. The computation creates an implicit rate subsidy that would not exist if the cost of
the coverage for this group (pre-age 65 retirees)was computed separately and paid 100%by that group.
As described in its audited financial statements, as of June 30, 2014, the City has an unfunded actuarial accrued
liability relating to its OPEB in an amount of$5,720,577. The Issuer's end of year (as of June 30, 2014) net OPEB
obligation is $3,760,615. See note 10 of the audited financial statements of the City attached as Appendix B for
further information on OPEB obligations of the City.
In addition, the City contributes to the Municipal Fire and Police Retirement System of Iowa (the "MFPRSP'), 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 9.40%of their
earnable compensation and the City's contribution rate is 30.12% of earnable compensation. The City's contributions
to the Plan for the years ended June 30, 2014, 2013, and 2012, were $3,906,483, $3,334,793 and $3,177,159,
respectively,which met the required minimum contribution for each year.
UNION CONTRACT S
City employees are represented by the following bargaining units:
Bargaining Unit Unit Members Contract Expiration Date
Teamsters Local Union No 421 128 June 30, 2017
Teamsters Local Union No 421 Bus Operators 57 June 30, 2017
Dubuque Professional Firefighters Association 77 June 30, 2017
Dubuque Police Protective Association" 83 June 30, 2015
International Union of Operating Engineers 65 June 30, 2017
is Currently under negotiation.
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INSURANCE
The City's insurance coverage is as follows:
Tyne of Insurance Limits
General Liability $15,000,000
Automobile Liability 15,000,000
Public Officials 15,000,000
Police Professional Liability 15,000,000
Boiler&Machinery 25,000,000
Property Blanket 492,563,640
Employees Crime Policy 1,000,000
Airport Commission 5,000,000
Airport Liability 20,000,000
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GENERAL INFORMATION
LOCATION AND TRANSPORTATION
The City is located in northeast Iowa and serves as the county seat for Dubuque County. The City, with a 2010
Census population of 57,637, has a land area of 31.6 square miles. Annexation activity in recent years has been
voluntary with over 760 acres annexed in the past five years. The City lies at the intersection of Highways 61/151
and 20. The City is located approximately 22 miles southwest of Platteville, Wisconsin; 92 miles southwest of
Madison, Wisconsin; 84 miles northeast of Iowa City, Iowa; 65 miles north of the Quad Cities (Rock Island and
Moline,Illinois and Bettendorf and Davenport, Iowa); 175 miles west of Chicago, Illinois and 185 miles northeast of
Des Moines. Dubuque Regional Airport provides jet service to Chicago via American Airlines. Railroad service to
the City is provided by the Iowa, Chicago & Eastern Railroad Corp, Canadian NationaFIllinois Central, and
Burlington Northern Santa Fe Railroad Company (BNSF), as well as bus service being provided by Greyhound and
Burlington Trailways.
LARGER EMPLOYERS
A representative list of larger employers and employees in the City is as follows:
Employer Type of Business Approximate# of Employees
John Deere Dubuque Works Agriculture Equipment 2,400
Dubuque Community School District Education 1,946
Mercy Medical Center Healthcare 1,313
University of Wisconsin-Platteville Education 1,105
Medical Associates Clinic,P.C. Healthcare 1,011
UnityPoint Health-Finley Hospital Healthcare 859
The City of Dubuque City Government 706
IBM Corp. Technology 650
Eagle Window&Door Windows 550
Sedgwick Claims Processing 550
Diamond Jo Casino Gaming 510
Western Dubuque School District Education 501
Northeast Iowa Community College Education 500
Dubuque County County Government 472
Cottingham&Butler Insurance 460
Prudential Retirement Financial Services 450
Mystique Casino Gaming 444
Flexsteel Industries Manufacturing 433
AY McDonald Manufacturing Company Manufacturing 402
McKesson Data Processing 400
Medline Industries, Inc. Health Care Equipment 400
Loras College Education 394
Hartig Drug Retail 393
Holy Family Catholic Schools Education 381
Mi-T-M Corporation Manufacturing 380
Nordstrom Distribution&Retail 370
University of Dubuque Education 363
McGraw-Hill Higher Education Education Content 350
Source: Greater Dubuque Development Corporation,the City.
