The Certificates are subject to optional, mandatory and extraordinary optional prepayment prior to their stated payment dates as described herein.

Transcription

1 NEW ISSUE BOOK-ENTRY ONLY NO RATING In the opinion of Gilmore & Bell, P.C., St. Louis, Missouri, Special Tax Counsel, under existing law and assuming continued compliance with certain requirements of the Internal Revenue Code of 1986, as amended, the Interest Portion of Basic Rent paid by the City under the Lease (as described herein) and distributed to the Owners of the Certificates is excludable from gross income for federal and Missouri income tax purposes, except as described herein, and is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations, except that Special Tax Counsel will not express any opinion for federal or Missouri tax purposes as to any money received in payment of or with respect to the Certificates subsequent to termination of the City s obligations under the Lease by reason of an Event of Nonappropriation or an Event of Default. The Certificates have not been designated as qualified tax-exempt obligations within the meaning of Section 265(b)(3) of the Internal Revenue Code of 1986, as amended. See TAX MATTERS herein. $26,840,000 CITY OF WASHINGTON, MISSOURI CERTIFICATES OF PARTICIPATION (MUNICIPAL COMPLEX ENHANCEMENT AND ROUTE 100 PROJECT) SERIES 2008 Evidencing Undivided, Proportionate Interests of the Owners Thereof in Basic Rent Payable, Subject to Annual Appropriation, by the CITY OF WASHINGTON, MISSOURI Pursuant to a Lease Purchase Agreement Dated: Date of Delivery Due: April 1, as shown on the inside cover The Certificates, representing undivided, proportionate interests in Basic Rent to be paid by the City of Washington, Missouri, are being delivered pursuant to a Declaration of Trust dated as of April 1, 2008, executed by The Bank of New York Trust Company, N.A., as trustee. The Basic Rent Payments are payable by the City under an annually-renewable Lease Purchase Agreement dated as of April 1, 2008, between the City and the Trustee. The Certificates will be delivered in fully-registered form in the denomination of $5,000 or any integral multiple thereof. Principal and interest distributable with respect to the Certificates are payable by the Trustee. Principal will be payable annually on April 1, beginning April 1, Interest will be payable semiannually on April 1 and October 1, beginning October 1, The Certificates are subject to optional, mandatory and extraordinary optional prepayment prior to their stated payment dates as described herein. The Certificates will be payable solely from the Basic Rent Payments due under the Lease and certain money held by the Trustee under the Declaration of Trust. The City has agreed to pay the total Basic Rent due under the Lease for each fiscal year, but only if the City Council annually appropriates sufficient money specifically designated to pay the Basic Rent coming due during each succeeding fiscal year. The obligation to make payments will not create a general obligation or other indebtedness of the City within the meaning of any constitutional or statutory debt limitation or restriction. The delivery of the Certificates will not obligate the City to levy any form of taxation therefor or to make any appropriation for their payment in any year subsequent to a year in which the Lease is in effect. herein. The Certificates are subject to certain risks. See RISK FACTORS AND INVESTMENT CONSIDERATIONS The Certificates are offered when, as and if issued and received by the Underwriter, subject to the approval of legality by Gilmore & Bell, P.C., St. Louis, Missouri, Special Tax Counsel, and certain other conditions. Certain legal matters relating to this Official Statement will also be passed upon by Gilmore & Bell, P.C., St. Louis, Missouri. Certain legal matters will be passed upon for the City by Lewis, Rice & Fingersh, L.C., Washington, Missouri. It is expected that the Certificates will be available for delivery through The Depository Trust Company in New York, New York, on or about April 23, The date of this Official Statement is April 15, 2008.

2 $26,840,000 CITY OF WASHINGTON, MISSOURI CERTIFICATES OF PARTICIPATION (MUNICIPAL COMPLEX AND ROUTE 100 PROJECT) SERIES 2008 MATURITY SCHEDULE Base Cusip: SERIAL CERTIFICATES Payment Date (April 1) Principal Component Interest Rate CUSIP 2010 $ 5, % AA , AB , AC , AD , AE , AF , AG , AH , AJ ,065, AK ,180, AL ,300, AM ,435, AN ,575, AP ,725, AQ ,890, AR ,060, AS ,250, AT ,450, AU5 TERM CERTIFICATES Payment Date (April 1) Principal Component Interest Rate CUSIP 2030 $7,990, % AV3 (All Certificates are priced at par)

3 CITY OF WASHINGTON, MISSOURI 405 Jefferson Street Washington, Missouri (636) ELECTED OFFICIALS Richard Stratman, Mayor Robert Engemann, Councilmember Ward 1 Tim Overschmidt, Councilmember Ward 1 Jeffrey Mohesky, Councilmember Ward 2 John Rhodes, Councilmember Ward 2 Connie Groff, Councilmember Ward 3 Guy Midkiff, Councilmember Ward 3 Marty Tudor, Councilmember Ward 4 Carolyn Witt, Councilmember Ward 4 APPOINTED OFFICIALS James A. Briggs, City Administrator Brian N. Boehmer, Assistant City Administrator Janet M. Braun, Finance Manager Brenda G. Mitchell, City Clerk CITY ATTORNEY Lewis, Rice & Fingersh, L.C. Washington, Missouri CERTIFIED PUBLIC ACCOUNTANTS Hochschild, Bloom & Company, L.L.P. Chesterfield, Missouri SPECIAL TAX COUNSEL Gilmore & Bell, P.C. St. Louis, Missouri UNDERWRITER Edward D. Jones & Co., L.P. St. Louis, Missouri TRUSTEE The Bank of New York Trust Company, N.A. St. Louis, Missouri

4 IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER MAY OVER-ALLOT OR EFFECT TRANSACTIONS THAT STABILIZE OR MAINTAIN THE MARKET PRICE OF THE CERTIFICATES AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. THE CERTIFICATES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION UNDER THE SECURITIES ACT OF 1933, AS AMENDED, NOR HAS THE DECLARATION BEEN QUALIFIED UNDER THE TRUST INDENTURE ACT OF 1939, IN RELIANCE UPON EXEMPTIONS CONTAINED IN SUCH ACTS. No dealer, broker, salesman or other person has been authorized by the City or the Underwriter to give any information or to make any representation with respect to the Certificates offered hereby other than those contained in this Official Statement, and, if given or made, such other information or representations must not be relied upon as having been authorized by any of the foregoing. This Official Statement does not constitute an offer to sell or the solicitation of an offer to buy nor may there be any sale of the Certificates offered hereby by any person in any jurisdiction in which it is unlawful for such person to make such offer, solicitation or sale. The information set forth herein has been obtained from the City and from other sources believed to be reliable, but it is not guaranteed as to accuracy or completeness and is not to be construed as a representation by the Underwriter. The information and expressions of opinion herein are subject to change without notice, and neither the delivery of this Official Statement nor any sale made hereunder will, under any circumstances, create any implication that there has been no change in the City s affairs since the date hereof. IN MAKING AN INVESTMENT DECISION, INVESTORS MUST RELY ON THEIR OWN EXAMINATION OF THE CITY AND THE TERMS OF THIS OFFERING, INCLUDING THE MERITS AND RISKS INVOLVED. THESE SECURITIES HAVE NOT BEEN RECOMMENDED BY ANY FEDERAL OR STATE SECURITIES COMMISSION OR REGULATORY AUTHORITY. FURTHERMORE, THE FOREGOING AUTHORITIES HAVE NOT CONFIRMED THE ACCURACY OR DETERMINED THE ADEQUACY OF THIS DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. CAUTIONARY STATEMENTS REGARDING FORWARD- LOOKING STATEMENTS IN THIS OFFICIAL STATEMENT Certain statements included or incorporated by reference in this Official Statement constitute forward-looking statements within the meaning of the United States Private Securities Litigation Reform Act of 1995, Section 21E of the United States Securities Exchange Act of 1934, as amended, and Section 27A of the United States Securities Act of 1933, as amended. Such statements are generally identifiable by the terminology used such as plan, expect, estimate, anticipate, projected, budget or other similar words. THE ACHIEVEMENT OF CERTAIN RESULTS OR OTHER EXPECTATIONS CONTAINED IN SUCH FORWARD-LOOKING STATEMENTS INVOLVE KNOWN AND UNKNOWN RISKS, UNCERTAINTIES AND OTHER FACTORS WHICH MAY CAUSE ACTUAL RESULTS, PERFORMANCE OR ACHIEVEMENTS DESCRIBED TO BE MATERIALLY DIFFERENT FROM ANY FUTURE RESULTS, PERFORMANCE OR ACHIEVEMENTS EXPRESSED OR IMPLIED BY SUCH FORWARD-LOOKING STATEMENTS. NEITHER THE CITY NOR ANY OTHER PARTY PLANS TO ISSUE ANY UPDATES OR REVISIONS TO THOSE FORWARD-LOOKING STATEMENTS IF OR WHEN THEIR EXPECTATIONS, OR EVENTS, CONDITIONS OR CIRCUMSTANCES UPON WHICH SUCH STATEMENTS ARE BASED OCCUR.

5 TABLE OF CONTENTS Page INTRODUCTION...1 Purpose of the Official Statement...1 Plan of Financing...1 Limited Obligations...2 Risk Factors...2 Continuing Disclosure Information...2 Definitions and Descriptions; Inspection of Documents...2 THE CERTIFICATES...2 Description...2 Book-Entry Only System...3 Transfer Outside Book-Entry Only System...5 Prepayment Provisions...5 PLAN OF FINANCING...7 The Project and the Leased Property...7 Sources and Uses of Funds...8 SECURITY FOR THE CERTIFICATES...8 Limited Obligations; Sources of Payment...8 Reserve Fund...9 Base Lease...9 Maintenance and Insurance of the Leased Property...9 Additional Parity Obligations...10 RISK FACTORS AND INVESTMENT CONSIDERATIONS...10 Limited Obligations...10 Expiration or Termination of the Lease...11 Delays in Exercising Remedies...11 Completion and Construction Risks...12 Destruction of the Leased Property...12 Page Principal Amount of Certificates Exceeds Insured Value of the Leased Property..12 Effect on Tax-Exemption of Termination of the Lease...13 Taxability...13 Secondary Markets and Prices...13 Constitutional Challenge of Kentucky State Income Tax Exemption for Interest Paid on Tax-Exempt Bonds...13 THE TRUSTEE...14 FINANCIAL STATEMENTS...14 APPROVAL OF LEGALITY...14 TAX MATTERS...14 Tax Opinion of Special Tax Counsel...14 Other Tax Consequences...15 LITIGATION...15 UNDERWRITING...15 NO RATING...15 CERTAIN RELATIONSHIPS...16 MISCELLANEOUS...16 APPENDIX A - General and Economic Information Regarding the City APPENDIX B - Independent Auditors' Report and Audited Financial Statements APPENDIX C - Definitions of Words and Terms and Summaries of Legal Documents (i)

