(BAM Insured) Ratings: S&P Insured: "AA" MUR: "Aa3" NEW ISSUE BOOK-ENTRY FORM ONLY See "RATINGS" and "BOND INSURANCE" herein. In the opinion of Bricker & Eckler LLP, Bond Counsel, under existing law (a) assuming continuing compliance with certain covenants and the accuracy of certain representations, interest on the Series 2020 Bonds is excluded from gross income for federal income tax purposes and is not treated as an item of tax preference for purposes of the alternative minimum tax, and (b) interest on and any profit made on the sale, exchange or other disposition of the Series 2020 Bonds is exempt from certain taxes levied by the State of Ohio and its political subdivisions. The City has not designated the Series 2020 Bonds as "qualified tax exempt obligations" within the meaning of Section 265(b)(3) of the Internal Revenue Code of 1986, as amended (the "Code"). Interest on the Series 2020 Bonds may be subject to certain federal income taxes imposed on certain corporations, and certain taxpayers may have certain other adverse federal income tax consequences as a result of owning the Series 2020 Bonds. For a more complete discussion of the tax aspects, see "TAX MATTERS." OFFICIAL STATEMENT $40,465,000 CITY OF MARYSVILLE, OHIO Water System Mortgage Revenue Bonds, Series 2020 Dated: Date of Delivery Due: As shown on the inside cover herein The above-captioned Water System Mortgage Revenue Bonds, Series 2020 (the "Series 2020 Bonds") are being issued by the City of Marysville, Ohio (the "City" or "Issuer") pursuant to an ordinance of the Council of the City adopted on February 10, 2020, and a Certificate of Award authorized by such ordinance (collectively, the "Bond Legislation"), and an Indenture of Mortgage, dated as of June 1, 1991, as supplemented and amended by a First Supplemental Indenture of Mortgage, dated as of November 15, 1993, a Second Supplemental Indenture of Mortgage, dated as of April 1, 2002, a Third Supplemental Indenture of Mortgage, dated as of November 1, 2003, a Fourth Supplemental Indenture of Mortgage, dated as of October 15, 2007, a Fifth Supplemental Indenture of Mortgage, dated as of June 15, 2016, and a Sixth Supplemental Indenture of Mortgage, dated as of May 20, 2020 (collectively, the "Indenture"), between the City and The Huntington National Bank, Cincinnati, Ohio, as trustee (the "Trustee"), for the purpose of paying costs associated with the acquisition, construction, expansion, rehabilitation, and improvement of the City's municipal water system (the "Utility"). Terms used herein with initial capitalization where the rules of grammar would not otherwise so require and not defined have the meanings given to them under "DEFINITIONS" herein or in APPENDIX B - "SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE." Interest on the Series 2020 Bonds will be payable semiannually on June 1 and December 1 of each year, commencing December 1, 2020. Principal of and interest on the Series 2020 Bonds will be payable at maturity in federal funds at the designated office of The Huntington National Bank, as trustee, registrar, paying agent and transfer agent for the Series 2020 Bonds. The Series 2020 Bonds are issuable as fully registered obligations and, when issued, will be initially registered in the name of Cede & Co., as nominee for The Depository Trust Company, New York, New York ("DTC"). Purchases of beneficial interests in the Series 2020 Bonds will be made in book-entry only form. Purchasers of beneficial interests ("Beneficial Owners") will not receive certificates representing their interests in the Series 2020 Bonds. So long as the Series 2020 Bonds of an issue are registered in the name of Cede & Co., as nominee of DTC, references herein to the owners shall mean Cede & Co. and shall not mean the Beneficial Owners of that issue of Series 2020 Bonds. See "BOOK-ENTRY ONLY SYSTEM" herein. The Series 2020 Bonds are subject to optional redemption prior to their stated maturity, as set forth herein. The Series 2020 Bonds maturing December 1, 2035, December 1, 2037, December 1, 2039, December 1, 2041, December 1, 2043 and December 1, 2049 will be subject to mandatory sinking fund redemption prior to stated maturity as set forth herein. See "THE SERIES 2020 BONDS – Redemption" herein. THE SERIES 2020 BONDS ARE SPECIAL LIMITED OBLIGATIONS OF THE CITY, SECURED BY THE INDENTURE HEREIN, AND WILL BE PAYABLE SOLELY FROM THE NET REVENUES AND AMOUNTS IN THE SPECIAL FUNDS DESCRIBED HEREIN. NEITHER THE GENERAL CREDIT OF THE CITY, NOR THAT OF THE STATE OF OHIO OR OF ANY POLITICAL SUBDIVISION THEREOF, IS PLEDGED TO THE PAYMENT OF THE PRINCIPAL OF OR PREMIUM, IF ANY, OR INTEREST ON THE SERIES 2020 BONDS AND THE OWNERS AND HOLDERS OF THE SERIES 2020 BONDS DO NOT HAVE THE RIGHT TO HAVE ANY EXCISES OR TAXES LEVIED BY THE GENERAL ASSEMBLY OF THE STATE OF OHIO OR THE TAXING AUTHORITY OF ANY POLITICAL SUBDIVISION THEREOF, INCLUDING THE CITY, FOR THE PAYMENT OF THE PRINCIPAL OF OR PREMIUM, IF ANY, OR INTEREST ON THE SERIES 2020 BONDS. The scheduled payment of principal of and interest on the Series 2020 Bonds when due will be guaranteed under a municipal bond insurance policy to be issued concurrently with the delivery of the Series 2020 Bonds by Build America Mutual Assurance Company. The Series 2020 Bonds are offered when, as and if issued and received by the Underwriter, subject to prior sale and to withdrawal or modification of the offer without notice. Certain legal matters relating to the issuance of the Series 2020 Bonds are subject to the approving opinion of Bricker & Eckler LLP, Bond Counsel. (See "LEGAL MATTERS" and "TAX MATTERS.") Certain other legal matters will be passed upon for the Underwriter by its counsel, Frost Brown Todd LLC, Columbus, Ohio. Bradley Payne, LLC, Circleville, Ohio, has acted as Municipal Advisor to the City in connection with the issuance of the Series 2020 Bonds. (See "MUNICIPAL ADVISOR.") This cover page contains certain information for general reference only. It is not a summary of the provisions of the Series 2020 Bonds. Investors must read the entire Official Statement to obtain information essential to the making of an informed investment decision. This Official Statement has been prepared by the City of Marysville in connection with the original offering for sale by it of the Series 2020 Bonds. It is expected that delivery of the Series 2020 Bonds in definitive form will be made through the facilities of DTC on or about May 20, 2020. The date of this Official Statement is April 29, 2020, and the information herein speaks only as of that date.
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(BAM Insured) Ratings: S&P Insured: "AA"
MUR: "Aa3" NEW ISSUE BOOK-ENTRY FORM ONLY See "RATINGS" and "BOND INSURANCE" herein. In the opinion of Bricker & Eckler LLP, Bond Counsel, under existing law (a) assuming continuing compliance with certain covenants and the accuracy of certain representations, interest on the Series 2020 Bonds is excluded from gross income for federal income tax purposes and is not treated as an item of tax preference for purposes of the alternative minimum tax, and (b) interest on and any profit made on the sale, exchange or other disposition of the Series 2020 Bonds is exempt from certain taxes levied by the State of Ohio and its political subdivisions. The City has not designated the Series 2020 Bonds as "qualified tax exempt obligations" within the meaning of Section 265(b)(3) of the Internal Revenue Code of 1986, as amended (the "Code"). Interest on the Series 2020 Bonds may be subject to certain federal income taxes imposed on certain corporations, and certain taxpayers may have certain other adverse federal income tax consequences as a result of owning the Series 2020 Bonds. For a more complete discussion of the tax aspects, see "TAX MATTERS."
OFFICIAL STATEMENT $40,465,000
CITY OF MARYSVILLE, OHIO Water System Mortgage Revenue Bonds, Series 2020
Dated: Date of Delivery Due: As shown on the inside cover herein The above-captioned Water System Mortgage Revenue Bonds, Series 2020 (the "Series 2020 Bonds") are being issued by the City of
Marysville, Ohio (the "City" or "Issuer") pursuant to an ordinance of the Council of the City adopted on February 10, 2020, and a Certificate of Award authorized by such ordinance (collectively, the "Bond Legislation"), and an Indenture of Mortgage, dated as of June 1, 1991, as supplemented and amended by a First Supplemental Indenture of Mortgage, dated as of November 15, 1993, a Second Supplemental Indenture of Mortgage, dated as of April 1, 2002, a Third Supplemental Indenture of Mortgage, dated as of November 1, 2003, a Fourth Supplemental Indenture of Mortgage, dated as of October 15, 2007, a Fifth Supplemental Indenture of Mortgage, dated as of June 15, 2016, and a Sixth Supplemental Indenture of Mortgage, dated as of May 20, 2020 (collectively, the "Indenture"), between the City and The Huntington National Bank, Cincinnati, Ohio, as trustee (the "Trustee"), for the purpose of paying costs associated with the acquisition, construction, expansion, rehabilitation, and improvement of the City's municipal water system (the "Utility"). Terms used herein with initial capitalization where the rules of grammar would not otherwise so require and not defined have the meanings given to them under "DEFINITIONS" herein or in APPENDIX B - "SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE."
Interest on the Series 2020 Bonds will be payable semiannually on June 1 and December 1 of each year, commencing December 1, 2020. Principal of and interest on the Series 2020 Bonds will be payable at maturity in federal funds at the designated office of The Huntington National Bank, as trustee, registrar, paying agent and transfer agent for the Series 2020 Bonds.
The Series 2020 Bonds are issuable as fully registered obligations and, when issued, will be initially registered in the name of Cede & Co., as nominee for The Depository Trust Company, New York, New York ("DTC"). Purchases of beneficial interests in the Series 2020 Bonds will be made in book-entry only form. Purchasers of beneficial interests ("Beneficial Owners") will not receive certificates representing their interests in the Series 2020 Bonds. So long as the Series 2020 Bonds of an issue are registered in the name of Cede & Co., as nominee of DTC, references herein to the owners shall mean Cede & Co. and shall not mean the Beneficial Owners of that issue of Series 2020 Bonds. See "BOOK-ENTRY ONLY SYSTEM" herein.
The Series 2020 Bonds are subject to optional redemption prior to their stated maturity, as set forth herein. The Series 2020 Bonds maturing December 1, 2035, December 1, 2037, December 1, 2039, December 1, 2041, December 1, 2043 and December 1, 2049 will be subject to mandatory sinking fund redemption prior to stated maturity as set forth herein. See "THE SERIES 2020 BONDS – Redemption" herein.
THE SERIES 2020 BONDS ARE SPECIAL LIMITED OBLIGATIONS OF THE CITY, SECURED BY THE INDENTURE HEREIN, AND WILL BE PAYABLE SOLELY FROM THE NET REVENUES AND AMOUNTS IN THE SPECIAL FUNDS DESCRIBED HEREIN. NEITHER THE GENERAL CREDIT OF THE CITY, NOR THAT OF THE STATE OF OHIO OR OF ANY POLITICAL SUBDIVISION THEREOF, IS PLEDGED TO THE PAYMENT OF THE PRINCIPAL OF OR PREMIUM, IF ANY, OR INTEREST ON THE SERIES 2020 BONDS AND THE OWNERS AND HOLDERS OF THE SERIES 2020 BONDS DO NOT HAVE THE RIGHT TO HAVE ANY EXCISES OR TAXES LEVIED BY THE GENERAL ASSEMBLY OF THE STATE OF OHIO OR THE TAXING AUTHORITY OF ANY POLITICAL SUBDIVISION THEREOF, INCLUDING THE CITY, FOR THE PAYMENT OF THE PRINCIPAL OF OR PREMIUM, IF ANY, OR INTEREST ON THE SERIES 2020 BONDS.
The scheduled payment of principal of and interest on the Series 2020 Bonds when due will be guaranteed under a municipal bond insurance policy to be issued concurrently with the delivery of the Series 2020 Bonds by Build America Mutual Assurance Company.
The Series 2020 Bonds are offered when, as and if issued and received by the Underwriter, subject to prior sale and to withdrawal or modification of the offer without notice. Certain legal matters relating to the issuance of the Series 2020 Bonds are subject to the approving opinion of Bricker & Eckler LLP, Bond Counsel. (See "LEGAL MATTERS" and "TAX MATTERS.") Certain other legal matters will be passed upon for the Underwriter by its counsel, Frost Brown Todd LLC, Columbus, Ohio. Bradley Payne, LLC, Circleville, Ohio, has acted as Municipal Advisor to the City in connection with the issuance of the Series 2020 Bonds. (See "MUNICIPAL ADVISOR.")
This cover page contains certain information for general reference only. It is not a summary of the provisions of the Series 2020 Bonds. Investors must read the entire Official Statement to obtain information essential to the making of an informed investment decision. This Official Statement has been prepared by the City of Marysville in connection with the original offering for sale by it of the Series 2020 Bonds. It is expected that delivery of the Series 2020 Bonds in definitive form will be made through the facilities of DTC on or about May 20, 2020. The date of this Official Statement is April 29, 2020, and the information herein speaks only as of that date.
$1,870,000 4.00% TERM BONDS MATURING DECEMBER 1, 2035,
YIELD 2.440%, CUSIP1 574486FL5
$2,155,000 3.00% TERM BONDS MATURING DECEMBER 1, 2037,
YIELD 2.810%, CUSIP1 574486FM3
$3,310,000 4.00% TERM BONDS MATURING DECEMBER 1, 2039,
YIELD 2.640%, CUSIP1 574486FN1
$4,520,000 4.00% TERM BONDS MATURING DECEMBER 1, 2041,
YIELD 2.720, CUSIP1 574486FP6
$4,890,000 4.00% TERM BONDS MATURING DECEMBER 1, 2043,
YIELD 2.790%, CUSIP1 574486FQ4
$11,735,000 3.00% TERM BONDS MATURING DECEMBER 1, 2049,
YIELD 3.170%, CUSIP1 574486FS0
Build America Mutual Assurance Company Disclaimer Statement
Build America Mutual Assurance Company ("BAM") makes no representation regarding the Series 2020 Bonds or the advisability of investing in the Series 2020 Bonds. In addition, BAM has not independently verified, makes no representation regarding, and does not accept any responsibility for the accuracy or completeness of this Official Statement or any information or disclosure contained herein, or omitted herefrom, other than with respect to the accuracy of the information regarding BAM, supplied by BAM and presented under the heading "BOND INSURANCE" and "APPENDIX G – Specimen Municipal Bond Insurance Policy."
REGARDING THIS OFFICIAL STATEMENT This Official Statement does not constitute an offering of any security other than the original offering of the Series 2020 Bonds of the City of Marysville, Ohio, (the "City" or "Issuer") identified on the cover hereof. No person has been authorized by the City to give any information or to make any representations, other than those contained in this Official Statement, and if given or made, such other information or representation must not be relied upon as having been given or authorized by the City. Statements contained in this Official Statement that involve estimates, forecasts, or matters of opinion, whether or not expressly described herein, are intended solely as such and are not to be construed as representations of facts. The information set forth herein has been obtained from the City and other sources that are believed to be reliable for purposes of this Official Statement. This Official Statement contains, in part, estimates and matters of opinion that are not intended as statements of fact, and no representation is made as to the correctness of such estimates and opinions or that they will be realized. The information and expressions of opinions herein are subject to change without notice and neither the delivery of this Official Statement nor any sale made hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of the City since the date hereof.
CUSIP data on the Cover has been provided by CUSIP Global Services, which is managed on behalf of the American Bankers Association ("ABA") by S&P Global Market Intelligence, a division of S&P Global Inc. CUSIP is a registered trademark of the ABA. The CUSIP data are being provided solely for the convenience of the owners of the Series 2020 Bonds and only at the time of issuance of the Series 2020 Bonds. The City, Bond Counsel, and the Underwriter are not responsible for the selection or use of these CUSIP numbers and make no representation with respect to such data or undertake any responsibility for its accuracy now or at any time in the future. CUSIP numbers are subject to being changed after the issuance of the 2020 Bonds as a result of subsequent actions and events.
Certain information in this Official Statement is attributed to the Ohio Municipal Advisory Council ("OMAC"). OMAC compiles information from official and other sources. OMAC believes the information it compiles is accurate and reliable, but OMAC does not independently confirm or verify the information and does not guarantee its accuracy. OMAC has not reviewed this official statement to confirm that the information attributed to it is information provided by OMAC or for any other purpose. Certain information located at websites referred to herein has been prepared by the respective entities responsible for maintaining such websites. The City takes no responsibility for the continued accuracy of any internet address or the accuracy, completeness, or timeliness of any information posted at any such address. In the absence of an express statement to the contrary, none of such information is incorporated herein by reference. Stifel, Nicolaus & Company, Incorporated (the "Underwriter") has reviewed the information in this Official Statement in accordance with, and as part of, its responsibilities to investors under federal securities laws as applied to the facts and circumstances of this transaction, but the Underwriter does not guarantee the accuracy or completeness of such information. UPON ISSUANCE, THE SERIES 2020 BONDS WILL NOT BE REGISTERED BY THE CITY UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAW OF ANY STATE, AND WILL NOT BE LISTED ON ANY STOCK OR OTHER SECURITIES EXCHANGE. THE SERIES 2020 BONDS HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION NOR HAS ANY OTHER FEDERAL, STATE, MUNICIPAL OR OTHER GOVERNMENTAL ENTITY OR AGENCY, EXCEPT THE
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CITY, PASSED UPON THE ACCURACY OR ADEQUACY OF THIS OFFICIAL STATEMENT OR APPROVED THE SERIES 2020 BONDS FOR SALE. THIS OFFICIAL STATEMENT DOES NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY, AND THERE SHALL NOT BE ANY SALE OF, THE SERIES 2020 BONDS BY ANY PERSON IN ANY JURISDICTION IN WHICH IT IS UNLAWFUL TO MAKE SUCH OFFER, SOLICITATION OR SALE.
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER MAY OVERALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SERIES 2020 BONDS AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. THE UNDERWRITER MAY OFFER AND SELL THE SERIES 2020 BONDS TO CERTAIN DEALERS, DEALER BANKS AND BANKS ACTING AS AGENT AT PRICES LOWER THAN THE PUBLIC OFFERING PRICE STATED ON THE COVER PAGE HEREOF AND SAID PUBLIC OFFERING PRICE MAY BE CHANGED FROM TIME TO TIME BY THE UNDERWRITER.
INVESTMENT CONSIDERATIONS General
The Series 2020 Bonds, like all obligations of state and local governments, are subject to changes in value due to changes in the condition of the market for taxable and tax-exempt obligations or changes in the financial position of the City. It is possible under certain market conditions, or if the financial condition of the City should change, that the market price of the Series 2020 Bonds could be adversely affected. With regard to the risk involved in a downward revision or withdrawal of the rating for the Series 2020 Bonds shown on the cover hereof, see "RATINGS" herein. With regard to the risk involved in a loss of the exclusion from gross income for purposes of federal income taxation of interest payable on the Series 2020 Bonds, see "TAX MATTERS" herein. Prospective purchasers of the Series 2020 Bonds should consult their own tax advisors prior to any purchase of the Series 2020 Bonds as to the impact of the Internal Revenue Code of 1986, as amended, upon their acquisition, holding or disposition of the Series 2020 Bonds. Market for the Series 2020 Bonds
Subject to prevailing market conditions, the Underwriter intends, but is not obligated, to make a market in the Series 2020 Bonds. There is no assurance that a secondary market for the Series 2020 Bonds will develop or, if developed, will not be disrupted by events including, but not limited to, the current pandemic associated with the COVID-19 virus (See "CORONAVIRUS (COVID-19)" herein). Consequently, investors may not be able to resell the Series 2020 Bonds purchased should they need or wish to do so for emergency or other purposes.
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Prepayments of Principal
The Series 2020 Bonds allow the City to prepay certain principal of the Series 2020 Bonds without penalty. See "THE SERIES 2020 BONDS – Redemption – Optional Redemption" herein. If such Series 2020 Bonds were to be prepaid before scheduled maturity, the investor would not receive the anticipated yield through the scheduled maturity date. In such a prepayment situation there is no guarantee that the investor could reinvest the proceeds and receive a comparable yield for the period remaining until the scheduled maturity of the Series 2020 Bonds. The investor, therefore, may receive a lower total return for the period beginning on the date of purchase through the scheduled date of maturity than anticipated.
[Balance of Page Intentionally Left Blank]
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BOND ISSUE SUMMARY The information contained in this Issue Summary is qualified in its entirety by the entire Official Statement, which should be reviewed in its entirety by potential investors. Issuer: City of Marysville, Ohio Issue: $40,465,000 Water System Mortgage Revenue Bonds, Series 2020 (the "Series 2020
Bonds") Dated Date: Date of Delivery Interest Payment Dates: Interest on the Series 2020 Bonds will be paid each June 1 and December 1, commencing
December 1, 2020. Maturity Dates: Serial Bonds: December 1, 2020 through December 1, 2033, December 1, 2044 and
December 1, 2045, inclusive; Term Bonds: December 1, 2035, December 1, 2037, December 1, 2039, December 1,
2041, December 1, 2043 and December 1, 2049. Redemption: The Series 2020 Bonds maturing after December 1, 2024 are subject to redemption at the
option of the City, either in whole or in part, in such order of maturity as the City shall determine, on any date on or after June 1, 2025, at a redemption price equal to 100% of the principal amount redeemed plus, in each case, accrued interest to the date fixed for redemption. See "THE SERIES 2020 BONDS – Redemption – Optional Redemption" herein.
The Series 2020 Bonds maturing on December 1, 2035, December 1, 2037, December 1,
2039, December 1, 2041, December 1, 2043 and December 1, 2049 are subject to mandatory sinking fund redemption prior to stated maturity. See "THE SERIES 2020 BONDS – Redemption – Mandatory Sinking Fund Redemption" herein.
Purpose: The Series 2020 Bonds are issued for the purpose of paying costs associated with the acquisition, construction, expansion, rehabilitation, and improvement of the City's municipal water system (the "Utility"). See "THE SERIES 2020 BONDS – Authorization and Purpose" herein.
Security: The Series 2020 Bonds will be special obligations of the City and are secured by a pledge
of the Net Revenues and moneys in the Special Funds. The Series 2020 Bonds are not general obligations of the City, the State of Ohio, or any political subdivision thereof, and are not secured by the full faith and credit of the City, the State, or any political subdivision thereof. See "SECURITY AND SOURCES OF PAYMENT FOR THE SERIES 2020 BONDS" herein."
Credit Ratings: The City has received a rating on the Series 2020 Bonds of "AA" from S&P Global Ratings
("S&P"), a division of S&P Global Inc. on the understanding that the Series 2020 Bonds will be insured by BAM upon their issuance. The Series 2020 Bonds also have an underlying rating of "Aa3" from Moody's Investors Service, Inc. ("Moody's"). See "RATINGS" herein.
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Tax Matters: In the opinion of Bond Counsel, (i) under existing law and assuming compliance with certain covenants and the accuracy of certain representations, interest on the Series 2020 Bonds is excluded from gross income for federal income tax purposes, is not treated as an item of tax preference for purposes of the alternative minimum income tax and is exempt from certain taxes imposed by the State and its political subdivisions. Interest on the Series 2020 Bonds may be subject to certain federal income taxes imposed on certain corporations, and certain taxpayers may have certain other adverse federal income tax consequences as a result of owning the Series 2020 Bonds. See "TAX MATTERS" herein.
Bond Insurance: The Series 2020 Bonds will be secured by a municipal bond insurance policy, to be issued on the date of delivery of the Series 2020 Bonds, securing the payment, when due, of the principal of and interest on the Series 2020 Bonds. (See "BOND INSURANCE.")
Bank Qualification: The City has not designated the Series 2020 Bonds as "qualified tax exempt obligations"
within the meaning of Section 265(b)(3) of the Code. Legal Opinion: Bricker & Eckler LLP Municipal Advisor: Bradley Payne, LLC Underwriter: Stifel, Nicolaus & Company, Incorporated Underwriter's Frost Brown Todd LLC Counsel: Trustee: The Huntington National Bank Book-Entry Only System: The Series 2020 Bonds are being issued as fully registered bonds in book entry form only
and book entry interests therein will be available for purchase in amounts of $5,000 and integral multiples thereof. Owners of book entry interests will not receive physical delivery of bond or note certificates. DTC or its nominee will receive all payments with respect to the Series 2020 Bonds from the Trustee. DTC is required by its rules and procedures to remit such payments to its participants for subsequent disbursement to owners of the book entry interests.
Delivery and Payment: It is expected that delivery of the Series 2020 Bonds in definitive form will be made through
DTC on or about May 20, 2020. The Series 2020 Bonds will be released to the Underwriter against payment in federal funds.
City Official: Questions concerning the Official Statement should be directed to Brad Lutz, Director of
Finance, City of Marysville, 209 South Main Street, Marysville, Ohio 43040. Telephone: (937) 645-7364.