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BUILDING PERMITS14
City officials report the following construction activity as of March 30, 2015. Permits for the City are reported on a
fiscal year basis.
Fiscal Year Singk Multi-Family Commercial Total Total Valuation
2010-11 88 89 15 3,020 $134,246,328
2011-12 97 8 14 4,183 224,053,472
2012-13 20 3 2 464 16,898,273
2013-14 65 0 11 1,095 88,105,521
2014-15 51 0 10 1,015 90,979,989
Source:The City.
US CENSUS DATA
US Census Year City Population
1980 62,374
1990 57,546
2000 57,686
2010 57,637
Source:U.S. Census Bureau website.
UNEMPLOYMENT RATES
Calendar
Year City of Dubuque State
Average Dubuque15 County15 of Iowa 16
2010 6.0% 6.2% 6.3%
2011 5.3% 5.4% 5.8%
2012 4.6% 4.7% 5.2%
2013 4.5% 4.5% 4.6%
2014 4.1% 4.2% 4.4%
201517 4.1% 4.8% 4.2%
Source: Iowa Workforce Development Center.
" Totals include single family, multi-family, commercial/industrial, remodeling, roofing, siding, decks,
additions and other miscellaneous residential and commercial permits.
15 Not seasonally adjusted.
16 Seasonally adjusted.
17 January 2015.
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EDUCATION
Public education to the City is provided by the Dubuque Community School District, with certified enrollment for the
2014-2015 school year of 10,633. The Dubuque School District has two high schools, an alternative high school,
three middle schools and thirteen elementary schools. The Archdiocese of Dubuque operates four Catholic elementary
facilities, one middle school and one high school within the City. Higher education opportunities within the County
include Loras College, Clarke University, University of Dubuque, and Northeast Iowa Community College, with local
facilities in downtown Dubuque and Peosta(15 minutes west of Dubuque on Highway 20).
FINANCIAL STATEMENTS
The City's INDEPENDENT AUDITOR'S REPORTS for the fiscal year ended June 30, 2014 is reproduced
in 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 Independent Auditor's Reports may be obtained from the City's
Financial Advisor,Independent Public Advisors, LLC.
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LEGAL AND TAX MATTERS
LEGAL MATTERS
Legal matters incident to the authorization, issuance and sale of the Series 2015A Bonds (see "FAX EXEMPTION
AND RELATED TAX MATTERS"herein) are subject to the approving legal opinion of Ahlers & Cooney, P.C.,
Des Moines, Iowa, Bond Counsel, a form of which is attached hereto as APPENDIX A. Signed copies of the
opinion, dated and premised on law in effect as of the date of original delivery of the Series 2015A Bonds, will be
delivered to the Underwriter at the time of such original delivery. The Series 2015A Bonds are offered subject to
prior sale and to the approval of legality of the Series 2015A Bonds by Bond Counsel.
The legal opinions to be delivered express the professional judgment of Bond Counsel and by rendering a legal
opinion, Bond Counsel does not become an insurer or guarantor of the result indicated by that expression of
professional judgment or of the transaction or the future performance of the parties to the transaction.
LITIGATION
The City is in the process of settling a class action law suit in which it is a defendant. The action was brought in the
Iowa District Court for Dubuque County (J. Thomas Zaber v. City of Dubuque), and alleged that certain gas and
electric franchise fees imposed by the City were illegal because they constituted unauthorized taxes.
Under the terms of the pending settlement, the City will pay the sum of$2,600,000 into an escrow account within
six months of the District Court's approval of the settlement agreement. The City will also be responsible for the
payment of certain administrative costs, currently estimated at $169,164. The settlement will not be final until the
District Court approves the settlement following a hearing, and no hearing date for the District Court to consider the
settlement has been set. The City recently increased its gas and electric franchise fees, as allowed under Iowa law,
to both fund the escrow and pay the costs of administration.