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7 OFFICIAL STATEMENT $26,840,000 CITY OF WASHINGTON, MISSOURI CERTIFICATES OF PARTICIPATION (MUNICIPAL COMPLEX ENHANCEMENT AND ROUTE 100 PROJECT) SERIES 2008 Evidencing Undivided, Proportionate Interests of the Owners Thereof in Basic Rent Payable, Subject to Annual Appropriation, by the CITY OF WASHINGTON, MISSOURI Pursuant to a Lease Purchase Agreement INTRODUCTION This introduction is only a brief description and summary of certain information contained in this Official Statement and is qualified in its entirety by reference to the more complete and detailed information contained in the entire Official Statement, including the cover page and appendices hereto, and the documents summarized or described herein. A full review should be made of the entire Official Statement. Purpose of the Official Statement The purpose of this Official Statement is to furnish information in connection with the offering and sale of Certificates of Participation (Municipal Complex Enhancement and Route 100 Project), Series 2008, in the aggregate principal amount of $26,840,000 (the Certificates ). The Certificates represent undivided, proportionate interests in Basic Rent Payments to be paid by the City of Washington, Missouri (the City ) pursuant to an annually-renewable Lease Purchase Agreement dated as of April 1, 2008 (the Lease ), between The Bank of New York Trust Company, N.A., St. Louis, Missouri (the Trustee ), as lessor, and the City, as lessee. The Trustee has agreed to execute and deliver the Certificates pursuant to a Declaration of Trust dated as of April 1, 2008 (the Declaration ). The Basic Rent Payments constitute rent for the Leased Property (hereafter defined) pursuant to the Lease. Plan of Financing Proceeds from the sale of the Certificates will be used to (1) renovate and improve the City s municipal complex and pay a portion of the costs of widening and improving Missouri Route 100 between Missouri Route 47 and Interstate 44 (collectively, the Project ), (2) fund a debt service reserve fund for the Certificates, and (3) pay the costs of delivering the Certificates. For a further description of the Project, see the caption PLAN OF FINANCING - The Project and the Leased Property herein. Simultaneously with the delivery of the Certificates, pursuant to a Base Lease dated as of April 1, 2008 (the Base Lease ), the City will lease to the Trustee all its interest in certain real estate and all improvements now or hereafter situated thereon, including the portion of the Project to be located thereon (collectively, the Leased Property ). For a further description of the Leased Property see the caption PLAN OF FINANCING - The Project and the Leased Property herein. Pursuant to the Base Lease, the Trustee will agree to enter into the Declaration and deliver the Certificates thereunder to provide funds to finance the Project. The Trustee, as lessor under the Lease, will lease the Leased Property back to the City for an initial term ending September 30, 2008, subject to the City s option to extend the term of the Lease for twenty-one (21) consecutive one-year renewal terms commencing October 1, 2008, and a final renewal term commencing October 1, 2029 and ending April 1, 2030 (each a Renewal Term and collectively, the Renewal Terms ). Each Renewal Term is subject to annual appropriation by the City Council. See the caption PLAN OF FINANCING herein.

8 Limited Obligations Under the Lease, the City has agreed to pay rental payments (the Basic Rent or Basic Rent Payments ), consisting of a principal portion (the Principal Portion ) and an interest portion (the Interest Portion ), but only if and to the extent that the City Council annually appropriates sufficient money to pay the Basic Rent coming due during each succeeding Renewal Term. The Certificates represent undivided, proportionate interests in the Basic Rent. Neither the Certificates, the Lease nor any payments required under the Lease will constitute a mandatory payment obligation of the City in any year beyond the year during which the City is a lessee under the Lease, or constitute or give rise to a general obligation or other indebtedness of the City. The City is not legally obligated to budget or appropriate money for any fiscal year beyond the current fiscal year or any subsequent fiscal year in which the Lease is in effect, and there can be no assurance that the City will appropriate funds to make Basic Rent Payments or renew the Lease after any Renewal Term. The City may terminate its obligations under the Lease on an annual basis. The City will have the option to purchase the Trustee s interest in the Leased Property at the times and upon the conditions described under SUMMARY OF THE LEASE Purchase Option in Appendix C hereto. Risk Factors Payment of the Principal Portions and Interest Portions distributable to the Owners of the Certificates is subject to certain risks. See the caption RISK FACTORS AND INVESTMENT CONSIDERATIONS herein. Continuing Disclosure Information The City has covenanted in a Continuing Disclosure Agreement to provide certain financial information and notices of material events to each nationally recognized municipal securities information repository, in compliance with Rule 15c2-12 promulgated by the Securities and Exchange Commission. A summary of the Continuing Disclosure Agreement is included in Appendix C hereto. Definitions and Descriptions; Inspection of Documents All capitalized terms used in this Official Statement not defined in the text hereof are defined under DEFINITIONS OF WORDS AND TERMS set forth in Appendix C hereto. Brief descriptions of the Certificates, the Base Lease, the Lease, the Declaration and certain other matters are included in this Official Statement. Such descriptions do not purport to be comprehensive or definitive. All references herein to the Base Lease, the Lease and the Declaration are qualified in their entirety by reference to such documents, drafts of which may be viewed prior to the delivery of the Certificates at the office of the City Clerk of the City. Copies of the final executed documents may be viewed after the delivery of the Certificates at the office of the Trustee, The Bank of New York Trust Company, N.A., 911 Washington Avenue, Suite 300, St. Louis, Missouri, or will be provided to any prospective purchaser requesting the same, upon payment by such prospective purchaser of the cost of complying with such request. All references to the Certificates are qualified in their entirety by the definitive terms thereof and the information with respect thereto included in the Base Lease, the Lease and the Declaration. Description THE CERTIFICATES The Certificates are dated as of the date of delivery thereof. The Principal Portion of Basic Rent distributable to the Registered Owner of each Certificate will bear interest at specified rates as set forth on the inside cover page hereof. The Interest Portion of Basic Rent distributable to the Registered Owner of each -2-

9 Certificate will be payable semiannually on April 1 and October 1 of each year beginning on October 1, 2008 (the Basic Rent Payment Dates ). The Principal Portion of Basic Rent distributable to the Registered Owner of each Certificate is payable on April 1 of each year in the principal amounts set forth on the inside cover page of this Official Statement. The Interest Portion distributable to the Registered Owner of each Certificate is payable (1) by check or draft mailed by the Trustee to the address of such Registered Owner shown on the registration books for the Certificates (the Register ), or (2) in the case of an interest payment to any Registered Owner of $500,000 or more in aggregate principal amount of Certificates, by electronic transfer to such Registered Owner upon written notice given to the Trustee by such Registered Owner, not less than 15 days prior to the Record Date for such interest, containing the electronic transfer instructions including the name of the bank (which shall be in the continental United States), the bank s ABA routing number and the account number to which such Registered Owner wishes to have such transfer directed. The Principal Portion of Basic Rent and prepayment premium, if any, distributable to the Registered Owner of each Certificate is payable upon presentation and surrender thereof at the principal corporate trust office of the Trustee, or at such other office as is designated by the Trustee. Book-Entry Only System The Certificates are available in book-entry only form and beneficial ownership interests therein may be purchased in the principal amount of $5,000 or any integral multiple thereof. Purchasers of the Certificates will not receive certificated securities representing their interests in the Certificates. The following information concerning The Depository Trust Company ( DTC ), New York, New York and DTC s book-entry system has been obtained from sources the City believes to be reliable. However, the City takes no responsibility as to the accuracy or completeness thereof and neither the Indirect Participants nor the Beneficial Owners should rely on the following information with respect to such matters, but should instead confirm the same with DTC or the Direct Participants, as the case may be. There can be no assurance that DTC will abide by its procedures or that such procedures will not be changed from time to time. DTC will act as securities depository for the Certificates. The Certificates will be issued as fullyregistered securities registered in the name of Cede & Co. (DTC s partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully-registered Certificate will be issued for each maturity of the Certificates, each in the aggregate principal amount of such maturity, and will be deposited with DTC. DTC, the world s largest depository, is a limited-purpose trust company organized under the New York Banking Law, a banking organization within the meaning of the New York Banking Law, a member of the Federal Reserve System, a clearing corporation within the meaning of the New York Uniform Commercial Code, and a clearing agency registered pursuant to the provisions of Section 17A of the Securities Exchange Act of DTC holds and provides asset servicing for over 2.2 million issues of U.S. and non-u.s. equity, 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, in turn, is owned by a number of Direct Participants of DTC and Members of the National Securities Clearing Corporation, Fixed Income Clearing Corporation, and Emerging Markets Clearing Corporation (NSCC, FICC, and EMCC, also subsidiaries of DTCC), as well as by the New York Stock Exchange, Inc., the American Stock Exchange LLC, and the National Association of Securities Dealers, Inc. 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 -3-

10 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 and Purchases of the Certificates 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 Certificate ( 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 Certificates 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 Certificates, except in the event that use of the bookentry system for the Certificates is discontinued. To facilitate subsequent transfers, all Certificates 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 Certificates with DTC and their registration in the name of Cede & Co. or such other nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Certificates; DTC s records reflect only the identity of the Direct Participants to whose accounts such Certificates are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers. Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Beneficial Owners of Certificates may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the Certificates, such as prepayments, tenders, defaults, and proposed amendments to the Certificate documents. For example, Beneficial Owners of Certificates may wish to ascertain that the nominee holding the Certificates 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. Prepayment notices shall be sent to DTC. If less than all of the Certificates within a maturity are being prepaid, DTC s practice is to determine by lot the amount of the interest of each Direct Participant in such maturity to be prepaid. Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to Certificates unless authorized by a Direct Participant in accordance with DTC s 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 the Certificates are credited on the record date (identified in a listing attached to the Omnibus Proxy). Prepayment proceeds and distributions on the Certificates 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 Trustee, on the payment 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, its nominee, the Trustee, or the City, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of redemption proceeds and distributions 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 Trustee. Disbursement of such payments to Direct Participants will be the -4-

11 responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants. DTC may discontinue providing its services as securities depository with respect to the Certificates at any time by giving reasonable notice to the City or the Trustee. Under such circumstances, in the event that a successor securities depository is not obtained, Certificates are required to be printed and delivered. The Direct Participants holding a majority of the Certificates may decide to discontinue use of the system of book-entry-only transfers through DTC (or a successor securities depository). In that event, Certificates will be printed, 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), and delivered to DTC (or a successor securities depository), to be held by it as securities depository for Direct Participants. If, however, the system of book-entry-only transfers has been discontinued and a Direct Participant has elected to withdraw its Certificates from DTC (or such successor securities depository), Certificates may be delivered to Beneficial Owners in the manner described herein under the caption Transfer Outside Book-Entry Only System. Transfer Outside Book-Entry Only System If the book-entry only system is discontinued the following provisions would apply. The Certificates are transferable only upon the Register upon presentation and surrender of the Certificates, together with instructions for transfer. The Certificates may be exchanged for other Certificates of any denomination authorized by the Declaration in the same aggregate principal amount, series, payment date and interest rate, upon presentation to the Trustee, subject to the terms, conditions and limitations and upon payment of any tax, fee or other governmental charge required to be paid with respect to any such registration, exchange or transfer. Prepayment Provisions Optional Prepayment. The Certificates will be subject to optional prepayment, as a whole or in part, on or after April 1, 2013, at a Prepayment Price equal to 100% of the Principal Portion of Basic Rent represented by the Certificates being prepaid, plus the Interest Portion of Basic Rent accrued to the Prepayment Date, from amounts paid by the City upon the exercise of its option to purchase the Trustee s interest in the Leased Property or to partially prepay Basic Rent Payments pursuant to the terms of the Lease. Extraordinary Optional Prepayment. The Certificates will be subject to optional prepayment, as a whole, at a prepayment price equal to 100% of the Principal Portion of Basic Rent represented thereby plus the Interest Portion of Basic Rent accrued to the prepayment date, in the event of substantial damage to or destruction or condemnation (other than by the City or any entity controlled by or otherwise affiliated with the City) of, or loss of title to, substantially all of the Leased Property, or as a result of changes in the constitution of the State or legislative or administrative action by the State or the United States, the Base Lease or the Lease becomes unenforceable, and the City purchases the Trustee s interest in the Leased Property pursuant to the Lease. See SUMMARY OF THE LEASE - Damage, Destruction and Condemnation in Appendix C hereto. Mandatory Prepayment. The Certificates maturing in the year 2030 (the Term Certificates ) are subject to mandatory prepayment prior to maturity pursuant to the mandatory prepayment requirements of the Declaration at a Prepayment Price equal to 100% of the Principal Portion of Basic Rent represented thereby plus the Interest Portion of Basic Rent accrued thereon to the mandatory prepayment date, as follows: -5-

