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HomeMy WebLinkAboutRESOLUTION NO. 2011-68 Fairfax419915-17/Set Date for Bond Sale MINUTES TO SET DATE FOR SALE OF IP BONDS AND APPROVE PRELIMINARY OFFICIAL STATEMENT 419915-17 Fairfax, Iowa September 26, 2011 The City Council of the City of Fairfax, Iowa, met on September 26, 2011, at 6:00 o'clock p.m., at the Council Chambers, Fairfax, Iowa. The meeting was called to order by the Mayor and the roll being called and the following named Council Members were present and absent: Present: Beer, Frieden, Otto, Magers, and Wainwright. Absent: None. Council Member Magers introduced the resolution next hereinafter set out with respect to setting the date for the sale of the City's General Obligation Corporate Purpose Bonds and approving a preliminary official statement, and moved that the resolution be adopted; seconded by Council Member Wainwright. After due consideration, the Mayor put the question on the IImotion and the roll being called, the following named Council Members voted: Ayes: Beer, Frieden, Otto, Magers, and Wainwright. Nays: None. Whereupon, the Mayor declared the resolution duly adopted, as hereinafter set out. . . • . At the conclusion of the meeting, and upon motion and vote, the City Council adjourned. k JasonIZ; e, Mayor Attest: / t ta Cyn, is Stimson, City Clerk/Treasurer • -t- DORSEY&WHITNEY LLP,ATTORNEYS,DES MOINES,IOWA Fairfax419915-17/Set Date for Bond Sale • RESOLUTION NO. 2011-68 RESOLUTION SETTING DATE FOR SALE OF $2,260,000 GENERAL OBLIGATION CORPORATE PURPOSE BONDS AND AUTHORIZING USE OF PRELIMINARY OFFICIAL STATEMENT WHEREAS, pursuant to the provisions of Section 384.24A of the Code of Iowa, the City of Fairfax, in the County of Linn, State of Iowa (hereinafter referred to as the "City") has heretofore proposed to contract indebtedness and enter into a loan agreement (the "Essential Corporate Purpose Loan Agreement") in a principal amount not to exceed $1,010,000, for the purpose of paying the cost, to that extent, of constructing storm drainage and water main improvements, and has published notice of the proposed action and has held a hearing thereon; and WHEREAS, pursuant to the provisions of Section 384.24A of the Code of Iowa, the City has heretofore proposed to contract indebtedness and enter into a loan agreement (the "General Corporate Purpose Loan Agreement") in a principal amount not to exceed $2,300,000, for the purpose of paying the cost, to that extent, of carrying out projects in the Fairfax Urban Renewal Area consisting of developing and constructing the Fairfax Athletics and Park Complex and constructing trail improvements, and, in lieu of calling an election upon such proposal, has published notice of the proposed action and has held a hearing thereon, and no petition has been filed with the City asking that the question of entering into the General Corporate Purpose Loan • Agreement be submitted to the registered voters of the City; and WHEREAS, the Essential Corporate Purpose Loan Agreement and the General Corporate Purpose Loan Agreement have been combined into a single loan agreement (the "Loan Agreement"); and WHEREAS, it has been determined that at this time, the City should sell $2,260,000 General Obligation Corporate Purpose Bonds, Series 2011B (the "Bonds") for the purpose of constructing water main improvements and developing and constructing the Fairfax Athletics and Park Complex, and it is necessary to set a date for the sale of the Bonds; and WHEREAS, a Preliminary Official Statement (the "Preliminary Official Statement") has been prepared describing and providing for the terms and conditions of the sale of the Bonds in evidence of the obligation of the City under the Loan Agreement, and it is now necessary to make provision for the approval of the Preliminary Official Statement and to authorize its use by Speer Financial, Inc.; • -2- DORSEY&WHITNEY LLP,ATTORNEYS,DES MOINES,IOWA Fairfax419915-17/Set Date for Bond Sale • NOW, THEREFORE, Be It Resolved by the City Council of the City of Fairfax, Iowa, as follows: Section 1. Sealed bids for the purchase of the Bonds shall be received and canvassed on behalf of the City at 11:00 o'clock a.m. on October 11, 2011, at the City Clerk's office, 525 Vanderbilt Street, Fairfax, Iowa, and the City Council shall meet on the same date at 6:00 o'clock p.m., at the Council Chambers, in the City, for the purpose of considering such bids received and considering and passing a resolution providing for the award and sale of the Bonds. Section 2. The use by Speer Financial, Inc. of the Preliminary Official Statement relating to the Bonds, in substantially the form as has been presented to and considered by this Council, is hereby approved, and Speer Financial, Inc. is hereby authorized to prepare and use a final Official Statement for the Bonds substantially in the form of the Preliminary Official Statement, but with such changes therein as are required to conform the same to the terms of the Bonds and the resolution, when adopted, providing for the issuance of the Bonds, and the City Clerk is hereby authorized and directed to execute a final Official Statement for the Bonds, if requested. The Preliminary Official Statement as of its date is deemed final by the City within the meaning of Rule 15(c)(2)-12 of the Securities and Exchange Commission. Section 3. All resolutions or parts thereof in conflict herewith are hereby repealed to the extent of such conflict. Passed and approved September 26, 2011. • Jason R e, Mayor Attest: &(/Afiet/(' (Caik/.4_ Cyr)L'Iiia Stimson, City Clerk/Treasurer • -3- DORSEY&WHITNEY LLP,ATTORNEYS,DES MOINES,IOWA Fairfax419915-17/Set Date for Bond Sale • STATE OF IOWA COUNTY OF LINN SS: CITY OF FAIRFAX I, the undersigned, City Clerk/Treasurer of the City of Fairfax, Iowa, do hereby certify that attached hereto is a true and correct copy of the proceedings of the City Council of the City relating to the City Council's determination to proceed with the sale of $2,260,000 General Obligation Corporate Purpose Bonds and the transcript hereto attached contains a true, correct and complete statement of all the measures adopted and proceedings, acts and things had, done and performed up to the present time in relation thereto. I do further certify that no appeal has been taken to the District Court of the City Council's decision to proceed with the issuance of the bonds. WITNESS MY HAND this 28th day of September, 2011. al‘ ,(L4/AAP\-- Cyn is Stimson, City Clerk/Treasurer • • -4- DORSEY&WHITNEY LLP,ATTORNEYS,DES MOINES,IOWA • September 19, 2011 Cynthia Stimson City Clerk/City Hall P.O. Box 337 Fairfax, Iowa 52228-0337 Re: $2,260,000 General Obligation Corporate Purpose Bonds Our File No. 422742-11 Dear Cynthia: We have prepared and enclose a resolution to be adopted at the Fairfax Council meeting to be held on September 26, in order to set October 11 as the date for the sale of the City's General Obligation Bonds. As these proceedings are completed, please return one fully executed copy to our office. If you have any questions, please contact me. • Very truly yours, Robert E. Josten Enclosures cc by email: Maggie Burger • City of Fairfax,Linn County,Iowa $2,260,000 General Obligation Corporate Purpose Bonds,Series 2011E IIIORIGINAL ISSUE PREMIUM The Bonds maturing in 2013-2018 are initially being reoffered at a premium. The difference between the principal amount and the initial public offering price of any Bond that is being sold in the initial public offering at a premium (i.e., at a price that is greater than the principal amount thereof or at a yield that is less than the interest rate thereon)constitutes original issue premium for federal income tax purposes. The initial purchaser(excluding bond houses,brokers,and other intermediaries) of any such Bond must amortize the premium over the term of the Bond using constant yield principles, based on such purchaser's yield to maturity (or, in the case of a Bond that is sold in the initial public offering at a premium and is callable prior to its maturity, by amortizing the premium to the call date,based on the purchaser's yield to the call date and giving effect to the call premium). As original issue premium is amortized,the amount of premium amortized offsets the interest allocable to the corresponding semiannual interest accrual period, and the purchaser's basis in the Bond is reduced by a corresponding amount, resulting in an increase in the gain (or decrease in the loss) to be recognized for federal income tax purposes upon a sale or disposition of the Bond prior to its maturity. Even though the purchaser's basis may be reduced, no federal income tax deduction is allowed. The owner of any Bond that is being sold in the initial public offering at a premium (including any purchaser of such Bond in the secondary market) should consult his or her tax advisors with respect to the determination and treatment of the original issue premium as of any date and with respect to the federal, state and local tax consequences of owning such Bond. ADDITIONAL INFORMATION References herein to laws, rules, regulations, resolutions, agreements, reports and other documents do not purport to be comprehensive or definitive. All references to such documents are qualified in their entirety by reference to the particular document,the full text of which may contain qualifications of and exceptions to statements made herein. Where full texts have not been included as appendices to the Official Statement or the Final Official Statement,they will be furnished on request. 0 UNDERWRITING The Bonds were offered for sale by the City at a public,competitive sale on October 11,2011. The best bid submitted at the sale was submitted by Northland Securities, Minneapolis, Minnesota,and associates(the"Underwriter"). The City awarded the contract for sale of the Bonds to the Underwriter at a price of$2,258,845.95. The Underwriter has represented to the City that the Bonds have been subsequently re-offered to the public initially at the yields set forth in this Addendum. QUALIFIED TAX-EXEMPT OBLIGATIONS The City intends to designate the Bonds as "qualified tax-exempt obligations" pursuant to the small issuer exemption provided by Section 265(b)(3)of the Code. AUTHORIZATION The Official Statement dated September 27, 2011, and this Addendum dated October 11, 2011, for the $2,260,000 General Obligation Corporate Purpose Bonds, Series 2011B, have been prepared under the authority of the City and have been authorized for distribution by the City. /s/ • NTHIA STIMSON / JASON RABE • City Clerk/Treasurer Mayor CITY OF FAIRFAX CITY OF FAIRFAX Linn County, Iowa Linn County, Iowa NEW ISSUE Not Rated. ADDENDUM DATED October 11, 2011 OFFICIAL STATEMENT DATED September 27, 2011 $2,260,000 CITY OF FAIRFAX Linn County,Iowa General Obligation Corporate Purpose Bonds,Series 2011B AMOUNTS,MATURITIES,INTEREST RATES AND YIELDS Principal Due Interest CUSIP Principal Due Interest CUSIP Amount June 1 Rate Yield NUMBER Amount June 1 Rate Yield NUMBER $175,000 2013 2.000% 0.500% 303898 ECO $185,000 2019 2.000% 2.000% 303898 EJ5 175,000 2014 2.000% 0.750% 303898 ED8 190,000 2020 2.200% 2.200% 303898 EK2 175,000 2015 2.000% 1.000% 303898 EE6 195,000 2021 2.400% 2.400% 303898 ELO 175,000 2016 2.000% 1.250% 303898 EF3 200,000 2022 2.600% 2.600% 303898 EM8 180,000 2017 2.000% 1.500% 303898 EG1 210,000 2023 2.800% 2.800% 303898 EN6 185,000 2018 2.000% 1.800% 303898 EH9 215,000 2024 3.000% 3.000% 303898 EP1 The Official Statement of the City dated September 27, 2011 (the"Official Statement")with respect to the Bond is incorporated by reference herein and made a part hereof. The "Final Official Statement"of the City with respect to thin, Bonds as that term is defined in Rule 15c2-12 of the Securities and Exchange Commission shall be comprised of the following: 1. Official Statement dated September 27,2011; and 2. This Addendum dated October 11,2011. No dealer, broker, salesman or other person has been authorized by the City to give any information or to make any representations with respect to the Bonds other than as contained in the Final Official Statement and, if given or made, such other information or representations must not be relied upon as having been authorized by the City. Certain information contained in the Final Official Statement may be obtained from sources other than records of the City and, while believed to be reliable, is not guaranteed as to completeness. NEITHER THE DELIVERY OF THE OFFICIAL STATEMENT OR THE FINAL OFFICIAL STATEMENT NOR ANY SALE MADE THEREUNDER SHALL CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE CITY SINCE THE DATE THEREOF. The City has authorized preparation of the Final Official Statement containing pertinent information relative to the Bonds and the City. Copies of that Final Official Statement can be obtained from the Underwriter, as defined herein. Additional information may also be obtained from the City or from the Independent Public Finance Consultants to the City: Established 1954 Speer Financial, Inc. INDEPENDENT PUBLIC FINANCE CONSULTANTSF/ • ONE NORTH LASALLE STREET,SUITE 4100•CHICAGO,ILLINOIS 60602 Telephone: (312)346-3700; Facsimile: (312)346-8833 531 COMMERCIAL STREET,SUITE 608•WATERLOO,IOWA 50701 Telephone: (319)291-2077; Facsimile: (319)291-8628 www.speerfinancial.com New Issue Not Rated Date of Sale: Tuesday,October 11,2011 11:00 A.M.,C.D.T.(Sealed Bids) Official Statement In the opinion ofDorsey&Whitney LLP,Bond Counsel,according to present laws,rulings and decisions and assuming compliance with certain cotenants;the interest on the Bonds will be excluded from gross income for federal income tax purposes,and such interest will not be an item oftax preference for purposes cfthe federal alternative minimum tax imposed on individuals and corporations under the Internal Revenue Code, but will be taken into account in determining adjusted current earnings for the purpose of computing the alternative minimum tax imposed on corporations(as defined for federal income tax purposes),and the City will designate the Bonds as"qual fled tax exempt obligations." See"TAX EXEMPTION"herein $2,260,000 CITY OF FAIRFAX Linn County,Iowa General Obligation Corporate Purpose Bonds,Series 2011B Dated Date of Delivery Book-Entry Bank Qualified Due Serially June 1, 2013 - 2024 The$2,260,000 General Obligation Corporate Purpose Bonds,Series 2011B(the"Bonds")are being issued by the City of Fairfax,Linn • County,Iowa(the"City"). Interest is payable semiannually on June 1 and December 1 of each year,commencing June 1,2012. The Bonds will be issued using a book-entry system. The Depository Trust Company("DTC"),New York,New York,will act as securities depository for the Bonds. The ownership of one fully registered Bond for each maturity will be registered in the name of Cede&Co.,as nominee for DTC and no physical delivery of Bonds will be made to purchasers. The Bonds will mature on June 1 in the following years and amounts. AMOUNTS,MATURITIES*AND INTEREST RATES Principal Due Interest Yield or Principal Due Interest Yield or Amount June 1 Rate Price Amount June 1 Rate Price $175,000 2013 % % $185,000 2019 % c,6 175,000 2014 % % 190,000 2020 % % • 175,000 2015 % % 195,000 2021 % % 175,000 2016 % % 200,000 2022 % % 180,000 2017 °,6 % 210,000 2023 % % 185,000 2018 % % 215,000 2024 % % Ai, *Any consecutive maturities may he aggregated into term bonds at the option of the bidder,in which case the mandatory redemption provisions shall be on the same schedule as above. OPTIONAL REDEMPTION Bonds due June 1,2013—2019,inclusive,are non-callable. Bonds due June 1,2020-2024,inclusive,are callable in whole or in part on any date on or after June 1,2019,at a price of par and accrued interest. If less than all the Bonds are called,they shall be redeemed in such principal amounts and from such maturities as determined by the City and within any maturity by lot. See"OPTIONAL REDEMPTION"herein. PURPOSE,LEGALITY AND SECURITY Bond proceeds will be used to: (i) pay the costs to construct water main improvements; (ii) construct the Fairfax Athletics and Park Complex;and(iii)pay the costs of issuance of the Bonds. See"THE PROJECT"herein. In the opinion of Bond Counsel, Dorsey & Whitney, LLP, Des Moines, Iowa, the Bonds will constitute valid and legally binding obligations of the City payable both as to principal and interest from ad valorem taxes levied against all taxable property therein without limitation as to rate or amount,all except as limited by bankruptcy,insolvency,moratorium,reorganization and other similar laws relating to the enforcement of creditors' rights generally and except that enforcement by equitable and similar remedies,such as mandamus, is subject to the exercise of judicial discretion. The City intends to designate the Bonds as"qualified tax-exempt obligations"pursuant to the small issuer exception provided by Section 265(bX3)of the Internal Revenue Code of 1986. This Official Statement is dated September 27,2011,and has been prepared under the authority of the City. An electronic copy of this Official Statement is available from the www.speerfmancial.com web site under"Official Statement Sales Calendar". Additional copies may be obtained from Ms. Cynthia Stimson,City Clerk/Treasurer,City of Fairfax, 525 Vanderbilt St.,Fairfax,IA 52228-0337, or from the Independent Public Finance Consultants to the City: Established 1954 Speer Financial, Inc. INDEPENDENT PUBLIC FINANCE CONSULTANTS ONE NORTH LASALLE STREET,SUITE 4100•CHICAGO,ILLINOIS 60602 Telephone: (312)346-3700;Facsimile: (312)346-8833 531 COMMERCIAL STREET,SUITE 