The City is also defendant in another lawsuit in the Iowa District Court for Dubuque County (Ainley Kennels &
Fabrication, Inc. et al v. City of Dubuque) brought by several manufacturers seeking to have a portion of franchise
fees paid over the last five years refunded. An ordinance of the City of Dubuque, since amended, did not impose a
franchise fee for gas or electric usage if the usage was exempt from State sales taxes. The total claims for refunds
exceed $280,000. The City has since modified its ordinance to limit claims for refund to the fiscal year in which the
franchise fees were paid. The City has asserted several defenses in the lawsuit and there are pending cross-motions
for summary judgment now before the District Court.
The City is also defendant in a lawsuit in the Iowa District Court for Dubuque County (W.C. Stewart vs. City of
Dubuque)regarding a contract relating to construction at the municipal airport. The lawsuit is on hold as the parties
have agreed to arbitrate the matter. The arbitration has been set for the week of September 28, 2015.
Stewart contends that the estimated quantity for the pay item for embankment was based on incorrect survey data
and as a result, the actual quantity of embankment excavation was much greater than the estimate. Stewart contends
it is entitled to an additional payment for this work in the amount of$808,500. Stewart also claims that the original
estimated quantity of 27,000 cubic yards for rock excavation was 50,000 cubic yards short of what it actually
estimated. Thus Stewart seeks to adjust the $3.50 per cubic yard bid/contract price for rock excavation upward to
$10 per cubic yard for a total claim on this item of$500,000. The City has not finalized Stewart's contract balance
or decided whether to assess liquidated damages and is still holding about $200,000 in retention pending a decision
on liquidated damages.
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To the knowledge of the City, no other litigation is pending or threatened which, in the opinion of the City Attorney,
if decided adversely to the City would be likely to result, either individually or in the aggregate, in final judgments
against the City which would materially adversely affect its ability to make debt service payments on the Series
2015A Bonds when due, or its obligations under the Series 2015A Resolution, or materially adversely affect its
financial condition.
TAX EXEMPTION AND RELATED TAX MATTERS
Tax Exemption and Related Considerations: Federal tax law contains a number of requirements and restrictions that
apply to the Series 2015A Bonds. These include investment restrictions, periodic payments of arbitrage profits to the
United States, requirements regarding the proper use of bond proceeds and facilities financed with bond proceeds,
and certain other matters. The City has covenanted to comply with all requirements that must be satisfied in order
for the interest on the Series 2015A Bonds to be excludable from gross income for federal income tax purposes.
Failure to comply with certain of such covenants could cause interest on the Series 2015A Bonds to become
includable in gross income for federal income tax purposes retroactively to the date of issuance of the Series 2015A
Bonds.
Subject to the City's compliance with the above referenced covenants, under present law, in the opinion of Bond
Counsel, interest on the Series 2015A Bonds is excludable from gross income of the owners thereof for federal
income tax purposes, and is not included as an item of tax preference in computing the federal alternative minimum
tax imposed on individuals and corporations. However, with respect to corporations (as defined for federal income
tax purposes), such interest is included in adjusted current earnings for the purpose of determining the federal
alternative minimum tax for such corporations.
Prospective purchasers of the Series 2015A Bonds should be aware that ownership of the Series 2015A Bonds may
result in collateral federal income tax consequences to 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 or 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 not express
any opinion as to such collateral tax consequences. Prospective purchasers of the Series 2015A Bonds should
consult their tax advisors as to collateral federal income tax consequences.
Not Qualified Tax-Exempt Obligations: The City will NOT designate the Series 2015A Bonds as "qualified tax-
exempt obligations" under the exception provided in Section 265(b)(3) of the Internal Revenue Code of 1986, as
amended(the"Code").