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TABLE OF CONTENTS
REGARDING THIS OFFICIAL STATEMENT .............................................................................................. iii INVESTMENT CONSIDERATIONS .............................................................................................................. iv
General .................................................................................................................................................. iv Market for the Series 2020 Bonds ........................................................................................................ iv Prepayments of Principal ....................................................................................................................... v
BOND ISSUE SUMMARY ............................................................................................................................... vi TABLE OF CONTENTS ................................................................................................................................. viii INTRODUCTORY STATEMENT .................................................................................................................... 1 DEFINITIONS ..................................................................................................................................................... 2 THE SERIES 2020 BONDS ............................................................................................................................... 5
Authorization and Purpose ..................................................................................................................... 5 Form and Terms ..................................................................................................................................... 5 Redemption ............................................................................................................................................. 5
ESTIMATED SOURCES AND USES OF FUNDS .......................................................................................... 8 SECURITY AND SOURCES OF PAYMENT FOR THE SERIES 2020 BONDS ......................................... 8
General ................................................................................................................................................... 8 Production of Adequate Revenues and Coverage Ratio ....................................................................... 9 Issuance of Additional Bonds .............................................................................................................. 10
MUNICIPAL BANKRUPTCY ......................................................................................................................... 10 BOND INSURANCE ........................................................................................................................................ 10
Bond Insurance Policy ......................................................................................................................... 10 Build America Mutual Assurance Company ....................................................................................... 11 BAM GreenStar Bonds ........................................................................................................................ 12
General ................................................................................................................................................. 16 Original Issue Discount ........................................................................................................................ 17 Amortizable Bond Premium ................................................................................................................ 17
BOOK-ENTRY ONLY SYSTEM .................................................................................................................... 18 Revision of Book-Entry System - Replacement Bonds ...................................................................... 20
TRANSCRIPT AND CLOSING DOCUMENTS ............................................................................................ 20 CORONAVIRUS (COVID-19) ........................................................................................................................ 20 CONTINUING DISCLOSURE ........................................................................................................................ 21 CONCLUDING STATEMENT ........................................................................................................................ 23 APPENDIX A – THE CITY OF MARYSVILLE, OHIO ............................................................................. A-1
General Information ........................................................................................................................... A-1 Map of Geographic Area .................................................................................................................... A-2 Structure of Government .................................................................................................................... A-3 Principal Officials ............................................................................................................................... A-3 City Employees .................................................................................................................................. A-3 Pension Obligations ............................................................................................................................ A-4 City Services ....................................................................................................................................... A-4
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THE UTILITY ................................................................................................................................................. A-5 Water System Facilities ...................................................................................................................... A-5 Organization and Management .......................................................................................................... A-7 Historical and Future Growth of Use of the Utility ........................................................................... A-7 Customer Base .................................................................................................................................... A-8 Capital Improvements Plan .............................................................................................................. A-10 Utility Rates and Charges ................................................................................................................. A-11 Historical and Projected Revenues and Expenditures of the Utility ............................................... A-13
ECONOMY AND EMPLOYMENT ............................................................................................................ A-14 Economic Development ................................................................................................................... A-14 Building Permit Values .................................................................................................................... A-15 Labor Force Statistics ....................................................................................................................... A-16 Largest Employers ............................................................................................................................ A-17
CITY TAX BASE .......................................................................................................................................... A-18 Ad Valorem Taxes and Assessed Valuation .................................................................................... A-18 State Reimbursement of Property Tax Revenues ............................................................................ A-19 Assessed Valuation ........................................................................................................................... A-20 Largest Taxpayers in the City .......................................................................................................... A-21 Property Tax Rate Calculations ....................................................................................................... A-22 Property Tax Revenues .................................................................................................................... A-22 Budgeting, Tax Levy and Appropriations Procedure ...................................................................... A-23 Investment of Funds ......................................................................................................................... A-23 Income Tax Revenues ...................................................................................................................... A-24
CITY DEBT AND DEBT LIMITATIONS .................................................................................................. A-25 Statutory Debt Limitations Generally .............................................................................................. A-25 Charter Millage Limitation .............................................................................................................. A-27 Bond Anticipation Notes .................................................................................................................. A-27 City General Obligation Debt Currently Outstanding ..................................................................... A-28 Leases and Other Long Term Obligations ....................................................................................... A-29 Debt Service Requirements for the Bonds ....................................................................................... A-30 Future Financings ............................................................................................................................. A-31 City Insurance ................................................................................................................................... A-31 Cyber-Security .................................................................................................................................. A-32
FINANCES OF THE CITY .......................................................................................................................... A-32 Financial Reports and Audits ........................................................................................................... A-33 General Fund Revenue Sources ....................................................................................................... A-33
APPENDIX B – Summary of Certain Provisions of the Indenture .......................................................... B-1 APPENDIX C – Audited Financial Statements for the Fiscal Year Ended December 31, 2018 .............. C-1 APPENDIX D – Form of Approving Legal Opinion of Bricker & Eckler LLP ....................................... D-1 APPENDIX E – Form of Closing Certificates .......................................................................................... E-1 APPENDIX F – Form of Continuing Disclosure Certificate ..................................................................... F-1 APPENDIX G – Specimen Municipal Bond Insurance Policy and Debt Service Reserve Insurance
INTRODUCTORY STATEMENT This Official Statement has been prepared by the City in connection with the original issuance and sale by the City of the Series 2020 Bonds identified on the cover page hereof. All financial and other information presented herein has been provided by the City from its records, except for information expressly attributed to other sources. The presentation of information, including tables of receipts from taxes and other sources, is intended to show recent historic information, and is not intended to indicate future or continuing trends in the financial position or other affairs of the City or the City's municipal water system (the "Utility"). No representation is made that past experience, as might be shown by such financial and other information, will necessarily continue or be repeated in the future. Certain statements contained in this Official Statement, including, without limitation, statements containing the words "believes," "anticipates," "expects" and words of similar import, involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of the City to be materially different from any future results, performance or achievements expressed or implied by such statements. Such factors include, among others, general economic conditions, demographic changes, and existing government regulations and changes in, or the failure to comply with, government regulations. Certain of these factors are discussed in more detail elsewhere in this Official Statement. Given these uncertainties, readers of this Official Statement and investors are cautioned not to place undue reliance on such forward-looking statements. This Official Statement should be considered in its entirety and no subject discussed should be considered less important than any other subject by reason of its location in the text. Reference should be made to laws, reports or documents referred to for more complete information regarding their contents. References herein to provisions of Ohio law, whether codified in the Ohio Revised Code (the "Revised Code") or uncodified, the Ohio Constitution, or federal law, are references to such provisions as they presently exist. Provisions of the Ohio law and Constitution and federal law may in the future, and from time to time, be amended, repealed or supplemented. Unless otherwise defined herein, capitalized terms shall have the meanings given to them under "DEFINITIONS" herein or in the Indenture. For information regarding the Indenture, see APPENDIX B - "SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE" in this Official Statement. Additional information relating to the financial condition of the City may be obtained by contacting its Director of Finance, Brad Lutz, City of Marysville, 209 South Main Street, Marysville, Ohio 43040, telephone: (937) 645-7364.
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DEFINITIONS The following capitalized terms, as used in this Official Statement and the Appendices attached
hereto, have the following meanings unless otherwise indicated:
"Additional Bonds" means any notes, bonds or other obligations of the City that may be issued on parity with the Series 2016 Bonds and the Series 2020 Bonds pursuant to the Indenture.
"Annual Report" means any annual report provided by the City referred to in this Official Statement and any appendix hereto.
"Bankruptcy Code" means Title 11 of the United States Code.
"Bond Counsel" means Bricker & Eckler LLP, Columbus, Ohio.
"Bond" or "Bonds" means the Series 2016 Bonds, Series 2020 Bonds and any Additional Bonds.
"Bond Insurer" or "BAM" means Build America Mutual Assurance Company, or any successor thereto.
"Bond Reserve Fund Facility" means the debt service reserve fund insurance policy.
"Bond Reserve Fund Facility Provider" or "BAM" means Build America Mutual Assurance Company, or any successor thereto.
"Charter" means the Charter of the City.
"City" or "Issuer" means the City of Marysville, Ohio.
"Code" means the Internal Revenue Code of 1986, as amended.
"Council" means the City Council of the City.
"County" means Union County, Ohio.
"County Auditor" means the County Auditor of the County.
"County Prosecutor" means the County Prosecutor of the County.
"County Treasurer" means the County Treasurer of the County.
"Cover" means the cover page and the inside cover of this Official Statement.
"Director of Finance" means the Director of Finance of the City.
"EMMA" means the Electronic Municipal Market Access System of the MSRB.
"First Supplemental Indenture" means, the First Supplemental Indenture of Mortgage, dated as of November 15, 1993, between the City and the Original Trustee, that secured the Series 1993 Bonds.
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"Fifth Supplemental Indenture" means, the Fifth Supplemental Indenture of Mortgage, dated as of June 15, 2016, between the City and the Trustee, that secures the Series 2016 Bonds.
"Fourth Supplemental Indenture" means, the Fourth Supplemental Indenture of Mortgage, dated as of October 15, 2007, between the City and the Trustee, that secured the Series 2007 Bonds.
"Indenture" means, collectively, the Original Indenture, the First Supplemental Indenture, the Second Supplemental Indenture, the Third Supplemental Indenture, the Fourth Supplemental Indenture, the Fifth Supplemental Indenture, and the Sixth Supplemental Indenture, as amended and supplemented from time to time.
"MSA" means the Columbus Metropolitan Statistical Area, as defined by the United States Office of Management and Budget.
"MSRB" means the Municipal Securities Rulemaking Board. "Municipal Advisor" means Bradley Payne, LLC. "OMAC" means the Ohio Municipal Advisory Council.
"Original Indenture" means, the Indenture of Mortgage, dated as of June 1, 1991, between the City and the Original Trustee.
"Original Trustee" means The Fifth Third Bank.
"Revised Code" means the Ohio Revised Code.
"Second Supplemental Indenture" means, the Second Supplemental Indenture of Mortgage, dated as of April 1, 2002, between the City and the Trustee, that secured the Series 2002 Bonds.
"Series 2002 Bonds" means the City's $3,820,000 Water System Mortgage Revenue Bonds, Series 2002, dated April 1, 2002, which are no longer outstanding.
"Series 2003 Bonds" means the City's $9,115,000 Water System Mortgage Revenue Bonds, Series 2003, dated October 15, 2003, which are no longer outstanding.
"Series 2007 Bonds" means the City's $21,335,000 Water System Mortgage Revenue Refunding Bonds, Series 2007, dated October 17, 2007, which are no longer outstanding.
"Series 2016 Bonds" means the City's $19,560,000 Water System Mortgage Revenue Refunding Bonds, Series 2016, dated June 15, 2016.
"Series 2020 Bonds" means the City's $40,465,000 Water System Mortgage Revenue Bonds, Series 2020, dated May 20, 2020.
"Sixth Supplemental Indenture" means, the Sixth Supplemental Indenture of Mortgage, dated as of May 20, 2020, between the City and the Trustee, that secures the Series 2020 Bonds.
"State" or "Ohio" means the State of Ohio.
"State Auditor" means Auditor of the State.
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"Tax Commissioner" means the Tax Commissioner of the State.
"Third Supplemental Indenture" means, the Third Supplemental Indenture of Mortgage, dated as of November 1, 2003, between the City and the Trustee, that secured the Series 2003 Bonds.
"Trustee" means The Huntington National Bank, as successor to the Original Trustee. "Underwriter" means Stifel, Nicolaus & Company, Incorporated. "Utility" means the City's municipal water system.
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THE SERIES 2020 BONDS Authorization and Purpose
The Series 2020 Bonds are authorized by an ordinance (the "Bond Ordinance") of the City Council of the City (the "Council") adopted on February 10, 2020, and are issued pursuant to Article XVIII, Section 12 of the Ohio Constitution, which permits the City to issue revenue bonds, such as the Series 2020 Bonds, under the provisions of its Charter.
The Series 2020 Bonds are special limited obligations of the City and do not constitute a pledge of the full faith and credit of the City. The proceeds from the Series 2020 Bonds will be used for the purpose of paying costs associated with the acquisition, construction, expansion, rehabilitation, and improvement of the City's municipal water system (the "Utility"). For a description of the Utility, see "THE UTILITY" herein. Upon issuance and delivery, the Series 2020 Bonds will be secured under the Indenture. The Indenture provides for a pledge of the Net Revenues and the moneys in the Special Funds, a rate covenant, and a requirement to maintain the debt service reserve fund to secure all Bonds, each as hereinafter described. See "SECURITY AND SOURCES OF PAYMENT FOR THE SERIES 2020 BONDS." Form and Terms
The Series 2020 Bonds will be issued in fully registered form and will bear interest, at the rates set forth on the Cover hereof based on a 360-day year, from their dated date until maturity. The Series 2020 Bonds will be in denominations of $5,000 or any integral multiple thereof, and will be numbered consecutively from R-1 upward as determined by the Director of Finance of the City.
The Series 2020 Bonds will bear interest payable on June 1 and December 1 of each year, commencing December 1, 2020, at the rates set forth on the Cover hereof and will be payable as to principal on December 1 in the years set forth on the Cover hereof. Principal of and interest on the Series 2020 Bonds will be payable at maturity in immediately available funds, in lawful money of the United States of America, at the designated office of the Trustee. Redemption
Mandatory Sinking Fund Redemption
The Series 2020 Bonds maturing on December 1, 2035 are subject to mandatory sinking fund redemption at a redemption price of 100% of the principal amount to be redeemed, plus accrued interest to the date of redemption, on December 1 in the years and in the respective principal amounts as follows:
Year Principal Amount to be Redeemed
2034 $900,000
The remaining principal amount of such Series 2020 Bonds ($970,000) will mature at stated maturity on December 1, 2035.
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The Series 2020 Bonds maturing on December 1, 2037 are subject to mandatory sinking fund redemption at a redemption price of 100% of the principal amount to be redeemed, plus accrued interest to the date of redemption, on December 1 in the years and in the respective principal amounts as follows:
Year Principal Amount to be Redeemed
2036 $1,045,000
The remaining principal amount of such Series 2020 Bonds ($1,110,000) will mature at stated maturity on December 1, 2037.
The Series 2020 Bonds maturing on December 1, 2039 are subject to mandatory sinking fund redemption at a redemption price of 100% of the principal amount to be redeemed, plus accrued interest to the date of redemption, on December 1 in the years and in the respective principal amounts as follows:
Year Principal Amount to be Redeemed
2038 $1,180,000
The remaining principal amount of such Series 2020 Bonds ($2,130,000) will mature at stated maturity on December 1, 2039.
The Series 2020 Bonds maturing on December 1, 2041 are subject to mandatory sinking fund redemption at a redemption price of 100% of the principal amount to be redeemed, plus accrued interest to the date of redemption, on December 1 in the years and in the respective principal amounts as follows:
Year Principal Amount to be Redeemed
2040 $2,215,000
The remaining principal amount of such Series 2020 Bonds ($2,305,000) will mature at stated maturity on December 1, 2041.
The Series 2020 Bonds maturing on December 1, 2043 are subject to mandatory sinking fund redemption at a redemption price of 100% of the principal amount to be redeemed, plus accrued interest to the date of redemption, on December 1 in the years and in the respective principal amounts as follows:
Year Principal Amount to be Redeemed
2042 $2,395,000
The remaining principal amount of such Series 2020 Bonds ($2,495,000) will mature at stated maturity on December 1, 2043.
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The Series 2020 Bonds maturing on December 1, 2049 are subject to mandatory sinking fund redemption at a redemption price of 100% of the principal amount to be redeemed, plus accrued interest to the date of redemption, on December 1 in the years and in the respective principal amounts as follows:
Year Principal Amount to be Redeemed
2046 $2,805,0002047 2,890,0002048 2,975,000
The remaining principal amount of such Series 2020 Bonds ($3,065,000) will mature at stated
maturity on December 1, 2049.
Optional Redemption
The Series 2020 Bonds maturing after December 1, 2024 are subject to redemption at the option of
the City, either in whole or in part, in such order of maturity as the City shall determine, on any date on or after June 1, 2025 at a redemption price equal to 100% of the principal amount redeemed plus, in each case, accrued interest to the date fixed for redemption.
When partial redemption is authorized, the Series 2020 Bonds or portions thereof to be redeemed will be selected by lot within a maturity in such manner as the Trustee may determine, provided, however, that the portion of any such Series 2020 Bond so selected will be in the amount of $5,000 or any integral multiple thereof.
The notice of the call for redemption of the Series 2020 Bonds to be redeemed shall identify (i) by designation, letters, numbers or other distinguishing marks, such Series 2020 Bonds or portions thereof to be redeemed, (ii) the redemption price to be paid, (iii) the date fixed for redemption, and (iv) the place or places where the amounts due upon redemption are payable. From and after the specified redemption date, interest on such Series 2020 Bonds or portions thereof called for redemption shall cease to accrue. Such notice shall be sent by first class mail to each such registered holder at the address shown in Series 2020 Bond registration records at least 30 days prior to the redemption date. Failure to receive such notice or any defect therein shall not affect the validity of the proceedings for the redemption of any such Series 2020 Bond.
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ESTIMATED SOURCES AND USES OF FUNDS
The proceeds of the Series 2020 Bonds will be applied as follows:
Sources
Par Value of the Series 2020 Bonds $ 40,465,000.00 Net Original Bond Premium 1,380,443.65
Total Sources $41,845,443.65 Uses
Deposit to Construction Fund $40,460,176.80 Deposit to Bond Fund 495,042.79 Costs of Issuance1 890,224.06
Total Uses $41,845,443.65
1 Includes Underwriter's compensation, rating fees, legal fees, Trustee fees, municipal bond insurance premium, Bond Reserve Fund Facility premium, Municipal Advisor fees, printing and distribution costs, and other miscellaneous expenses.
SECURITY AND SOURCES OF PAYMENT FOR THE SERIES 2020 BONDS
General
The Series 2020 Bonds and Additional Bonds which may be issued on a parity therewith under the Indenture are special obligations of the City payable from the Net Revenues and moneys in the Special Funds, each as hereinafter defined. The Series 2020 Bonds are secured by the pledge of the Net Revenues and the Special Funds and by a first mortgage lien, subject to Permitted Encumbrances. In addition, a franchise to operate the Utility for a period of 20 years after foreclosure will be granted to the purchaser at any foreclosure sale under the Indenture. Pursuant to the Indenture, the Special Funds consist of the Bond Fund, the Bond Reserve Fund, the Construction Fund, the Replacement and Improvement Fund, and the Water System Reserve Fund. The Bond Reserve Fund for the Series 2020 Bonds will be funded at closing of the Series 2020 Bonds through a Bond Reserve Fund Facility provided by the Bond Reserve Fund Facility Provider.
The Series 2020 Bonds are further secured by the municipal bond insurance policy provided by the
Bond Insurer as described herein. THE SERIES 2020 BONDS ARE NOT GENERAL OBLIGATIONS OF THE CITY, THE
STATE, OR ANY POLITICAL SUBDIVISION THEREOF, AND ARE NOT SECURED BY THE FULL FAITH AND CREDIT OF THE CITY, THE STATE, OR ANY POLITICAL SUBDIVISION THEREOF, AND THE OWNERS AND HOLDERS OF THE SERIES 2020 BONDS DO NOT HAVE THE RIGHT TO HAVE ANY EXCISES OR TAXES LEVIED BY THE GENERAL ASSEMBLY OF THE STATE OF OHIO OR THE TAXING AUTHORITY OF ANY POLITICAL SUBDIVISION THEREOF, INCLUDING THE CITY, FOR THE PAYMENT OF THE PRINCIPAL OF, PREMIUM, IF ANY, OR INTEREST ON THE SERIES 2020 BONDS.
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The table below sets forth the historical and projected Net Revenues for the Utility from 2015 through 2023:
Historical and Projected Net Revenues for the Utility City of Marysville, Ohio
Production of Adequate Revenues and Coverage Ratio
Section 503 of the Original Indenture requires that the Net Revenues of the Utility be equal to not less than 110% of the aggregate amount of bond service charges payable on the Bonds during each Fiscal Year. In the event that such coverage ratio is not met for two consecutive Fiscal Years, the City is required to take certain steps under Section 503 of the Original Indenture with respect to the rates, charges, and operation of the Utility in order to ensure that the 110% coverage ratio is restored. Failure by the City to take such action will be deemed an Event of Default under Section 601(c) of the Original Indenture. See "APPENDIX B – Summary of Certain Provisions of the Indenture – Production of Adequate Revenues" herein.
Pursuant to Section 503 of the Original Indenture, the City is in compliance with the required 110%
coverage ratio.
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Issuance of Additional Bonds
The Series 2020 Bonds are being issued as Additional Bonds under Section 205 of the Original Indenture. Section 205 of the Original Indenture permits the City to issue Additional Bonds from time to time for the purpose of (i) refunding any Bonds issued for Utility purposes, (ii) making replacements, extensions or improvements to the Utility, or (iii) any combination of the (i) and (ii). Such Additional Bonds are equally and ratably secured by the Net Revenues and the Special Funds with any other series of Bonds issued under the Indenture, including the Series 2016 Bonds and Series 2020 Bonds. See "APPENDIX B – Summary of Certain Provisions of the Indenture – Issuance of Additional Bonds" herein.
Section 205 of the Original Indenture further provides that the City may issue other obligations secured by a security interest in the Net Revenues which are junior in lien to the Bonds; provided that certain certifications are made with respect to the adequacy of the Net Revenues and debt service on such obligations. See "APPENDIX B – Summary of Certain Provisions of the Indenture – Issuance of Additional Bonds" herein.
MUNICIPAL BANKRUPTCY An Ohio municipality may file for bankruptcy under Chapter 9 of the Bankruptcy Code if it meets certain prerequisites under both federal and State law. Section 109(c) of the Bankruptcy Code sets forth the requirements for a State political subdivision to file for bankruptcy protection. In addition to requiring the municipality to be insolvent1, the municipality must be specifically authorized, in its capacity as a municipality or by name, to be a debtor under such chapter by State law, or by a governmental officer or organization empowered by State law to authorize such entity to be a debtor under such chapter2. With regard to State law, Revised Code Section 133.36 requires that a political subdivision which desires to file bankruptcy seek and obtain permission of the Tax Commissioner. The foregoing federal and State laws also permit an Ohio county to initiate Chapter 9 proceedings which, because a county collects certain revenues on behalf of a municipality (particularly ad valorem property taxes), may adversely affect the financial condition of such municipality.
BOND INSURANCE
Bond Insurance Policy
Concurrently with the issuance of the Series 2020 Bonds, Build America Mutual Assurance Company ("BAM") will issue its Municipal Bond Insurance Policy for the Series 2020 Bonds (the "Policy"). The Policy guarantees the scheduled payment of principal of and interest on the Series 2020 Bonds when due as set forth in the form of the Policy included as an appendix to this Official Statement.
The Policy is not covered by any insurance security or guaranty fund established under New York,
California, Connecticut or Florida insurance law.
1 11 U.S.C. Section 101(32)(C) requires that in order to be "insolvent" a municipality must not be paying its debts as they come due. 2 See 11 U.S.C. Section 109(c)(2).
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Build America Mutual Assurance Company
BAM is a New York domiciled mutual insurance corporation and is licensed to conduct financial guaranty insurance business in all fifty states of the United States and the District of Columbia. BAM provides credit enhancement products solely to issuers in the U.S. public finance markets. BAM will only insure obligations of states, political subdivisions, integral parts of states or political subdivisions or entities otherwise eligible for the exclusion of income under section 115 of the U.S. Internal Revenue Code of 1986, as amended. No member of BAM is liable for the obligations of BAM. The address of the principal executive offices of BAM is: 200 Liberty Street, 27th Floor, New York, New York 10281, its telephone number is: 212-235-2500, and its website is located at: www.buildamerica.com.
BAM is licensed and subject to regulation as a financial guaranty insurance corporation under the
laws of the State of New York and in particular Articles 41 and 69 of the New York Insurance Law.
BAM's financial strength is rated "AA/Stable" by S&P Global Ratings, a business unit of Standard & Poor's Financial Services LLC ("S&P"). An explanation of the significance of the rating and current reports may be obtained from S&P at www.standardandpoors.com. The rating of BAM should be evaluated independently. The rating reflects the S&P's current assessment of the creditworthiness of BAM and its ability to pay claims on its policies of insurance. The above rating is not a recommendation to buy, sell or hold the Series 2020 Bonds, and such rating is subject to revision or withdrawal at any time by S&P, including withdrawal initiated at the request of BAM in its sole discretion. Any downward revision or withdrawal of the above rating may have an adverse effect on the market price of the Series 2020 Bonds. BAM only guarantees scheduled principal and scheduled interest payments payable by the Issuer of the Series 2020 Bonds on the date(s) when such amounts were initially scheduled to become due and payable (subject to and in accordance with the terms of the Policy), and BAM does not guarantee the market price or liquidity of the Series 2020 Bonds, nor does it guarantee that the rating on the Series 2020 Bonds will not be revised or withdrawn.
Capitalization of BAM
BAM's total admitted assets, total liabilities, and total capital and surplus, as of December 31, 2019 and as prepared in accordance with statutory accounting practices prescribed or permitted by the New York State Department of Financial Services were $534.9 million, $132.5 million and $402.4 million, respectively.
BAM is party to a first loss reinsurance treaty that provides first loss protection up to a maximum of 15% of the par amount outstanding for each policy issued by BAM, subject to certain limitations and restrictions.