608•WATERLOO,IOWA 50701 Telephone: (319)291-2077;Facsimile: (319)291-8628 www.speerfmancial.com City ofFairfax,Linn County,Iowa $2,260,000 General Obligation Corporate Purpose Bonds,Series 2011B For purposes of compliance with Rule 15c2-12 of the Securities and Exchange Commission,this document,as the same may be supplemented or corrected by the City from time to time (collectively, the "Official Statement"), may be treated as an Official Statement with respect to the Bonds described herein that is deemed near final as of the date hereof (or the date of any such supplement or correction)by the City. The Official Statement, when further supplemented by an addendum or addenda specifying the maturity dates, principal amounts and interest rates of the Bonds, together with any other information required by law or deemed appropriate by the City, shall constitute a"Final Official Statement"of the City with respect to the Bonds, as that term is defined in Rule 15c2-12. Any such addendum shall, on and after the date thereof,be fully incorporated herein and made a part hereof by reference. No dealer, broker, salesman or other person has been authorized by the City to give any information or to make any representations with respect to the Bonds other than as contained in the Official Statement or the Final Official Statement and, if given or made, such other information or representations must not be relied upon as having been authorized by the City. Certain information contained in the Official Statement and the Final Official Statement may have been obtained from sources other than records of the City and, while believed to be reliable, is not guaranteed as to completeness. THE INFORMATION AND EXPRESSIONS OF OPINION IN THE OFFICIAL STATEMENT AND THE FINAL OFFICIAL STATEMENT ARE SUBJECT TO CHANGE, AND NEITHER THE DELIVERY OF THE OFFICIAL STATEMENT OR THE FINAL OFFICIAL STATEMENT NOR ANY SALE MADE UNDER EITHER SUCH DOCUMENT SHALL CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE CITY SINCE THE RESPECTIVE DATES THEREOF. References herein to laws, rules,regulations, ordinances, resolutions, agreements, reports and other documents do not purport to be comprehensive or definitive. All references to such documents are qualified in their entirety by reference to the particular document, the full text of which may contain qualifications of and exceptions to statements made herein. Where full texts have not been included as appendices to the Official Statement or the Final Official Statement they will be furnished on request. This Official Statement does not constitute an offer to sell, or solicitation of an offer to buy, any securities to any person in any jurisdiction where such offer or solicitation of such offer would be unlawful. a 2 City of Fairfax,Linn County,Iowa $2,260,000 General Obligation Corporate Purpose Bonds,Series 2011B BOND ISSUE SUMMARY sir This Bond Issue Summary is expressly qualified by the entire Official Statement, including the Official Terms of Offering and the Official Bid Form, which are provided for the convenience of potential investors and which should be reviewed in their entirety by potential investors. Issuer: City of Fairfax, Linn County,Iowa. Issue: $2,260,000 General Obligation Corporate Purpose Bonds, Series 2011B. Dated Date: Date of Delivery(expected on or about November 10,2011). Interest Due: Each June 1 and December 1,commencing June 1, 2012. Principal Due: Serially each June 1, commencing June 1, 2013 through 2024, as detailed on the front page of this Official Statement. Optional Redemption: Bonds maturing on or after June 1,2020, are callable at the option of the City on any date on or after June 1, 2019, at a price of par plus accrued interest. See "OPTIONAL REDEMPTION"herein. Authorization: The Bonds are being issued pursuant to authority established in Code of Iowa, Chapter 384, Division II, and all laws amendatory thereof and supplementary thereto, and in conformity with a resolution of the City Council duly passed and approved. Security: The Bonds are valid and legally binding obligations of the City payable both as to principal and interest from ad valorem taxes levied against all taxable property therein 1 without limitation as to rate or amount, all except as limited by bankruptcy, insolvency, moratorium, reorganization and other similar laws relating to the enforcement of creditors' rights generally and except that enforcement by equitable and similar remedies, such as mandamus, is subject to the exercise of judicial discretion. No Investment Rating: The City does not intend to apply for an investment rating on the Bonds. Purpose: Bond proceeds will be used to: (i) pay the costs to construct water main improvements; (ii) construct the Fairfax Athletics and Park Complex; and (iii) pay the costs of issuance of the Bonds. See "THE PROJECT" herein. Tax Exemption: Dorsey & Whitney, LLP, Des Moines, Iowa, will provide an opinion as to the tax exemption of the Bonds as discussed under "TAX EXEMPTION" in this Official Statement. Interest on the Bonds is not exempt from present State of Iowa income taxes. Bank Qualification: The City intends to designate the Bonds as"qualified tax-exempt obligations." Registrar & Paying Agent: Bankers Trust Company,Des Moines,Iowa. Book-Entry Form: The Bonds will be registered in the name of Cede &Co. as nominee for The Depository Trust Company ("DTC"), New York, New York. DTC will act as securities depository of the Bonds. See APPENDIX B herein. Delivery: The Bonds are expected to be delivered on or about November 10, 2011. Financial Advisor: Speer Financial, Inc.,Waterloo, Iowa and Chicago, Illinois. 3 City of Fairfax,Linn County,Iowa $2,260,000 General Obligation Corporate Purpose Bonds,Series 2011B CITY OF FAIRFAX Linn County,Iowa Jason Rabe Mayor Council Members JoAnn Beer Bernie Frieden Marc Magers Travis Otto Marianne Wainwright Officials Cynthia Stimson Randal Scholer,Esq. City Clerk/Treasurer City Attorney THE CITY General The City of Fairfax (the "City"), Linn County (the "County") is located just southwest of Cedar Rapids, Iowa along Highway 151. This City's population has increased approximately 710% from 262 residents in 1940 to 2,123 residents in 2010 with a 139%growth in the last decade,as reported by the U.S.Census Bureau. City Organization and Services The City has Council-Mayor form of government. Policy is established by a Mayor and five council members. All five council members are elected at large for four-year tenns. The City Clerk/Treasurer, Deputy City Clerk, Fire Chief, City Engineer, and City Attorney are appointed by the City Council. The City operated facilities include the water and sewer systems. The City contracts for solid waste management. Seven people are employed by the City on a full-time basis. In addition, there are five part-time library employees. The City considers its employee relations to be very good. The City is served by approximately 40 volunteer employees on the Fairfax Fire and Rescue Department. They operate out of one fire station in the City and one station in the City of Walford. The City of Fairfax contracts with the Linn County Sheriff's Department for law enforcement. Electric utilities are supplied to the City by Alliant Energy or Linn County Rural Electric Cooperative,and natural gas utilities by MidAmerican. City operated facilities include the water system and sanitary sewer system. t 4 City ofFairfax,Linn County,Iowa $2,260,000 General Obligation Corporate Purpose Bonds,Series 2011B lIWTransportation The City is located adjacent to Cedar Rapids, 20 miles from Iowa City and 65 miles from Waterloo. The City's location provides transportation options for City businesses and residents. The City is served by State Highway 151. Approximately 11 miles east is Interstate 380 which serves Waterloo, Cedar Rapids, Iowa City and other points on the Federal interstate system. Commercial air transportation is available at the Eastern Iowa Airport in Cedar Rapids, less than a three mile drive from the City. Education Educational opportunities and facilities are provided by the College Community School District which serves approximately 4,200 students from Linn, Benton and Johnson counties. The 137 square mile district includes parts of Cedar Rapids and the cities of Ely, the City, Shueyville, Swisher and Walford and the surrounding countryside. The District provides public education through a senior high school, two middle schools and four elementary schools. The school also has a complete Early Childhood Learning Center. The Districts regular programs are offered on a 305 acre tract in south Cedar Rapids. A new Prairie Point Middle School,at the site,is currently under construction. It will offer a 1,000 seat concert hall as well. Post secondary educational opportunities are provided to City residents in nearby Mount Vernon, Iowa City, Cedar Rapids, and include: Cornell College, Mount Mercy University, Coe College, Kirkwood Community College, and University of Iowa. Community Life Fairfax has several City parks distributed throughout the community and each offers a different type of recreational opportunity. City Park contains one Little League diamond, a mens league diamond, tennis court, concession/restroom building, playground system, and one park pavilion. The City also has a six-hole disc golf course located near Prairie Creek Park, which has a pavilion and playground system. Hawks Ridge Park is the newest city park and contains two playground systems, swings,a walking trail,and a park pavilion. Numerous area recreational opportunities are offered in Linn and Johnson County parks. Palisades Kepler State Park, Lake MacBride and Sugar Bottom recreational areas are within easy driving distance. Lake MacBride offers fishing, swimming, boating, hiking, and several scenic camping and picnicking sites. Palisades Kepler State Park offers fishing,boating,hiking,camping and picnicking. Mercy and St. Luke's Hospital in Cedar Rapids,as well as Mercy and University of Iowa Hospitals in Iowa City, provide emergency health care services to City residents. Services offered-at the hospitals include: a medical/surgical unit with 24-hour nursing,obstetrics and family health, radiology,respiratory care, 24-hour emergency room coverage,cardiac rehabilitation and fitness center,home health services/anesthesia,emergency,women's health centers and Hall Radiation. Residents of the City enjoy library services provided by the Fairfax Public Library. The library has an expansive collection of materials,registered cardholders and a joint circulation program with area libraries. The City's tax increment finance district (the "TIF District"), which includes the City's downtown area, industrial, commercial and residential areas, has also been successful. The City first established its TIF District in 1993. Because of rapid growth within the TIF District,the City is utilizing only about 40%of the potential taxing capacity in the TIF District. V 5 City ofFairfax,Linn County,Iowa $2,260,000 General Obligation Corporate Purpose Bonds,Series 2011E The following demographic information is for the City. Additional comparisons are made with Linn County Oh* "County")and the State of Iowa(the "State"). Population The following table reflects population trends for the City,the County and the State. Population Comparison(1) City Percent The Percent The Percent Year Population Change County Change State Change 1990 780 14.20% 168,767 (0.59%) 2,776,785 (4.70%) - 2000 889 13.97% 191,701 13.59% 2,926,324 5.39% 2010 2,123 138.81% 211,226 10.19% 3,046,355 4.10% Note: (1) Source: U.S. Bureau of the Census. Employment Major area employers are shown below. The area list shows the diversity of the employers located within 50 miles of the City. The majority of City residents are employed throughout the County. Major Area Employers(]) Approximate Location Name Business or Product Employment(2) 0011 Iowa City University of Iowa Education 21,045 Cedar Rapids Rockwell-Collins, Inc. Communications Instruments 7,800 Iowa City University of Iowa Hospitals&Clinics Health Care 7,450 Cedar Rapids AEGON Insurance Group Insurance 3,500 Cedar Rapids Cedar Rapids Community Schools Education 2,900 Cedar Rapids St. Luke's Hospital Health Care 2,700 Cedar Rapids Hy-Vee Food Stores Groceries 2,550 Cedar Rapids Mercy Medical Center Health Care 2,500 Iowa City NCS Pearson Educational Data Processors 2,000 Iowa City Iowa City Community School District Education 1,700 Cedar Rapids Wal-Mart Stores, Inc Retail 1,530 Iowa City ACT, Inc Education Programs 1,425 Cedar Rapids Kirkwood Community College Education 1,410 Cedar Rapids City of Cedar Rapids. Government 1,230 Cedar Rapids Yellow Book USA, Inc Telephone Directory Publishing 1,100 Cedar Rapids Quaker Oats Company Food Processing 1,000 Notes: (1) Source: Greater Cedar Valley and Cedar Rapids Areas Chambers of Commerce, selected telephone surveys and the 2011 Iowa Manufacturers Directory. (2) Includes full and part-time as well as seasonal employees. 40 6 City of Fanfax,Linn County,Iowa $2,260.000 General Obligation Corporate Purpose Bonds,Series 2011B The following tables show employment by industry and by occupation for the City, County and the State as illb•ireported by the U.S. Census Bureau 2005-2009 American Community Survey 5-year estimated values. Employment By Industry(/) The City The County The State Classification Number Percent Number Percent Number Percent Agriculture,forestry,fishing and hunting,and mining 8 0.9% 1,403 1.3% 61,725 4.0% Construction 78 9.1% 6,164 5.6% 98,447 6.4% Manufacturing 145 16.9% 18,960 17.4% 236,718 15.3% Wholesale trade 29 3.4% 3,375 3.1% 52,129 3.4% Retail trade 96 11.2% 12,529 11.5% 181,074 11.7% Transportation and warehousing,and utilities 44 5.1% 5,826 5.3% 75,473 4.9% Information 24 2.8% 4,353 4.0% 33,559 2.2% Finance,insurance,and real estate and rental and leasing 71 8.3% 8,361 7.7% 117,705 7.6% Professional,scientific,management,administrative,and Waste management services 60 7.0% 9,572 8.8% 99,658 6.4% Educational services,and health care and social assistance 211 24.6% 24,101 22.1% 359,787 23.3% Arts,entertainment, recreation,accommodation and food services63 7.3% 7,516 6.9% 113,661 7.4% Other services 17 2.0% 4,393 4.0% 65,865 4.3% Public administration 13 1.5% 2,656 2.4% 49,897 3.2% Total 859 100.0% 109,209 100.0% 1,545,698 100.0% I Note: (1) Source: U.S. Bureau of the Census,American Community Survey 5-year estimates 2005 to 2009. Employment By Occupation(I) The City The County The State Classification Number Percent Number Percent Number Percent Management,professional,and related occupations 338 39.4% 40,274 36.9% 507,001 32.8% Service occupations 153 17.8% 16,327 15.0% 246,857 16.0% Sales and office occupations 184 21.4% 29,238 26.8% 383,761 fitii, Farming,fishing,and forestry occupations 8 0.9% 443 0.4% 16,387 1.1% Construction,extraction,maintenance and repair occupations 76 8.9% 8,791 8.0% 134,775 8.7% Production,transportation,and material moving occupations 100 11.6% 14.136 12.9% 256.917 16.6% Total 859 100.0% 109,209 100.0% 1,545,698 100.0% Note: (1) Source: U.S. Bureau of the Census,American Community Survey 5-year estimates 2005 to 2009. The following shows the annual average unemployment rates for the County, the State and the United States. Annual average unemployment rates are not available for the City. Annual Average Unemployment Rates(/) Calendar The State United Year County of Iowa States 2001 3.1% 3.3% 5.3% 2002 4.4% 3.9% 5.6% 2003 4.8% 4.4% 6.3% 2004 4.8% 4.7% 5.4% 2005 4.3% 4.3% 5.1% 2006 3.7% 3.8% 4.6% 2007 3.8% 3.8% 4.6% 2008 3.9% 4.0% 5.8% 2009 5.7% 6.0% 9.3% 2010 6.0% 6.7% 9.7% 2011(2) 6.1% 6.0% 9.1% Notes: (1) Source: Iowa Workforce Development. (2) Through August 2011. 7 City of Fairfcoc,Linn County,Iowa $2,260,000 General Obligation Corporate Purpose Bonds,Series 2011B Cedar Rapids MSA Non-Agricultural Labor Force By Place of Work(1) 1110 2007 2008 2009 2010 2011(2) Goods Producing 29,800 30,500 28,400 27,700 27,500 Service Producing 91,600 91,900 92,400 93,200 94,200 Government 15,800 15,700 16,500 16,500 16,300 Total 137,200 138,100 137,300 137,400 138,000 Notes: (1) Source: Iowa Workforce Development. Place of Work concept counts an individual in the area where he or she works regardless of where that person lives. (2) Through August 2011. 1 Building Permits Total building permits have averaged approximately $8,461,158 annually over the last four years in the City, excluding the value of land. City Building Permits(/) (Excludes the Value of Land) Fiscal Year Number Total Value 2007 60 $10,600,657 2008 60 8,688,490 2009 65 7,970,033 2010 65 6,585,452 Note: (1) Source: The County. 