Tax Accounting Treatment of Discount and Premium on Certain Bonds: The initial public offering price of certain
Series 2015A Bonds (the `Discount Bonds") may be less than the amount payable on such Series 2015A Bonds at
maturity. An amount equal to the difference between the initial public offering price of Discount Bonds (assuming
that a substantial amount of the Discount Bonds of that maturity are sold to the public at such price) and the amount
payable at maturity constitutes original issue discount to the initial purchaser of such Discount Bonds. A portion of
such original issue discount allocable to the holding period of such Discount Bonds by the initial purchaser will,
upon the disposition of such Discount Bonds (including by reason of its payment at maturity), be treated as interest
excludable from gross income, rather than as taxable gain, for federal income tax purposes, on the same terms and
conditions as those for other interest on the Series 2015A Bonds described above under "Fax Exemption and
Related Considerations". Such interest is considered to be accrued actuarially in accordance with the constant
interest method over the life of Discount Bonds, taking into account the semi-annual compounding of accrued
interest, at the yield to maturity on such Discount Bonds and generally will be allocated to an original purchaser in a
different amount from the amount of the payment denominated as interest actually received by the original
purchaser during the tax year.
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However, such interest may be required to be taken into account in determining the amount of the branch profits tax
applicable to certain foreign corporations doing business in the United States, even though there will not be a
corresponding cash payment. In addition, the accrual of such interest may result in certain other collateral federal
income tax consequences to, among others, financial institutions, life insurance companies, property and casualty
insurance companies, S corporations with "subchapter C" earnings and profits, individual recipients of Social
Security or Railroad Retirement benefits, and taxpayers who may be deemed to have incurred or continued
indebtedness to purchase or carry, or who have paid or incurred certain expenses allocable to, tax-exempt
obligations. Moreover, in the event of the redemption, sale or other taxable disposition of Discount Bonds by the
initial owner prior to maturity, the amount realized by such owner in excess of the basis of such Discount Bonds in
the hands of such owner (adjusted upward by the portion of the original issue discount allocable to the period for
which such Discount Bonds were held)is includable in gross income.
Owners of Discount Bonds should consult with their own tax advisors with respect to the determination of accrued
original issue discount on Discount Bonds for federal income tax purposes and with respect to the state and local tax
consequences of owning and disposing of Discount Bonds. It is possible that,under applicable provisions governing
determination of state and local income taxes, accrued interest on Discount Bonds may be deemed to be received in
the year of accrual even though there will not be a corresponding cash payment.
The initial public offering price of certain Series 2015A Bonds (the `Premium Bonds") may be greater than the
amount of such Series 2015A Bonds at maturity. An amount equal to the difference between the initial public
offering price of Premium Bonds (assuming that a substantial amount of the Premium Bonds of that maturity are
sold to the public at such price) and the amount payable at maturity constitutes premium to the initial purchaser of
such Premium Bonds. The basis for federal income tax purposes of Premium Bonds in the hands of such initial
purchaser must be reduced each year by the amortizable bond premium, although no federal income tax deduction is
allowed as a result of such reduction in basis for amortizable bond premium. Such reduction in basis will increase
the amount of any gain(or decrease the amount of any loss)to be recognized for federal income tax purposes upon a
sale or other taxable disposition of Premium Bonds. The amount of premium which is amortizable each year by an
initial purchaser is determined by using such purchaser's yield to maturity.
Purchasers of the Premium Bonds should consult with their own tax advisors with respect to the determination of
amortizable bond premium on Premium Bonds for federal income tax purposes and with respect to the state and
local tax consequences of owning and disposing of Premium Bonds.
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 Series 2015A Bonds, including the tax consequences under federal, state, local,
foreign, and other tax laws and the possible effects of changes in federal or other tax laws.
Related Tax Matters: The Internal Revenue Service (the "Service") has an ongoing program of auditing tax-exempt
obligations to determine whether, in the view of the Service, interest on such tax-exempt obligations is includable in
the gross income of the owners thereof for federal income tax purposes. It cannot be predicted whether or not the
Service will commence an audit of the Series 2015A Bonds. If an audit is commenced,under current procedures the
Service may treat the City as a taxpayer and the bondholders may have no right to participate in such procedure.