BAM's most recent Statutory Annual Statement, which has been filed with the New York State Insurance Department and posted on BAM's website at www.buildamerica.com, is incorporated herein by reference and may be obtained, without charge, upon request to BAM at its address provided above (Attention: Finance Department). Future financial statements will similarly be made available when published.
BAM makes no representation regarding the Series 2020 Bonds or the advisability of investing in the Series 2020 Bonds. In addition, BAM has not independently verified, makes no representation regarding, and does not accept any responsibility for the accuracy or completeness of this Official Statement or any information or disclosure contained herein, or omitted herefrom, other than with respect to the accuracy of the information regarding BAM, supplied by BAM and presented under the heading "BOND INSURANCE".
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BAM GreenStar Bonds
The Series 2020 Bonds have been designated BAM GreenStar Bonds because BAM has determined that the use of bond proceeds by the Issuer as described in this Official Statement and in any additional information obtained by BAM aligns with one of the Green Bond Principals (GBPs) developed by the International Capital Markets Association (ICMA). The GBPs were developed by the ICMA with the goal of establishing universally accepted guidelines for the issuance of green bonds, and one of the key requirements addresses the use of proceeds. BAM has been identified by the ICMA as an observer organization that is active in the field of green and/or social or sustainability finance and is a Climate Bond Initiative approved verifier. The Credit Profile prepared by BAM for the Series 2020 Bonds will identify which of the following GBP categories applies to the Series 2020 Bonds:
renewable energy energy efficiency pollution prevention and control environmentally sustainable management of living natural resources and land use terrestrial and aquatic biodiversity clean transportation climate change adaptation sustainable water and wastewater management green buildings
Each of the GBPs correlates to one of the following UN Sustainable Development Goals which
will also be included in the Credit Profile for the Series 2020 Bonds:
clean water and sanitation affordable and clean energy sustainable cities and communities industry innovation and infrastructure responsible consumption and production climate action life below water life on land
For projects under construction, the bond obligor has agreed to furnish annual information to BAM
on the status of the project until completion, which will be reflected in the BAM Credit Profile for the Series 2020 Bonds.
The BAM GreenStar designation is based upon information obtained by BAM, which information BAM believes to be reliable, at the time of the issuance of the Series 2020 Bonds. BAM does not charge a fee in connection with the designation, does not perform an audit and undertakes no duty of due diligence or independent verification of any information it receives. The designation is provided on an "AS IS" basis. BAM makes no representation or warranty, express or implied, including, but not limited to, the accuracy, results, timeliness, completeness, merchantability or fitness for any particular purpose with respect to the designation. A complete description of BAM GreenStar, and its limitations and terms of use, are available on BAM's website https://buildamerica.com/greenstar and https://buildamerica.com/terms-of-use and incorporated herein by reference. The BAM GreenStar designation is determined solely by BAM; it has not been reviewed or approved by the Issuer of or the Underwriter for the Series 2020 Bonds, and the Issuer and Underwriter assume no responsibility for such designation.
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Additional Information Available from BAM
Credit Insights Videos. For certain BAM-insured issues, BAM produces and posts a brief Credit Insights video that provides a discussion of the obligor and some of the key factors BAM's analysts and credit committee considered when approving the credit for insurance. The Credit Insights videos are easily accessible on BAM's website at buildamerica.com/creditinsights/. (The preceding website address is provided for convenience of reference only. Information available at such address is not incorporated herein by reference.)
Credit Profiles. Prior to the pricing of bonds that BAM has been selected to insure, BAM may prepare a pre-sale Credit Profile for those bonds. These pre-sale Credit Profiles provide information about the sector designation (e.g. general obligation, sales tax); a preliminary summary of financial information and key ratios; and demographic and economic data relevant to the obligor, if available. Subsequent to closing, for any offering that includes bonds insured by BAM, any pre-sale Credit Profile will be updated and superseded by a final Credit Profile to include information about the gross par insured by CUSIP, maturity and coupon. BAM pre-sale and final Credit Profiles are easily accessible on BAM's website at buildamerica.com/obligor/. BAM will produce a Credit Profile for all bonds insured by BAM, whether or not a pre-sale Credit Profile has been prepared for such bonds. (The preceding website address is provided for convenience of reference only. Information available at such address is not incorporated herein by reference.)
Disclaimers. The Credit Profiles and the Credit Insights videos and the information contained therein are not recommendations to purchase, hold or sell securities or to make any investment decisions. Credit-related and other analyses and statements in the Credit Profiles and the Credit Insights videos are statements of opinion as of the date expressed, and BAM assumes no responsibility to update the content of such material. The Credit Profiles and Credit Insight videos are prepared by BAM; they have not been reviewed or approved by the Issuer of or the Underwriter for the Series 2020 Bonds, and the Issuer and Underwriter assume no responsibility for their content.
BAM receives compensation (an insurance premium) for the insurance that it is providing with respect to the Series 2020 Bonds. Neither BAM nor any affiliate of BAM has purchased, or committed to purchase, any of the Series 2020 Bonds, whether at the initial offering or otherwise.
RATINGS
As noted on the Cover, the City has received a rating from S&P Global Ratings ("S&P"), a division of S&P Global Inc. which has rated the Series 2020 Bonds "AA" (the "Insured Rating"), on the understanding that the Series 2020 Bonds will be insured by the Bond Insurer upon their issuance. The Series 2020 Bonds also have an underlying rating of "Aa3" from Moody's Investors Service, Inc., ("Moody's"). No application for a rating has been made to any other rating agency.
The Insured Rating reflects only the views of S&P. Any explanation of the significance of the Insured Rating may only be obtained from S&P Global Ratings, a division of S&P Global Inc., 55 Water Street, New York, New York 10041, telephone (212) 438-2000; website: www.standardandpoors.com.
The underlying rating reflects only the views of Moody's. Any explanation of the significance of
the underlying rating may only be obtained from Moody's Investors Service, Inc., 7 World Trade Center, New York, New York 10007, telephone (212) 553-0300, website: www.moodys.com.
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The City furnished to Moody's certain information and materials, some of which may not have been included in this Official Statement, relating to the Series 2020 Bonds and the City. Generally, rating agencies base their ratings on such information and materials, as well as investigation, studies and assumptions by the rating agencies. Such ratings are not recommendations to buy, sell or hold the Series 2020 Bonds.
The Insured Rating assumes, upon delivery of the Series 2020 Bonds, the issuance of the Policy by
the Bond Insurer, a copy of which is attached to this Official Statement as APPENDIX G. See "BOND INSURANCE." Pursuant to the Policy, the Bond Insurer will insure the payment, when due, of principal of and interest on the Series 2020 Bonds, as described in this Official Statement.
The ongoing stability of the Bond Insurer and the Bond Insurer's ability to pay principal of and interest on the Series 2020 Bonds, and otherwise to perform its obligation under the Policy, are the primary basis for the Insured Rating assigned to the Series 2020 Bonds and the ultimate security for the payment of principal of and interest on the Series 2020 Bonds. A decline in the financial condition of the Bond Insurer could have an adverse effect on the Insured Rating and, consequently, on the market price of the Series 2020 Bonds.
There can be no assurance that a rating, when assigned, will continue for any given period of time or that it will not be lowered or withdrawn entirely by a rating agency if, in its judgment, circumstances so warrant. In addition, the City currently expects to provide to Moody's (but assumes no obligation to furnish to the Underwriter or the holders from time to time of the Series 2020 Bonds) further information and materials that it or they may request. The City does not, however, obligate itself hereby to furnish such information and materials, and may issue unrated bonds and notes from time to time. Failure by the City to furnish such information and materials, or the issuance of unrated bonds or notes, may result in the suspension or withdrawal of Moody's underlying rating on the Series 2020 Bonds. Any lowering, suspension or withdrawal of such rating may have an adverse effect on the marketability or market price of the Series 2020 Bonds.
UNDERWRITING Stifel, Nicolaus & Company, Incorporated (the "Underwriter") has agreed, pursuant to the Bond Purchase Agreement, dated April 29, 2020 (the "Bond Purchase Agreement"), to purchase all, but not less than all, of the Series 2020 Bonds at an aggregate purchase price of $41,592,736.15 (the "Purchase Price"), which is equal to the principal amount of the Series 2020 Bonds ($40,465,000.00), plus net original issue premium ($1,380,443.65), less Underwriter's discount ($252,707.50), plus accrued interest thereon, if any, to the date of delivery.
The Underwriter is purchasing the Series 2020 Bonds as originally issued for purpose of resale. The Underwriter reserves the right to join with dealers and other underwriters in offering the Series 2020 Bonds to the public. The Underwriter may offer and sell the Series 2020 Bonds to certain dealers (including dealer banks and dealers depositing the Series 2020 Bonds into unit investment trusts, certain of which may be sponsored or managed by the Underwriter), and others at prices lower than the public offering price noted on the Cover. The initial offering prices of the Series 2020 Bonds may be changed, from time to time, by the Underwriter.
The Underwriter has agreed to retain $203,557.81 from the Purchase Price to pay certain costs of issuance of the Series 2020 Bonds, including municipal bond insurance premium ($141,964.13) and the Bond Reserve Fund Facility premium ($61,593.68), which amounts will be wired to the Bond Insurer and Bond Reserve Fund Facility Provider on behalf of the City at closing.
The Underwriter has agreed to wire funds to the Trustee at closing for further distribution by the Trustee to pay certain costs of issuance of the Series 2020 Bonds on behalf of the City, including Municipal
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Advisor fees, rating fees, legal fees, Trustee fess, printing and distribution costs, and other miscellaneous expenses. An amount of $433,958.75 shall be deposited with the Trustee from the proceeds of the Series 2020 Bonds for this purpose and disbursed in accordance with instructions from the Underwriter.
The obligation of the Underwriter to accept delivery of the Series 2020 Bonds is subject to the various conditions set forth in the Bond Purchase Agreement. The Underwriter is obligated to purchase all of the Series 2020 Bonds if any of the Series 2020 Bonds are purchased.
MUNICIPAL ADVISOR
The City has retained Bradley Payne, LLC, as municipal advisor (the "Municipal Advisor") to provide financial advice in connection with the City's issuance of the Series 2020 Bonds. The Municipal Advisor is not obligated to undertake, and has not undertaken to make, an independent verification or to assume responsibility for the accuracy, completeness, or fairness of the information contained in this Official Statement. The Municipal Advisor is an independent advisory firm and is not engaged in the business of underwriting, trading or distributing municipal securities or other public securities.
LITIGATION
To the knowledge of the appropriate officials of the City, no litigation or administrative action or proceeding is pending or threatened restraining or enjoining, or seeking to restrain or enjoin, the issuance and delivery of the Series 2020 Bonds, imposition or amounts of the Utility's rates, or the validity and enforceability of the Indenture securing the Series 2020 Bonds or contesting or questioning the proceedings and authority under which the Series 2020 Bonds and the Indenture have been authorized and under which the Series 2020 Bonds are to be issued, sold, executed, and delivered and the Indenture is to be executed and delivered, or the validity of the Series 2020 Bonds and Indenture. A no-litigation certificate to such effect will be delivered by the City to the Underwriter at the time of original delivery of the Series 2020 Bonds to such Underwriter. In common with other political subdivisions, the City from time to time receives notices of claims for money damages. In the opinion of officials of the City, any such claims outstanding, regardless of their merit, are not in excess of the City's insurance coverage.
LEGAL MATTERS Legal matters incident to the issuance of the Series 2020 Bonds and with regard to the excludability of the interest on the Series 2020 Bonds from gross income for federal income tax purposes (see "TAX MATTERS" herein) are subject to the approving opinion of Bricker & Eckler LLP, Bond Counsel to the City. A signed copy of that opinion will be delivered to the Underwriter at the time of original delivery. Assuming no change in applicable law prior to the date of delivery of such opinion, the opinion will be substantially in the form attached hereto as APPENDIX D. The opinion will speak only as of its date, and subsequent distribution of it by recirculation of the Official Statement or otherwise shall create no implication that Bond Counsel has reviewed or expresses any opinion concerning any of the matters referred to in the opinion subsequent to the date thereof. Certain legal matters will be passed upon for the Underwriter by their counsel, Frost Brown Todd LLC, Columbus, Ohio. While Bond Counsel has participated in the preparation of portions of this Official Statement, it has not been engaged to confirm or verify, and expresses and will express no opinion as to the accuracy, completeness or fairness of any of the statements in this Official Statement, including its appendices (other than APPENDIX D), or in any other reports, financial information, offering or disclosure documents or
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other information pertaining to the City or the Series 2020 Bonds that may be prepared or made available by the City or others to the holders of the Series 2020 Bonds or others.
TAX MATTERS General
In the opinion of Bricker & Eckler LLP, Bond Counsel, under existing law interest on the Series 2020 Bonds is excluded from gross income for federal income tax purposes under Section 103(a) of the Code, and is not treated as an item of tax preference under Section 57 of the Code for purposes of the alternative minimum tax. Further, the Series 2020 Bonds are not "private activity bonds" as defined in Section 141(a) of the Code.
Interest on the Series 2020 Bonds, the transfer thereof, and any profit made on their sale, exchange or other disposition, are exempt from the Ohio personal income tax, the Ohio commercial activity tax, the net income base of the Ohio corporate franchise tax, and municipal, school district, and joint economic development district income taxes in Ohio.
The opinion on tax matters will be based on and will assume the accuracy of certain representations and certifications made by Council and others, and the compliance with certain covenants of the City, to be contained in the transcript of proceedings and which are intended to evidence and assure the foregoing, including that the Series 2020 Bonds are and will remain obligations the interest on which is excluded from gross income for federal income tax purposes. Bond Counsel has not and will not independently verify the accuracy of such certifications and representations. The City has not designated the Series 2020 Bonds as "qualified tax-exempt obligations" as defined in Section 265(b)(3) of the Code. The Code prescribes a number of qualifications and conditions for the interest on state and local government obligations to be and remain excluded from gross income for federal income tax purposes some of which, including provisions for the rebate by the City of certain investment earnings to the federal government, require future or continued compliance after issuance of the obligations in order for the interest to be and continue to be so excluded from the date of issuance. Noncompliance with these requirements could cause the interest on the Series 2020 Bonds to be included in gross income for federal income tax purposes and thus to be subject to regular federal income tax retroactively to the date of their issuance. The City has covenanted to take such actions that may be required of it for the interest on the Series 2020 Bonds to be and remain excluded from gross income for federal income tax purposes, and not to take any actions which would adversely affect that exclusion. Under the Code, interest on the Series 2020 Bonds may be subject to a branch profits tax imposed on certain foreign corporations doing business in the United States of America, and a tax imposed on excess net passive income of certain S corporations. Under the Code, the exclusion of interest from gross income for federal income tax purposes can have certain adverse federal income tax consequences on items of income or deductions for certain taxpayers, including among them financial institutions, certain insurance companies, recipients of Social Security and Railroad Retirement benefits, and those that are deemed to incur or continue indebtedness to acquire or carry tax-exempt obligations and individuals otherwise eligible for the earned income tax credit. The applicability and extent of these or other tax consequences will depend upon the particular tax status or other items of income and expenses of the holders of the Series 2020 Bonds. Bond Counsel will express no opinion and make no representation regarding such consequences.
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From time to time, legislative proposals are pending in the United States Congress that would, if enacted, alter or amend one or more of the federal tax matters referred to above in certain respects or would adversely affect the market value of the Series 2020 Bonds. Court proceedings may also be filed, the outcome of which could modify the tax treatment of obligations such as the Series 2020 Bonds. There can be no assurance that legislation enacted or proposed, or actions by a court, after the date of issuance of the Series 2020 Bonds will not have an adverse effect on the tax status of interest or other income on the Series 2020 Bonds or the market value or marketability of the Series 2020 Bonds. Prospective purchasers of the Series 2020 Bonds should consult their own tax advisers regarding pending or proposed federal and state tax legislation and court proceedings, as to all of which Bond Counsel expresses no opinion. Original Issue Discount
Certain of the Series 2020 Bonds may be sold to the public at a price of less than 100% of their face amount (the "Discount Bonds"). The following information, which has not been included in the opinion of Bond Counsel, may be helpful to prospective purchasers of the Discount Bonds.
Under present federal income tax law, original issue discount (i.e., the difference between the issue price, as hereinafter defined, of a Discount Bond and the stated redemption price at maturity of such Discount Bond), is treated as accruing ("accreted") over the term of such Discount Bond. The issue price is the price at which a substantial amount of the Discount Bonds is sold to the public (excluding bond houses, brokers or similar persons acting in the capacity of underwriters or wholesalers). In general, the amount of original issue discount that is to be accreted in each "accretion period" will equal (a) the issue price of that Discount Bond, increased by the amount of original issue discount that has been accreted in all prior accretion periods, multiplied by (b) the initial offering yield of that Discount Bond reflected on the Cover of this Official Statement (determined on the basis of compounding at the close of each accretion period and properly adjusted for the length of the accretion period), minus interest actually paid during such accretion period. For these purposes, "accretion period" means a six-month period (or shorter period from the date the Discount Bond was issued) which ends on a day in the calendar year corresponding to the maturity date of that Discount Bond or the date six months before such maturity date.
The amount of original issue discount so accreted in a particular accretion period will be considered to accrete ratably on each day of the accretion period. Such accreted amount is used for purposes of determining the adjusted basis for federal income tax purposes of the holder of such Discount Bond but is not included in such holder's gross income for federal income tax purposes. Consequently, a purchaser who buys a Discount Bond in the initial offering at the issue price and holds such Discount Bond to its maturity would not realize any gain or loss for federal income tax purposes upon payment of the stated redemption price of that Discount Bond at maturity.
Amortizable Bond Premium
Certain of the Series 2020 Bonds may be sold at issue prices greater than the principal amount payable at maturity or earlier call date (the "Premium Bonds"). The following information, which has not been included in the opinion of Bond Counsel, may be helpful to prospective purchasers of the Premium Bonds. Premium Bonds will be considered to be issuable with amortizable bond premium (the "Bond Premium"). A taxpayer who acquires a Premium Bond in the initial public offering will be required to adjust his or her basis in the Premium Bond downward as a result of the amortization of the Bond Premium, pursuant to Section 1016(a)(5) of the Code. The amount of amortizable Bond Premium will be computed on the basis of the taxpayer's yield to maturity with compounding at the end of each accrual period. Rules for determining (i) the amount of amortizable Bond Premium and (ii) the amount amortizable in a particular
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year are set forth at Section 171(b) of the Code. No income tax deduction for the amount of amortizable Bond Premium will be allowed to a holder pursuant in Section 171(a)(2) of the Code. The amortization of Bond Premium may be taken into account as a reduction in the amount of tax-exempt income for purposes of determining other tax consequences of owning the Premium Bonds. A purchaser of a Premium Bond at its issue price in the initial public offering who holds that Premium Bond to maturity will realize no gain or loss upon the retirement of such Premium Bond. PROSPECTIVE PURCHASERS OF THE PREMIUM BONDS SHOULD CONSULT THEIR OWN TAX ADVISORS AS TO THE TAX CONSEQUENCES OF THE PURCHASE, SALE, TRANSFER, REDEMPTION, PAYMENT, OR OTHER DISPOSITION OF THE PREMIUM BONDS, INCLUDING, WITHOUT LIMITATION, MODIFICATIONS TO THE METHOD FOR AMORTIZING PREMIUM FOR CERTAIN SUBSEQUENT PURCHASERS, AND INCLUDING THE EFFECT OF ANY APPLICABLE STATE OR LOCAL INCOME TAX LAWS.
BOOK-ENTRY ONLY SYSTEM
The information in this section concerning DTC and DTC's book-entry only system has been obtained from DTC and the City takes no responsibility for the completeness or accuracy thereof. The City cannot and does not give any assurances that DTC, Direct Participants or Indirect Participants will distribute to the Beneficial Owners (each as hereinafter defined) (a) payments of interest, principal, or premium, if any, with respect to the Series 2020 Bonds, (b) certificates representing ownership interest in or other confirmation of ownership interest in the Series 2020 Bonds, or (c) redemption or other notices sent to DTC or Cede & Co., its partnership nominee, as the registered owner of the Series 2020 Bonds, or that they will so do on a timely basis or that DTC, Direct Participants or Indirect Participants will act in the manner described in this Official Statement. The current "Rules" applicable to DTC are on file with the Securities and Exchange Commission and the current "Procedures" of DTC to be followed in dealing with DTC Participants are on file with DTC.
The Depository Trust Company ("DTC"), New York, New York, will act as securities depository for the Series 2020 Bonds. The Series 2020 Bonds will be issued as fully-registered bonds 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 bond certificate will be issued for each maturity of the Series 2020 Bonds and will be deposited with DTC.
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, either directly
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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.
Purchases of Series 2020 Bonds under the DTC system must be made by or through Direct Participants, which will receive a credit for the Series 2020 Bonds on DTC's records. The ownership interest of each actual purchaser of each Bond ("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 Series 2020 Bonds 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 the Series 2020 Bonds, except in the event that use of the book-entry system for the Series 2020 Bonds is discontinued.
To facilitate subsequent transfers, all Series 2020 Bonds 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 Series 2020 Bonds with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not affect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Series 2020 Bonds; DTC's records reflect only the identity of the Direct Participants to whose accounts such Series 2020 Bonds are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Beneficial Owners of Series 2020 Bonds may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the Series 2020 Bonds, such as redemptions, tenders, defaults, and proposed amendments to the Series 2020 Bonds. For example, Beneficial Owners of Series 2020 Bonds may wish to ascertain that the nominee holding the Series 2020 Bonds 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 Trustee and request that copies of the notices be provided directly to them.
Redemption notices shall be sent to DTC. If less than all of the Series 2020 Bonds within an issue are being redeemed, DTC's practice is to determine by lot the amount of the interest of each Direct Participant in such issue to be redeemed.
Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to Series 2020 Bonds 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 the Series 2020 Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy).
Redemption proceeds, distribution and dividend payments on the Series 2020 Bonds 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 Trustee, on payable date in accordance with their respective holdings
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shown on DTC's records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in "street name", and will be the responsibility of such Participant and not of DTC, the Trustee, or the City, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of redemption proceeds, distributions and dividend payments to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the City or the Trustee, 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.
DTC may discontinue providing its services as a depository with respect to the Series 2020 Bonds at any time by giving reasonable notice to the City or the Trustee. Under such circumstances, in the event that a successor depository is not obtained, Bond certificates are required to be printed (or otherwise produced) and delivered.
The City may decide to discontinue use of the system of book-entry-only transfers through DTC (or a successor securities depository). In that event, Bond certificates will be printed (or otherwise produced) and delivered to DTC. (See also "BOOK-ENTRY ONLY SYSTEM – Revision of Book-Entry Only System – Replacement Bonds")
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.
Revision of Book-Entry System - Replacement Bonds
The Bond Ordinance provides for issuance of fully registered bonds (the "Replacement Bonds") directly to owners other than DTC or its nominee only if DTC determines not to continue to act as security depository of the Series 2020 Bonds. In such event, the City may in its discretion establish a securities depository/book entry relationship with another qualified securities depository. If the City does not or is unable to do so, and after appropriate notice to DTC, the Trustee will authenticate and deliver fully registered Replacement Bonds, in the denominations of $5,000 or any multiple thereof, to or at the direction of and, if the event is not the result of City action or inaction, at the expense (including printing costs) of, any persons requesting such issuance. Replacement Bonds may be transferred, registered and assigned only in the registration books of the Trustee.
TRANSCRIPT AND CLOSING DOCUMENTS A complete transcript of proceedings for the Series 2020 Bonds, including an appropriate no-litigation certificate (see "LITIGATION" herein), will be delivered by the City when the Series 2020 Bonds are delivered by the City to the Underwriter. The City will at that time also provide to the Underwriter a certificate of the Director of Finance, in the form attached hereto as APPENDIX E, addressed to the Underwriter relating to the accuracy and completeness of this Official Statement.
CORONAVIRUS (COVID-19)
As widely reported, the outbreak of COVID-19, a new strain of coronavirus that can result in severe respiratory disease, and has reportedly spread to more than 170 countries and regions, including the United States and the State of Ohio. COVID-19 has been declared a pandemic by the World Health Organization. The spread of the strain of coronavirus commonly known as COVID-19 is altering the behavior of businesses and people in a manner that is having negative effects on global, state and local economies.
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In response, the Governor of the State (the "Governor") and the Director of the Ohio Department of Health have taken certain actions to limit the spread of the virus and its impact on local communities and health care services, including the declaration of a state of emergency in the State on March 9, 2020 and the issuance of a shelter-in-place order and related closure of all non-essential businesses from March 23, 2020, through at least May 1, 2020.
The full effect of the pandemic on global financial markets as well as national, state, and local economies is unknown. There can be no assurances as to the materiality, severity and duration of negative economic conditions caused by the pandemic.
