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Home My WebLink About2016-11-07-J01U Sewer Revenue CLN - Electronic Bidding, Official Statement AGENDA ITEM: CITY OF WAUKEE, IOWA CITY COUNCIL MEETING COMMUNICATION MEETING DATE: November 7, 2016 AGENDA ITEM: Consideration of approval of a resolution approving electronic bidding procedures and official statement [$2,685,000* Sewer Revenue Capital Loan Notes] FORMAT: Consent Agenda SYNOPSIS INCLUDING PRO & CON: FISCAL IMPACT INCLUDING COST/BENEFIT ANALYSIS: Not to exceed $2,900,000 COMMISSION/BOARD/COMMITTEE COMMENT: Public Financial Management (PFM) has provided the Official Statement and states the following: As the City reviews the POS, please be aware the Official Statement (OS) is subject to Federal Securities Law regulation (Office of Municipal Securities). Under current, established law the OS is the responsibility of the Issuer, the City of Waukee (the “City”). As you know, the City has hired PFM to assist in the preparation of the document, but ultimate responsibility remains with the City. On Page 13 of the POS, the City is certifying, to the best of its knowledge, information and belief, the information, facts and representations in the POS are correct in all material respects, including the date of delivery of the Notes. STAFF REVIEW AND COMMENT: RECOMMENDATION: Approve the resolution. ATTACHMENTS: I. Proposed Resolution II. Official Statement PREPARED BY: Becky Schuett REVIEWED BY: RESOLUTION 16- RESOLUTION APPROVING ELECTRONIC BIDDING PROCEDURES AND OFFICIAL STATEMENT WHEREAS, the Issuer is in need of funds to pay costs of improvements and extensions to the Municipal Sewer System, including the Southwest Outfall (Phase 1) and Fox Creek (Phase 3) projects, and it is deemed necessary and advisable that Sewer Revenue Capital Loan Notes, to the amount of not to exceed $2,900,000 be authorized for said purpose(s); and WHEREAS, pursuant to notice published as required by Section 384.24A and 384.83 of the Code of Iowa, this Council has held a public meeting and hearing upon the proposal to institute proceedings for the issuance of the Notes, and the Council is therefore now authorized to proceed with the issuance of said Notes for such purpose(s); and WHEREAS, in conjunction with its Municipal Advisor, PFM Financial Advisors LLC, the City has caused a Preliminary Official Statement to be prepared outlining the details of the proposed sale of the Notes; and WHEREAS, the Council has received information from its Municipal Advisor evaluating and recommending the procedure hereinafter described for electronic, facsimile and internet bidding to maintain the integrity and security of the competitive bidding process and to facilitate the delivery of bids by interested parties; and WHEREAS, the Council deems it in the best interests of the City and the residents thereof to receive bids to purchase such Notes by means of both sealed and electronic internet communication. NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF WAUKEE, STATE OF 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 Mayor and Clerk, upon the advice of bond counsel and the City's Municipal Advisor, shall determine to be appropriate, and is authorized to be distributed in connection with the offering of the Notes for sale. Section 2. That the receipt of electronic bids by facsimile machine and through the PARITY® Competitive Bidding System described in the Official Statement are hereby found and determined to provide reasonable security and to maintain the integrity of the competitive bidding process, and to facilitate the delivery of bids by interested parties in connection with the offering at public sale. PASSED AND APPROVED this 7th day of November, 2016. Mayor ATTEST: City Clerk This Preliminary Official Statement and the information contained herein are subject to completion, amendment or other change without notice. The Notes may not be sold nor may offers to buy be accepted prior to the time the Preliminary Official Statement is delivered in final form. Under no circumstances shall this Preliminary Official Statement constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of the Notes in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the applicable securities laws of any such jurisdiction. PRELIMINARY OFFICIAL STATEMENT DATED NOVEMBER 7, 2016 New Issue Rating: Application Made to Moody’s Investor Service Assuming compliance with certain covenants, in the opinion of Ahlers & Cooney, P.C., Bond Counsel, under present law and assuming continued compliance with the requirements of the Internal Revenue Code of 1986, as amended (the “Code”) (i) interest on the Notes is excludable from gross income of the owners thereof for federal income tax purposes; and (ii) is not included as an item of tax preference in computing the federal alternative minimum tax imposed on individuals and corporations; however, interest is taken into account in computing an adjustment used in determining the federal alternative minimum tax for certain corporations (as defined for federal income tax purposes). Finally, interest on the Notes is not excluded from gross income for purposes of some Iowa income taxes. The Notes will be designated as “qualified tax-exempt obligations”. See “TAX MATTERS” herein for a more detailed discussion. CITY OF WAUKEE, IOWA $2,685,000* Sewer Revenue Capital Loan Notes, Series 2016C BIDS RECEIVED: Monday, November 21, 2016, 10:00 o’clock A.M., Central Time AWARD: Monday, November 21, 2016, 5:30 o’clock P.M., Central Time Dated: December 20, 2016 Principal Due: June 1, 2019-2036 The $2,685,000* Sewer Revenue Capital Loan Notes, Series 2016C (the “Notes”) will be issued pursuant to Division V of Sections 384.24A and 384.83 of the Code of Iowa, and a resolution to be adopted by the City Council of the City of Waukee, Iowa (the “City”). The Notes are being issued for the purpose of providing funds to pay the costs of improvements and extensions to the Municipal Sewer System (the “Sewer Utility”), including the Southwest Outfall (Phase 1) and Fox Creek (Phase 3) projects. The purchaser of the Notes agrees to enter into a loan agreement (the “Loan Agreement”) with the City pursuant to the authority contained in Section 384.24A of the Code of Iowa. The Notes are issued in evidence of the City’s obligations under the Loan Agreement. THE NOTES ARE NOT GENERAL OBLIGATIONS OF THE CITY, but are payable solely and only from Net Revenues of the Sewer Utility. The Notes will be issued as fully registered Notes 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 Notes. 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 Notes purchased. Principal of the Notes, payable annually on each June 1, beginning June 1, 2019 and interest on the Notes, payable initially on June 1, 2017 and thereafter on each December 1 and June 1, will be paid to DTC by the City’s Registrar/Paying Agent, Bankers Trust Company, 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 Notes as described herein. Interest and principal shall be paid to the registered holder of a bond as shown on the records of ownership maintained by the Registrar as of the close of business on the 15th day of the month preceding such interest payment date (the “Record Date”). THE NOTES WILL MATURE AS LISTED ON THE INSIDE FRONT COVER MINIMUM BID: $2,644,725 GOOD FAITH DEPOSIT: Required of Purchaser Only TAX MATTERS: Federal: Tax-Exempt State: Taxable See “TAX MATTERS” for more information. The Notes are offered, subject to prior sale, withdrawal or modification, when, as, and if issued subject to the legal opinion of Ahlers & Cooney, P.C., Bond Counsel, of Des Moines, Iowa, to be furnished upon delivery of the Notes. It is expected the Notes will be available for delivery on or about December 20, 2016. This Preliminary Official Statement will be further supplemented by offering prices, interest rates, aggregate principal amount, principal amount per maturity, anticipated delivery date, and underwriter, together with any other information required by law, and shall constitute a “Final Official Statement” of the City with respect to the Notes, as defined in Rule 15c2-12. * Preliminary; subject to change. CITY OF WAUKEE, IOWA $2,685,000* Sewer Revenue Capital Loan Notes, Series 2016C MATURITY: The Notes will mature June 1 in the years and amounts as follows: Year Amount* 2019 $110,000 2020 100,000 2021 100,000 2022 100,000 2023 100,000 2024 100,000 2025 145,000 2026 150,000 2027 155,000 2028 160,000 2029 160,000 2030 170,000 2031 175,000 2032 180,000 2033 185,000 2034 190,000 2035 200,000 2036 205,000 * PRINCIPAL ADJUSTMENT: Preliminary; subject to change. The aggregate principal amount of the Notes, and each scheduled maturity thereof, are subject to reduction by the City or its designee after the determination of the successful bidder. The City may increase or decrease each maturity in increments of $5,000 but the total amount to be issued will not exceed $2,900,000. Interest rates specified by the successful bidder for each maturity will not change. Final adjustments shall be in the sole discretion of the City. The dollar amount of the purchase price proposed by the successful bidder will be changed if the aggregate principal amount of the Notes is adjusted as described above. Any change in the principal amount of any maturity of the Notes will be made while maintaining, as closely as possible, the successful bidder's net compensation, calculated as a percentage of principal. The successful bidder may not withdraw or modify its bid as a result of any post-bid adjustment. Any adjustment shall be conclusive, and shall be binding upon the successful bidder. INTEREST: Interest on the Notes will be payable on June 1, 2017 and semiannually thereafter. REDEMPTION: Notes due after June 1, 2024 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. Notice of such call shall be given at least thirty (30) days prior to the date fixed for redemption to the registered owners of the Notes to be redeemed at the address shown on the registration books. * Preliminary; subject to change. COMPLIANCE WITH S.E.C. RULE 15c2-12 Municipal obligations (issued in an aggregate amount over $1,000,000) are subject to General Rules and Regulations, Securities Exchange Act of 1934, Rule 15c2-12 Municipal Securities Disclosure. Preliminary Official Statement: This Preliminary Official Statement was prepared for the City for dissemination to prospective bidders. Its primary purpose is to disclose information regarding the Notes to prospective bidders in the interest of receiving competitive bids in accordance with the TERMS OF OFFERING contained herein. Unless an addendum is received prior to the sale, this document shall be deemed the “Near Final Official Statement”. Review Period: This Preliminary Official Statement has been distributed to City staff as well as to prospective bidders for an objective review of its disclosure. Comments, omissions or inaccuracies must be submitted to PFM Financial Advisors LLC (the “Municipal Advisor”) at least two business days prior to the sale. Requests for additional information or corrections in the Preliminary Official Statement received on or before this date will not be considered a qualification of a bid received. If there are any changes, corrections or additions to the Preliminary Official Statement, prospective bidders will be informed by an addendum at least one business day prior to the sale. Final Official Statement: Upon award of sale of the Notes, the legislative body will authorize the preparation of a final Official Statement that includes the offering prices, interest rates, aggregate principal amount, principal amount per maturity, anticipated delivery date and other information required by law and the identity of the syndicate manager (the “Syndicate Manager”) and syndicate members. Copies of the final Official Statement will be delivered to the Syndicate Manager within seven business days following the bid acceptance. REPRESENTATIONS 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 Preliminary Official Statement. This Preliminary 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 Notes 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 Preliminary 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 Preliminary 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. This Preliminary Official Statement and any addenda thereto were prepared relying on information from the City and other sources, which are believed to be reliable. Bond Counsel has not participated in the preparation of this Preliminary Official Statement and is not expressing any opinion as to the completeness or accuracy of the information contained therein. Compensation of the Municipal Advisor, payable entirely by the City, is contingent upon the sale of the issue. (This page has been left blank intentionally.) TABLE OF CONTENTS TERMS OF OFFERING ........................................................................................................................... i SCHEDULE OF BOND YEARS ........................................................................................................... vii INTRODUCTION .................................................................................................................................... 1 Authority and Purpose .................................................................................................................. 1 Optional Redemption .................................................................................................................... 1 Interest .......................................................................................................................................... 2 Payment of and Security for the Notes ......................................................................................... 2 Book-Entry-Only Issuance ............................................................................................................ 4 Future Financing ........................................................................................................................... 6 Litigation ....................................................................................................................................... 6 Debt Payment History ................................................................................................................... 6 Legality ......................................................................................................................................... 6 Tax Matters ................................................................................................................................... 7 Noteholders’ Risk ......................................................................................................................... 9 Rating ........................................................................................................................................... 12 Municipal Advisor ....................................................................................................................... 13 Continuing Disclosure ................................................................................................................. 13 Certification ................................................................................................................................. 13 DESCRIPTION OF THE MUNICIPAL SEWER UTILITY ............................................................. 14 The Sewer Utility ......................................................................................................................... 14 The Des Moines Metropolitan Wastewater Reclamation Authority ............................................ 14 Sewer Utility Rates and Charges ................................................................................................. 14 Sewer Utility Sales History and Total Charges ........................................................................... 15 Number of Sewer Utility Customers ............................................................................................ 15 Larger Sewer Utility Customers (FY 2015-16) ........................................................................... 15 Sewer Utility Funds on Hand (As of August 31, 2016) .............................................................. 15 Sewer Utility Revenue Debt ........................................................................................................ 16 Other Sewer Utility Revenue Debt ............................................................................................. 17 Sewer Utility Historical Cashflow and Anticipated Debt Coverage ........................................... 