New Issue
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New Issue
New Issue Date of Sale: Investment Rating: Moody’s Investors Service… (Rating Requested) Tuesday, April 19, 2011 10:30 - 11:00 A.M., C.D.T. (Speer Auction – Closed) 11:00 A.M., C. D. T. (Sealed Bids) (Alternative Bid Methods) Official Statement Subject to compliance by the Issuer with certain covenants, in the opinion of Ahlers & Cooney, P.C., under present laws, interest on the Notes is excluded from gross income for federal income tax purposes and interest on the Notes is not an item of tax preference for purposes of 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 alternative minimum tax imposed on such corporations. Interest on the Notes is not exempt from present Iowa income taxes. The Notes will be designated as “qualified tax exempt obligations.” See “THE NOTES – TAX MATTERS” herein. $6,915,000* CITY OF BOONE Boone County, Iowa General Obligation Capital Loan Notes, Series 2011 Dated May 15, 2011 Book-Entry Bank Qualified Due Serially June 1, 2012 - 2030 The $6,915,000* General Obligation Capital Loan Notes, Series 2011 (the “Notes”) are being issued by the City of Boone, Boone County, Iowa (the “City”). Interest is payable semiannually on June 1 and December 1 of each year, commencing December 1, 2011. The Notes will be issued using a book-entry system. The Depository Trust Company (“DTC”), New York, New York, will act as securities depository for the Notes. The ownership of one fully registered Note for each maturity will be registered in the name of Cede & Co., as nominee for DTC and no physical delivery of Notes will be made to purchasers. The Notes will mature on June 1 in the following years and amounts. AMOUNTS*, MATURITIES AND INTEREST RATES Principal Due Amount June 1 $830,000 ........................ 2012 760,000 ........................ 2013 480,000 ........................ 2014 485,000 ........................ 2015 450,000 ........................ 2016 215,000 ........................ 2017 220,000 ........................ 2018 225,000 ........................ 2019 235,000 ........................ 2020 245,000 ........................ 2021 Interest Rate ______% ______% ______% ______% ______% ______% ______% ______% ______% ______% Yield or Price ______% ______% ______% ______% ______% ______% ______% ______% ______% ______% CUSIP Number ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ Principal Due Amount June 1 $255,000 ........................ 2022 265,000 ........................ 2023 280,000 ........................ 2024 290,000 ........................ 2025 300,000 ........................ 2026 320,000 ........................ 2027 335,000 ........................ 2028 355,000 ........................ 2029 370,000 ........................ 2030 Interest Rate ______% ______% ______% ______% ______% ______% ______% ______% ______% Yield or Price ______% ______% ______% ______% ______% ______% ______% ______% ______% CUSIP Number ______ ______ ______ ______ ______ ______ ______ ______ ______ *Any consecutive maturities may be aggregated into no more than five term notes at the option of the bidder, in which case the mandatory redemption provisions shall be on the same schedule as above. OPTIONAL REDEMPTION Notes due June 1, 2012 – 2020, inclusive, are non-callable. Notes due June 1, 2021 - 2030, inclusive, are callable in whole or in part on any date on or after June 1, 2020, at a price of par and accrued interest. If less than all the Notes are called, they shall be redeemed in such principal amounts and from such maturities as determined by the City and within any maturity by lot. See “OPTIONAL REDEMPTION” herein. PURPOSE, LEGALITY AND SECURITY Note proceeds will be used to: (i) pay costs of improvements, extensions and equipping the municipal sewer system; (ii) currently refund the City’s outstanding general obligation notes, including Series 2002, 2003, 2003A, 2005, 2005A and the City’s outstanding General Obligation Capital Loan Note Anticipation Note, Series 2008; and (iii) pay the cost of issuance of the Notes. See “PLAN OF FINANCING” herein. In the opinion of Bond Counsel, Ahlers & Cooney, P.C., Des Moines, Iowa, the Notes will constitute valid and legally binding obligations of the City payable both as to principal and interest from ad valorem taxes levied against all taxable property therein without limitation as to rate or amount, all except as limited by bankruptcy, insolvency, moratorium, reorganization and other similar laws relating to the enforcement of creditors’ rights generally and except that enforcement by equitable and similar remedies, such as mandamus, is subject to the exercise of judicial discretion. The City intends to designate the Notes as “qualified tax-exempt obligations” pursuant to the small issuer exception provided by Section 265(b)(3) of the Internal Revenue Code of 1986 as amended. This Official Statement is dated April 7, 2011, and has been prepared under the authority of the City. An electronic copy of this Official Statement is available from the www.speerfinancial.com web site under “Official Statement Sales Calendar”. Additional copies may be obtained from Mr. Luke Nelson, City Administrator/Clerk, City of Boone, 923 8th Street, Boone, Iowa 50036-0550, or from the Independent Public Finance Consultants to the City: Established 1954 Speer Financial, Inc. INDEPENDENT PUBLIC FINANCE CONSULTANTS ONE NORTH LASALLE STREET, SUITE 4100 • CHICAGO, ILLINOIS 60602 Telephone: (312) 346-3700; Facsimile: (312) 346-8833 531 COMMERCIAL STREET, SUITE 608 • WATERLOO, IOWA 50701 Telephone: (319) 291-2077; Facsimile: (319) 291-8628 www.speerfinancial.com *Subject to change. The City reserves the right to change the principal amount of the Notes to effect the City’s desired refunding savings, but any such change shall not increase the principal amount of the Notes above $6,915,000. Any such change will be in increments of $5,000 and may be made in any of the maturities. In such event, the purchase price of the Notes will be adjusted proportionately allowing the same dollar amount of gross spread per $1,000 Note (assuming a delivery date of May 18, 2011). City of Boone, Boone County Iowa $6,915,000* General Obligation Capital Loan Notes, Series 2011 For purposes of compliance with Rule 15c2-12 of the Securities and Exchange Commission, this document, as the same may be supplemented or corrected by the City from time to time (collectively, the “Official Statement”), may be treated as an Official Statement with respect to the Notes described herein that is deemed near final as of the date hereof (or the date of any such supplement or correction) by the City. The Official Statement, when further supplemented by an addendum or addenda specifying the maturity dates, principal amounts and interest rates of the Notes, together with 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. Any such addendum shall, on and after the date thereof, be fully incorporated herein and made a part hereof by reference. No dealer, broker, salesman or other person has been authorized by the City to give any information or to make any representations with respect to the Notes other than as contained in the Official Statement or the Final Official Statement and, if given or made, such other information or representations must not be relied upon as having been authorized by the City. Certain information contained in the Official Statement and the Final Official Statement may have been obtained from sources other than records of the City and, while believed to be reliable, is not guaranteed as to completeness. THE INFORMATION AND EXPRESSIONS OF OPINION IN THE OFFICIAL STATEMENT AND THE FINAL OFFICIAL STATEMENT ARE SUBJECT TO CHANGE, AND NEITHER THE DELIVERY OF THE OFFICIAL STATEMENT OR THE FINAL OFFICIAL STATEMENT NOR ANY SALE MADE UNDER EITHER SUCH DOCUMENT SHALL CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE CITY SINCE THE RESPECTIVE DATES THEREOF. References herein to laws, rules, regulations, ordinances, resolutions, agreements, reports and other documents do not purport to be comprehensive or definitive. All references to such documents are qualified in their entirety by reference to the particular document, the full text of which may contain qualifications of and exceptions to statements made herein. Where full texts have not been included as appendices to the Official Statement or the Final Official Statement they will be furnished on request. This Official Statement does not constitute an offer to sell, or solicitation of an offer to buy, any securities to any person in any jurisdiction where such offer or solicitation of such offer would be unlawful. 2 City of Boone, Boone County Iowa $6,915,000* General Obligation Capital Loan Notes, Series 2011 NOTE ISSUE SUMMARY This Note Issue Summary is expressly qualified by the entire Official Statement, including the Official Terms of Offering and the Official Bid Form, which are provided for the convenience of potential investors and which should be reviewed in their entirety by potential investors. Issuer: City of Boone, Boone County, Iowa. Issue: $6,915,000* General Obligation Capital Loan Notes, Series 2011. Dated Date: May 15, 2011. Interest Due: Each June 1 and December 1, commencing December 1, 2011. Principal Due: Serially each June 1, commencing June 1, 2012 through 2030, as detailed on the front page of this Official Statement. Optional Redemption: Notes maturing on or after June 1, 2021, are callable at the option of the City on any date on or after June 1, 2020, at a price of par plus accrued interest. See “OPTIONAL REDEMPTION” herein. Authorization: The Notes are being issued pursuant to authority established in Code of Iowa, Chapter 384, Division III, and all laws amendatory thereof and supplementary thereto, and the conformity with a resolution of the City Council duly passed and approved. Security: The Notes are valid and legally binding obligations of the City payable both as to principal and interest from ad valorem taxes levied against all taxable property therein without limitation as to rate or amount, all except as limited by bankruptcy, insolvency, moratorium, reorganization and other similar laws relating to the enforcement of creditors’ rights generally and except that enforcement by equitable and similar remedies, such as mandamus, is subject to the exercise of judicial discretion. Investment Rating: An investment rating for the Notes have been requested from Moody’s Investors Service. See “INVESTMENT RATING” herein. Purpose: Note proceeds will be used to: (i) pay costs of improvements, extensions and equipping the municipal sewer system; (ii) currently refund the City’s outstanding general obligation notes, including Series 2002, 2003, 2003A, 2005, 2005A; and the City’s outstanding General Obligation Capital Loan Note Anticipation Note, Series 2008; and (iii) pay the cost of issuance of the Notes. See “PLAN OF FINANCING” herein. Tax Matters: Ahlers & Cooney, P.C., Des Moines, Iowa, will provide an opinion as to the tax exemption of the Notes as discussed under “TAX MATTERS” in this Official Statement. Interest on the Notes is not exempt from present State of Iowa income taxes. See APPENDIX D for a draft form of legal opinion for the Notes. Bank Qualification: The City intends to designate the Notes as “qualified tax-exempt obligations.” MATTERS – Qualified Tax Exempt Obligations” therein. Registrar/Paying Agent: Bankers Trust Company, of Des Moines, Iowa. Book-Entry Form: The Notes will be registered in the name of Cede & Co. as nominee for The Depository Trust Company (“DTC”), New York, New York. DTC will act as securities depository of the Notes. See APPENDIX B herein. Delivery: The Notes are expected to be delivered on or about May 18, 2011. Financial Advisor: Speer Financial, Inc., Waterloo, Iowa and Chicago, Illinois. See “TAX *Subject to change. The City reserves the right to change the principal amount of the Notes to effect the City’s desired refunding savings, but any such change shall not increase the principal amount of the Notes above $6,915,000. Any such change will be in increments of $5,000 and may be made in any of the maturities. In such event, the purchase price of the Notes will be adjusted proportionately allowing the same dollar amount of gross spread per $1,000 Note (assuming a delivery date of May 18, 2011). 3 City of Boone, Boone County Iowa $6,915,000* General Obligation Capital Loan Notes, Series 2011 CITY OF BOONE Boone County, Iowa John Slight Mayor City Council Shari Gillespie Greg Piklapp Nick Mallas Steven Ray Gary Nystrom Fenner Stevenson Kevin Hicks __________________________________ Officials Luke Nelson City Administrator Ondrea Elmquist Director of Finance Alan Schroeder, Esq. City Attorney THE CITY The City of Boone, Boone County, Iowa (the “City”) is the county seat of Boone County (the “County”). The City is located in the center of the scenic Des Moines River Valley, approximately 45 miles from Des Moines, the State capital. The City was once a small army camp, at various times called Boonesboro, Booneville, and Montana. By 1865, a railroad through the City was completed, development intensified, and the City’s boundaries were formed. In 1871, a petition was filed in the Circuit Court that changed the City’s name to Boone. The City and the County are named after Captain Nathan Boone, the youngest son of the great pioneer, Daniel Boone. According to the 2010 Census, the City’s population is 12,661. This is a slight decrease in City population from 12,803 in 2000. City Organization and Services The City operates under the home rule provisions of the Constitution of the State of Iowa. The City has a MayorCouncil form of government. The Mayor is elected to a two-year term and seven council members are elected to staggered four-year terms. Policy is established by the Mayor and the City Council. The City Administrator, Director of Finance and City Attorney are appointed by the City Council. The City Administrator also serves as the City Clerk. The day-to-day operations of the City are the responsibility of the City Administrator. Approximately 65 people are employed by the City on a full-time basis. The City considers its employee relations to be good. The City’s Police are represented by the Police Bargaining Unit; the Fire Fighters by Local No. 678 of the International Association of Fire Fighters, and the Public Works Employees by the Public Works Employees Bargaining Unit. The current Police contract expires on June 30, 2011 and a succeeding contract expires on June 30, 2014. The contract with the Public Works Employees expires on June 30, 2013 and the Fire Fighters contract does not expire until June 30, 2013. The City employs 17 full-time police officers and is served by 8 full-time firefighter, 5 part-time, 10 paid-on-call and 13 cross-trained firefighters who operate out of one centrally located fire station. The fire insurance classification is Class 6 within Boone and Class 6 in adjacent districts. 4 City of Boone, Boone County Iowa $6,915,000* General Obligation Capital Loan Notes, Series 2011 The City’s water system provides water to City residents from shallow wells. The County runs the landfill and residents contract with private haulers for garbage removal. Electric power and natural gas are provided to City residents by Alliant Energy. Telecommunication services are provided locally by Qwest Communications. Cable services are provided by MediaCom and internet services by GalaxyLynx, Mediacom, and FBX. The Central Iowa Expo site located 4 miles east of the City on Highway 17 and Highway 30 and is an important site that is expected to generate tourism for years to come. This 600 acre site, which included 106 acres of exhibit area, will be the biennial host to the National Farm Progress Show beginning in August 2008 and to be held at this location on alternate years for the next twenty years. Additionally, planners are designing this facility to host many other types of attractions and shows at other times. It is considered to be one of the most important economic development projects in Boone County for many years. Funding to complete this project is estimated to be approximately $8.5 million to be paid by the County. Over 240,000 visitors are expected to attend each three day Farm Progress Show. Transportation City residents have easy access to various State and U. S. Highways, all of which cross the City or are within approximately 10 miles of the City, as follows: north, State Highway 175; south, U. S. Highway 30; east, State Highway 17; and west, U. S. Highway 169. The Union Pacific Railroad provides the City with freight rail service, including piggyback ramp facilities and one day switching service. Within 45 minutes of the City is the Des Moines International Airport which is served by the following passenger and freight airlines: Allegiant Air, American; Comair – Delta Connections; Continental Express, Midwest Airlines, Northwest; United; USAirways, Airborne Express/DHL, Federal Express, United Parcel Service and United States Postal Service. Community Life The Ericson Public Library was built in 1901 and was placed in the National Register of Historic Places in 1983. It houses a collection of 87,000 items, including local history and genealogy materials. Approximately 300 acres in the City have been dedicated to 14 parks, the largest of which is McHose Park. Located in the southwestern part of the City, McHose Park provides approximately 200 acres of timber and recreational space. The municipal swimming pool is located in McHose Park as well as three baseball diamonds, six tennis courts and various other playing fields, playgrounds and picnic shelters. Ledges State Park, just south of the City, offers a variety of recreational activities. The Des Moines River, Pease Creek and Davis Creek all weave in and around Ledges State Park, providing scenic attractions for visitors and tourists. The Kate Shelly Bridge was built in 1901 and is reportedly the longest and highest double track railroad bridge in the world. The Bridge stands 135 feet above the Des Moines River and runs for 2,685 feet. Located three and one-half miles northwest of the City, it is named for a young heroine who crossed the Des Moines River in the midst of a ferocious storm to warn an oncoming train that the bridge was out. Located between the City and the City of Ames is the Iowa Arboretum, which is a non-profit privately funded facility. Founded in 1967, the Arboretum is located on approximately 380 acres nine miles south of the City. Within the Arboretum is a 40-acre “Library of Living Plants” containing hundreds of species of trees, shrubs and flowers. The Arboretum also functions as an outdoor laboratory, a center for the preservation and propagation of rare and endangered plant species and a meeting center for horticultural and conservation organizations. 