12 Year Principal Portion + Final Maturity $2,660, ,330,000 At its option, to be exercised on or before the 45th day next preceding any mandatory prepayment date, the City may: (1) deliver to the Trustee for cancellation Term Certificates in any aggregate principal amount desired, (2) furnish the Trustee funds, together with appropriate instructions, for the purpose of purchasing any of said Term Certificates from any Owner thereof, whereupon the Trustee shall expend such funds for such purpose to such extent as may be practical, or (3) receive a credit with respect to the mandatory prepayment obligation of the Trustee pursuant to the Declaration for any Term Certificates which prior to such date have been prepaid (other than through the operation of the requirements of the Declaration) and cancelled by the Trustee and not theretofore applied as a credit against any prepayment obligation pursuant to the Declaration. Each Term Certificate so delivered or previously purchased or prepaid shall be credited at 100% of the principal amount thereof on the obligation of the Trustee to prepay Term Certificates of the same series and payment date on such prepayment date, and any excess of such amount shall be credited on future mandatory prepayment obligations for Term Certificates of the same series and payment date in chronological order, and the principal amount of Certificates of the same series and payment date to be prepaid by operation of the requirements of the Declaration shall be accordingly reduced. If the City intends to exercise any option granted by the provisions of clauses (1), (2) or (3) above, the City will, on or before the 45th day next preceding each mandatory prepayment date, furnish the Trustee a certificate signed by the Authorized City Representative indicating to what extent the provisions of said clauses (1), (2), and (3) are to be complied with in respect to such mandatory prepayment. Partial Prepayment of Certificates. Upon surrender of any Certificate prepaid in part only, the Trustee will execute and deliver to the Owner thereof, at the expense of the City, a new Certificate or Certificates of the same series and maturity, equal in aggregate principal amount to the unprepaid portion of the Certificate surrendered. Notice of Prepayment. Unless otherwise provided in the Declaration, notice of prepayment will be given by the Trustee, not more than 60 days and not less than 30 days prior to the Prepayment Date, to the City and the Owner of each Certificate affected at the address shown on the registration books of the Registrar on the date such notice is mailed. Each notice of prepayment will state (1) the Prepayment Date, (2) the place of prepayment, (3) the Prepayment Price, (4) if less than all, the identification of the Certificates to be prepaid, and (5) if a Certificate is being prepaid in part, the portion thereof being prepaid. Such notice will also state that the Interest Portion of the Basic Rent represented by the Certificates designated for prepayment will cease to accrue from and after such Prepayment Date and that on said date the Prepayment Price will become due and payable on each of said Certificates. The failure of the Owner of any Certificate to be so prepaid to receive notice of prepayment mailed as herein provided or any defect therein will not affect or invalidate the validity of any proceedings for the prepayment of such Certificate. The Trustee is also directed to comply with any mandatory standards then in effect for processing redemptions of municipal securities established by the Securities and Exchange Commission. Failure to comply with such standards will not affect or invalidate the prepayment of any Certificate to be prepaid. The Trustee, as long as a book-entry system is used for the Certificates, will send notices of prepayment only to the Securities Depository, as the Owner of the Certificates. Any failure of the Securities Depository to advise any of the Participants, or of any participant or any nominee to notify any Beneficial Owner of the Certificates, of any such notice and its content or effect will not affect the validity or sufficiency of the proceedings relating to the prepayment of the Certificates called for prepayment. -6-

13 Effect of Prepayment. Notice of prepayment having been duly given as aforesaid, and upon funds for payment of the Prepayment Price of such Certificates (or portions thereof) being held by the Trustee, on the Prepayment Date designated in such notice, the Certificates (or portions thereof) so called for prepayment will become due and payable at the Prepayment Price specified in such notice and the Interest Portion of Basic Rent represented by the Certificates so called for prepayment will cease to accrue, said Certificates (or portions thereof) will cease to be entitled to any benefit or security under this Declaration of Trust and the Owners of such Certificates will have no rights in respect thereof except to receive payment of the Prepayment Price. All Certificates prepaid pursuant to the provisions of the Declaration will be cancelled upon surrender thereof and destroyed by the Trustee. The Project and the Leased Property PLAN OF FINANCING The Project consists of renovating, improving, equipping and furnishing the City s municipal complex and constructing certain roadway improvements. Missouri Route 100 Improvements. The City is located approximately 10 miles west of Interstate 44 along Missouri Route 100. Missouri Route 100 is currently a two-lane road for the majority of this 10-mile stretch, and because it functions as the main connector between the City and Interstate 44, it serves large traffic volumes. In April 2005, the City s voters approved a one-half cent sales tax for transportation purposes, based on representations by the City that such sales tax would allow for the widening of and improvements to Missouri Route 100 between Missouri Route 47 and Interstate 44 (the Highway Project ). The Highway Project will be constructed pursuant to a Cooperative Agreement dated as of November 9, 2006, whereby the City and the Missouri Department of Transportation ( MODOT ) each agreed to fund 50% of the Highway Project. The City s estimated total cost of the Highway Project is $23,500,000, including more than $7,000,000 that the City has already paid for improving and widening Missouri Route 100 within the City s limits. If the cost of the Highway Project is more than anticipated, the City will be responsible for 50% of the additional costs. If the cost of the Highway Project is less than anticipated, MODOT will refund a proportionate amount to the City. The City expects the Highway Project to be completed by December 31, Municipal Complex Enhancements. The municipal complex consists of the city hall and the city library buildings. A portion of the Certificate proceeds will be used to improve these facilities, including: (1) replacing the roof of the library building, (2) relocating a generator from the City s former police station to the city hall building, (3) constructing a new entrance to the city hall building, (4) installing a handicapped-accessible door entrance for the city hall building, and (5) making other miscellaneous capital improvements throughout the municipal complex (collectively, the Municipal Complex Project ). The estimated total cost of the Municipal Complex Project is $660,000, all of which will be paid from the proceeds of the Certificates and investment earnings thereon. The City expects the renovation of the Municipal Complex Project to commence in June Project Budget. All costs of the Project will be paid by the Trustee from money in the Project Fund. On the date of delivery of the Certificates, the Trustee will pay approximately $16.1 million to MODOT to satisfy the City s obligations under the Cooperative Agreement and will pay $7,364,451 to the Missouri Transportation Finance Corporation to refinance a loan that the City incurred for its initial contribution to the Highway Project as described above. Each written request for payment from the Project Fund for the Municipal Complex Project must be signed by an Authorized City Representative. If funds on deposit in the Project Fund are insufficient to complete the Municipal Complex Project, the City will pay for any additional costs from its general fund. Leased Property. The Leased Property consists of the City s entire interest in its municipal complex and the real property on which the complex is situated. The city hall building is approximately 18,600 square feet spread between a three-story main structure and a two-story addition. The city hall houses the administrative offices of the City (including finance, information technology, engineering, building inspection, and general -7-

14 administration), the City Council chambers, and additional offices for the State Driver Examiner, Worker s Compensation Administrative Hearings and the processing of passport applications. The library building is a twostory structure of approximately 20,000 square feet. The municipal complex is situated on 1.6 acres and is insured by the City for $5,632,000. The City estimates the value of the real property, excluding the buildings thereon, at $1,180,000. Sources and Uses of Funds The following table itemizes the proceeds from the sale of the Certificates, together with other available funds of the City, and how such funds are expected to be used: Sources of Funds: Principal Amount of the Certificates $26,840,000 City Contribution 660,000 Total $27,500,000 Uses of Funds: Deposit to Project Fund $24,160,950 Deposit to Reserve Fund 2,684,000 Costs of Issuance (including underwriter s discount) 655,050 Total $27,500,000 Limited Obligations; Sources of Payment SECURITY FOR THE CERTIFICATES Each Certificate evidences the undivided, proportionate interest of the Owner thereof in the right to receive Basic Rent Payments to be made by the City under the Lease. The Certificates are payable solely from the Basic Rent and other money and investments held by the Trustee under the Declaration. The City s obligation to make Basic Rent Payments and other payments under the Lease is subject to annual appropriation by the City Council and will not constitute a debt or liability of the City or of the State of Missouri or any political subdivision thereof. Neither the Lease nor the Certificates will constitute an indebtedness within the meaning of any constitutional or statutory debt limitation or restriction. The execution and delivery of the Lease and the Certificates will not obligate the City to levy any form of taxation therefor or to make any appropriation for their payment in any fiscal year subsequent to a fiscal year in which the Lease is in effect. Under the terms of the Lease, if the City elects to renew the Lease at the end of any Renewal Term, it is obligated to budget, appropriate and set aside a portion of its general revenues derived from sales taxes and other sources, which appropriation must be sufficient to make the Basic Rent Payments coming due during the ensuing fiscal year. To provide for the timely payment of Basic Rent, the City has covenanted and agreed in the Lease to pay the Basic Rent Payments to the Trustee for deposit in the Lease Revenue Fund no later than the five (5) business days prior to each Basic Rent Payment Date (but only if the City elects to renew the Lease for each Renewal Term). There can be no assurance that the City Council will appropriate funds for Basic Rent or renew the Lease for any subsequent Renewal Term. The City is not legally required to budget or appropriate money for any subsequent fiscal year beyond the current fiscal year. -8-