20 APPENDIX A - GENERAL INFORMATION ABOUT THE CITY OF WAUKEE, IOWA APPENDIX B - FORM OF LEGAL OPINION APPENDIX C - JUNE 30, 2015 INDEPENDENT AUDITOR’S REPORTS APPENDIX D - FORM OF CONTINUING DISCLOSURE CERTIFICATE OFFICIAL BID FORM CITY OF WAUKEE, IOWA City Council William Peard Mayor Rick Peterson Council Member/Mayor Pro Tem Brian Harrison Council Member Shelly Hughes Council Member Larry Lyon Council Member Anna Bergman Council Member Administration Tim Moerman, City Administrator Rebecca Schuett, City Clerk Linda Burkhart, Finance Director City Attorney Brick, Gentry, Bowers, Swartz, Stoltze, Schuling & Levis, P.C. Steven P. Brick Des Moines, Iowa Bond Counsel Ahlers & Cooney, P.C. Des Moines, Iowa Municipal Advisor PFM Financial Advisors LLC Des Moines, Iowa i TERMS OF OFFERING CITY OF WAUKEE, IOWA Bids for the purchase of the City of Waukee’s (the “City”) $2,685,000* Sewer Revenue Capital Loan Notes, Series 2016C (the “Notes”) will be received on Monday, November 21, 2016 before 10:00 o’clock A.M. Central Time after which time they will be tabulated. The City Council will consider award of the Notes at 5:30 o’clock P.M. Central Time, on the same day. Questions regarding the sale of the Notes may be made to PFM Financial Advisors LLC, 801 Grand Avenue, Suite 3300, Des Moines, Iowa, 50309 or by telephoning 515-243-2600. Information can also be obtained from Ms. Linda Burkhart, Finance Director, City of Waukee, 230 West Hickman Road, Waukee, Iowa 50263, or by telephoning 515-987-4522. This section sets forth the description of certain terms of the Notes as well as the TERMS OF OFFERING with which all bidders and bid proposals are required to comply, as follows: DETAILS OF THE NOTES The Sewer Revenue Capital Loan Notes, Series 2016C in the principal amount of $2,685,000* will be dated the delivery date of (December 20, 2016) in the denomination of $5,000 or multiples thereof, and will mature June 1 as follows: Year Amount* 2019 $110,000 2020 100,000 2021 100,000 2022 100,000 2023 100,000 2024 100,000 2025 145,000 2026 150,000 2027 155,000 2028 160,000 2029 160,000 2030 170,000 2031 175,000 2032 180,000 2033 185,000 2034 190,000 2035 200,000 2036 205,000 ADJUSTMENT TO NOTE MATURITY AMOUNTS The City reserves the right to increase or decrease the aggregate principal amount of the Notes and to increase or reduce each scheduled maturity thereof after the determination of the successful bidder. The City may increase or decrease each maturity in increments of $5,000 but the total amount to be issued will not exceed $2,900,000. Interest rates specified by the successful bidder for each maturity will not change. Final adjustments shall be in the sole discretion of the City. The dollar amount of the purchase price proposed by the successful bidder will be changed if the aggregate principal amount of the Notes is adjusted as described above. Any change in the principal amount of any maturity of the Notes will be made while maintaining, as closely as possible, the successful bidder’s net compensation, calculated as a percentage of bond principal. The successful bidder may not withdraw or modify its bid as a result of any post-bid adjustment. Any adjustment shall be conclusive, and shall be binding upon the successful bidder. * Preliminary; subject to change. ii TERM-NOTE OPTION Bidders shall have the option of designating each series of the Notes as serial notes or term notes, or both. The bid must designate whether each of the principal amounts shown above represent a serial maturity or a mandatory redemption requirement for a term note maturity. (See the OFFICIAL BID FORM for more information.) In any event, the above principal amount scheduled shall be represented by either serial note maturities or mandatory redemption requirements, or a combination of both. OPTIONAL REDEMPTION Notes due after June 1, 2024 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. Notice of such call shall be given at least thirty (30) days prior to the date fixed for redemption to the registered owners of the Notes to be redeemed at the address shown on the registration books. INTEREST Interest on the Notes will be payable on June 1, 2017 and semiannually on the 1st day of December and June thereafter. Interest and principal shall be paid to the registered holder of a note as shown on the records of ownership maintained by the Registrar as of the 15th day of the month preceding such interest payment date (the “Record Date”). Interest will be computed on the basis of a 360-day year of twelve 30-day months and will be rounded pursuant to rules of the Municipal Securities Rulemaking Board. LIEN THE NOTES ARE NOT GENERAL OBLIGATIONS OF THE CITY, but are payable solely and only from a pledge of Net Revenues of the Municipal Sanitary Sewer Utility (the “Sewer Utility”). The Notes will constitute a valid lien on the Net Revenues of the Sewer Utility of the City. The Notes are being issued on parity with the $1,185,000 Sewer Revenue Capital Loan Notes, Series 2013A dated March 1, 2013, of which $885,000 is currently outstanding and the following State Revolving Fund (“SRF”) payment obligations for the City’s proportionate allocated share of debt obligations issued by the SRF: the $455,748 Iowa State Revolving Fund Revenue Bonds, Series 1998A dated October 8, 1998, of which $64,000 is currently outstanding; the $945,252 Iowa State Revolving Fund Revenue Bonds, Series 1998B dated October 8, 1998, of which $134,000 is currently outstanding; the $1,178,000 Iowa State Revolving Fund Revenue Bonds, Series 1998C dated October 8, 1998, of which $161,000 is currently outstanding (collectively the “Parity Obligations”). The Parity Obligations constitute a valid lien on the Net Revenues of the Sewer Utility. In addition, the City has the Des Moines Metropolitan Wastewater Reclamation Authority (“WRA”) payment obligations for the City’s proportionate allocated share of debt obligations issued by the WRA as highlighted under “OTHER SEWER UTILITY REVENUE DEBT (“WRA Payment Obligations”). The WRA Payment Obligations constitute a lien on the Net Revenues of the Sewer Utility. PARITY NOTES The City reserves the right and privilege to issue Additional Obligations on a parity and equality of rank with the Notes with respect to the lien and claim of such Additional Obligations to the Net Revenues of the Sewer Utility and the money on deposit in the funds adopted by the Resolution for the Notes, for the purpose of refunding any of the Notes, parity obligations or general obligation bonds outstanding, or making extensions, additions, improvements or replacements to the Sewer Utility. Before any such Additional Obligations ranking on a parity are issued, there will have been procured and filed with the City Clerk, a statement of an independent auditor or independent municipal advisor, not a regular employee of the City, reciting the opinion based upon necessary investigations that the Net Revenues of the System for the preceding fiscal year (with adjustments as hereinafter provided) were equal to at least 1.25 times the maximum amount that will be required in any fiscal year prior to the longest maturity of any of the Notes or parity obligations for both principal of and interest on all Notes and parity obligations then outstanding which are payable from the Net Revenues of the System and the Additional Obligations then proposed to be issued. iii GOOD FAITH DEPOSIT A good faith deposit in the amount of $26,850 (the “Deposit”) is required from the lowest bidder only. The lowest bidder is required to submit such Deposit payable to the order of the City, not later than 12:00 o’clock P.M. Central Time on the day of the sale of the Notes and in the form of either (i) a cashier’s check provided to the City or its Municipal Advisor or (ii) a wire transfer as instructed by the City’s Municipal Advisor. If not so received, the bid of the lowest bidder may be rejected and the City may direct the second lowest bidder to submit a deposit and thereafter may award the sale of the Notes to the same. No interest on a deposit will accrue to the successful bidder (the “Purchaser”). The Deposit will be applied to the purchase price of the Notes. In the event a Purchaser fails to honor its accepted bid proposal, any deposit will be retained by the City. FORM OF BIDS AND AWARD All bids shall be unconditional for the Notes for a price not less than $2,644,725, plus accrued interest, and shall specify the rate or rates of interest in conformity to the limitations set forth under the “BIDDING PARAMETERS” section. Bids must be submitted on or in substantial compliance with the OFFICIAL BID FORM provided by the City. The Notes will be awarded to the bidder offering the lowest interest rate to be determined on a true interest cost (the “TIC”) basis assuming compliance with the “GOOD FAITH DEPOSIT” section. The TIC shall be determined by the present value method, i.e., by ascertaining the semiannual rate, compounded semiannually, necessary to discount to present value as of the dated date of the Notes, the amount payable on each interest payment date and on each stated maturity date or earlier mandatory redemption, so that the aggregate of such amounts will equal the aggregate purchase price offered therefore. The TIC shall be stated in terms of an annual percentage rate and shall be that rate of interest, which is twice the semiannual rate so ascertained (also known as the Canadian Method). The TIC shall be as determined by the Municipal Advisor based on the TERMS OF OFFERING and all amendments, and on the bids as submitted. The Municipal Advisor’s computation of the TIC of each bid shall be controlling. In the event of tie bids for the lowest TIC, the Notes will be awarded by lot. The City will reserve the right to: (i) waive non-substantive informalities of any bid or of matters relating to the receipt of bids and award of the Notes, (ii) reject all bids without cause and (iii) reject any bid which the City determines to have failed to comply with the terms herein. BIDDING PARAMETERS Each bidder’s proposal must conform to the following limitations: 1. Each annual maturity shall bear a single rate of interest from the dated date of the Notes to the date of maturity. 2. Rates of interest bid must be in multiples of one-eighth or one-twentieth of one percent. 3. The initial price to the public for each maturity must be 98% or greater. RECEIPT OF BIDS Forms of Bids: Bids must be submitted on or in substantial compliance with the TERMS OF OFFERING and OFFICIAL BID FORM provided by the City or through PARITY® competitive bidding system (the “Internet Bid System”). The City shall not be responsible for malfunction or mistake made by any person, or as a result of the use of an electronic bid or the means used to deliver or complete a bid. The use of such facilities or means is at the sole risk of the prospective bidder who shall be bound by the terms of the bid as received. No bid will be accepted after the time specified in the OFFICIAL BID FORM. The time as maintained by the Internet Bid System shall constitute the official time with respect to all bids submitted. A bid may be withdrawn before the bid deadline using the same method used to submit the bid. If more than one bid is received from a bidder, the last bid received shall be considered. iv Sealed Bidding: Sealed bids may be submitted and will be received at the office of the City Clerk at City Hall, 230 West Hickman Road, Waukee, Iowa, 50263. Electronic Internet Bidding: Electronic internet bids will be received at the office of the City Clerk at City Hall, 230 West Hickman Road, Waukee, Iowa, 50263. Electronic internet bids must be submitted through the PARITY® competitive bidding system (the “Internet Bid System”). Information about the Internet Bid System may be obtained by calling 212-849-5021. Each bidder shall be solely responsible for making necessary arrangements to access the Internet Bid System for purposes of submitting its internet bid in a timely manner and in compliance with the requirements of the TERMS OF OFFERING and OFFICIAL BID FORM. The City is permitting bidders to use the services of the Internet Bid System solely as a communication mechanism to conduct the Internet bidding and the Internet Bid System is not an agent of the City. Provisions of the TERMS OF OFFERING and OFFICIAL BID FORM shall control in the event of conflict with information provided by the Internet Bid System. Electronic Facsimile Bidding: Electronic facsimile bids will be received at the office of the City Clerk at City Hall, 230 West Hickman Road, Waukee, Iowa, 50263 (facsimile number: 515-987-1845) or at the office of the City’s Municipal Advisor, PFM Financial Advisors LLC, 801 Grand Avenue, Suite 3300, Des Moines, Iowa, 50309 (facsimile number: 515-243-6994). Electronic facsimile bids will be sealed and treated as sealed bids. Electronic facsimile bids received after the deadline will be rejected. Bidders electing to submit bids via facsimile transmission bear full responsibility for the transmission of such bid. Neither the City nor its agents shall be responsible for malfunction or mistake made by any person, or as a result of the use of the facsimile facilities or any other means used to deliver or complete a bid. The use of such facilities or means is at the sole risk of the prospective bidder who shall be bound by the terms of the bid as received. Neither the City nor its agents will assume liability for the inability of the bidder to reach the above named facsimile numbers prior to the time of sale specified above. Time of receipt shall be the time recorded by the facsimile operator receiving the bids. BOOK-ENTRY-ONLY ISSUANCE The Notes will be issued by means of a book-entry-only system with no physical distribution of bond certificates made to the public. The Notes will be issued in fully registered form and one bond certificate, representing the aggregate principal amount of the Notes maturing in each year will be registered in the name of Cede & Co. as nominee of The Depository Trust Company (“DTC”), New York, New York, which will act as securities depository of the Notes. Individual purchases of the Notes may be made in the principal amount of $5,000 or any multiple thereof of a single maturity through book entries made on the books and records of DTC and its participants. Principal and interest are payable by the Registrar to DTC or its nominee as registered owner of the Notes. Transfer of principal and interest payments to participants of DTC will be the responsibility of DTC; transfer of principal and interest payments to beneficial owners by participants will be the responsibility of such participants and other nominees of beneficial owners. MUNICIPAL BOND INSURANCE AT PURCHASER’S OPTION If the Notes qualify for issuance of any policy of municipal bond insurance or commitment therefore at the option of the bidder, the purchase of any such insurance policy or the issuance of any such commitment shall be at the sole option and expense of the Purchaser. Any increased costs of issuance of the Notes resulting from such purchase of insurance shall be paid by the Purchaser, except that, if the City has requested and received a rating on the Notes from a rating agency, the City will pay that initial rating fee. Any other rating agency fees shall be the responsibility of the Purchaser. Failure of the municipal bond insurer to issue the policy after the Notes have been awarded to the Purchaser shall not constitute cause for failure or refusal by the Purchaser to accept delivery on the Notes. The City reserves the right in its sole discretion to accept or deny changes to the financing documents requested by the insurer selected by the Purchaser. v DELIVERY The Notes will be delivered to the Purchaser via Fast Automated Securities Transfer (“FAST”) delivery with the Registrar holding the Notes on behalf of DTC, against full payment in immediately available cash or federal funds. The Notes are expected to be delivered within forty-five days after the sale. Should delivery be delayed beyond sixty days from the date of sale for any reason except failure of performance by the Purchaser, the Purchaser may withdraw their bid and thereafter their interest in and liability for the Notes will cease. When the Notes are ready for delivery, the City will give the Purchaser five working days’ notice of the delivery date and the City will expect payment in full on that date, otherwise reserving the right at its option to determine that the Purchaser failed to comply with the offer of purchase. INFORMATION FROM PURCHASER The Purchaser will be required to certify to the City immediately after the opening of bids: (i) the initial public offering price of each maturity of the Notes (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 Notes (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 at which Purchaser reasonably expected to sell at least 10% of each maturity to the Public; and (iii) that the initial public offering price does not exceed the fair market value of the Notes on the sale date. The Purchaser will also be required to provide a certificate at closing confirming the information required by this paragraph. OFFICIAL STATEMENT The City has authorized the preparation of a Preliminary Official Statement containing pertinent information relative to the Notes. The Preliminary Official Statement when further supplemented with maturity dates, principal amounts, and interest rates of the Notes, and any other information required by law or deemed appropriate by the City, shall constitute a final Official Statement of the City with respect to the Notes, as that term is defined in Rule 15c2-12 of the Securities and Exchange Commission (the “Rule”). By awarding the Notes to any underwriter or underwriting syndicate submitting an OFFICIAL BID FORM therefore, the City agrees that, no more than seven (7) business days after the date of such award, it shall provide without cost to the senior managing underwriter of the syndicate to which each series of the Notes are awarded up to 25 copies for the Notes of the final Official Statement to permit each “Participating Underwriter” (as that term is defined in the Rule) to comply with the provisions of such Rule. The City shall treat the senior managing underwriter of the syndicate or syndicates to which the Notes are awarded as its designated agent for purposes of distributing copies of the final Official Statement to the Participating Underwriter. Any underwriter executing and delivering an OFFICIAL BID FORM with respect to the Notes agrees thereby that if its bid is accepted by the City, (i) it shall accept such designation and (ii) it shall enter into a contractual relationship with all Participating Underwriters of the Notes for purposes of assuring the receipt by each such Participating Underwriter of the final Official Statement. CONTINUING DISCLOSURE In order to permit bidders for the Notes and other Participating Underwriters in the primary offering of the Notes to comply with paragraph (b)(5) of Rule 15c2-12 promulgated by the Securities and Exchange Commission (the “SEC”) 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 Notes, in the resolution authorizing the issuance of the Notes and the Continuing Disclosure Certificate, to provide Annual Financial Information filings of specified information and notice of the occurrence of certain material events as hereinafter described (the “Undertakings”). 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 Undertakings, including termination, amendment and remedies, are set forth as APPENDIX D to this Official Statement. vi Within the past five years while the Bond Call Notice for the redemption of the City’s General Obligation Series 2006B was timely filed in 2013; however, the corresponding Notice of Defeasance in 2013 was not posted as required. The Series 2006B Bonds were redeemed in 2014. The Series 2007 Gas Revenue Bonds were insured by Radian Insurance. The City failed to timely file material event notices for bond insurance rating changes. Breach of the Undertakings will not constitute a default or an “Event of Default” under the Notes or the resolution for the Notes. A broker or dealer is to consider a known breach of the Undertakings, however, before recommending the purchase or sale of the Notes in the secondary market. Thus, a failure on the part of the City to observe the Undertakings may adversely affect the transferability and liquidity of the Notes and their market price. CUSIP NUMBERS It is anticipated that the Committee on Uniform Security Identification Procedures (“CUSIP”) numbers will be printed on the Notes and the Purchaser must agree in the bid proposal to pay the cost thereof. In no event will the City, Bond Counsel or Municipal Advisor be responsible for the review or express any opinion that the CUSIP numbers are correct. Incorrect CUSIP numbers on said Notes shall not be cause for the Purchaser to refuse to accept delivery of said Notes. BY ORDER OF THE CITY COUNCIL Linda Burkhart, Finance Director City of Waukee 230 West Hickman Road Waukee, IA 50263 vii $2,685,000* CITY OF WAUKEE, IOWA Sewer Revenue Capital Loan Notes, Series 2016C Bonds Dated: Interest Due: June 1, 2017 and each December 1 and June 1 to maturity Principal Due: June 1, 2019-2036 Cumulative Year Bond Years Bond Years 2019 $110,000 269.19 269.19 2020 100,000 344.72 613.92 2021 100,000 444.72 1,058.64 2022 100,000 544.72 1,603.36 2023 100,000 644.72 2,248.08 2024 100,000 744.72 2,992.81 2025 145,000 1,224.85 4,217.65 2026 150,000 1,417.08 5,634.74 2027 155,000 1,619.32 7,254.06 2028 160,000 1,831.56 9,085.61 2029 160,000 1,991.56 11,077.17 2030 170,000 2,286.03 13,363.19 2031 175,000 2,528.26 15,891.46 2032 180,000 2,780.50 18,671.96 2033 185,000 3,042.74 21,714.69 2034 190,000 3,314.97 25,029.67 2035 200,000 3,689.44 28,719.11 2036 205,000 3,986.68 32,705.79 Average Maturity (dated date): 12.181 Years * Preliminary; subject to change SCHEDULE OF BOND YEARS December 20, 2016 Principal* 1 PRELIMINARY OFFICIAL STATEMENT CITY OF WAUKEE, IOWA $2,685,000* Sewer Revenue Capital Loan Notes, Series 2016C INTRODUCTION This Preliminary Official Statement contains information relating to the City of Waukee, Iowa (the “City”) and its issuance of $2,685,000* Sewer Revenue Capital Loan Notes, Series 2016C (the “Notes”). This Preliminary Official Statement has been executed on behalf of the City by its Finance Director and may be distributed in connection with the sale of the Notes authorized therein. Inquiries may be made to PFM Financial Advisors LLC, 801 Grand Avenue, Suite 3300, Des Moines, Iowa, 50309 or by telephoning 515-243-2600. Information can also be obtained from Ms. Linda Burkhart, Finance Director, City of Waukee, 230 West Hickman Road, Waukee, Iowa 50263, or by telephoning 515-987-4522. AUTHORITY AND PURPOSE The $2,685,000* Sewer Revenue Capital Loan Notes, Series 2016C are being issued pursuant to Division V of Sections 384.24A and 384.83 of the Code of Iowa, and a resolution to be adopted by the City Council of the City of Waukee, Iowa (the “City”). The Notes are being issued for the purpose of providing funds to pay the costs of improvements and extensions to the Municipal Sewer System (the “Sewer Utility”), including the Southwest Outfall (Phase 1) and Fox Creek (Phase 3) projects. The purchaser of the Notes agrees to enter into a loan agreement (the “Loan Agreement”) with the City pursuant to the authority contained in Section 384.24A of the Code of Iowa. The Notes are issued in evidence of the City’s obligations under the Loan Agreement. The estimated Sources and Uses of the Notes are as follows: Sources of Funds Par Amount of Notes $2,685,000.00 * Other Monies 191,001.00 Total Sources $2,876,001.00 * Uses of Funds Deposit to Construction Account $2,482,000.00 Deposit to Reserve Account 303,166.36 Underwriter’s Discount 40,275.00 Cost of Issuance & Contingency 50,559.64 Total Uses $2,876,001.00 * * Preliminary; subject to change. OPTIONAL REDEMPTION Notes due after June 1, 2024 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. Notice of such call shall be given at least thirty (30) days prior to the date fixed for redemption to the registered owners of the Notes to be redeemed at the address shown on the registration books. 