The commencement of an audit could adversely affect the market value and liquidity of the Series 2015A Bonds
until the audit is concluded,regardless of the ultimate outcome.
Payments of interest on, and proceeds of the sale, redemption or maturity of, tax-exempt obligations, including the
Series 2015A Bonds, are in certain cases required to be reported to the Service. Additionally, backup withholding
may apply to any such payments to any Series 2015A Bonds owner who fails to provide an accurate Form W-9
Request for Taxpayer Identification Number and Certification, or a substantially identical form, or to any bond
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owner who is notified by the Service of a failure to report any interest or dividends required to be shown on federal
income tax returns. The reporting and backup withholding requirements do not affect the excludability of such
interest from gross income for federal tax purposes.
Current and future legislative proposals, including some that carry retroactive effective dates, if enacted into law, or
clarification of the Code may cause interest on the Series 2015A Bonds to be subject, directly or indirectly, to
federal income taxation, or otherwise prevent owners of the Series 2015A Bonds from realizing the full current
benefit of the tax status of such interest. For example, Representative David Camp, Chair of the House Ways and
Means Committee released draft legislation that would subject interest on the Series 2015A Bonds to a federal
income tax at an effective rate of 10% or more for individuals, trusts and estates in the highest tax bracket, and the
Obama Administration has proposed legislation that would limit the exclusion from gross income of interest on
obligations like the Series 2015A Bonds to some extent for taxpayers whose income is subject to higher marginal
income tax rates. Other proposals have been made that could significantly reduce the benefit of, or otherwise affect,
the exclusion from gross income of interest on obligations like the Series 2015A Bonds. The introduction or
enactment of any such legislative proposals or clarification of the Code may also affect, perhaps significantly, the
market price for, or marketability of, the Series 2015A Bonds. Prospective purchasers of the Series 2015A Bonds
should consult their own tax advisors regarding any pending or proposed tax legislation, as to which Bond Counsel
expresses no opinion.
Opinion: Bond Counsel's opinion is not a guarantee of a result, or of the transaction on which the opinion is
rendered, or of the future performance of parties to the transaction, but represents its legal judgment based upon its
review of existing statutes, regulations, published rulings and court decisions and the representations and covenants
of the City described in this section. No ruling has been sought from the Service with respect to the matters
addressed in the opinion of Bond Counsel and Bond Counsel's opinion is not binding on the Service. Bond Counsel
assumes no obligation to update its opinion after the issue date to reflect any further action, fact or circumstance, or
change in law or interpretation, or otherwise.
State Taxabilitv: Interest on the Series 2015A Bonds is not exempt from present state of Iowa income taxes.
Prospective purchasers of the Series 2015A Bonds should consult their tax advisors regarding the applicability of
such state and local taxes.
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OTHER FINANCING INFORMATION
RATING
The Series 2015A Bonds have an uninsured rating of ' by Moody's Investors Service (Moody's). In
addition, Moody's currently rates the City's outstanding uninsured General Obligation Debt as ` ' with negative
outlook. Such ratings reflect only the view of the rating agency and any explanation of the significance of such
rating may only be obtained from the respective rating agency. There is no assurance that such ratings will continue
for any period of time or that they will not be revised or withdrawn.
UNDERWRITING
The Series 2015A Bonds are being purchased, subject to certain conditions, by Robert W. Baird & Co. (the
"Underwriter'). The Underwriter has agreed, subject to certain conditions,to purchase all,but not less than all, of the
Series 2015A Bonds at an aggregate purchase price of S
The Underwriter may offer and sell the Series 2015A Bonds to certain dealers (including dealers depositing the Series
2015A Bonds into unit investment trusts, certain of which may be sponsored or managed by the Underwriter) at
prices lower than the initial public offering prices stated on the inside cover page. The initial public offering prices of
the Series 2015A Bonds may be changed, from time to time, by the Underwriter.