15 Reserve Fund A Reserve Fund is established pursuant to the Declaration and is required to be initially funded from the proceeds of the Certificates in an amount equal to $2,684,000, which equals the least of (1) 10% of the original amount of the Principal Portion of Basic Rent represented by the Certificates, (2) the maximum annual amount of the Principal Portion and the Interest Portion of Basic Rent represented by the Certificates and (3) 125% of the average annual amount of the Principal Portion and the Interest Portion of Basic Rent represented by the Certificates (the Reserve Fund Requirement ). Except as my otherwise be provided in the Declaration, money in the Reserve Fund will be used solely to make up any deficiencies in the Lease Revenue Fund. Moneys in the Reserve Fund will also be used to pay the last Certificates becoming due unless such Certificates have been otherwise paid. If the money in the Lease Revenue Fund is insufficient to pay the Principal Portion and the Interest Portion of Basic Rent as the same become due, the Trustee will without further authorization transfer any funds available to make Basic Rental Payments or deposits to the Lease Revenue Fund to make such payments. Money in the Reserve Fund will be used to make all or part of the final Basic Rent Payment. The investments in the Reserve Fund will be valued annually on September 1. If at any time the amount in the Reserve Fund exceeds the Reserve Fund Requirement, such excess will be transferred to the Lease Revenue Fund. If at any time the amount in the Reserve Fund is less than the Reserve Fund Requirement as a result of a withdrawal or a decrease in value, the City will replenish the Reserve Fund at the time and in the manner set forth in the Lease. See SUMMARY OF THE LEASE Supplemental Rent in Appendix C hereto. Base Lease The City will, pursuant to the Base Lease, lease all its interest in the Leased Property to the Trustee, as lessee. The Base Lease is for a term ending April 1, 2050 (which is 20 years after the latest scheduled maturity date of the Certificates), unless sooner terminated if the City makes all payments required by the Lease. If an Event of Default or Event of Nonappropriation occurs under the Declaration or the Lease, the Trustee has the right to possess and use the Leased Property for the remainder of the term of the Base Lease, and has the right to sublease or assign its interests under the Base Lease upon such terms as it deems prudent. The proceeds from any assignment of the Base Lease and the Trustee s rights thereunder or any sublease of the Leased Property are required to be paid to the Trustee and applied in accordance with the Declaration. Owners of the Certificates are cautioned, however, that the proceeds from any such sale or assignment may not be sufficient to pay the Principal Portions and the Interest Portions represented by all Certificates then Outstanding. See the caption RISK FACTORS AND INVESTMENT CONSIDERATIONS - Expiration or Termination of the Lease herein. Maintenance and Insurance of the Leased Property The City has agreed in the Lease, at its own expense, to maintain, manage and operate the Leased Property in good order, condition and repair, ordinary wear and tear excepted. The City will provide or cause to be provided all security service, custodial service, janitor service, power, gas, telephone, light, heating, water and all other public utility services. As provided in the Lease, the Trustee and the Owners of the Certificates will not have any obligation to incur any expense of any kind or character for the management, operation or maintenance of the Leased Property during the term of the Lease. The Leased Property is required to be insured to the extent described in Appendix C hereto under SUMMARY OF THE LEASE Insurance. All Net Proceeds from policies of insurance or condemnation awards will be applied to the prompt replacement, repair, restoration or modification of the Leased Property, unless the City has exercised its option to purchase the Trustee s interest in the Lease Property pursuant to the Lease. -9-

16 If the City determines that the replacement, repair, restoration, or modification of the Leased Property is not economically feasible or in the best interest of the City, then, in lieu of making such replacement, repair, restoration, or modification and if permitted by law, the City will promptly purchase the Trustee s interest in the Leased Property pursuant to the Lease. The Net Proceeds will be applied by the City to the purchase of the Leased Property. Any balance of the Net Proceeds remaining after purchasing the Leased Property will belong to the City. If the Net Proceeds are insufficient to pay in full the cost of any replacement, repair, restoration, or modification of the Project and the City has not elected to purchase the Trustee s interest in the Leased Property pursuant to the Lease, the City will complete such replacement, repair, restoration, modification and pay any costs thereof in excess of the amount of the Net Proceeds and the City will not be entitled to any reimbursement therefor from the Trustee nor will the City be entitled to any diminution of Basic Rent. Additional Parity Obligations Additional Certificates may be issued under and be equally and ratably secured by the Declaration on a parity with the Certificates and any other Additional Certificates Outstanding, at any time and from time to time so long as no Event of Default or Event of Nonappropriation exists, upon compliance with the conditions provided in the Declaration. See SUMMARY OF THE DECLARATION OF TRUST - Additional Certificates in Appendix C hereto. RISK FACTORS AND INVESTMENT CONSIDERATIONS The purchase of the Certificates involves certain investment risks that are discussed throughout this Official Statement. Each prospective purchaser of the Certificates should make an independent evaluation of all of the information presented in this Official Statement in order to make an informed investment decision. Certain risk factors relating to the Certificates are described below. Limited Obligations Each Certificate evidences the undivided, proportionate interest of the Owner thereof in the right to receive Basic Rent Payments to be paid by the City under the Lease. The Certificates are payable solely from the Basic Rent and other money and investments held by the Trustee under the Declaration. The Basic Rent Payments constitute currently budgeted expenditures of the City, payable only if the City Council appropriates sufficient money to extend the term of the Lease for each successive fiscal year. The Initial Term of the Lease commences as of the date of delivery of the Lease and expires on September 30, The Lease is thereafter subject to successive one-year Renewal Terms commencing on October 1 of each year, with a final renewal term commencing October 1, 2029 and ending April 1, The City s obligations under the Lease do not constitute an indebtedness within the meaning of any constitutional or statutory debt limitation or restriction. The City intends to satisfy its obligation to make Basic Rent Payments under the Lease from available funds of the City. The City Council has declared its current intention and expectation that the Lease will be renewed annually until the City exercises its option to acquire the Trustee s interest in the Leased Property. However, such a declaration may not be construed as contractually obligating or otherwise binding the City. Accordingly, the likelihood that the City will renew the Lease for all Renewal Terms and continue to pay the Basic Rent thereunder to enable the Trustee to timely pay the Principal Portions and Interest Portions of Basic Rent represented by the Certificates is dependent upon certain factors that are beyond the control of the Owners, including (1) the availability of funds from the Certificates or other sources in an amount sufficient to complete the Project, (2) the City s continuing need for the Leased Property, (3) the demographic conditions within the City, (4) the City s ability to generate sufficient property taxes, sales taxes, utility fees and charges and revenues from other sources -10-

17 to pay its obligations under the Lease and its other obligations, and (5) the value of the Leased Property if the Trustee s interest therein is relet or sold in a foreclosure or other liquidation proceeding instituted by the Trustee upon the termination of the Lease as a result of an Event of Default or Event of Nonappropriation. Expiration or Termination of the Lease The Lease will expire by its terms on September 30 during each year commencing in 2008 and ending in 2029, with a final Renewal Term commencing October 1, 2029 and ending April 1, 2030, unless the City in its sole discretion exercises the option provided in the Lease to extend its term for each next succeeding Renewal Term. If in any year the City does not extend the term of the Lease, the City s obligation to make payments will terminate on the September 30 occurring at the end of the then current Renewal Term. Upon (1) the expiration of any Renewal Term during which an Event of Nonappropriation occurs (which is not waived by the Trustee as provided in the Lease) or (2) a default under the Lease and an election by the Trustee to terminate the City s possessory interest under the Lease, the City s right of possession and use of the Leased Property under the Lease will expire or be terminated, as appropriate. See SUMMARY OF THE LEASE - Events of Default and - Remedies on Default in Appendix C hereto. If the City s right of possession and use of the Leased Property under the Lease expires or is terminated for either of the reasons described in the preceding paragraph, (1) the City s obligation to make payments thereunder will continue through the Renewal Term then in effect, but not thereafter; (2) the Principal Portion of Basic Rent that have been appropriated but are then unpaid by the City for the City s then current fiscal year may be declared immediately due and payable; and (3) the Certificates will be payable from, among other sources, such money as may be available by way of recovery from the City of the Basic Rent Payments that are due through the Renewal Term then in effect. If the Lease expires at the end of a Renewal Term without any extension for the next succeeding Renewal Term or if an event occurs as described above pursuant to which the Trustee terminates the City s right of possession of the Leased Property under the Lease, the Trustee may recover possession of the Leased Property and assign the Base Lease and its rights thereunder or sublease the Leased Property pursuant to its rights under the Base Lease. The net proceeds of any assignment of the Base Lease or sublease of the Trustee s interest in the Leased Property, together with certain other money then held by the Trustee under the Declaration, are required to be used to pay the Certificates to the extent of such money. Upon the occurrence of an Event of Default or an Event of Nonappropriation, the Trustee has the right under the Declaration and the Lease to take possession and relet the Leased Property for the remaining term of the Base Lease. No assurance can be made that the Leased Property will generate sufficient revenues to pay the Principal Portion and Interest Portion of Basic Rent represented by the Certificates upon the exercise of such remedy by the Trustee. The Base Lease extends only to April 1, 2050, which may limit the Trustee s ability to relet the Leased Property for sufficient revenues to pay the Principal Portion and Interest Portion of Basic Rent represented by the Certificates, upon the exercise of such remedy by the Trustee. No assurance can be given that the Trustee could assign the Base Lease and its rights thereunder or sublease the Leased Property for the amount necessary (after taking into account money legally available from other sources) to pay in full the Principal Portions and Interest Portions of Basic Rent then due with respect to the Certificates. Furthermore, no assurance can be given that the amount, if any, realized upon any assignment or sublease of the Trustee s interest in the Leased Property will be available to provide for the payment of the Certificates on a timely basis. Delays in Exercising Remedies A termination of the Lease will give the Trustee the right to possession and use of the Leased Property, and the right to assign the Base Lease and its rights thereunder or to sublease the Leased Property, all in accordance with the provisions of the Base Lease, the Lease and the Declaration. However, the enforceability of the Lease and the Declaration is subject to applicable bankruptcy laws, equitable principles affecting the enforcement of creditors rights generally and liens securing such rights, the exercise of judicial authority by State -11-

18 of Missouri or federal courts and the exercise by the United States of America of the powers delegated to it by the U.S. Constitution. Any delays in the ability of the Trustee to obtain possession of the Leased Property will, of necessity, result in delays in any payment of Principal Portions and Interest Portions of Basic Rent represented by the Certificates. Completion and Construction Risks There are a number of risks and contingencies associated with the completion of the Project, including total cost and date of completion. The City is relying on MODOT to construct the Highway Project and to provide all funding, other than the local match funded in part by the proceeds of the Certificates. There can be no assurances by the City that MODOT will fund and complete the Highway Project. Although the construction contract for the Municipal Complex Project will include a guaranteed maximum price, the City has not yet entered into a construction contract and there can be no assurance that the actual costs will not exceed the funds available from the proceeds of the Certificates. Change orders and other contingencies generally involved in the construction of any facilities, such as weather conditions, labor conditions and difficulties in obtaining materials, may cause the actual cost of completion to exceed available funds. Because the Municipal Complex Project serves as collateral for the Certificates, the failure by the City to complete the Municipal Complex Project would likely adversely affect the security for the Certificates and could increase the likelihood of nonappropriation of Basic Rent by the City. Destruction of the Leased Property The Lease requires the Leased Property to be insured as described in SUMMARY OF THE LEASE Insurance in Appendix C hereto. If the Leased Property is damaged or destroyed, the City is nevertheless required to continue to make Basic Rent Payments under the Lease, subject to the exercise of its option to extend the term of the Lease for each next succeeding Renewal Term and to the application of Net Proceeds from insurance and certain other sources to repair, restore, modify, improve or replace the affected portion of the Leased Property. If the Net Proceeds from insurance and such other sources are sufficient to repair, restore, modify, improve or replace the affected portion of the Leased Property, such proceeds are to be so applied unless the City elects to purchase the Trustee s interest in the Leased Property pursuant to the Lease. If the Net Proceeds are insufficient for such purpose, (1) the City is obligated to commence and thereafter complete the work and pay any cost in excess of such net proceeds, in order for the affected portion of the Leased Property to be repaired, restored and replaced, or (2) the City may apply net proceeds to the payment of the Purchase Price applicable on the next available Optional Payment Date and, if such net proceeds are insufficient to pay such Purchase Price, the City is required under the Lease to pay such amounts as are necessary to equal the full Purchase Price. There can be no assurance either as to the adequacy of or timely payment under property damage insurance in effect at that time or that the City will elect to extend the term of the Lease for the next Renewal Term succeeding such damage or destruction. See SUMMARY OF THE LEASE - Damage, Destruction and Condemnation in Appendix C hereto. Principal Amount of Certificates Exceeds Insured Value of the Leased Property The City insures the Leased Property against casualty loss for $5,632,000, which is substantially less than the principal amount of the Certificates. In the event of a casualty loss, the proceeds of any insurance claim may be insufficient to fund the City s purchase of the Leased Property, pursuant to the Lease, if the City determines that the repair, restoration, modification or improvement of the Leased Property is not economically feasible or in the best interest of the City, and accordingly could increase the likelihood of nonappropriation of Basic Rent by the City. The City also has a title insurance policy on the Leased Property for $6,812,000. Accordingly, in the event of a title loss, the proceeds of the title insurance policy may be insufficient to allow the City to purchase the -12-