2 INTEREST Interest on the Notes will be payable on June 1, 2017 and semiannually on the 1st day of December and June thereafter. Interest and principal shall be paid to the registered holder of a note as shown on the records of ownership maintained by the Registrar as of the 15th day of the month preceding such interest payment date (the “Record Date”). Interest will be computed on the basis of a 360-day year of twelve 30-day months and will be rounded pursuant to rules of the Municipal Securities Rulemaking Board. PAYMENT OF AND SECURITY FOR THE NOTES This section contains a summary of the security provisions for the Notes. A detailed statement of security provisions is contained in the Resolution for the Notes, which is available upon request from the City’s Municipal Advisor, PFM Financial Advisors LLC. Source of Payment: THE NOTES ARE NOT GENERAL OBLIGATIONS OF THE CITY, but are payable solely and only from a pledge of Net Revenues of the Sewer Utility. The City pledges a valid lien on the Net Revenues of the Sewer Utility for payment of principal and interest on the Notes and on parity obligations (the “Parity Obligations”), after paying for operating, maintaining, repairing and insuring the Sewer Utility. Outstanding Parity Obligations debt includes: The Notes are being issued on parity with the $1,185,000 Sewer Revenue Capital Loan Notes, Series 2013A (the “Series 2013A Bonds”) dated March 1, 2013, of which $885,000 is currently outstanding and the following State Revolving Fund (the “SRF”) payment obligations for the City’s proportionate allocated share of debt obligations issued by the SRF: the $455,748 Iowa State Revolving Fund Revenue Bonds, Series 1998A (the “Series 1998A Bonds”) dated October 8, 1998, of which $64,000 is currently outstanding; the $945,252 Iowa State Revolving Fund Revenue Bonds, Series 1998B (the “Series 1998B Bonds”) dated October 8, 1998, of which $134,000 is currently outstanding; the $1,178,000 Iowa State Revolving Fund Revenue Bonds, Series 1998C (the “Series 1998C Bonds”) dated October 8, 1998, of which $161,000 is currently outstanding; and the (collectively the “Parity Obligations”). The Parity Obligations constitute a valid lien on the Net Revenues of the Sewer Utility. In addition, the City has the Des Moines Metropolitan Wastewater Reclamation Authority (“WRA”) payment obligations for the City’s proportionate allocated share of debt obligations issued by the WRA as highlighted under OTHER SEWER UTILITY REVENUE DEBT (“WRA Payment Obligations”). The WRA Payment Obligations constitute a lien on the Net Revenues of the Sewer Utility. Unpaid Sewer Charges: As provided by Section 384.84, Subsection 1, City Code of Iowa, unpaid sewer charges constitute a lien upon the premises served by the sewer utility upon certification by the City to the county treasurer that the rates or charges are past due. The lien has equal precedence with ordinary taxes, may be certified to the county treasurer and collected in the same manner as taxes, and is not divested by a judicial sale. Sewer Rate Covenant: The City covenants to adopt or continue in effect rates for all services rendered by the Sewer Utility to its customers, including the City, to produce gross revenues for the next fiscal year at least sufficient to pay the costs of operating, maintaining, repairing and insuring the Sewer Utility, including purchases at wholesale, if any, salaries, wages, and costs of materials and supplies and all other items normally included under recognized accounting practices (but does not include allowances for depreciation in the valuation of physical property, capital outlays or principal and interest payments on the Notes) (which such expenses are hereinafter sometimes referred to as the “Sewer Operating Expenses”), and to leave a balance of Net Revenues equal to at least 1.25 times the annual installments of principal and interest on all of the Notes and outstanding sewer Parity Obligations from time to time, as the same become due in the current fiscal year and to maintain a reasonable reserve for the payment of such principal and interest, if required, as provided in the Resolution for the Notes, or Parity Obligations. 3 Sewer Revenue Fund: The City covenants to establish a separate Sewer Revenue Fund (the “Sewer Revenue Fund”) to be used in maintaining and operating the Sewer Utility, and after payment of the Sewer Operating Expenses shall, to the extent hereinafter provided, be used to pay the principal of and interest on the Notes and any Parity Obligations, and to create and maintain the several separate funds as established in the Resolution for the Notes, and Parity Obligations. Operation and Maintenance Fund: Money in the Sewer Revenue Fund shall first be disbursed to make deposits into a separate and special fund to pay current expenses. The fund shall be known as the Sewer Revenue Operation and Maintenance Fund (the "Operation and Maintenance Fund"). There shall be deposited in the Operation and Maintenance Fund each month an amount sufficient to meet the current expenses (the “Current Expenses”) of the month plus an amount equal to 1/12th of expenses payable on an annual basis such as insurance. After the first day of the month, further deposits may be made to this account from the Sewer Revenue Fund to the extent necessary to pay Current Expenses accrued and payable to the extent that funds are not available in a sewer surplus revenue fund. Sinking Fund: Money in the Sewer Revenue Fund shall next be disbursed to make deposits into a separate and special fund to pay the principal and interest requirements of the fiscal year on the Notes and Parity Obligations. The fund shall be known as the Sewer Revenue Note and Interest Sinking Fund (the "Sinking Fund"). The required amount to be deposited in the Sinking Fund in any month shall be the equal monthly amount necessary to pay in full the installment of interest coming due on the next interest payment date on the then outstanding Notes and Parity Obligations, plus the equal monthly amount necessary to pay in full the installment of principal coming due on such Notes and Parity Obligations on the next succeeding principal payment date until the full amount of such installment is on hand. If for any reason the amount on hand in the Sinking Fund exceeds the required amount, the excess shall forthwith be withdrawn and paid into the Sewer Revenue Fund. Money in the Sinking Fund shall be used solely for the purpose of paying principal of and interest on the Notes and Parity Obligations as the same shall become due and payable. Reserve Fund: Money in the Sewer Revenue Fund shall be disbursed to maintain a debt service reserve in an amount equal to the reserve fund requirement (the “Reserve Fund Requirement”) (as defined in the Resolution authorizing the Notes). Such fund shall be known as the Sewer Revenue Debt Service Reserve Fund (the "Reserve Fund"). In each month there shall be deposited in the Reserve Fund an amount equal to 25 percent of the amount required by this Resolution to be deposited in such month in the Sinking Fund; provided, however, that when the amount on deposit in the Reserve Fund shall be not less than the Reserve Fund Requirement, no further deposits shall be made into the Reserve Fund except to maintain such level, and when the amount on deposit in the Reserve Fund is greater than the balance required above, such additional amounts shall be withdrawn and paid into the Sewer Revenue Fund. Money in the Reserve Fund shall be used solely for the purpose of paying principal at maturity of or interest on the Notes and Parity Obligations requiring a reserve for the payment of which insufficient money shall be available in the Sinking Fund. Whenever it shall become necessary to so use money in the Reserve Fund, the payments required above shall be continued or resumed until it shall have been restored to the required minimum amount. The Series 1998A Bonds, Series 1998B Bonds and Series 1998C Bonds and the WRA payment obligations do not require a reserve. Notwithstanding the foregoing, there shall be no deposit into the Reserve Fund with respect to the outstanding SRF or WRA Payment Obligations, nor shall the Reserve Fund secure the outstanding SRF or WRA Payment Obligations. After delivery of the Notes, the Reserve Fund Requirement for the Notes and Parity Obligations requiring a reserve will be $303,166 which represents 125% of average aggregate debt service on the Notes and Parity obligations requiring a reserve. Subordinate Obligations: Money in the Sewer Revenue Fund may next be used to pay principal of and interest on (including reasonable reserves therefor, if required) any other obligations which by their terms shall be payable from the Net Revenues of the Sewer Utility, but subordinate to the Notes and Parity Obligations, and which have been issued for the purposes of extensions and improvements to the Sewer Utility or to retire the Notes or Parity Obligations in advance of maturity, or to pay for extraordinary repairs or replacements to the Sewer Utility. 4 Sewer Surplus Revenue: All money thereafter remaining in the Sewer Revenue Fund at the close of each month may be deposited in any of the funds created by the Resolution, to pay for extraordinary repairs or replacements to the Sewer Utility, or may be used to pay or redeem the Notes or Parity Obligations, any of them, or for any lawful purpose. Additional Obligations Test: The City reserves the right and privilege to issue additional obligations (the “Additional Obligations”) on a parity and equality of rank with the Notes and Parity Obligations with respect to the lien and claim of such Additional Obligations to Net Revenues of the Sewer Utility and the money on deposit in the funds adopted by the Resolution for the Notes and Parity Obligations, for the purpose of refunding any of the Notes, Parity Obligations or general obligation notes outstanding, or making extensions, additions, improvements or replacements to the Sewer Utility. Before any such Additional Obligations ranking on a parity are issued, there will have been procured and filed with the City, a statement of an independent auditor or an independent municipal advisor, not a regular employee of the City, reciting the opinion, based upon necessary investigations, that the Net Revenues of the Sewer Utility for the preceding fiscal year (with adjustments as provided in the resolution for the Notes) were equal to at least 1.25 times the maximum amount that will be required in any fiscal year prior to the longest maturity of any of the Notes or Parity Obligations for both the principal and interest on all Notes or Parity Obligations then outstanding which are payable from the Net Revenues of the Sewer Utility and the Additional Obligations then proposed to be issued. For the purpose of determining the Net Revenues of the Sewer Utility for the preceding fiscal year as aforesaid, the amount of the gross revenues for such year may be adjusted by an independent auditor or independent municipal advisor, not a regular employee of the City, so as to reflect any changes in the amount of such revenues which would have resulted had any revision of the schedule of rates or charges imposed at or prior to the time of the issuance of any such Additional Obligations been in effect during all of such preceding fiscal year. The “preceding fiscal year” shall be the most recently completed fiscal year for which audited financial statements prepared by a certified public accountant are issued and available, but in no event a fiscal year which ended more than eighteen months prior to the date of issuance of Additional Obligations. 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 securities (the “Securities”). The Securities will be issued as fully-registered securities registered in the name of Cede & Co. (DTC’s partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully- registered Security certificate will be issued for each issue of the Securities, each in the aggregate principal amount of such issue, and will be deposited with DTC. If, however, the aggregate principal amount of any issue exceeds $500 million, one certificate will be issued with respect to each $500 million of principal amount, and an additional certificate will be issued with respect to any remaining principal amount of such issue. DTC, the world’s largest securities depository, is a limited-purpose trust company organized under the New York Banking Law, a “banking organization” within the meaning of the New York Banking Law, a member of the Federal Reserve System, a “clearing corporation” within the meaning of the New York Uniform Commercial Code, and a “clearing agency” registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non-U.S. equity issues, corporate and municipal debt issues, and money market instruments from over 100 countries that DTC’s participants (the “Direct Participants”) deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book-entry transfers and pledges between Direct Participants’ accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, clearing 5 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 rating: AA+. The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at www.dtcc.com and www.dtc.org. Purchases of Securities under the DTC system must be made by or through Direct Participants, which will receive a credit for the Securities on DTC’s records. The ownership interest of each actual purchaser of each Security (the “Beneficial Owner”) is in turn to be recorded on the Direct and Indirect Participants’ records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Securities are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in Securities, except in the event that use of the book-entry system for the Securities is discontinued. To facilitate subsequent transfers, all Securities deposited by Direct Participants with DTC are registered in the name of DTC’s partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of DTC. The deposit of Securities with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not affect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Securities; DTC’s records reflect only the identity of the Direct Participants to whose accounts such Securities are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers. Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Beneficial Owners of Securities may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the Securities, such as redemptions, tenders, defaults, and proposed amendments to the Security documents. For example, Beneficial Owners of Securities may wish to ascertain that the nominee holding the Securities for their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names and addresses to the Registrar and request that copies of notices be provided directly to them. Redemption notices shall be sent to DTC. If less than all of the Securities within an issue are being redeemed, DTC’s practice is to determine by lot the amount of the interest of each Direct Participant in such issue to be redeemed. Neither DTC nor Cede & Co., nor any other DTC nominee, will consent or vote with respect to Securities unless authorized by a Direct Participant in accordance with DTC’s MMI Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the City as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.’s consenting or voting rights to those Direct Participants to whose accounts Securities are credited on the record date identified in a listing attached to the Omnibus Proxy. Redemption proceeds, distributions, and dividend payments on the Securities will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC’s practice is to credit Direct Participants’ accounts upon DTC’s receipt of funds and corresponding detail information from the City or Agent, on payable date in accordance with their respective holdings shown on DTC’s records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in “street name,” and will be the responsibility of such Participant and not of DTC, Agent, or the City, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of redemption proceeds, distributions, and dividend payments to Cede & Co., or such 6 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. FUTURE FINANCING The City anticipates no additional borrowings within 90 days of the date of this Official Statement. LITIGATION The City is not aware of any threatened or pending litigation affecting the validity of the Notes or the City’s ability to meet its financial obligations. DEBT PAYMENT HISTORY The City knows of no instance in which it has defaulted in the payment of principal or interest on its debt. LEGALITY The Notes are subject to approval as to certain matters by Ahlers & Cooney, P.C. of Des Moines, Iowa as Bond Counsel. Bond Counsel has not participated in the preparation of this Preliminary Official Statement and will not pass upon its accuracy, completeness or sufficiency. Bond Counsel has not examined, nor attempted to examine or verify, any of the financial or statistical statements or data contained in this Preliminary Official Statement, and will express no opinion with respect thereto. The FORM OF LEGAL OPINION as set out in APPENDIX B to this Preliminary Official Statement will be delivered at closing. The legal opinion to be delivered concurrently with the delivery of the Notes expresses the professional judgment of the attorneys rendering the opinions as to legal issues expressly addressed therein. By rendering a legal opinion, the opinion giver does not become an insurer or guarantor of the result indicated by that expression of professional judgment, or of the transaction on which the opinion is rendered, or of the future performance of parties to the transaction. Nor does the rendering of an opinion guarantee the outcome of any legal dispute that may arise out of the transaction. There is no bond trustee or similar person to monitor or enforce the provisions of the resolution for the Notes. The owners of the Notes should, therefore, be prepared to enforce such provisions themselves if the need to do so arises. In the event of a default in the payment of principal of or interest on the Notes, there is no provision for acceleration of maturity of the principal of the Notes. Consequently, the remedies of the owners of the Notes (consisting primarily of an action in the nature of mandamus requiring the City and certain other public officials to perform the terms of the resolutions for the Notes) may have to be enforced from year to year. 7 In addition, the enforceability of the rights and remedies of owners of the Notes may be subject to limitation as set forth in Bond Counsel’s opinion. The opinion will state, in part, that the obligations of the City with respect to the Notes may be subject to bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors’ rights heretofore or hereafter enacted to the extent constitutionally applicable, and to the exercise of judicial discretion in appropriate cases. TAX MATTERS Tax Exemptions and Related Considerations: Federal tax law contains a number of requirements and restrictions that apply to the Notes. These include investment restrictions, periodic payments of arbitrage profits to the United States, requirements regarding the proper use of note proceeds and facilities financed with note 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 Notes to be excludable from gross income for federal income tax purposes. Failure to comply with certain of such covenants could cause interest on the Notes to become includable in gross income for federal income tax purposes retroactively to the date of issuance of the Notes. Subject to the City’s compliance with the above referenced covenants, under present law, in the opinion of Bond Counsel, interest on the Notes 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 Interest on the Notes is not exempt from present Iowa income taxes. Ownership of the Notes may result in other state and local tax consequences to certain taxpayers. Bond Counsel expresses no opinion regarding any such collateral consequences arising with respect to the Notes. The prospective purchaser of the Notes should consult their tax advisors regarding the applicability of any such state and local taxes. Prospective purchasers of the Notes should be aware that ownership of the Notes 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 Notes should consult their tax advisors as to collateral federal income tax consequences. Qualified Tax-Exempt Obligations: The City intends to designate the Notes 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”), which affords banks and certain other financial institutions more favorable treatment of their deduction for interest expense than would otherwise be allowed under Section 265(b)(2) of the Code. Tax Accounting Treatment of Discount and Premium on Certain Notes: The initial public offering price of certain Notes (the “Discount Notes”) may be less than the amount payable on such Notes at maturity. An amount equal to the difference between the initial public offering price of Discount Notes (assuming that a substantial amount of the Discount Notes 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 Notes. Owners of Discount Notes should consult with their own tax advisors with respect to the determination of accrued original issue discount on Discount Notes for federal income tax purposes and with respect to the state and local tax consequences of owning and disposing of Discount Notes. It is possible that, under applicable provisions governing determination of state and local income taxes, accrued interest on Discount Notes may be deemed to be received in the year of accrual even though there will not be a corresponding cash payment. 8 The initial public offering price of certain Notes (“Premium Notes”) may be greater than the amount of such Notes at maturity. An amount equal to the difference between the initial public offering price of Premium Notes (assuming that a substantial amount of the Premium Notes of that maturity are sold to the public at such price) and the amount payable at maturity constitutes a premium to the initial purchaser of such Premium Notes. Purchaser of the Premium Notes should consult with their own tax advisors with respect to the determination of amortizable note premium on Premium Notes for federal income tax purposes and with respect to the state and local tax consequences of owning and disposing of Premium Notes. 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 Notes. If an audit is commenced, under current procedures the Service may treat the City as a taxpayer and the noteholders may have no right to participate in such procedure. The commencement of an audit could adversely affect the market value and liquidity of the Notes 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 Notes, are in certain cases required to be reported to the Service. Additionally, backup withholding may apply to any such payments to any Note 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 Note 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 Notes to be subject, directly or indirectly, to federal income taxation, or otherwise prevent owners of the Notes from realizing the full current benefit of the tax status of such interest. For example, Representative David Camp, the then Chair of the House Ways and Means Committee released draft legislation that would subject interest on the Notes 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 proposed legislation that would limit the exclusion from gross income of interest on obligations like the Notes 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 Notes. 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 Notes. Prospective purchasers of the Notes should consult their own tax advisors regarding any pending or proposed tax legislation, as to which Bond Counsel expresses no opinion. The opinions expressed by Bond Counsel are based upon existing legislation and regulations as interpreted by relevant judicial and regulatory authorities as of the date of issuance and delivery of the Notes, and Bond Counsel has expressed no opinion as of any date subsequent thereto or with respect to any proposed or pending legislation, regulatory initiatives or litigation. Enforcement: There is no note trustee or similar person to monitor or enforce the terms of the resolution for issuance of the Notes. In the event of a default in the payment of principal of or interest on the Notes, there is no provision for acceleration of maturity of the principal of the Notes. Consequently, the remedies of the owners of the Notes (consisting primarily of an action in the nature of mandamus requiring the City and certain other public officials to perform the terms of the resolution for the Notes) may have to be enforced from year to year. The owners of the Notes cannot foreclose on property within the boundaries of the City or sell such property in order to pay the debt service on the Notes. In addition, the enforceability of the rights and remedies of owners of the Notes may be subject to limitation as set forth in Bond Counsel’s opinion. The opinion will state, in part, that the obligations of the City with respect to the Notes may be subject to bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors’ rights heretofore or hereafter enacted to the extent constitutionally applicable, and to the exercise of judicial discretion in appropriate cases. 9 No representation is made, and no assurance is given, that the enforcement of any remedies with respect to such assets will result in sufficient funds to pay all amounts due under the Resolution, including principal of and interest on the Notes. 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. ALL POTENTIAL PURCHASERS OF THE NOTES SHOULD CONSULT WITH THEIR TAX ADVISORS WITH RESPECT TO FEDERAL, STATE AND LOCAL TAX CONSEQUENCES OF OWNERSHIP OF THE NOTES (INCLUDING BUT NOT LIMITED TO THOSE LISTED ABOVE. NOTEHOLDERS’ RISKS A number of factors could prevent the receipt of or reduce the amount of available Net Revenues for payment of debt service on the Notes and Parity Obligations, including, but not limited to, the default by certain users to pay their Utility bill when and as due. The ability of the City to generate sufficient Net Revenues is dependent upon a number of conditions and risk factors that are unpredictable including general economic conditions. NO REPRESENTATION OR ASSURANCE CAN BE MADE THAT NET REVENUES WILL BE REALIZED BY THE UTILITY IN AMOUNTS SUFFICIENT TO PAY MATURING PRINCIPAL OF AND INTEREST ON THE NOTES AND THE OTHER OUTSTANDING OBLIGATIONS. Prospective purchasers of the Notes should be aware that investment in the Notes entails some degree of risk. Each prospective investor in the Notes is encouraged to read this Official Statement in its entirety. Particular attention should be given to the factors described below which, among others, could affect the payment of debt service on the Notes and which could also affect the market price of the Notes to an extent that cannot be determined. This discussion of risk factors is not, and is not intended to be, exhaustive. Limited Obligation The obligation of the City to pay debt service on the Notes is a special limited obligation of the City. The taxing powers of the City are not pledged to pay debt service on the Notes and the City does not have the authority to levy ad valorem property taxes without limit in order to pay debt service on the Notes. As further described elsewhere herein, debt service on the Notes is payable solely from Net Revenues derived from the Utility and amounts on deposit in the Reserve Fund. While it is believed that Net Revenues of the Utility will be sufficient to pay debt service on the Notes when due, a number of other factors described below, or factors not presently anticipated, may affect the receipt of sufficient revenues from the Utility for such purposes. By the Resolution, the City has covenanted that it will establish and maintain rates and charges with respect to the Utility so that the gross revenues derived from the Utility will be sufficient, when combined with other available funds, to pay when due all expenses of the operation and maintenance of the Utility, and all principal of and interest on Notes and Parity Obligations, to provide for the establishment and maintenance of reserve funds as provided in the Resolution, and on or before the beginning of each Fiscal Year the Governing Body will adopt or continue in effect rates for all services rendered by the Utility determined to be sufficient to produce Net Revenues for the next succeeding Fiscal Year adequate to pay principal and interest requirements and create reserves as provided in the Resolution but not less than 125 percent of the principal and interest requirements of the Fiscal Year. See “PAYMENT OF AND SECURITY FOR THE NOTES – Sewer Rate Covenant” herein for a further discussion of the Issuer’s covenants regarding setting rates and charges. 10 Nature of Pro Forma Debt Service Coverage Certain historical net operating income and other financial information for the Utility, including pro forma debt service coverage, are included in this Official Statement under the caption “SEWER UTILITY HISTORICAL CASHFLOW AND ANTICIPATED DEBT COVERAGE.” The pro forma coverage is merely a mathematical computation as reflected in the applicable table, and constitutes no assurance as to the future debt of the City or the sufficiency of Net Revenues to satisfy operating costs of the Utility and other debt service requirements. Construction Risks Construction of the projects funded by the Notes is subject to ordinary risks associated with new construction, such as risks of cost overruns, non-completion and delays due to a variety of factors, including, among other things, site difficulties, necessary design changes or final detailing, labor shortage or strife, delays in and shortages of material, weather conditions, fire and casualty and environmental findings. Any delays in construction may adversely impact the ability to complete the projects by the expected completion date, which may result in, among other things, costs overruns. General Factors that May Affect Sufficiency of Net Revenues The City is obligated to pay debt service on the Notes solely from Net Revenues generated by the operation of the Utility and from amounts on deposit in the Reserve Fund. A number of factors may have an adverse effect on the receipt of monies in an amount sufficient to pay operating and maintenance expenses of the Utility, as well as, debt service on the Notes. These include potential adverse changes in the economic condition of the City or the Utility, including potential decreases in population that may arise from decisions by employers located in and around the City to relocate their operations elsewhere; periodic fluctuations in demand due to weather conditions; potential unemployment at a level that would preclude residents of the City from paying sufficient user fees in order to support the operations of the Utility and the payment of debt service on the Notes; and increased emphasis on and adoption by the general population of conservation measures; and increased regulatory or environmental costs, that cannot be foreseen at this time. The loss of any of the major users may also have an adverse impact on the Net Revenues of the Utility. See “DESCRIPTION OF THE MUNICIPAL SEWER UTILITY” herein for further discussion of the System. Unforeseen increases in maintenance and operating expenses may also have an adverse impact on the Net Revenues of the Utility. Factors affecting such expenses include increased costs of equipment and labor. The City believes that it has made a reasonable projection of and allocation for maintenance and operating costs in setting its rates and charges, including the surcharge, but no assurance can be given that actual costs will not exceed cost projections. The Issuer’s covenants with respect to sufficiency of rates as set forth under the heading “PAYMENT OF AND SECURITY FOR THE NOTES – Sewer Rate Covenant” herein is a prospective covenant to set rates sufficient to produce Net Revenues for the next succeeding Fiscal Year adequate to pay principal and interest requirements and create reserves as provided in the Resolution but not less than 125 percent of the principal and interest requirements of the Fiscal Year (the “Issuer’s Rate Covenant”). The Issuer’s Rate Covenant does NOT require the Issuer to maintain historical Net Revenues of at least 125 percent of the principal and interest requirements of the applicable Fiscal Year. Provided the Issuer adopts or continues in effect sufficient rates to meet this covenant, the Issuer will not be in default under the Issuer’s Rate Covenant even if historical Net Revenues for such Fiscal Year are less than 125 percent of the principal and interest requirements for such Fiscal Year. Unforeseen Problems with the Utility Payment of principal of and interest on the Notes is dependent to a considerable degree upon the continued operation of the Utility for the purposes for which it was designed. While the City believes that the Utility has been designed and will be maintained in such a manner as to permit continued operation without requiring unreasonable costs for maintenance or repairs, and while they have provided under the terms of the Bond Resolution for the creation and maintenance of funds in amounts which they believe to be sufficient to provide for the necessary repairs and maintenance of the Utility, there can be no assurance that such amounts will, in fact, be sufficient to assure the ongoing 11 operation of the Utility. Although the Utility is covered by policies of insurance, casualties and other occurrences may result in damage to the Utility, which may not be covered by the net proceeds of any insurance award. Any material interruption of the operation of the Utility may have an adverse effect on the ability of the City to collect fees from users of the Utility and could, in turn, have a materially adverse effect on the ability of the City to make timely payment of debt service on the Notes. Additional Debt of the Utility Upon the satisfaction of certain conditions set forth in the Resolution, the City may issue Parity Obligations for the purpose of financing improvements or modifications to the Utility, which Parity Obligations would be equally and ratably secured with the Notes by the Net Revenues of the Utility. See “PAYMENT OF AND SECURITY FOR THE NOTES – Additional Obligations Test” herein. Natural Disaster The Utility is subject to interruption and loss of business in the event of a disaster, such as a windstorm, fire, explosion, sabotage and other events not now foreseen. Environmental Protection Cost and Regulations The City believes it meets all environmental requirements. In the future, however, environmental protection agencies could adopt more stringent and costly pollution control measures, which would require additional capital and cause added operation and fuel expenses. The Utility is subject to state and federal environmental laws and regulations. The laws and regulations governing entities such as the Utility may require the Utility to expend substantial funds to meet the requirements of such changings laws and regulations in the future. Failure to comply with these laws and regulations may result in the imposition of administrative, civil and criminal penalties, or an injunction requiring the City to take or refrain from taking certain actions. In addition, environmental laws and regulations are complex and change frequently and it is possible that new on stricter standards could be imposed that will require additional capital expenditures or raise operating costs. In addition, failure to comply with regulatory changes, or the inability to comply with regulatory changes, in a timely manner could cause portions of the Utility to become unavailable resulting in a loss of or disruption of services negatively impacting Net Revenues. Rating Loss Moody's Investors Services, Inc. (“Moody's”) has assigned a rating of “_____” to the Notes. Generally, a rating agency bases its rating on the information and materials furnished to it and on investigations, studies and assumptions of its own. There is no assurance that the rating with continue for any given period of time, or that such rating will not be revised, suspended or withdrawn, if, in the judgment of S&P, circumstances so warrant. A revision, suspension or withdrawal of a rating may have an adverse effect on the market price of the Notes. Changes in Secondary Market Conditions There can be no guarantee that there will be a secondary market for the Notes or, if a secondary market exists, that such Notes can be sold for any particular price. It is possible, because of general market conditions, changes in the financial condition of the City or Utility, or because of adverse history of economic prospects connected with a particular issue, secondary marketing practices in connection with a particular bond issue may be suspended or terminated. Additionally, prices of issues for which a market is being made will depend upon then prevailing market circumstances. Such prices could be substantially different from the original purchase price of the Notes. EACH PROSPECTIVE PURCHASER IS RESPONSIBLE FOR ASSESSING THE MERITS AND RISKS OF AN INVESTMENT IN THE NOTES AND MUST BE ABLE TO BEAR THE ECONOMIC RISK OF SUCH INVESTMENT. THE SECONDARY MARKET FOR THE NOTES, IF ANY, COULD BE LIMITED. 