The generation of Net Revenues is dependent upon additional factors outside the City's control, such as the economy, natural disasters, pandemics and changes in law. The current national and regional economic conditions may increase the rate of nonpayment of fees and charges by the City's customers. In response to the Governor's shelter-in-place order, many businesses have temporarily closed. These actions have resulted in significant increases in unemployment rates. Increased rates of unemployment could result in some customers' inability to pay utility bills on time. In addition, the recent Am. Sub. House Bill 197 signed into law by the Governor on March 27, 2020, gives the Director of Environmental Protection the ability to issue orders to public water systems during the COVID-19 outbreak regarding access to water service and fees or charges that are permitted to be charged to customers. Specifically, the director may order a public water systems to (i) restore water service to any customer whose service was disconnected for nonpayment of fees or charges, (ii) waive all fees for connection or reconnection to the public water system, or (iii) prohibit disconnecting customers for nonpayment of fees or charges. Over an extended length of time, significant instances of late payment or nonpayment could result in Net Revenues that are insufficient to pay debt service on the Bonds. However, the City believes it has sufficient cash reserves available to meet its operating expenses and all debt service payments, notwithstanding the possibility of late payments or non-payments due to the COVID-19 pandemic. See the "THE UTILITY – Historical and Projected Revenues and Expenditures of the Utility" and APPENDIX C.
While the potential impact on the City cannot be predicted at this time, the continued spread of the outbreak could have a material adverse effect on the City, its financial operations, and the Utility. There can be no assurance concerning the full effect that the spread of COVID-19 will have on the City's finances or operations.
CONTINUING DISCLOSURE The City has agreed for the benefit of the holders and beneficial owners of the Series 2020 Bonds to provide annual financial and operating information in its Annual Report, not later than September 30 of each year, and to provide notices of certain significant events, as listed in the Disclosure Certificate defined below. Concurrently with the delivery of the Series 2020 Bonds, the City will deliver a certificate of the Director of Finance, in the form attached hereto as APPENDIX F (the "Disclosure Certificate"), describing the nature of the information to be provided, the persons and entities to whom such information will be provided and the times at which such information will be provided. The City's failure to comply with any undertaking contained in such certificate will not constitute an event of default under the Series 2020 Bonds.
The Disclosure Certificate is being signed by the City to assist the Underwriter in complying with the Rule. Specifically, the City agrees to provide the Annual Report to the Municipal Securities Rulemaking Board (the "MSRB") in the manner and format prescribed by the MSRB.
The City has had 12 continuing disclosure undertakings (collectively, the "Undertakings") that were in effect for all or part of the previous five years. During the previous five years, the City filed its Annual
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Reports with the MSRB on a timely basis as required pursuant to the Undertakings. With respect to the City's audited financial statements that were released by the State Auditor within the past five years, the City filed such audited financial statements with the MSRB on the same day of their release by the State Auditor. The City has retained Bond Counsel to assist it with complying with the Undertakings and the Disclosure Certificate.
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CONCLUDING STATEMENT To the extent that any statements made in this Official Statement involve matters of opinion or estimates, whether or not expressly stated to be such, they are made as such and not as representations of fact or certainty, and no representation is made that any of such statements will be realized. Information herein has been derived by the City from official and other sources and is believed by the City to be reliable, but information other than that obtained from official records of the City has not been independently confirmed or verified by the City and its accuracy is not guaranteed. Neither this Official Statement nor any statement which may have been made orally or in writing is to be construed as or as part of a contract with the original purchasers or holders of the Series 2020 Bonds. This Official Statement has been duly prepared and delivered by the City, and executed for and on behalf of the City by its City Manager and Director of Finance.
CITY OF MARYSVILLE, OHIO By: /s/ Terry Emery City Manager By: /s/ Brad Lutz Director of Finance
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APPENDIX A
THE CITY OF MARYSVILLE, OHIO
The following is a brief description of the City of Marysville, Ohio (the "City" or "Issuer") and the geographic area in which the City is located, together with certain information concerning its economy and governmental organization, its indebtedness, current major revenue sources and general and specific funds. General Information
The City is an independent political subdivision of the State of Ohio and operates subject to the provisions of its Charter, the Ohio Constitution, and various sections of the Revised Code. The City is the county seat of Union County (the "County"), and it offers the advantages of a metropolitan area combined with the charm of a rural, smaller community. Settled along Mill Creek early in the 1820's, the City encompasses approximately 16 square miles of territory and serves as the hub for the County. The City is located approximately 25 miles northwest of Columbus, the State capital, on U.S. Route 33, a major highway. Other principal highways in the City are U.S. Route 36 and State Routes 4, 31, 38, 245 and 736. The City's central location is among its greatest assets because it makes travel quick and convenient for residents. As the largest city in the County, the City is the home of both large and small industries, and its diversified business base helps provide a desirable quality of life. Few communities of its size in the country have enjoyed the international spotlight that has focused on the City, largely as a result of the Honda of America Manufacturing, Inc. automobile assembly facilities. Other major companies located in the City include the Scotts Miracle-Gro Company (lawn care products), Veyance Technologies, Inc. (formerly a division of The Goodyear Tire & Rubber Company), Midwest Express, Inc. (trucking), Nestlé USA (food research and development), and Parker Hannifin (manufacturer). The Union County Airport, which is located in the City, provides complete air service, including charter and freight service. The Union County Airport's 4,218 ft. runway can accommodate most private and executive aircraft. Commercial air service is also available at John Glenn Columbus International Airport in the City of Columbus. The Marysville Exempted Village School District serves City residents with its five elementary schools (K-4), one intermediate school (5-6), one middle school (7-8), one high school (9-12), and one Early College/STEM high school (9-12). A number of public and private two-year and four-year colleges and universities are also located within commuting distance, including The Ohio State University, Capital University, Otterbein College, Ohio Dominican College, Franklin University, Columbus State Community College, and DeVry Institute of Technology. The City has an extensive park system. The City owns and operates 16 parks encompassing 300 acres, one of which, American Legion Park, contains the municipal swimming pool. In addition, several public golf courses are currently operating in the immediate vicinity. City residents are served by two local healthcare facilities: Memorial Hospital of Union County, a modern 110 bed facility located just south of the downtown area of the City, and the Charles B. Mills
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Mental Health Center. A large number of other hospital and healthcare facilities are located within an hour's commute, including The Ohio State University Hospitals.
Map of Geographic Area
MARYSVILLE
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Structure of Government
The City operates under its Charter, but is also subject to the general statutes of the State that are applicable to all municipalities in the State. As a home-rule municipality, the City may exercise all powers of local self-government under Article XVIII, Section 3 of the Ohio Constitution.
The City operates under a "Council/Manager" form of government. The Council is composed of seven members and selects a President (who also serves as Mayor of the City) and Vice President from among its ranks to serve one-year terms. Under this form of government, the Council also appoints a city manager (the "City Manager") and other executive officials. The City Manager serves as the City's chief executive officer and supervises executive departments and divisions of the City. Principal Officials
The current elected officials of the City and some of its appointed officials are:
Principal Officials City of Marysville, Ohio
Name Office Date Term Expires Beginning of Tenure
Henk Berbee Mayor/Council President December 31, 2021 January 2010Mark Reams Council Vice President December 31, 2021 January 1998Donald Boerger Council Member December 31, 2023 January 2020Aaron Carpenter Council Member December 31, 2023 January 2020Alan Seymour Council Member December 31, 2023 August 2015Deborah Groat Council Member December 31, 2023 January 2008J.R. Rausch Council Member December 31, 2021 January 2012Terry Emery City Manager Appointed May 2011 Brad Lutz Director of Finance Appointed February 2020Tim Aslaner Law Director December 31, 2021 January 2000Rebecca Dible Clerk of Council Appointed July 2018 Source: City of Marysville
City Employees
The City has 206 full-time employees and 95 part-time employees. This includes 42 in the firefighter service and 40 sworn police officers. Thirty-seven (37) of the sworn officers are unionized and represented by the Fraternal Order of Police (FOP). Thirty-eight (38) of the firefighters are unionized and represented by the International Association of Fire Fighters (IAFF). All other employees are not unionized.
The City completed a collective bargaining agreement (CBA) with the IAFF for the dates July 1,
2019 through June 30, 2022, with the following cost of living increases for each year: 2020 (2.75%), 2021 (2.75%) and 2022 (2.25%). The City more recently completed the CBA with the FOP for dates January 1, 2020 through December 31, 2022, with the same cost of living increases for each year.
City officials note that the labor/management relationships are outstanding with both unions.
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Pension Obligations
All full-time employees of the City are covered either by the Ohio Public Employees Retirement System or the Ohio Police and Fire Pension Fund. The current employee contribution to the statewide systems is 10.0% of total compensation to the Ohio Public Employees Retirement System and 10.0% to the Ohio Police and Fire Pension Fund. The City's share, as employer, is currently 14.0% to Public Employees Retirement System; 19.5% for Police and 24.0% for Fire to the Ohio Police and Fire Pension Fund. These pension funds are regulated by the laws of the State, and changes in benefits will change the employer's contribution rate. Under the Consolidated Omnibus Reconciliation Act of 1985 (Public Law 99-272), public employers, including the City, are subject to mandatory Medicare (hospital insurance tax of Federal Insurance Contributions Act tax) contributions of 1.45% of each covered employee's wage base. Covered employees include all employees (with limited exceptions) hired after March 31, 1986. City Services
The City currently provides water, sewer, police and fire protection services. Residents of the City receive utility services from Dayton Power & Light, Union Rural Electric, Columbia Gas of Ohio, CenturyLink, and Spectrum.
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THE UTILITY
Water System Facilities
The Utility provides potable water supply to residential, commercial, and industrial customers within the City corporation limits and to several areas outside the City. As reflected in the map below, the Utility serves a total area of 85.90 square miles.
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Service Area The Utility, which consists of three basic components – supply, treatment, and distribution –
provides potable water supply to residential, commercial, and industrial customers within the City's corporate limits and to several areas outside the City, including portions of the County.
On January 31, 2006, approximately 475 customers were added to the Utility from the
unincorporated areas of the County as a result of the City's acquisition of the County's water system utility. The acquisition superseded the City's prior agreement with the County to provide water to these customers and expanded the City's service area from 16.2 square miles to 85.9 square miles.
The City encompasses approximately 9.815 acres, or 15.34 square miles. It has been estimated that
approximately 4,392 of these acres (or 44.8% of these acres) are developed. Residential land use accounts for approximately 62% of these developed acres, commercial land use accounts for 20% of these developed acres and industrial land use accounts for the remaining 18% of these developed acres.
The surrounding areas of the County outside the City's corporate limits are largely undeveloped.
There are, however, a few pockets of developed areas to the east and southeast of the City. These include several residential, commercial, and industrial developments located to the southeast along the Industrial Parkway/U.S. Route 33 corridor, extending southward to State Route 161.
The City is currently in compliance with all orders from the Environmental Protection Agency with
respect to the Utility. Water Supply The City obtains its water supply from several groundwater wells and surface water that is pumped from Mill Creek through the Creek View Pump Station to the reservoir located on Raymond Road. The surface water comes from Mill Creek, a stream that flows through Logan, Union, and Delaware Counties and eventually discharges into the Scioto River. Water Treatment
The City's Water Treatment Plant (the "Existing Plant") is located at the intersection of Main Street and Mill Creek in the City. The Existing Plant was constructed in 1928, and expanded in 1956 and 1980 by the Ohio Water Service Company. The City purchased the Utility in 1991 from the Ohio Water Service Company for $11,000,000, through the issuance of mortgage revenue bonds. In 2007, the City issued its Series 2016 Bonds for the purpose of making improvements to the Utility. Since 1991, the City has invested nearly $35,000,000 of improvements in the Utility.
The Existing Plant is a conventional lime/soda softening facility which treats blended raw surface
and ground water by clarification, softening, and recarbonation. The water is then filtered and disinfected. The capacity of the Existing Plant is 3.80 mgd. The Existing Plant is being replaced with a new water treatment plant as part of the Project. (See "Capital Improvements Plan" below.) Water Distribution
The Utility's distribution system consists of approximately 198 miles of distribution pipelines. Within the distribution system, there are water storage facilities at four locations for a total capacity of 3.5 million gallons. A fifth storage tank is planned on the eastern side of the City.
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Organization and Management
The Existing Plant's operating structure includes 16 full-time employees. The Existing Plant's operations are managed by the City's Division of Water (within the Public Service Department), and supervised by one Superintendent. The Existing Plant staff includes a Chief Plant Operator who assists the Superintendent with management of the Existing Plant. The Superintendent has a Class IV Water Supply Certification and the Chief Plant Operator has a Class III Operators Certificate.
In addition to the Plant management referenced above, there are four Plant operators and one
mechanic/relief operator at the Existing Plant. The Existing Plant's Distribution Crew has nine additional positions including a foreman, two servicemen, and six distribution maintenance positions.
Historical and Future Growth of Use of the Utility
Over the past 50 years, the City has exhibited significant population growth, which has consequently corresponded to an increase in the number of customers and system demands on the Utility. The population at the 2010 census was 22,094 which is an approximate 39% increase from 2000. The City's estimated population, according to the U.S. Census Bureau, was 23,509 in 2018. It is expected that the City's population will continue to grow at a steady rate. The tables below summarize historical and projected Utility demand.
Historical Demand of the Utility City of Marysville, Ohio
As of December 31, 2019, the Utility served a customer base of 8,205 residential customers and 662 commercial customers. The table below summarizes the statistical information of the 10 largest customers for calendar year 2019.
Top Ten Utility Customers City of Marysville, Ohio
Customer
Volume (Cubic Feet)
Percentage of Total Volume
Billed
Amount
Percentage of Total Billed
AmountState of Ohio 8,855,000 4.54% $215,074 1.59%
Nestlé USA 2,848,489 1.46 75,569 0.56
Hilcrest LLC 966,411 0.50 69,375 0.51
HAP V 959,328 0.49 62,947 0.47
EPCON Jerome 628,054 0.32 51,200 0.38
Marysville Estates 648,032 0.33 51,111 0.38
Veyance Technologies, Inc. 1,968,600 1.01 50,792 0.38
Scotts Miracle-Gro Company 1,151,064 0.59 54,932 0.41
Schottenstein Real Estate 459,667 0.24 37,152 0.28
Prestige Gardens 749,232 0.38 21,985 0.16 Source: City of Marysville
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The table below summarizes the user types of the Utility from 2018 through 2020.
Classification of Users of the Utility City of Marysville, Ohio
Description
2018 2019 2020
# of Customers % of Total # of Customers % of Total # of Customers % of Total
Residential - Single Unit 6,470 73.83% 6,631 72.93% 7,214 73.02%
Residential - Multi Unit 815 9.30 820 9.02 898 9.09
Commercial - Single Unit 623 7.11 593 6.52 578 5.85
Commercial - Multi Unit 40 0.46 42 0.46 66 0.67
Industrial 28 0.32 27 0.30 31 0.31
Private Fire 100 1.14 1 0.01 1 0.01
Sewer ONLY 0 0.00 34 0.37 39 0.39
Fire Lines 0 0.00 119 1.31 118 1.19
Public Authority 43 0.49 43 0.47 43 0.44
City Accounts 29 0.33 28 0.31 28 0.28
Residential/Secondary Meter 553 6.31 691 7.60 801 8.11
Total 8,763 100.00% 9,092 100.00% 9,880 100.00%
% Yearly Increase 3.6% 3.8% 8.7%
% Overall Increase 7.8% 11.8% 20.7%
Source: City of Marysville
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Capital Improvements Plan
The City has implemented a capital improvement program ("CIP") with respect to the Utility, which includes planned designs, construction projects, maintenance and repair of the Utility, the associated costs, and schedules for implementation of these improvements. The total cost of the improvements in the CIP is estimated at approximately $70,000,000 – $75,000,000 and will be funded through proceeds from the Series 2020 Bonds, private contributions and reserves, and cash on-hand. The following table provides an overview of the CIP.
Capital Improvements Plan
City of Marysville, Ohio
Description 2020 2021 2022 2023 2024 2025 Water Main Over Sizing $ 150,000 $ 150,000 $ 150,000 $ 150,000 $150,000 $150,000Distribution Materials (e.g., water main, valves, hydrants) 200,000 200,000 200,000 200,000 200,000 200,000Main Replacement: E. 6th Street (Plum Street to Cherry Street) 800,000 -- -- -- -- --New Water Treatment Plant 60,000,000 -- -- -- -- --New Water Treatment Plant – Distribution -- 5,000,000 -- -- -- --Main Replacement: W. 5th Street (Court Street to Maple Street) -- 400,000 -- -- -- --Southern Water Tower – Design and Property Purchase -- 700,000 -- -- -- --Southern Water Tower – Construction -- -- 2,500,000 2,500,000 -- --VMware Cloud on AWS 117,329 -- -- -- -- --AWS Storage 19,892 -- -- -- -- --Upgrade Office Software 26,820 -- -- -- -- -- -- -- -- -- -- --In House Projects -- -- -- -- -- --Paving, N. Plum Street 60,000 -- -- -- -- --Waterline, Fairwood Drive 100,000 -- -- -- -- --Paving, Fairwood Drive -- 75,000 -- -- -- --Waterline, 2nd Street -- 100,000 75,000 -- -- --Paving, 2nd Street -- -- 75,000 -- -- Total $61,474,041 $6,625,000 $2,925,000 $2,850,000 $350,000 $350,000
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New Water Treatment Plant The Project consists of the acquisition, construction, expansion, rehabilitation, and improvement of a new City-owned water treatment plant (the "New Plant"). The New Plant will be a conventional lime/soda softening facility which treats blended raw surface and ground water. The New Plant will utilize solid contact clarification, biologically active sand filters, and secondary treatment with ozonation and will provide 7.5 mgd of capacity with provisions to eventually expand capacity to 15 mgd. The construction phase of the New Plant is anticipated to commence in 2020 and to be paid with from proceeds of the Series 2020 Bonds as well as accumulated cash balances within the three water operating and capital funds. Design and engineering of the New Plant has been completed.
The New Plant will replace the City's Existing Plant. After construction on the New Plant is complete, the Existing Plant will be decommissioned, and any usable equipment will be removed from the site. The lime lagoon will be dredged until empty, and the empty lagoon will likely be used as a clean fill dirt site. There is also an opportunity for the City to scrap steel from the site of the Existing Plant, or it may be left for a potential buyer. City management's goal, however, is to find a commercial buyer for the site that will take advantage of the historical provenance of the Existing Plant building, preserving the structure while providing jobs for the community.
Staffing at the New Plant is also expected to resemble staffing at the Existing Plant. Existing Plant
staffing includes four Operators, one Mechanic/Relief Operator and a Chief Operator. The New Plant is expected to staff four Operators, one Mechanic, one Relief Operator, one Assistant Superintendent, and one Superintendent. The classification of the New Plant has been assigned by the Ohio Environmental Protection Agency as a class IV, thus requiring the Superintendent to occupy the plant for 40 hours per week. Utility Rates and Charges
The City has exclusive jurisdiction over rates, operations, and services of the Utility within the City's service boundaries. It establishes rates and charges to fund working capital requirements, operation and maintenance expenditures, debt service, and to generate sufficient revenues to permit the issuance of bonds on terms favorable to the City. Rates are approved by City Council and no other federal, State, County, or regulatory agency has jurisdiction over the rates charged. No future rate increases are anticipated in the upcoming years. The City's water rates/charges are summarized below.
Rates for the Utility
City of Marysville, Ohio Effective January 1 of each year 2017 2018 2019 2020 First 200 cubic feet per month $11.50 $11.50 $11.50 $11.50 Next 1,300 cubic feet per month 6.75 6.75 6.75 6.75 Next 48,500 cubic feet per month 3.60 3.60 3.60 3.60 Over 50,000 cubic feet per month 2.90 2.90 2.90 2.90 Minimum monthly charge 23.00 23.00 23.00 23.00
Note: Rates residential, commercial, and industrial rates per 100 cubic feet or fraction thereof. Source: City of Marysville
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Capacity fees for new water service are based upon the size of the tap, and are assessed to each new connection to the Utility at the time a building permit is issued. The City charges the following capacity fees for new water service:
Capacity Fees for the Utility City of Marysville, Ohio
January 1 Fund Balance 12,028,096 14,727,008 18,301,432 22,076,380 11,603,901 7,065,263 $6,360,629 5,878,880
December 31 Fund Balance $14,727,008 $18,301,432 $22,076,380 $11,603,901 $7,065,263 $6,360,629 $5,878,880 $8,057,721Fund Balance as % of Revenues 166% 187% 212% 130% 77% 67% 60% 80%
Source: City of Marysville
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ECONOMY AND EMPLOYMENT Economic Development
The City and the parts of the County near the City have experienced enormous economic growth and development in the past 30 years. This development has helped the assessed valuation of the City grow 500% since the early 1990's as the City has been transformed from a predominantly agricultural area to a young and robust municipality. Much of this economic development has been in the area of manufacturing and relates to the Honda of America ("Honda") automobile assembly facility. The Honda facility was built in the late 1970's outside the City, but within the County, and serves as a major employer for the City's residents. In fact, Honda represents the largest amount of international investment in Ohio when ranked by the number of employees. Another large manufacturer, the Scotts Miracle-Gro Company ("Scotts"), maintains its world and North American headquarters as well as its main manufacturing facility in the City. Scotts is a global leader in consumer lawn, garden and pest control products. With the Honda plant and Scotts serving as the backbone for the area's employment base, the manufacturing industry is the largest employment sector within the County. The Ohio Development Services Agency recently estimated that 7,744 of the County's 29,384 private-sector jobs (26 percent) were in manufacturing. The City's commercial and industrial base continues to expand, particularly along U.S. Route 33 which has recently been named the Ohio 33 Smart Mobility Corridor ("Smart Corridor"). The Smart Corridor is a 35-mile highway stretch connecting East Liberty, Ohio and the City with the Columbus region and is home to one of the largest concentrations of manufacturers, research and development firms, and logistics companies in Ohio, including Honda and Scotts. The State and U.S. Department of Transportation have recently made funding commitments totaling $20.9 million to make the Smart Corridor into a proving ground for autonomous and connected vehicles. Installation of the fiber optic cable and redundant fiber loop along the Smart Corridor was completed in 2019. The new 33 Innovation Park, located along the Smart Corridor and within the City, offers numerous attractive options for companies seeking to establish or relocate. Two planned buildings at the 200-acre commercial park will offer a combined 168,000 square feet of premier space for advanced manufacturing, research and development, smart mobility, data analytics, and logistics firms. 33 Innovation Park will also be home to the new 20,000 square foot Automotive and Mobility Innovation Center. Three of the newest commercial developments have transformed the eastern side of the City into a bustling hive of active businesses. Coleman's Crossing, City Gate, and Bethel Woods offer several hundred acres of highly developable property that has attracted many big box retailers, including a Home Depot, Super Wal-Mart, Lowe's, Meijer and a Kroger Marketplace. Restaurants, banks, drug stores and a variety of service-based businesses make these developments, which are conveniently located along U.S. Route 33, a shopping destination for the whole County. Two large mixed-use projects are also underway in the City that will provide more single family and multi-family housing options to the growing area, in addition to significant commercial opportunities. In 2018, development began on Woodside, a 107-acre mixed-use project located less than one mile east of the City's downtown along Industrial Parkway. Woodside is the largest mixed-use development in City history and will include more than 850 residences, offices, shops and restaurants when completed. Development also recently started on Cook's Pointe, a 170-acre Planned Unit Development located two miles north of the downtown along U.S. Route 33. Cook's Pointe is projected to have approximately one million square feet of office and retail business space and 360 apartments and condominiums. Construction of Cook's Pointe Boulevard, a new half-mile, five lane roadway, was completed in late 2018.
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The sharp increase in population over the past two decades have been the catalyst for several other large residential developments, including Mill Valley and Scott Farms to the north of U.S. Route 33 as well as the Green Pastures subdivision in the western portion of the City. Construction also recently began recently on four new hotels in various locations within the City. Combined, these four hotels will add nearly 350 new hotel rooms to the community. Commercial and office land uses are also concentrated in the central business district, which has benefited from a successful downtown revitalization program. Nearly $1,300,000 of public and private investments was used to beautify businesses and improve infrastructure in the downtown area. Many strip retail and auto-oriented commercial land uses are thriving along West Fifth Street to the west of downtown, Delaware Avenue west of U.S. Route 33, and Main Street between Mill Creek and U.S. Route 33. In order to further the City's commercial and industrial development, the City has entered into several tax abatement agreements with businesses in the area. The City has entered into agreements with Scotts, the largest employer and second largest taxpayer in the City, as well as with ABI and Parker Hannifin. All of these agreements create jobs and promote economic development for the City. In addition to new commercial businesses, the City is actively targeting new industries, particularly around the Industrial Parkway and Smart Corridor. With room for additional development, the City has poised itself for significant commercial growth in the future. Manufacturing, alternative energy, research and development, and logistics and warehousing are just a few of the markets that would be a perfect fit for this growing community. The City's administration and leaders are committed to embracing the opportunities for growth, but are careful to maintain control so that growth is orderly and productive. According to the U.S. Bureau of the Census, the City's population in 2018 was 23,509. Building Permit Values
The City's growth in the past decade is reflected, in part, in the degree of building activity in the City. The following table relating to the issuance of building permits (residential, commercial, and industrial) by the City since 2014 is set forth for informational purposes only.
Annual Permits and Total Construction Value City of Marysville, Ohio
Unemployment and labor force statistics specific to the City are not available. The County, MSA, State and United States information presented in this section is included for informational purposes only. It should not be implied from the inclusion of such data in this Official Statement that the City is representative of the County, MSA, State, or United States, or vice versa. The following statistics are not seasonally adjusted.