44111 The U.S. Census Bureau 5-year estimated values reported that the median value of the City's owner-occupied homes was $166,000, which compares with $132,600 for the County and $115,800 for the State. The following table represents the five year average market value of specified owner-occupied units for the City, the County and the State at the time of the 2005 -2009 American Community Survey. Specified Owner-Occupied Units(/) The City The County The State Value Number Percent Number Percent Number Percent Under$50,000 9 1.7% 4,335 7.0% 108,705 12.3% $ 50,000 to$ 99,999 55 10.2% 12,305 19.8% 258,167 29.1% $100,000 to$149,999 164 30.5% 20,952 33.8% 218,031 24.6% $150,000 to$199,999 135 25.1% 11,052 17.8% 136,341 15.4% $200,000 to$299,999 117 21.7% 8,816 14.2% 105,029 11.8% $300,000 to$499,999 58 10.8% 3,459 5.6% 44,768 5.1% $500,000 to$999,999 0 0.00% 921 1.5% 12,445 1.4% $1,000,000 or more 0 0.00% 168 0.3% 2.958 0.3% Total 538 100.0% 62,008 100.0% 886,444 100.0% Note: (1) Source: U.S.Bureau of the Census,American Community Survey 5-year estimates 2005 to 2009. • ilk 8 City ofFairfax,Linn County,Iowa $2,260,000 General Obligation Corporate Purpose Bonds,Series 2011B The U.S. Bureau of the Census 5-year estimated values reported that the City had a median household income of $68,603. This compares to $52,642 for the County and $48,052 for the State. The following table represents the distribution of household incomes for the City, the County and the State at the time of the 2005 - 2009 American Community Survey. Household Income(1) The City The County The State Income Number Percent Number Percent Number Percent Under$10,000 12 1.9% 4,896 5.7% 78,921 6.5% $ 10,000 to$ 14,999 0 0.0% 3,963 4.6% 73,103 6.0% $ 15,000 to$ 24,999 76 12.1% 8,842 10.3% 142,553 11.7% $ 25,000 to$ 34,999 32 5.1% 9,711 11.3% 140,586 11.6% $ 35,000 to$ 49,999 76 12.1% 13,340 15.6% 196,063 16.1% $ 50,000 to$ 74,999 160 25.4% 17,562 20.5% 253,784 20.9% $ 75,000 to$ 99,999 115 18.3% 11,717 13.7% 154,623 12.7% $100,000 to$149,999 118 18.8% 10,520 12.4% 119,205 9.8% $150,000 to$199,999 28 4.5% 2,526 3.0% 30,281 2.5% $200,000 or more 12 1.9% 2,499 2.9% 26,851 2.2% Total 629 100.0% 85,576 100.0% 1,215,970 100.0% Note: (1) Source: U.S.Bureau of the Census,American Community Survey 5-year estimates 2005 to 2009. LOCAL OPTION SALES TAX The City approved a 1%local option sales and service tax("Local Option Tax") at a special referendum in 2009. The Local Option Tax for the City became effective July 1, 2009 with actual tax monies received in the City's 2010 fiscal year. The Local Option Tax is set to expire in June 2014. The City attempted re-authorization in May 2011,but were part 116 of the Cedar Rapids Metro Block area which voted down the measure. The City's fiscal year 2010/11 Local Option Tax receipts were $213,898. The City's Local Option Tax referendum question stated that proceeds of such tax would be designated 100%for any lawful purpose. Once approved,a Local Option Tax can only be repealed through a public referendum at which a majority voting approve the repeal or tax rate change. Contiguous municipalities are one unit for this purpose. If a Local Option Tax is not imposed county-wide,then the question of repeal is voted upon only by voters in such areas of a county where the tax has been imposed. A Local Option Tax may not be repealed within one year of the effective date. The State of Iowa Department of Revenue (the "Department")administers collection and disbursement of all local option sales and services taxes in conjunction with administration of the State-wide sales, services and use tax presently assessed at 6%. The Department is required by statute to remit at least 95%of the estimated tax receipts to a county board of supervisors (for taxes imposed in unincorporated areas) and to each incorporated city. Such remittances are on a monthly basis. Once a year the Department reconciles its monthly estimated payments and makes an adjustment payment or debit at the November 10 payment date. Remittance of collections within a county are based upon the following statutory formula for county-wide collections: 75 percent: Based on a pro rata share of population (the most recent certified federal census) of those incorporated or unincorporated areas in a county which have approved a Local Option Tax. 25 percent: Based on a pro rata share of total property tax dollars levied during the three year period beginning July 1, 1982,through June 30, 1985, for those incorporated or unincorporated areas of a county which have approved a Local Option Tax. �► Local Option Taxes are based on the same sales currently taxed by the state-wide 6% sales and services tax, with the present statutory exceptions of use taxes, lottery tickets, motor fuel and special fuels, certain farm machinery, industrial equipment, and the sale of automobiles, room rental already subject to a hotel/motel tax, or natural gas or electricity already subject to a city or county franchise fee or user fee. 9 City ofFairfax,Linn County,Iowa $2,260,000 General Obligation Corporate Purpose Bonds,Series 2011B The following table shows the trend of City sales tax receipts. 1' Local Option Tax Receipts(1) Local Fiscal Year Option Tax Percent Ending June 30 Receipts Change 2009/10 $210,813 N/A 2010/11 213,898 1.46% Note: (1) Source:the City. Retail Sales The Department of Revenue of the State of Iowa provides retail sales figures based on sales tax reports for years ending March 31. The Department of Revenue figures provide recent data to confirm trends in retail sales activity in the City. Retail Taxable Sales(1) Fiscal Year Taxable Annual Percent Ending March 31 Sales Change + (-) 2001 $5,435,420 N/A 2002 5,526,395 1.67% 2003 5,706,613 3.26% 2004 6,306,121 10.51% 2005 6,331,373 0.40% 2006 6,712,137 6.01% 2007 7,863,092 17.15% 2008 7,901,961 0.49% -1410 2009(2) 8,815,448 11.56% 2010(2) 8,700,093 (1.31%) Growth from 2001 to 2010 60.06% Notes: (1) Source: Iowa Department of Revenue. (2) Beginning with Fiscal Year 2009,annual reports cover the period beginning July 1 and ending June 30. THE PROJECT Bond proceeds will be used to pay the costs to construct water main improvements,construct the Fairfax Athletics and Park Complex(collectively,the"Project")and pay the costs of issuance of the Bonds. The Project includes replacement of approximately two 260 feet of old six-inch diameter water main with eight- inch diameter water main, reconnection of 16 water services with the replacement of the water shut-offs for these services and related valves and fire hydrants. The Project also includes the development of two youth baseball/softball fields(with at least one of these fields being lighted), two full sized soccer fields, a concessions/restrooms/storage building, batting cages,two parking lots,a trail system throughout the area,and two playground areas. 10 City of Fairfax,Linn County,Iowa $2,260,000 General Obligation Corporate Purpose Bonds,Series 2011B DEBT INFORMATION After issuance of the Bonds,the City will have outstanding approximately$5,746,000 principal amount of general obligation debt and tax increment fmancing rebate agreements. The City has $2,380,000 outstanding in sewer revenue debt through the state revolving fund program, which does not count against the City's debt limitation. The City has a general obligation legal debt limit equal to 5% of Actual Valuation. For the January 1, 2010 Actual Valuation of $159,674,553 (including tax increment valuation and excluding military exemption valuation) applied to fiscal year 2011/12, the total limit is $7,983,728. Including the Bonds, the principal amount of bonded indebtedness applicable to this limit is $5,746,000. Applying such bonded and non-bonded indebtedness to the legal debt limitation, the City will have a remaining legal debt margin of$2,237,728. The City intends to issue approximately $1,200,000 in general obligation debt within the next 12 months for a trail project and sewer drainage projects. General Obligation Debt Summary(1) (Principal Only) Series 2004 $ 475,000 Series 2005 350,000 Series 2008A 410,000 Series 2008B 510,000 Series 2009 790,000 Series 2010 108,000 Series 2010 33,000 Series 2010 270,000 Series 2011 540,000 The Bonds 2.260,000 iir Total $5,746,000 Note: (1) Source: the City. General Obligation Bonded Debt(1) (Principal Only) Fiscal Year Total Total Cumulative Ending Outstanding G.O. The Direct G.O. Principal Retired June 30 Bonded Debt Bonds Debt Amount Percent 2012 $ 431,000 $ 0 $ 431,000 $ 431,000 7.50% 2013 481,000 175,000 656,000 1,087,000 18.92% 2014 511,000 175,000 686,000 1,773,000 30.86% 2015 517,000 175,000 692,000 2,465,000 42.90% 2016 372,000 175,000 547,000 3,012,000 52.42% 2017 227,000 180,000 407,000 3,419,000 59.50% 2018 232,000 185,000 417,000 3,836,000 66.76% 2019 208,000 185,000 393,000 4,229,000 73.60% 2020 218,000 190,000 408,000 4,637,000 80.70% 2021 158,000 195,000 353,000 4,990,000 86.84% 2022 68.000 200,000 268,000 5,258,000 91.51% 2023 8,000 210,000 218,000 5,476,000 95.30% 2024 9,000 215,000 224,000 5,700,000 99.20% 2025 9,000 0 9,000 5,709,000 99.36% 2026 9,000 0 9,000 5,718,000 99.51% 2027 9,000 0 9,000 5,727,000 99.67% 2028 9,000 0 9,000 5,736,000 99.83% 2029 10,000 0 10.000 5,746,000 100.00% Total $3,486,000 $2,260,000 $5,746,000 $5,746,000 II Note: (1) Source: the City. 11 City of Fabfax,Linn County,Iowa $2,260,000 General Obligation Corporate Purpose Bonds,Series 2011B Statement of Bonded Indebtedness(]) (As of September 7, 2011) 4 City Actual Valuation,January 1,2010 $159,917,165 City Taxable Valuation,January 1,2010 $ 82,380,507 Ratio Ratio Per Capita Applicable to City to City (2010 Pop. Total Percent Amount Actual Taxable 2,123 Direct Debt $ 5,746,000 100.00% $5,746,000 3.59% 6.97% $2,706.55 (Less) Debt Paid from TIF Revenues (4,798,000) 100.00% (4,798,000) (3.00%) (5.82%) (2,260.011 Total Direct Debt $ 948,000 100.00% $ 948,000 0.59% 1.15% $ 446.54 Overlapping Debt: College Community School District $64,040,000 5.53% $3,541,412 2.21% 4.30% $1,668.12 Kirkwood Community College 12,585,000 0.94% 118,299 0.07% 0.14% 55.72 Linn County 14,230,000 0.90% 128.070 0.08% 0.16% 60.33 Total Net Direct and Overlapping Debt $4,735,781 2.96% 5.75% $2,230.71 Per Capita Actual Value $75,326.03 Per Capita Taxable Value $38,803.82 Note: (1) Source:the City,the County,the College Community School District and Kirkwood Community College. PROPERTY TAX INFORMATION Property Tax Assessment In compliance with Section 441.21 of the Code of Iowa, as amended, the State Director of Revenue annually directs all county auditors to apply prescribed statutory percentages to the assessments of certain categories of real property. The final values, called Actual Valuation, are then adjusted by the County Auditor. Taxable Valuation subject It. to tax levy is then determined by the application of State determined rollback percentages, principally to residential property. Beginning in 1978, the State required a reduction in Actual Valuation to reduce the impact of inflation on its residents. The resulting value is defined as the Taxable Valuation. Such rollback percentages may be changed in future years. Certain historical rollback percentages for residential valuation are as follows: Residential Rollback Percentages for Taxable Valuation(]) Fiscal Year Percentage 2002/03 51.6676% 2003/04 51.3874% 2004/05 48.4588% 2005/06 47.9642% 2006/07 45.9960% 2007/08 45.5596% 2008/09 44.0803% 2009/10 45.5893% 2010/11 46.9094% 2011/12 48.5299% Note: (1) Source: Iowa Department of Revenue. Property is assessed on a calendar year basis. The assessments finalized as of January 1 of each year are applied to the following tax year. For example, the assessments finalized on January 1, 2010, are used to calculate tax liability for the tax year starting July 1, 2011 through June 30, 2012. illt 12 City ofFairfax,Linn County,Iowa $2,260,000 General Obligation Corporate Purpose Bonds,Series 2011B Property Tax Collection ilk Each county is required by State law to collect all tax levies within its jurisdiction and remit, before the fifteenth of each month, the amount collected through the last day of the preceding month to underlying units of government, including the City. Property tax payments are made at the office of each county treasurer in full or one-half by September 30 and March 31, pursuant to the Code of Iowa, Sections 445.36 and 445.37. Where the first half of any property tax has not been paid by October 1, such installment becomes delinquent. If the second installment is not paid, it becomes delinquent on April 1. Delinquent taxes and special assessments are subject to a penalty at the rate of one and one-half percent per month,to a maximum of eighteen percent per annum. If taxes are not paid when due,the property may be offered at the regular tax sale on the third Wednesday of June following the delinquency date. Purchasers at the tax sale must pay an amount equal to the taxes, special assessments, interest and penalties due on the property, and funds so received are applied to the payment of taxes. A property owner may redeem from the regular tax sale, but failing redemption within two years, the tax sale purchaser is entitled to a deed which in general conveys the title free and clear of all liens except future installments of taxes. Actual (100%) Valuations for the City(/)(2) Fiscal Year: 2007/08 2008/09 2009/10 2010/11 2011/12 Property Class Levy Year January 1: 2006 2007 2008 2009 2010 Residential $ 97,742,310 $111,191,627 $121,582,561 $130,901,706 $139,824,487 Agricultural 457,816 433,041 579,525 829,292 876,847 Commercial 7,464,028 9,288,824 10,179,837 11,575,490 11,686,805 Industrial 107,075 107,075 107,075 107,075 107,075 Railroad 257,721 305,078 296,255 319,770 347,906 Utilities without Gas and Electric(3) 209,535 188,881 239,463 286,856 328,825 Gas and Electric Utilities(3) 5,553,734 5,428,755 5,747,580 6,470,593 6,745,220 Less: Military Exemption (201,8681 (211,128) (220,388) (224,092) (242,612) i,„,- Total $111,590,351 $126,732,153 $138,511,908 $150,266,690 $159,674,553 Percent Change+(-) n/a 13.57% 9.30% 8.49% 6.26% Notes: (1) Source: Linn County Auditor; Iowa Department of Management-Valuations. (2) Includes tax increment finance(TIF)valuations used in the following amounts: January 1: 2006 2007 2008 2009 2010 TIF Valuation $20,582,692 $20,257,549 $19,468,861 $19,761,295 $15,387,595 (3) See"PROPERTY TAX INFORMATION-Utility Property Tax Replacement"herein. For the January 1,2010 levy year,the City's Taxable Valuation was comprised of approximately 82%residential, 14%commercial, 2%railroad and utilities, 1%agricultural,and less than 1%industrial. Taxable ("Rollback") Valuations for the City(/)(2) Fiscal Year: 2007/08 2008/09 2009/10 2010/11 2011/12 Property Class Levy Year January 1: 2006 2007 2008 2009 2010 Residential $44,531,040 $49,013,577 $55,428,631 $61,405,243 $67,856,653 Agricultural 457,816 390,179 543,923 549,584 605,158 Commercial 7,464,028 9,263,856 10,179,837 11,575,490 11,686,805 Industrial 107,075 107,075 107,075 107,075 107,075 Railroad 257,721 304,258 296,255 319,770 347,906 Utilities without Gas and Electric(3) 209,535 188,881 239,463 286,856 328,825 Gas and Electric Utilities(3) 3,530,734 3,550,448 1,936,574 1,822,933 1,690,697 Less: Military Exemption (201,868) (211,128) (220,388) (224,092) (242,612) Total $56,356,081 $62,607,146 $68,511,370 $75,842,859 $82,380,507 Percent Change+(-) n/a 11.09% 9.43% 10.70% 8.62% Notes: (1) Source: Linn County Auditor; Iowa Department of Management-Valuations. (2) Includes tax increment finance(TIF)valuations used in the following amounts: Sib January 1: 2006 2007 2008 2009 2010 TIF Valuation $20,582,692 $20,257,549 $19,468,861 $19,761,295 $15,387,595 (3) See"PROPERTY TAX INFORMATION -Utility Property Tax Replacement"herein. 13 City ofFairfax,Linn County,Iowa $2,260,000 General Obligation Corporate Purpose Bonds,Series 2011B The following shows the trend in the City's tax extensions and collections. 1 Tax Extensions and Collections(/)(2) Levy Collection Amount Amount Percent Year Year Levied Collected(2) Collected 2005 2006-2007 $321,426 $350,321 108.99% 2006 2007-2008 258,832 290,749 112.33% 2007 2008-2009 351,924 381,245 108.33% 2008 2009-2010 407,321 425,909 104.56% 2009 2010-2011 436,694 452,537 103.63% 2010 2011-2012 525,864 --In Collection— Notes: (1) Source: County Treasurer and Auditor. Does not include levies and collections for the City's tax increment finance District. (2) Includes delinquent taxes, penalties, interest payments and taxes on mobile homes, but excludes Tax Increment Finance collections. Principal Taxpayers(]) January 1,2010 Taxpayer Name Business/Service Taxable Valuation(2) ITC Midwest LLC Utility $1,070,173 CR-IC Development Group LLC Residential Housing 965,889 Melody R Vance&Jeffrey L Vance Commercial Storage Units 953,015 Fairfax State Savings Bank Financial Institution 846,901 Cedar Oma LLC Financial Services 752,363 Blood,Joseph&Raxane. Commercial Warehouse&Storage 658,878 Heintz,Michael& Deanna. Car Wash 601,597 Regent Investment Corporation. Retail Shopping Center 551,515 Stark Real Estate Holdings Commercial 496,469 Hilton, Ronald Commercial 445,738 Total $7,342,538 • Ten Largest Taxpayers as Percent of City's 2010 Taxable Valuation($82,380,507) 8.91% Notes: (1) Source: The County. (2) Every effort has been made to seek out and report the largest taxpayers. However, many of the taxpayers listed contain multiple parcels and it is possible that some parcels and their valuations have been overlooked. Levy Limits Normal municipal operations and maintenance costs are generally funded through the corporate property tax levy. Iowa State Code does not allow the municipal general fund to be taxed above $8.10 per thousand dollars of taxable value in any one year. In addition to the General Fund, there are several other tax funds that the City can create and use for specific purposes. 