12 Bankruptcy The rights and remedies provided in the Resolution may be limited by and are subject to the provisions of federal bankruptcy laws, to other laws or equitable principles that may affect the enforcement of creditor’s rights, to the exercise of judicial discretion in appropriate cases and to limitations in legal remedies against exercise of judicial discretion in appropriate cases and to limitations on legal remedies against municipal corporations in the State of Iowa. 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,” “pro forma,” “forecast,” “projected,” “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 City to pay debt service when due on the Notes. General Economic Factors The ability of the Utility to generate sufficient Net Revenues is subject to general economic factors that may impact both the costs of operating the Utility and demand by customers of the Utility. Examples of these economic factors include increased operation and maintenance costs, adverse demographic changes in the Utility’s service area, reduction in consumption patterns by customers, and a decrease in financial means by which customers pay their bills. Any or a combination of these factors may have a material adverse effect on the ability of the Utility to collect sufficient Net Revenues for payment of the Notes. Changes in Legislation The future financial condition of the Utility and its ability to earn sufficient Net Revenues could be adversely affected by legislative, environmental and other regulatory actions, to the extent such changes are material and adversely alter the current operation environment for the Utility. The City cannot and does not make any predictions about such future legislative or regulatory changes, other than to note that any number of possible changes may adversely affect the operation of the Utility. Summary The foregoing is intended only as a summary of certain risk factors attendant to an investment in the Bonds. In order for potential investors to identify risk factors and make an informed investment decision, potential investors should become thoroughly familiar with this entire Official Statement and the Appendices hereto. Municipal notes are generally viewed as long-term investments, subject to material unforeseen changes in the investor’s circumstances, and may require commitment of the investor’s funds for an indefinite period of time, perhaps until maturity. RATING The City has requested a rating on the Notes from Moody’s Investors Service, Inc. (“Moody’s”). The City’s outstanding sewer revenue long-term debt is currently rated ‘Aa3’ by Moody’s. The existing rating on long-term debt reflects only the view of the rating agency and any explanation of the significance of such rating may only be obtained from Moody’s. There is no assurance that such rating will continue for any period of time or that it will not be revised or withdrawn. Any revision or withdrawal of the rating may have an effect on the market price of the Notes. 13 MUNICIPAL ADVISOR The City has retained PFM Financial Advisors LLC, Des Moines, Iowa (the “Municipal Advisor”) in connection with the preparation of the City’s issuance of the Notes. The Municipal 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. PFM Financial 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 Notes and other Participating Underwriters in the primary offering of the Notes to comply with paragraph (b)(5) of Rule 15c2-12 promulgated by the Securities and Exchange Commission (the “SEC”) 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 Notes, in the resolution authorizing the issuance of the Notes and the Continuing Disclosure Certificate, to provide Annual Financial Information filings of specified information and notice of the occurrence of certain material events as hereinafter described (the “Undertakings”). 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 Undertakings, including termination, amendment and remedies, are set forth as APPENDIX D to this Preliminary Official Statement. Within the past five years while the Bond Call Notice for the redemption of the City’s General Obligation Series 2006B was timely filed in 2013; however, the corresponding Notice of Defeasance in 2013 was not posted as required. The Series 2006B Bonds were redeemed in 2014. The Series 2007 Gas Revenue Bonds were insured by Radian Insurance. The City failed to timely file material event notices for bond insurance rating changes. Breach of the Undertakings will not constitute a default or an “Event of Default” under the Notes or the resolution for the Notes. A broker or dealer is to consider a known breach of the Undertakings, however, before recommending the purchase or sale of the Notes in the secondary market. Thus, a failure on the part of the City to observe the Undertakings may adversely affect the transferability and liquidity of the Notes and their market price. CERTIFICATION The City has authorized the distribution of this Preliminary Official Statement for use in connection with the initial sale of the Notes. I have reviewed the information contained within the Preliminary Official Statement prepared on behalf of the City of Waukee, Iowa, by PFM Financial Advisors LLC, Des Moines, Iowa, and to the best of my knowledge, information and belief, said Preliminary Official Statement does not contain any material misstatements of fact nor omission of any material fact regarding the issuance of $2,685,000* Sewer Revenue Capital Loan Notes, Series 2016C. BY ORDER OF THE CITY COUNCIL Linda Burkhart, Finance Director City of Waukee 230 West Hickman Road Waukee, IA 50263 *Preliminary; subject to change. 14 DESCRIPTION OF THE MUNICIPAL SEWER UTILITY THE SEWER UTILITY The City owns its Sewer Utility. The management and operation of the Sewer Utility is directed by the City Council. The City Council has complete authority to establish rates and charges for utility services and is not subject to rate regulation by any state agency. The Public Works Director is responsible for implementation of City Council policies and daily operations of the Sewer Utility. The City of Waukee built the existing wastewater treatment plant in May of 1998 to operate the Sewer Utility. The purpose of the sanitary sewer is to carry waste from the source to the wastewater treatment plant. There are currently 15 lift stations located throughout the community whose purpose is to move the sewage from a collection site or well to a higher point where it can gravity flow to the wastewater treatment plant. The wastewater department tests the effluent of the plant three times a week and the City continually reaches high quality effluent levels that exceed the Department of Natural Resources (“DNR”) Standards. Sewage is treated at the plant with a maximum capacity design of 2.95 million gallons per day (“MGD”) and an average day capacity of 1.20 MGD. The Sewer Utility’s current average usage is 1.05 MGD. The plant has primary treatment consisting of extended aeration and activated sludge process. The City of Waukee opted into the Des Moines Wastewater Reclamation Authority (the “WRA”) in 2006 which will allow for additional sanitary sewer capacity to meet the needs of the growing community. THE DES MOINES METROPOLITAN WASTERWATER RECLAMATION AUTHORITY The WRA, which includes the City, eleven surrounding communities, two counties and three sanitary sewer districts, was formed to implement wastewater conveyance and treatment facilities improvements mandated by federal law. Each WRA participant institutes user charges to cover the cost of operation of WRA facilities as well as debt payments related to the construction of improvements. To facilitate the implementation of capital improvements to expand the treatment and conveyance capacity of the existing facility, the constituent communities have accomplished a reorganization of the WRA to provide for a financing structure that allows all participants to share in debt liability, as well as establish a mechanism for new communities to acquire ownership rights to the facility. The WRA is a separate legal entity created on July 1, 2004, governed by an intergovernmental agreement under Chapters 28E (Joint Exercise of Governmental Powers) and 28F (Joint Financing of Public Works and Facilities) of the Code of Iowa. The original agreement was amended and restated in 2014. SEWER UTILITY RATES AND CHARGES The following rates and charges were became effective July 1, 2016. Minimum monthly bill: First 1,000 gallons metered sanitary sewer usage per month $12.50 1,001 gallons and over metered water usage per month $9.45 15 SEWER UTILITY SALES HISTORY AND TOTAL CHARGES (Residential and Commercial Customers) Fiscal Year Sewer Operating Revenues Total Sewer Usage (1K Gallons) 2011-12 $2,266,918 289,458 2012-13 2,451,486 287,299 2013-14 2,696,807 301,445 2014-15 2,853,205 300,838 2015-16 3,149,945 327,660 NUMBER OF SEWER UTILITY CUSTOMERS (Residential and Commercial Customers) Fiscal Year Total 2011-12 4,745 2012-13 5,025 2013-14 5,302 2014-15 5,586 2015-16 5,968 LARGER SEWER UTILITY CUSTOMERS (FY 2015-16) Customer Name Sewer Charges Midwest Country Estates $133,105.41 Hy-Vee Car Wash 57,869.37 Hy-Vee Store 1873 31,759.18 YMCA 23,931.18 World Color Waukee 20,224.62 Waukee Timberline School 18,365.10 The Village at Legacy Pointe 17,997.12 JNB Hometown Harbor 15,903.27 Waukee High School 15,870.30 OneNeck 15,833.76 SEWER UTILITY FUNDS ON HAND (As of August 31, 2016) Operating $5,083,996.76 Improvement Bond Reserve 0.00 191,001.54 Sinking 94,165.28 Total $5,369,163.58 16 SEWER UTILITY REVENUE DEBT City Issued Revenue Debt Supported by Sewer Utility Revenues (Includes the Notes) Date of Issue Original Amount Purpose Final Maturity Principal Outstanding As of 12/20/16 10/98A $455,748 Sewer Imp. (SRF Loan) 6/18 $64,000 10/98B 945,252 Sewer Imp. (SRF Loan) 6/18 134,000 10/98C 1,178,000 Sewer Imp. (SRF Loan) 6/18 161,000 03/13A 1,185,000 Sewer Improvements 6/24 885,000 12/16C 2,685,000* Sewer Improvements 6/36 2,685,000* Total: $3,929,000* * Preliminary; subject to change. Annual Fiscal Year Debt Service Payments of Sewer Revenue Debt (Includes the Notes) Current Outstanding The Notes Total Outstanding Fiscal Year Principal Principal & Interest Principal* Principal & Interest* Principal* Principal & Interest* 2016-17 $276,000 $288,513 1) $36,871 $276,000 $325,384 1) 2017-18 283,000 302,946 82,444 283,000 385,390 2018-19 110,000 124,744 $110,000 192,444 220,000 317,188 2019-20 110,000 122,544 100,000 180,024 210,000 302,568 2020-21 110,000 120,344 100,000 177,714 210,000 298,058 2021-22 115,000 123,144 100,000 175,324 215,000 298,468 2022-23 120,000 125,700 100,000 172,824 220,000 298,524 2023-24 120,000 123,000 100,000 170,204 220,000 293,204 2024-25 145,000 212,464 145,000 212,464 2025-26 150,000 213,361 150,000 213,361 2026-27 155,000 213,981 155,000 213,981 2027-28 160,000 214,315 160,000 214,315 2028-29 160,000 209,355 160,000 209,355 2029-30 170,000 214,267 170,000 214,267 2030-31 175,000 213,776 175,000 213,776 2031-32 180,000 213,036 180,000 213,036 2032-33 185,000 212,024 185,000 212,024 2033-34 190,000 210,753 190,000 210,753 2034-35 200,000 214,217 200,000 214,217 2035-36 205,000 212,237 205,000 212,237 Total $1,244,000 $2,685,000* $3,929,000* 1) Excludes December 1, 2016 interest payment. * Preliminary; subject to change. 17 OTHER SEWER UTILITY REVENUE DEBT Des Moines Metropolitan Wastewater Reclamation Authority (“WRA”) Existing Payment Obligations The City is a member of the Des Moines Metropolitan Wastewater Reclamation Authority (WRA) and has entered into a financing agreement with the WRA to provide for the City’s share of capital contribution for the construction and ongoing expansion of a metropolitan wastewater system. The City is responsible for a portion of the WRA sewer revenue debt payable from the revenues of their Sewer Enterprise System; its responsibilities pursuant to the WRA Financing Agreement stand as nearly as practicable on a parity and equality of rank with the City’s direct sewer revenue notes and parity obligations, if any. The City’s share of the WRA debt is as follows: Date of Issue Allocated/ Original Amount Purpose Final Maturity Principal Outstanding As of 12/20/16 06/08A $477,428 Sewer Improvements (SRF Loan) 6/39 $456,280 1) 06/08B 312,970 Sewer Improvements (SRF Loan) 6/39 293,029 2) 06/08D 126,140 Sewer Improvements (SRF Loan) 6/38 114,028 3) 3/09B 388,920 Sewer Improvements (SRF Loan) 6/39 376,417 4) 7/09C 425,960 Sewer Improvements (SRF Loan) 6/39 412,259 5) 4/10A 233,750 Sewer Improvements (SRF Loan) 6/40 242,821 6) 4/10B 324,100 Sewer Improvements (SRF Loan) 6/40 322,732 7) 6/10C-1 37,200 Sewer Improvements (SRF Loan) 6/32 44,571 8) 6/10C-2 389,150 Sewer Improvements (SRF Loan) 6/32 400,221 9) 3/11B 739,461 Sewer Improvements (SRF Loan) 6/41 757,931 10) 5/11A 1,046,925 Sewer Improvements (SRF Loan) 6/42 1,251,507 11) 5/11C 259,564 Sewer Improvements (SRF Loan) 6/41 281,722 12) 12/11D 378,144 Sewer Improvements (SRF Loan) 6/43 476,714 13) 5/12B 130,229 Sewer Improvements (SRF Loan) 6/42 134,628 14) 5/12C 303,660 Sewer Improvements (SRF Loan) 6/43 384,545 15) 5/12D 118,090 Sewer Improvements (SRF Loan) 6/42 145,971 16) 11/12E 577,854 Sewer Improvements (SRF Loan) 6/43 611,079 17) 11/12F 67,087 Sewer Improvements (SRF Loan) 6/43 70,851 18) 11/12G 592,020 Sewer Improvements (SRF Loan) 6/44 760,692 19) 4/13A 141,680 Sewer Improvements (SRF Loan) 6/43 165,733 20) 6/13B 1,717,863 Sewer Revenue Refunding Bonds 6/43 1,797,517 21) 1/14A 35,820 Sewer Improvements (SRF Loan) 6/34 36,867 22) 2/14C 268,488 Sewer Improvements (SRF Loan) 6/34 268,579 23) 2/14D 179,040 Sewer Improvements (SRF Loan) 6/34 184,871 24) 1/15A 307,768 Sewer Improvements (SRF Loan) 6/35 287,395 25) 1/15B 8,105 Sewer Improvements (SRF Loan) 6/34 7,570 26) 1/15C 85,792 Sewer Improvements (SRF Loan) 6/35 79,799 27) 5/15E 1,178,866 Sewer Revenue Refunding Bonds 6/36 1,141,351 28) 1/16A 178,858 Sewer Revenue Refunding Bonds 6/35 168,926 29) Total $11,676,606 The amounts above represent the City’s share of the par amount for various issues. Other participating communities within the WRA pay the remaining amounts. Flow-based allocations are subject to change on an annual basis; as such the amount outstanding may be greater than the amount issued due to fluctuations in flow. 1) The City’s flow-based share of the WRA’s Series 2008A SRF Loan outstanding in the amount of $14,157,000. 2) The City’s flow-based share of the WRA’s Series 2008B SRF Loan outstanding in the amount of $5,633,000. (Continued on next page) 18 3) The City’s flow-based share of the WRA’s Series 2008D SRF Loan outstanding in the amount of $2,192,000. 4) The City’s flow-based share of the WRA’s Series 2009B SRF loan outstanding in the amount of $7,236,000. 5) The City’s flow based share of the WRA’s Series 2009C SRF loan outstanding in the amount of $7,925,000. 6) The City’s flow based share of the WRA’s Series 2010A SRF loan outstanding in the amount of $7,534,000. 7) The City’s flow based share of the WRA’s Series 2010B SRF loan outstanding in the amount of $6,204,000. 8) The City’s flow based share of the WRA’s Series 2010C-1 SRF loan outstanding in the amount of $1,996,000. 9) The City’s flow based share of the WRA’s Series 2010C-2 SRF loan outstanding in the amount of $17,923,000. 10) The City’s flow based share of the WRA’s Series 2011B SRF loan outstanding in the amount of $14,570,000. 11) The City’s flow based share of the WRA’s Series 2011A SRF loan outstanding in the amount of $56,046,000. 12) The City’s flow based share of the WRA’s Series 2011C SRF loan outstanding in the amount of $8,741,000. 13) The City’s flow based share of the WRA’s Series 2011D SRF loan outstanding in the amount of $14,791,000. 14) The City’s flow based share of the WRA’s Series 2012B SRF loan outstanding in the amount of $2,588,000. 15) The City’s flow based share of the WRA’s Series 2012C SRF loan outstanding in the amount of $17,221,000. 16) The City’s flow based share of the WRA’s Series 2012D SRF loan outstanding in the amount of $6,537,000. 17) The City’s flow based share of the WRA’s Series 2012E SRF loan outstanding in the amount of $11,747,000. 18) The City’s flow based share of the WRA’s Series 2012F SRF loan outstanding in the amount of $1,362,000. 19) The City’s flow based share of the WRA’s Series 2012G SRF loan outstanding in the amount of $23,602,000. 20) The City’s flow based share of the WRA’s Series 2013A SRF loan outstanding in the amount of $7,422,000. 21) The City’s flow based share of the WRA’s Series 2013B outstanding in the amount of $52,405,000. 22) The City’s flow based share of the WRA’s Series 2014A SRF loan outstanding in the amount of $1,651,000. 23) The City’s flow based share of the WRA’s Series 2014C SRF loan outstanding in the amount of $5,163,000. 24) The City’s flow based share of the WRA’s Series 2014D SRF loan outstanding in the amount of $5,736,000. 25) The City’s flow based share of the WRA’s Series 2015A SRF loan outstanding in the amount of $8,917,000. 26) The City’s flow based share of the WRA’s Series 2015B SRF loan outstanding in the amount of $339,000. 27) The City’s flow based share of the WRA’s Series 2015C SRF loan outstanding in the amount of $1,534,000. 28) The City’s flow based share of the WRA’s Series 2015E outstanding in the amount of $31,865,000. 29) The City’s flow based share of the WRA’s Series 2016A SRF loan outstanding in the amount of $7,565,000. Des Moines Metropolitan Wastewater Reclamation Authority Proposed Payment Obligations The WRA proposed payment obligations listed below represent the anticipated State Revolving Fund Loans that have been certified. The amounts below represent the City’s share of the debt service payments of the proposed issues. Other participating communities of the WRA pay the remaining amount. Flow-based allocations are subject to change on an annual basis; as such the amount outstanding may be greater than the amount issued due to fluctuations in flow. Date of Issue Original Amount* Purpose Final Maturity Principal Proposed* As of 12/20/16 TBD $267,960 Sewer Improvements (SRF) TBD $267,960 1) TBD 623,360 Sewer Improvements (SRF) TBD 623,360 2) TBD 584,400 Sewer Improvements (SRF) TBD 584,400 3) TBD 46,818 Sewer Improvements (SRF) TBD 46,818 4) TBD 200,970 Sewer Improvements (SRF) TBD 200,970 5) Total $1,723,508 1) The City’s flow-based share of the WRA’s proposed SRF Loan in the amount of $12,000,000*. 