Source: Ohio Department of Job and Family Services, Bureau of Labor Market Information * As of December 2019
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Largest Employers
The following table lists the 50 largest employers in the MSA as of October 2019. It should not be implied from the inclusion of such data in this Official Statement that the City is representative of the MSA, or vice versa.
Largest Employers Columbus MSA
Rank Firm Number of Employees Industry
1 The Ohio State University 33,335 Education2 OhioHealth 23,836 Healthcare3 State of Ohio 21,342 State government 4 JPMorgan Chase & Co. 18,400 Banking & financial services 5 Nationwide Mutual Insurance Company 12,500 Insurance & financial services6 Nationwide Children's Hospital 10,875 Pediatric healthcare 7 Kroger Co. 10,563 Retail grocery 8 City of Columbus 8,963 Government 9 Mount Carmel Health System 8,776 Healthcare
10 L Brands Inc. 8,616 Specialty retailer 11 Honda North America, Inc. 7,700 Auto manufacturing 12 Franklin County 6,150 Government 13 Cardinal Health Inc. 5,075 Healthcare products & services14 Huntington Bancshares Inc. 4,921 Banking & financial services 15 Amazon.com, Inc. 4,828 Online retailer/cloud computing16 Alliance Data Systems Corp. 4,396 Marketing/credit card transaction services17 American Electric Power Company Inc. 4,294 Electric power utility 18 Giant Eagle Inc. 3,386 Retail grocery 19 Abercrombie & Fitch Company 2,700 Retail clothing 20 South-Western City School District 2,688 Education21 Wendy's Co. 2,338 Restaurant22 Discover Financial Services LLC 2,283 Financial services 23 XPO Logistics, Inc. 2,246 Transportation and logistics services24 YMCA of Central Ohio 2,243 Youth development/social outreach 25 DHL Supply Chain 2,192 Contract logistics provider 26 Fairfield Medical Center 2,081 Healthcare27 Safelite Group Inc. 2,064 Automotive glass repair 28 Abbott Laboratories/Abbott Nutrition 2,055 Nutrition research and products29 Big Lots Inc. 2,008 Discount retail 30 Donatos Pizzeria LLC 1,982 Restaurant31 Licking Memorial Health Systems 1,975 Healthcare32 TS Tech Americas Inc. 1,821 Automotive seat manufacturing33 Charter Communications, Inc. 1,779 Telecommunications provider34 Westerville City School District 1,739 Education35 Worthington Industries Inc. 1,735 Steel manufacturing 36 Central Ohio Primary Care Physicians Inc. 1,730 Healthcare36 Teleperformance USA 1,730 Call center, customer service, tech support38 Aetna Inc. 1,719 Healthcare insurance 39 Stanley Electric U.S. Co. Inc. 1,680 Automotive equipment manufacturer40 United Parcel Service 1,669 Package delivery & logistics 41 Cameron Mitchell Restaurants LLC 1,658 Restaurants and catering 42 Battelle Memorial Institute 1,636 Technology & research development43 Ascena Retail Group, Inc. 1,635 Retail clothing 44 Roosters Inc. 1,578 Restaurant45 Gap Inc. 1,508 Retail clothing 46 PNC Financial Services Group Inc. 1,500 Banking & financial services 46 UnitedHealth Group 1,500 Healthcare insurance 48 Columbia Gas of Ohio Inc. 1,402 Natural gas utility 49 CAS, a division of the American Chemical Society 1,400 Scientific research information50 Pickerington Local School District 1,384 Education
Source: Columbus Business First. Data as of October 2019
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Largest Employers City of Marysville, Ohio
Source: City of Marysville Notes: (1) Honda of America, while not located within the territory of the City, employs approximately 7,700, including more residents of the
City than any other employer. (2) Information as of November 18, 2019.
CITY TAX BASE
THE FOLLOWING SUMMARY INFORMATION REGARDING THE CITY IS PRESENTED FOR GENERAL INFORMATION PURPOSES, AND IT IS NOT THE BASIS ON WHICH THE SERIES 2020 BONDS ARE BEING OFFERED TO INVESTORS. THE SERIES 2020 BONDS ARE SPECIAL LIMITED OBLIGATIONS OF THE CITY, SECURED BY THE INDENTURE HEREIN, AND WILL BE PAYABLE SOLELY FROM THE NET REVENUES AND AMOUNTS IN THE SPECIAL FUNDS DESCRIBED HEREIN. NEITHER THE GENERAL CREDIT OF THE CITY, NOR THAT OF THE STATE OF OHIO OR OF ANY POLITICAL SUBDIVISION THEREOF, IS PLEDGED TO THE PAYMENT OF THE PRINCIPAL OF OR PREMIUM, IF ANY, OR INTEREST ON THE SERIES 2020 BONDS AND THE OWNERS AND HOLDERS OF THE SERIES 2020 BONDS DO NOT HAVE THE RIGHT TO HAVE ANY EXCISES OR TAXES LEVIED BY THE GENERAL ASSEMBLY OF THE STATE OF OHIO OR THE TAXING AUTHORITY OF ANY POLITICAL SUBDIVISION THEREOF, INCLUDING THE CITY, FOR THE PAYMENT OF THE PRINCIPAL OF OR PREMIUM, IF ANY, OR INTEREST ON THE SERIES 2020 BONDS.
Ad Valorem Taxes and Assessed Valuation
Overview
For property taxation purposes, assessment of real property is performed on a calendar year basis by the elected County Auditor subject to supervision by the Tax Commissioner, and assessment of public utility tangible personal property is performed by the Tax Commissioner. Property taxes are billed and collected by the County Treasurer.
Taxes collected from real property in one calendar year are levied in the preceding calendar year on assessed values as of January 1 of that preceding year. Public utility tangible personal property taxes collected in one calendar year are levied in the preceding calendar year on assessed values determined as of December 31 of that second year preceding the tax collection year. Beginning with the 2009 tax year, general business tangible personal property is no longer subject to tax.
Firm Number of Employees Type of Business
Scotts Miracle-Gro Company 1,403 Lawn Care ProductsMemorial Hospital of Union County 808 Healthcare Marysville Exempted Village School District 704 Education Ohio Reformatory for Women 698 Government Union County 571 Government Wal-Mart 471 Retail Veyance Technologies Inc. 387 Manufacturing City of Marysville 337 Government Nestlé R&D Center Inc. 333 Research & DevelopmentScioto Corporation 279 Custodial/Janitor Supplies
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Real Property
The "assessed valuation" of real property is fixed at 35% of true value and is determined pursuant to rules of the Tax Commissioner, except that real property devoted exclusively to agricultural use is assessed at not more than 35% of its current agricultural use value. Beginning in 2009, certain elderly or disabled resident homeowners receive a flat $25,000 property tax exemption on the market value of their homestead.
Ohio law requires the County Auditor, subject to supervision by the Tax Commissioner, to adjust the true value of taxable real property every six years to reflect current fair market values. This "sexennial reappraisal" is done by individual appraisal of properties. In the third year following a sexennial reappraisal, the County Auditor, again subject to supervision by the Tax Commissioner, performs a "triennial update" to adjust the value of taxable real property to reflect true values. The triennial update is done without individual appraisal of properties, but with reference to a sales-assessment ratio over the three-year period.
Personal Property
In 2005, the State accelerated its phase-out of the tangible personal property tax. Beginning with the 2009 tax year, general business tangible personal property is no longer subject to tax.
Public utility tangible personal property – including tangible personal property of electric utilities not used for transmission and distribution and all tangible personal property of gas utilities – was not included in the phase-out created by the State. All public utility tangible personal property is assessed at varying percentages of its true value depending on the type of property and the type of utility.
The State currently reimburses school districts for tax losses resulting from the phase-out of the tangible personal property tax. However, recent legislation will reduce and eliminate the amount of such payments. (See "CITY TAX BASE – Property Tax Rate Calculations.")
State Reimbursement of Property Tax Revenues
Rollback and Homestead Exemption Reimbursement
The State reimburses taxing districts, including municipalities, for decreased tax revenues due to (a) the 10% reduction or "rollback" in certain non-commercial property taxes, (b) the 2.5% reduction applicable to certain owner-occupied housing, and (c) the flat, $25,000 reduction in taxable value applicable to certain elderly or disabled homeowners. Such reimbursements are subject to repeal or revision by the State.
Public Utility Property and Tangible Personal Property Tax Loss Reimbursement In tax year 2001, changes took effect which reduced the assessment percentages applicable to electric generation and natural gas tangible personal property, thereby reducing the amount of tangible public utility property tax revenue collected by taxing districts. In order to replace the taxes no longer received due to the lower assessment percentages, State consumption taxes on electricity and natural gas were enacted in 1999 and 2000, respectively. Beginning in 2006, the State began to phase out the tax on tangible personal property used in business. The State also reimburses certain taxing districts for the loss of tax revenues due to the phase-out of the tax on general business tangible personal property, and on the tangible personal property belonging to telephone, telegraph, and interexchange companies. In order to replace a portion of the lost revenue, a
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commercial activity tax was enacted in 2005 and is imposed on gross receipts, including receipts from services, in the State.
The reimbursement of both types of tangible personal property tax revenues losses, although originally scheduled to end by calendar year 2018, had been frozen. Recent legislation generally combines the two types of tangible personal property tax revenue loss payments, reinstitutes the phase-out and reduces the payments depending on the type of levy.
For additional information prepared by the Ohio Department of Taxation illustrating the amount of reimbursements for future years, go to http://www.tax.ohio.gov/personal_property/phaseout.aspx.
Assessed Valuation
The following table classifies the City's taxable property according to use:
Assessed Valuation City of Marysville, Ohio (2020 Collection Year)
Property Classification
Amount Percent of
Total Assessed Valuation
Real Estate1 Residential/Agricultural $348,887,270 72.74%Commercial/Industrial/Mineral 117,204,380 24.44 Public Utility Real 0 0.00
Total Real Estate $466,091,650 97.17%
Personal Property2 Public Utility Personal $13,555,390 2.83%
Total Personal $13,555,390 2.83%
Total Assessed Valuation $479,647,040 100.00%
Source: Union County Auditor 1 Real property taxes collected in a calendar year are levied in the preceding calendar year on assessed values as of January 1 of that preceding year. Real property is assessed at 35% of market value and reappraised every six years, with triennial updates every three years. 2 Tangible personal property taxes collected in a calendar year are levied in the same calendar year, on assessed values during and at the close of the most recent fiscal year of the taxpayer (ending on or before March 30 of said calendar year) at tax rates determined in the preceding year.
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Historic Growth in the City's Assessed Valuation City of Marysville, Ohio
Tax Year Assessed Valuation Percent Increase Over Prior Year
Source: Union County Auditor 1 Year of triennial update 2 Year of sexennial appraisal
Largest Taxpayers in the City
The following tables list the largest real estate and public utility taxpayers in the City. Percentage of total assessed valuation is based on a total assessed valuation of $479,647,040 for collection year 2020.
Largest Taxpayers City of Marysville, Ohio (2020 Collection Year)
Real Estate Taxpayers
Name Type of Business Assessed Valuation
Percent of City's Total Assessed
Valuation Scotts Miracle-Gro Company Lawn Care Products $9,148,130 1.91%Nestlé USA Research 4,137,900 0.86Watkins Glen Holdings Ltd. Developer 2,966,480 0.62The Kroger Company Grocer 2,591,320 0.54SM-Links LLC Real Estate 2,400,620 0.50Marcus Pohlmann Properties LLC Real Estate 2,301,150 0.48Lakeside at Marysville LLC Real Estate 2,209,620 0.46Ohio Department of Development Government 2,441,150 0.51UMH OH Marysville Estates LLC Real Estate 2,015,920 0.42Nissan International Transport Developer 1,954,040 0.41Source: Union County Auditor
Public Utility Taxpayers
Name Type of Business Assessed Valuation
Percent of City's Total Assessed
Valuation Dayton Power & Light Company Electric Utility $9,103,800 1.90%Union Rural Electric Electric/Gas Utility 2,436,250 0.51Columbia Gas of Ohio Gas Utility 1,793,320 0.37Source: Union County Auditor
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Property Tax Rate Calculations
State law has a "reduction factor" mechanism that is intended to negate increases in taxes resulting from increases in the true value of real property due solely to inflation. Legislation implementing a 1980 constitutional amendment classifies real property as either (1) residential and agricultural or (2) all other real property, and provides for tax reduction factors to be separately computed for and applied to each class.
Statutory procedures limit the amount realized by each taxing subdivision from real property taxation, by the application of a tax reduction factor, to the amount realized from those taxes in the preceding year plus: (i) the proceeds of any new taxes (other than renewals) approved by the electors, calculated to produce an amount equal to the amount that would have been realized if those taxes had been levied in the preceding year, and (ii) amounts realized from new and existing taxes on the assessed valuation of real property added to the tax duplicate since the preceding year. Such limitations are expressly inapplicable to amounts realized from taxes levied at a rate required to produce a specified amount, such as for debt service charges, and from taxes levied inside the ten-mill limitation or any applicable municipal charter tax rate limitation.
A reduction factor is computed for each separate levy that is subject to the limitation. A resulting "effective tax rate" reflects the aggregate of those reductions and is the rate at which real property taxes are, in fact, collected. Real property tax amounts from property devoted to residential and agricultural purposes are, in certain cases, further reduced by an additional 10% (12.5% in the case of certain owner-occupied residential property) or a flat, $25,000 reduction in taxable value applicable to certain elderly or disabled resident homeowners, when billed to the taxpayer. These reductions are reimbursed to the taxing subdivisions by the State. A phase out of these reductions began in 2013. The 10% reduction for residential and agricultural properties and 2.5% additional reduction for owner-occupied residential property do not apply to new levies and replacement levies approved by voters after the August 6, 2013 election. Additionally, starting in the 2014 tax year, the $25,000 reduction in taxable value for certain elderly homeowners and homeowners with disabilities is being grandfathered out, with new reductions limited to property owners with total income less than or equal to $30,000. This figure is adjusted for inflation annually by the Tax Commissioner. (See "CITY TAX BASE – State Reimbursement of Property Tax Revenues" for a discussion of reimbursement by the State for these reductions.)
Property Tax Revenues
The following table shows historical property tax levies and collections for the City since tax year 2014.
Historical Property Tax Collections City of Marysville, Ohio
Tax Year Taxes Levied Taxes Collected* Collection Rate
Source: Union County Auditor * Includes rollbacks reimbursed by the State and delinquent taxes, but does not include payments in lieu of taxes associated with TIF districts.
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Budgeting, Tax Levy and Appropriations Procedure
The Revised Code contains detailed provisions regarding City budgeting, tax levy and appropriation procedures. These procedures involve review by County officials at several steps.
The law requires generally that a subdivision prepare, and then adopt after a public hearing, a tax budget approximately six months before the start of the next fiscal year. The tax budget then is presented for review by the county budget commission, which is comprised of the county auditor, treasurer and prosecuting attorney. However, a county budget commission may waive the requirement for a tax budget and require an alternative form of more limited information required by the commission to perform its duties.
City budgeting for a fiscal year (which is the calendar year) formally begins with the preparation of a tax budget by the Union County Budget Commission, which is comprised of the County Auditor, County Treasurer and County Prosecuting Attorney (the "Budget Commission"). Among other items, the tax budget must show the amounts required for debt service, the estimated receipts for payment from sources other than ad valorem property taxes and the net amount for which an ad valorem property tax levy must be made. The tax budget then is presented for review by the Budget Commission. The Budget Commission holds a public hearing, reviews the budget, and issues a Certificate of Estimated Resources by September 1, which certificate is the basis for City appropriations and expenditures for the coming fiscal year.
Upon approval of the tax budget and issuance of the Certificate of Estimated Resources, the Budget Commission certifies its actions to the Council together with the approved tax rates. Thereafter, the Council levies the approved taxes and certifies them to the proper County officials. The approved and certified tax rates are reflected in the tax bills sent to property owners during the collection year. Real property taxes are payable on a calendar year basis, generally in two installments with the first due usually in February and the second due in July or later.
Appropriation measures may be amended or supplemented during the fiscal year. Annual appropriations may not exceed the Budget Commission's official estimates of resources. The County Auditor must certify that the Council's appropriation measures, including any supplements or amendments, do not appropriate moneys in excess of the amount set forth in the latest of those official estimates. Investment of Funds
According to the Director of Finance, all moneys of the City, including specifically moneys in the general fund, the bond retirement fund, and all project funds containing proceeds of any debt issuances of the City, are presently or will be invested in accordance with the requirements of Ohio law, and in particular Chapter 135 of the Revised Code (the "Uniform Depository Act"). Under Section 135.14, Revised Code, the City may invest its funds provided that such investments must mature or be redeemable within five years from the date of purchase. The classifications of obligations which are eligible for such investment by the City range from investment in the State Treasury Asset Reserve of Ohio investment pool ("STAR Ohio") to investment in United States Treasury bills, certificates of deposit and investment grade bonds, notes, or other obligations issued by any federal government agency. Certain investment practices remain exclusive to those political subdivisions whose fiscal officers have completed additional training in accordance with the Uniform Depository Act.
Further, pursuant to Revised Code Section 135.14, all investments of the City, except for investments in securities in STAR Ohio and certain no-load money market mutual funds, must be made
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through members of the National Association of Securities Dealers, Inc., banks, savings banks, or savings and loan associations regulated by the State superintendent of financial institutions or through institutions regulated by the comptroller of the currency, Federal Deposit Insurance Corporation, or board of governors of the Federal Reserve System.
The City interprets the limits on federally guaranteed investments and all other legal investments very conservatively. No moneys of the City have ever been invested in interest-only obligations, reverse-repurchase obligations, inverse floater obligations, or other investment vehicles commonly referred to as derivative investments. No moneys of the City are invested in obligations which mature later than the time at which it is reasonably expected that the City will need access to such moneys in order to meet current financial commitments. The Director of Finance has attended special training in all of the investment areas to assure strict compliance with the conservative investment philosophy of the City. All investments are transacted with banks or other financial institutions operating in the State. Complete detail of the current investment practices of the City can be found in the most recent audited financial statements of the City (see APPENDIX C herein).
Income Tax Revenues
The Revised Code authorizes municipal corporations to levy a tax on income at a uniform rate. No municipal corporation is authorized to levy a municipal income tax in excess of one percent (1%) per annum without obtaining the approval of at least a majority of its electors voting on the question at an election held in accordance with applicable Ohio law.
The City's income tax is imposed on wages, salaries, commissions, and other compensation of individuals and on net profits of businesses and professions received within the City. Military pay or allowances, income of religious, charitable, or educational institutions (to the extent derived from tax-exempt property or activities), net profits of public utilities (except for long-distance telephone companies), and interest and dividends are exempt from municipal income tax. The City's income tax rate is 1.5%. The income tax rate increased from 1.0% to the current rate effective July 1, 2010. The City does not allow an income tax credit based on income taxes paid to another municipality by residents who work outside of the City. Revenues derived from the income tax since 2011 are as follows:
Historical Income Tax Revenues City of Marysville, Ohio
Source: City of Marysville * Cash basis (unaudited)
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CITY DEBT AND DEBT LIMITATIONS THE SERIES 2020 BONDS ARE SPECIAL LIMITED OBLIGATIONS OF THE CITY, SECURED BY THE INDENTURE, AND WILL BE PAYABLE SOLELY FROM THE NET REVENUES AND AMOUNTS IN THE SPECIAL FUNDS DESCRIBED HEREIN. NEITHER THE GENERAL CREDIT OF THE CITY, NOR THAT OF THE STATE OF OHIO OR OF ANY POLITICAL SUBDIVISION THEREOF, IS PLEDGED TO THE PAYMENT OF THE PRINCIPAL OF OR PREMIUM, IF ANY, OR INTEREST ON THE SERIES 2020 BONDS AND THE OWNERS AND HOLDERS OF THE SERIES 2020 BONDS DO NOT HAVE THE RIGHT TO HAVE ANY EXCISES OR TAXES LEVIED BY THE GENERAL ASSEMBLY OF THE STATE OF OHIO OR THE TAXING AUTHORITY OF ANY POLITICAL SUBDIVISION THEREOF, INCLUDING THE CITY, FOR THE PAYMENT OF THE PRINCIPAL OF OR PREMIUM, IF ANY, OR INTEREST ON THE SERIES 2020 BONDS. Statutory Debt Limitations Generally
The City may issue voted general obligation bonds, and notes issued in anticipation thereof, pursuant to a vote of the electors of the City. Ad valorem taxes, without limitation as to amount or rate, assessed to pay debt service on voted bonds are authorized by the electors at the same time they authorize issuance of the bonds. Such voted debt is subject to the direct debt limitations but is not subject to the indirect debt limitation. (See "Direct Debt Limitations" below.) Voted obligations may also be issued by certain overlapping subdivisions.
General obligation bonds, and notes issued in anticipation thereof, may also be issued by the City (and certain overlapping political subdivisions, such as the Marysville Exempted Village School District and the County) without a vote of the electors. Unvoted debt is subject to both the direct and indirect debt limitations. (See "Direct Debt Limitations" and "Indirect Debt Limitation")
Following are descriptions of the statutory and constitutional debt and ad valorem property tax limitations applying to the City's presently outstanding and projected bond and note indebtedness, and certain other long term financial obligations of the City.
Direct Debt Limitations
Revised Code Section 133.05 provides that, exclusive of certain "exempt debt" (discussed below), the net principal amount of unvoted general obligation debt of the City may not exceed five and one-half percent (5.5%) of the total value of all property in the City as listed and assessed for taxation. Revised Code Section 133.05 also provides that the net principal amount of both voted and unvoted general obligation debt of the City may not exceed ten and one-half percent (10.5%) of the total value of all property in the City as listed and assessed for taxation. These two limitations, referred to as "the direct debt limitations," may be amended from time to time by the Ohio General Assembly.
Ohio law provides that certain forms of municipal debt are exempt from the direct debt limitations ("exempt debt"). Exempt debt includes, among others, general obligation debt, to the extent that such debt is "self-supporting" (that is, revenues from the facilities financed are sufficient to pay applicable operating and maintenance expenses and related debt service and other requirements); bonds issued in anticipation of the collection of special assessments; revenue bonds, such as the Series 2020 Bonds; notes issued in anticipation of the collection of current revenues or in anticipation of the proceeds of a specific tax levy; notes issued for certain emergency purposes; and bonds issued to pay final judgments. Notes issued in anticipation of such bonds are also exempt from the direct debt limitations.
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In calculating debt subject to the direct debt limitations, the amount of money in a City's bond retirement fund allocable to the principal amount of non-exempt debt is deducted from gross non-exempt debt.
Without consideration of money in the City's bond retirement fund, and based on the currently
applicable assessed valuation of $479,647,040:
(a) The total voted and unvoted non-exempt debt that the City could issue subject to the 10-1/2% limitation described above is $50,362,939.20. The total City non-exempt debt which will be outstanding after delivery of the Series 2020 Bonds is $0.00, leaving the full borrowing capacity of $50,362,939.20 within the limitation for combined voted and unvoted non-exempt debt; and
(b) The total unvoted non-exempt debt that the City could issue subject to the 5-1/2%
limitation is $26,380,587.20. The total City non-exempt debt subject to such limitation which will be outstanding after issuance of the Series 2020 Bonds is $0.00, leaving the full borrowing capacity of $26,380,587.20 within the 5-1/2% limitation for unvoted non-exempt debt.
Indirect Debt Limitation
Unvoted general obligation bonds and bond anticipation notes cannot be issued by the City unless the tax required to be imposed on taxable property in the City for the payment of the debt service on (a) such bonds (or the bonds in anticipation of which notes are issued), and (b) all outstanding unvoted general obligation bonds (including bonds in anticipation of which notes are issued) of the combination of overlapping taxing subdivisions in the City resulting in the highest tax rate required for such debt service, in any one year, is ten mills or less per $1.00 of assessed valuation. This indirect debt limitation, the product of which is commonly referred to as the "ten-mill limitation," is imposed by a combination of the provisions of Article XII, Sections 2 and 11 of the Ohio Constitution and Revised Code Section 5705.02.
The ten-mill limitation is the maximum aggregate millage for all purposes that may be levied on any single piece of property by all overlapping taxing subdivisions without a vote of the electors. The ten mills which may be levied without a vote of the electors is in fact levied, collected and allocated among the City and its overlapping taxing subdivisions for general fund purposes pursuant to a statutory formula.
This "inside" millage allocated to each overlapping taxing subdivision is required by present Ohio law to be used first for the payment of debt service on unvoted general obligation debt of the subdivision, unless provision has been made for its payment from other sources. The balance of the millage is available for other purposes of the subdivision. Thus, to the extent this inside millage is required for debt service of a taxing subdivision (which may exceed the formula allocation to that subdivision), the amount that would otherwise be available to that subdivision or to other such overlapping subdivisions for general fund purposes is reduced.
A political subdivision's allocation of inside millage can be exceeded only in the event it is required for the payment of debt service on its unvoted general obligation debt and, in that case, the inside millage allocated to the other overlapping subdivisions would be reduced proportionally to bring the aggregate levies of inside millage down to ten mills.
In case of notes issued in anticipation of the issuance of unvoted general obligation bonds, the highest annual debt service estimated for the bonds anticipated by the notes is used to calculate the millage required.