5 City of Boone, Boone County Iowa $6,915,000* General Obligation Capital Loan Notes, Series 2011 The Boone County Cultural Center and Historical Museum is listed on the National Historic Register of Historic Places and is located in the City. The Center is a multi-purpose facility. It serves as a museum for valuable collections of Boone County natural history and historical artifacts. It also serves City and County residents as a cultural and community center where businesses, individuals and civic groups can gather for meetings, special programs and social events. The Boone & Scenic Valley Railroad is a unique railroad attraction in the City. It is the result of private endeavors, including donations from the City’s approximately 2,250 charter member Boone Railroad Historical Society. In 1989, the Railroad purchased a Chinese Steam Locomotive, the first one ever imported into the United States and the only engine of its class in the United States. Over 50,000 people ride the Railroad annually. In 1900 the first hospital in Boone County was built at the present site of the Boone County Hospital. Upgrades and additions were added in 1940, 1956, 1968 and 2002. The Hospital operates both acute care and skilled nursing beds and provides many other health services such as neurology, plastic surgery, radiology, respiratory care, 24 hour emergency services and various laboratory services and testing. Education Public education is provided for City residents by the Boone Community School District (the “District”). The District has five elementary schools, one middle school and one high school. The District has a combined 2010-201 enrollment of approximately 2,184. The City also has two elementary parochial schools. Opportunities for continuing and higher education are provided for City residents at the Des Moines Area Community College with campuses in Boone, Ankeny, Carroll, Newton and Des Moines; Iowa State University in Ames; and the University of Osteopathic Medicine, Grandview College, Upper Iowa University and Drake University in Des Moines. CITY COMMERCIAL AND INDUSTRIAL DEVELOPMENT Activity in industrial development in the City continues to be strong. Industrial development continues to expand through development of local companies. Proliant has had recent growth as they released a human grade supplement for health of the body’s immune system. Proliant added 10 new employees. Midland Bioproducts is working on an expansion of their facility adding an estimated 12 employees. Patterson Dental incorporated additional shipment products from their current facility while CDS Global expanded their local operation as part of a restructure of their Midwest operations. Commerce The City’s business district (the “Business District”) is located on Story Street in downtown Boone. The Business District is anchored by the national chain store HyVee. There is also various specialty retail stores located in the Business District. Five financial institutions serve City residents as well as a daily newspaper. A Wal-Mart discount store is located at the junction of Highway 30 and Story Street with anticipated plans of a new Super Wal-Mart Center at a new location northeast of the intersection of Highway 30 and South Linn Street. City residents also have easy access to commercial and retail facilities in the City of Ames, which is located only 14 miles from Boone and the City of Des Moines, which is located only 45 miles from the City. 6 City of Boone, Boone County Iowa $6,915,000* General Obligation Capital Loan Notes, Series 2011 Boone Industrial Park The City is active in economic development and community planning as seen through the development of the Boone Industrial Park (the “Park”). The City completed infrastructure improvements on three sites in the Park in 1994. Site B has approximately 10 acres available and it is not the City’s intention to develop it into a tax increment district. Sites C and D have approximately 50 acres available and are located in tax increment areas of the Park. . The City also expanded further development opportunities on Eastgate Drive. The development is call The RL Fisher Airport Business Park and is conveniently located next to the Boone Municipal Airport. The development has over 35 acres of available land. Some key features include: Joint storm water detention; Immediate access to Highway 30 (close to Interstate 35); Immediate access to the Boone Municipal Airport; Water/Sewer/Data/Electricity/Gas/Phone. The Industrial Park northeast of Boone has had extensive expansion by Fareway in the form of two large refrigerated storage buildings with a combined value exceeding $10 million. In addition, PDM moved a facility to Boone from Des Moines and now uses the Boone and Scenic Valley Railroad for rail access as part of their food-grade oil operation. SOCIOECONOMIC INFORMATION The following demographic information is for the City. Additional comparisons are made with Boone County (the “County”) and the State of Iowa (the “State”). Employment Following are lists of certain major employers located in the City. Major City Employers(1) Approximate Name Business or Product Employment Iowa National Guard ...................................................................... Civil Defense ....................................................................................... 450 Union Pacific Railroad ................................................................... Railroad ............................................................................................... 450 Boone County Hospital .................................................................. General Hospital .................................................................................. 430 Communication Data Services....................................................... Magazine Billing Services .................................................................... 370 Boone Community School District ................................................. Education Services .............................................................................. 370 Fareway Food Stores .................................................................... Company Headquarters and Warehousing .......................................... 320 Hy-Vee Food Stores ...................................................................... Grocery-Retail ..................................................................................... 175 Gates Corporation. ........................................................................ Coupled Hydraulic Hose Assemblies ................................................... 160 Eastern Star Home ........................................................................ Care Facility......................................................................................... 155 Quinn Machinery & Foundry Corporation ....................................... Iron Castings, Forms and Machinery.................................................... 150 Boone County Government ........................................................... Government Services .......................................................................... 135 Evangelical Free Church Home ..................................................... Nursing Home...................................................................................... 125 Note: (1) Source: Boone Area Chamber of Commerce, Iowa Manufacturers 2011 Directory and a selected telephone survey. 7 City of Boone, Boone County Iowa $6,915,000* General Obligation Capital Loan Notes, Series 2011 The following tables show employment by industry and by occupation for the City, the County and the State as reported by the 2000 Census. Employment By Industry(1) Classification Agriculture, forestry, fishing and hunting, and mining ......................... Construction ...................................................................................... Manufacturing.................................................................................... Wholesale trade ................................................................................ Retail trade ........................................................................................ Transportation and warehousing, and utilities .................................... Information ........................................................................................ Finance, insurance, real estate and rental and leasing ...................... Professional, scientific, management, administrative, and Waste management services........................................................... Education, health and social services ................................................ Arts, entertainment, recreation, accommodation and food services ... Other services ................................................................................... Public administration ......................................................................... Total ................................................................................................ Note: (1) The City Number Percent 121 1.82% 583 8.78% 705 10.62% 220 3.31% 1,130 17.02% 323 4.86% 187 2.82% 252 3.80% 372 1,730 406 364 247 6,640 The County Number Percent 642 4.71% 1,117 8.20% 1,395 10.24% 409 3.00% 1,903 13.97% 827 6.07% 342 2.51% 616 4.52% 5.60% 26.05% 6.11% 5.48% 3.72% 100.00% 754 3,510 759 710 635 13,619 State of Iowa Number Percent 65,903 4.42% 91,824 6.16% 253,444 17.01% 53,267 3.58% 179,381 12.04% 73,170 4.91% 41,970 2.82% 100,395 6.74% 5.54% 25.77% 5.57% 5.21% 4.66% 100.00% 90,157 6.05% 324,142 21.76% 98,819 6.63% 66,286 4.45% 51,058 3.43% 1,489,816 100.00% Source: U. S. Census Bureau. Employment By Occupation(1) The City Classification Number Percent Management, professional, and related occupations ............... 1,562 23.52% Service occupations ................................................................ 1,341 20.20% Sales and office occupations ................................................... 1,842 27.74% Farming, fishing, and forestry occupations ............................... 27 0.41% Construction, extraction, and maintenance occupations .......... 796 11.99% Production, transportation, and material moving occupations .. 1,072 16.14% Total ...................................................................................... 6,640 100.00% Note: (1) The County Number Percent 3,721 27.32% 2,373 17.42% 3,517 25.82% 214 1.57% 1,584 11.63% 2,210 16.23% 13,619 100.00% State of Iowa Number Percent 466,436 31.31% 219,837 14.76% 385,794 25.90% 15,877 1.07% 132,530 8.90% 269,342 18.08% 1,489,816 100.00% Source: U. S. Census Bureau. Annual Average Unemployment Rates(1) Calendar The Year County 2000................................................................... 2.9% 2001................................................................... 2.7% 2002................................................................... 3.1% 2003................................................................... 3.4% 2004................................................................... 3.6% 2005................................................................... 3.7% 2006................................................................... 3.0% 2007................................................................... 3.3% 2008................................................................... 3.7% 2009................................................................... 5.5% 2010................................................................... 6.2% 2011(2) .............................................................. 6.0% Notes: (1) (2) Source: Iowa Workforce Development. Through January 2011. 8 State of Iowa 2.8% 3.3% 3.9% 4.4% 4.7% 4.3% 3.7% 3.7% 4.4% 6.0% 6.7% 6.1% United States 4.0% 5.3% 5.8% 6.0% 5.5% 5.1% 4.6% 4.6% 5.8% 9.3% 9.6% 9.0% City of Boone, Boone County Iowa $6,915,000* General Obligation Capital Loan Notes, Series 2011 Boone County Non-Agricultural Wage and Salary Employment By Place of Work(1) Goods Producing ................................................................... Service Producing ................................................................. Government........................................................................... Total .................................................................................... Note: (1) 2006 1,520 6,040 2,490 10,050 2007 1,490 6,020 2,510 10,020 2008 1,540 5,910 2,560 10,010 2009 1,250 5,890 2,560 9,700 2010 1,160 5,730 2,470 9,360 Source: Iowa Workforce Development. Place of Work concept counts an individual in the area where he or she works regardless of where that person lives. Building Permits Building permits have averaged approximately $8,467,711 annually over the last five fiscal years in the City, excluding the value of land. City Building Permits(1) (Excludes the Value of Land) Fiscal Year Number 2001 ............................... 263 2002 ............................... 283 2003 ............................... 248 2004 ............................... 228 2005 ............................... 270 2006 ............................... 309 2007 ............................... 256 2008 ............................... 173 2009 ............................... 245 2010 ............................... 225 Note: (1) Total Value $11,972,951 12,120,393 7,201,082 21,764,150 7,324,078 8,590,337 10,373,299 5,831,383 11,071,582 6,471,958 Source: The City. The 2000 Census reported that the median value of the City’s owner-occupied homes was $67,400, which compares with $74,900 for the County and $82,500 for the State. The 2000 market value of specified owner-occupied units for the City, Boone County and the State was as follows: Specified Owner-Occupied Units(1) The City Value Number Percent Under $50,000 ........................ 906 27.04% $ 50,000 to $ 99,999 ............. 1,731 51.67% $100,000 to $149,999 ............. 510 15.22% $150,000 to $199,999 ............. 115 3.43% $200,000 to $299,999 ............. 80 2.39% $300,000 to $499,999 ............. 8 0.24% $500,000 to $999,999 ............. 0 0.00% $1,000,000 or more................. 0 0.00% Total ..................................... 3,350 100.00% Note: (1) The County Number Percent 1,460 23.59% 2,934 47.40% 1,113 17.98% 409 6.61% 241 3.89% 33 0.53% 0 0.00% 0 0.00% 6,190 100.00% Source: U.S. Census Bureau. 9 State of Iowa Number Percent 135,833 20.41% 301,591 45.32% 134,212 20.17% 53,228 8.00% 29,483 4.43% 8,938 1.34% 1,743 0.26% 414 0.06% 665,442 100.00% City of Boone, Boone County Iowa $6,915,000* General Obligation Capital Loan Notes, Series 2011 According to the 2000 Census, the City had a median household income of $38,179. This compares to $40,763 for the County and $39,469 for the State. The following table represents the distribution of household incomes for the City, Boone County and the State at the time of the 2000 Census. Household Income(1) The City Income Number Percent Under $10,000 ........................ 504 9.43% $ 10,000 to $ 14,999 ............. 427 7.99% $ 15,000 to $ 24,999 ............. 