2) The City’s flow-based share of the WRA’s proposed SRF Loan in the amount of $32,000,000*. 3) The City’s flow-based share of the WRA’s proposed SRF Loan in the amount of $30,000,000*. 4) The City’s flow-based share of the WRA’s proposed SRF Loan in the amount of $900,000*. 5) The City’s flow based share of the WRA’s proposed SRF Loan in the amount of $9,000,000*. *Preliminary; subject to change. 19 Annual Fiscal Year Debt Service Payments for City Issued Revenue Debt, WRA Existing Payment Obligations and WRA Proposed Payment Obligations (Includes the Notes) City Issued Debt WRA Annual Payment Obligations Total Parity Debt Existing WRA Existing WRA Proposed WRA Total Fiscal Year Annual Payments* Annual Payments Annual Payments* Annual Payments* Annual Payments* 2016-17 $325,384 1) $548,430 1) $6,758 1) $555,188 1) $880,572 1) 2017-18 385,390 722,207 53,583 775,790 1,161,180 * 2018-19 317,188 722,759 97,388 820,147 1,137,335 2019-20 302,568 734,354 97,794 832,148 1,134,716 2020-21 298,058 745,229 97,817 843,046 1,141,104 2021-22 298,468 744,724 97,754 842,478 1,140,946 2022-23 298,524 744,914 97,770 842,684 1,141,208 2023-24 293,204 744,707 97,769 842,476 1,135,680 2024-25 212,464 744,936 97,795 842,731 1,055,195 2025-26 213,361 744,465 97,799 842,264 1,055,625 2026-27 213,981 743,707 97,805 841,512 1,055,493 2027-28 214,315 743,276 97,781 841,057 1,055,372 2028-29 209,355 742,345 97,768 840,113 1,049,468 2029-30 214,267 742,179 97,772 839,951 1,054,218 2030-31 213,776 741,263 97,773 839,036 1,052,812 2031-32 213,036 740,956 97,792 838,748 1,051,784 2032-33 212,024 703,995 76,927 780,922 992,946 2033-34 210,753 703,074 76,926 780,000 990,753 2034-35 214,217 529,928 76,923 606,851 821,068 2035-36 212,237 495,568 76,919 572,487 784,724 2036-37 416,131 74,105 490,236 490,236 2037-38 416,053 74,097 490,150 490,150 2038-39 408,626 61,624 470,250 470,250 2039-40 313,713 61,612 375,325 375,325 2040-41 279,464 61,618 341,082 341,082 2041-42 218,053 61,600 279,653 279,653 2042-43 129,866 61,617 191,483 191,483 2043-44 37,082 61,608 98,690 98,690 2044-45 61,630 61,630 61,630 2045-46 61,624 61,624 61,624 2046-47 61,627 61,627 61,627 2047-48 61,618 61,618 61,618 Total 1) Excludes December 1, 2016 interest payment. * Preliminary; subject to change. 20 SEWER UTILITY HISTORICAL CASHFLOW AND ANTICIPATED DEBT COVERAGE The following table represents the financial performance of the Sewer Utility for Fiscal Year 2011-12 through Fiscal Year 2014-15 using information from the City’s Independent Auditor Reports. Based on the Fiscal Year 2014-15 Independent Auditor Reports, the $2,197,242 net revenue available for debt service would provide 1.89 times coverage of the $1,161,180 projected maximum annual debt service in Fiscal Year 2017-18 (Including the Notes) as shown on the previous page. In addition, the following table highlights the unaudited financial performance for Fiscal Year 2015-16 as provided by the City and the projected performance for Fiscal Year 2016-17. The $3,233,873 net revenue available for debt service in Fiscal Year 2015-16 would provide 2.78 times coverage of the projected maximum annual debt service. 1) Includes the December 1, 2016 interest payment. 2) Includes the offset of the City’s portion of interest earnings on the WRA debt of $1,757 and the WRA prior year adjustment of $21,517. Unaudited Budget FY 2011-12 FY 2012-13 FY 2013-14 FY 2014-15 FY 2015-16 FY 2016-17 Operating Revenues Sales to Customers $2,257,626 $2,444,961 $2,688,588 $2,838,823 $3,137,689 $3,321,400 Miscellaneous Revenues 9,292 6,525 8,219 14,382 12,256 14,166 Total Operating Revenues $2,266,918 $2,451,486 $2,696,807 $2,853,205 $3,149,945 $3,335,566 Operating Expenses Personal Services $494,882 $530,695 $565,339 $581,993 $589,831 $728,112 Contractual 523,791 517,443 506,967 660,784 562,744 749,783 WRA O&M Exp 1,273 1,005 5,641 12,891 27,207 31,786 Surcharge - Received (408) (398) (460) (8,601)00 Depreciation 475,917 564,637 564,753 614,434 607,532 609,355 Total Operating Expense $1,495,455 $1,613,382 $1,642,240 $1,861,501 $1,787,314 $2,119,036 Net Operating Income $771,463 $838,104 $1,054,567 $991,704 $1,362,631 $1,216,530 Add: Depreciation 475,917 564,637 564,753 614,434 607,532 609,355 Capacity Fees 489,596 576,970 847,439 421,032 582,996 275,000 Connections Fees 131,061 105,454 288,372 162,679 672,994 290,889 Interest on Reserves 6,061 5,727 4,129 7,393 7,720 16,125 Net Revenue for Debt Service $1,874,098 $2,090,892 $2,759,260 $2,197,242 $3,233,873 $2,407,899 Sewer Debt Service Series 1998A SRF Bonds $32,120 $32,340 $30,643 $31,153 $31,645 $32,120 Series 1998B SRF Bonds 65,660 66,070 62,495 64,498 66,448 68,345 Series 1998C SRF Bonds 80,360 80,409 76,650 78,425 80,148 81,818 Series 2013A Revenue Notes 0 0 130,930 122,744 120,744 118,744 Proposed Series 2016C Revenue Notes 0 0 0 0 0 36,871 Total City Debt Service $178,140 $178,819 $300,718 $296,820 $298,985 $337,898 1) Total WRA Debt $400,238 $445,068 $512,262 $576,092 $720,057 $706,059 1) 2) Subtotal Sewer Revenue Debt $578,378 $623,887 $812,980 $872,912 $1,019,042 $1,043,957 Subordinated Debt Service Series 2004C/2012A GO Bonds 67,090 $67,090 $66,225 $0 $0 $0 Series 2010C G.O.-Public Works 92,890 92,165 93,650 92,587 93,513 94,075 Total Sewer Debt $738,358 $783,142 $972,855 $965,499 $1,112,555 $1,138,032 Debt Service Coverage Net Revenues/ Revenue Debt 3.24 3.35 3.39 2.52 3.17 2.31 Net Revenues / All Debt 2.54 2.67 2.84 2.28 2.91 2.12 Audited Financial Statements (This page has been left blank intentionally.) APPENDIX A GENERAL INFORMATION ABOUT THE CITY OF WAUKEE, IOWA This section is included for informational purposes only. THE $2,685,000* SEWER REVENUE CAPITAL LOAN NOTES, SERIES, 2016C (THE “NOTES”) ARE NOT GENERAL OBLIGATIONS OF THE CITY OF WAUKEE, IOWA, but are payable solely and only from the Net Revenues of the Sewer Utility. The Notes are not a debt of nor a charge against the City of Waukee, Iowa (the “City”) within the meaning of any constitutional or statutory limitation or provision and are not payable in any manner by taxation, and the City shall not be liable by reason of the failure of the Net Revenues to be sufficient for the payment of the Notes. * Preliminary; subject to change. (This page has been left blank intentionally.) A-1 CITY PROPERTY VALUATIONS IOWA PROPERTY VALUATIONS In compliance with Section 441.21 of the Code of Iowa, the State Director of Revenue annually directs the county auditors to apply prescribed statutory percentages to the assessments of certain categories of real property. The 2015 final Actual Values were adjusted by the Dallas County Auditor. The reduced values, determined after the application of rollback percentages, are the Taxable Values subject to tax levy. For assessment year 2015, the taxable value rollback rate was 55.6259% of actual value for residential property; 46.1068% of actual value for agricultural property; 86.2500% of the actual value for multiresidential property; and 90% of actual value for commercial, industrial, and railroad property. No adjustment was ordered for utility property because its assessed value did not increase enough to qualify for reduction. Utility property is limited to an 8% annual growth. The Legislature’s intent has been to limit the growth of statewide taxable valuations for the specific classes of property to 3% annually. Political subdivisions whose taxable values are thus reduced or are unusually low in growth are allowed to appeal the valuations to the State Appeal Board, in order to continue to fund present services. PROPERTY VALUATIONS (1/1/2015 Valuations for Taxes payable July 1, 2016 to June 30, 2017) 100% Actual Value Taxable Value (With Rollback) Residential $1,168,765,640 $650,135,644 Commercial 55,860,438 40,373,969 Industrial 1,813,738 1,001,915 Multiresidential 11,987,573 6,758,577 Railroad 565,370 508,833 Utilities w/o Gas & Electric 3,108,454 3,108,454 Gross valuation $1,242,101,213 $701,887,392 Less military exemption (861,180) (861,180) Net valuation $1,241,240,033 $701,026,212 TIF Increment (used to compute debt service levies and constitutional debt limit) $131,350,231 $131,350,231 Taxed separately: Ag. Land $8,372,620 $3,860,341 Ag. Buildings $202,850 $93,527 Gas & Electric Utilities 1) $6,239,687 $3,966,356 1) See “Utility Property Replacement Tax” herein. 2015 GROSS TAXABLE VALUATION BY CLASS OF PROPERTY 1) Taxable Valuation Percent Total Residential $650,135,644 92.11% Multiresidential 6,758,577 0.96% Commercial, Industrial, Railroad and Utilities w/o Gas & Electric 44,993,171 6.37% Gas & Electric Utilities 2) 3,966,356 0.56% Total Gross Taxable Valuation $705,853,748 100.00% 1) Excludes Ag. Land, Ag. Buildings and Taxable TIF Increment. 2) See “Utility Property Replacement Tax” herein. A-2 TREND OF VALUATIONS Assessment Year Payable Fiscal Year 100% Actual Valuation Taxable Valuation (With Rollback) Taxable TIF Increment 2011 2012-13 $1,071,249,014 $498,187,117 $121,506,240 2012 2013-14 1,106,538,383 540,750,146 117,323,335 2013 2014-15 1,171,177,915 575,087,827 129,504,284 2014 2015-16 1,287,907,585 645,867,003 131,329,471 2015 2016-17 1,387,405,421 704,992,568 131,350,231 The 100% Actual Valuation, before rollback and after reduction of military exemption, includes Ag. Land, Ag. Buildings, TIF Increment and Gas & Electric Utilities. The Taxable Valuation, with the rollback and after the reduction of military exemption, includes Gas & Electric Utilities and excludes Ag. Land, Ag. Buildings and Taxable TIF Increment. 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. LARGER TAXPAYERS Set forth in the following table are the persons or entities which represent larger taxpayers within the boundaries of the City, as provided by the Dallas County Auditor’s office. No independent investigation has been made of and no representation is made herein as to the financial condition of any of the taxpayers listed below or that such taxpayers will continue to maintain their status as major taxpayers in the City. With the exception of the electric and natural gas providers (which is subject to an excise tax in accordance with Iowa Code chapter 437A), the City’s mill levy is applicable to all of the properties included in the table, and thus taxes expected to be received by the City from such taxpayers will be in proportion to the assessed valuations of the properties. The total tax bill for each of the properties is dependent upon the mill levies of the other taxing entities which overlap the properties. Taxpayer 1) Type of Property/Business 1/1/2015 Taxable Valuation 2) Health Care REIT 3) Commercial $20,432,377 Hy-Vee, Inc. Commercial 12,977,433 Winhall at William Pointe LLC Residential 10,387,785 Continental 296 Fund LLC Commercial 7,724,119 Stivers Iowa Real Estate, LLC Commercial 6,932,034 Shottenkirk Partnership, LP Commercial 5,425,587 Gilcrest/Jewett Lumber Company Commercial 4,873,689 Atlantic Bottling Company Commercial 4,126,266 MidAmerican Energy Co. 4) Utility 3,966,356 Downey Development, LTD Commercial 3,719,259 Downey Printing/Waukee, Inc. Industrial 3,682,863 1) This list represents some of the larger taxpayers in the City, not necessarily the 10 largest taxpayers. 2) The Taxable Valuation listed represents only those valuations associated with the title holder and may not necessarily represent the entire taxable valuation. 3) Represents both Waukee Senior Housing LLC & Waukee Senior Housing II LLC. 4) See “Utility Property Replacement Tax” herein. Source: Dallas County Auditor’s Office. A-3 UTILITY PROPERTY TAX REPLACEMENT Property owned by entities involved primarily in the production, delivery, service and sale of electricity and natural gas (“Utilities”) pay a replacement tax based upon the delivery of energy by Utilities in lieu of property taxes. All replacement taxes are allocated among local taxing bodies by the State Department of Revenue and Finance and the Department of Management. This allocation is made in accordance with a general allocation formula developed by the Department of Management on the basis of general property tax equivalents. Utility properties paying the replacement tax are exempt from the levy of property tax by political subdivisions. In addition to the replacement tax, Utility property will continue to be valued by a special method as provided in the statute and taxed at the rate of three cents per one thousand dollars for the general fund of the State. By statute, the replacement tax collected by the State and allocated among local taxing bodies (including the City) shall be treated as property tax when received and shall be disposed of by the county treasurer as taxes on real estate. It is possible that the general obligation debt capacity of the City could be adjudicated to be proportionately reduced in future years if Utility property were determined to be other than “taxable property” for purposes of computing the City’s debt limit under Article XI of the Constitution of the State of Iowa. There can be no assurance that future legislation will not (i) operate to reduce the amount of debt the City can issue or (ii) adversely affect the City’s ability to levy taxes in the future for the payment of the principal of and interest on its outstanding debt obligations, including the Notes. Approximately 0.6% of the City’s tax base currently is Utility property. PROPERTY TAX LEGISLATION During the 2013 legislative session, the Iowa General Assembly enacted Senate File 295 (the “Act”), which the Governor signed into law on June 12, 2013. Among other things, the Act (i) reduced the maximum annual taxable value growth percent, due to revaluation of existing residential and agricultural property to 3%, (ii) assigned a “rollback” (the percentage of a property’s value that is subject to tax) to commercial, industrial and railroad property of 90%, (iii) created 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) (“Multiresidential Property”), and assigned a declining rollback percentage of 3.75% to such properties for each year until the 2021 assessment year (the rollback percentage for Multiresidential Properties is equal to the residential rollback percentage in the 2022 assessment year and thereafter) and (iv) exempted a specified portion of the assessed value of telecommunication properties. The Act included 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. 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%, the gradual transition for Multiresidential Property to the residential rollback percentage, 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 the Act on the City’s future property tax collections is uncertain and the City is unable to accurately assess the financial impact of the Act’s provisions on the City’s future operations. Notwithstanding any decrease in property tax revenues that may result from the Act, 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 A-4 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 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. A-5 CITY INDEBTEDNESS DEBT LIMIT Article XI, Section 3 of the State of Iowa Constitution limits the amount of debt outstanding at any time of any county, municipality or other political subdivision to no more than 5% of the actual value of all taxable property within the corporate limits, as taken from the last state and county tax list. The debt limit for the City, based on its 2015 actual valuation currently applicable to the Fiscal Year 2016-17, is as follows: 2015 Actual Valuation of Property $1,387,405,421 Legal Debt Limit of 5% 0.05 Legal Debt Limit $69,370,271 Less: G.O. Debt Subject to Limit (48,459,060) Less: Urban Renewal Revenue Debt Subject to Limit (805,000) Less: Rebate Agreements (160,300) 1) Net Debt Limit $19,945,911 1) As reported by the City pursuant to development agreements for urban renewal projects under the authority of Iowa Code Chapter 403. The Iowa Supreme Court has not formally ruled on the question of whether contracts to rebate the tax increment generated by a particular development constitutes indebtedness of a City for constitutional debt limit purposes. The amount above includes rebate agreements that may not be debt. DIRECT DEBT General Obligation Debt Paid by Taxes and Tax Increment Date of Issue Original Amount Purpose Final Maturity Principal Outstanding As of 12/20/16 4/09A $1,055,000 Corporate Purpose 6/17 $130,000 6/10A 1,435,000 Corporate Purpose 6/22 775,000 6/12A 2,013,000 Refunding 6/20 668,000 6/12B 4,220,000 Refunding 6/21 2,990,000 12/12D 3,745,000 Urban Renewal 6/21 2,140,000 5/13B 3,280,000 Corporate Purpose 6/28 2,420,000 5/13C 2,265,000 Urban Renewal Refunding 6/20 1,320,000 12/13D 6,190,000 Urban Renewal 6/21 3,930,000 12/14 21,560,000 Urban Renewal 6/34 20,710,000 11/15 7,340,000 Corporate Purpose & Refunding 6/30 6,600,000 9/16B 1,720,000 Refunding 6/22 1,720,000 Subtotal $43,403,000 A-6 General Obligation Bonds Paid by Sewer, Water, and Storm Water Revenues Date of Issue Original Amount Purpose Final Maturity Principal Outstanding As of 12/20/16 6/10B $1,745,000 Water & Sewer Projects 6/21 $860,000 6/12 667,000 Refunding 6/18 187,000 12/13D 2,550,000 Stormwater Projects 6/33 2,210,000 12/14 1,735,000 Water Projects 6/30 1,550,000 Subtotal $4,807,000 General Obligation Bonds Paid by Golf Course Revenues Date of Issue Original Amount Purpose Final Maturity Principal Outstanding As of 12/20/16 6/16 $279,990 Golf Course 6/20 $249,060 Total G.O. Debt Subject to Limit $48,459,060 Urban Renewal Revenue Bonds Date of Issue Original Amount Purpose Final Maturity Principal Outstanding As of 12/20/16 6/10C $1,590,000 Urban Renewal Project 6/21 $805,000 Total Urban Renewal Revenue Debt Subject to Limit $805,000 OTHER REVENUE DEBT 1) The City has outstanding revenue debt payable from the water, storm water and gas utilities, and special assessments and golf course revenues as follows: Date of Issue Original Amount Purpose Final Maturity Principal Outstanding As of 12/20/16 5/09 $362,000 Special Assess. Sewer Improvements 12/18 $90,000 6/10 598,790 Golf Course Purchase 6/20 552,500 9/12C 2,625,000 Water Improvements 6/32 2,220,000 3/15 2,632,000 Gas Revenue (Private Placement) 6/22 2,298,000 7/15B 1,450,000 Water Improvements 6/27 1,340,000 6/16 640,000 Storm Water Improvements (Private Placement) 6/26 640,000 Total $7,140,500 1) Table excludes payments made by the City pursuant to an agreement with Des Moines Water Works for its proportionate share of the bond payments on the Des Moines Water Works’ 2012B Bonds. A-7 OVERLAPPING DEBT Taxing District 1/1/2015 Taxable Valuation 1) Portion of Taxable Valuation in City Percent In City G.O. Debt 2) City’s Proportionate Share Dallas County $5,259,759,471 $841,445,658 3) 16.00% $13,375,000 $2,140,000 Waukee CSD 3,697,362,634 838,584,863 4) 22.68% 103,735,000 23,527,098 Van Meter CSD 208,617,771 2,860,795 5) 1.37% 9,040,000 123,848 Des Moines Area Community College 42,301,482,075 841,445,658 3) 1.99% 82,960,000 1,650,904 City’s Share of Total Overlapping Debt $27,441,850 1) Taxable Valuation is less military exemption and includes Ag. Land & Ag. Buildings, Taxable TIF Increment and all Utilities. 