14 City of Fairfax,Linn County,Iowa $2,260,000 General Obligation Corporate Purpose Bonds,Series 2011B The property tax rates for the City from levy year 2006 through levy year 2010 are shown below: Property Tax Rates: Levy Years 2006-2010(1)(2) (Per$1,000 Actual Valuation) Fiscal Year: 2007/08 2008/09 2009/10 2010/11 2011/12 4 Levy Year: 2006 2007 2008 2009 2010 The City: General Fund $ 8.10000 $ 8.10000 $ 8.10000 $ 8.10000 $ 8.10000 Other 0.00000 0.49872 0.18970 0.00000 0.00000 Employee Benefits 0.00000 0.53330 0.42313 0.00000 0.00000 Total City Rate $ 8.10000 $ 9.13202 $ 8.71283 $ 8.10000 $ 8.10000 Others: Linn County $ 5.69014 $ 5.88629 $ 6.14971 $ 5.95245 $ 6.06829 College Community School District 17.33832 16.84626 17.21168 17.20361 16.55788 Community College and Other 1.42644 1.74331 1.25773 1.61374 1.63320 Total City Tax Rate $3255490 $33.60788 $33.33195 $32.86980 $32.35937 Notes: (1) Source:The County. (2) Includes the aggregate tax rate for a resident of the City. Does not include the tax rate for agriculture. Utility Property Tax Replacement Beginning in 1999, the State replaced its previous property tax assessment procedure in valuing the property of entities involved primarily in the production, delivery, service and sale of electricity and natural gas with a replacement tax formula based upon the delivery of energy by these entities. Electric and natural gas utilities now pay replacement taxes to the State in lieu of property taxes. All replacement taxes are allocated among local taxing district by the State 216 Department of Revenue and Finance and the Department of Management. This allocation is made in accordance with a general allocation formula developed by the Department of Management on the basis of general property tax equivalents. Properties of these utilities are exempt from the levy of property tax by political subdivisions. Utility property will continue to be valued by a special method as provided in the statute and taxed at the rate of three cents per one thousand dollars for the general fund of the State. For the tax years following 1999, 2000, and 2001, each county treasurer computed a special utility property tax levy and levied a special utility property tax equal to the shortfall. However,this special tax was subject to a statutory sunset in 2002. A task force was established through January 1, 2003 to study the effects of the utility replacement tax legislation on all local taxing districts and to report its findings to the General Assembly. Currently the utility replacement tax statute states that the utility replacement tax collected by the State and allocated among local taxing districts (including the City) shall be treated as property tax when received and shall be disposed of by the county treasurer as taxes on real estate. However, utility property is not subject to the levy of property tax by political subdivisions, only the utility replacement tax and statewide property tax. It is possible that the general obligation debt capacity of the City could be adjudicated to be proportionately reduced in future years if utility property were determined to be other than "taxable property" for purposes of computing the City's debt limit under Article XI of the Constitution of the State of Iowa. With the sunset of the special utility property tax levy to make up for the short fall in the replacement tax revenue for specific taxing districts, and pending any General Assembly action pursuant to the task force report and recommendations, there can be no assurance that future legislation will not (i) operate to reduce the amount of debt the City can issue or (ii) adversely affect the City's ability to levy taxes in the future for the payment of the principal of and interest on its outstanding debt obligations, including the Bonds. Approximately 2%of the City's tax base currently is utility property. Notwithstanding the foregoing, the City has the obligation to levy taxes against all the taxable property in the City sufficient to pay principal of and interest on the Bonds. S 15 City ofFairfax,Linn County,Iowa $2,260,000 General Obligation Corporate Purpose Bonds,Series 2011B Tax Increment Financing • The Code of Iowa currently authorizes the use of two types of tax increment financing by local taxing districts in the State of Iowa. The first type allows local governments to establish TIF districts to be established for the purposes of financing capital improvements constructed within the defined area which contribute to the urban redevelopment and economic development of the immediate area. The City has multiple TIF districts of this type with a total certified taxable valuation of$15,387,595 for levy year 2010. The second type of tax increment financing was authorized by state legislative action in the mid-1980's. The area community colleges can establish TIF districts by contract with specific local businesses and industries to provide jobs training programming for new employees of existing expanding businesses or employees of new businesses. The revenues from these job training TIF districts then retires the debt incurred from the issuance of jobs training certificates which finance the cost of jobs training programming over a maximum of ten years. Upon payment of all jobs training certificates, the district dissolves and the incremental value from the new or expanded business reverts to the general tax base. FINANCIAL INFORMATION Investment Policy Each investment made by the City must be authorized by applicable law and the City's Investment Policy (the "Policy"). Only the City Clerk/Treasurer and Deputy City Clerk, as limited by a special City resolution, and others authorized by resolution of the City may invest City funds. The City Clerk/Treasurer when investing or depositing public funds is required to exercise care, skill,prudence,and diligence. • According to the Policy,the primary objectives of all investment activities of the City are the following: • Safety. The safety and preservation of principal in the overall portfolio is the foremost investment objective. • Liquidity. Maintaining the necessary liquidity to match expected liabilities. • Return. Obtaining a reasonable return. Under the Policy,assets of the City may be invested in the following: • Interest bearing savings accounts, interest bearing money market accounts and interest bearing checking accounts at any bank,savings and loan association or credit union in the State of Iowa; • Obligations of the United States government,its agencies and instrumentalities; • Certificates of deposit and other evidences of deposit at federally insured Iowa depository institutions approved and secured pursuant to Chapter 12C of the Iowa Code; • Iowa Public Agency Investment Trust(IPAIT);and Assets may not be invested in reverse repurchase agreements, futures and options. Assets of the City may not be invested pursuant to the trading of securities for speculation or short term gains. Competitive investment bids are required from at least two investment providers when investing any amount for longer than 397 days. Operating funds of the City are those funds which are reasonably expected to be expended during the current budget year or within fifteen months of receipt. Operating funds of the City may only be invested in instruments authorized under the Investment Policy that mature within 397 days. Other than operating funds may be invested in 0 investments with maturities longer than 397 days; however, all investments of the City must have maturities that are consistent with the needs and use of the City. 16 City ofFairfax,Linn County,Iowa • $2,260,000 General Obligation Corporate Purpose Bonds,Series 2011B Financial Reports The City's financial statements in the past have been audited at the least every two years by certified public accountants. Due to the growth in population the City will now have an audit prepared every year by certified public accountants. The City's financial statements are completed on a basis of cash receipts and disbursements, which is a comprehensive basis of accounting other than generally accepted accounting principles. See APPENDIX A for more detail. No Consent or Updated Information Requested of the Auditor The tables and excerpts (collectively, the "Excerpted Financial Information") contained in this "FINANCIAL INFORMATION" section and in APPENDIX A are from the audited financial statements of the City, including the audited financial statements for the fiscal year ended June 30, 2010 (the "2010 Audit"). The 2010 Audit has been prepared by Dietz, Donald&Co., Elkader,Iowa, (the "Auditor"),and approved by formal action of the City Council. The City has not requested the Auditor to update information contained in the Excerpted Financial Information; nor has the City requested that the Auditor consent to the use of the Excerpted Financial Information in this Official Statement. Other than as expressly set forth in this Official Statement, the financial information contained in the Excerpted Financial Information has not been updated since the date of the 2010 Audit. The inclusion of the Excerpted Financial Information in this Official Statement in and of itself is not intended to demonstrate the fiscal condition of the City since the date of the 2010 Audit. Questions or inquiries relating to financial information of the City since the date of the 2010 Audit should be directed to the City. Summary Financial Information The following tables are summaries and do not purport to be the complete audits, copies of which are available upon request. The City anticipates an increase of approximately $130,000 in the general fund balance for fiscal year ended June 30, 2011. The City anticipates decreasing the general fund cash balance by approximately $25,000 in fiscal year 2012. See APPENDIX A for excerpts of the City's June 30,2010 fiscal year audit. S 17 City ofFairfax,Linn County,Iowa $2,260,000 General Obligation Corporate Purpose Bonds,Series 2011 B Statement of Activities and Net Assets- Cash Basis ifit Governmental Activities(1) Audited Fiscal Year Ended June 30 2007 2008 2010 PROGRAMS/FUNCTIONS Governmental Activities: Public Safety $ (50,834) $ (18,079) $ (61,926) Public Works (50,166) (177,981) (182,648) Culture and Recreation (943,426) (84,811) (144,460) Community and Economic Development (4,174) (9,487) (0) General Government (104,828) (128,767) (132,665) Debt Service (321,970) (1,646,738) (661,240) Total Governmental Activities $(1,475,398) $(2,065,863) $(1,182,939) GENERAL RECEIPTS: Property and Other City Tax Levied For: General Purposes $ 361,391 $ 293,911 $ 425,909 Tax Increment Financing 277,827 572,680 585,576 Local Option Sales Tax 9,413 0 210,814 Unrestricted Interest on Investments 12,567 20,140 33,041 Note Proceeds 798,355 0 0 Miscellaneous 12,973 6,171 7,164 Transfers In(Out) (3,611) 1,050,000 (21,588) Total General Revenues, Gains and Transfers $1,468,915 $ 1,942,902 $1,240,916 CHANGE IN CASH BASIS NET ASSETS $ (6,483) $ (122,961) $ 57,977 CASH BASIS NET ASSETS,BEGINNING OF YEAR $ 803,375 $ 796,892 $1,011,894 CASH BASIS NET ASSETS,END OF YEAR $ 796,892 $ 673,931 $1,069,871 CASH BASIS NET ASSETS Restricted: lir Streets $ 190,006 $ 56,364 $ 92,997 Urban Renewal Purposes 92,824 111,327 176,908 Library 17,060 17,568 0 Fire Department 14,545 18,964 0 Debt Service 0 0 0 Other Purposes 16,306 22,350 169,093 Unrestricted 466,151 447.358 630.873 Total Cash Basis Net Assets $ 796,892 $ 673,931 $1,069,871 Note: (1) Source:Audited financial statements of the City for the fiscal years ended June 30,2007,2008 and 2010. 410 18 City ofFairfar,Linn County,Iowa $2,260000 General Obligation Corporate Purpose Bonds,Series 2011B lit General Fund Statement of Cash Receipts,Disbursements and Changes in Cash Balances Unaudited Unaudited Financial Report Audited Fiscal Financial Report Audited Fiscal Year June 30 Year Ended June 30 June 30 Ended June 30 2006(1) 2007(2) 2008(2) 2009(1) 2010(2) RECEIPTS: Property Taxes $ 281,842 $ 316,348 $ 258,720 $ 345,313 $ 405,311 Tax Increment Financing Collections 240,046 0 0 599,174 0 Other City Taxes 173,655 45,043 32,029 55,521 0 Licenses and Permits 24,104 57,387 35,845 30,876 33,250 Use of Money and Property 14,445 14,044 20,533 25,029 33,586 Intergovernmental 234,928 97,724 129,323 271,711 141,106 Charges for Service 5,986 4,215 6,271 7,375 0 Miscellaneous 6,996 33,846 36,800 224,995 86,731 Other Financing Sources 373.150 0 0 1.261.357 0 Total Receipts $1,355,152 $ 568,607 $ 519,521 $2,821,351 $ 699,984 DISBURSEMENTS: Public Safety $ 107,208 $ 138,184 $ 108,726 $ 129,520 $ 153,167 Public Works 183,083 83,292 170,653 522,137 186,204 Culture and Recreation 189,551 976,642 140,321 153,849 216,350 Community and Economic Development 8,947 0 15,043 14,835 5,064 General Government 169,006 165,366 167,781 178,703 198,174 Debt Service 288.910 0 0 594,268 0 Total Disbursements $ 946,705 $1,363,484 $ 602,524 $1,593,312 $ 758,959 Excess(Deficiency)of Receipts Over (Under)Disbursements $ 408,447 $ (794,877) $ (83,003) $1,228,039 $ (58,975) 11. Other Financing Sources(Uses): Sale of Capital Assets $ 0 $ 0 $ 0 $ 0 $ 0 Bond and Note Proceeds 0 798,355 0 0 0 Operating Transfers(Net) 457.628 (40,428) (27,338) 890,074 (34,859) Total Other Financing Sources(Uses) $ 457,628 $ 757,927 $ (27,338) $ 890,074 $ (34,859) Net Change in Cash Balances (49,181) (36,950) $ (110,341) $ 337,965 $ (93,834) Beginning Balance $ 852,558 $ 653,532 $ 616,582 $ 673,931 $ 724,707 Ending Balance $ 803,377 $ 616,582 $ 506,241 $1,011,896 $ 630,873 Notes: (1) Source: The City's State of Iowa Financial Report for fiscal years ending June 30,2006 and 2009. (2) Source: The City's audited financial statements for fiscal years ending June 30,2007,2008 and 2010. EMPLOYEE RETIREMENT BENEFIT OBLIGATIONS See APPENDIX A - Note (5) herein for a further discussion of the City's employee retirement benefit obligations. REGISTRATION,TRANSFER AND EXCHANGE See also APPENDIX B, BOOK-ENTRY SYSTEM for information on registration, transfer and exchange of book-entry Bonds. The Bonds will be initially issued as book-entry Bonds. 411 The City shall cause books (the "Bond Register") for the registration and for the transfer of the Bonds to be kept at the principal corporate trust office of the Registrar in Des Moines, Iowa. The City will authorize to be prepared, and the Registrar shall keep custody of, multiple Bond blanks executed by the City for use in the transfer and exchange of Bonds. 19 City ofFairfax,Linn County,Iowa $2,260,000 General Obligation Corporate Purpose Bonds,Series 2011B Any Bond may be transferred or exchanged,but only in the manner, subject to the limitations, and upon payment. of the charges as set forth in the Bond Resolution. Upon surrender for transfer or exchange of any Bond at the principal corporate trust office of the Registrar, duly endorsed by,or accompanied by a written instrument or instruments of transfer in form satisfactory to the Registrar and duly executed by the registered owner or such owner's attorney duly authorized in writing,the City shall execute and the Registrar shall authenticate,date and deliver in the name of the registered owner, transferee or transferees (as the case may be) a new fully registered Bond or Bonds of the same maturity and interest rate of authorized denominations,for a like aggregate principal amount. The execution by the City of any fully registered Bond shall constitute full and due authorization of such Bond, and the Registrar shall thereby be authorized to authenticate,date and deliver such Bond,provided,however,the principal amount of outstanding Bonds of each maturity authenticated by the Registrar shall not exceed the authorized principal amount of Bonds for such maturity less Bonds previously paid. The Registrar shall not be required to transfer or exchange any Bond following the close of business on the 15th day of the month next preceding any interest payment date on such Bond, nor to transfer or exchange any Bond after notice calling such Bond for redemption has been mailed, nor during a period of fifteen days next preceding mailing of a notice of redemption of any Bonds. The person in whose name any Bond shall be registered shall be deemed and regarded as the absolute owner thereof for all purposes, and payment of the principal of or interest on any Bonds shall be made only to or upon the order of the registered owner thereof or such owner's legal representative. All such payments shall be valid and effectual to satisfy and discharge the liability upon such Bond to the extent of the sum or sums so paid. No service charge shall be made for any transfer or exchange of Bonds,but the City or the Registrar may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any T transfer or exchange of Bonds. TAX EXEMPTION Federal Income Tax Exemption The opinion of Bond Counsel will state that under present laws and rulings, interest on the Bonds are excluded from gross income for federal income tax purposes and is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations under the Internal Revenue Code of 1986 (the "Code"). Furthermore,the opinion will state that for the Bonds, such interest need not be taken into account in determining adjusted current earnings for the purpose of computing the alternative minimum tax imposed on corporations (as defined for federal income tax purposes). The opinions referred to in the preceding paragraph will be subject to the condition that the City comply with all requirements of the Code that must be satisfied subsequent to the issuance of the Bonds in order that interest thereon be, or continue to be, excluded from gross income for federal income tax purposes. Failure to comply with certain of such requirements may cause the inclusion of interest on the Bonds in gross income for federal income tax purposes to be retroactive to the date of issuance of the Bonds. In the resolutions authorizing the issuance of the Bonds, the City will covenant to comply with all such requirements. There may be certain other federal tax consequences to the ownership of the Bonds by certain taxpayers, including without limitation, corporations subject to the branch profits tax, financial institutions, certain insurance ap companies,certain S corporations, individual recipients of Social Security and Railroad Retirement benefits and taxpayers who may be deemed to have incurred (or continued) indebtedness to purchase or carry tax-exempt obligations. Bond Counsel will express no opinion with respect to other federal tax consequences to owners of the Bonds. Prospective purchasers of such bonds should consult with their tax advisors as to such matters. 