774 14.49% $ 25,000 to $ 34,999 ............. 759 14.21% $ 35,000 to $ 49,999 ............. 1,011 18.92% $ 50,000 to $ 74,999 ............. 1,265 23.68% $ 75,000 to $ 99,999 ............. 339 6.34% $100,000 to $149,999 ............. 182 3.41% $150,000 to $199,999 ............. 46 0.86% $200,000 or more ................... 36 0.67% Total ................................... 5,343 100.00% Note: (1) The County Number Percent 786 7.55% 644 6.18% 1,367 13.13% 1,556 14.94% 2,065 19.83% 2,526 24.25% 846 8.12% 423 4.06% 110 1.06% 92 0.88% 10,415 100.00% State of Iowa Number Percent 93,783 8.15% 77,333 6.72% 165,122 14.36% 168,713 14.67% 218,204 18.97% 242,022 21.04% 101,287 8.81% 55,998 4.87% 12,879 1.12% 14,856 1.29% 1,150,197 100.00% Source: U.S. Census Bureau. Retail Sales The Department of Revenue of the State of Iowa provides retail sales figures based on sales tax reports for years ending March 31. The Department of Revenue figures provide recent data to confirm trends in retail sales activity in the City. Retail Taxable Sales(1) Year Ending March 31 Taxable Sales 2001 .......................................................... $129,910,464 2002 .......................................................... 130,697,849 2003 .......................................................... 136,657,408 2004 .......................................................... 149,829,039 2005 .......................................................... 154,134,353 2006 .......................................................... 154,680,440 2007 .......................................................... 151,630,447 2008 .......................................................... 144,426,063 2009(3) ...................................................... 139,482,276 2010(3) ...................................................... 135,642,695 Annual Percent Change + (-) 0.46% 0.61% 4.56% 9.64% 2.87% 0.35% (1.97%) (4.75% (3.42%) (2.75%) Growth from 2001 to 2010 .................................................................................. 4.41% Notes: (1) (2) (3) Source: the Iowa Department of Revenue and Finance. Based on a 2000 taxable sales of $129,309,576. Beginning in fiscal year 2009 the numbers reflect a fiscal year ending June 30th instead of March 31st, as previously reported. LOCAL OPTION SALES TAX The City approved a 1% local option sales and service tax (“Local Option Tax”) at a special referendum. The Local Option Tax for the City became effective 1991 with actual tax monies received in the City’s 1991 fiscal year. The City’s Local Option Tax referendum question stated that proceeds of such tax would be designated 5% for Human Services; 20% property tax relief; and 75% for capital projects. The City has historically used its Local Option Tax receipts for the abatement of debt service on a portion of its general obligation debt. See “DEBT INFORMATION” herein. The City does plan to abate a portion of its annual debt service on the Notes from its Local Option Tax receipts. 10 City of Boone, Boone County Iowa $6,915,000* General Obligation Capital Loan Notes, Series 2011 Once approved, a Local Option Tax can only be repealed through a public referendum at which a majority voting approve the repeal or tax rate change. Contiguous municipalities are one unit for this purpose. If a Local Option Tax is not imposed county-wide, then the question of repeal is voted upon only by voters in such areas of a county where the tax has been imposed. A Local Option Tax may not be repealed within one year of the effective date. The State of Iowa Department of Revenue and Finance (the “Department”) administers collection and disbursement of all local option sales and services taxes in conjunction with administration of the State-wide sales, services and use tax presently assessed at 5%. The Department is required by statute to remit at least 95% of the estimated tax receipts to a county board of supervisors (for taxes imposed in unincorporated areas) and to each incorporated city. Such remittances are on a monthly basis. Once a year the Department reconciles its estimated payments and makes an adjustment payment or debit at the November 10 payment date. Remittance of collections within a county are based upon the following statutory formula for county-wide collections: 75 percent: Based on a pro rata share of population (the most recent certified federal census) of those incorporated or unincorporated areas in a county which have approved a Local Option Tax. 25 percent: Based on a pro rata share of total property tax dollars levied during the three year period beginning July 1, 1982, through June 30, 1985, for those incorporated or unincorporated areas of a county which have approved a Local Option Tax. Local Option Taxes are based on the same sales currently taxed by the state-wide 5% sales and services tax, with the present statutory exceptions of use taxes, lottery tickets, motor fuel and special fuels, certain farm machinery, industrial equipment, and the sale of automobiles, room rental already subject to a hotel/motel tax, or natural gas or electricity already subject to a city or county franchise fee or user fee. The following table shows the trend of City sales tax receipts. Local Option Tax Receipts(1) Local Fiscal Year Option Tax Ending June 30 Receipts 2000-01................................ $728,401 2001-02................................ 730,233 2002-03................................ 760,920 2003-04................................ 894,117 2004-05................................ 859,586 2005-06................................ 873,064 2006-07................................ 966,293 2007-08................................ 976,640 2008-09................................ 961,811 2009-10................................ 957,617 2010-11................................ 635,894(3) Notes: (1) (2) (3) Percent Change (7.99%)(2) 0.25% 4.20% 17.50% (3.86%) 1.57% 10.68% 1.07% (1.52%) (0.44%) N/A Source: the City. Percent change based on 1999-2000 Local Option Tax Receipt of $791,625. Local Option Sales Tax receipts collected through February 2011. 11 City of Boone, Boone County Iowa $6,915,000* General Obligation Capital Loan Notes, Series 2011 PLAN OF FINANCING Approximately $2,160,000 in proceeds of the Notes will be used to currently refund certain outstanding general obligation notes of the City (the “Refunded Notes”). The Refunded Notes are described below. General Obligation Capital Loan Notes, Series 2002 (Originally dated July 1, 2002) Refunded Outstanding Maturities Amount 6/1/11 .......................... $265,000 6/1/12 .......................... 275,000 Note: (1) Amount Refunded(1) $ 0 275,000 Redemption Price n/a 100% Maturity or Redemption Date(1) 06/01/11 06/01/11 Subject to Change General Obligation Capital Loan Notes, Series 2003 (Originally dated January 1, 2003) Refunded Outstanding Maturities Amount 6/1/11 .......................... $225,000 6/1/12 .......................... 230,000 6/1/13 .......................... 240,000 Note: (1) Amount Refunded(1) $ 0 230,000 240,000 Redemption Price n/a 100% 100% Maturity or Redemption Date(1) 06/01/11 06/01/11 06/01/11 Subject to Change General Obligation Capital Loan Notes, Series 2003A (Originally dated October 1, 2003) Refunded Outstanding Maturities Amount 6/1/11 .......................... $205,000 6/1/12 .......................... 215,000 6/1/13 .......................... 220,000 6/1/14 .......................... 230,000 6/1/15 .......................... 235,000 6/1/16 .......................... 245,000 Note: (1) Amount Refunded(1) $ 0 215,000 220,000 230,000 235,000 245,000 Redemption Price n/a 100% 100% 100% 100% 100% Maturity or Redemption Date(1) 06/01/11 06/01/11 06/01/11 06/01/11 06/01/11 06/01/11 Subject to Change General Obligation Capital Loan Notes, Series 2005 (Originally dated March 1, 2005) Refunded Outstanding Maturities Amount 6/1/11 .......................... $210,000 6/1/12 .......................... 45,000 6/1/13 .......................... 45,000 6/1/14 .......................... 50,000 6/1/15 .......................... 55,000 Note: (1) Amount Refunded(1) $ 0 45,000 45,000 50,000 55,000 Subject to Change 12 Redemption Price n/a 100% 100% 100% 100% Maturity or Redemption Date(1) 06/01/11 06/01/11 06/01/11 06/01/11 06/01/11 City of Boone, Boone County Iowa $6,915,000* General Obligation Capital Loan Notes, Series 2011 General Obligation Capital Loan Notes, Series 2005A (Originally dated October 1, 2005) Refunded Outstanding Maturities Amount 6/1/11 .......................... $35,000 6/1/12 .......................... 35,000 6/1/13 .......................... 35,000 Note: (1) Amount Refunded(1) $ 0 35,000 35,000 Redemption Price n/a 100% 100% Maturity or Redemption Date(1) 06/01/11 04/01/11 04/01/11 Subject to Change Approximately $3,000,000 of the Note proceeds will refinance the City’s outstanding General Obligation Capital Loan Anticipation Note, Series 2008 (the “Refinanced 2008 Note”) with permanent financing. The 2008 Note is expected to be redeemed at a redemption price of $3,000,000 on a redemption date of June 1, 2011. The remaining $1,755,000 will finance certain capital improvements in the City (the “Projects”) and pay the costs of issuance of the Notes. The Projects include improvements, extensions and equipping of the municipal sewer system, including SCADA improvements, Trunk Sewer Phase IIIB, NE Sanitary Sewer Drainage District improvements and grit removal system improvements. DEBT INFORMATION After issuance of the Notes and refunding the Refunded Notes, the City will have outstanding $18,600,000* aggregate principal amount of general obligation bonded indebtedness. Of the $18,600,000* principal amount, approximately $3,000,000 is expected to be paid in full on June 1, 2011. The City also has outstanding $3,765,000 in principal amount of water revenue notes, $10,159,000 outstanding principal in state revolving fund sewer bonds and $195,000 outstanding principal in state revolving water bonds. The City does not expect to issue any other additional bonded indebtedness in the foreseeable future. The City has a constitutional general obligation debt limit equal to 5% of Actual Valuation. For the January 1, 2009 levy year, the adjusted Actual Valuation of $607,948,806 (including tax increment valuation and excluding military exemption valuation) results in a total debt limit of $30,397,440. This limitation less the City’s outstanding general obligation indebtedness leaves a general obligation debt margin of $14,797,440*. General Obligation Debt Summary(1) (Principal Only) General Obligation Bonds: Series 2008....................................................................................................... $ 3,995,000 General Obligation Loan Notes: Series 2002....................................................................................................... Series 2003....................................................................................................... Series 2003A .................................................................................................... Series 2005....................................................................................................... Series 2005A .................................................................................................... Series 2006....................................................................................................... 540,000 700,000 1,350,000 405,000 105,000 3,750,000 General Obligation Bond Anticipation Notes: Series 2008....................................................................................................... 3,000,000(2) The Notes(3) ....................................................................................................... 6,915,000 Less: the Refunded Notes(3)............................................................................... (2,160,000) Less: the Refinanced 2008 Note ......................................................................... (3,000,000) Total General Obligation Debt(3)......................................................................... $15,600,000 Note: (1) (2) (3) Source: The City. Redeemed by the Notes on June 1, 2011. Subject to change. *Subject to change. 13 City of Boone, Boone County Iowa $6,915,000* General Obligation Capital Loan Notes, Series 2011 City Outstanding Bonded Debt(1) (Principal Only) Fiscal Year Total Ending Outstanding June 30 Notes & Bonds 2011 ...................... $ 4,945,000 2012 ...................... 1,850,000 2013 ...................... 1,625,000 2014 ...................... 1,405,000 2015 ...................... 1,460,000 2016 ...................... 1,460,000 2017 ...................... 540,000 2018 ...................... 560,000 2019 ...................... 0 2020 ...................... 0 2021 ...................... 0 2022 ...................... 0 2023 ...................... 0 2024 ...................... 0 2025 ...................... 0 2026 ...................... 0 2027 ...................... 0 2028 ...................... 0 2029 ...................... 0 2030 ...................... 0 Total .................... $13,845,000 Notes: (1) (2) The Notes(2) $ 0 830,000 760,000 480,000 485,000 450,000 215,000 220,000 225,000 235,000 245,000 255,000 265,000 280,000 290,000 300,000 320,000 335,000 355,000 370,000 $6,915,000 Less: The Refunded Notes(2) $(3,000,000) (805,000) (540,000) (280,000) (290,000) (245,000) 0 0 0 0 0 0 0 0 0 0 0 0 0 0 $(5,160,000) Total Cumulative Principal Retired(2) Amount Percent $ 1,945,000 12.74% 3,820,000 24.49% 5,665,000 36.31% 7,270,000 46.60% 8,925,000 57.21% 10,590,000 67.88% 11,345,000 72.72% 12,125,000 77.72% 12,350,000 79.17% 12,585,000 80.67% 12,830,000 82.24% 13,085,000 83.88% 13,350,000 85.58% 13,630,000 87.37% 13,920,000 89.23% 14,220,000 91.15% 14,540,000 93.21% 14,875,000 95.35% 15,230,000 97.63% 15,600,000 100.00% Total Debt(2) $1,945,000 1,875,000 1,845,000 1,605,000 1,655,000 1,665,000 755,000 780,000 225,000 235,000 245,000 255,000 265,000 280,000 290,000 300,000 320,000 335,000 355,000 370,000 $15,600,000 Source: the City. Subject to change Statement of General Obligation Bonded Indebtedness (As of March 16, 2011) City Actual Value, January 1, 2009 ......................................................................................................................... City Taxable Value, January 1, 2009 ...................................................................................................................... Total Direct Debt(2) .......................................... $15,600,000 Applicable Percent Amount 100.00% $15,600,000 Overlapping Debt: Boone County.......................................... $4,105,000 29.57% $1,213,849 Boone Community School District............ 9,465,000 75.89% 7,182,989 Des Moines Areas Community College.... 10,830,000 30.09% 3,258,747 Total Direct and Overlapping Debt(2)............................................... $30,255,585 $609,591,530 $342,484,784 Ratio to City Actual Value 2.56% Ratio to City Taxable Value 4.55% 0.20% 1.18% 0.53% 4.96% 0.35% 2.10% 0.95% 8.83% Per Capita (2010 Pop. 12,661) $1,232.13 $ 95.87 567.33 257.38 $2,152.72 Per Capita Actual Value................................................................................................................................................ $48,147.19 Per Capita Taxable Value ............................................................................................................................................. $27,050.37 Notes: (1) (2) Source: The City, County, Boone School District and Des Moines Area Community College. Subject to change. *Subject to change. PROPERTY TAX INFORMATION Property Tax Assessment In compliance with Section 441.21 of the Code of Iowa, as amended, the State Director of Revenue annually directs all county auditors to apply prescribed statutory percentages to the assessments of certain categories of real property. The final values, called Actual Valuation, are then adjusted by the County Auditor. Taxable Valuation subject to tax levy is then determined by the application of State determined rollback percentages, principally to residential property. 14 City of Boone, Boone County Iowa $6,915,000* General Obligation Capital Loan Notes, Series 2011 Beginning in 1978, the State required a reduction in Actual Valuation to reduce the impact of inflation on its residents. The resulting value is defined as the Taxable Valuation. Such rollback percentages may be changed in future years. Certain historical rollback percentages for residential valuation are as follows: Rollback Percentages for Residential Taxable Valuation(1) Fiscal Year Percentage 2002/03 ................................................... 51.6676% 2003/04 ................................................... 51.3874% 2004/05 ................................................... 48.4558% 2005/06 ................................................... 47.9642% 2006/07 ................................................... 