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Revenue bonds, such as the Series 2020 Bonds, and notes in anticipation of revenue bonds, are not included in debt subject to the ten-mill limitation since they are not general obligations of the City, and neither the general revenue nor the full faith and credit of the City are pledged for their payment.
The ten-mill limitation applies to all unvoted general obligation debt even if debt service on some of such debt is expected to be paid in fact from special assessments, utility earnings or other sources.
In calculating whether or not unvoted debt to be issued by the City is within the ten-mill limitation, it is necessary to determine the total outstanding debt service requirements within the ten-mill limitation of all the taxing subdivisions overlapping the City.
THE SERIES 2020 BONDS ARE NOT GENERAL OBLIGATION DEBT AND ARE PAYABLE SOLELY FROM THE NET REVENUES AND AMOUNTS IN THE SPECIAL FUNDS DESCRIBED HEREIN. THE SERIES 2020 BONDS, THEREFORE, ARE NOT SUBJECT TO THE STATUTORY DEBT LIMITATIONS.
Charter Millage Limitation
Pursuant to its Charter, the City has increased the amount of millage available to cover unvoted debt. The City has an additional five mills available as a result of such Charter millage. Pursuant to Revised Code Section 5705.18, the Charter millage limitation is in addition to the ten-mill limitation that would otherwise apply to the City.
The highest debt service requirement in any year for all City unvoted debt is estimated to be approximately $2,557,373.50* and is expected to be paid by sources other than ad valorem taxes, such as City income taxes and enterprise revenues.
Based upon the maximum debt service schedule required for the City's outstanding general obligation debt (but excluding therefrom debt service requirements for voted debt), the highest annual debt service requirement in any year for all City, debt subject to the ten-mill limitation, is estimated to be approximately $2,557,373.50*. The payment of that annual debt service would require a levy of approximately 5.3318* mills per $1.00 of assessed valuation based on current (collection year 2020) assessed valuation of $479,647,040. Within the ten-mill limitation, according to the Union County Auditor, 2.0021 mills have been allocated to unvoted debt of overlapping subdivisions in Union County. After taking into account the 5.3318* mills allocated to the City's unvoted debt, within the ten-mill limitation, and the 2.0021 mills allocated to overlapping subdivisions, an additional 1.2870* mills are available within the ten-mill limitation. Along with the City's five Charter mills, a total of 6.28703* mills are available to support additional unvoted debt of the City. Based upon the current assessed valuation of the City, this remaining millage capacity would permit the City to issue approximately $39,548,251.46* of additional 20-year bonds, assuming an interest rate of 5.50% (and subject to the 5.5% percent direct debt limit heretofore described).
Bond Anticipation Notes
Under Ohio law, notes, including renewal notes, issued in anticipation of the issuance of general obligation bonds may be issued and outstanding from time to time up to a maximum period of 20 years from the date of issuance of the original notes, except that the maximum maturity for notes issued in anticipation of general obligation bonds payable from special assessments is approximately five years. Any period in excess of five years must be deducted from the permitted maximum maturity of the bonds anticipated, and
* Estimated. Assumes the City's $2,435,000 Various Purpose Notes, Series 2019C, dated August 22, 2019 are amortized over 13 years at 5.0% and the City's $4,535,000 Various Purpose Notes, Series 2020A, dated March 26, 2020 are amortized over 17 years at 5.0%.
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portions of the principal amount of notes outstanding for more than five years must be retired in amounts at least equal to, and payable not later than, principal maturities that would have been required if bonds had been issued at the expiration of the initial five-year period. The last maturity of any bonds issued to refund general obligation bond anticipation notes may not be later than the year of last maturity permitted by law for the bonds anticipated.
$6,970,000 of the debt of the City is in the form of general obligation bond anticipation notes. This balance will be unaffected by the issuance of the Series 2020 Bonds. Such bond anticipation notes, however, are expected to be renewed in 2020 or 2021.
Bond anticipation notes may be retired at maturity from the proceeds of the sale of renewal notes, the proceeds of the sale of the bonds anticipated by such notes, from other available funds of the City, or from a combination of these sources.
The ability of the City to retire its outstanding bond anticipation notes from the proceeds of the sale of either renewal notes or bonds will be dependent upon the marketability of such renewal notes or bonds under market conditions then prevailing. Under present Ohio law, there is no ceiling on the annual interest rate permitted on general obligation notes and bonds of municipalities.
City General Obligation Debt Currently Outstanding
The City currently has the following issues of general obligation bonds and notes outstanding:
Outstanding General Obligation Debt City of Marysville, Ohio
Issue Dated Date Final
Maturity
Balance Outstanding on May 20, 2020
Bonds
Refunding Bonds, Series 2007 04/03/2007 12/01/2020 $ 760,000Various Purpose Bonds, Series 2011 10/26/2011 12/01/2031 9,960,000Park Construction and Improvement Bonds, Series 2014
10/30/2014 12/01/2024 670,000
Wastewater Treatment System Bonds, Series 2015
04/22/2015
12/01/2047
9,445,000
Total Bonds
$20,835,000
Bond Anticipation Notes Various Purpose Notes, Series 2019C 08/22/2019 08/20/2020 $2,435,000Various Purpose Notes, Series 2020A 03/26/2020 03/25/2021 4,535,000
Total Bond Anticipation Notes
$6,970,000
Total General Obligation Debt $27,805,000
Source: City of Marysville
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Leases and Other Long Term Obligations
The City has the other following long-term obligations: A. Leases Aside from basic leases for copiers and a phone system, the City has one lease obligation for a street sweeper. The term of the sweeper lease is for five years and expires on February 1, 2023. The annual payment for the sweeper lease is $276,752.35, amortized at an interest rate of 3.82%. The City will own the sweeper at the conclusion of the lease, and currently has $55,350 of equity in the sweeper.
B. Utility Revenue Bonds After issuance of the Series 2020 Bonds, the City will have the following issues of sewer and water revenue bonds (collectively, the "Utility Revenue Debt") outstanding:
Outstanding Utility Revenue Debt City of Marysville, Ohio
Issue
Dated Date
Final Maturity
Balance Outstanding May 20, 2020
Wastewater Treatment System Revenue Refunding Bonds, Series 2015
04/22/2015 12/01/2047 $41,380,000
Wastewater Treatment System Revenue Refunding Bonds, Series 2016
04/06/2016 12/01/2047 66,160,000
Water System Mortgage Revenue Refunding Bonds, Series 2016
06/15/2016 12/01/2038 16,530,000
Wastewater System Revenue Bonds, Series 2016B
09/15/2016 12/01/2035 8,060,000
The Series 2020 Bonds 05/20/2020 12/01/2049 40,465,000
Total $172,595,000
Source: City of Marysville
The City's Utility Revenue Debt is not general obligation debt and is payable only from revenues of sewer and water enterprises. The respective bond indentures for the various issues comprising the City's Utility Revenue Debt have certain restrictive covenants which principally require that bond reserve funds be maintained and charges for services to customers be in sufficient amounts, as defined, to satisfy the obligations under each respective indenture. In addition, special provisions exist regarding covenant violations, redemptions of principal and maintenance or properties in good condition.
[Balance of Page Intentionally Left Blank]
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Debt Service Requirements for the Bonds
As noted herein, the Series 2020 Bonds are not general obligation debt and are payable only from the Net Revenues and amounts in the Special Funds described herein.
The following schedule presents the City's actual debt service requirements for the Bonds, with the Series 2020 Bonds presented separately:
Outstanding Debt Service Requirements for the Bonds City of Marysville, Ohio
Total $16,530,000.00 $6,542,400.00 $40,465,000.00 $30,517,064.44 $94,054,464.44
Source: City of Marysville
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C. Special Obligation Debt The City has the following issues of special obligation debt (the "Special Obligation Debt") outstanding:
Outstanding Special Obligation Debt City of Marysville, Ohio
Issue
Dated Date
Final Maturity
Balance Outstanding May 20, 2020
Special Obligation Revenue Bonds, Series 2014
08/27/2014 12/01/2034 $8,660,000
Special Obligation TIF Revenue Bonds, Series 2018 (Cook's Pointe)
03/07/2018 12/01/2049 4,870,000
Total $13,530,000
Source: City of Marysville
The Special Obligation Revenue Bonds, Series 2014 (the "2014 Special Obligation Revenue
Bonds") are not general obligation debt and secured under a Trust Agreement, dated as of August 27, 2014, between the City and The Bank of New York Mellon Trust Company, N.A., as trustee. The 2014 Special Obligation Revenue Bonds are payable from the non-tax revenues of the City.
The Special Obligation TIF Revenue Bonds, Series 2018 (the "2018 Special Obligation TIF
Revenue Bonds") are not general obligation debt and secured under an Amended and Restated Service Payment Agreement, dated as of January 31, 2018, between the City and Three D Properties, LLC. The 2018 Special Obligation TIF Revenue Bonds are payable from payments in lieu of taxes made in connection with a development in the City known as Cook's Pointe.
Future Financings
The City anticipates additional capital spending over the next several years as follows: in 2021 issuing debt in the amount of $1,203,917 to support roadway improvements to State Route 38, 11th Street, Cottage Street and the Uptown alley; in 2022 issuing debt in the amount of $578,601 to support road paving, as well as additional improvements to Cottage Street and the Uptown alley; in 2023 issuing debt in the amount of $1,474,702 for State Route 31 phase 3 improvements; and in 2024 issuing debt in the amount of $230,774 for the installation of a traffic signal at Coleman's Crossing and Industrial Parkway. City Insurance
The City maintains comprehensive insurance coverage with the Public Entities Proof of Claim for real property, building contents and vehicles in a maximum amount of $148,076,206 with deductible clauses ranging from $500 for vehicles to $5,000 for real and personal property. In addition, the City maintains liability coverage with limits of $3,000,000. Vehicle policies include liability coverage for bodily injury and property damage. Ohio law provides immunity for political subdivisions such as the City from liability in damages. The immunity covers injury, death, or loss to persons or property allegedly caused by an act or omission of such political subdivisions or their employees in connection with governmental and proprietary functions, as defined in State statutes. The statutes have no effect on any liability imposed by federal law or other federal cause of action. Pursuant to Ohio law, there are, however, five areas in which a political subdivision
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may be held liable for such loss. These include the negligent operation of a motor vehicle by employees engaged within the scope of their employment and authority; negligent performance of proprietary functions; negligent failure to keep public roads in repair, and other negligent failure to remove obstructions from public roads; negligence of employees due to physical defects within or upon the grounds of buildings used in the performance of governmental functions, excluding jails, juvenile detention workhouses and other detention facilities; and liability specifically imposed by statute. Ohio law also imposes a two-year statute of limitations and puts limits on the damages which may be recovered from such political subdivisions. No punitive or exemplary damages can be recovered, and any insurance benefits are deducted from any award against a political subdivision. Although there is no limitation with respect to compensatory damages representing a person's economic loss, there is a $250,000 per person ceiling on the compensatory damage that represents a person's non-economic loss in cases other than wrongful death, in which case there is no maximum limitation. Cyber-Security
The City, like many other large public and private entities, relies on a large and complex technology environment to conduct its operations and faces multiple cybersecurity threats, including, but not limited to, hacking, phishing, viruses, malware and other attacks on its computing and other digital networks and systems (collectively, "Systems Technology"). As a recipient and provider of personal, private, or sensitive information, the City may be the target of cybersecurity incidents that could result in adverse consequences to the City and its Systems Technology, requiring action to mitigate the consequences. Cybersecurity incidents could result from unintentional events or from deliberate attacks by unauthorized entities or individuals attempting to gain access to the City's Systems Technology for the purposes of misappropriating assets or information or causing operational disruption and damage.
To mitigate the risk of operations impact and/or damage from cybersecurity incidents or cyber-attacks, the City invests in multiple forms of cybersecurity and operational safeguards. While City cybersecurity and operational safeguards are periodically tested, no assurances can be given by the City that such measures will ensure against cybersecurity threats and attacks, and any breach could damage the City's Systems Technology and cause material disruption to the City's finances or operations. The costs of remedying any such damage or protecting against future attacks could be substantial. Furthermore, cybersecurity breaches could expose the City to material litigation and other legal risks, which could cause the City to incur material costs.
In the event of a Systems Technology breach, the City has invested in a cyber-security insurance
policy. The policy provides for a variety of coverages: cyber-crime, liability, breach response and business loss. Maximum coverage ranges from $250,000 to $5,000,000 with deductibles ranging from $5,000 to $10,000.
FINANCES OF THE CITY
THE SERIES 2020 BONDS ARE SPECIAL LIMITED OBLIGATIONS OF THE CITY, SECURED BY THE INDENTURE, AND WILL BE PAYABLE SOLELY FROM THE NET REVENUES AND AMOUNTS IN THE SPECIAL FUNDS DESCRIBED HEREIN. NEITHER THE GENERAL CREDIT OF THE CITY, NOR THAT OF THE STATE OF OHIO OR OF ANY POLITICAL SUBDIVISION THEREOF, IS PLEDGED TO THE PAYMENT OF THE PRINCIPAL OF OR PREMIUM, IF ANY, OR INTEREST ON THE SERIES 2020 BONDS AND THE OWNERS AND HOLDERS OF THE SERIES 2020 BONDS DO NOT HAVE THE RIGHT TO HAVE ANY EXCISES OR TAXES LEVIED BY THE GENERAL ASSEMBLY OF THE STATE OF OHIO OR THE TAXING AUTHORITY OF ANY POLITICAL SUBDIVISION THEREOF, INCLUDING
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THE CITY, FOR THE PAYMENT OF THE PRINCIPAL OF OR PREMIUM, IF ANY, OR INTEREST ON THE SERIES 2020 BONDS. Financial Reports and Audits
The City's fiscal year is the calendar year. The City maintains its accounts, appropriations and other fiscal records in accordance with the procedures established and prescribed by the State Auditor. The State Auditor is charged by Ohio law with the responsibility of auditing the financial statements of each taxing subdivision and most agencies and public institutions. The State Auditor is charged by law with the responsibility for auditing the financial statements of each taxing subdivision and most public agencies and institutions. A financial report for each fiscal year is required to be filed with the State Auditor pursuant to Revised Code Section 117.38. Such reports are required to be submitted to the State Auditor at the close of each fiscal year. At the time of filing of such report, the Director of Finance is required to publish a notice that the report is completed and available for review in the Director of Finance's office.
The most recent audit of the City's financial statements by the State Auditor was completed through the fiscal year ending December 31, 2018 and was reviewed by the City's administrative staff during the post-audit conference on June 21, 2019. The Audit revealed no findings for recovery. No bring-down procedures have been undertaken by the Auditor since the date of the financial statements. The financial statements presented fairly the overall financial condition of the City. The Audited Financial Statements for the fiscal year ended December 31, 2018 are attached hereto as APPENDIX C.
Except for audits by, or by certified public accountants at the direction of, the State Auditor pursuant to Ohio law and audits under federal program requirements, no independent audit of the City's financial records is made.
All Ohio municipalities and counties are required to prepare their annual financial reports on the basis of generally accepted accounting principles ("GAAP"). Governmental Accounting Standards Board ("GASB") pronouncements and Financial Accounting Standards Board pronouncements are the principal sources used to determine the accounting principles employed. These publications, among other things, provide for a modified accrual basis of accounting for governmental funds and for a full accrual basis of accounting for proprietary funds and for each major and aggregated non-major fiduciary funds. The publications also further provide for the preparation of balance sheets for each major and non-major fund, and statements of revenues and expenditures, and changes in fund balances (major and aggregated non-major governmental funds) or statements of revenues, expenses and changes in retained earnings/equity (major and aggregated non-major proprietary funds) and statement of cash flows. The principles further require preparation of a statement of net assets and a statement of activities for the entity's business type and government type activities on the full accrual basis of accounting, and management's discussion and analysis of major events and transactions during the year.
General Fund Revenue Sources
The General Fund is the main operating fund of the City. It is the fund from which most of the City's expenditures are paid and into which most of the City's revenues are deposited. The City derives most of its revenues from a tax on real and tangible personal property, a municipal income tax, the local government fund, estate taxes, and fees for services. The local government fund includes moneys derived from portions of state general revenue fund taxes that are earmarked for distribution to local governmental units and the rollback reimbursement (see "CITY TAX BASE – State Reimbursement of Property Tax Revenues –
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Rollback and Homestead Exemption Reimbursement" in this APPENDIX A). These programs are subject to repeal or modification by the General Assembly of the State.
Although the security for the City's general obligation debt is its pledge to pay such debt from ad
valorem taxes to be levied on all taxable property within the City, debt service for the City is in practice paid from four sources: voted property tax revenues, income tax revenues, local government fund, and enterprise surcharge revenues.
The following table sets forth the historical revenues of the major revenue sources of the City's General Fund.
General Fund – Major Tax Revenue Sources City of Marysville (Non-GAAP basis)
Certain material provisions of the Indenture are discussed below. The discussion does not purport to be complete and is subject in all respects to the provisions of, and is qualified in its entirety by reference to, the Indenture, and is subject to certain provisions of the Bond Insurer (as defined below). Copies of the Indenture are available from the Original Purchaser and, after delivery of the Series 2020 Bonds, for inspection at the principal corporate trust office of the Trustee. Capitalized terms not otherwise defined herein shall have the meaning assigned to them in the Original Indenture. Terms neither defined herein nor in the Original Indenture shall have the meaning assigned to them in accordance with industry standards. Definitions "Additional Bonds" means any notes, bonds or other obligations of the Issuer that may be issued on parity with the Series 2016 Bonds and the Series 2020 Bonds pursuant to the Indenture. "Authenticating Agent" means, with respect to the Series 2016 Bonds and the Series 2020 Bonds the Trustee, and, with respect to any Series of Additional Bonds, the authenticating agent identified in the Bond Legislation for such Series of Additional Bonds, or if no authenticating agent is so identified, the Trustee. "Authorized Denomination" means, with respect to the Series 2020 Bonds, $5,000, or such other amount as will be provided in the Certificate of Award with respect to Series 2020 Bonds which are Capital Appreciation Bonds, and, with respect to any other Series of Bonds, $5,000 unless a different amount is set forth in the Bond Legislation for such Series of Bonds. "Authorized Officer" or "Authorized Officers" of the Issuer means any person or persons specifically authorized by resolution or ordinance of the Legislative Authority to take the action intended, and, if there is no such specific authorization, the Executive Officer or the Fiscal Officer. "Bonds" means the Series 2016 Bonds, Series 2020 Bonds and Additional Bonds. "Bondholder" or "holder" means the person in whose name any Bond is registered. "Bond Fund" or "City of Marysville, Ohio - Water System Bond Fund" means the fund of that name created by the Bond Legislation under the Original Indenture. "Bond Insurer" means the entity issuing a municipal bond insurance policy, and with respect to the Series 2020 Bonds, Build America Mutual Assurance Company ("BAM").
"Bond Legislation" means, when used in connection with the Series 2020 Bonds, Ordinance No. 006-2020 adopted by the Legislative Authority on February 10, 2020, including the Certificate of Award referred to therein, and, when used in connection with Additional Bonds or to relate to Bonds when Additional Bonds are outstanding, means or includes, as the case may be, such ordinance to the extent applicable and the ordinance or other legislation providing for the issuance of such Additional Bonds, all
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as the same may be amended, modified or supplemented by any amendments or modifications thereof and supplements thereto entered into in accordance with the provisions of the Indenture. "Bond Purchase Agreement" means, as to the Series 2020 Bonds, the Bond Purchase Agreement, dated April 29, 2020, between the Issuer and the Underwriter, providing for the sale of the Series 2020 Bonds to the Original Purchaser. "Bond Registrar" means the Trustee, until a successor Bond Registrar will have become such pursuant to applicable provisions of the Indenture. Any Bond Registrar designated under the Indenture will be a transfer agent registered in accordance with Section 17(A)(c) of the Securities Exchange Act of 1934. "Bond Reserve Fund" or "City of Marysville, Ohio - Water System Bond Reserve Fund" means the fund of that name created under the Original Indenture. "Bond Reserve Fund Facility," or with respect to the Series 2020 Bonds, "Bond Reserve Fund Surety Bond," means a letter of credit, surety bond or other credit facility that, if determined by the Fiscal Officer to be the most economical manner of providing all or part of the Bond Reserve Requirement, is issued by a Bond Reserve Fund Facility Provider for the benefit of the holders of the Bonds and that guarantees or assures the timely payment of principal of and interest on the Bonds, subject only to notification that there are insufficient funds for such payment. The Bond Reserve Fund Facility (a) will comply with the requirements of Section 401 of the Indenture, (b) will be in a stated amount that, when added to the funds, if any, deposited in the Bond Reserve Fund, will equal the Bond Reserve Requirement and (c) will either remain in effect so long as the Bond Reserve Requirement, which in whole or in part is met by the Bond Reserve Fund Facility, continues or will provide for a draw by the Trustee or payment thereunder for deposit in the Bond Reserve Fund at or prior to the expiration of the Bond Reserve Fund Facility (unless renewed or replaced by a new Bond Reserve Fund Facility) in an amount equal to the stated amount. "Bond Reserve Fund Facility Provider" means the entity issuing a Bond Reserve Fund Facility, and (a) with respect to the Series 2016 Bonds, Build America Mutual Assurance Company ("BAM"), and (b) with respect to the Series 2020 Bonds, BAM. "Bond Reserve Requirement" means, as of the date of any calculation, that amount which is equal to the least of (a) the maximum amount of Bond Service Charges required to be paid during any future Fiscal Year, (b) 125% of average annual debt service, and (c) an amount equal to ten percent (10%) of the proceeds of the sale of the Series 2020 Bonds. "Bond Service Charges" means, for any period of time, the principal of (including mandatory sinking fund payments) and interest and any premium payable on the Bonds during that period. "Bond Year" means the annual period provided for computation of the Rebate Amount pursuant to Section 148 of the Code. "Business Day" means any day of the year, other than: (a) a Saturday; (b) a Sunday; (c) a day on which banks located in Cincinnati, Ohio are required or authorized by law to remain closed; or (d) a day on which the New York Stock Exchange is closed. "Capital Appreciation Bonds" means, as to Bonds of any Series, Bonds identified in the Bond Legislation for that Series which do not pay interest on a current basis but with respect to which interest will be compounded on each Interest Payment Date and paid only at maturity.
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"Capitalized Interest" means, with respect to any Series of Additional Bonds, the amount set forth in the Bond Legislation for such Series of Bonds. "Certificate of Award" means the Certificate of Award authorized by the Bond Legislation providing for issuance of the Series 2020 Bonds. "Charter" means the Charter of the Issuer.
"Clerk" means the Clerk of the Legislative Authority and any officer of the Issuer who succeeds to the functions thereof. "Code" means the Internal Revenue Code of 1986, as amended, and references to the Code and Sections of the Code will include relevant regulations and proposed regulations thereunder, as amended, and any successor provisions to such Sections, regulations or proposed regulations. "Construction Fund" or "City of Marysville, Ohio - Water System Construction Fund" means with respect to any Series of Bonds a fund of that name, if any, created by the Bond Legislation for that Series of Bonds. "Construction Period" means the period between the beginning of the acquisition, construction and installation of improvements to be financed with a Series of Bonds and the date of substantial completion thereof as certified pursuant to the Indenture. "Custodian" means a bank or trust company, organized and existing under the laws of the United States of America or any state thereof which (a) has capital and surplus at least as great as that required under the Indenture for a successor to the Trustee and (b) is qualified to exercise trust powers in the state in which its principal office is located. "Eligible Investments" means, to the extent permitted by law:
(a) bonds, notes or other obligations of, or obligations guaranteed by, the United States of America, or those for which the faith of the United States of America is pledged for the payment of principal and interest thereon;
(b) bonds, notes, debentures, or any other obligations or securities
issued by any federal government agency or instrumentality; (c) bonds and other obligations of the State of Ohio; (d) no-load money market mutual funds consisting exclusively of
obligations described in clauses (a) or (b) above and repurchase agreements secured by such obligations, provided that investments in securities described in this part are made only through eligible institutions mentioned in Ohio Revised Code Section 135.03;
(e) written repurchase agreements not exceeding thirty (30) days in
length secured fully by obligations of the types specified in clause (a), (b), (c), and (d) above and issued by any institution eligible to become a public depository as permitted under Ohio Revised
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Code Section 135.03, which collateral (a) is in the custody of the Trustee or an agent designated by the Issuer, (b) is not subject to any third party claims, and (c) has a market value equal to at least 102% of the amount invested and be market to market daily; and
(f) the Ohio Subdivisions' Investment Fund created and administered
by the Treasurer of the State of Ohio pursuant to Ohio Revised Code Section 135.45 ("STAROhio").