2) Includes general obligation bonds, PPEL notes, certificates of participation and new jobs training certificates. 3) Includes City-exempt Phase In and Phase In Ag valuations in the amount of $1,148,991. 4) Includes City-exempt Phase In and Phase In Ag valuations in the amount of $1,060,184. 5) Includes City-exempt Phase In and Phase In Ag valuations in the amount of $88,807. DEBT RATIOS G.O. Debt Debt/Actual Market Value ($1,387,405,421) 1) Debt/17,945 2) Population Total General Obligation Debt $48,459,060 3.49% $2,700.42 Less: General Obligation Debt paid by Water, Sewer, Stormwater, and Golf (5,056,060) Net General Obligation Debt $43,403,000 3.13% $2,418.67 Total Urban Renewal Revenue Debt $805,000 0.06% $44.86 City’s Share of Total Overlapping Debt $27,441,850 1.98% $1,529.22 1) Based on 1/1/2015 Actual Value. Includes Ag. Land, Ag. Buildings, TIF Increment and all Utilities. 2) Population based on the U.S. Census Bureau’s 2015 Special Census. LEVIES AND TAX COLLECTIONS Fiscal Year Levy 1) Collected During Collection Year 1) Percent Collected 2012-13 $10,633,373 $10,570,270 99.4% 2013-14 10,789,629 10,734,914 99.5% 2014-15 11,494,859 11,538,128 100.4% 2015-16 12,462,647 12,792,344 102.6% 2016-17 13,326,239 ----------- In process of collection ----------- 1) Totals include TIF, utility replacement and mobile home taxes. Collections include delinquent taxes from all prior years. Taxes in Iowa are delinquent each October 1 and April 1 and a late payment penalty of 1% per month of delinquency is enforced as of those dates. If delinquent taxes are not paid, the property may be offered at the regular tax sale on the third Monday of June following the delinquency date. Purchasers at the tax sale must pay an amount equal to the taxes, special assessments, interest and penalties due on the property and funds so received are applied to taxes. A property owner may redeem from the regular tax sale but, failing redemption within three years, the tax sale purchaser is entitled to a deed, which in general conveys the title free and clear of all liens except future tax installments. Source: Dallas County Auditor’s Office and the Iowa Department of Management website. A-8 TAX RATES FY 2012-13 $/$1,000 FY 2013-14 $/$1,000 FY 2014-15 $/$1,000 FY 2015-16 $/$1,000 FY 2016-17 $/$1,000 Dallas County 4.26780 3.87452 3.82607 3.86494 3.98887 City of Waukee 13.50000 13.50000 13.50000 13.50000 13.50000 Waukee Comm. School District 17.61083 16.57669 16.57427 16.69522 17.64874 State of Iowa 0.00330 0.00330 0.00330 0.00330 0.00330 County Assessor 0.31173 0.31134 0.31423 0.31371 0.32072 County Ag. Extension 0.06806 0.08087 0.08002 0.07934 0.07569 Dallas County Hospital 0.60683 0.54517 0.57912 0.54042 0.54055 Des Moines Area Community College 0.58466 0.69120 0.65724 0.67574 0.72334 Walnut Cemetery 0.00000 0.00000 0.04446 0.03000 0.01000 Total Tax Rate City Resident 36.95321 35.58309 35.57871 35.70267 36.81121 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 Fiscal Year 2016-17. The City does levy a portion of costs for employee benefits in addition to the $8.10 general fund limit as authorized by law. Currently, the City does not levy for an emergency fund. Debt service levies are not limited. FUNDS ON HAND (Cash and Investments as of August 31, 2016) General Checking $3,466,381.45 Park Land Fees 536,305.02 Sewer Fund 5,083,996.76 Sewer Sinking Funds 94,165.28 Water Fund 3,999,042.00 Water Sinking Funds 87,357.22 GO Debt Sinking Funds 1,782,306.99 Capital Projects 16,322,686.38 Water/ Gas Bond & Note Reserve 691,315.44 Gas Fund 2,344,135.15 Gas Fund Sinking Funds 110,101.96 Storm Water Fund 1,425,249.19 Storm Water Sinking Funds 12,000.00 Golf Course Fund (616,493.38) 1) Golf Course Sinking Funds 18,000.00 Golf Course Bond Reserve Fund 57,341.72 Equipment Reserve Fund 188,622.80 Total Cash and Investments $35,602,513.68 1) Deficit will be eliminated by future seasonal revenues and/or reduction of expenses. A-9 THE CITY CITY GOVERNMENT The City of Waukee, Iowa (the “City”) was incorporated in 1869 and comprises approximately 8,000 land acres. The City operates under a Mayor-Council-Clerk/Administrator form of government consisting of a 5 member City Council and a Mayor who is a non-voting member. The full-time City Administrator is responsible for administrative details and financial records. EMPLOYEES AND PENSIONS The City has 90 full-time and 105 part-time employees (including seasonal employees). In addition, the City has approximately 30 paid on call/volunteer fire/EMS employees. The City participates in a statewide employee retirement system, Iowa Public Employees Retirement System (“IPERS”). Membership is mandatory for employees for the City, except for those covered by another retirement system. Iowa Public Employees Retirement System: The City contributes to IPERS, which is a cost-sharing multiple-employer, contributory defined benefit public employee retirement system administered by IPERS. IPERS provides retirement and death benefits, which are established by state statute, to plan members and beneficiaries. IPERS is authorized to adjust the total contribution rate up or down each year, by no more than 1 percentage point, based upon the actuarially required contribution rate. The City’s contributions to IPERS for the years ended June 30, 2014, 2015 and 2016 as shown below equal the required contributions for each year. FY 2013-14 FY 2014-15 FY 2015-16 IPERS Contributions $496,800 $549,900 $577,880 1) The IPERS CAFR is available on the IPERS website, https://www.ipers.org/financial-and-investment, or by contacting IPERS at 7401 Register Drive P.O. Box 9117, Des Moines, IA 50321. Bond Counsel, the City and the Municipal 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. Pursuant to Governmental Accounting Standards Board (“GASB”) Statement No. 68, the City reported a liability of $2,637,573 1) within its Independent Auditors Report as of June 30, 2016 for its proportionate share of the net pension liability. The net pension liability is the amount by which the total actuarial liability exceeds the pension plan’s net assets or fiduciary net position (essentially the market value) available for paying benefits. The net pension liability was measured as of June 30, 2015, and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of that date. The City’s proportion of the net pension liability was based on the City’s share of contributions to the pension plan relative to the contributions of all IPERS participating employers. At June 30, 2015, the City’s proportion was 0.053387% which was an increase of 0.007270% from its proportion measured as of June 30, 2014. 1) Amounts are unaudited as of the date of this Preliminary Official Statement. A-10 OTHER POST-EMPLOYMENT BENEFITS The City operates a single-employer retiree benefit plan which provides healthcare benefits for retirees and their spouses and dependents. There are both active and retired members in the plan. Participants must be age 55 or older at retirement. The healthcare benefit plans are partially self-insured and are administered by a third party. The benefits are provided in the form of an implicit rate subsidy where pre 65 retirees receive health insurance coverage by paying a combined retiree/active rate which results in an implicit rate subsidy and other post-employment benefits (the “OPEB”) liability. The City currently finances the retiree benefit plan on a pay-as-you-go basis. The City’s annual OPEB cost is calculated based on the annual required contribution (the “ARC”) of the City, an amount actuarially determined in accordance with GASB Statement No. 45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and amortize any unfunded actuarial liabilities over a period not to exceed 30 years. The following table shows the components of the City’s annual OPEB cost for June 30, 2016, the amount actually contributed to the plan and changes in the City’s net OPEB obligation: Annual required contribution, ARC $56,000 Interest on net OPEB obligation 16,675 Adjustment to annual required contribution (15,159) Annual OPEB cost $57,516 Contributions made 0 Increase in net OPEB obligation $57,516 Net OPEB obligation, beginning of year 416,881 Net OPEB obligation, end of year $474,397 1) For the year ended June 30, 2016, the City made no contributions to the plan. The City’s annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the net OPEB obligation as of June 30, 2016 are summarized as follows: Fiscal Year Ended Annual OPEB Cost Percentage of Annual OPEB Cost Contribution Net OPEB Obligation June 30, 2014 $70,140 0.0% $359,573 June 30, 2015 57,308 0.0% 416,881 June 30, 2016 1) 57,516 0.0% 474,397 As of July 1, 2014, the most recent actuarial valuation date for the period July 1, 2014 through June 30, 2016, the actuarial accrued liability was $275,000 with no actuarial value of assets, resulting in an unfunded actuarial accrued liability, UAAL, of $275,000. The covered payroll (annual payroll of active employees covered by the plan) was approximately $6,260,000 1) and the ratio of the UAAL to the covered payroll was 4.4% 1). As of June 30, 2016, there were no trust fund assets. 1) Amounts are unaudited as of the date of this Preliminary Official Statement. A-11 UNION CONTRACT The City currently has one negotiated contract with the Communications Workers of America, which expires on June 30, 2021. INSURANCE The City’s insurance coverage is as follows: Type of Insurance Coverage Municipal Property Coverage Replacement Buildings $40,487,514 Contents $3,005,450 Book Collection $1,575,000 Miscellaneous Property $2,585,897 EDP Hardware $684,562 EDP Software $104,329 Vehicles $6,260,366 Municipal Automobile Physical Damage Comprehensive Coverage Actual Cash Value Collision Coverage Actual Cash Value Municipal General Liability $8,000,000 Wrongful Acts Liability $8,000,000 Law Enforcement Liability $8,000,000 Municipal Automobile Liability $8,000,000 Boiler and Machinery $1,500,000 Public Employee Dishonesty $2,000,000 Standard Workers’ Compensation (Includes Volunteer Firemen) Statutory A-12 GENERAL INFORMATION LOCATION AND TRANSPORTATION The City is located in central Iowa, approximately 16 miles northwest of Des Moines. The City is located near U.S. Interstate Highways No. 35 and 80. U.S. Highway No. 6 passes directly through the community. Commercial airline service is available at the Des Moines International Airport. LARGER EMPLOYERS A representative list of larger employers in the City is as follows: Employer Type of Business Approximate Number of Employees 1) Waukee Community School District Education 1,182 2) Ultimate Nursing Services Healthcare 690 Hy-Vee Grocery Store 435 Waukee Family YMCA Family Recreation & Health Center 370 City of Waukee City Government 221 Quad Graphics Waukee Printing 220 Gilcrest/Jewett Lumber Company Lumber, Windows, Doors 142 Atlantic Bottling Coca Cola Bottling 100 Stivers Ford Automobile Sales and Service 110 Monarch Manufacturing Egress Window Systems 95 1) Includes full time, part time, and seasonal employees. 2) Includes several part time employees, most of whom are teacher and associate substitutes. Source: The City of Waukee, the Waukee Community School District and a telephone survey conducted July 2016. Some additional major employers in the Des Moines metropolitan area include, but are not limited to the following: Employer Type of Business Approximate Number of Employees Wells Fargo Financial Services 14,000 1) State of Iowa State Government 7,630 2) Mercy Hospital Medical Center Healthcare (Hospitals and Clinics)7,055 UnityPoint Health Healthcare 6,435 Principal Financial Group Insurance 6,066 Des Moines Public Schools Education 5,125 3) Nationwide/Allied Insurance Insurance 4,269 DuPont Pioneer Agribusiness 2,800 John Deere Companies Agricultural Machinery & Consumer Financial Services 1,900 4) 1) Includes both Wells Fargo Banks and Wells Fargo Financial. 2) Total is for the Greater Des Moines metropolitan statistical area which includes Dallas, Guthrie, Madison, Polk and Warren counties. 3) Total does not include substitute teachers. 4) Includes both John Deere Des Moines Works and John Deere Credit Company. Source: The Greater Des Moines Partnership as of September 2016 and telephone interviews conducted July 2016. The list is updated frequently as changes are identified and is not to be construed as a complete profile. A-13 BUILDING PERMITS City officials report the following construction activity as of August 31, 2016. Building permits are reported on a calendar year basis. The figures below include both new construction and remodeling. 2012 2013 2014 2015 2016 Single Family Homes: No. of new homes: 121 208 294 461 346 Valuation: $32,643,672 $57,369,889 $83,714,389 $130,620,802 $86,060,702 No. of Multi-Family: 9 1 14 4 4 Valuation: $29,055,437 $7,908,394 $30,234,990 $18,213,385 $23,756,760 Commercial/Industrial/Other: No. of new buildings: 29 22 41 39 20 Valuation: $14,206,836 $36,876,356 $6,426,386 $3,142,605 $7,021,860 Other: 209 311 298 296 362 Valuation: $2,206,626 $3,040,431 $1,859,337 $2,486,646 $2,569,431 Total Permits 368 542 647 800 732 Total Valuations $78,112,571 $105,195,070 $122,235,102 $154,463,438 $119,408,753 U.S. CENSUS DATA Population Trend: 1990 U.S. Census 2,512 2000 U.S. Census 5,126 2010 U.S. Census 13,790 2015 U.S. Special Census 17,945 Source: U.S. Census Bureau website. UNEMPLOYMENT RATES Dallas County State of Iowa Annual Averages: 2012 3.9% 5.1% 2013 3.6% 4.7% 2014 3.3% 4.2% 2015 2.8% 3.7% 2016 (though August) 3.0% 4.1% Source: Iowa Workforce Development Center website. EDUCATION The Waukee Community School District (the “District”) provides public education with an October 2015 certified enrollment for the 2016-17 school year of 9,448.4. The District has approximately 1,182 1) employees and owns and operates eight elementary schools, one fifth grade school, two middle schools, one ninth grade school, and one high school. 1) Includes several part time employees, most of whom are teacher and associate substitutes. A-14 FINANCIAL SERVICES Financial services for residents of the City are provided by branch offices of Charter Bank, Community State Bank, N.A., First American Bank, People’s Trust & Savings Bank, Wells Fargo Bank, N.A. and West Bank. The branch offices of Charter Bank, First American Bank, and Wells Fargo Bank, N.A. report the following deposits as of June 30th for each year: Year Charter Bank First American Bank Wells Fargo Bank, N.A. 2012 $23,266,000 $34,684,000 $30,853,000 2013 24,685,000 30,500,000 34,717,000 2014 26,103,000 28,227,000 38,209,000 2015 26,748,000 26,202,000 41,399,000 2016 26,436,000 28,114,000 44,730,000 Source: FDIC website. FINANCIAL STATEMENTS The City’s Independent Auditor’s Reports for the Fiscal Year ended June 30, 2015 are reproduced in APPENDIX C. 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 Municipal Advisor, PFM Financial Advisors LLC. APPENDIX B FORM OF LEGAL OPINION (This page has been left blank intentionally.) Ahlers & Cooney, P.C. Attorneys at Law 100 Court Avenue, Suite 600 Des Moines, Iowa 50309-2231 Phone: 515-243-7611 Fax: 515-243-2149 www.ahlerslaw.com Wishard & Baily – 1888, Guernsey & Baily – 1893, Baily & 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 DRAFT We hereby certify that we have examined a certified transcript of the proceedings of the City Council and acts of administrative officers of the City of Waukee, State of Iowa (the "Issuer"), relating to the issuance of Sewer Revenue Capital Loan Notes, Series 2016C, by said City, dated December 20, 2016, in the denomination of $5,000 or multiples thereof, in the aggregate amount of $__________________ (the "Notes"). We have examined the law and such certified proceedings and other papers as we deem necessary to render this opinion as bond counsel. As to questions of fact material to our opinion, we have relied upon representations of the Issuer contained in the resolution authorizing the Loan Agreement and issuance of the Notes (the "Resolution") and in the certified proceedings and other certifications of public officials furnished to us, without undertaking to verify the same by independent investigation. Based on our examination and in reliance upon the certified proceedings and other certifications described above, we are of the opinion, under existing law, as follows: 1. The Issuer is duly created and validly existing as a body corporate and politic and political subdivision of the State of Iowa with the corporate power to adopt and perform the Resolution and Loan Agreement and issue the Notes. 2. The Resolution has been duly adopted by the Issuer and constitutes a valid and binding obligation of the Issuer enforceable upon the Issuer. The Resolution creates a valid lien on the Net Revenues of the Municipal Sewer Utility pledged by the Resolution for the security of the Notes. The lien of the Notes ranks on a parity as to the pledge of Net Revenues with respect to other Outstanding Obligations and Additional Obligations. The right to issue Additional Obligations is reserved upon conditions set forth in the Resolution. 3. The Notes have been duly authorized, issued and delivered by the Issuer and are valid and binding special obligations of the Issuer, payable solely from the sources provided therefor in the Resolution. 