45.9960% 2007/08 ................................................... 45.5596% 2008/09 ................................................... 44.0803% 2009/10 ................................................... 45.5893% 2010/11 ................................................... 46.9094% 2011/12 ................................................... 48.5299% Note: (1) Source: the City. Property is assessed on a calendar year basis. The assessments finalized as of January 1 of each year are applied to the following tax year. For example, the assessments finalized on January 1, 2009, are used to calculate tax liability for the tax year starting July 1, 2010 through June 30, 2011. Property Tax Collection Each county is required by State law to collect all tax levies within its jurisdiction and remit, before the fifteenth of each month, the amount collected through the last day of the preceding month to underlying units of government, including the City. Property tax payments are made at the office of each county treasurer in full or one-half by September 30 and March 31, pursuant to the Code of Iowa, Sections 445.36 and 445.37. Where the first half of any property tax has not been paid by October 1, such installment becomes delinquent. If the second installment is not paid, it becomes delinquent on April 1. Delinquent taxes and special assessments are subject to a penalty at the rate of one and one-half percent per month, to a maximum of eighteen percent per annum. If taxes are not paid when due, the property may be offered at the regular tax sale on the third Wednesday 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 the payment of taxes. A property owner may redeem from the regular tax sale, but failing redemption within two years, the tax sale purchaser is entitled to a deed which in general conveys the title free and clear of all liens except future installments of taxes. Actual (100%) Valuations for the City(1) Fiscal Year: 2006/07 Property Class Levy Year January 1: 2005 Residential ............................................................ $423,350,675 Agricultural ............................................................ 1,841,667 Commercial ........................................................... 77,636,947 Industrial ............................................................... 2,120,584 Railroad ................................................................. 742,722 Utilities without Gas and Electric(3) ....................... 2,873,124 Gas and Electric Utilities(3) ................................... 19,311,367 Total Valuation (Without TIF) ............................... $527,877,086 Tax Increment Finance (TIF) Valuation.................. 22,954,287 Total Valuation (With TIF) .................................... $550,831,373 Percent Change +(-) ............................................ 15.37%(2) Notes: (1) (2) (3) 2007/08 2006 $434,006,177 1,797,695 78,751,298 2,120,584 745,050 2,288,983 19,201,433 $538,911,220 22,112,035 $561,023,255 1.85% 2008/09 2007 $462,144,042 2,116,931 79,468,955 2,120,584 836,062 2,303,304 18,542,116 $565,837,414 21,064,396 $586,901,810 4.61% Source: Iowa Department of Management. Based on 2004 Actual Valuation of $527,877,086. See “PROPERTY TAX INFORMATION - Utility Property Tax Replacement” herein. 15 2009/10 2008 $470,350,529 2,086,876 81,834,510 2,246,745 854,110 2,276,727 19,350,630 $579,000,127 19,181,741 $598,181,868 1.92% 2010/11 2009 $478,044,923 3,201,400 89,235,233 15,470,897 985,175 2,371,079 21,925,547 $587,429,740 22,161,790 $609,591,530 1.91% City of Boone, Boone County Iowa $6,915,000* General Obligation Capital Loan Notes, Series 2011 For the 2009 levy year, the City’s Taxable Valuation was comprised of approximately 65% residential, 5% industrial, 26% commercial, 3% utilities and railroad and less than 1% agricultural and military exemption. Taxable (“Rollback”) Valuations for the City(1) Fiscal Year: 2006/07 Property Class Levy Year January 1: 2005 Residential ............................................................ $194,724,735 Agricultural ............................................................ 1,841,667 Commercial ........................................................... 76,892,659 Industrial ............................................................... 2,120,584 Railroad ................................................................. 736,416 Utilities without Gas and Electric(3) ....................... 2,873,124 Gas and Electric Utilities(3) ................................... 12,269,395 Less: Military Exemption ....................................... (1,642,724) Total Valuation (Without TIF) ............................... $289,815,856 Tax Increment Finance (TIF) Valuation.................. 22,954,287 Total Valuation (With TIF) .................................... $312,770,143 Percent Change +(-) ............................................ 9.85%(2) Notes: (1) (2) (3) 2007/08 2006 $197,731,552 1,797,695 78,751,298 2,120,584 745,050 2,288,983 11,798,811 (1,718,656) $293,515,317 22,112,035 $315,627,352 0.91% 2008/09 2007 $203,714,370 1,907,402 79,231,360 2,120,584 833,814 2,303,304 12,093,621 (1,694,580) $298,815,295 21,064,396 $321,574,271 1.88% 2009/10 2008 $214,429,594 1,958,676 81,892,495 2,246,745 854,110 2,276,727 10,920,049 (1,674,208) $312,904,188 19,181,741 $332,085,929 3.27% 2010/11 2009 $224,247,636 2,088,975 89,235,233 15,470,897 985,175 2,371,079 9,728,513 (1,642,724) $320,322,994 22,161,790 $342,484,784 3.13% Source: Iowa Department of Management. Based on 2004 Actual Valuation of $284,719,696. See “PROPERTY TAX INFORMATION - Utility Property Tax Replacement” herein. The following shows the trend in the City’s tax extensions and collections. Tax Extensions and Collections(1)(2) Levy Fiscal Amount Year Year Levied 1999....................... 2000-01 .................. $2,854,743 2000....................... 2001-02 .................. 3,297,765 2001....................... 2002-03 .................. 3,864,905 2002....................... 2003-04 .................. 3,871,666 2003....................... 2004-05 .................. 3,805,766 2004....................... 2005-06 .................. 3,655,175 2005....................... 2006-07 .................. 4,325,419 2006....................... 2007-08 .................. 4,630,285 2007....................... 2008-09 .................. 4,582,630 2008....................... 2009-10 .................. 4,762,814 2009....................... 2010-11 .................. 4,859,084 Notes: (1) (2) Amount Percent Collected(2) Collected $2,902,519 101.67% 3,341,945 101.34% 3,860,915 99.90% 3,833,421 99.01% 3,796,309 99.75% 3,685,445 100.83% 4,521,667 104.54% 4,595,454 99.25% 4,322,710 94.33% 4,884,178 102.34% --In Collection-- Source: The County. Does not include levies and collections for the City’s tax increment finance districts. Principal Taxpayers(1) Fiscal Year 2010/11 Taxable Taxpayer Name Business/Service Valuation(2) Interstate Power & Light Co. .................................................. Utility...................................................................... $8,783,434 Patterson Logistic Service, Inc. .............................................. Dental Supply ........................................................ $ 3,784,610 Forselles II Partners............................................................... Real Estate ............................................................ 3,155,545 Community Bank of Boone .................................................... Financial Institution ................................................ 3,093,709 Boone Eleven Cousins, LLC (Wal-Mart)................................. Real Estate ............................................................ 2,724,024 Hy-Vee Inc............................................................................. Grocery Store ........................................................ 2,599,485 Composite Technologies ....................................................... Technology ............................................................ 2,350,000 Qwest Corporation ................................................................. Telephone Utility .................................................... 2,275,911 Redeker Furniture Store ........................................................ Retail ..................................................................... 2,242,628 International Pipe Mach Corp................................................. Manufacturing ........................................................ 2,206,204 Moffitts Inc. ............................................................................ Car Dealership ....................................................... 1,806,010 Total ................................................................................................................................................................... $35,021,560 Ten Largest Taxpayers as Percent of City’s Taxable 2010/11 Taxable Valuation ($342,484,784) ....................... 10.23% Notes: (1) (2) Source: The County. Every effort has been made to seek out and report the largest taxpayers. However, many of the taxpayers listed contain multiple parcels and it is possible that some parcels and their valuations have been overlooked. 16 City of Boone, Boone County Iowa $6,915,000* General Obligation Capital Loan Notes, Series 2011 Levy Limits Normal municipal operations and maintenance costs are generally funded through the corporate property tax levy. Iowa State Code does not allow the municipal general fund to be taxed above $8.10 per thousand dollars of taxable value in any one year. In addition to the General Fund, there are several other tax funds that the City can create and use for specific purposes. The property tax rates for the City from levy year 2005 through levy year 2009 are shown below: Property Tax Rates: Levy Years 2005 – 2009 (1)(2) (Per $1,000 Actual Valuation) Fiscal Year: Levy Year: 2006/07 2005 2007/08 2006 2008/09 2007 2009/10 2008 2010/11 2009 The City: General Fund ..................................................... Debt Service ...................................................... Pension and Benefits ......................................... Others ................................................................ Total City Rate ................................................. $ 8.10000 1.40086 5.49078 0.56017 $15.55181 $ 8.10000 0.85422 6.07592 0.59566 $15.62580 $ 8.10000 0.33330 6.60435 0.58815 $15.62580 $ 8.10000 0.88934 5.99662 0.63984 $15.62580 $ 8.10000 1.45133 5.44310 0.63137 $15.62580 Others: Boone County .................................................... Boone Community School District ...................... Des Moines Area Community College ................ Other ................................................................. Total Rate Paid ................................................ $ 4.90894 17.97848 0.68688 1.64120 $40.76731 $ 5.34236 17.92497 0.60276 1.61262 $41.10851 $ 5.14749 18.06292 0.56386 1.55959 $40.95966 $ 5.22429 18.55059 0.56778 1.50215 $41.47061 $ 5.21405 18.87498 .56008 1.61138 $41.88629 Notes: (1) (2) Source: The County. Does not include the tax rate for agriculture. Utility Property Tax Replacement Beginning in 1999, the State replaced its previous property tax assessment procedure in valuing the property of entities involved primarily in the production, delivery, service and sale of electricity and natural gas with a replacement tax formula based upon the delivery of energy by these entities. Electric and natural gas utilities now pay replacement taxes to the State in lieu of property taxes. All replacement taxes are allocated among local taxing districts 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. Properties of these utilities are exempt from the levy of property tax by political subdivisions. 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. For the tax years following 1999, 2000, and 2001, each county treasurer computed a special utility property tax levy and levied a special utility property tax equal to the shortfall. However, this special tax was subject to a statutory sunset in 2002. 17 City of Boone, Boone County Iowa $6,915,000* General Obligation Capital Loan Notes, Series 2011 A task force was established through January 1, 2003 to study the effects of the utility replacement tax legislation on all local taxing districts and to report its findings to the General Assembly. Currently the utility replacement tax statute states that the utility replacement tax collected by the State and allocated among local taxing districts (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. However, utility property is not subject to the levy of property tax by political subdivisions, only the utility replacement tax and statewide property tax. 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. With the sunset of the special utility property tax levy to make up for the short fall in the replacement tax revenue for specific taxing districts, and pending any General Assembly action pursuant to the task force report and recommendations, 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 3% of the City’s tax base currently is utility property. Notwithstanding the foregoing, the City has the obligation to levy taxes against all the taxable property in the City sufficient to pay principal of and interest on the Notes. Tax Increment Financing The Code of Iowa currently authorizes the use of two types of tax increment financing by local taxing districts in the State of Iowa. The first type allows local governments to establish TIF districts to be established for the purposes of financing capital improvements constructed within the defined area which contribute to the urban redevelopment and economic development of the immediate area. The City has three TIF districts of this type with a total certified taxable valuation of $22,161,790 for levy year 2009. The second type of tax increment financing was authorized by state legislative action in the mid-1980’s. The area community colleges can establish TIF districts by contract with specific local businesses and industries to provide jobs training programming for new employees of existing expanding businesses or employees of new businesses. The revenues from these job training TIF districts then retires the debt incurred from the issuance of jobs training certificates which finance the cost of jobs training programming over a maximum of ten years. Upon payment of all jobs training certificates, the district dissolves and the incremental value from the new or expanded business reverts to the general tax base. FINANCIAL INFORMATION Budgeting The City Administrator presents the annual budget to the City Council for consideration. The Council holds hearings with the public prior to the budget being adopted. By March 15, the adopted budget is certified to the County Auditor who, in turn, certifies the City budget to the Iowa Department of Management. Investment Policy Each investment made by the City must be authorized by applicable law and the City’s Investment Policy (the “Policy”). Only the City Treasurer and others authorized by resolution of the City may invest City funds. The City Treasurer when investing or depositing public funds is required to exercise care, skill, prudence, and diligence. 