19 Trustee s interest in the Leased Property pursuant to the Lease and could increase the likelihood of nonappropriation of Basic Rent by the City. Effect on Tax-Exemption of Termination of the Lease Special Tax Counsel is not rendering an opinion with respect to the tax-exempt status of the Interest Portion of Basic Rent distributable to Certificate owners subsequent to the termination of the Lease for any reason (including an Event of Default under the Lease or an Event of Nonappropriation). If the Lease is terminated while Certificates are Outstanding, there is no assurance that payments made to Certificate owners after such termination with respect to interest will be excluded from gross income of the Owners thereof for federal or Missouri income tax purposes. Taxability The Certificates are not subject to prepayment nor are the interest rates on the Certificates subject to adjustment in the event of a determination by the Internal Revenue Service or a court of competent jurisdiction that the Interest Portion of Basic Rent paid or to be paid on any Certificate is or was includible in the gross income of the Certificate Owner for federal income tax purposes. Under such circumstances, Certificate Owners would continue to hold their Certificates, receiving the Principal Portion and Interest Portion of Basic Rent as and when due, but would be required to include the Interest Portion of Basic Rent in gross income for federal and Missouri income tax purposes. Secondary Markets and Prices The Certificates are not readily liquid, and no person should invest in the Certificates with funds such person may need to convert readily into cash. Owners of the Certificates should be prepared to hold their Certificates to the stated maturity date. The Underwriter will not be obligated to repurchase any of the Certificates, and no representation is made concerning the existence of any secondary market for the Certificates. No assurance can be given that any secondary market will develop following the completion of the offering of the Certificates as no assurance can be given that the initial offering price for the Certificates will continue for any period of time. Constitutional Challenge of Kentucky State Income Tax Exemption for Interest Paid on Tax-Exempt Bonds The U.S. Supreme Court recently heard oral arguments on an appeal of a decision by a Kentucky state court regarding a statute that exempts interest on obligations issued by the state of Kentucky and political subdivisions of Kentucky but does not extend that exemption to interest on obligations issued by other states and political subdivisions. The lower court concluded that the exemption for interest on Kentucky bonds violated the Commerce Clause in the U.S. Constitution, as the state statute did not extend the exemption to interest paid on bonds issued in other states. Special Tax Counsel will render its opinion that the interest on the Certificates is exempt from income taxation by the State of Missouri. Missouri law is similar to the Kentucky statute that is being challenged, and exempts interest on the bonds, but not the interest on bonds issued in other states. The City can not predict either the outcome of the Kentucky case to be decided by the Supreme Court or what impact that outcome might have on the exemption of interest on the Certificates from Missouri income tax. Purchasers of the Certificates should consult their own tax advisors as to the potential impact on the Certificates of a decision by the U.S. Supreme Court in this matter. -13-

20 THE TRUSTEE The Bank of New York Trust Company, N.A., a national banking association duly organized and existing and authorized to conduct its operations under the laws of the United States of America, will be the Trustee under the Declaration and lessor under the Lease. The Trustee may consult with counsel, and the opinion of such counsel will be full and complete authorization and protection with respect to any action taken or suffered by the Trustee in good faith in accordance with such opinion. The Trustee may execute any trusts or powers or perform the duties required by the Declaration or the Lease by or through attorneys, agents or receivers and will not be answerable for the default or misconduct of any such attorney, agent or receiver selected by it in good faith. The Certificates are executed by the Trustee, not individually or personally but solely as Trustee under the Declaration, in the exercise of the power and authority conferred upon and invested in it as such Trustee. Except for its negligence or willful misconduct, nothing contained in the Declaration or the Lease is to be construed as creating any liability on the Trustee, individually or personally, to perform any covenant either express or implied in the Certificates, the Declaration or the Lease, all such liability, if any, being expressly waived by the Owners of the Certificates by the acceptance thereof and by each and every person now or hereafter claiming by, through or under the Trustee or the Owners of the Certificates. Insofar as the City is concerned, the Trustee and the Owner of any Certificate and any person claiming by, through or under the Trustee or the Owner of any Certificate may look solely to the Trust Estate described in the Declaration for payment of the interests evidenced by the Certificates. As security for the compensation, expenses, disbursements and indemnification to which it is entitled upon the occurrence of an Event of Default under the Declaration, the Trustee will have a first lien with right of payment prior to payment on account of any principal or interest with respect to the Certificates for such compensation, expenses, disbursements and indemnification. FINANCIAL STATEMENTS The City s audited financial statements for the fiscal year ended September 30, 2007, together with the Independent Auditors Report of Hochschild, Bloom & Company, L.L.P., are set forth in Appendix B hereto. APPROVAL OF LEGALITY Legal matters incident to the authorization, issuance and sale of the Certificates are subject to the approving legal opinion of Gilmore & Bell, P.C., St. Louis, Missouri, Special Tax Counsel. Gilmore & Bell, P.C. will also pass upon certain matters relating to this Official Statement. Certain legal matters will be passed upon for the City by Lewis, Rice & Fingersh, L.C., Washington, Missouri. Tax Opinion of Special Tax Counsel TAX MATTERS In the opinion of Special Tax Counsel, under existing law, the Interest Portion of Basic Rent paid by the City and distributed to the registered owners of the Certificates is excludable from gross income for federal and Missouri income tax purposes and is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations; such Interest Portion, however, is taken into account in determining adjusted current earnings for the purpose of computing the alternative minimum tax imposed on certain corporations. The opinion set forth in this paragraph is subject to the condition that the City comply with all requirements of the Internal Revenue Code of 1986, as amended (the Code ), that must be satisfied subsequent to the delivery of the Certificates in order that said Interest Portion of Basic Rent be, or continue to be, excludable from gross income, for federal and Missouri income tax purposes. The City has covenanted to comply with all such requirements. Failure to comply with certain of such requirements may cause the inclusion of said Interest -14-

21 Portion of Basic Rent represented by the Certificates in gross income for federal and Missouri income tax purposes retroactive to the date of the initial delivery of the Certificates. The Certificates have not been designated as qualified tax-exempt obligations within the meaning of Section 265(b)(3) of the Code. Special Tax Counsel expresses no opinion regarding other federal or State tax consequences arising with respect to the Certificates. Other Tax Consequences Prospective purchasers of the Certificates should be aware that ownership of the Certificates may result in collateral federal income tax consequences to certain taxpayers, including, without limitation, financial institutions, property and casualty insurance companies, individual recipients of Social Security or Railroad Retirement benefits, certain S corporations with excess net passive income, foreign corporations subject to the branch profits tax, life insurance companies, and taxpayers who may be deemed to have incurred or continued indebtedness to purchase or carry or have paid or incurred certain expenses allocable to the Certificates. Special Tax Counsel expresses no opinion regarding these tax consequences. Purchasers of Certificates should consult their tax advisors as to the applicability of these tax consequences and other federal income tax consequences of the purchase, ownership and disposition of the Certificates, including the possible application of state, local, foreign and other tax laws LITIGATION There is not now pending or, to the City s knowledge, threatened, any litigation seeking to restrain or enjoin or in any way limit the approval or the issuance and delivery of this Official Statement or the Certificates or the proceedings or authority under which they are to be issued. In addition, there is no litigation pending or, to the City s knowledge, threatened which in any manner challenges or threatens the City s powers to enter into or carry out the transactions contemplated by the Declaration, the Lease, the Base Lease and this Official Statement. UNDERWRITING Edward D. Jones & Co., L.P (the Underwriter ) has agreed, subject to certain conditions, to purchase the Certificates at a price of $26,260,950 (which equals the principal amount of the Certificates, less an underwriter s discount of $579,050) plus accrued interest from the date of the Certificates to the date of payment and delivery of the Certificates, if any. The Certificates may be offered and sold to certain dealers and others at prices lower than the initial public offering price, and such initial offering price may be changed from time to time. The Underwriter is purchasing the Certificates for resale in the normal course of the Underwriter s business activities. The Underwriter reserves the right to offer any of the Certificates to one or more purchasers on such terms and conditions and at such price or prices as the Underwriter, in its discretion, determines. NO RATING The City has not applied to Standard & Poor s, Moody s Investors Service, Inc. or any other similar rating service for a rating of the Certificates. -15-

22 CERTAIN RELATIONSHIPS Gilmore & Bell, P.C., Special Tax Counsel, has represented the Underwriter in transactions unrelated to the delivery of the Certificates, but is not representing the Underwriter in connection with the delivery of the Certificates. Lewis, Rice & Fingersh, L.C., counsel to the City, has represented the Trustee in transactions unrelated to the delivery of the Certificates, but is not representing the Trustee in connection with the delivery of the Certificates. MISCELLANEOUS References herein to the Declaration, the Lease, the Base Lease and certain other matters are brief discussions of certain provisions thereof. Such discussions do not purport to be complete, and reference is made to such documents for full and complete statements of such provisions. Any statement made in this Official Statement involving matters of opinion or of estimates, whether or not expressly so stated, are set forth as such and not as representations of fact, and no representation is made that any of the estimates will be realized. The information and expressions of opinion herein are subject to change without notice and neither the delivery of this Official Statement nor any sale made hereunder shall, under any circumstances, create any implication that there has been no change in the information presented herein since the date hereof. This Official Statement is not to be construed as a contract or agreement between the City and the Underwriter and the purchaser or Owners of any Certificates. [Remainder of Page Intentionally Left Blank] -16-

23 The form of this Official Statement and its distribution and use by the Underwriter have been approved by the City. CITY OF WASHINGTON, MISSOURI By: /s/ Richard Stratman Mayor -17-

24 THIS PAGE INTENTIONALLY LEFT BLANK

25 APPENDIX A GENERAL AND ECONOMIC INFORMATION REGARDING THE CITY

26 TABLE OF CONTENTS Page THE CITY... A-1 General... A-1 Location... A-1 Government and Organization... A-1 Employee Relations... A-1 Risk Management... A-2 Utilities... A-2 Public Safety... A-2 Communications... A-2 Transportation... A-3 Park and Recreation Services... A-3 Educational Institutions and Facilities... A-4 Medical and Health Facilities... A-4 FINANCIAL INFORMATION CONCERNING THE CITY... A-5 Accounting, Budgeting and Auditing Procedures... A-5 The General Fund... A-5 Sources of Revenue.... A-7 SALES TAX INFORMATION... A-7 Sales Taxes... A-7 Sales Tax Collection... A-7 Transportation Sales Tax Revenues... A-7 PROPERTY TAX INFORMATION... A-8 Property Valuations... A-8 Property Tax Levies and Collections... A-10 History of Tax Levies... A-11 Tax Collection Record... A-11 Major Property Taxpayers... A-11 DEBT STRUCTURE OF THE CITY... A-12 Certificate Payment Schedule... A-12 General Obligation Indebtedness... A-12 Revenue Bonds... A-13 Lease Obligations... A-13 Tax Abatement and Tax Increment Financing...A-14 History of Debt Payment... A-14 Future Debt Plans... A-14 DEMOGRAPHIC AND ECONOMIC INFORMATION CONCERNING THE CITY... A-15 Employment... A-15 Housing... A-15 General Demographic Statistics... A-16 Building Permits... A-17