4. Interest on the Notes is excludable from gross income for federal income tax purposes and is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations; however, such interest is taken into account in determining adjusted current earnings for the purpose of computing the alternative minimum tax imposed on certain corporations. The opinion set forth in the preceding sentence is subject to the condition that the Issuer comply with all requirements of the Internal Revenue Code of 1986, as amended, that must be satisfied subsequent to the issuance of the Notes in order that the interest DRAFT City of Waukee, State of Iowa $__________________ Sewer Revenue Capital Loan Notes, Series 2016C Page 2 thereon be, and continue to be, excludable from gross income for federal income tax purposes. The Issuer has covenanted to comply with all such requirements. Failure to comply with certain of such requirements may cause interest on the Notes to be included in gross income for federal income tax purposes retroactively to the date of issuance of the Notes. We express no opinion regarding the accuracy, adequacy, or completeness of the Official Statement or other offering material relating to the Notes. Further, we express no opinion regarding tax consequences arising with respect to the Notes other than as expressly set forth herein. The rights of the owners of the Notes and the enforceability of the Notes are limited by bankruptcy, insolvency, reorganization, moratorium, and other similar laws affecting creditors' rights generally, and by equitable principles, whether considered at law or in equity. This opinion is given as of the date hereof, and we assume no obligation to revise or supplement this opinion to reflect any facts or circumstances that may hereafter come to our attention, or any changes in law that may hereafter occur. Respectfully submitted, 01292058-1\21938-122 APPENDIX C JUNE 30, 2015 INDEPENDENT AUDITOR’S REPORTS (This page has been left blank intentionally.) APPENDIX D FORM OF CONTINUING DISCLOSURE CERTIFICATE (This page has been left blank intentionally.) CONTINUING DISCLOSURE CERTIFICATE This Continuing Disclosure Certificate (the "Disclosure Certificate") is executed and delivered by the City of Waukee, State of Iowa (the "Issuer"), in connection with the issuance of $__________________ Sewer Revenue Capital Loan Notes, Series 2016C (the "Notes") dated December 20, 2016. The Notes are being issued pursuant to a Resolution of the Issuer approved on December 5, 2016 (the "Resolution"). The Issuer covenants and agrees as follows: Section 1. Purpose of the Disclosure Certificate. This Disclosure Certificate is being executed and delivered by the Issuer for the benefit of the Holders and Beneficial Owners of the Notes and in order to assist the Participating Underwriters in complying with S.E.C. Rule 15c2- 12(b)(5). Section 2. Definitions. In addition to the definitions set forth in the Resolution, which apply to any capitalized term used in this Disclosure Certificate unless otherwise defined in this Section, the following capitalized terms shall have the following meanings: "Annual Financial Information" shall mean financial information or operating data of the type included in the final Official Statement, provided at least annually by the Issuer pursuant to, and as described in, Sections 3 and 4 of this Disclosure Certificate. "Beneficial Owner" shall mean any person which (a) has the power, directly or indirectly, to vote or consent with respect to, or to dispose of ownership of, any Notes (including persons holding Notes through nominees, depositories or other intermediaries), or (b) is treated as the owner of any Notes for federal income tax purposes. "Business Day" shall mean a day other than a Saturday or a Sunday or a day on which banks in Iowa are authorized or required by law to close. "Dissemination Agent" shall mean the Issuer or any Dissemination Agent designated in writing by the Issuer and which has filed with the Issuer a written acceptance of such designation. "Holders" shall mean the registered holders of the Notes, as recorded in the registration books of the Registrar. "Listed Events" shall mean any of the events listed in Section 5(a) of this Disclosure Certificate. "Municipal Securities Rulemaking Board" or "MSRB" shall mean the Municipal Securities Rulemaking Board, 1300 I Street NW, Suite 1000, Washington, DC 20005. "National Repository" shall mean the MSRB's Electronic Municipal Market Access website, a/k/a "EMMA" (emma.msrb.org). 2 "Official Statement" shall mean the Issuer's Official Statement for the Notes, dated _______________, 2016. "Participating Underwriter" shall mean any of the original underwriters of the Notes required to comply with the Rule in connection with offering of the Notes. "Rule" shall mean Rule 15c2-12(b)(5) adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as the same may be amended from time to time. "State" shall mean the State of Iowa. Section 3. Provision of Annual Financial Information. a) The Issuer shall, or shall cause the Dissemination Agent to, not later than two hundred seventy (270) days after the end of the Issuer's fiscal year (presently June 30th), commencing with information for the 2015/2016 fiscal year, provide to the National Repository an Annual Financial Information filing consistent with the requirements of Section 4 of this Disclosure Certificate. The Annual Financial Information filing must be submitted in such format as is required by the MSRB (currently in "searchable PDF" format). The Annual Financial Information filing may be submitted as a single document or as separate documents comprising a package. The Annual Financial Information filing may cross-reference other information as provided in Section 4 of this Disclosure Certificate; provided that the audited financial statements of the Issuer may be submitted separately from the balance of the Annual Financial Information filing and later than the date required above for the filing of the Annual Financial Information if they are not available by that date. If the Issuer's fiscal year changes, it shall give notice of such change in the same manner as for a Listed Event under Section 5(c). b) If the Issuer is unable to provide to the National Repository the Annual Financial Information by the date required in subsection (a), the Issuer shall send a notice to the Municipal Securities Rulemaking Board, if any, in substantially the form attached as Exhibit A. c) The Dissemination Agent shall: i. each year file Annual Financial Information with the National Repository; and ii. (if the Dissemination Agent is other than the Issuer), file a report with the Issuer certifying that the Annual Financial Information has been filed pursuant to this Disclosure Certificate, stating the date it was filed. Section 4. Content of Annual Financial Information. The Issuer's Annual Financial Information filing shall contain or incorporate by reference the following: 3 a) The last available audited financial statements of the Issuer for the prior fiscal year, prepared in accordance with generally accepted accounting principles promulgated by the Financial Accounting Standards Board as modified in accordance with the governmental accounting standards promulgated by the Governmental Accounting Standards Board or as otherwise provided under State law, as in effect from time to time, or, if and to the extent such financial statements have not been prepared in accordance with generally accepted accounting principles, noting the discrepancies therefrom and the effect thereof. If the Issuer's audited financial statements for the preceding years are not available by the time Annual Financial Information is required to be filed pursuant to Section 3(a), the Annual Financial Information filing shall contain unaudited financial statements of the type included in the final Official Statement, and the audited financial statements shall be filed in the same manner as the Annual Financial Information when they become available. b) A table, schedule or other information prepared as of the end of the preceding fiscal year, of the type contained in the final Official Statement under the caption "Sewer utility Rates and Charges," "Sewer Utility Sales History and Total Charges," "Number of Sewer Customers," "Larger Sewer Utility Customers." Any or all of the items listed above may be included by specific reference to other documents, including official statements of debt issues of the Issuer or related public entities, which have been filed with the National Repository. The Issuer shall clearly identify each such other document so included by reference. Section 5. Reporting of Significant Events. a) Pursuant to the provisions of this Section, the Issuer shall give, or cause to be given, notice of the occurrence of any of the following events with respect to the Notes in a timely manner not later than 10 Business Days after the day of the occurrence of the event: i. Principal and interest payment delinquencies; ii. Non-payment related defaults, if material; iii. Unscheduled draws on debt service reserves reflecting financial difficulties; iv. Unscheduled draws on credit enhancements relating to the Notes reflecting financial difficulties; v. Substitution of credit or liquidity providers, or their failure to perform; vi. Adverse tax opinions, the issuance by the Internal Revenue Service of proposed or final determinations of taxability, Notices of Proposed Issue (IRS Form 5701-TEB) or other material notices or determinations with respect to the 4 tax-exempt status of the Series Notes, or material events affecting the tax-exempt status of the Notes; vii. Modifications to rights of Holders of the Notes, if material; viii. Note calls (excluding sinking fund mandatory redemptions), if material, and tender offers; ix. Defeasances of the Notes; x. Release, substitution, or sale of property securing repayment of the Notes, if material; xi. Rating changes on the Notes; xii. Bankruptcy, insolvency, receivership or similar event of the Issuer; xiii. The consummation of a merger, consolidation, or acquisition involving the Issuer or the sale of all or substantially all of the assets of the Issuer, other than in the ordinary course of business, the entry into a definitive agreement to undertake such an action or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms, if material; and xiv. Appointment of a successor or additional trustee or the change of name of a trustee, if material. b) Whenever the Issuer obtains the knowledge of the occurrence of a Listed Event, the Issuer shall determine if the occurrence is subject to notice only if material, and if so shall as soon as possible determine if such event would be material under applicable federal securities laws. c) If the Issuer determines that knowledge of the occurrence of a Listed Event is not subject to materiality, or determines such occurrence is subject to materiality and would be material under applicable federal securities laws, the Issuer shall promptly, but not later than 10 Business Days after the occurrence of the event, file a notice of such occurrence with the Municipal Securities Rulemaking Board through the filing with the National Repository. Section 6. Termination of Reporting Obligation. The Issuer's obligations under this Disclosure Certificate shall terminate upon the legal defeasance, prior redemption or payment in full of all of the Notes or upon the Issuer's receipt of an opinion of nationally recognized bond counsel to the effect that, because of legislative action or final judicial action or administrative actions or proceedings, the failure of the Issuer to comply with the terms hereof will not cause Participating Underwriters to be in violation of the Rule or other applicable requirements of the Securities Exchange Act of 1934, as amended. 5 Section 7. Dissemination Agent. The Issuer may, from time to time, appoint or engage a Dissemination Agent to assist it in carrying out its obligations under this Disclosure Certificate, and may discharge any such Agent, with or without appointing a successor Dissemination Agent. The Dissemination Agent shall not be responsible in any manner for the content of any notice or report prepared by the Issuer pursuant to this Disclosure Certificate. The initial Dissemination Agent shall be the Issuer. Section 8. Amendment; Waiver. Notwithstanding any other provision of this Disclosure Certificate, the Issuer may amend this Disclosure Certificate, and any provision of this Disclosure Certificate may be waived, provided that the following conditions are satisfied: a) If the amendment or waiver relates to the provisions of Section 3(a), 4, or 5(a), it may only be made in connection with a change in circumstances that arises from a change in legal requirements, change in law, or change in the identity, nature or status of an obligated person with respect to the Notes, or the type of business conducted; b) The undertaking, as amended or taking into account such waiver, would, in the opinion of nationally recognized bond counsel, have complied with the requirements of the Rule at the time of the original issuance of the Notes, after taking into account any amendments or interpretations of the Rule, as well as any change in circumstances; and c) The amendment or waiver either (i) is approved by the Holders of the Notes in the same manner as provided in the Resolution for amendments to the Resolution with the consent of Holders, or (ii) does not, in the opinion of nationally recognized bond counsel, materially impair the interests of the Holders or Beneficial Owners of the Notes. In the event of any amendment or waiver of a provision of this Disclosure Certificate, the Issuer shall describe such amendment in the next Annual Financial Information filing, and shall include, as applicable, a narrative explanation of the reason for the amendment or waiver and its impact on the type (or in the case of a change of accounting principles, on the presentation) of financial information or operating data being presented by the Issuer. In addition, if the amendment relates to the accounting principles to be followed in preparing financial statements, (i) notice of such change shall be given in the same manner as for a Listed Event under Section 5(c), and (ii) the Annual Financial Information filing for the year in which the change is made will present a comparison or other discussion in narrative form (and also, if feasible, in quantitative form) describing or illustrating the material differences between the financial statements as prepared on the basis of the new accounting principles and those prepared on the basis of the former accounting principles. Section 9. Additional Information. Nothing in this Disclosure Certificate shall be deemed to prevent the Issuer from disseminating any other information, using the means of dissemination set forth in this Disclosure Certificate or any other means of communication, or including any other information in any Annual Financial Information filing or notice of occurrence of a Listed Event, in addition to that which is required by this Disclosure Certificate. If the Issuer chooses to include any information in any Annual Financial Information filing or 6 notice of occurrence of a Listed Event in addition to that which is specifically required by this Disclosure Certificate, the Issuer shall have no obligation under this Certificate to update such information or include it in any future Annual Financial Information filing or notice of occurrence of a Listed Event. Section 10. Default. In the event of a failure of the Issuer to comply with any provision of this Disclosure Certificate, any Holder or Beneficial Owner of the Notes may take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the Issuer to comply with its obligations under this Disclosure Certificate. Direct, indirect, consequential and punitive damages shall not be recoverable by any person for any default hereunder and are hereby waived to the extent permitted by law. A default under this Disclosure Certificate shall not be deemed an event of default under the Resolution, and the sole remedy under this Disclosure Certificate in the event of any failure of the Issuer to comply with this Disclosure Certificate shall be an action to compel performance. Section 11. Duties, Immunities and Liabilities of Dissemination Agent. The Dissemination Agent shall have only such duties as are specifically set forth in this Disclosure Certificate, and the Issuer agrees to indemnify and save the Dissemination Agent, its officers, directors, employees and agents, harmless against any loss, expense and liabilities which it may incur arising out of or in the exercise or performance of its powers and duties hereunder, including the costs and expenses (including attorneys' fees) of defending against any claim of liability, but excluding liabilities due to the Dissemination Agent's negligence or willful misconduct. The obligations of the Issuer under this Section shall survive resignation or removal of the Dissemination Agent and payment of the Notes. Section 12. Beneficiaries. This Disclosure Certificate shall inure solely to the benefit of the Issuer, the Dissemination Agent, the Participating Underwriters and Holders and Beneficial Owners from time to time of the Notes, and shall create no rights in any other person or entity. Date: __________ day of _______________, 2016. CITY OF WAUKEE, STATE OF IOWA By: Mayor ATTEST: By: City Clerk EXHIBIT A NOTICE TO NATIONAL REPOSITORY OF FAILURE TO FILE ANNUAL FINANCIAL INFORMATION Name of Issuer: City of Waukee, Iowa. Name of Note Issue: $__________________ Sewer Revenue Capital Loan Notes, Series 2016C Dated Date of Issue: December 20, 2016 NOTICE IS HEREBY GIVEN that the Issuer has not provided Annual Financial Information with respect to the above-named Notes as required by Section 3 of the Continuing Disclosure Certificate delivered by the Issuer in connection with the Notes. The Issuer anticipates that the Annual Financial Information will be filed by ____________________. Dated: __________ day of _______________, 20___. CITY OF WAUKEE, STATE OF IOWA By: Its: 01292059-1\21938-122 (This page has been left blank intentionally.) OFFICIAL BID FORM TO: City Council Sale Date: November 21, 2016 City of Waukee, Iowa 10:00 AM Central Time RE: $2,685,000* Sewer Revenue Capital Loan Notes, Series 2016C (the “Notes”) For all or none of the above the Notes, in accordance with the TERMS OF OFFERING, we will pay you $____________________ (not less than $2,644,725) plus accrued interest to date of delivery for fully registered Notes bearing interest rates and maturing in the stated years as follows: Coupon Maturity Coupon Maturity __________ 2019 __________ 2028 __________ 2020 __________ 2029 __________ 2021 __________ 2030 __________ 2022 __________ 2031 __________ 2023 __________ 2032 __________ 2024 __________ 2033 __________ 2025 __________ 2034 __________ 2026 __________ 2035 __________ 2027 __________ 2036 * Preliminary; subject to change. The aggregate principal amount of the Notes, and each scheduled maturity thereof, are subject to reduction by the City or its designee after the determination of the successful bidder. The City may increase or decrease each maturity in increments of $5,000 but the total amount to be issued will not exceed $2,900,000. Interest rates specified by the successful bidder for each maturity will not change. Final adjustments shall be in the sole discretion of the City. The dollar amount of the purchase price proposed by the successful bidder will be changed if the aggregate principal amount of the Notes is adjusted as described above. Any change in the principal amount of any maturity of the Notes will be made while maintaining, as closely as possible, the successful bidder's net compensation, calculated as a percentage of principal. The successful bidder may not withdraw or modify its bid as a result of any post-bid adjustment. Any adjustment shall be conclusive, and shall be binding upon the successful bidder. In making this offer we accept all of the terms and conditions of the TERMS OF OFFERING published in the Preliminary Official Statement dated November 7, 2016. In the event of failure to deliver these Notes in accordance with the TERMS OF OFFERING as printed in the Preliminary Official Statement and made a part hereof, we reserve the right to withdraw our offer, whereupon the deposit accompanying it will be immediately returned. All blank spaces of this offer are intentional and are not to be construed as an omission. Not as a part of our offer, the above quoted prices being controlling, but only as an aid for the verification of the offer, we have made the following computations: NET INTEREST COST: $_________________________ TRUE INTEREST COST: _________________________% (Calculated to dated date of December 20, 2016) Account Manager: ___________________________________ By: ___________________________________ Account Members: ___________________________________________________________________________________________ The foregoing offer is hereby accepted by and on behalf of the City Council of the City of Waukee, Iowa this 21st day of November, 2016. Attest: ______________________________________ By: ________________________________________ Title: _______________________________________ Title: _______________________________________