18 City of Boone, Boone County Iowa $6,915,000* General Obligation Capital Loan Notes, Series 2011 According to the Policy, the primary objectives of all investment activities of the City are the following: • • • Safety. The safety and preservation of principal in the overall portfolio is the foremost investment objective. Liquidity. Maintaining the necessary liquidity to match expected liabilities. Return. Obtaining a reasonable return. Under the Policy, assets of the City may be invested in the following: • • • • • • • Interest bearing savings accounts, interest bearing money market accounts and interest bearing checking accounts at any bank, savings and loan association or credit union in the State of Iowa; Obligations of the United States government, its agencies and instrumentalities; Certificates of deposit and other evidences of deposit at federally insured Iowa depository institutions approved and secured pursuant to Chapter 453 of the Iowa Code; Iowa Public Agency Investment Trust (IPAIT); Commercial paper or other short-term corporate debt that matures within 270 days of purchase and is rated within the two highest classifications, as established by at least one of the standard rating services approved by the superintendent of banking; Repurchase agreements, provided that the underlying collateral consists of obligations of the United States government, its agencies and instrumentalities and the City takes delivery of the collateral either directly or through an authorized custodian; and An open-end management investment company registered with the Securities & Exchange Commission under the federal Investment Company Act of 1940, whose portfolio investments are limited to those instruments individually authorized in the Policy. Assets may not be invested in reverse repurchase agreements, futures and options. Assets of the City may not be invested pursuant to the trading of securities for speculation or short term gains or pursuant to a contract providing for the compensation of an agent or fiduciary based upon performance of invested assets. Under the Policy, the City’s assets shall be diversified to eliminate the risk of loss resulting from over concentration of assets in a specific maturity, a specific issuer or a specific class of securities. In addition to certain constraints that apply solely to commercial paper and other short-term corporate debt, the following constraints apply: • • • Maturities shall be selected to provide stability of income and reasonable liquidity; Liquidity practices shall ensure that disbursement dates and payroll dates are covered through maturing investments, marketable U. S. Treasury bills or cash on hand shall be used at all times; and Risks of market price volatility shall be controlled through maturity diversification so that aggregate price losses on instruments with maturities approaching one year shall not be greater than coupon interest and investment income received from the balance of the portfolio. The City Treasurer is required to submit a quarterly investment report stating the current portfolio terms of maturity, rates of return and other features summarizing all investment transactions that have occurred during the reporting period. This report must also compare the investment result with budgetary expectations. Financial Reports The City’s financial statements are audited annually by certified public accountants. The City’s financial statements are completed on a cash receipts and disbursements, which is a comprehensive basis of accounting other than generally accepted accounting principles. See APPENDIX A for more detail. 19 City of Boone, Boone County Iowa $6,915,000* General Obligation Capital Loan Notes, Series 2011 No Consent or Updated Information Requested of the Auditor The tables and excerpts (collectively, the “Excerpted Financial Information”) contained in this “FINANCIAL INFORMATION” section and in APPENDIX A are from the audited financial statements of the City, including the audited financial statements for the fiscal year ended June 30, 2010 (the “2010 Audit”). The 2010 Audit has been prepared by Houston & Seeman, P.C., Certified Public Accountants, Boone, Iowa (the “Auditor”), and approved by formal action of the City Council. The City has not requested the Auditor to update information contained in the Excerpted Financial Information; nor has the City requested that the Auditor consent to the use of the Excerpted Financial Information in this Official Statement. Other than as expressly set forth in this Official Statement, the financial information contained in the Excerpted Financial Information has not been updated since the date of the 2010 Audit. The inclusion of the Excerpted Financial Information in this Official Statement in and of itself is not intended to demonstrate the fiscal condition of the City since the date of the 2010 Audit. Questions or inquiries relating to financial information of the City since the date of the 2010 Audit should be directed to the City. Summary Financial Information The following tables are summaries and do not purport to be the complete audits, copies of which are available upon request. The City has approved a balanced budget for the General Fund for fiscal year 2011. The City expects it’s general fund balance to remain the same or increase slightly at the end of fiscal year 2011. The City certified a balanced budget for fiscal year 2012, and does not plan to use any cash balances in that budget. 20 City of Boone, Boone County Iowa $6,915,000* General Obligation Capital Loan Notes, Series 2011 Statement of Activities and Net Assets – Cash Basis Governmental Activities (1) 2006 Audited as of June 30 2008 2007 2009 2010 FUNCTIONS/PROGRAMS Governmental Activities: Public Safety ............................................................... $(3,258,529) Public Works ............................................................... (356,776) Health and Social Services .......................................... (40,000) Culture and Recreation................................................ (1,060,692) Community and Economic Development ..................... (275,411) General Government ................................................... (711,048) Debt Service................................................................ (2,232,387) Capital Projects ........................................................... (2,023,186) Total Governmental Activities ........................................ $(9,958,029) $ (3,003,308) (610,308) (44,516) (1,104,625) (487,911) (557,730) (4,051,421) (3,789,360) $(13,649,179) $(3,138,753) (456,540) (41,862) (999,077) (425,491) (547,109) (2,444,413)) (3,643,851) $(11,697,096) $ (2,694,746) (388,431) (50,888) (951,581) (245,730) (596,029) (2,124,799) (6,205,655) $(13,257,859) $ (2,901,624) (303,025) (47,650) (1,047,123) (924,040) (633,894) (2,340,887) (6,251,712) $(14,449,955) GENERAL RECEIPTS Property Tax Levied for: General Purposes ..................................................... Tax Increment Financing ........................................... Debt Service.............................................................. Special Assessments ................................................ Property Tax Replacement .......................................... Local Option Sales Tax ............................................... Hotel/Motel Tax ........................................................... Franchise Taxes .......................................................... Unrestricted Investment Earnings ................................ Bond Proceeds ............................................................ Bond Good Faith Deposit ............................................ Miscellaneous ............................................................. Sale of Assets ............................................................. Transfers ..................................................................... Total General Receipts and Transfers ........................... $3,464,833 1,200,875 395,690 146,013 0 873,064 125,766 152,126 70,083 233,063 116,800 636,395 1,262 281,382 $7,698,072 $ 3,982,186 890,451 435,876 116,018 0 966,291 117,058 177,062 108,984 5,952,244 0 652,113 125,000 363,050 $13,886,333 $ 4,215,451 887,670 269,917 191,568 0 976,428 129,542 158,501 107,196 4,921,038 0 439,543 0 330,420 $ 12,627,274 $ 4,524,853 921,749 109,100 98,777 0 1,004,222 132,326 174,048 103,557 3,878,305 0 410,881 0 353,736 $11,711,554 $ 4,504,355 847,236 290,603 94,365 0 934,432 107,614 140,420 52,947 6,958,621 0 997,187 0 748,232 $15,676,012 CHANGE IN CASH BASIS NET ASSETS .................... (2,259,957) 237,154 930,178 CASH BASIS NET ASSETS, BEGINNING OF YEAR... $4,201,320 $ 1,941,363 $ 2,303,517(2) $ 3,233,695 $ 1,687,390 CASH BASIS NET ASSETS, END OF YEAR ............... $1,943,363 $ 2,178,517 $ 3,233,695 $ 1,687,390 $ 2,913,447 CASH BASIS NET ASSETS: Restricted Streets....................................................................... Urban Renewal Purposes .......................................... Debt Service.............................................................. Other Purposes ......................................................... Unrestricted ................................................................. Total Cash Basis Net Assets ......................................... $ 631,892 643,428 85,120 1,427,071 (846,148) $1,941,363 $ $ $ $ Notes: (1) (2) 414,151 489,392 504,888 1,175,429 (405,343) $ 2,178,517 366,241 444,453 (347,267) 1,533,247 1,237,021 $ 3,233,695 (1,546,305) 451,767 489,022 (227,580) 2,333,587 (1,359,406) $ 1,687,390 Source: Audited financial statements of the City for the fiscal years ended June 30, 2006 through 2010. Restated. 21 1,226,057 532,914 547,195 (378,839) 2,590,508 (378,331) $ 2,913,447 City of Boone, Boone County Iowa $6,915,000* General Obligation Capital Loan Notes, Series 2011 General Fund Statement of Cash Receipts, Disbursements and Changes in Cash Balances(1) 2006 2007 RECEIPTS: Property Taxes ........................................................ Other City Tax ......................................................... Licenses and Permits .............................................. Use of Money and Property ..................................... Intergovernmental ................................................... Charges for Service ................................................. Special Assessments .............................................. Miscellaneous.......................................................... Total Receipts ....................................................... $2,139,804 0 242,983 115,469 159,794 163,651 12,651 137,092 $2,971,444 $2,324,036 99,160 293,117 151,429 202,902 177,824 6,008 123,442 $3,377,918 DISBURSEMENTS: Public Safety ........................................................... Public Works ........................................................... Culture and Recreation............................................ Community and Economic Development ................. General Government ............................................... Total Disbursements.............................................. $2,023,724 97,847 845,247 0 411,696 $3,378,514 Excess (Deficiency) of Receipts Over (Under) Disbursements ....................................... 2009 2010 $2,367,343 94,651 240,869 95,780 233,792 186,632 4,522 140,392 $3,363,981 $2,473,035 48,267 249,394 138,731 187,950 207,607 2,329 151,676 $3,458,989 $2,552,462 87,001 222,811 107,273 202,129 222,378 806 105,827 $3,500,687 $2,156,586 94,050 884,199 23,266 332,385 $3,490,486 $2,165,400 91,181 902,147 27,450 354,304 $3,540,482 $2,019,321 101,366 851,197 25,540 322,106 $3,319,530 $2,110,951 93,561 867,599 37,923 348,412 $3,458,446 $ (407,070) $ (112,568) $ (176,501) $ $ 42,241 $ $ $ $ $ 0 63,893 63,893 Other Financing Sources (Uses): Note Proceeds......................................................... Operating Transfers (Net) Total Other Financing Sources (Uses) ................... $ 0 334,000 334,000 Net Change in Cash Balances ................................. $ (73,070) Cash Balances Beginning of Year ........................... Cash Balances End of Year..................................... $ (214,922) $ (287,992) Note: (1) Audited as of June 30 2008 0 301,740 $ 301,740 $ 189,172 $ 287,992) $ (98,820) 139,459 0 317,126 $ 317,126 0 102,368 $ 102,368 $ $ 140,625 $ 241,827 $ 106,134 $ $ $ 41,805 $ 283,632 $ 283,632 $ 389,766 (98,820) 41,805 Source: The City's audited financial statements for fiscal years ending June 30, 2006 through 2010. EMPLOYEE RETIREMENT OBLIGATIONS In June 2004, the Governmental Accounting Standards Board (“GASB”) issued GASB 45, which address how state and local governments are required to account for and report their costs and obligations related to other postemployment benefits (“OPEB”), defined to include post- retirement healthcare benefits. GASB 45 Accounting and Financial Reporting by Employers for Postemployment Benefits Other Than Pension establishes financial reporting standards designed to measure, recognize and display OPEB costs. OPEB costs would become measurable on an accrual basis of accounting, and contribution rates (actuarially determined) would be prescribed for funding such costs. The provisions of GASB 45 do not require governments to fund their OPEBs. The Issuer may establish its OPEB liability at zero as of the beginning of the initial year of implementation; however the unfunded actuarial liability is required to be amortized over future periods. Consistent with Iowa Code section 509A.13, the City offers post-retirement medical/prescription drug benefits are available to all fulltime employees and their spouses of the Issuer who retire at the age of 55. Retirees under as 65 pay the same premium for medical/prescription drug benefits as active employees. See APPENDIX A – Note (4 &5) herein for further discussion of the City’s employee retirement and other postemployment benefit obligations. 22 City of Boone, Boone County Iowa $6,915,000* General Obligation Capital Loan Notes, Series 2011 REGISTRATION, TRANSFER AND EXCHANGE See also APPENDIX B, BOOK-ENTRY SYSTEM for information on registration, transfer and exchange of book-entry Notes. The Notes will be initially issued as book-entry Notes. The City shall cause books (the “Note Register”) for the registration and for the transfer of the Notes to be kept at the principal corporate trust office of the Registrar in Des Moines, Iowa. The City will authorize to be prepared, and the Registrar shall keep custody of, multiple Note blanks executed by the City for use in the transfer and exchange of Notes. Any Note may be transferred or exchanged, but only in the manner, subject to the limitations, and upon payment of the charges as set forth in the Note Resolution. Upon surrender for transfer or exchange of any Note at the principal corporate trust office of the Registrar, duly endorsed by, or accompanied by a written instrument or instruments of transfer in form satisfactory to the Registrar and duly executed by the registered owner or such owner’s attorney duly authorized in writing, the City shall execute and the Registrar shall authenticate, date and deliver in the name of the registered owner, transferee or transferees (as the case may be) a new fully registered Note or Notes of the same maturity and interest rate of authorized denominations, for a like aggregate principal amount. The execution by the City of any fully registered Note shall constitute full and due authorization of such Note, and the Registrar shall thereby be authorized to authenticate, date and deliver such Note, provided, however, the principal amount of outstanding Notes of each maturity authenticated by the Registrar shall not exceed the authorized principal amount of Notes for such maturity less Notes previously paid. The Registrar shall not be required to transfer or exchange any Note following the close of business on the 15th day of the month next preceding any interest payment date on such Note, nor to transfer or exchange any Note after notice calling such Note for redemption has been mailed, nor during a period of fifteen days next preceding mailing of a notice of redemption of any Notes. The person in whose name any Note shall be registered shall be deemed and regarded as the absolute owner thereof for all purposes, and payment of the principal of or interest on any Notes shall be made only to or upon the order of the registered owner thereof or such owner’s legal representative. All such payments shall be valid and effectual to satisfy and discharge the liability upon such Note to the extent of the sum or sums so paid. No service charge shall be made for any transfer or exchange of Notes, but the City or the Registrar may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any transfer or exchange of Notes. TAX MATTERS Tax Exemption Federal tax law contains a number of requirements and restrictions that apply to the Bonds, including investment restrictions, periodic payments of arbitrage profits to the United States, requirements regarding the proper use of Bond proceeds and facilities financed with Bond proceeds, and certain other matters. The Issuer has covenanted to comply with all requirements that must be satisfied in order for the interest on the Bonds to be excludable from gross income for federal income tax purposes. Failure to comply with certain of such covenants could cause interest on the Bonds to become includable in gross income for federal income tax purposes retroactively to the date of issuance of the Bonds. Subject to the Issuer’s compliance with the above-referenced covenants, under present law, in the opinion of Bond Counsel, interest on the Bonds (a) is excludable from gross income of the owners thereof for federal income tax purposes; (b) is not included as an item of tax preference in computing the federal alternative minimum tax imposed on individuals and corporations; and (c) is not taken into account in computing an adjustment used in determining the federal alternative minimum tax for certain corporations. 