20 City of Faufax,Linn County,Iowa $2,260,000 General Obligation Corporate Purpose Bonds,Series 2011B et Bank Qualification In the resolutions authorizing the issuance of the Bonds, the City will designate such bonds as "qualified tax exempt obligations"within the meaning of Section 265(b)(3)of the Code relating to the ability of financial institutions to deduct from income for federal income tax purposes a portion of the interest expense that is allocable to tax-exempt obligations. CONTINUING DISCLOSURE Because at the time of the delivery of the Bonds the City will be an "obligated person" (as such term is defined in Rule 15c2-12 (the "Rule"))with respect to less than$10,000,000 in aggregate amount of outstanding municipal securities, including the Bonds, the City is required to provide to the Municipal Securities Rulemaking Board (the "MSRB"), as specified in the Rule,annual financial information or operating data regarding the City which annual financial information and operating data shall include,at a minimum,that annual financial information and operating data which is customarily prepared by the City and is publicly available. Consequently, pursuant to the Rule, the City will enter into a Continuing Disclosure Undertaking (the "Undertaking") for the benefit of the beneficial owners of the Bonds to send certain annual financial information and operating data to the MSRB for purposes of the Rule and to provide notice of certain material events to the MSRB pursuant to the requirements of Section (b)(5) of the Rule adopted by the Securities and Exchange Commission(the "Commission")under the Securities Exchange Act of 1934 (the "1934 Act"). No person, other than the City,has undertaken or is otherwise expected to provide,continuing disclosure with respect to the Bonds. The information to be provided,the events which will be noticed on an occurrence basis and a summary of other terms of the Undertaking, including termination, amendment and remedies, are set forth in APPENDIX C— FORM OF CONTINUING DISCLOSURE CERTIFICATE. The City has represented that it is in compliance with each and every undertaking previously entered into by it pursuant to the Rule. A failure by the City to comply with the Undertaking will not constitute a default under the Bond Resolution and beneficial owners of the Bonds are limited to the remedies described in the Undertaking. Bond Counsel expresses no opinion as to whether the Undertaking complies with the requirements of Section (b)(5)of the Rule. OPTIONAL REDEMPTION Bonds due June 1,2013 -2019,inclusive,are non-callable. Bonds due June 1,2020-2024,inclusive,are callable in whole or in part on any date on or after June 1, 2019, at a price of par and accrued interest. If less than all the Bonds are called, they shall be redeemed in such principal amounts and from such maturities as determined by the City and within any maturity by lot. The Bond Registrar will give notice of redemption, identifying the Bonds (or portions thereof)to be redeemed,by mailing a copy of the redemption notice by electronic means or by first class mail not less than thirty (30)days nor more than sixty (60) days prior to the date fixed for redemption to the registered owner of each Bond (or portion thereof) to be redeemed at the address shown on the registration books maintained by the Bond Registrar. Unless moneys sufficient to pay the redemption price of the Bonds to be redeemed are received by the Bond Registrar prior to the giving of such notice of redemption, such notice may, at the option of the City, state that said redemption will be conditional upon the receipt of such moneys by the Bond Registrar on or prior to the date fixed for redemption. If such moneys are not fa received, such notice will be of no force and effect,the City-will not redeem such Bonds,and the Bond Registrar will give notice, in the same manner in which the notice of redemption has been given,that such moneys were not so received and that such Bonds will not be redeemed. Otherwise, prior to any redemption date, the City will deposit with the Bond Registrar an amount of money sufficient to pay the redemption price of all the Bonds or portions of Bonds which are to be redeemed on the date. 21 City of Faufax,Linn County,Iowa $2,260,000 General Obligation Corporate Purpose Bonds,Series 2011B Subject to the provisions for a conditional redemption described above,notice of redemption having been given asa described above and in the Bond Resolution, the Bonds or portions of Bonds so to be redeemed will, on the redemption date,become due and payable at the redemption price therein specified, and from and after such date (unless the City shall default in the payment of the redemption price) such Bonds or portions of Bonds shall cease to bear interest. Upon surrender of such Bonds for redemption in accordance with said notice, such Bonds will be paid by the Bond Registrar at the redemption price. LITIGATION There is no litigation of any nature now pending or threatened restraining or enjoining the issuance, sale, execution or delivery of the Bonds, or in any way contesting or affecting the validity of the Bonds or any proceedings of the City taken with respect to the issuance or sale thereof. LEGAL MATTERS The Bonds are subject to approval as to certain legal matters by Dorsey &Whitney, LLP, Des Moines, Iowa, as Bond Counsel. Bond Counsel has not participated in the preparation of this Official Statement except for guidance concerning the section regarding "TAX EXEMPTION," and will not pass upon its accuracy, completeness, or sufficiency. Bond Counsel has not examined nor attempted to examine or verify any of the financial or statistical statements,or data contained in this Official Statement,and will express no opinion with respect thereto. The legal opinions to be delivered concurrently with the delivery of the Bonds express the professional judgment of the attorneys rendering the opinions as to legal issues expressly addressed therein. By rendering a legal opinion, the 111 opinion giver does not become an insurer or guarantor of the result indicated by that expression of professional judgment, or of the transaction on which the opinion is rendered, or of the future performance of parties to the transaction. Nor does the rendering of an opinion guarantee the outcome of any legal dispute that may arise out of the transaction. OFFICIAL STATEMENT AUTHORIZATION This Official Statement has been authorized for distribution to prospective purchasers of the Bonds. All statements, information, and statistics herein are believed to be correct but are not guaranteed by the consultants or by the City,and all expressions of opinion,whether or not so stated,are intended only as such. UNDERWRITING The Bonds were offered for sale by the City at a public,competitive sale on Tuesday, October 11, 2011. The best bid submitted at the sale was submitted by (the "Underwriter"). The City awarded the contract for sale of the Bonds to the Underwriter at a price of$ . The Underwriter has represented to the City that the Bonds have been subsequently re-offered to the public initially at the yields or prices set forth in the addendum to this Official Statement. 22 City of Fairfax,Linn County,Iowa $2,260,000 General Obligation Corporate Purpose Bonds,Series 2011E • FINANCIAL ADVISOR The City has engaged Speer Financial, Inc. as financial advisor(the "Financial Advisor") in connection with the issuance and sale of the Bonds. The Financial Advisor will not participate in the underwriting of the Bonds. The financial information included in the Official Statement has been compiled by the Financial Advisor. Such information does not purport to be a review, audit or certified forecast of future events and may not conform with accounting principles applicable to compilations of financial information. The Financial Advisor is not obligated to undertake any independent verification of or to assume any responsibility for the accuracy, completeness or fairness of the information contained in this Official Statement, nor is the Financial Advisor obligated by the City's continuing disclosure undertaking. • CERTIFICATION We have examined this Official Statement dated September 27, 2011, for the $2,260,000 General Obligation Corporate Purpose Bonds, Series 2011B,believe it to be true and correct and will provide to the purchaser of the Bonds at the time of delivery a certificate confirming to the purchaser that to the best of our knowledge and belief information in the Official Statement was at the time of acceptance of the bid for the Bonds and, including any addenda thereto, was at the time of delivery of the Bonds true and correct in all material respects and does not include any untrue statement of a material fact, nor does it omit the statement of any material fact required to be stated therein, or necessary to make the statements therein, in the light of the circumstances under which they were made,not misleading. /,A1412.btelat /s/ CY/THIA STIMSON /s/ ASON RABE City Clerk/Treasurer Mayor CITY OF FAIRFAX CITY OF FAIRFAX Linn County, Iowa Linn County,Iowa Cu)'ofFairfax,Linn County,Iowa $2,260,000 General Obligation Corporate Purpose Bonds,Series 2011B • APPENDIX A CITY OF FAIRFAX LINN COUNTY,IOWA EXCERPTS FROM THE AUDITED FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDING JUNE 30,2010 40 A-1 0 * 0 H a 3 Exhibit A O �, n CITY OF FAIRFAZ p STATEMENT OF ACTIVITIES AND NET ASSETS-CASH BASIS As of and for the Year Ended June 30, 2010 ° a c"s7. Program Receipts Net (Disbursements) Receipts and Operating Changes in Cash Basis Net Asssets n Grants a Contributions 'b Charges and b - for Restricted Governmental Business Type o Disbursements Service Interest Activities Activities Total m too _ Functions/Programs: ° Governmental activities: Public safety $ 155,302 74,324 19,052 (61,926) (61,926) a Public works 336,818 - 154,170 (182,648) - (182,648) m Culture and recreation 219,882 33,212 42,210 (144,460) _ (144,460) Community and economic development 5,064 - 5,064 - - `„° General government 206,012 73,347 (132,665) - (132,665) o Debt service 661,240 - - (661,240) (661,240) Total governmental activities 1,584,318 -160,8E3 220,496 1,182,939) (1,182,939) Ry Business type activities: Water 757,723 170,155 35,000 - (552,568) (552,568).," Sewer - 32,704 32,704 238,315 271,019 - - Garbage 103,024 95,954 - (7,070) (7,070) n, Total business type activities 1,094,062 537,128 35,000 (526,934) (526,934) Total $ 2,683,380 ' 718,011 255,496 (1,182,939) (526,934) (1,709,873) General Receipts and Transfers: • 425,909 - 425,909 Property and other city tax 585,576 - 585,576 Tax increment financing 210,814 - 215,576 Local option sales tai 814 1,660 34,701 Unrestricted interest on investments 10, 1 9 ,660 34,701 Bond proceeds 7,164 1,800 8,964 Miscellaneous (21,588) 21,588 - Transfers 1,240 916 123,187 1,364,103 Total ginecas receipts and transfers 57 977 (403,747) (345,770) Change in cash basis net inneansns 1,011,894 801,894 1,81.3,788 Cash basis net assets beginning of year Cash basis net assets end of year $ 1,069,871 398,147 1,468,018 Cash Basis Net Assets • Restricted: Non-expendable: $ - 18,105 18,105 Utility deposits Expendable: 92,997 92,997 Streets176,908 63,356 1766,90 IIrben.r renewal purposes - , Debt service169,093 - 169,093 Otherictpurposes 630,873 316,686 947,559 Tots],ricted- $ 1,069,871 398,147 1,468,018 Total cash basis net assets _ See notes to financial statements. is tJ .5::=.*---.., ° 0'&'X N' ^.i or) °' s 4 s Exhibit B aES CITY OF FAIRFAX s ° STATEMENT OF CASH RECEIPTS, DISBURSEMENTS r a AND CHANGES IN CASH BALANCES b GOVERNMENTAL FUNDS 0 a As of and for the Year Ended June 36, 2010 a m Special Revenue Urban Local ° Renewal Option Tax Sales Debt to General Increment Tax Service Nonmajar Total °sry Receipts: Property tax $405,311 - - - 20,598 425,909 y Tax increment financing - 585,576 - - - 585,576 a Other city tax - - 210,814 - - 210,814 m Licenses and permits 33,250 - - - - 33,250 0 Use of money and property 33,586 - - 33,586 Intergovernmental 141,106 - - - 146911 288,017 , ti Miscellaneous 86,731 - - - - 86,731 't ."-n receipts 699,984 585,576 210,814 - 167,509 1,663,883 Disbursements: Operating: Public safety 153,167 - - - 2,135 155,302 Public works 186,204 - 5,767 - 144,847 336,818 Culture and recreation 216,350 - - - 3,532 219,882 Community and economic development 5,064 - - - - 5,064 General government 198,174 - - - 7,838 206,012 Debt service - - - 661,240 - 661,240 Total disbursements 758,959 - 5,767 661,240 158,352 1,584,318 Excess (deficiency) of receipts over (under) disbursements (58,975) 585,576 205,047 (661,240) 9,157 79.565 Other financing sources (uses): Operating transfers in 11,469 - - 661,240 - 672,709 Operating transfers out (46.328) (576,613) (71,356) - - (694,297) Total other financing sources (uses) (34,859) (576,613) (71,356) 661,240 - (21,588) Net change in cash balances (93,834) 8,963 133,691 - 9,157 57,977 Cash balances beginning of year 724,707 167,945 19,588 - 99,654 1,011,894 Cash balances end of year $ 630,873 176,908 153,279 - 108,811 1,069,871 Cash Basis Fund Balances Unreserved, designated: Fire Department $ 37,241 - - - - 37,241 Drainage/detention project - 60,272 - - - - 60,272 Parks 12,099 - - - - 12,099 Library 211,327 - - - - 211,327 Unreserved, undesignated: General fund 309,934 - - - - 309,934 Special revenue funds - 176,908 153,279 - 108,811 438,998 Total cash basis fund balances $ 630,873 176,908 153,279 - 108,811 1,069,871 See notes to financial statements. lilt 11 46 N N O g ° S x F'' h a n • C)r) P i Board, City Assessor's Conference Board, Linn County Emergency �, Management Commission, and Linn County Joint E911 Service Board. C)0 CITY OF FAIRFAX B. Basis of Presentation 'g 4 NOTES TO FINANCIAL STATEMENTS Government-wide Financial Statement - The Statement of Activities ° m and Net Assets reports information on all of the nonfiduciary b June 30, 2010 activities of the City. For the most park, the effect of inter- fund activity has been removed from this statement. Governmental p activities, which are supported by tax and intergovernmental "o (1) Summary of Significant Accounting Policies receipts are reported separately from business type activities, to which rely to a significant extent on fees and charges for ser- m The City of Fairfax is a political subdivision of the State of Iowa vice. located in Linn County. It was first incorporated in 1936 and oo operates under the Home Rule provisions of the Constitution of Iowa. The Statement of Activities and Net Assets presents the City's e The City operates under the Mayor-Council form of government with nonfiduciary net assets. Net assets are reported in the following „° the. Mayor and Council Members elected on a non-partisan basis. categories/components: o The City provides numerous services to citizens, including public safety, public works, culture and recreation, community and economic Expendable restricted net assets result when constraints `o development, and general government services. The City also provides placed on net asset use are either externally imposed or water, sewer and garbage utilities for its citizens. imposed by law through constitutional provisions or enabling legislation. A. Reporting Entity 4. Unrestricted net assets consist of net assets not meeting For financial reporting purposes, the City of Fairfax has included the definition of the preceding category. Unrestricted net all funds, organizations, agencies, boards, commissions and assets often have constraints on resources imposed by manage- authorities. The City has also considered all potential component sent, which can be removed or modified. units for which it is financially accountable and other organiz- ations for which the nature and significance of their relationship The Statement of Activities and Net Assets demonstrates the with the City are such that exclusion would cause the City's degree to which the direct disbursements of a given function financial statements to be misleading or incomplete. The Govern- are offset by program receipts. Direct disbursements are these mental Accounting Standards Board has set forth criteria to clearly identifiable with a specific function. Program receipts be considered in determining financial accountability. These include 1) charges to customers or applicants who purchase, criteria include appointing a voting majority of an organization's use or directly benefit from goods, services or privileges pro- governing body and (1) the ability of the City to impose its vided by a given function and 2) grants, contributions and inter- will on that organization or (2) the potential for the organiz- est on investments restricted to meeting the operational require- ation to provide specific benefits to or impose specific fin- ments of a particular function. Property tax and other items ancial burdens on the City. The City has no component unite not properly included among program receipts are reported instead which meet the Governmental Accounting Standards Board criteria. as general receipts. Jointly Governed Organizations Fund Financial Statements - Separate financial statements are provided for governmental funds and proprietary funds. Major