27 THE CITY General The City of Washington, Missouri (the City ) is a third-class city, with an estimated current population of 13,250 residents. The City was settled in 1799, became a village in 1827 and was incorporated as a city in The City currently encompasses approximately 9 square miles. Location The City is located along State Highways 47 and 100 in Franklin County, Missouri, approximately 50 miles west of downtown St. Louis, Missouri. Franklin County is the first county west of St. Louis County, Missouri, and portions of Franklin County, including the City, are experiencing new development associated with the growth of the St. Louis Metropolitan Area. The community can best be characterized as a historic river town experiencing new residential, commercial and industrial development. Government and Organization The City is governed under the Mayor/City Council/Administrator form of government. The governing body of the City is the City Council, which is comprised of eight Councilmembers and the Mayor, who establish policy and handle major decision-making responsibilities. The City is divided into four wards with two Councilmembers representing each ward. The Mayor is vested with supervisory control of the day-to-day affairs of the City and its officers. The Mayor, elected at large to serve a four-year term, is the President of the City Council, who are elected by wards in alternate years with each serving for two years. The Mayor may vote in the event of a tie vote by the City Council. However, he does not have power to vote in cases when he is an interested party. The current Mayor and members of the City Council are listed below. Name Title First Elected Term Expires Richard Stratman Mayor Robert Engemann Councilmember 1999 (1) 2009 Tim Overschmidt Councilmember John Rhodes Councilmember Jeffrey Mohesky Councilmember Connie Groff Councilmember 2005 (2) 2009 Guy Midkiff Councilmember Marty Tudor Councilmember Carolyn Witt Councilmember (1) Was first appointed to Council in May, (2) Was first appointed to Council in May, Employee Relations The City has approximately 125 full-time employees and approximately 50 part-time and seasonal employees. In May 2007, the Missouri Supreme Court reversed 60 years of precedent and held that public employees have a constitutional right to collectively bargain under Missouri s Constitution. The impact of this decision on the City and its employees is not yet known. The City has no record of any work stoppages or other labor disputes. A-1

28 Risk Management The City is a member of the Missouri Intergovernmental Risk Management Association ( MIRMA ), which is a jointly self-funded insurance program consisting solely of Missouri municipalities. MIRMA assesses each participant in the program based upon past experience of the group. MIRMA purchases excess insurance coverage in the event of significant losses by participants of the program. The assessment for the coverage period July 1, 2007 through June 30, 2008 was $459,062. Utilities Utility service is provided by a variety of carriers. The electric provider for the City is AmerenUE. Natural gas is being provided by Missouri Natural Gas Company. Water and sewer services within the City are provided by the City. Public Safety The City provides a full range of municipal services for its citizens, which include public safety, streets, sanitation, culture and recreation, public improvements, planning and zoning, and general administrative services. The Washington Police Department consists of a staff of 31 employees. The department is headed by Chief Kenneth W. Hahn. The police force has 28 commissioned officers. The force consists of a Chief of Police, Assistant Chief of Police, administrative staff, four lieutenants, three sergeants, and 19 officers serving in a variety of capacities. The department currently operates through the following divisions: Administration, Road Patrol, Detectives, Traffic, D.A.R.E. and the School Resource Officer Program. The Police Department also sponsors the Police Explorers and a Reserve Officer Program. The Communications Division serves as dispatchers for the Police Department, Fire Department and Ambulance District, as well as the non-emergency departments of the City (street, sanitation, water, sewer, parks, etc.). The communication officers assigned to this division perform a variety of duties including: (1) receive and dispatch all 911 calls, (2) the dispatch of police, fire, ambulance and other emergency and non-emergency city crews; (3) monitoring movements of police, fire and ambulance personnel; (4) providing pre-arrival instructions for medical, fire and law enforcement emergency situations; (5) observing prisoners via video cameras in holding areas; and (6) tracking weather conditions and signaling alarm sirens when needed. Fire protection is provided through the Washington Volunteer Fire Company (the Fire Company ). The main fire station and headquarters of the Fire Company are located within the City. The Fire District has 93 active volunteers. The fire houses, trucks and all equipment are funded from the City s Capital Improvement Fund. Operating expenses are paid from the City s General Fund. The City was the first community in Missouri to receive a Class 4 fire insurance rating and the first community in the United States serviced by an all volunteer department to receive a Class 3 rating. The Washington Area Ambulance District (the Ambulance District ) provides ambulance service and maintains a station within the City. Both the Ambulance District and the Fire Company are operational 24 hours a day. Communications Telecommunications services are provided by AT&T. Charter Communications provides cable television service to the City, as well as telephone and high-speed internet services. The City receives all St. Louis radio stations and television channels. Newspapers serving Franklin County include the Washington Missourian (a weekly paper), the New Haven Leader (a weekly paper), the St. Clair Missourian (a weekly paper), the Sullivan Independent News (a weekly paper), and the Union Missourian (a weekly paper). A-2

29 Transportation The City is served directly by State Highway 100, State Highway 47 and State Highway A, which becomes Jefferson Street north of Highway 100. Interstate 44 does not directly connect to the City, but does connect via Missouri Route 100 east of the City near Gray Summit, Missouri. This portion of Missouri Route 100 will be widened and improved as part of the Highway Project. The City also links to Interstate 47 via Missouri Route 47 south of the City at the City of St. Clair, Missouri. Interstate 70 also has a connection with the City via Missouri Route 47 north. Principal motor freight carriers servicing the City include Yellow Freight, D&H Trucking, ABF Freight and Arkansas Freightways. Most motor freight carriers connect with Interstate 44 or to Highway (Interstate 64) or Interstate 70 via Missouri Route 47 north of the City. The City is located immediately south and adjacent to the Missouri River. There is presently no public or private barge dock. However, with the movement of the sand plant, a dock should become available for larger boats. Distance to the nearest barge dock is 50 river miles. Recreational access to the Missouri River occurs at Rennick Riverfront Park where a free boat ramp launching area is located. The U.S. Army Corps of Engineers maintain a nine foot channel depth in this section of the Missouri River. Rail service to the City is provided by Amtrak. The rail line is located adjacent to Rennick Riverfront Park in downtown. A refurbished passenger depot is located on Front Street. Two daily trains provide passenger service between St. Louis and Kansas City, Missouri. This rail corridor extends for 40 miles and extends from Pacific, Missouri, at the St. Louis County, Missouri line, westward to the Gasconade County, Missouri line near Berger, Missouri. Air service is provided by the Washington Regional Airport located in Warren County, approximately two miles north of the City. The airport is owned by the City. The City recently completed a 75 foot by 5,000 foot concrete runway expansion, which has upgraded the airport s classification to B-2. Presently no commercial air service is available at Washington Memorial Airport. The City is located approximately 55 miles from Lambert International Airport, which provides commercial air service to the St. Louis Metropolitan Area and surrounding areas. Bus service in the City occurs on a focused basis and includes the Franklin County Transportation Council, the Older Adults Transportation Service and Mid America Transportation LLC, among other specialized community providers. Park and Recreation Services The City owns, operates and maintains over 200 acres of park land located throughout the community. The major park areas for the City include the Washington City Park, the James W. Rennick Riverfront Park, Krog Park, McLaughlin Field, Bernie E. Hillermann Park and the newly completed Lakeview Park. These parks are supplemented by other park and recreational opportunities offered by the public and private school systems, service and fraternal organizations and various homeowner associations. The public and semi-public opportunities offered by these facilities include swimming pools, playground areas, lake resources, lighted baseball/softball fields, sand volleyball courts, soccer fields, lighted outdoor basketball courts, lighted tennis courts, hiking/biking trails and covered picnic pavilions. The City also has a Municipal Auditorium which is used by the community for functions such as home shows, exercise programs, concerts, dances and other recreational programming. The City recently applied for a grant to fund a new lighting system for the facility through the AmerenUE Smartlights Grant program. Other recreational opportunities are provided at the YMCA located adjacent to Lakeview Park. A-3

30 The City developed a 12-mile bikeway system consisting of 9 miles of on-street bicycle routes, connecting to a 3-mile trail along the riverfront. The project was partially funded with Federal Transportation Enhancement funds and from the City s Capital Improvements Fund. Although not a part of the City s park system, the Katy Trail is located within approximately five miles of the City in Warren County. This trail is operated by the Missouri Department of Natural Resources ( MDNR ), and is one of MDNR s most heavily used parks. Recreational programming throughout the year provides classes and instruction in many types of recreational pursuits. These activities, coupled with those provided by the schools and local business community (i.e., miniature golf, bowling, karate) provide many opportunities for recreational interests. Educational Institutions and Facilities The City has both public and private parochial schools. The Washington School District (the School District ) is located in the City and in addition to the City, the School District covers portions of Franklin, St. Charles and Warren Counties. The School District is comprised of eight elementary schools, one middle school and one high school. The elementary schools have a combined enrollment of 1,835 students. There are almost 600 students in the middle school and over 1,300 students in the high school. The total number of students in the School District exceeds 3,700. The high school, middle school and three elementary schools (Washington West, Fifth Street and South Point) are located within the City limits. The School District also has established the Four Rivers Area Vocation-Technical School. Private elementary schools include Our Lady of Lourdes Catholic School with an enrollment of approximately 300, the Immanuel Lutheran School with 226 students and St. Francis Borgia Catholic School with 442 students. St. Francis Borgia also offers a Regional High School which is financed and supported by the members of nineteen parish communities in Franklin, Warren and St. Charles Counties. Opening in 1987 with an enrollment of 406, today the enrollment nears 700 students. Although not in the City, the community is served by East Central College located in Union, Missouri. East Central College is a comprehensive community college which has been serving students for over 30 years. Founded in 1968, East Central College was established to serve the educational needs of people in east central Missouri, which includes the City. The college serves more than 3,000 students each semester. East-Central College also offers evening classes at its Vocational-Technical Building located in the City. Other private colleges have satellite facilities in the community, as well. In addition, City residents have easy access to the St. Louis Metropolitan Area s many colleges and universities, including the University of Missouri-St. Louis, Washington University, Maryville University, Saint Louis University, Webster University and various other colleges and technical schools. Medical and Health Facilities Health services in the City are provided by St. John s Mercy Hospital, a full service regional hospital featured as one of the best hospitals in the United States. In addition to emergency care, the hospital also provides surgery services, a childbirth center, home health care, patient rehabilitation, and eye care facility. Patients First Health Care is a 41-doctor multi-specialty physician group offering primary care and specialty services, is located in the heart of the City across from Washington High School. The Patients First medical campus includes physician offices, an urgent care facility, pharmacy, cafe, accredited nuclear heart lab, diagnostic sleep center, full-service laboratory and diagnostic digital imaging. A-4