23 City of Boone, Boone County Iowa $6,915,000* General Obligation Capital Loan Notes, Series 2011 The interest on the Bonds is not exempt from present Iowa income taxes. Ownership of the Bonds 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 Bonds. Prospective purchasers of the Bonds should consult their tax advisors regarding the applicability of any such state and local taxes. Prospective purchasers of the Bonds should be aware that ownership of the Bonds may result in collateral federal income tax consequences to certain taxpayers, including, without limitation, corporations subject to the branch profits tax, financial institutions, certain insurance companies, certain S corporations, individual recipients of Social Security or Railroad Retirement benefits and taxpayers who may be deemed to have incurred (or continued) indebtedness to purchase or carry tax-exempt obligations. Bond Counsel will not express any opinion as to such collateral tax consequences. Prospective purchasers of the Bonds should consult their tax advisors as to collateral federal income tax consequences. Qualified Tax-Exempt Obligations The Issuer will designate the Bonds as “qualified tax-exempt obligations” under the exception provided in Section 265(b)(3) of the Internal Revenue Code of 1986, as amended (the “Code”), 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 Bonds The initial public offering price of certain Bonds (the "Discount Bonds") may be less than the amount payable on such Bonds at maturity. An amount equal to the difference between the initial public offering price of a Discount Bond (assuming that a substantial amount of the Discount Bonds of that maturity are sold to the public at such price) and the amount payable at maturity constitutes original issue discount to the initial purchaser of such Discount Bond. A portion of such original issue discount allocable to the holding period of such Discount Bond by the initial purchaser will, upon the disposition of such Discount Bond (including by reason of its payment at maturity), be treated as interest excludable from gross income, rather than as taxable gain, for federal income tax purposes, on the same terms and conditions as those for other interest on the Bonds described above under "Tax Exemption". Such interest is considered to be accrued actuarially in accordance with the constant interest method over the life of a Discount Bond, taking into account the semiannual compounding of accrued interest, at the yield to maturity on such Discount Bond and generally will be allocated to an original purchaser in a different amount from the amount of the payment denominated as interest actually received by the original purchaser during the tax year. However, such interest may be required to be taken into account in determining the amount of the branch profits tax applicable to certain foreign corporations doing business in the United States, even though there will not be a corresponding cash payment. In addition, the accrual of such interest may result in certain other collateral federal income tax consequences to, among others, financial institutions, life insurance companies, property and casualty insurance companies, S corporations with "subchapter C" earnings and profits, individual recipients of Social Security or Railroad Retirement benefits, and taxpayers who may be deemed to have incurred or continued indebtedness to purchase or carry, or who have paid or incurred certain expenses allocable to, tax-exempt obligations. Moreover, in the event of the redemption, sale or other taxable disposition of a Discount Bond by the initial owner prior to maturity, the amount realized by such owner in excess of the basis of such Discount Bond in the hands of such owner (adjusted upward by the portion of the original issue discount allocable to the period for which such Discount Bond was held) is includable in gross income. Owners of Discount Bonds should consult with their own tax advisors with respect to the determination of accrued original issue discount on Discount Bonds for federal income tax purposes and with respect to the state and local tax consequences of owning and disposing of Discount Bonds. It is possible that, under applicable provisions governing determination of state and local income taxes, accrued interest on Discount Bonds may be deemed to be received in the year of accrual even though there will not be a corresponding cash payment. 24 City of Boone, Boone County Iowa $6,915,000* General Obligation Capital Loan Notes, Series 2011 The initial public offering price of certain Bonds (the "Premium Bonds") may be greater than the amount of such Bonds at maturity. An amount equal to the difference between the initial public offering price of a Premium Bond (assuming that a substantial amount of the Premium Bonds of that maturity are sold to the public at such price) and the amount payable at maturity constitutes premium to the initial purchaser of such Premium Bonds. The basis for federal income tax purposes of a Premium Bond in the hands of such initial purchaser must be reduced each year by the amortizable bond premium, although no federal income tax deduction is allowed as a result of such reduction in basis for amortizable bond premium. Such reduction in basis will increase the amount of any gain (or decrease the amount of any loss) to be recognized for federal income tax purposes upon a sale or other taxable disposition of a Premium Bond. The amount of premium which is amortizable each year by an initial purchaser is determined by using such purchaser's yield to maturity. Purchasers of the Premium Bonds should consult with their own tax advisors with respect to the determination of amortizable bond premium on Premium Bonds for federal income tax purposes and with respect to the state and local tax consequences of owning and disposing of Premium Bonds. 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 Bonds. If an audit is commenced, under current procedures the Service may treat the Issuer as a taxpayer and the bondholders may have no right to participate in such procedure. The commencement of an audit could adversely affect the market value and liquidity of the Bonds until the audit is concluded, regardless of the ultimate outcome. Payments of interest on, and proceeds of the sale, redemption or maturity of, tax-exempt obligations, including the Bonds, are in certain cases required to be reported to the Service. Additionally, backup withholding may apply to any such payments to any Bond owner who fails to provide an accurate Form W-9 Request for Taxpayer Identification Number and Certification, or a substantially identical form, or to any Bond 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. There are or may be pending in the Congress of the United States, legislative proposals, including some that carry retroactive effective dates, that, if enacted, could alter or amend the federal tax matters referred to in this section or affect the market value of the Bonds. It cannot be predicted whether or in what form any such proposal might be enacted or whether, if enacted, it would apply to bonds issued prior to enactment. Prospective purchasers of the Bonds should consult their own tax advisors regarding any pending or proposed tax legislation. Bond Counsel expresses no opinion regarding any pending or proposed federal or state tax legislation. Opinions 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 Issuer 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. See “APPENDIX D” for a form of Bond Counsel opinion for the Notes. 25 City of Boone, Boone County Iowa $6,915,000* General Obligation Capital Loan Notes, Series 2011 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; and (iii) that the initial public offering price does not exceed their fair market value of the Notes on the sale date. The Purchaser will also be required to provide a certificate in a form acceptable to Bond Counsel at closing confirming the information required by this paragraph. CONTINUING DISCLOSURE The City will enter into a Continuing Disclosure Undertaking (the “Undertaking”) for the benefit of the beneficial owners of the Notes to send certain information annually and to provide notice of certain events to the Municipal Securities Rulemaking Board (“MSRB”) pursuant to the requirements of Section (b)(5) of Rule 15c2-12, as amended, (the “Rule”) adopted by the Securities and Exchange Commission (the “Commission”) under the Securities Exchange Act of 1934. The information to be provided on an annual basis, the events which will be noticed on an occurrence basis and a summary of other terms of the Undertaking, including termination, amendment and remedies, are set forth in APPENDIX C – FORM OF CONTINUING DISCLOSURE CERTIFICATE. The City believes it has substantially complied with those undertakings previously entered into by it pursuant to the Rule. A failure by the City to comply with the Undertaking will not constitute a default under the Note Resolution and beneficial owners of the Notes are limited to the remedies described in the Undertaking. See APPENDIX C – FORM OF CONTINUING DISCLOSURE CERTIFICATE. A failure by the City to comply with the Undertaking must be reported in accordance with the Rule and must be considered by any broker, dealer or municipal securities dealer before recommending the purchase or sale of the Notes in the secondary market. Consequently, such a failure may adversely affect the transferability and liquidity of the Notes and their market price. Bond Counsel expresses no opinion as to whether the Undertaking complies with the requirements of Section (b)(5) of the Rule. OPTIONAL REDEMPTION Notes due June 1, 2012 - 2020, inclusive, are non-callable. Notes due June 1, 2021 - 2030, inclusive, are callable in whole or in part on any date on or after June 1, 2020, at a price of par and accrued interest. If less than all the Notes are called, they shall be redeemed in such principal amounts and from such maturities as determined by the City and within any maturity by lot. The Note Registrar will give notice of redemption, identifying the Notes (or portions thereof) to be redeemed, by mailing a copy of the redemption notice by first class mail not less than thirty (30) days nor more than sixty (60) days prior to the date fixed for redemption to the registered owner of each Note (or portion thereof) to be redeemed at the address shown on the registration books maintained by the Note Registrar. Unless moneys sufficient to pay the redemption price of the Notes to be redeemed are received by the Note Registrar prior to the giving of such notice of redemption, such notice may, at the option of the City, state that said redemption will be conditional upon the receipt of such moneys by the Note Registrar on or prior to the date fixed for redemption. If such moneys are not received, such notice will be of no force and effect, the City will not redeem such Notes, and the Note Registrar will give notice, in the same manner in which the notice of redemption has been given, that such moneys were not so received and that such Notes will not be redeemed. Otherwise, prior to any redemption date, the City will deposit with the Note Registrar an amount of money sufficient to pay the redemption price of all the Notes or portions of Notes which are to be redeemed on the date. 26 City of Boone, Boone County Iowa $6,915,000* General Obligation Capital Loan Notes, Series 2011 Subject to the provisions for a conditional redemption described above, notice of redemption having been given as described above and in the Note Resolution, the Notes or portions of Notes so to be redeemed will, on the redemption date, become due and payable at the redemption price therein specified, and from and after such date (unless the City shall default in the payment of the redemption price) such Notes or portions of Notes shall cease to bear interest. Upon surrender of such Notes for redemption in accordance with said notice, such Notes will be paid by the Note Registrar at the redemption price. LITIGATION There is no litigation of any nature now pending or threatened restraining or enjoining the issuance, sale, execution or delivery of the Notes, or in any way contesting or affecting the validity of the Notes or any proceedings of the City taken with respect to the issuance or sale thereof. LEGAL MATTERS The Notes are subject to approval as to certain legal matters by Ahlers & Cooney, P.C., Des Moines, Iowa, as Bond Counsel. Bond Counsel has not participated in the preparation of this Official Statement except for guidance concerning the section regarding “TAX MATTERS,” 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 Official Statement, and will express no opinion with respect thereto. The legal opinions to be delivered concurrently with the delivery of the Notes express 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. OFFICIAL STATEMENT AUTHORIZATION This Official Statement has been authorized for distribution to prospective purchasers of the Notes. All statements, information, and statistics herein are believed to be correct but are not guaranteed by the consultants or by the City, and all expressions of opinion, whether or not so stated, are intended only as such. INVESTMENT RATING The City has supplied certain information and material concerning the Notes and the City to the rating service shown on the cover page as part of its application for investment rating on the Notes. Generally, such rating service bases its ratings on such information and material, and also on such investigations, studies and assumptions that they may undertake independently. There is no assurance that a rating for the Bonds will continue for any given period of time or that it may not be lowered or withdrawn entirely by such rating service if, in their judgment, circumstances so warrant. Any such downward change in or withdrawal of such rating may have an adverse effect on the secondary market price of the Notes. An explanation of the significance of the investment rating may be obtained from the rating agency: Moody’s Investors Service, 7 World Trade Center at 250 Greenwich Street, New York, New York 10007, telephone 212-553-1658. 27 City of Boone, Boone County Iowa $6,915,000* General Obligation Capital Loan Notes, Series 2011 UNDERWRITING The Notes were offered for sale by the City at a public, competitive sale on April 19, 2011. The best bid submitted at the sale was submitted by ____________________ (the “Underwriter”). The City awarded the contract for sale of the Notes to the Underwriter at a price of $___________. The Underwriter has represented to the City that the Notes have been subsequently re-offered to the public initially at the yields or prices set forth in the addendum to this Official Statement. FINANCIAL ADVISOR The City has engaged Speer Financial, Inc. as financial advisor (the “Financial Advisor”) in connection with the issuance and sale of the Notes. The Financial Advisor will not participate in the underwriting of the Notes. The financial information included in the Official Statement has been compiled by the Financial Advisor. Such information does not purport to be a review, audit or certified forecast of future events and may not conform with accounting principles applicable to compilations of financial information. The Financial Advisor is not obligated to undertake any independent verification of or to assume any responsibility for the accuracy, completeness or fairness of the information contained in this Official Statement, nor is the Financial Advisor obligated by the City’s continuing disclosure undertaking. CERTIFICATION We have examined this Official Statement dated April 7, 2011, for the $6,915,000* General Obligation Capital Loan Notes, Series 2011, believe it to be true and correct and will provide to the purchaser of the Notes at the time of delivery a certificate confirming to the purchaser that to the best of our knowledge and belief information in the Official Statement was at the time of acceptance of the proposal for the Notes and, including any addenda thereto, was at the time of delivery of the Notes true and correct in all material respects and does not include any untrue statement of a material fact, nor does it omit the statement of any material fact required to be stated therein, or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. /s/ JOHN SLIGHT Mayor CITY OF BOONE Boone County, Iowa /s/ LUKE NELSON City Administrator CITY OF BOONE Boone County, Iowa *Subject to change. The City reserves the right to change the principal amount of the Notes to effect the City’s desired refunding savings, but any such change shall not increase the principal amount of the Notes above $6,915,000. Any such change will be in increments of $5,000 and may be made in any of the maturities. In such event, the purchase price of the Notes will be adjusted proportionately allowing the same dollar amount of gross spread per $1,000 Note (assuming a delivery date of May 18, 2011). 