The City participates in several jointly governed organizations individual governmental funds and major individual enterprise that provide goods or services to the citizenry of the City funds are reported as separate columns in the fund financial but do not meet the criteria of a joint venture since there statements. All remaining governmental funds are aggregated is no ongoing financial interest or responsibility by the part- and reported as nonmajor governmental funds. icipating governments. City officials are members of the fol- lowing boards and commissions: Linn County Assessor's Conference The City reports the following major governmental funds: o , • N n N q QO O pO X17 ep 3 N lr' aa' on A O The General Fund is the general operating fund of the City. re All general tax receipts and other receipts not allocated 0 m by law or contractual agreement to some other fund are account- ed for in this fund. From the fund are paid the general operating disbursements, the fixed charges and the capital D. Budgets and Budgetary Accounting n m improvement costs not paid from other funds. The budgetary comparison and related disclosures are reported .y as Required Supplementary Information. a 0 (2) Cash and Pooled Investments m The Urban Renewal Tax Increment. Fend is used to account for urban renewal projects financed by tax increment financing. The City's deposits in banks at June 30, 2010 were entirely covered by federal depository insurance or by the State Sinking Fund in a. The Local Option Sales Tax Fund is used to account for the accordance with Chapter 12C of the Code of Iowa. This chapter pro- spending of the 1% local option sales tax in accordance with vides for additional assessments against the depositories to insure m voter wishes. there will be no loss of public funds. Z y The City is authorized by statute to invest public funds in oblige- p The Debt Service Fund is utilized to account for the payment of interest and principal on the City's general long-term tions of the United States government, its agencies and instrument- .. debt. alities; certificates of deposit or other evidences of deposit at to federally insured depository institutions approved by the City Cotn1- The City reports the following major proprietary funds: cit; prime eligible bankers acceptances; certain high rated commercial • paper; perfected repurchase agreements; certain registered open- ,›' The Water Fund accounts for the operation and maintenance end management investment companies; certain joint investment trusts; Cn of the City's water system. and warrants or improvement certificates of a drainage district. The Sewer Fund accounts for the operation and maintenance The City had no investments meeting the disclosure requirements of the City's wastewater treatment and sanitary sewer system. of Governmental Accounting Standards Board Statement Number 3. The Garbage Fund accounts for the operation of the City's Interest rate risk - The City's investment policy limits the invest- solid waste collection program. ment of operating funds (funds expected to be expended in the current • budget year or within 15 months of receipt) to instruments that C. Measurement Focus and Basis of Accounting mature within 397 days. Funds not identified as operating funds The City of Fairfax maintains its financial records on the basis may be invested in investments with maturities longer that 397 days, of cash receipts and disbursements and the financial statements but the maturities shall be consistent with the needs and use of of the City are prepared on—that basis. .The cash basis of ac- the City. counting does not give effect to accounts receivable, accounts payable and accrued items. Accordingly, the financial statements (3) Bonds and /Totes Payable do not present financial position and results of operations of the funds in accordance with U.S. generally accepted accounting Annual debt service requirements to maturity for general obligati.on principles. notes and revenue bonds are as follows: Proprietary funds distinguish operating receipts and disbursements from non-operating items. Operating receipts and disbursements generally result from providing services and producing and delivering goods in connection with a proprietary fund's principal ongoing operations. All receipts and disbursements not meeting this definition are reported as non-operating receipts and dis- bursements. IP 111 1110 0 0 . N n (..)2', OV, p6�J 6 A 3 l N a ai o-0 6 4 a`.0 Yea: General Obligation m 0 Boding Bonds and Notes Revenue Bonds Total members are required to contribute 4.30E of their annual covered 0 o June 30, Principal Lnterest Principal Jnr Interest salary and the City is required to contribute 6.65E of covered salary. 2011 $ 545,000 114,576 5,000 71,550 55U,OG0 1E6,126The City contributions to IPERS for the year ended June 30, 2010 e 2012 515,000 14,7.76 5,000 71,400 420,000 167,588 were $ 20,078, aqua: to the required contributions for the gear. a 2013 415,000 83,114 118,000 71,250 533,000 154,364 20.14 390,000 69,659 122,000 67,710 512,000 137,369 (6) Compensated Absences a 2015 395,OD0 56,786 125,000 64,030 583,000 120+836City employees accumulate a limited amount of earned but unused 7116 al-,n 977,000 123,815 685,000 261,500 1,662,000 385,415 vacation and compensatcry hours for oubsequent uae or for payment to m M1-2(3(25 122,000 8,330 794,000 152,460 916,000 160,790upon termination, retirement or death. These accumulations are s 2026 2029 10,529 422 531,000 32,040 541,529 32,462 not recognized as disbursements by the City until used or paid. A. The City's approximate liability for earned vacation and compensatory Total $3,269,529 552,890 2,385,000 792460 5+0+,529 1.344.950hours payable to employees at June 30, 2010, primarily relating �o to the General Fund, is as follows: w 2 N The January 27, 2010 general obligation bonds were issued from the o State Revolving Loan Fund of the Iowa Finance Authority. At June Type of Benefit Amount 30, 2010, the City had $ 18,471 remaining on their $ 118,000 line 63 of credit with the Iowa Finance Authority. Vacation $ 3,000 Compensatory hours 6.000 (4) Other Long-Tern Debt Total $ 9,000 aN Annual debt service requirements to maturity for other long-term debt is as follows: The liability has been computed based on rates of pay in effect at June 30, 2010. Year Ending Lease-purchase agreement (7) Interfand Transfers June 30, Principal Interest The detail of interfund transfers for the year ended June 30, 2010 2011 $ 11,484 2,876 is as follows: 2012 12,115 2,245 2013 28,786 1,580 Transfer to _ ... ..__Transfer,from Amount Total $ 52,385 6,701 • General Enterprise: Sewer $ 11,469 (5) Pension and Retirement Benefits Debt Service General 46,328 The City contributes to the Iowa Public Employees Retirement System Special Revenue: (IPERS), which is a cost-sharing multiple-employer defined benefit Urban Renewal Tax Increment 576,613 pension plan administered by the State of Iowa. IPERS provides Local Option Sales Tax 33,356 retirement and death benefits which are established by state statute Enterprise: to plan members and beneficiaries. IPERS issues a publicly available Sewer4,943 financial report that includes financial statements and required 661,240 supplementary information. The report may be obtained by writing Enterprise: Special Revenue to IPERS, P.O. Boz 9117, Des Moines, Iowa 50306-9117. Water Local Option Sales Tax 38,000 Enterprise: Sewer 19,759 57,759 Total $ 730,466 ti(') V, p6 LTJ 6 ax on a � � o Transfers generally move resources from the fund statutorily required • n a to collect the resources to the fund statutorily required to disburse 2 the resources. (B) Related Party Transactions The City had business transactions between the City and City officials totaling $ 1,140. (9) Risk Management The City is exposed to various risks of loss related to torte; theft, damage to and destruction of assets; errors and omi.ssione; injuries m to employees; and natural disasters. These risks are covered by �. the purchase of commercial insurance. The City assumes liability for any deductibles and claims in excess of coverage limitations. SP- coverage Settled claims from these risks have not exceeded commercial insurance 6":1 in the past fiscal year. tb (10) Commitments At June 30, 2010 the City had commitments on uncompleted contracts THIS PAGE LNTENT1ONALLY of $ 17,504 relating to water meter replacement and $ 37,878 relating to Phase I of the Vater Main replacement. LEFT BLANK City of Faitfax,Linn County,Iowa $2,260,000 General Obligation Corporate Purpose Bonds,Series 2011B APPENDIX B • DESCRIBING BOOK-ENTRY-ONLY ISSUANCE 1. The Depository Trust Company ("DTC"),New York, New York, will act as securities depository for the Bonds (the "Securities"). The Securities will be issued as fully-registered securities registered in the name of Cede & Co. (DTC's partnership nominee)or such other name as may be requested by an authorized representative of DTC. One fully- registered Security certificate will be issued for each issue of the Securities, each in the aggregate principal amount of such issue,and will be deposited with DTC. 2. DTC, the world's largest securities depository, is a limited-purpose trust company organized under the New York Banking Law, a"banking organization" within the meaning of the New York Banking Law, a member of the Federal Reserve System,a"clearing corporation"within the meaning of the New York Uniform Commercial Code,and a "clearing agency" registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non-U.S. equity issues, corporate and municipal debt issues, and money market instruments (from over 100 countries) that DTC's participants ("Direct Participants") deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book-entry transfers and pledges between Direct Participants' accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation ("DTCC"). DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non-U.S. securities brokers and dealers,banks, trust companies,and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, Ilk either directly or indirectly ("Indirect Participants"). DTC has a Standard & Poor's rating of AA+. The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at www.dtcc.com. 3. Purchases of Securities under the DTC system must be made by or through Direct Participants,which will receive a credit for the Securities on DTC's records. The ownership interest of each actual purchaser of each Security ("Beneficial Owner")is in turn to be recorded on the Direct and Indirect Participants' records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Securities are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in Securities, except in the event that use of the book-entry system for the Securities is discontinued. • 4. To facilitate subsequent transfers, all Securities deposited by Direct Participants with DTC are registered in the name of DTC's partnership nominee, Cede & Co., or such other name as may be requested by an authorized • representative of DTC. The deposit of Securities with DTC and their registration in the name of Cede &Co. or such other DTC nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Securities; DTC's records reflect only the identity of the Direct Participants to whose accounts such Securities are credited,which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers. s B-1 City ofFairfax,Linn County,Iowa $2,260,000 General Obligation Corporate Purpose Bonds,Series 2011B 5. Conveyance of notices and other communications by DTC to Direct Participants,by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time Beneficial Owners of Securities may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the Securities, such as redemptions, tenders, defaults, and proposed amendments to the Security documents. For example, Beneficial Owners of Securities may wish to ascertain that the nominee holding the Securities for their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names and addresses to the registrar and request that copies of notices be provided directly to them. 6. Redemption notices shall be sent to DTC. If less than all of the Securities within an issue are being redeemed, DTC's practice is to determine by lot the amount of the interest of each Direct Participant in such issue to be redeemed. 7. Neither DTC nor Cede&Co. (nor any other DTC nominee)will consent or vote with respect to Securities unless authorized by a Direct Participant in accordance with DTC's MMI Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the City as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.'s consenting or voting rights to those Direct Participants to whose accounts Securities are credited on the record date (identified in a listing attached to the Omnibus Proxy). 8. Redemption proceeds, distributions, and dividend payments on the Securities will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC's practice is to credit Direct Participants' accounts upon DTC's receipt of funds and corresponding detail information from the City or the Paying Agent, on payable date in accordance with their respective holdings shown on DTC's records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in"street name,"and will be the responsibility of AiL such Participant and not of DTC,the Paying Agent,or the City,subject to any statutory or regulatory requirements as may Wir be in effect from time to time. Payment of redemption proceeds, distributions, and dividend payments to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the City or the Paying Agent, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants. 9. A Beneficial Owner shall give notice to elect to have its Securities purchased or tendered, through its Participant, to any Tender/Remarketing Agent, and shall effect delivery of such Securities by causing the Direct Participant to transfer the Participant's interest in the Securities, on DTC's records, to any Tender/Remarketing Agent. The requirement for physical delivery of Securities in connection with an optional tender or a mandatory purchase will be deemed satisfied when the ownership rights in the Securities are transferred by Direct Participants on DTC's records and followed by a book-entry credit of tendered Securities to any Tender/Remarketing Agent's DTC account. 10. DTC may discontinue providing its services as depository with respect to the Securities at any time by giving reasonable notice to the City or the Paying Agent. Under such circumstances, in the event that a successor depository is not obtained, Security certificates are required to be printed and delivered. 11. The City may decide to discontinue use of the system of book-entry-only transfers through DTC (or a successor securities depository). In that event, Security certificates will be printed and delivered to DTC. 12. The information in this section concerning DTC and DTC's book-entry system has been obtained from sources that the City believes to be reliable,but the City takes no responsibility for the accuracy thereof. s B-2 Ciry of FaUfax,Linn County,Iowa $2,260,000 General Obligation Corporate Purpose Bonds,Series 2011B 411 APPENDIX C *[Form of] CONTINUING DISCLOSURE CERTIFICATE This Continuing Disclosure Certificate (the "Disclosure Certificate") is executed and delivered by the City of Fairfax, Iowa(the "Issuer"), in connection with the issuance of$2,260,000 General Obligation Corporate Purpose Bonds, Series 2011B (the "Bonds"),dated November 10,2011. The Bonds are being issued pursuant to a resolution of the Issuer ' approved on October 24,2011 (the "Resolution"). The Issuer covenants and agrees as follows: Section 1. Purpose of the Disclosure Certificate. This Disclosure Certificate is being executed and delivered by the Issuer for the benefit of the Holders and Beneficial Owners of the Bonds and in order to assist the Participating Underwriters in complying with S.E.C. Rule 15c2-12. Section 2. Definitions. In addition to the defmitions set forth in the Resolution, which apply to any capitalized term used in this Disclosure Certificate unless otherwise defined in this Section, the following capitalized terms shall have the following meanings: "Annual Report"shall mean any Annual Report provided by the Issuer pursuant to. and as described in, Sections 3 and 4 of this Disclosure Certificate. "Beneficial Owner" shall mean any person which(a) has the power, directly or indirectly,to vote or consent with 11 respect to, or to dispose of ownership of, any Bonds (including persons holding Bonds through nominees, depositories or other intermediaries),or(b)is treated as the owner of any Bonds for federal income tax purposes. "Dissemination Agent"shall mean the Dissemination Agent, if any, designated in writing by the Issuer and which has filed with the Issuer a written acceptance of such designation. • "Holders"shall mean the registered holders of the Bonds, as recorded in the registration books of the Registrar. "Listed Events"shall mean any of the events listed in Section 5(a)of this Disclosure Certificate. "Municipal Securities Rulemaking Board" or "MSRB" shall mean the Municipal Securities Rulemaking Board, 1900 Duke Street, Suite 600,Alexandria,VA 22314. "National Repository" shall mean, at any point in time, a nationally recognized municipal securities information repository which is then recognized as such by the SEC; as of the date of this Disclosure Certificate, the sole National Repository is the MSRB, which accepts filings via its Electronic Municipal Market Access (EMMA) system at http://emma.msrb.org. "Participating Underwriter" shall mean any of the original