31 Other community health services include two skilled nursing facilities: Cedar Crest Manor and Grandview Healthcare Center. The Washington Residential Care facility is a Residential II Care Facility located in the City. Adult care is provided at Home Sweet Home. Because of its close proximity to the St. Louis Metropolitan Area, residents of the City have access to 50 hospitals, including the highly regarded Barnes-Jewish Hospital, and two medical schools, Washington University Medical School and Saint Louis University Medical School, which are well regarded for their medical schools and quality of research. In addition, numerous dentists, chiropractors and doctors provide medical services from offices and clinics located in close proximity to the City. Accounting, Budgeting and Auditing Procedures FINANCIAL INFORMATION CONCERNING THE CITY A summary of the City s accounting, budgeting and auditing procedures can be found in the Audited Financial Statements attached to this Official Statement as Appendix B. The General Fund In accordance with established accounting procedures of governmental units, the City records its financial transactions under various funds. The largest is the General Fund, from which all general operating expenses are paid and to which taxes and all other revenues not specifically allocated by law or contractual agreement to other funds are deposited. The following table sets forth the revenues, expenditures and fund balances for the City's General Fund for the following years: [Remainder of Page Intentionally Left Blank.] A-5

32 GENERAL FUND REVENUES Taxes: Property Taxes $ 1,342,293 $ 1,401,073 $ 1,578,934 $ 1,825,922 Sales Taxes 3,407,506 3,554,411 3,745,935 4,183,659 Franchise Tax 1,350,815 1,423,277 1,527,221 1,828,544 License and permits 210, , , ,026 Fees and fines 121, , , ,502 Intergovernmental 954, , , ,022 Charges for services 619, , ,263 1,120,786 Rents 30,279 26,242 85,587 81,243 Contributions and donations 4,960 38,251 49,178 50,774 Investment income 82, , , ,259 Other TOTAL REVENUES $ 8,124,290 $ 8,319,317 $ 9,174,065 $10,036,737 EXPENDITURES Current: General government $ 1,632,054 $ 1,683,480 $1,822,544 $ 2,081,732 Public safety 2,525,648 2,543,298 2,707,872 2,892,479 Highways and streets 1,599,502 1,842,138 1,506,186 1,673,717 Airport ,816 (1) 162,082 Culture and recreation - - 1,139,006 (1) 1,120,310 Debt Service: Principal Interest expense and fiscal charges 25,475 27,100 21,015 28,345 Capital outlay: General government 73,819 40,261 13,569 46,883 Public safety 53,494 91,807 54, Highways and streets 196, , ,479 (2) 144,617 Airport , Culture and recreation , ,571 Water system Sanitary sewer system TOTAL EXPENDITURES $ 6,106,679 $ 6,369,577 $ 8,151,902 $ 8,445,482 Excess (deficiency) of revenues over (under) expenditures $ 2,017,611 $ 1,949,740 $ 1,022,163 $ 1,591,255 OTHER FINANCING SOURCES (USES) Proceeds from capital lease $ - $ - $ - $ - Capital-related debt issued Transfers in - 30, ,636 - Transfers out (1,682,385) (1,892,457) (2,895,734) (3) (896,743) Sale of capital assets - 5, ,000 TOTAL OTHER FINANCING SOURCES (USES) $ (1,682,385) $ (1,856,644) $(2,577,014) $( 893,743) Net change in fund balances 335,226 93,096 (1,554,851) 697,512 Fund balances - beginning $ 4,881,477 $5,216,703 $ 5,309,799 $ 3,754,948 Fund balances - ending $ 5,216,703 $5,309,799 $ 3,754,948 (3) $ 4,452,460 Source: City s Audited Financial Statements. (1) Prior to 2006, the City maintained separate Airport and Culture and recreation funds. In 2006, such separate funds were consolidated into the General Fund. (2) In 2006, the City began applying a novachip surface treatment to several roads within the City. (3) The increase in Transfers Out and decrease in Fund balances - ending for fiscal year 2006 compared to previous fiscal years are the result of funding a new capital projects fund for vehicle and equipment replacement. A-6

33 Sources of Revenue The City finances its operations through various taxes, fees and other miscellaneous sources. The sources of revenue anticipated by the City for the fiscal year ending September 30, 2008 are shown below: (1) Source Taxes % Licenses & Permits Intergovernmental Transfers Charges for Services Interest Other (1) Total % Other sources of revenue include, but are not limited to special assessments, fines, rents, donations and grants. Source: City s Budget for the fiscal year ending September 30, 2008, Combined Funds Revenues. Sales Taxes SALES TAX INFORMATION The City imposes three sales taxes: (1) a one-cent sales tax for use in the General Fund, which has been in effect since 1970; (2) a one-half cent capital improvements sales tax, which expires in 2010; and (3) a one-half cent transportation sales tax, which was passed by the voters in April 2005, became effective on October 1, 2005, and expires on June 30, 2030 (the Transportation Sales Tax ). Sales Tax Collection The following table represents the collection history of the City s one-cent general sales tax for the past five fiscal years: Fiscal Year (September 30) Total Amount Collected Percent Change Transportation Sales Tax Revenues 2003 $3,254,254 N/A ,407, % ,554, ,745, ,183, The City campaigned for the Transportation Sales Tax on the premise that its proceeds would allow for the funding of the Highway Project. The Transportation Sales Tax may only be used to pay for transportationrelated costs within the City limits. Therefore, the City intends to use Transportation Sales Tax revenues to pay for street, road, bridge and other costs that historically have been paid from the General Fund, which will free up General Fund revenues to pay costs of the Highway Project (through the payment of Basic Rent on the Certificates). A-7

34 The City estimates that approximately $1,375,000 in fiscal year 2007 expenditures for transportation improvements from the General Fund could have been funded by the Transportation Sales Tax. The City collected $1,568,854 in fiscal year 2006 and $1,664,077 in fiscal year 2007 from the Transportation Sales Tax and accordingly could have offset such General Fund transportation expenses from Transportation Sales Tax revenues. Projections for Transportation Sales Tax revenue during the term of the Lease are shown below: Year Projected Revenue (1) 2008 $1,714, ,765, ,818, ,873, ,929, ,987, ,046, ,108, ,171, ,236, ,304, ,373, ,444, ,517, ,593, ,671, ,751, ,834, ,919, ,006, ,097, ,190, ,286,000 (1) Assumes 3.0% annual growth in revenues, beginning from actual fiscal year 2007 collections. The City s recent retail developments, which opened in 2007 or are expected to lease out in 2008, are not accounted for in these projections. The City expects these recent retail developments, including the expansion of a Wal-Mart Supercenter, the expansion of J.C. Penney and the opening of Phoenix Center II (a large retail shopping center anchored by Target and Kohl s) are likely to result in higher sales tax revenues. Property Valuations PROPERTY TAX INFORMATION Assessment Procedure. All taxable real and personal property within the City is assessed by the Franklin County Assessor. Missouri law requires that personal property be assessed at 33-1/3% of true value (except for a few subclasses of minimal value that are assessed at a lower percentage) and that real property be assessed at the following percentages of true value: Residential real property...19% Agricultural and horticultural real property...12% Utility, industrial, commercial, railroad and all other real property...32% A-8

35 On January 1 in every odd-numbered year, each County Assessor must adjust the assessed valuation of all real property located within the county in accordance with a two-year assessment and equalization maintenance plan approved by the State Tax Commission. The County Assessor is responsible for preparing the tax roll each year and for submitting the tax roll to the Board of Equalization. The County Board of Equalization has the authority to adjust and equalize the values of individual properties appearing on the tax rolls. Current Assessed Valuation. The following table shows the total assessed valuation and the estimated actual valuation, by category, of all taxable tangible property situated in the City, according to the assessment as of January 1, 2007, including state and locally assessed railroad and utility property, as finally adjusted and equalized: Assessed Assessment Estimated Total Valuation Rate Valuation Real Estate: Residential $144,020,591 19% $ 758,003,111 Commercial 107,169,568 32% 334,904,900 Agricultural 937,465 12% 7,712,208 Sub-Total $252,127,624 $1,100,720,219 Personal Property $ 46,789, % $ 140,382,289 Locally Assessed Railroad & Utility Property: Commercial $ 59,109 32% $ 184,716 Personal Property 88, % 264,563 State Assessed Railroad & Utility Property: Commercial $ 4,844,428 32% $ 15,138,838 Personal Property 1,334, % 4,003,642 Sub-total $ 6,178,842 $ 19,142,480 Less TIF 181,435 TOTAL $305,061,736 $1,260,694,266 Source: Franklin County Clerk. A-9

36 History of Property Valuations. The total assessed valuation of all taxable tangible property situated in the City, including state and locally assessed railroad and utility property, according to assessments of January 1 in each of the following years, has been as follows: Year Assessed Valuation Percent Change 2003 $228,200,616 N/A ,189, ,962, ,179, ,061, Source: Franklin County Clerk. Property Tax Levies and Collections Property taxes are levied and collected for the City by the Franklin County Collector, for which the County receives a collection fee of approximately 1.5% of the gross current tax collections made and 2% of the gross delinquent tax collections made. The City is required by law to prepare an annual budget, which includes an estimate of the amount of revenues to be received from all sources for the budget year, including an estimate of the amount of money required to be raised from property taxes and the tax levy rates required to produce such amounts. The budget must also include proposed expenditures and must state the amount required for the payment of interest, amortization and redemption charges on the City s debt for the ensuing budget year. Such estimates are based on the assessed valuation figures provided by the County Clerk. If the assessed valuation of property in the City has increased by 10% or more over the prior year s valuation by action other than a general reassessment, the rates of levy must be reduced to the extent necessary to produce substantially the same amount of tax revenues as estimated in the City s budget. The City must fix its ad valorem property tax rates and certify them to the County Clerk not later than September 1 for entry in the tax books. The County Clerk receives the county tax books from the County Assessor, which set forth the assessments of real and personal property. The County Clerk enters the tax rates certified to him by the local taxing bodies in the tax books and assesses such rates against all taxable property in the City as shown in such books. The County Clerk forwards the tax books by October 31 to the County Collector, who is charged with levying and collecting taxes as shown therein. The County Collector extends the taxes on the tax rolls and issues the tax statements in early December. Taxes are due by December 31 and become delinquent if not paid to the County Collector by that time. All tracts of land and city lots on which delinquent taxes are due are charged with a penalty of 18% of each year s delinquency. All lands and lots on which taxes are delinquent and unpaid are subject to sale at public auction in August of each year. The County Collector is required to make disbursements of collected taxes to the City each month. Because of the tax collection procedure described above, the City receives the bulk of its moneys from local property taxes in the months of December, January and February. A-10