28 City of Boone, Boone County Iowa $6,915,000* General Obligation Capital Loan Notes, Series 2011 APPENDIX A CITY OF BOONE BOONE COUNTY, IOWA THE CITY HAS NOT REQUESTED ITS AUDITOR TO CONSENT TO THE INCLUSION OF SUCH EXCERPTS IN THIS OFFICIAL STATEMENT EXCERPTS FROM THE AUDITED FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDING JUNE 30, 2010 A-1 City of Boone, Boone County Iowa $6,915,000* General Obligation Capital Loan Notes, Series 2011 A-2 City of Boone, Boone County Iowa $6,915,000* General Obligation Capital Loan Notes, Series 2011 A-3 City of Boone, Boone County Iowa $6,915,000* General Obligation Capital Loan Notes, Series 2011 A-4 City of Boone, Boone County Iowa $6,915,000* General Obligation Capital Loan Notes, Series 2011 A-5 City of Boone, Boone County Iowa $6,915,000* General Obligation Capital Loan Notes, Series 2011 A-6 City of Boone, Boone County Iowa $6,915,000* General Obligation Capital Loan Notes, Series 2011 A-7 City of Boone, Boone County Iowa $6,915,000* General Obligation Capital Loan Notes, Series 2011 A-8 City of Boone, Boone County Iowa $6,915,000* General Obligation Capital Loan Notes, Series 2011 APPENDIX B DESCRIBING BOOK-ENTRY-ONLY ISSUANCE 1. The Depository Trust Company (“DTC”), New York, New York, will act as securities depository for the Notes (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 fullyregistered 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. 2. 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 1 7A 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 (“Direct Participants”) deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book-entry transfers and pledges between Direct Participants’ accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation (“DTCC”). DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non-U.S. securities 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 (“Indirect Participants”). DTC has Standard & Poor’s highest rating: AAA. 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. 3. 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 (“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. 4. 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 effect 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. B-1 City of Boone, Boone County Iowa $6,915,000* General Obligation Capital Loan Notes, Series 2011 5. 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. 6. 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. 7. 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). 8. 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 the Paying 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, the Paying Agent, or the City, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of redemption proceeds, distributions, and dividend payments to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the City or the Paying 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. 9. A Beneficial Owner shall give notice to elect to have its Securities purchased or tendered, through its Participant, to any 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 any 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 any Tender/Remarketing Agent’s DTC account. 10. DTC may discontinue providing its services as depository with respect to the Securities at any time by giving reasonable notice to the City or the Paying Agent. Under such circumstances, in the event that a successor depository is not obtained, Security certificates are required to be printed and delivered. 11. 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. 12. 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. B-2 City of Boone, Boone County Iowa $6,915,000* General Obligation Capital Loan Notes, Series 2011 APPENDIX C CONTINUING DISCLOSURE CERTIFICATE This Continuing Disclosure Certificate (the "Disclosure Certificate") is executed and delivered by the City of Boone, State of Iowa (the "Issuer"), in connection with the issuance of $6,915,000 1 General Obligation Capital Loan Notes, Series 2011 (the "Notes") dated May 15, 2011. The Notes are being issued pursuant to a Resolution of the Issuer approved on May 2, 2011 (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 Report" shall mean any Annual Report provided 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, 1900 Duke Street, Suite 600, Alexandria, VA 22314. "National Repository" shall mean the MSRB's Electronic Municipal Market Access website, a/k/a "EMMA" (emma.msrb.org). "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. 1 Preliminary, subject to change. C-1 City of Boone, Boone County Iowa $6,915,000* General Obligation Capital Loan Notes, Series 2011 SECTION 3. Provision of Annual Reports. (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 the report for the 2010/2011 fiscal year, provide to the National Repository an Annual Report which is consistent with the requirements of Section 4 of this Disclosure Certificate. The Annual Report must be submitted in such format as is required by the MSRB (currently in "searchable PDF" format). The Annual Report may be submitted as a single document or as separate documents comprising a package. The Annual Report 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 Report and later than the date required above for the filing of the Annual Report 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 an Annual Report 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 the Annual Report 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 Report has been filed pursuant to this Disclosure Certificate, stating the date it was filed. SECTION 4. Content of Annual Reports. The Issuer's Annual Report shall contain or incorporate by reference the following: (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 the Annual Report is required to be filed pursuant to Section 3(a), the Annual Report shall contain unaudited financial statements in a format similar to the financial statements contained in the final Official Statement, and the audited financial statements shall be filed in the same manner as the Annual Report when they become available. b) A table, schedule or other information contained in the final Official Statement under the captions "Socioeconomic Information – Retail Sales and Local Option Sales Tax", "Property Tax Information", "Debt Information", and "Financial Information". 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 5, 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; C-2 City of Boone, Boone County Iowa $6,915,000* General Obligation Capital Loan Notes, Series 2011 (1) Principal and interest payment delinquencies; (2) Non-payment related defaults, if material; (3) Unscheduled draws on debt service reserves reflecting financial difficulties; (4) Unscheduled draws on credit enhancements relating to the Notes reflecting financial difficulties; (5) Substitution of credit or liquidity providers, or their failure to perform; (6) 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 tax-exempt status of the Series Notes, or material events affecting the tax-exempt status of the Notes; (7) Modifications to rights of Holders of the Notes, if material; (8) Note calls (excluding sinking fund mandatory redemptions), if material, and tender offers; (9) Defeasances of the Notes; (10) Release, substitution, or sale of property securing repayment of the Notes, if material; (11) Rating changes on the Notes; (12) Bankruptcy, insolvency, receivership or similar event of the Issuer; (13) 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 (14) 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. If such termination occurs prior to the final maturity of the Notes, the Issuer shall give notice of such termination in the same manner as for a Listed Event under Section 5(c). C-3 City of Boone, Boone County Iowa $6,915,000* General Obligation Capital Loan Notes, Series 2011 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 Report, 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 Report 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 Report 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 Report or 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 Report 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. C-4 City of Boone, Boone County Iowa $6,915,000* General Obligation Capital Loan Notes, Series 2011 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 _______________, 2011. CITY OF BOONE, STATE OF IOWA By: Mayor ATTEST: By: City Clerk EXHIBIT A NOTICE TO NATIONAL REPOSITORY OF FAILURE TO FILE ANNUAL REPORT Name of Issuer: City of Boone, Iowa. Name of Note Issue: $6,915,000 2 General Obligation Capital Loan Notes, Series 2011 Dated Date of Issue: May 15, 2011 NOTICE IS HEREBY GIVEN that the Issuer has not provided an Annual Report 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 Report will be filed by ____________________. Dated: __________ day of _______________, 20___. CITY OF BOONE, STATE OF IOWA By: Its: 2 Preliminary, subject to change. C-5 City of Boone, Boone County Iowa $6,915,000* General Obligation Capital Loan Notes, Series 2011 APPENDIX D 100 COURT AVENUE, SUITE 600 DES MOINES, IOWA 50309-2231 PHONE: 515-243-7611 FAX: 515-243-2149 WWW.AHLERSLAW.COM * 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 Boone, State of Iowa (the "Issuer"), relating to the issuance of General Obligation Capital Loan Notes, Series 2011, by the City (the "Notes"), dated May 15, 2011, in the denomination of $5,000 or multiples thereof, in the aggregate amount of $6,915,000 3. 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. We have not been engaged to or undertaken to review the accuracy, completeness or sufficiency of the official statement or any offering material relating to the Notes and we express no opinion relating thereto. 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. 3 The Loan Agreement and Notes are valid and binding general obligations of the Issuer. Preliminary, subject to change. D-1 City of Boone, Boone County Iowa $6,915,000* General Obligation Capital Loan Notes, Series 2011 3. All taxable property in the territory of the Issuer is subject to ad valorem taxation without limitation as to rate or amount to pay the Notes. Taxes have been levied by the Resolution for the payment of the Notes and the Issuer is required by law to include in its annual tax levy the principal and interest coming due on the Notes to the extent the necessary funds are not provided from other sources. 4. The interest on the Notes is excluded from gross income for federal income tax purposes and interest on the Notes is not an item of tax preference for purposes of 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 alternative minimum tax imposed on such corporations. We express no opinion regarding other federal income tax consequences caused by the receipt or accrual of interest on the Notes. For the purpose of rendering the opinion set forth in paragraph numbered 4 above, we have assumed compliance by the Issuer with requirements of the Internal Revenue Code of 1986, as amended, that must be met subsequent to the issuance of the Notes in order that interest thereon be and remain excluded from gross income for federal income tax purposes. Failure to comply with such requirements could cause the interest on the Notes to be so included in gross income retroactive to the date of issuance of the Notes. The Issuer has covenanted to comply with such requirements. It is to be understood that the rights of the holders of the Notes and the enforceability thereof may be subject to bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors' rights heretofore or hereafter enacted to the extent constitutionally applicable and that their enforcement may also be subject to the exercise of judicial discretion in appropriate cases. Respectfully submitted, D-2 OFFICIAL BID FORM City of Boone 923 8th Street Boone, IA 50036-0550 Facsimile: (515) 433-0630 April 19, 2011 Speer Financial, Inc. Facsimile: (319) 291-8628 Dear City Council Members: For the $6,915,000* General Obligation Capital Loan Notes, Series 2011, (the “Notes”) of the City of Boone, Boone County, Iowa, as described in the annexed Official Terms of Offering, which is expressly made a part of this bid, we will pay you $___________________ (no less than $6,859,680). The Notes are to bear interest at the following respective rates (each rate a multiple of 1/8 or 1/100 of 1%). MATURITIES* – JUNE 1 $830,000 ............ 2012 % $220,000 ............ 2018 % $290,000 ............ 2025 % 760,000 ............ 2013 % 225,000 ............ 2019 % 300,000 ............ 2026 % 480,000 ............ 2014 % 235,000 ............ 2020 % 320,000 ............ 2027 % 485,000 ............ 2015 % 245,000 ............ 2021 % 335,000 ............ 2028 % 450,000 ............ 2016 % 255,000 ............ 2022 % 355,000 ............ 2029 % 215,000 ............ 2017 % 265,000 ............ 2023 % 370,000 ............ 2030 % 280,000 ............ 2024 % *Subject to change. The City reserves the right to change the principal amount of the Notes to effect the City’s desired refunding savings, but any such change shall not increase the principal amount of the Notes above $6,915,000. Any such change will be in increments of $5,000 and may be made in any of the maturities. In such event, the purchase price of the Notes will be adjusted proportionately allowing the same dollar amount of gross spread per $1,000 Note (assuming a delivery date of May 18, 2011). *Any consecutive maturities may be aggregated into no more than five term notes at the option of the bidder, in which case the mandatory redemption provisions shall be on the same schedule as above. Maturities: ____________ Term Maturity _______ Maturities:___________ Term Maturity _______ Maturities: ____________ Term Maturity _______ Maturities:___________ Term Maturity _______ Maturities: ____________ Term Maturity _______ The Notes are to be executed and delivered to us in accordance with the terms of this bid accompanied by the approving legal opinion of Ahlers & Cooney, P.C., Des Moines, Iowa. The City will pay for the legal opinion. The Purchaser agrees to apply for CUSIP numbers within 24 hours and pay the fee charged by the CUSIP Service Bureau and will accept the Notes with the CUSIP numbers as entered on the Notes. As evidence of our good faith, we have wire transferred or enclose herewith a check or Surety Bond payable to the order of the Treasurer of the City in the amount of TWO PERCENT OF PAR (the “Deposit”) under the terms provided in your Official Terms of Offering. Attached hereto is a list of members of our account on whose behalf this bid is made. Form of Deposit Check One: Account Manager Information Bidders Option Insurance We have purchased insurance from: Name Certified/Cashier’s Check Financial Surety Bond Wire Transfer [] [] [] Address Name of Insurer (Please fill in) By Amount: $138,300 _____________________ City State/Zip Premium: _____________ Direct Phone Maturities: (Check One) FAX Number ____ _______Years Email Address ____ All The foregoing bid was accepted and the Notes sold by resolution of the City on April 19, 2011, and receipt is hereby acknowledged of the good faith Deposit which is being held in accordance with the terms of the annexed Official Terms of Offering. ATTEST: CITY OF BOONE, BOONE COUNTY, IOWA City Clerk Mayor ---------------NOT PART OF THE BID--------------(Calculation of true interest cost) Gross Interest $ Less Premium/Plus Discount $ True Interest Cost $ True Interest Rate % TOTAL NOTE YEARS 59,902.33 AVERAGE LIFE 8.663 Years City of Boone, Boone County, Iowa $6,915,000* General Obligation Capital Loan Notes, Series 2011 _________________________________ THIS PAGE INTENTIONALLY LEFT BLANK _________________________________ City of Boone, Boone County, Iowa $6,915,000* General Obligation Capital Loan Notes, Series 2011 Page 1 f 5 OFFICIAL TERMS OF OFFERING $6,915,000* CITY OF BOONE Boone County, Iowa General Obligation Capital Loan Notes, Series 2011 The City of Boone, Boone County, Iowa (the “City”), will receive electronic bids on the SpeerAuction (“SpeerAuction”) website address “www.SpeerAuction.com” for its $6,915,000* General Obligation Capital Loan Notes, Series 2011 (the “Notes”), on an all or none basis between 10:30 A.M. and 11:00 A.M., C.D.T., Tuesday, April 19, 2011. To bid electronically, bidders must have: (1) completed the registration form on the SpeerAuction website, and (2) requested and received admission to the City’s sale (as described below). The City will receive sealed bids for its $6,915,000* General Obligation Capital Loan Notes, Series 2011, on an all or none basis, at City Hall, 923 8th St.., Boone, IA 50036-0550 until 11:00 A.M., C.D.T., Tuesday, April 19, 2011. The City will also receive facsimile bids at (319) 291-8628 or (515) 433-0630 for the Notes, on an all or none basis until 11:00 A.M., C.D.T., Tuesday, April 19, 2011. Upon receipt, facsimile and electronic bids will be sealed and treated as sealed bids, and along with all other electronic and sealed bids will be publicly opened and read. Award will be made or all bids rejected at a meeting of the City Council on that date. The City reserves the right to change these Official Terms of Offering. Any such change shall be made not less than twenty-four (24) hours prior to the revised date and time for receipt of the bids for the Notes and shall be communicated by publishing the changes in the Amendments Page of the SpeerAuction webpage and through Thompson Municipal News. The Notes are general obligations payable as to both principal and interest from ad valorem taxes levied against all taxable property of the City without limitation as to rate or amount, all except as limited by bankruptcy, insolvency, moratorium, reorganization and other similar laws relating to the enforcement of creditors’ rights generally and except that enforcement by equitable and similar remedies, such as mandamus, is subject to the exercise of judicial discretion. The Notes will be in fully registered form in the denominations of $5,000 and integral multiples thereof in the name of Cede & Co. as nominee of The Depository Trust Company (“DTC”), New York, New York, to which principal and interest payments on the Notes will be paid. Individual purchases will be in book-entry form only. Interest on each Note shall be paid by check or draft of the Note Registrar to the person in whose name such Note is registered at the close of business on the fifteenth day of the month next preceding an interest payment date. The principal of the Notes shall be payable in lawful money of the United States of America at the principal office maintained for the purpose by the Note Registrar in Des Moines, Iowa. Semiannual interest is due June 1 and December 1 of each year, commencing December 1, 2011 and is payable by Bankers Trust Company, Des Moines, Iowa (the “Note Registrar”). The Notes are dated May 15, 2011. MATURITIES* – JUNE 1 $830,000 .................... 