The Underwriter will be required to certify to the Issuer: (i) the initial public offering price of each maturity of the
Series 2015A Bonds (not including sales to bond houses and brokers or similar persons or organizations acting in the
capacity of underwriters or wholesalers) at which price a substantial amount of the Series 2015A Bonds (not less than
10%of each maturity)were sold to the public; or (ii) if less than 10%of any maturity has been sold,the price for that
maturity determined as of the time of the sale based upon the reasonably expected initial offering price to the public;
and(iii)that the initial public offering price does not exceed their fair market value of the Series 2015A Bonds on the
sale date.
FINANCIAL ADVISOR
The City has retained Independent Public Advisors, LLC, Johnston, Iowa as financial advisor (the "Financial
Advisor') in connection with the preparation of the issuance of the Series 2015A 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 the Preliminary Official Statement. Independent Public Advisors, LLC 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 Series 2015A Bonds and other Participating Underwriters in the primary offering
of the Series 2015A 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 City will covenant and agree,
for the benefit of the registered holders or beneficial owners from time to time of the outstanding Series 2015A
Bonds, in the Series Resolution authorizing the issuance of the Series 2015A 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 Official Statement.
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During the past five years,the City inadvertently failed to timely file certain required tables and the audited financial
statements for the years ending June 30, 2009, June 30, 2010 and June 30, 2011; however, all such late filings were
made within [10] days of the due date. As part of continued review of policies and procedures regarding the Rule,
the City also discovered certain tables for financings related to general obligation and water revenue issuances for
the years ending June 30, 2012 and 2013, were not included as part of the Issuer's annual financial information, and
made supplemental filings related to these issues on May 6, 2014. In addition, a table regarding retail sales was not
included as part of the Issuer's annual financial information for the year ending June 30, 2013, and was subsequently
filed on May 27, 2014. The City has taken steps internally to assure future compliance with its Disclosure
Covenants.
Breach of the Disclosure Covenants will not constitute a default or an "Event of Default" under the Series 2015A
Bonds or the Series Resolution authorizing issuance of the Series 2015A Bonds. A broker or dealer is to consider a
known breach of the Disclosure Covenants, however, before recommending the purchase or sale of the Series
2015A 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 Series 2015A Bonds and their market price.
MISCELLANEOUS
The references herein to the Master Resolution, Series Resolution and the Award Agreement are brief outlines of
certain provisions thereof Such outlines do not purport to be complete and for full and complete statements of such
provisions reference is made to the Master Resolution, Series Resolution and Award Agreement. Copies of the
documents mentioned under this heading following delivery of the Series 2015A Bonds will be on file at the office
of the Issuer.
Neither any advertisement of the Series 2015A Bonds nor this Official Statement is to be construed as constituting
an agreement with the purchasers of the Series 2015A Bonds. So far as any statements are made in this Official
Statement involving matters of opinion, whether or not expressly so stated, they are intended merely as such and not
as representations of fact.
The attached Appendices are integral parts of this Official Statement and must be read together with all of the
foregoing statements.
CERTIFICATION
The City has authorized the distribution of this Official Statement for use in connection with the initial sale of the
Series 2015A Bonds. I have reviewed the information contained within the Official Statement prepared on behalf of
the City of Dubuque, Iowa, and said Official Statement does not contain any material misstatements of fact nor
omission of any material fact regarding the issuance of S *Sales Tax Increment Revenue Bonds (Annual
Appropriation Property Tax Supported), Senior Bond Series 2015A.
CITY OF DUBUQUE,IOWA
/s/Jenny Larson,Budget Director
*Subject to change.
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APPENDIX A: FORM OF LEGAL OPINION
APPENDIX B: JUNE 30, 2014 INDEPENDENT AUDITOR'S REPORTS
APPENDIX C: FORM OF CONTINUING DISCLOSURE CERTIFICATE
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APPENDIX D: DEFINITIONS AND SUMMARY OF MASTER RESOLUTION AND
THE SERIES RESOLUTION