"Event of Default" means an Event of Default as defined in the Indenture and summarized herein. "Executive Officer" means the Mayor of the Issuer and any officer of the Issuer who succeeds to the function thereof. "First Supplemental Indenture" means the First Supplemental Indenture of Mortgage dated as of November 15, 1993, that amends and supplements the Original Indenture, between the Issuer and the Original Trustee, that secured the Series 1993 Bonds. "Fiscal Officer" means the Director of Finance of the Issuer and any officer of the Issuer who succeeds to the functions thereof. "Fiscal Year" or "fiscal year" means, with respect to the Utility, the calendar year, unless otherwise provided by law or permitted by law if a voluntary change in Fiscal Year is approved by the Trustee after receipt of written notice from the Fiscal Officer of the proposed change in the Fiscal Year. "Fourth Supplemental Indenture" means the Fourth Supplemental Indenture of Mortgage dated as of October 15, 2007, between the Issuer and the Trustee, that amends and supplements the Original Indenture, First Supplemental Indenture, Second Supplemental Indenture, and Third Supplemental Indenture, that secured the Series 2007 Bonds. "Fifth Supplemental Indenture" means the Fifth Supplemental Indenture of Mortgage dated as of June 15, 2016, between the Issuer and the Trustee, that amends and supplements the Original Indenture, First Supplemental Indenture, Second Supplemental Indenture, Third Supplemental Indenture, and Fourth Supplemental Indenture, and secures the Series 2016 Bonds,. "Indenture" means, collectively, the Original Indenture, securing the Bonds, as amended and supplemented by the First Supplemental Indenture, the Second Supplemental Indenture, the Third Supplemental Indenture, the Fourth Supplemental Indenture, the Fifth Supplemental Indenture and the Sixth Supplemental Indenture as the same may be duly modified, amended or supplemented from time to time in accordance with the terms thereof. "Independent Engineer" means any engineer, firm of engineers or nationally recognized consultant (whether or not trained as an engineer), independent of the Issuer, experienced in the construction and operation of water systems such as the Utility, selected by the Issuer. "Insurance Consultant" means a person who is not an officer or employee of the Issuer, or a firm which is not a partnership, corporation or association having a partner, principal director, officer, member or substantial stockholder who is an officer or employee of the Issuer, qualified to survey risks and to recommend insurance coverage for plants and systems engaged in operations similar to those of the Utility and having a favorable reputation for skill and experience in such surveys and such recommendations, and
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so long as meeting the foregoing requirements, who may be a broker or agent with whom the Issuer transacts business. "Interest Payment Date" means, with respect to the Series 2020 Bonds, the first (1st) day of each June and December commencing December 1, 2020, and, with respect to each Series of Additional Bonds, the dates set forth in the Bond Legislation for such Series of Additional Bonds. "Investment Company" means an open-end diversified management investment company registered under the Investment Company Act of 1940, as amended. "Issuer" or "City" means the City of Marysville, Ohio, a municipal corporation and political subdivision in and of the State of Ohio, located in the County of Union thereof, and its lawful successors. "Legal Officer" means the Law Director of the Issuer and any officer of the Issuer who succeeds to the functions thereof. "Legislative Authority" means the Council of the Issuer and any officer, board, commission or other body which hereafter succeeds, by operation of law, to the powers and duties of such council. "Moody's" means Moody's Investors Service, Inc., a corporation organized and existing under the laws of the State of Delaware, its successors and their assigns, and, if such corporation is dissolved or liquidated or no longer performs the functions of a securities rating agency, "Moody's" will be deemed to refer to any other nationally recognized securities rating agency designated by the Legislative Authority by notice to the Trustee.
"Mortgaged Properties" means:
(a) All the title and interests of the Issuer in and to the real estate and in the easements described in the Indenture and relating to the Utility, together with all other real properties now or hereafter made subject to the lien of the Indenture by supplemental indenture or otherwise (collectively the "Utility Site");
(b) All buildings, structures, additions, improvements, facilities, transmission and distribution
lines, fixtures, fittings, machinery, apparatus, installations, furniture, equipment and other tangible property, now or hereafter located in, upon or under, or based at the Utility Site or located in or on any public streets, roads, rights-of-way or other public property and used in connection with the Utility (collectively the "Utility Facilities");
(c) All easements, rights of way or use, licenses, privileges, franchises, servitudes, tenements,
hereditaments and all appurtenances now or hereafter belonging to or anywise appertaining to the Utility Site or the Utility Facilities including, without limitation, all right, title and interest in any street, open or proposed;
(d) All revenues, payments, repayments, income, charges, rentals and moneys derived by the
Issuer from the lease, sale or other disposition of any portion of the Utility Site or Utility Facilities and the proceeds from any insurance or condemnation award pertaining thereto;
(e) All right, title and interest of the Issuer in any property, real, personal, mixed, tangible or
intangible, of every nature and kind and wheresoever situated now owned and hereafter acquired and forming a part of, or, directly appertaining to the business, maintenance or operation of the Utility (other than that property pledged in Clause Two of the Original
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Indenture) including, to the extent provided in the Indenture, Motor Vehicles and accounts receivable; and
(f) The franchise provided for in the Bond Legislation for the Bonds, under which, in case of
foreclosure, the purchaser may operate the Utility.
"Municipal Bond Insurance Policy" means the municipal bond insurance policy issued by the Bond Insurer assuring the payment when due of principal of and interest on the Series 2020 Bonds, as provided therein.
"Net Revenues" means for any period the difference between Revenues and Operating and Maintenance Expenses for such period. "Notice by Mail" or "notice" of any action or condition "by Mail" will mean a written notice meeting the requirements of the Indenture mailed by certified mail return receipt requested to the holders of specified Bonds at the addresses shown on the registration books maintained pursuant to the Indenture. "Operating and Maintenance Expenses" means all expenses for the operation, maintenance, administration and ordinary current repairs of the Utility made in the usual course of business in order to maintain and operate the Utility in a reasonable and prudent manner, and including items normally included as essential expenses in the operating budget of municipally owned water systems, and further including, without limitation, insurance premiums, the Issuer's reasonable administrative expenses properly allocable to the Utility (including, without limitation, engineering, architectural, legal, consulting and accounting fees and expenses), any taxes or assessments, whether general or special, which are lawfully imposed on the Utility or on the revenue or income derived from the operation thereof, the Rebate Amount, charges for purchased power, telephone and other public or private utility services, and fees and expenses of the Trustee, the Bond Registrar, and any Authenticating and Paying Agents, fees and expenses payable to any Person providing a credit enhancement facility for any Series of Bonds, fees and expenses of Independent Engineers, architects, consultants (including, but not limited to, Insurance Consultants), accountants and attorneys retained by the Issuer, from time to time, to perform and carry out duties imposed on the Issuer by the Indenture, all as determined (except as otherwise specified in this definition) in accordance with generally accepted accounting principles consistently applied. Operating and Maintenance Expenses do not include: (1) Bond Service Charges on the Bonds or principal of or interest or premium on any other Bonds or bond anticipation notes issued by the Issuer; (2) any allowance (whether on capitalized leases or other debt) for amortization or depreciation of the Utility; and (3) any of the fees and expenses previously described which are paid from the Construction Fund. "Original Indenture" means the Indenture of Mortgage dated as of June 1, 1991, between the Issuer and the Original Trustee, that secured the Series 1991 Bonds. "Original Issuance Date" means as to Series 2020 Bonds, the date on which such Series 2020 Bonds are first authenticated and delivered to the Original Purchaser against payment therefor. "Original Purchaser" or "Underwriter" means, as to the Series 2020 Bonds, Stifel, Nicolaus & Company, Incorporated, and as to each Series of Additional Bonds the Person or Persons identified in the Bond Legislation for such Series of Additional Bonds. "Original Trustee" means The Fifth Third Bank, Cincinnati, Ohio.
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"Outstanding Bonds" or " Bonds Outstanding" or "Outstanding" when used in reference to Bonds means all Bonds that have been authenticated and delivered by the Authenticating Agent under the Indenture except:
(a) Bonds canceled by the Trustee on surrender, exchange or transfer or canceled because of payment at maturity or redemption;
(b) Bonds that are deemed to have been paid and discharged pursuant to the provisions of the
Indenture (which will not include Bonds paid with the proceeds of credit enhancement facilities, including drawings on the Municipal Bond Insurance Policy);
(c) Bonds in lieu of which others have been authenticated under the Indenture.
"Paying Agent" means with respect to the Series 2020 Bonds, the Trustee, and, with respect to any Series of Additional Bonds, the paying agent appointed in accordance with the Bond Legislation for such Series of Additional Bonds and, in either case, any successor paying agent appointed in accordance with the Indenture. "Principal office" or "Principal Office" of the Paying Agent means the principal corporate trust office of the Trustee if the Trustee is serving as Paying Agent, and, with respect to any other Paying Agent, the office thereof designated in writing to the Trustee. "Person" means one or more natural persons, firms, associations, partnerships, corporations or public bodies. "Principal Payment Date" means December 1 in any year in which Bonds of any Series mature or are subject to mandatory sinking fund redemption. "Project" means the acquisition, construction, expansion, rehabilitation, and improvement of the Utility, including the acquisition of land and interests in land related to the same, and related improvements thereto necessary for the enhanced efficiency and usefulness thereof. "Qualified Self Insurance" means insurance maintained through a program of self-insurance or, to the extent permitted by law, insurance maintained with an association in which the Issuer has a material interest or of which the Issuer has control, either singly or with others. "Rebate Amount" means the aggregate of Excess Earnings. "Record Date" means, with respect to the Series 2020 Bonds, the fifteenth (15th) day of the month preceding the month in which an Interest Payment Date occurs; and, with respect to any Series of Additional Bonds, the day or days identified as such in the Bond Legislation for such Series of Additional Bonds. "Revenue Account" means an account within the Revenue Fund established under the Indenture. "Rebate Fund" or "City of Marysville, Ohio - Water System Revenue Bonds Rebate Fund" means the fund of that name created under the Original Indenture. "Replacement and Improvement Fund" or "City of Marysville, Ohio - Water System Replacement and Improvement Fund" means the fund of that name created under the Original Indenture.
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"Replacement and Improvement Fund Requirement" means the sum of $1,000,000 or such greater amount as may be provided for in any supplemental indenture hereto; provided, however, that no such supplemental indenture will reduce the amount of the Replacement and Improvement Fund Requirement. "Revenue Fund" or "City of Marysville, Ohio - Water System Revenue Fund" means the fund of that name created under the Original Indenture. "Revenues" means all revenues received by or on behalf of the Issuer from or in connection with the ownership, operation, use and services of the Utility including, without limitation, any investment income realized from any investment made from any moneys credited to the Revenue Fund, the Bond Fund, the Bond Reserve Fund, the Replacement and Improvement Fund, and the Water System Reserve Fund, revenues pledged or appropriated for the benefit of the Utility, all rates, charges, rentals, and other income received by the Issuer or accrued to the Issuer, and other moneys pledged in the Indenture, to be deposited in the Revenue Fund. Revenues will not include (a) any income resulting from investment of moneys on deposit in the Construction Fund or the Rebate Fund, (b) proceeds of the Bonds, (c) proceeds of the sale of any portion of the Utility (to the extent such proceeds are not used to replace equipment or property of the Utility), or (d) proceeds of insurance (other than insurance which provides for lost revenue to the Utility when the Utility is unable to function) or eminent domain. "S&P" means Standard & Poor's Corporation, a corporation organized and existing under the laws of the State of New York, its successors and their assigns, and, if such corporation is dissolved or liquidated or is no longer perform the functions of a securities rating agency, "S&P" will be deemed to refer to any other nationally recognized securities rating agency designated by the Legislative Authority by notice to the Trustee. "Second Supplemental Indenture" means the Second Supplemental Indenture of Mortgage, dated as of April 1, 2002, between the Issuer and the Trustee, that secured the Series 2002 Bonds. "Series" means the Series 2020 Bonds, and, with respect to Additional Bonds, one or more of the series in which Additional Bonds are authorized to be issued. "Series 1991 Bonds" means the Water System Mortgage Revenue Bonds, Series 1991, dated June 1, 1991, issued in the original principal amount of $11,000,000, which principal amount was defeased by the Series 1993 Bonds. "Series 1993 Bonds" means the Water System Mortgage Revenue Bonds, Series 1993, dated November 15, 1993, issued in the original principal amount of $12,280,000, which principal amount was defeased by the Series 2003 Bonds. "Series 2002 Bonds" means the Water System Mortgage Revenue Bonds, Series 2002, dated April 1, 2002, issued in the original principal amount of $3,820,000, of which no aggregate principal amount remains outstanding. "Series 2003 Bonds" means the Water System Mortgage Revenue Refunding Bonds, Series 2003, dated October 15, 2003, issued in the original principal amount of $9,155,000, of which no aggregate principal amount remains outstanding. "Series 2007 Bonds" means the Issuer's Water System Mortgage Revenue Bonds, Series 2007, dated October 17, 2007, issued in the original principal amount of $21,335,000, of which no aggregate principal amount remains outstanding.
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"Series 2016 Bonds" means the Issuer's Water System Mortgage Revenue Refunding Bonds, Series 2016, dated June 15, 2016, issued in the original principal amount of $19,560,000, of which $16,530,000 in aggregate principal amount remains outstanding.
"Series 2020 Bonds" means the Issuer's Water System Mortgage Revenue Bonds, Series 2020, in the aggregate principal amount of $40,465,000, authorized by the Bond Legislation for the Series 2020 Bonds. "Sixth Supplemental Indenture" means the Sixth Supplemental Indenture of Mortgage dated as of May 20, 2020, between the Issuer and the Trustee, that amends and supplements the Original Indenture, First Supplemental Indenture, Second Supplemental Indenture, Third Supplemental Indenture, Fourth Supplemental Indenture and Fifth Supplemental Indenture, and secures the Series 2020 Bonds.
"Special Funds" means the Bond Fund, the Bond Reserve Fund, the Construction Fund, the Replacement and Improvement Fund, and the Water System Reserve Fund. "Third Supplemental Indenture" means the Third Supplemental Indenture of Mortgage dated as of November 1, 2003, between the Issuer and the Trustee, that amends and supplements the Original Indenture, the First Supplemental Indenture, and the Second Supplemental Indenture, that secured the Series 2003 Bonds. "Trustee" means The Huntington National Bank, Cincinnati, Ohio, and its successors and any corporation or association resulting from or surviving any consolidation or merger to which it or its successors may be a party and any successor trustee at the time serving as successor trustee under the Indenture. "Utility" means the Issuer's municipal water system of the Issuer, now or hereafter owned or operated by the Issuer as a public utility, and includes any extensions, modifications, enlargements or additions thereto.
"Water System Reserve Fund" or "City of Marysville, Ohio – Water System Reserve Fund" means the fund of that name created under the Original Indenture.
Creation of Funds
The Indenture and the Bond Legislation establish the following Funds:
(a) the Construction Fund designated the "City of Marysville, Ohio – Water System Construction Fund;"
(b) the Revenue Fund designated the "City of Marysville, Ohio – Water System Revenue
Fund;" (c) the Bond Fund designated the "City of Marysville, Ohio – Water System Bond Fund;" (d) the Bond Reserve Fund designated the "City of Marysville, Ohio – Water System Bond
Reserve Fund;" (e) the Replacement and Improvement Fund designated the "City of Marysville, Ohio – Water
System Replacement and Improvement Fund;"
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(f) the Water System Reserve Fund designated the "City of Marysville, Ohio – Water System Reserve Fund;" and
(g) the Rebate Fund designated "City of Marysville, Ohio – Water System Revenue Bonds Rebate Fund."
Application of Proceeds and Funds The proceeds of sale of the Series 2020 Bonds will be allocated and deposited as follows:
(a) $40,460,176.80, to the City of Marysville, Ohio – Water System Construction Fund, as the amount necessary to finance certain costs associated with the Project;
(b) $495,042.79, to the City of Marysville, Ohio – Water System Bond Fund; (c) $252,707.50, to be retained by the Original Purchaser, as its compensation in connection
with the sale and underwriting of the Series 2020 Bonds; (d) $433,958.75, to be wired by the Original Purchaser to the Trustee to pay certain costs of
issuance of the Series 2020 Bonds; (e) $141,964.13, to be wired to BAM as payment for the Municipal Bond Insurance Policy;
and
(f) $61,593.68, to be wired to BAM as payment for the Bond Reserve Fund Facility. As set forth above, the Underwriter has agreed to wire funds to the Trustee at closing for further
distribution by the Trustee to pay certain costs of issuance of the Series 2020 Bonds on behalf of the City, including rating fees, legal fees, Trustee fees, printing and distribution costs, and other miscellaneous expenses.
The Special Funds will be maintained in the custody of the Issuer or the Trustee, as provided in the Indenture or in the Bond Legislation, as a separate account (except when invested in Eligible Investments). The Trustee may establish in the Bond Fund, the Bond Reserve Fund and the Rebate Fund such additional accounts and subaccounts as it determines necessary in order to permit it to maintain appropriate records for accounting and federal income tax compliance purposes.
The Construction Fund will be maintained in the custody of the Issuer as a trust fund and will be used for the purposes and in accordance with the provisions of the Indenture. If the unexpended proceeds of a prior Series of Bonds remain in the Construction Fund upon the issuance of any Additional Bonds, the Issuer will establish a separate subaccount within the Construction Fund, for accounting purposes, for the deposit of the proceeds of the issue of Additional Bonds in accordance with the Indenture.
The Revenue Fund will be maintained in the custody of the Issuer as a trust fund separate and
distinct from all other funds of the Issuer. So long as any of the Bonds are Outstanding, all Revenues will be deposited in the Revenue Fund. The funds on deposit in the Revenue Fund will be allocated as provided in the Indenture.
The Bond Fund and the Bond Reserve Fund will be maintained in the custody of the Trustee as trust funds and will be used solely for the payment of Bond Service Charges on the Bonds, and to the extent
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provided in the Indenture, for the purchase for cancellation or redemption of Bonds. If at any time, upon the Issuer's request and if the Trustee will have moneys and investments then on deposit in the Bond Fund and Bond Reserve Fund sufficient to purchase for cancellation or redeem on the next available redemption date any Outstanding Bonds, without thereby reducing the balance thereafter remaining in the Bond Fund and Bond Reserve Fund below the amount which on such redemption date would be required by the Indenture to be on hand therein with respect to Bonds not to be so redeemed, the Trustee will cause such moneys to be used out of the Bond Fund and Bond Reserve Fund in the amounts required, together with any other moneys provided by the Issuer, to accomplish such purchase or redemption.
The Bond Reserve Fund will be funded with cash of the Issuer, proceeds from the Bonds, a Bond Reserve Fund Facility, or any combination thereof, in an aggregate amount equal to the Bond Reserve Requirement. In the event that the balance in the Bond Reserve Fund falls below the Bond Reserve Requirement at any time which the Bonds are outstanding, the Issuer will immediately deposit with the Trustee from Revenues, for credit to the Bond Reserve Fund, an amount equal to cover such deficiency. The Trustee will review and value at fair market value the Eligible Investments on deposit in the Bond Reserve Fund on the first day of each January, April, July and October, and deliver a written notice of such evaluation to the Issuer. When the amount on deposit in the Bond Reserve Fund on any quarterly valuation date is in excess of the Bond Reserve Requirement, the Trustee will transfer the excess to the Interest Payment Account of the Bond Fund. When the amount on deposit in the Bond Reserve Fund is at least equal to the principal amount of the Bonds, the Trustee will transfer from the Bond Reserve Fund to the Bond Fund an amount equal to the principal of such bonds due and payable on their maturity date or the next succeeding bond retirement date, as the case may be. Those moneys will be used to pay the principal of such Bonds due on such date. The reduction in the Bond Reserve Fund resulting from that transfer need not be restored.
The Replacement and Improvement Fund will be maintained in the custody of the Issuer as a trust
fund separate and distinct from all other funds of the Issuer. The moneys held in the Replacement and Improvement Fund will, to the extent necessary from time to time, after applying to that purpose any moneys then in the Water System Reserve Fund, be transferred to the Bond Fund to permit the payment of all obligations payable from the Bond Fund without drawing on the Bond Reserve Fund and, otherwise, at the written request of the Issuer (to be delivered to the Trustee) signed by the Fiscal Officer or Executive Officer, will be used by the Issuer solely to replace obsolete or worn-out equipment or to make improvements, or, with funds in the Bond Fund and Bond Reserve Fund and other funds made available by the Issuer, to retire by purchase or by call in accordance with applicable redemption provisions in the Indenture, all or part of the Bonds from time to time Outstanding. If the amount in the Bond Fund is insufficient to permit payment of all obligations payable from the Bond Fund on any Interest Payment Date, the Trustee, in accordance with the Indenture, may direct the Issuer to apply to that purpose moneys held in the Replacement and Improvement Fund. The Issuer may from time to time deposit to the Replacement and Improvement Fund amounts in excess of the amounts required by the Indenture. The Water System Reserve Fund will be maintained in the custody of the Issuer as a trust fund separate and distinct from all other funds of the Issuer. The moneys held in the Water System Reserve Fund will, to the extent necessary from time to time, upon the Issuer's request and if the Trustee will have sufficient funds available for such purpose, be transferred to the Bond Fund to permit the payment of all obligations payable from the Bond Fund without drawing upon the Replacement and Improvement Fund or Bond Reserve Fund, may be transferred to the appropriate fund of the Issuer to permit the payment of principal of and interest on any unvoted general obligation bonds, or notes issued in anticipation thereof, issued by the Issuer to pay costs of Improvements, or may be transferred to the Revenue Fund and otherwise
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may be used for any other lawful Utility purpose, including without limitation, the retirement of outstanding Bonds, by call for redemption or by purchase for cancellation. Application of Revenues
The Revenue Fund will be maintained in the custody of the Issuer and invested only in Eligible Investments. Except as otherwise provided in Indenture only the following payments will be made out of the Revenue Fund and in the following order:
First: For Operating and Maintenance Expenses, as and when payable. Second: Not later than the last Business Day of each month, to the Trustee (a) for deposit
into the Bond Fund, an amount equal to 1/12 of the principal amount of Bonds maturing or subject to mandatory sinking fund redemption on the next succeeding Principal Payment Date, and (b) for deposit into the Bond Fund, an amount equal to the sum of (1) 1/6 of the amount of interest payable on or before the next succeeding Interest Payment Date on Bonds the interest on which is paid semi-annually, and (2) the amount of interest payable during the next succeeding month on Bonds the interest on which is paid more frequently than semi-annually; provided, however, that payments to the Bond Fund with respect to any Series of Additional Bonds for any period may be made from Capitalized Interest for such Series of Bonds to the extent provided for in the Bond Legislation for such Series of Bonds.
Third: Not later than the fifth Business Day after each Interest Payment Date to the
Trustee for deposit into the Bond Reserve Fund, the amount, if any, necessary to restore the balance in the Bond Reserve Fund to the Bond Reserve Requirement.
For purposes of determining the Bond Reserve Requirement with respect to, and the amount required to be paid on each deposit date into the Bond Reserve Fund for, Additional Bonds constituting interim indebtedness, principal (including Mandatory Sinking Fund Redemption Requirements) and interest requirements payable on such Additional Bonds will be deemed to be those amounts that equal the principal (including Mandatory Sinking Fund Redemption Requirements) and interest payments that would be required for an issue of long term bonds in the same principal amount bearing interest at a rate equal to 90% of the revenue bond index.
Notwithstanding the foregoing provisions, in lieu of any required deposits of cash or Eligible Investments into the Bond Reserve Fund or in substitution for any cash or Eligible Investments on deposit in the Bond Reserve Fund, the Issuer may cause to be deposited into the Bond Reserve Fund a Bond Reserve Fund Facility, provided that: (i) if the Bonds are outstanding and a municipal bond insurance policy is in full force and effect, the use of any such instrument, including its form and substance and the issuer thereof, will be approved in writing by the applicable bond insurer, which approval will not be withheld unreasonably and the reasonableness of which is to be determined by reference to the general requirements then imposed by the bond insurer as approved by rating services for the maintenance of any then current ratings of the Bonds, (ii) the following criteria will be satisfied: (A) the rating category assigned by a rating service to the long-term unsecured debt or claims paying ability or other credit standing of the
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Bond Reserve Fund Facility Provider is not less than one rating category lower than the highest long-term rating assigned by that rating service to any Bonds and is not less than "A," (B) the Bond Reserve Fund Facility has a term of at least one year, (C) at least 31 days prior to the expiration of the Bond Reserve Fund Facility, the Issuer will fully fund the Bond Reserve Fund or deliver to the Trustee a substitute Bond Reserve Fund Facility, as provided below, and (D) if any Bonds outstanding from time to time are rated and if the rating assigned by a rating service to the Bond Reserve Fund Facility Provider falls more than one rating category below the highest rating assigned by that rating service to any Bonds, the Issuer, within 12 months after the rating falls, will either fully fund the Bond Reserve Fund or deliver to the Trustee a substitute Bond Reserve Fund Facility satisfying the requirement of clause (A) above, and (iii) there will be delivered to the Trustee an opinion of nationally recognized bond counsel to the effect that such action, and the proposed use of any money released from the Bond Reserve Fund as a result of such action will not adversely affect the exclusion from gross income of interest on any Bonds for federal income tax purposes. In the event that such a Bond Reserve Fund Facility is delivered to the Trustee and will expire before the Bond Reserve Fund will be released in accordance with the terms hereof, the replacement therefor, whether in the form of cash, Eligible Investments, or a Bond Reserve Fund Facility, will be delivered to the Trustee and, if applicable, be effective at least 31 days before the stated expiration of the prior Bond Reserve Fund Facility, in which case the prior Bond Reserve Fund Facility will immediately thereupon be canceled and returned to the issuing financial institution. Any amounts in excess of the Bond Reserve Requirement created by virtue of a deposit of a Bond Reserve Fund Facility into the Bond Reserve Fund will be transferred to the Bond Fund in accordance with the paragraph below.