2012 760,000 .................... 2013 480,000 .................... 2014 485,000 .................... 2015 450,000 .................... 2016 215,000 .................... 2017 $220,000.................... 2018 225,000.................... 2019 235,000.................... 2020 245,000.................... 2021 255,000.................... 2022 265,000.................... 2023 280,000.................... 2024 $290,000 .................... 2025 300,000 .................... 2026 320,000 .................... 2027 335,000 .................... 2028 355,000 .................... 2029 370,000 .................... 2030 Any consecutive maturities may be aggregated into no more than five term notes at the option of the bidder, in which case the mandatory redemption provisions shall be on the same schedule as above. The Notes due June 1, 2012 - 2020, inclusive, are non-callable. Notes due June 1, 2021 - 2030, inclusive, are callable in whole or in part and on any date on or after June 1, 2020, at a price of par and accrued interest. If less than all the Notes are called, they shall be redeemed in any order of maturity as determined by the City and within any maturity by lot. *Subject to change. The City reserves the right to change the principal amount of the Notes to effect the City’s desired refunding savings, but any such change shall not increase the principal amount of the Notes above $6,915,000. Any such change will be in increments of $5,000 and may be made in any of the maturities. In such event, the purchase price of the Notes will be adjusted proportionately allowing the same dollar amount of gross spread per $1,000 Note (assuming a delivery date of May 18, 2011). City of Boone, Boone County, Iowa $6,915,000* General Obligation Capital Loan Notes, Series 2011 Page 2 of 5 Method of Bidding Electronically Notwithstanding the fact that the City permits receiving bids electronically using SpeerAuction, all bidders must have a signed, but uncompleted, Official Bid Form delivered to Speer Financial, Inc., Suite 608, 531 Commercial Street, Waterloo, Iowa, (319) 291-8628 facsimile, prior to the close of bidding to which a printout of the electronic bid will be attached and delivered to the City. All-or-none bids must be submitted via the internet address www.SpeerAuction.com. The use of SpeerAuction shall be at the bidder’s risk and expense and the City shall have no liability with respect thereto, including (without limitation) liability with respect to incomplete, late arriving and non-arriving bids. To bid via the SpeerAuction webpage, bidders must first visit the SpeerAuction webpage where, if they have not previously registered with either SpeerAuction, Grant Street Group (the “Auction Administrator”) or any other website administered by the Auction Administrator, they may register and then request admission to bid on the Notes. Bidders will be notified prior to the scheduled bidding time of their eligibility to bid. Only broker-dealers and dealer banks with DTC clearing arrangements will be eligible to bid via the SpeerAuction webpage. The “Rules” of the SpeerAuction bidding process may be viewed on the SpeerAuction webpage and are incorporated herein by reference. Bidders must comply with the Rules of SpeerAuction in addition to the requirements of the County’s Official Terms of Offering. In the event the Rules of SpeerAuction and this Official Terms of Offering conflict, this Official Terms of Offering shall be controlling. All electronic bids must be submitted on the SpeerAuction webpage. Bidders may change and submit bids as many times as they choose during the sale period but may not delete a submitted bid. The last bid submitted by a bidder before the deadline for receipt of bids will be compared to all other final bids to determine the winning bidder. During the bidding, no bidder will see any other bidder’s bid nor the status of their bid relative to other bids (e.g., whether their bid is a leading bid). The bidder bears all risk of transmission failure. Any questions regarding bidding on the SpeerAuction website should be directed to Grant Street Group at (412) 391-5555 x370. The City reserves the right to reject all bids, to reject any bid not conforming to this Official Terms of Offering, and to waive any irregularity or informality with respect to any bid. Additionally, the City reserves the right to modify or amend this Official Terms of Offering; however, any such modification or amendment shall not be made less than twentyfour (24) hours prior to the date and time for receipt of bids on the Notes and any such modification or amendment will be announced on the Amendments Page of the SpeerAuction webpage and through Thompson Municipal News. Each bidder shall be solely responsible for making necessary arrangements to access SpeerAuction for purposes of submitting its internet bid in a timely manner and in compliance with the requirements of the Terms of Offering. The City is permitting bidders to use the services of the SpeerAuction solely as a communication mechanism to conduct the internet bidding and the SpeerAuction is not an agent of the City. Provisions of the Notice of Sale, Terms of Offering or Official Bid Form shall control in the event of conflict with information provided by the Internet Bid System. Electronic Facsimile Bidding: Bids may be submitted via facsimile at (319) 291-8628 or (515) 433-0630. Electronic facsimile bids will be sealed and treated as sealed bids. Neither the City nor its agents will assume liability for the inability of the bidder to reach the above named fax numbers prior to the time of sale specified above. Transmissions received after the deadline will be rejected. Bidders electing to submit bids via facsimile transmission bear full and complete responsibility for the transmission of such bid. Time of receipt shall be the time recorded by the person receiving the facsimile, and shall be conclusive. City of Boone, Boone County, Iowa $6,915,000* General Obligation Capital Loan Notes, Series 2011 Page 3 of 5 Bid Parameters and Award of the Notes The Notes must be in multiples of one-eighth or one one-hundredth of one percent (1/8 or 1/100 of 1%). The rates shall be in non-descending order. The differential between the highest rate and the lowest rate shall not exceed six percent (6%). All bids must be for all of the Notes, must be for not less than $6,859,680 plus accrued interest, if any, from the dated date to the date of delivery, must be signed and made upon the Official Bid Form and delivered at the time and place set forth above. Award of the Notes: The Notes will be awarded on the basis of true interest cost, determined in the following manner. True interest cost shall be computed by determining the annual interest rate (compounded semi-annually) necessary to discount the debt service payments on the Notes from the payment date thereof to the dated date and to the bid price. For the purpose of calculating true interest cost, the Notes shall be deemed to become due in the principal amounts and at the times set forth in the table of maturities set forth above. The Notes will be awarded to the purchaser complying with the terms of this Official Terms of Offering whose bid produces the lowest true interest cost rate to the City as determined by the City’s Financial Advisor, which determination shall be conclusive and binding on all prospective purchasers; provided, that the City reserves the right to reject all bids or any non-conforming bid and reserves the right to waive any informality in any bid. The winning purchaser will be required to make the standard filings and maintain the appropriate records routinely required pursuant to MSRB Rules G-8, G-11 and G-36. The winning purchaser will be required to pay the standard MSRB charge for Notes purchased. In addition, the winning purchaser who is a member of the Securities Industry and Financial Markets Association (“SIFMA”) will be required to pay SIFMA’s standard charge per Note. Good Faith Deposit and Other Matters Each bid shall be accompanied by a certified or cashier’s check on, or a wire transfer from, a solvent bank or trust company or a Financial Surety Bond for TWO PERCENT OF PAR payable to the City’s Treasurer as evidence of good faith of the prospective purchaser (the “Deposit”). The Deposit of the successful purchaser will be retained by the City pending delivery of the Notes and all others will be promptly returned. Should the successful purchaser fail to take up and pay for the Notes when tendered in accordance with this Official Terms of Offering and said bid, said Deposit shall be retained as full and liquidated damages to the City caused by failure of the purchaser to carry out the offer of purchase. Such Deposit will otherwise be applied on the purchase price upon delivery of the Notes. No interest on the Deposit will accrue to the Purchaser. If a wire transfer is used for the Deposit, it must be sent according to the following wire instructions: Amalgamated Bank of Chicago One W. Monroe Street Chicago, Illinois 60603 ABA # 071003405 Credit to: DDA # 150002305 Further Credit to: 1853281001 Speer Bidding Escrow RE: [name of prospective purchaser] bid for [name of Note issue] City of Boone, Boone County, Iowa $6,915,000* General Obligation Capital Loan Notes, Series 2011 Page 4 of 5 The wire shall arrive in such account no later than 30 minutes prior to the date and time of the sale of the Notes. Contemporaneously with such wire transfer, the prospective purchaser shall send an email to [email protected] with the following information: (1) indication that a wire transfer has been made, (2) the amount of the wire transfer, (3) the issue to which it applies, and (4) the return wire instructions if such prospective purchaser is not awarded the Notes. The City and any prospective purchaser who chooses to wire the Deposit hereby agree irrevocably that Speer Financial, Inc. (“Speer”) shall be the escrow holder of the Deposit wired to such account subject only to these conditions and duties: (i) if the bid is not accepted, Speer shall, at its expense, promptly return the Deposit amount to the unsuccessful prospective purchaser; (ii) if the bid is accepted, the Deposit shall be forwarded to the City, (iii) Speer shall bear all costs of maintaining the escrow account and returning the funds to the prospective purchaser; (iv) Speer shall not be an insurer of the Deposit amount and shall have no liability except if it willfully fails to perform, or recklessly disregards, its duties specified herein; and (v) income earned on the Deposit, if any, shall be retained by Speer. If a Financial Surety Bond is used for the Deposit, it must be from an insurance company licensed to issue such a bond in the State of Iowa and such bond must be submitted to Speer prior to the opening of the bids. The Financial Surety Bond must identify each prospective purchaser whose deposit is guaranteed by such Financial Surety Bond. If the Notes are awarded to a purchaser using a Financial Surety Bond, then that purchaser is required to submit its Deposit to the City in the form of a certified or cashier’s check or wire transfer as instructed by Speer, or the City not later than 3:00 P.M. on the next business day following the award. If such Deposit is not received by that time, the Financial Surety Bond may be drawn by the County to satisfy the Deposit requirement. The City covenants and agrees to enter into a written agreement, certificate or contract, constituting an undertaking (the “Undertaking”) to provide ongoing disclosure about the City for the benefit of the beneficial owners of the Notes on or before the date of delivery of the Notes as required under Section (b)(5) of Rule 15c2-12 (the “Rule”) adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934. The Undertaking shall be as described in the Official Statement, with such changes as may be agreed in writing by the Underwriter. The City represents that it is in substantial compliance with each and every undertaking previously entered into by it pursuant to the Rule. The Underwriter’s obligation to purchase the Notes shall be conditioned upon the City delivering the Undertaking on or before the date of delivery of the Notes. The Notes will be delivered to the successful purchaser against full payment in immediately available funds as soon as they can be prepared and executed, which is expected to be on or about May 18, 2011. Should delivery be delayed beyond sixty (60) days from the date of sale for any reason beyond the control of the City except failure of performance by the purchaser, the City may cancel the award or the purchaser may withdraw the good faith deposit and thereafter the purchaser’s interest in and liability for the Notes will cease. The Official Statement, when further supplemented by an addendum or addenda specifying the maturity dates, principal amounts, and interest rates of the Notes, and any other information required by law or deemed appropriate by the County, shall constitute a “Final Official Statement” of the City with respect to the Notes, as that term is defined in the Rule. By awarding the Notes to any underwriter or underwriting syndicate, 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 the Notes are awarded, up to 50 copies 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 to which the Notes are awarded as its designated agent for purposes of distributing copies of the Final Official Statement to each 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 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. City of Boone, Boone County, Iowa $6,915,000* General Obligation Capital Loan Notes, Series 2011 Page 5 of 5 By submission of its bid, the senior managing underwriter of the successful purchaser agrees to supply all necessary pricing information and any Participating Underwriter identification necessary to complete the Official Statement within 24 hours after award of the Notes. Additional copies of the Final Official Statement may be obtained by Participating Underwriters from the printer at cost. The City will, at its expense, deliver the Notes to the purchaser in New York, New York (or arrange for “FAST” delivery) through the facilities of DTC and will pay for the bond attorney’s opinion. At the time of closing, the City will also furnish to the purchaser the following documents, each dated as of the date of delivery of the Notes: (1) the legal opinion of Ahlers & Cooney, P.C., Des Moines, Iowa, that the Notes are lawful and enforceable obligations of the City in accordance with their terms; (2) the opinion of said attorneys that the interest on the Notes is exempt from federal income taxes as and to the extent set forth in the Official Statement for the Notes; and (3) a no litigation certificate by the City. The City has authorized the printing and distribution of an Official Statement containing pertinent information relative to the City and the Notes. Copies of such Official Statement or additional information may be obtained from Mr. Luke Nelson, Finance Director, City of Boone, 923 8th Street, Boone, Iowa, or an electronic copy of this Official Statement is available from the www.speerfinancial.com website under “Official Statement Sales Calendar” or from the Independent Public Finance Consultants to the City, Speer Financial, Inc., 531 Commercial Street, Suite 608, Waterloo, Iowa 50701 (telephone (319) 291-2077) and One North LaSalle Street, Suite 4100, Chicago, Illinois 60602 (telephone (312) 346-3700). /s/ LUKE NELSON Finance Director CITY OF BOONE Boone, County, Iowa