37 History of Tax Levies The following table shows the City s tax levies (per $100 of assessed valuation) for each of the last four fiscal years: Fiscal Year Ended September 30 General Fund 2005 $ Tax Collection Record 2007: The following table sets forth tax collection information for the City for the fiscal years 2003 through Fiscal Year (September 30) Total Taxes Levied Current Taxes Collected Percent of Current Taxes Collected Delinquent Taxes Collected Total Amount Collected Percent of Total Taxes Collected (1) 2003 $1,120,421 $1,104, % $16,617 $1,121, % ,354,690 1,326, ,004 1,339, ,409,752 1,395, ,866 1,410, ,578,851 1,553, ,318 1,565, ,772,384 1,761, ,360 1,778, (1) Delinquent taxes are shown in the year payment is actually received which may cause the percentage of current and delinquent taxes collected to exceed 100%. Major Property Taxpayers The following table sets forth the 10 largest property taxpayers in the City for 2007: Firm Type of Business Assessed Valuation Percent of Total Assessed Value 1. Wal-Mart R.E. Business Trust Retail $7,202, % 2. Creekside Land & Development Co., LLC (Patients First Healthcare) Medical/Dental Offices 5,498, Parker-Hannifan Manufacturing 3,948, Lowes Home Centers, Inc. Retail 3,816, Bluff Road, LLC (Fricks Quality Meats) Manufacturing 2,840, MCW-Rd Wash Crossing, LLC (Schnucks Shopping Center 2,790, Supermarket) 7. Safe Harbor, LLC (Rawlings Sporting Goods) Warehouse 2,660, Pauwels Transformers, Inc. Manufacturing 2,405, Magnet, LLC Manufacturing 1,703, JAF 3, LLC (Modern Auto) Auto Showroom 1,681, Source: Franklin County Clerk. A-11

38 DEBT STRUCTURE OF THE CITY Certificate Payment Schedule The annual Base Rental requirements for the Certificates are as follows: Fiscal Year (September 30) Principal Component Interest Component Total 2008 $ 0.00 $ 0.00 $ ,194, ,194, , ,272, ,277, , ,272, ,277, , ,272, ,347, , ,269, ,284, , ,269, ,284, , ,268, ,413, , ,263, ,578, , ,250, ,635, , ,234, ,194, ,065, ,194, ,259, ,180, ,148, ,328, ,300, ,096, ,396, ,435, ,037, ,472, ,575, , ,546, ,725, , ,622, ,890, , ,705, ,060, , ,785, ,250, , ,875, ,450, , ,965, ,660, , ,055, ,330, , ,593, Totals $26,840, $22,255, $49,095, General Obligation Indebtedness Debt Summary. The following table summarizes certain financial information concerning the City as of March 1, This information should be reviewed in conjunction with the information in the financial statements of the City in Appendix B hereto. Population (2000): 13,243 Assessed Valuation (2007): $305,061, Estimated Actual Value (2007): $1,260,694, Direct General Obligation Bonded Debt: $0.00 Overlapping General Obligation Debt: $13,995, Per Capita Direct and Overlapping General Obligation Debt: $ Ratio of Direct and Overlapping General Obligation Debt to Assessed Valuation: 0.46% Ratio of Direct and Overlapping General Obligation Debt to Estimated Actual Value: 0.11% A-12

39 Computation of Legal Debt Margin. Article VI, Sections 26(b) and 26(c) of the Constitution of Missouri, limit the net outstanding amount of authorized general obligation bonds, exclusive of neighborhood improvement district bonds and notes, for a city to 10 percent of the assessed valuation of the city. Article VI, Sections 26(d) and 26(e), however, provide that a city may, with the required voter approval, issue general obligation bonds in an amount not to exceed an additional 10 percent of assessed valuation for the purpose of acquiring rights-of-way; constructing, extending and improving streets and avenues; constructing, extending and improving sanitary or storm sewer systems; or purchasing or constructing waterworks or electric light plants. This additional 10 percent is permitted provided that the total general obligation indebtedness of a city, including neighborhood improvement district bonds and notes, does not exceed 20 percent of the city s assessed valuation. The legal debt margin of the City based upon the 2007 assessed valuation is calculated as follows: Constitutional Debt Limit (20% of Assessed Valuation) $61,012, Less Total General Obligation Indebtedness (0.00) Legal Debt Margin $61,012, Overlapping Bonded Indebtedness. The following table sets forth the general obligation indebtedness of political subdivisions with boundaries overlapping the City as of March 1, 2008, and the percent attributable (on the basis of assessed valuation) to the City. The table was compiled from information furnished by the jurisdictions responsible for the debt, and the City has not independently verified the accuracy or completeness of such information. Furthermore, political subdivisions may have ongoing programs requiring the issuance of additional bonds, the amounts of which cannot be determined at this time. Taxing Jurisdiction Outstanding General Obligation Indebtedness Percent Applicable to City Amount Applicable to City School District of Washington $13,995, % $13,995,000 Source: Taxing jurisdictions records and telephone surveys. Revenue Bonds On June 16, 1992, City approved the delivery of its Sewerage System Revenue Bonds, Series 1992A (the Series 1992A Bonds ) in the original principal amount of $1,300,000 for the purpose of extending and improving the City s sewer system. The Series 1992A Bonds were issued through the City s participation in the Missouri Leveraged State Water Pollution Control Revolving Fund Program (the SRF Program ). On April 16, 2001, in order to achieve a net interest savings available through the SRF Program, the City amended the ordinance approving the Series 1992A Bonds. There is currently $490,000 principal amount outstanding on the Series 1992A Bonds. On November 15, 2007, the City approved the delivery of its Sewerage System Revenue Bond, Series 2007 (the Series 2007 Bonds ) in the original principal amount of $20,000,000 for the purpose of extending and improving its sewerage system. There is currently $20,000,000 principal amount outstanding on the Series 2007 Bonds. Annual Appropriation Obligations On December 20, 2005, the City approved the delivery of its Certificates of Participation (City of Washington, Missouri, Lessee), Series 2005 (the Series 2005 Certificates ) in the original principal amount of $5,000,000 for the purpose of constructing a public safety building. There is currently $4,575,000 principal amount outstanding on the Series 2005 Certificates. A-13

40 The City has also entered into a lease purchase agreement for the acquisition of public safety communications equipment. As of December 31, 2007, the amount outstanding under this lease totaled $82,582. In 2006, the City created the Phoenix Center II Community Improvement District (the District ), in accordance with the Community Improvement District Act, to The District is a separate political subdivision from the City and levies its own three-fourths of one cent sales tax to fund various District projects. Pursuant to a development agreement dated as of May 15, 2006, relating to the development of the Phoenix Center II shopping center and the creation of the District, the City has agreed to fund certain public improvements within the District with one-half of its total sales taxes generated within the District. Tax Abatement and Tax Increment Financing Under Missouri law, tax abatement is available for redevelopers of areas determined by the governing body of a city to be blighted. The Land Clearance for Redevelopment Authority Law authorizes 10-year tax abatement pursuant to Sections to , Revised Statutes of Missouri, as amended. In lieu of 10-year tax abatement, a redeveloper which is an urban redevelopment corporation formed pursuant to Chapter 353, Revised Statutes of Missouri, as amended, may seek real property tax abatement for a total period of 25 years. In addition, the Real Property Tax Increment Allocation Redevelopment Act, Sections to , Revised Statutes of Missouri, as amended, makes available tax increment financing for redevelopment projects in certain areas determined by the governing body of a city to be a blighted area, conservation area, or economic development area, each as defined in such Act. In 2007, the City established the Downtown Washington Redevelopment Area (comprised of multiple subareas), a tax increment financing area encompassing much of the City s historic downtown, in accordance with the Real Property Tax Increment Allocation Redevelopment Act, to , RSMo. Currently, the City has only imposed tax increment financing in one subarea and has not yet issued any obligations payable from tax increment revenues. However, as redevelopment opportunities become available, the City may impose tax increment financing in the remaining subareas and issue obligations in the form of notes or bonds payable from tax increment revenues. In 2005, the City issued Industrial Development Revenue Bonds under Chapter 100 of the Revised Statutes of Missouri to provide 10 years of partial tax abatement to Harman Becker in connection with the construction and equipment of an approximately $30 million manufacturing facility in the City. The bonds are payable solely from lease payments made by Harman Becker and are not payable from City funds. History of Debt Payment The City has never defaulted on any indebtedness. Future Debt Plans The City does not currently anticipate any future borrowings. A-14

41 Employment DEMOGRAPHIC AND ECONOMIC INFORMATION CONCERNING THE CITY Listed below are the major employers located in the City and the approximate number of employees employed by each as of March 1, 2008: Employer Type of Business Number of Employees Parker Hannifin (Sporlan Valve Division) Manufacturing 1,120 St. John s Mercy Hospital Healthcare 756 Washington School District Education 575 Wal-Mart Supercenter Retail 425 Magnet, Inc. Manufacturing 390 Patients First Health Care Medical/Dental Offices 307 Pauwels Transformers Manufacturing 280 Harman/Becker Automotive Auto Information Systems 239 Rawlings/K2 Manufacturing 230 RTI Tradco Manufacturing 190 Source: City of Washington, Missouri. Employment figures are not yet available for the newly-opened Target and Kohl s stores. The following table sets forth the total labor force, number of employed and unemployed workers in the City and, for comparative purposes, the unemployment rates for the City, Franklin County, the State of Missouri and the United States for 2002 through 2006, the last available year that information is available: City of Washington Labor Force Unemployment Rates Year Employed Unemployed Total City of Washington Franklin County State of Missouri United States , , % 5.4% 5.2% 5.8% , , , , , , , , Source: Missouri Economic Research and Information Center, Missouri Department of Economic Development in cooperation with the U.S. Department of Labor, Bureau of Labor Statistics. Housing The median value of owner-occupied housing units in the City, Franklin County and the State of Missouri according to the 2000 Census is as follows: Source: United States Census Bureau, 2000 U.S. Census. City of Washington $100,600 Franklin County 96,400 State of Missouri 89,900 A-15

42 General Demographic Statistics Population. According to the U.S. Census Bureau, the population patterns for the City, Franklin County and the State of Missouri have been as follows: Year City of Washington Franklin County State of Missouri Percentage Percentage Percentage Population Change Population Change Population Change ,251 N/A 71,233 N/A 4,916,686 N/A , % 80, % 5,117, % , , ,595, Source: United States Census Bureau, 2000 U.S. Census. The following table shows the 2000 Census counts of population by age categories for the City, Franklin County and the State of Missouri: Age City of Washington Franklin County State of Missouri under 5 years 990 6, , years 2,789 21,819 1,224, years 765 5, , years ,128 1,626, years 2,569 21,008 1,249, and over 2,122 11, ,379 Median Age Source: United States Census Bureau, 2000 U.S. Census. Other Statistics. The following table presents per capita personal income (1) for Franklin County and for the State of Missouri for the years 2001 through 2005, the latest dates for which such information is available: (1) Franklin County State of Missouri Year Per Capita Income Per Capita Income 2001 $26,207 $27, ,869 28, ,064 29, ,247 30, ,392 31,231 Per Capita Personal Income is the annual total personal income of residents divided by resident population as of July 1. Personal Income is the sum of net earnings by place of residence, rental income of persons, personal dividend income, personal interest income, and transfer payments. Net Earnings is earnings by place of work the sum of wage and salary disbursements (payrolls), other labor income, and proprietors income less personal contributions for social insurance, plus an adjustment to convert earnings by place of work to a place-of-residence basis. Personal Income is measured before the deduction of personal income taxes and other personal taxes and is reported in current dollars (no adjustment is made for price changes). Source: U.S. Department of Commerce, Bureau of Economic Analysis. A-16

43 Building Permits The following table shows the number of building permits and total valuation of these permits issued within the City for the last five fiscal years. These numbers reflect permits issued either for new construction or for major renovation. Year Commercial Construction Residential Construction Permits Value Permits Value $22,042, $17,333, ,600, ,522, ,943, ,967, ,610, ,090, ,244, ,975,668 * * * A-17

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45 APPENDIX B INDEPENDENT AUDITORS REPORT AND AUDITED FINANCIAL STATEMENTS

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