underwriters of the Bonds required to comply with the Rule in connection with offering of the Bonds. "Repository"shall mean each National Repository and each State Repository. "Rule" shall mean Rule 15c2-12 adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934,as the same may be amended from time to time. "State"shall mean the State of Iowa. C-1 City ofFairfax,Linn County,Iowa $2,260,000 General Obligation Corporate Purpose Bonds,Series 2011B "State Repository" shall mean any public or private repository or entity designated by the State as a state repository for the purpose of the Rule and recognized as such by the Securities and Exchange Commission. As of the date of this Certificate,there is no State Repository. Section 3. Provision of Reports and Audited Financial Statements. (a) To the extent such information is customarily prepared by the Issuer and is publicly available, the Issuer, as soon as available but not later than 12 months after the end of the Issuer's fiscal year (presently June 30), commencing with the report for the 2010-2011 fiscal year, shall, or shall cause the Dissemination Agent (if any) to, provide to each National Repository an electronic copy of its Annual Report which is consistent with the requirements of Section 4 of this Disclosure Certificate and which Annual Report is in a format and accompanied by such identifying information as prescribed by the MSRB. The Annual Report may be submitted as a single document or as separate documents comprising a package, and may cross-reference other information as provided in Section 4 of this Disclosure Certificate; provided that the audited financial statements of the Issuer may be submitted separately from the balance of the Annual Report and later than the date required above for the filing of the Annual Report if they are not available by that date. If the Issuer's fiscal year changes, it shall give notice of such change in the same manner as for a Listed Event under Section 5(c). (b) If the Issuer has designated a Dissemination Agent, then not later than fifteen (15) business days prior to the filing date in Section 3(a),the Issuer shall provide the Annual Report to the Dissemination Agent. Section 4. Content of Annual Reports. The Issuer's Annual Report shall contain or include by reference the following: (a) the audited financial statements of the Issuer for the prior fiscal year, prepared in accordance with generally accepted accounting principles promulgated by the Financial Accounting Standards Board as modified in' accordance with the governmental accounting standards promulgated by the Governmental Accounting Standards Board or as otherwise provided under State law, as in effect from time to time, or, if and to the extent such financial statements have not been prepared in accordance with generally accepted accounting principles, noting the discrepancies therefrom and the effect thereof. (b) other financial information and operating data regarding the Issuer of the type presented in the final official statement distributed in connection with the primary offering of the Bonds. Any or all of the items listed above may be included by specific reference to other documents, including official statements of debt issues of the Issuer or related public entities,which are available to the public on the MSRB's web site or are filed with the Securities and Exchange Commission. If the document included by reference is a final official statement, it must be available from the Municipal Securities Rulemaking Board. The Issuer shall clearly identify each such other document so included by reference. Section 5. Reporting of Significant Events. (a) Pursuant to the provisions of this Section 5, the Issuer shall give, or cause to be given, notice of the occurrence of any of the following events with respect to the Bonds: (1)Principal and interest payment delinquencies; (2)Non-payment related defaults,if material; (3)Unscheduled draws on debt service reserves reflecting financial difficulties; S. (4)Unscheduled draws on credit enhancements reflecting financial difficulties; C-2 City ofFairfax,Linn County,Iowa $2,260,000 General Obligation Corporate Purpose Bonds,Series 2011B (5) Substitution of credit or liquidity providers,or their failure to perform; (6) Adverse tax opinions, the issuance by the Internal Revenue Service of proposed or final determinations of taxability, Notices of Proposed Issue (IRS Form 5701-TEB) or other material notices or determinations with respect to the tax status of the security,or other material events affecting the tax status of the security; (7)Modifications to rights of security holders,if material; (8)Bond calls,if material, and tender offers; (9)Defeasances; (10) Release,substitution,or sale of property securing repayment of the securities,if material; (11) Rating changes; (12) Bankruptcy,insolvency,receivership or similar event of the obligated person; Note to paragraph (12): For the purposes of the event identified in subparagraph (12), the event is considered to occur when any of the following occur: the appointment of a receiver, fiscal agent or similar officer for an obligated person in a proceeding under the U.S. Bankruptcy Code or in any other proceeding under state or federal law in which a court or governmental authority has assumed jurisdiction over substantially all of the assets 11. or business of the obligated person, or if such jurisdiction has been assumed by leaving the existing governing body and officials or officers in possession but subject to the supervision and orders of a court or governmental authority, or the entry of an order confirming a plan of reorganization, arrangement or liquidation by a court or governmental authority having supervision or jurisdiction over substantially all of the assets or business of the obligated person; (13) The consummation of a merger, consolidation,or acquisition involving an obligated person or the sale of all or substantially all of the assets of the obligated person, other than in the ordinary course-of business, the entry into a definitive agreement to undertake such an action or the termination of a definitive agreement relating to any such actions,other than pursuant to its terms, if material; (14) Appointment of a successor or additional trustee or the change of name of a trustee, if material;and (b) If a Listed Event described in paragraph (2), (7), (8) (but only with respect to bond calls under(8)), (10), (13) or(14) above has occurred and the Issuer has determined that such Listed Event is material under applicable federal securities laws,the Issuer shall,in a timely manner but not later than ten business days after the occurrence of such Listed Event,promptly file a notice of such occurrence with each National Repository. (c) If a Listed Event described in paragraph (1), (3), (4), (5), (6), (8) (but only with respect to tender offers under (8)), (9), (11) or(12) above has occurred the Issuer shall, in a timely manner but not later than ten business days after the occurrence of such Listed Event, promptly file a notice of such occurrence with each National Repository. Notwithstanding the foregoing, notice of Listed Events described in subsections (a) (8) and (9) need not be given under this subsection any earlier than the notice (if any) of the underlying event is given to Holders of affected Bonds pursuant to the Resolution. 4 C-3 City ofFairfax,Linn County,Iowa $2,260,000 General Obligation Corporate Purpose Bonds,Series 2011B Section 6. Termination of Reporting Obligation. The Issuer's obligations under this Disclosure Certificate shall terminate upon the legal defeasance, prior redemption or payment in full of all of the Bonds or upon the Issuer's receipt of an opinion of nationally recognized bond counsel to the effect that,because of legislative action or final judicial action or administrative actions or proceedings, the failure of the Issuer to comply with the terms hereof will not cause Participating Underwriters to be in violation of the Rule or other applicable requirements of the Securities Exchange Act of 1934, as amended. If such termination occurs prior to the final maturity of the Bonds, the Issuer shall give notice of such termination in the same manner as for a Listed Event under Section 5(c). Section 7. Dissemination Agent. The Issuer may, from time to time, appoint or engage a Dissemination Agent to assist it in carrying out its obligations under this Disclosure Certificate, and may discharge any such Agent, with or without appointing a successor Dissemination Agent. The Dissemination Agent shall not be responsible in any manner for the content of any notice or report prepared by the Issuer pursuant to this Disclosure Certificate. The initial Dissemination Agent shall be the Issuer. Section 8. Amendment; Waiver. Notwithstanding any other provision of this Disclosure Certificate, the Issuer may amend this Disclosure Certificate, and any provision of this Disclosure Certificate may be waived, provided that the following conditions are satisfied: (a) If the amendment or waiver relates to the provisions of Sections 3, 4, or 5(a), it may only be made in connection with a change in circumstances that arises from a change in legal requirements,change in law, or change in the identity,nature or status of an obligated person with respect to the Bonds,or the type of business conducted; (b) The undertaking, as amended or taking into account such waiver, would, in the opinion of nationally recognized bond counsel, have complied with the requirements of the Rule at the time of the original issuance of the Bonds, after taking into account any amendments or interpretations of the Rule, as well as any change in circumstances111 and (c) The amendment or waiver either (i) is approved by the Holders of the Bonds in the same manner as provided in the Resolution for amendments to the Resolution with the consent of Holders, or(ii) does not, in the opinion of nationally recognized bond counsel,materially impair the interests of the Holders or Beneficial Owners of the Bonds. In the event of any amendment or waiver of a provision of this Disclosure Certificate, the Issuer shall describe such amendment in the next Annual Report, and shall include, as applicable, a narrative explanation of the reason for the amendment or waiver and its impact on the type (or in the case of a change of accounting principles, on the presentation) of financial information or operating data being presented by the Issuer. In addition, if the amendment relates to the accounting principles to be followed in preparing financial statements, (i)notice of such change shall be given in the same manner as for a Listed Event under Section 5(c), and(ii)the Annual Report for the year in which the change is made will present a comparison or other discussion in narrative form (and also, if feasible, in quantitative form) describing or illustrating the material differences between the financial statements as prepared on the basis of the new accounting principles and those prepared on the basis of the former accounting principles. Section 9. Additional Information. Nothing in this Disclosure Certificate shall be deemed to prevent the Issuer from disseminating any other information, using the means of dissemination set forth in this Disclosure Certificate or any other means of communication, or including any other information in any Report or notice of occurrence of a Listed Event, in addition to that which is required by this Disclosure Certificate. If the Issuer chooses to include any information in any Report or notice of occurrence of a Listed Event in addition to that which is specifically required by this Disclosure Certificate,the Issuer shall have no obligation under this Certificate to update such information or include it in any future Report or notice of occurrence of a Listed Event. C-4 City ofFairfax,Linn County,Iowa $2,260,000 General Obligation Corporate Purpose Bonds,Series 2011B Section 10. Default. In the event of a failure of the Issuer to comply with any provision of this Disclosure *Certificate, any Holder or Beneficial Owner of the Bonds may take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order,to cause the Issuer to comply with its obligations under this Disclosure Certificate. Direct, indirect, consequential and punitive damages shall not be recoverable by any person for any default hereunder and are hereby waived to the extent permitted by law. A default under this Disclosure Certificate shall not be deemed an event of default under the Resolution, and the sole remedy under this Disclosure Certificate in the event of any failure of the Issuer to comply with this Disclosure Certificate shall be an action to compel performance. Section 11. Duties, Immunities and Liabilities of Dissemination Agent. The Dissemination Agent, if any, shall have only such duties as are specifically set forth in this Disclosure Certificate, and the Issuer agrees to indemnify and save the Dissemination Agent, its officers, directors, employees and agents, harmless against any loss, expense and liabilities which it may incur arising out of or in the exercise or performance of its powers and duties hereunder, including the costs and expenses (including attorneys' fees) of defending against any claim of liability, but excluding liabilities due to the Dissemination Agent's negligence or willful misconduct. The obligations of the Issuer under this Section shall survive resignation or removal of the Dissemination Agent and payment of the Bonds. Section 12. Beneficiaries. This Disclosure Certificate shall inure solely to the benefit of the Issuer, the Dissemination Agent, the Participating Underwriters and Holders and Beneficial Owners from time to time of the Bonds, and shall create no rights in any other person or entity. Dated: November 10,2011. CITY OF FAIRFAX, IOWA 4 By Mayor Attest City Clerk/Treasurer C-5 City of Fairfax,Linn County,Iowa $2,260,000 General Obligation Corporate Purpose Bonds,Series 2011B APPENDIX D *[Form of Bond Counsel Opinion] We hereby certify that we have examined certified copies of the proceedings (the "Proceedings") of the City Council of the City of Fairfax (the "Issuer"), in Linn County, Iowa, passed preliminary to the issue by the Issuer of its General Obligation Corporate Purpose Bonds, Series 2011B (the "Bonds") in the amount of $2,260,000, dated November 10, 2011, in the denomination of$5,000 each, or any integral multiple thereof, in evidence of the Issuer's obligation under a certain loan agreement (the "Loan Agreement"), dated as of November 10, 2011. The Bonds mature on June 1 in each of the respective years and in the principal amounts and bear interest payable semiannually, commencing June 1, 2012, at the respective rates as follows: Principal Interest Rate Principal Interest Rate Year Amount Per Annum Year Amount Per Annum 2013 $175,000 % 2019 $185,000 2014 $175,000 % 2020 $190,000 2015 $175,000 % 2021 $195,000 2016 $175,000 % 2022 $200,000 2017 $180,000 % 2023 $210,000 2018 $185,000 % 2024 $215,000 but the Bonds maturing in each of the years 2020 to 2024, inclusive, are subject to redemption prior to maturity on June 1, 2019 or any date thereafter, upon terms of par and accrued interest. Based upon our examination, we are of the opinion, as of the date hereof, that: 1. The Proceedings show lawful authority for such issue under the laws of the State of Iowa. 2. The Bonds and the Loan Agreement are valid and binding general obligations of the Issuer. 3. All taxable property within the corporate boundaries of the Issuer is subject to the levy of taxes to pay the principal of and interest on the Bonds without constitutional or statutory limitation as to rate or amount. 1 4. The interest on the Bonds (including any original issue discount properly allocable to an owner thereof) is excluded from gross income for federal income tax purposes and is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations; it should be noted, however, that for the purpose of computing the alternative minimum tax imposed on corporations (as defined for federal income tax purposes), such interest is taken into account in determining adjusted current earnings. The opinions set forth in the preceding sentence are subject to the condition that the Issuer comply with all requirements of the Internal Revenue Code of 1986 (the "Code") that must be satisfied subsequent to the issuance of the Bonds in order that interest thereon be, or continue to be, excluded from gross income for federal income tax purposes. The Issuer has covenanted to comply with each such requirement. Failure to comply with certain of such requirements may cause the inclusion of interest on the Bonds in gross income for federal income tax purposes to be retroactive to the date of issuance of the Bonds. D-1 City of Fairfax,Linn County,Iowa $2,260,000 General Obligation Corporate Purpose Bonds,Series 2011B 5. The Bonds are "qualified tax-exempt obligations" within the meaning of Section 265(b)(3) of the Code. The opinion set forth in the preceding sentence is subject to the condition that the Issuer comply with all requirements of the Code that must be satisfied subsequent to the issuance of the Bonds in order that the Bonds be, or continue to be, qualified tax-exempt obligations. The Issuer has covenanted to comply with each such requirement. We express no opinion regarding other federal tax consequences arising with respect to the Bonds. The rights of the owners of the Bonds and the enforceability thereof may be subject to bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors' rights heretofore or hereafter enacted to the extent constitutionally applicable, and their enforcement may also be subject to the exercise of judicial discretion in appropriate cases. DORSEY & WHITNEY LLP *This form of bond counsel opinion is subject to change pending the results of the sale of the Bonds contemplated herein. 4111, • • D-2 OFFICIAL BID FORM $2,260,000 General Obligation Corporate Purpose Bonds,Series 2011B City of Fairfax October 11,2011 PO Box 337. Speer Financial,Inc. Fairfax,IA 52228-0337 Facsimile: (319)291-8628 Mayor&Council Members: • For the $2,260,000 General Obligation Corporate Purpose and Bonds, Series 2011B (the `Bonds"), of the.City of Fairfax, Linn County, Iowa, (the"City")as described in the annexed Official Terms of Offering,which is expressly made a part of this bid, we will pay you$ (no less than$2,241,920)bearing interest as follows(each rate a multiple of 1/100 or 1/8 of 1%). MATURITIES*—JUNE 1 $175,000 2013 % $180,000 2017 % $195,000 2021 % 175,000 2014 % 185,000 2018 % 200,000 2022 % 175,000 2015 % 185,000 2019 % 210,000 2023 % 175,000 2016 % 190,000 2020 % 215,000 2024 *Any consecutive maturities may be aggregated into term bonds at the option of the bidder, in which case the mandatory redemption provisions shall be on the same schedule as above Maturities: Term Maturity Maturities: Term Maturity Maturities: Term Maturity Maturities: Term Maturity Maturities: Term Maturity Maturities: Term Maturity The Bonds are to be executed and delivered to us in accordance with the terms of this bid accompanied by the approving legal opinion of Dorsey&Whitney,LLP.,Des Moines,Iowa. The City will pay for the legal opinion. The Purchaser agrees to apply for CUSIP numbers and pay the fee charged by the CUSIP Service Bureau and will accept the Bonds with the CUSIP numbers as entered on the Bonds. As evidence of our good faith,we have wire transferred or enclose herewith a check or Surety Bond payable to the order of the Treasurer of the City in the amount of TWO PERCENT OF PAR (the "Deposit") under the terms provided in your Official Terms of Offering. Attached hereto is a list of members of our account on whose behalf this bid is made. Form of Deposit Account Manner Information Bidders Option Insurance_ Check One: e ha%a purchased Name insurance from: Certified/Cashier's Check [] Financial Surety Bond [] Address Name of Insurer Wire Transfer [] (Please fill in) BY Amount: $45,200 City State/Zip Premium: Direct Phone Maturities: (Check One) Years FAX Number All Email Address The foregoing bid was accepted and the Bonds sold by resolution of the City on October 11, 2011, and receipt is hereby acknowledged of the good faith Deposit which is being held in accordance with the terms of the annexed Official Terms of Offering. CITY OF FAIRFAX ATTEST: LINN COUNTY,IOWA City Clerk/Treasurer Mayor NOT PART OF THE BID------- (Calculation of true interest cost) Gross Interest $ Less Premium/Plus Discount $ True Interest Cost $ True Interest Rate 0/0 TOTAL BOND YEARS 16,481.83 AVERAGE LIFE 7.293 years City ofFairfax,Linn County,Iowa $2,260,000 General Obligation Corporate Purpose Bonds,Series 2011B Page 1 of 4 OFFICIAL TERMS OF OFFERING $2,260,000 CITY OF FAIRFAX Linn County,Iowa General Obligation Corporate Purpose Bonds,Series 2011B The City of Fairfax, Linn County, Iowa will receive sealed bids for the Bonds, on an all or none basis, at City Hall, 525 Vanderbilt St., Fairfax, Iowa, until 11:00 A.M., C.D.T., Tuesday, October 11, 2011. The City will also receive facsimile bids for the Bonds at the facsimile numbers listed below, on an all or none basis, at City Hall, 525 Vanderbilt St., Fairfax, Iowa until 11:00 A.M., C.D.T., Tuesday, October 11, 2011. Upon receipt, facsimile bids will be sealed and treated as sealed bids,and along with all other sealed bids will be publicly opened and read. Award will be made or all bids rejected at a meeting of the City on that date. The City reserves the right to reject all proposals,to reject any bid proposal not conforming to this Official Terms of Offering,and to waive any irregularity or informality with respect to any proposal. Additionally,the City reserves the right to modify or amend this Official Terms of Offering;however,any such modification or amendment shall not be made less than twenty-four(24)hours prior to the date and time for receipt of bids on the Bonds and any such modification or amendment will be announced on the Speer Financial webpage and through Thompson Municipal News. The Bonds are general obligations payable as to both principal and interest from ad valorem taxes levied against all taxable property of the City without limitation as to rate or amount, all except as limited by bankruptcy, insolvency, moratorium, reorganization and other similar laws relating to the enforcement of creditors' rights generally and except that enforcement by equitable and similar remedies, such as mandamus, is subject to the exercise of judicial discretion. The Bonds will be in fully registered form in the denominations of$5,000 and integral multiples thereof in the name of Cede & Co. as nominee of The Depository Trust Company ("DTC"), New York,New York, to which principal and interest payments on the Bonds will be paid. Individual purchases will be in book-entry form only. Interest on each Bond shall be paid by check or draft of the Bond Registrar to the person in whose name such Bond is registered at the close of business on the fifteenth day of the month next preceding an interest payment date. The principal of the Bonds shall be payable in lawful money of the United States of America at the principal office maintained for the purpose by the Bond Registrar in Des Moines, Iowa. Semiannual interest is due June 1 and December 1 of each year, commencing June 1, 2012 and is payable by Banker's Trust Company, Des Moines, Iowa(the "Bond Registrar"). The Bonds are dated the date of delivery,which is expected to be on or about November 10,2011. MATURITIES* -JUNE 1 $175,000 2013 $180,000 2017 $195,000 2021 175,000 2014 185,000 2018 200,000 2022 175,000 2015 185,000 2019 210,000 2023 175,000 2016 190,000 2020 215,000 2024 *Any consecutive maturities may be aggregated into term bonds at the option of the bidder,in which case the mandatory redemption provisions shall be on the same schedule as above The Bonds due June 1, 2013 - 2019, inclusive, are non-callable. Bonds due June 1, 2020 - 2024, inclusive, are callable in whole or in part and on any date on or after June 1, 2019, at a price of par and accrued interest. If less than all the Bonds are called, they shall be redeemed in any order of maturity as determined by the City and within any maturity by lot. City of Faufax,Linn County,Iowa $2,260,000 General Obligation Corporate Purpose Bonds,Series 2011B Page 2 of 4 Electronic Facsimile Bidding: Bids may be submitted via facsimile at (319) 291-8628 or (319) 319-846-3480 Electronic facsimile bids will be sealed and treated as sealed bids. Neither the City nor its agents will assume liability for the inability of the bidder to reach the above named fax numbers prior to the time of sale specified above. Transmissions received after the deadline will be rejected. Bidders electing to submit bids via facsimile transmission bear full and complete responsibility for the transmission of such bid. Neither the City nor its agents will assume responsibility for the inability of the bidder to reach the above specified fax number prior to the time of sale. Time of receipt shall be the time recorded by the facsimile operator. Bid Parameters and Award of the Bonds The interest rate(s) in a bid must be in multiples of one-eighth or one one-hundredth of one percent(1/8 or 1/100 of 1%). The rates shall be in non-descending order. The differential between the highest rate and the lowest rate shall not exceed five percent(5%). All bids must be for all of the Bonds,must be for not less than $2,241,920,must be signed and made upon the Official Bid Form and delivered at the time and place set forth above. Award of the Bonds: The Bonds will be awarded on the basis of true interest cost, determined in the following manner. True interest cost shall be computed by determining the annual interest rate (compounded semi-annually) necessary to discount the debt service payments on the Bonds from the payment date thereof to the dated date and to the bid price. For the purpose of calculating true interest cost, the Bonds shall be deemed to become due in the principal amounts and at the times set forth in the table of maturities set forth above. The Bonds will be awarded to the purchaser complying with the terms of this Official Terms of Offering whose bid produces the lowest true interest cost rate to the City as determined by the City's Financial Advisor, which determination shall be conclusive and binding on all prospective purchasers; provided,that the City reserves the right to, , reject all bids or any non-conforming bid and reserves the right to waive any informality in any bid. The winning purchaser will be required to make the standard filings and maintain the appropriate records routinely required pursuant to MSRB Rules G-8, G-11 and G-36. The winning purchaser will be required to pay the standard MSRB charge for Bonds purchased. In addition, the winning purchaser who is a member of the Securities Industry and Financial Markets Association("SIFMA")will be required to pay SIFMA's standard charge per Bond. Good Faith Deposit and Other Matters Each bid shall be accompanied by a certified or cashier's check on, or a wire transfer from,a solvent bank or trust company or a Financial Surety Bond for TWO PERCENT OF PAR payable to the Treasurer of the City as evidence of good faith of the prospective purchaser(the "Deposit"). The Deposit of the successful purchaser will be retained by the City pending delivery of the Bonds and all others will be promptly returned. Should the successful purchaser fail to take up and pay for the Bonds when tendered in accordance with this Official Terms of Offering and said bid, said Deposit shall be retained as full and liquidated damages to the City caused by failure of the purchaser to carry out the offer of purchase. Such Deposit will otherwise be applied on the purchase price upon delivery of the Bonds. No interest on the Deposit will accrue to the purchaser. If a wire transfer is used for the Deposit,it must be sent according to the following wire instructions: Amalgamated Bank of Chicago One W. Monroe Street Chicago, Illinois 60603 ABA#071003405 Credit to: 1853281001 Speer Bidding Escrow RE: [name of prospective purchaser] bid for[name of bond issue] City ofFairfax,Linn County,Iowa $2,260,000 General Obligation Corporate Purpose Bonds,Series 2011B Page 3 of 4 The wire shall arrive in such account no later than 30 minutes prior to the date and time of the sale of the Bonds. Contemporaneously with such wire transfer, the prospective purchaser shall send an email to biddingescrow@aboc.com with the following information: (1) indication that a wire transfer has been made, (2)the amount of the wire transfer, (3) the issue to which it applies, and (4)the return wire instructions if such prospective purchaser is not awarded the Bonds. The City and any prospective purchaser who chooses to wire the Deposit hereby agree irrevocably that Speer Financial, Inc. ("Speer") shall be the escrow holder of the Deposit wired to such account subject only to these conditions and duties: li (i) if the bid is not accepted, Speer shall, at its expense, promptly return the Deposit amount to the unsuccessful prospective purchaser; (ii) if the bid is accepted,the Deposit shall be forwarded to the City, (iii) Speer shall bear all costs of maintaining the escrow account and returning the funds to the prospective purchaser; (iv) Speer shall not be an insurer of the Deposit amount and shall have no liability except if it willfully fails to perform, or recklessly disregards, its duties specified herein;and(v)income earned on the Deposit,if any, shall be retained by Speer. If a Financial Surety Bond is used for the Deposit, it must be from an insurance company licensed to issue such a bond in the State of Iowa and such bond must be submitted to Speer prior to the opening of the bids. The Financial Surety Bond must identify each prospective purchaser whose deposit is guaranteed by such Financial Surety Bond. If the Bonds are awarded to a purchaser using a Financial Surety Bond,then that purchaser is required to submit its Deposit to the City in the form of a certified or cashier's check or wire transfer as instructed by Speer, or the City not later than 3:00 P.M. on the next business day following the award. If such Deposit is not received by that time,the Financial Surety Bond may be drawn by the City to satisfy the Deposit requirement. The City covenants and agrees to enter into a written agreement, certificate or contract, constituting an undertaking (the "Undertaking") to provide ongoing disclosure about the City for the benefit of the beneficial owners of the Bonds on or before the date of delivery of the Bonds as required under Section (b)(5) of Rule 15c2-12 (the "Rule") adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934. The Undertaking shall i,• be as described in the Official Statement, with such changes as may be agreed in writing by the Underwriter. The City represents that it is in substantial compliance with each and every undertaking previously entered into by it pursuant to the Rule. The Underwriter's obligation to purchase the Bonds shall be conditioned upon the City delivering the Undertaking on or before the date of delivery of the Bonds. The Bonds will be delivered to the successful purchaser against full payment in immediately available funds as soon as they can be prepared and executed,which is expected to be on or about November 10, 2011. Should delivery be delayed beyond sixty (60) days from the date of sale for any reason beyond the control of the City except failure of performance by the purchaser, the City may cancel the award or the purchaser may withdraw the good faith deposit and thereafter the purchaser's interest in and liability for the Bonds will cease. The Official Statement, when further supplemented by an addendum or addenda specifying the maturity dates, principal amounts, and interest rates of the Bonds, and any other information required by law or deemed appropriate by the City, shall constitute a"Final Official Statement"of the City with respect to the Bonds, as that term is defined in the Rule. By awarding the Bonds to any underwriter or underwriting syndicate, the City agrees that, no more than seven (7) business days after the date of such award, it shall provide, without cost to the senior managing underwriter of the syndicate to which the Bonds are awarded, up to 50 copies of the Final Official Statement to permit each "Participating Underwriter" (as that term is defined in the Rule) to comply with the provisions of such Rule. The City shall treat the senior managing underwriter of the syndicate to which the Bonds are awarded as its designated agent for purposes of distributing copies of the Final Official Statement to each Participating Underwriter. Any underwriter executing and delivering an Official Bid Form with respect to the Bonds agrees thereby that if its bid is accepted by the City it shall enter into a contractual relationship with all Participating Underwriters of the Bonds for purposes of assuring the receipt by 4 each such Participating Underwriter of the Final Official Statement. City of Fairfax,Linn County,Iowa $2,260,000 General Obligation Corporate Purpose Bonds,Series 2011B Page 4 of 4 By submission of its bid, the senior managing underwriter of the successful purchaser agrees to supply all necessary pricing information and any Participating Underwriter identification necessary to complete the Official Statement within 24 hours after award of the Bonds. Additional copies of the Final Official Statement may be obtained by Participating Underwriters from the printer at cost. The City will, at its expense, deliver the Bonds to the purchaser in New York,New York(or arrange for"FAST" delivery)through the facilities of DTC and will pay for the bond attorney's opinion. At the time of closing,the City will also furnish to the purchaser the following documents, each dated as of the date of delivery of the Bonds: (1) the legal opinion of Dorsey &Whitney, LLP, Des Moines, Iowa,that the Bonds are lawful and enforceable obligations of the City in accordance with their terms; (2) the opinion of said attorneys that the interest on the Bonds is exempt from federal income taxes as and to the extent set forth in the Official Statement for the Bonds; and(3)a no litigation certificate by the City. The City has authorized the printing and distribution of an Official Statement containing pertinent information relative to the City and the Bonds. Copies of such Official Statement or additional information may be obtained from Ms. Cynthia Stimson, City Clerk/Treasurer, City of Fairfax, 525 Vanderbilt St., PO Box 337., Fairfax, IA 52253 or an electronic copy of this Official Statement is available from the www.speerfinancial.com website under "Official Statement Sales Calendar" or from the Independent Public Finance Consultants to the City, Speer Financial, Inc., 531 Commercial Street, Suite 608, Waterloo, Iowa 50701 (telephone (319) 291-2077) and One North LaSalle Street, Suite 4100, Chicago,Illinois 60602 (telephone(312)346-3700). I/s/ Cerg? IIA STIMSON City Clerk/Treasurer CITY OF FAIRFAX Linn County,Iowa