Fourth: Not later than the last Business Day of each month, to the Issuer for deposit into
the Replacement and Improvement Fund, the sum of $10,000 or such lesser sum as may then be required to create and thereafter maintain a balance in the Replacement and Improvement Fund at least equal to the Replacement and Improvement Fund Requirement.
Fifth: On the first Business Day of each month, to the Trustee such sums in addition to
any of the foregoing allocations as may be necessary and available, after meeting the requirements of the preceding Second, Third and Fourth Paragraphs to make up any previous deficiency in any such monthly allocation.
Sixth: As and when due, such sums as are required to pay principal of and interest on
other indebtedness of the Issuer incurred for Utility purposes. Seventh: On or before January 31 of each year, the balance then remaining in the Revenue
Fund as of December 31 of the previous calendar year, after reserving therein an amount which, in the opinion of the Fiscal Officer, is sufficient to maintain adequate working capital, will be transferred to the Water System Reserve Fund; provided that the amount reserved for working capital will not be less than one fourth (1/4) of the aggregate amount of Operating and Maintenance Expenses for the immediately preceding Fiscal Year.
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Covenants of the City
The Issuer covenants, but without pledging its credit or taxing power and only out of the Net Revenues, to make such payments into the Special Funds as are required by the Indenture and pay the Bond Service Charges on the dates and at the places and in the manner mentioned in the Bonds according to the true intent and meaning thereof.
Anything in the Indenture, the Bond Legislation or the Bonds to the contrary notwithstanding, neither the general resources of the Issuer will be required to be used for, nor will the general credit of the Issuer be pledged to, the performance of any duty under the Indenture, the Bond Legislation or the Bonds, but any payment to be made under the Indenture, the Bond Legislation or the Bonds will be made only from the Revenues and the Special Funds to the extent provided in the Bond Legislation and the Indenture; provided, however, that if otherwise lawful, nothing in the Indenture will be deemed to prohibit the Issuer from using, of its own volition, any of its general resources for the fulfillment of any of the terms and conditions of the Indenture, the Bond Legislation or the Bonds. Production of Adequate Revenues
To provide for the payment of the Bond Service Charges on the Bonds as the same will become due and payable, the Issuer covenants at all times to prescribe, charge and collect such rates for the services, and to restrict the Operating and Maintenance Expenses, of the Utility as will result in Net Revenues at least adequate to provide for (i) the payments required by the Indenture to be made into the Bond Fund, the Bond Reserve Fund and the Replacement and Improvement Fund, (ii) the payment of debt service on any other obligation of the Issuer incurred for Utility purposes, (iii) the payment of the fees and expenses of the Trustee, the Authenticating Agent, the Paying Agent, the Bond Registrar and any Person providing credit enhancement for any Series of Bonds, and (iv) sufficient coverage to permit the issuance of Additional Bonds required for the construction of necessary or advisable extensions or improvements of the Utility. In no event will the Net Revenues for any Fiscal Year, be less than 110% of the aggregate amount of Bond Service Charges payable during such Fiscal Year; provided that the failure in any Fiscal Year to meet such test will not constitute a basis for the declaration of an Event of Default under the Indenture unless such test is not met for two consecutive Fiscal Years. In the event of such a failure, however, the Issuer will notify the Trustee and will immediately employ an Independent Engineer knowledgeable in the operation of municipal water systems and rate studies applicable thereto, and having a good repute for skill and experience in such work, to prepare and submit, within 120 days following the close of such fiscal year, a written report and recommendations with respect to the rates and charges of the Utility and with respect to improvements or changes in the operations of the Utility, stating also the extent to which prior recommendations of consultants or engineers may not have been complied with by the Issuer. A copy of such report and recommendations will be filed with the Issuer, the Trustee, the Original Purchaser and any Bondholders requesting the same. The Issuer will, within 90 days after receipt of such report, revise its rates and charges in conformity with such recommendations and otherwise follow such recommendations, and the failure to do so will constitute the basis for a declaration of an Event of Default under the Indenture. Operation and Maintenance
The Issuer will operate the Utility under the provisions of the Constitution of Ohio, laws and applicable regulations of the United States of America, the State of Ohio, and other governmental agencies having jurisdiction thereover, and will efficiently maintain and carry on the operations and business of the Utility and will keep the Utility in good condition, repair and working order, replacing any part or parts thereof which may become worn out or injured by other suitable property of at least equal value and efficiency. Nothing in the Indenture however, will be held to prevent the Issuer from discontinuing the use and operation of any property or equipment forming a non-essential part of the Utility if it is no longer
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profitable to use and operate such property or equipment. Any monies received from such dispositions or discontinuations will be credited to the Revenue Fund. Title to Utility
Except as otherwise provided in the Indenture and except for Permitted Encumbrances, the Issuer covenants that it has good and marketable title in fee simple to the real property comprising the Utility Site which it purports to hold in fee simple, free and clear of liens and encumbrances other than Permitted Encumbrances, good and marketable leasehold title to that portion of the Utility Site in which the Issuer holds a leasehold estate, sufficient other interests in real property to permit the Utility to carry out the intended use of the property so held as to interests owned or held in other than fee simple or leasehold and good right, full power, and lawful authority to grant, bargain, sell, assign, transfer, convey, pledge, set-over, quit-claim, release and mortgage that title to the Trustee in the manner intended in the Indenture. Except as otherwise provided in the Indenture, the Issuer covenants that it has and will preserve good and indefeasible title to all personal property now or hereafter included in the Mortgaged Properties and will warrant and defend the same to the Trustee and its successors and assigns against the claims of all persons and parties whomsoever. Compliance with Requirements of Law
The Issuer covenants to comply with all laws, rules and orders of any governmental body or officers exercising any power of regulation or supervision over it or any part of the Utility and to make any repairs to the Utility or any part thereof that may be required by any such rule or regulation, provided, however, that the Issuer will have the right in good faith to contest the validity of any such law, rule or order in any reasonable manner and to delay or refuse to comply therewith if such contest will not affect the conduct of the business of the Utility or the maintenance of the physical condition of the Utility in a manner which will permit the Issuer to comply with its covenants under the Indenture. Books of Record and Account; Financial Reports
The Issuer covenants to separately account for the Revenues and keep proper books of record and account (separate and distinct from all other records and accounts of the Issuer) in such manner as is required by the Bond Legislation and is necessary to show the complete financial results of operation of the Utility and all capital expenditures for replacements or betterments of the Utility, the Operating and Maintenance Expenses, and amounts deposited in the Special Funds. The Issuer will promptly notify the Trustee of the filing by the Issuer of a petition in bankruptcy or any similar insolvency proceedings pursuant to the Federal Bankruptcy Code or any state law.
The Issuer covenants to furnish to the Trustee and the Original Purchaser an annual financial report with respect to the Utility in such form, containing such information and within such time period as is required by the laws of the State of Ohio. Insurance
The Issuer covenants to insure and at all times keep insured, at its own expense, or cause to be insured, but solely from the Revenues, the property and equipment from time to time comprising the Utility, which are of an insurable nature and of the character usually insured by private companies operating similar properties and businesses, for the full insurable value thereof (except that such insurable value will not be deemed to include any value for which any contractor engaged in constructing improvements to the Utility will be liable under his contract), with a responsible insurance company or companies against loss or damage by fire, tornado, lightning, vandalism and other causes covered by standard "extended coverage"
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or "all risks" policies by such private companies. The Issuer will also carry or cause to be carried general liability insurance with a responsible insurance company or companies in amounts of not less than $1,000,000 resulting from any one occurrence in connection with the Utility and not less than $1,000,000 with respect to property damage in connection with the Utility, provided that the Issuer may include aggregate deductibles or self-insurance retention of $25,000 in any one year in such policies. Such insurance may include personal indemnity bonds for officers or employees of the Issuer in an amount commensurate with industry standards. The Issuer also will procure such workers' compensation insurance as may be required by the laws of the State.
The Issuer covenants to apply all proceeds received from policies of property and casualty insurance required hereunder to the payment of costs related to rebuilding, restoring, replacing, or otherwise curing the damage or loss giving rise to such proceeds, unless otherwise approved by the Trustee.
If at any time it will be unlawful to carry such insurance or if at any time the Issuer will be unable to obtain such insurance for the risks covered thereby, it will not constitute an Event of Default under the provisions of the Indenture if the Issuer will carry or cause to be carried such insurance through Qualified Self Insurance, as defined below, provided that the requirements set forth in the Indenture are satisfied. Events of Default
Each of the following events is an Event of Default under the Indenture:
(a) Failure by the Issuer to pay the Bond Service Charges on any Bond, when and as the same will have become due and payable, whether at maturity, by acceleration or upon call for redemption; or
(b) Failure by the Issuer to make the deposits, when due, into the Bond Fund required to be
made pursuant to the Indenture, and the continuance thereof for three (3) Business Days; (c) Failure to perform or observe duly or punctually any other covenant, condition or
agreement contained in the Bonds, in the Bond Legislation or in the Indenture or any supplemental indenture and to be performed by the Issuer, which failure will have continued for a period of sixty (60) days after written notice specifying such failure and requiring the same to be remedied has been given to the Issuer by the Trustee, which may give such notice in its discretion and will give such notice at the written request of the holders of not less than ten percent (10%) of the principal amount of the Bonds then Outstanding;
(d) The Issuer will (i) commence a proceeding under any federal bankruptcy, insolvency,
reorganization or similar law or (ii) have a receiver or trustee appointed for it or for the whole or any substantial part of its property.
Notwithstanding the foregoing, if, by reason of Force Majeure, the Issuer is unable to observe or perform any covenant, agreement or obligation which would give rise to an Event of Default under the Indenture, the Issuer will not be deemed in default during the continuance of such inability. However, the Issuer will promptly give notice to the Trustee of the existence of an event of Force Majeure and must use its best efforts to remove the effects thereof; provided that the settlement of strikes or other such disturbances are entirely within its discretion.
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Acceleration
Upon the occurrence of an Event of Default, the Trustee may declare, and upon the written request of the holders of not less than 25% in aggregate principal amount of the Bonds then outstanding the Trustee will declare, by notice in writing delivered to the Issuer, the principal of all the Bonds then outstanding (if not then due and payable), and the interest accrued thereon, to be due and payable immediately. Upon that declaration, that principal and interest will become and be immediately due and payable. Interest on the Bonds will accrue to the date determined by the Trustee for the tender of payment to the holders pursuant to that declaration; provided, that interest on any unpaid principal of Bonds outstanding will continue to accrue from the date determined by the Trustee for the tender of payment to the holders of those Bonds. Rescinding of Declaration
The acceleration provisions of the Indenture are subject to the condition that if, at any time after the principal of the Bonds will have been so declared due and payable and prior to the first to occur of (a) the entry of a judgment in a court of law or equity for enforcement hereunder and (b) the appointment, and the confirmation thereof, of a receiver after the opportunity for hearing by the Issuer, all sums payable hereunder except the principal of the Bonds which have not reached their maturity dates or been called for earlier prior redemption will have been duly paid and all existing defaults will have been cured, then and in every such case such payment will constitute a waiver of such default and its consequences and an automatic rescission and annulment of such declaration, and if the Issuer has transferred custody of any Special Funds to the Trustee, in accordance with a direction to do so given by the Trustee to the Issuer pursuant to Section 604 of the Indenture, the Trustee immediately will return custody of such Special Funds to the Issuer upon receipt of a written request from the Issuer to do so; but such waiver will not extend to or affect any subsequent default or impair any rights consequent thereon. Foreclosure Sale of Mortgaged Properties
In the event of any sale pursuant to the provisions of the Indenture under or by virtue of a judgment or decree of foreclosure and sale, or otherwise, the Mortgaged Properties will be sold as an entirety, or substantially as an entirety, unless the court ordering such sale will otherwise direct. The Issuer, for itself and all who may claim through or under it, waives any and all right to have the Mortgaged Properties marshaled upon any foreclosure of the lien hereof and hereby agrees that any court having jurisdiction to foreclose that lien may sell the Mortgaged Properties substantially as an entirety. Moneys or security held in any Special Fund or the Revenue Fund will be applied to the payment of the Outstanding Bonds and interest thereon, subject to and in accordance with the procedure specified in the Indenture for application of proceeds of the foreclosure sale.
The Trustee may cause to be adjourned from time to time any sale by announcement at the time and place appointed for sale or for adjourned sale or sales; and except as otherwise provided by law, that sale may be made, without further notice or publication, at the time and place to which that sale will be so adjourned.
Upon the completion of that sale, the Trustee will, if requested by the purchaser, execute and deliver to the purchaser a quitclaim deed or deeds and other instruments conveying, assigning and transferring all its estate, right, title and interest in and to the property sold, and the Issuer will also execute and deliver to the purchaser all necessary quitclaim deeds and instruments as may be advisable in the judgment of, and as may be requested by, the Trustee for the purpose of confirming that sale.
Any sale will operate to divest all the estate, right, title, interest, claim and demand whatsoever, whether at law or in equity, of the Issuer and the Trustee in and to the property so sold, and will be a
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perpetual bar both at law and in equity against the Issuer and the Trustee and all persons or parties claiming or who may claim that property, or any part thereof, from, through or under the Issuer.
Upon the completion of any sale, the purchaser will be entitled to operate the Utility under the terms and conditions of the franchise set out in the Bond Legislation for the Bonds. Other Default Provisions
The Trustee, upon the written request of the holders of a majority in principal amount of the Bonds at the time Outstanding and provided that all fees and expenses of the Trustee have been paid, will waive any Event of Default and its consequences, except an Event of Default arising from a default in the payment of the principal of any Bond at the date of maturity specified therein; provided, however, that an Event of Default arising from a default in the payment of interest on the Bonds will not be waived unless, prior to such waiver, all arrears of interest will have been paid or, as to such interest, will have been provided for by payment into the appropriate Special Fund of a sum sufficient to pay the same. In case of any such waiver, or in case any proceeding taken on account of any such default will have been discontinued or abandoned or determined adversely to the Trustee, then in every such case, the Issuer, the Trustee and the holders of the Bonds will be restored to their former positions and rights hereunder respectively, and all rights, remedies, powers and duties of the Trustee will continue as though no such proceedings had been taken. Remedial Action by Bondholders
In order to promote and protect the equal and ratable rights of every holder of the Bonds, and to avoid multiplicity of suits, no holder of any Bond will be entitled to institute any suit, action or proceeding at law or in equity to enforce any rights or remedies granted by the Indenture unless:
(a) Such holder will have previously given to the Trustee written notice of an Event of Default as hereinbefore provided; and
(b) The holders of at least 25% in principal amount of the Bonds then Outstanding, in
accordance with the provisions of the Indenture will have made written request upon the Trustee, and will have afforded to it a reasonable opportunity to institute such action, suit or proceeding in its own name; and
(c) The Trustee will have been offered security and indemnity satisfactory to it against the
costs, expenses and liabilities to be incurred by compliance with such requests; and (d) The Trustee, for sixty (60) days after receipt of such notification, request and offer of
indemnity, will not have instituted any such action, suit or proceeding; and (e) The Indenture authorizes the Trustee to institute the action, suit or proceeding requested by
the Bondholders.
Such notification, request and offer of indemnity are hereby declared, in every case, at the option of the Trustee, to be conditions precedent to any action or cause of action for the enforcement of any remedy hereunder; it being understood and intended that no one or more holders of Bonds will have any right in any manner whatsoever by his or their action to affect, disturb or prejudice the lien of the Indenture or to enforce any right hereunder except in the manner provided, and that all proceedings at law or in equity will be instituted, had and maintained in the manner provided in the Indenture and for the equal and ratable benefit of all holders of the Outstanding Bonds.
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Nothing contained in the Indenture or in the Bonds, however, will affect the right of any Bondholder
to enforce the payment of principal of and interest on any Bond at and after the maturity thereof without reference to or consent of either the Trustee or the holder of any other Bond. Supplemental Indentures Not Requiring Consent of Bondholders
The Issuer and the Trustee may, without the consent of, or notice to, any of the holders of the Bonds, enter into indentures supplemental to the Indenture as will not be inconsistent with the terms and provisions hereof for any one of the following purposes:
(a) To cure any ambiguity, inconsistency or formal defect or omission in the Indenture; (b) To grant to or confer upon the Trustee for the benefit of the holders of the Bonds any
additional rights, remedies, powers, or authority that may lawfully be granted to or conferred upon the holders of the Bonds or the Trustee or either of them;
(c) To subject to the lien and pledge of the Indenture additional revenues; (d) To add to the covenants and agreements of the Issuer contained in the Indenture other
covenants and agreements thereafter to be observed for the protection of the holders of the Bonds, or to surrender or limit any right, power or authority herein reserved to or conferred upon the Issuer, including the limitation of rights of redemption so that in certain instances Bonds of different Series will be redeemed in some prescribed ratio to one another;
(e) To evidence any succession to the Issuer and the assumption by such successor of the
covenants and agreements of the Issuer herein and in the Bonds contained; (f) In connection with the issuance of Additional Bonds; (g) In connection with any other change which in the judgment of the Trustee is not to the
prejudice of the Trustee or the Bondholders; (h) To effect a book entry registration system for any Series of Bonds or to cause any such
system to be discontinued and certificated Bonds to be issued therefor; (i) To permit compliance with changes in federal tax laws; (j) To permit the exchange of any Series of Bonds initially issued only in fully registered form,
at the option of the holders, for coupon Bonds of such Series payable to bearer, in an aggregate principal amount not exceeding the unmatured and unredeemed principal amount of the predecessor Bonds, bearing interest at the same rate and maturing on the same date, with coupons attached representing all unpaid interest due or to become due thereon, if in the opinion of nationally recognized bond counsel selected by the Issuer that exchange would not result in the interest on any of Series of Bonds outstanding becoming subject to federal income taxation.
Supplemental Indentures Requiring Consent of Bondholders
Exclusive of supplemental indentures entered into pursuant to the preceding section, the Issuer, by appropriate legislation and with the consent of the holders of a majority in principal amount of the Bonds
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at the time Outstanding, given as provided in the Indenture, and such other consent or consents as are required by the terms of the Bonds or Bond Legislation, may modify or amend any covenant, condition or provision of the Indenture or any supplemental indenture; provided, however, that no such modification or amendment will permit or effect a change in the redemption or purchase provisions or in the maturity of principal of any Bond or of any installment of interest thereon or reduction in the amount of principal thereof or the rate of interest thereon or reduce the amount or extend the time of any sinking fund payment without the consent of the holder of such Bond, or will change or modify any of the rights or obligations of the Trustee without its written consent thereto, or, without the consent of holders of all Bonds Outstanding, will permit the imposition upon the Net Revenues or the Special Funds of a lien ranking prior to or equal with the applicable lien of the Indenture, or any supplemental indenture, or create a preference or priority of any Bond over any other Bond, or reduce the percentage of the principal amount of Bonds the consent of which is required to effect a modification or amendment of the provisions of the Indenture or any supplemental indenture. Modification by Unanimous Action
Notwithstanding anything contained in the foregoing provisions of Section 1103 of the Original Indenture, the rights and obligations of the Issuer and of the holders of the Bonds, and the terms and provisions of the Bonds and the Indenture or any supplemental indenture, may be modified or altered, in any respect with the consent of (i) the Issuer, (ii) the Trustee, and (iii) the holders of all of the Bonds then Outstanding, provided, however, that before any such modification, amendment, alteration or change will be effective there will have been delivered to the Trustee an opinion of bond counsel to the effect that such modification, amendment, alteration or change will not adversely affect the exclusion of interest on any Bonds from the gross income of Bondholders thereof for federal income tax purposes. Issuance of Additional Bonds
If no Event of Default has occurred and is continuing, the Issuer may, to the extent permitted by law in effect at the time thereof, and provided such issuance does not adversely affect the tax exempt status of any Outstanding Bonds, issue Additional Bonds from time to time for the purpose of (i) refunding, in advance or otherwise, any one or more Series of Bonds or other indebtedness of the Issuer incurred for Utility purposes, (ii) making replacements, extensions or improvements to the Utility, or (iii) any combination of the foregoing purposes. Additional Bonds of any Series will be equally and ratably secured by the Net Revenues and the Special Funds with the Series 2016 Bonds, the Series 2020 Bonds and each other Series of Additional Bonds; provided, however, that nothing herein will prevent payment of Bond Service Charges on a Series of Additional Bonds from (i) being otherwise secured and payable from sources or by property or instruments not applicable to the Series 2016 Bonds, the Series 2020 Bonds, or any one or more Series of Additional Bonds or (ii) not being secured or protected from sources or by property or instruments applicable to the Series 2016 Bonds, the Series 2020 Bonds, or one or more Series of Additional Bonds. Before any Additional Bonds are authenticated there will be delivered to the Trustee the following items:
(a) If the Additional Bonds are issued to finance replacements, extensions or improvements to the Utility, a certificate of an Independent Engineer (i) stating that in the opinion of such Independent Engineer, the replacements, extensions or improvements are reasonably necessary for the proper and economical operation of the Utility or for meeting existing or prospective demands for its services or both; and (ii) setting forth such Independent Engineer's estimate of the additional Net Revenues, if any, that will result from such replacements, extensions or improvements to the Utility for the first full Fiscal Year after completion of such replacements, extensions or improvements, which estimate will be based upon rates in effect at the time of such estimate, but such estimates will not be based
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on projected increases in the number of customers of the Utility (except for increases in the number of customers attributable to the acquisition of any additional water system, or the acquisition of customers from any such water system, by the Issuer); and
(b) A certificate of an Independent Engineer stating that in his or her opinion the Net Revenues
for the twelve calendar months immediately preceding the passage of the Bond Legislation authorizing such Additional Bonds, as adjusted to reflect rates in effect at the time of adoption of such Bond Legislation and the additional Net Revenues, if any, as set forth in the certificate of the Independent Engineer provided for in paragraph (a) above, equals or exceeds (i) 110% of the sum reasonably estimated as being the largest amount which will be required in any subsequent twelve month period to pay Bond Service Charges of all Bonds to be Outstanding Bonds immediately after the issuance of such Additional Bonds plus (ii) 100% of the sum reasonably estimated as being the largest amount which will be required in any subsequent twelve month period to pay principal and interest payable with respect to all other indebtedness of the Issuer (including without limitation general obligation bonds or notes, provided that in the case of notes, it will be assumed that the notes are converted to bonds bearing interest at the rate of seven percent (7.0%) per annum and amortizing over 25 years with level debt service) which the Issuer intends to pay from Net Revenues; and
(c) In the case of Additional Bonds to be issued for the purpose of refunding any Outstanding
Bonds or other indebtedness of the Issuer incurred for Utility purposes, evidence satisfactory to the Trustee that provision has been made to assure that moneys sufficient to retire the Bonds or such other indebtedness to be refunded will be available in the possession of the Trustee or in the Issuer's bond retirement fund at the time provided for retirement thereof under the plan for refunding and are committed to such purpose.
In making the calculation for purposes of the certificate of the Independent Engineer provided for
in paragraph (b) above: (i) in the case of issuance of Additional Bonds for refunding any Outstanding Bonds or other indebtedness of the Issuer issued for Utility purposes, payments on account of interest and principal maturities of such Additional Bonds will be used in lieu of and to the exclusion of such payments on account of interest and principal maturities of the Bonds or other indebtedness being refunded thereby; (ii) if any variable rate Series of Bonds are outstanding immediately prior to the issuance of such Additional Bonds, an interest rate equal to the greater of 6.5% per annum or the average interest rate actually borne by such Series of Bonds during the twelve (12) month period (or, if shorter, the period during which such Bonds were Outstanding) ended the end of the month next preceding the month in which such Series of Additional Bonds are to be issued will be used (provided that if such variable rate Bonds are convertible to a fixed rate, the fixed rate applicable upon conversion will be used) for estimating the interest requirements for such variable rate Series of Bonds; (iii) for purposes of estimating the payments of Bond Service Charges on any Series of Additional Bonds required to be made following the issuance thereof (A) if such Series of Additional Bonds will bear interest at a variable rate, an interest rate for such Series of Additional Bonds equal to the greater of 6.5% per annum or the average interest rate actually borne during the twelve (12) month period (or, if shorter, the period during which any variable rate Bonds were outstanding) ended the end of the month next preceding the month in which such Series of Additional Bonds are to be issued by all variable rate Series of Bonds Outstanding at the time of issuance of such Series of Additional Bonds will be used (provided that if such variable rate Bonds are convertible to a fixed rate, the fixed rate applicable upon conversion will be used) for estimating the interest requirements for such Series of Additional Bonds, (B) if such Series of Additional Bonds has a final stated maturity of three years or less, a level annual debt service based upon an interest rate determined as set forth in clause (A) of this paragraph and a final maturity of 25 years will be used; and (iv) any variable rate Series of Bonds having an interest
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reset period of more than one year will not be considered to be a variable rate Series of Bonds Outstanding for purposes of clause (iii) of this paragraph.
To the extent permitted by law, the Issuer may issue other obligations secured by a security interest
in the Net Revenues subordinate to that of the Bonds; provided, however, that the Fiscal Officer will certify to the Trustee, prior to the issuance of any such subordinate obligations, that Net Revenues are projected to be adequate to meet all requirements of the Indenture as well as pay all debt service on such subordinate obligations.
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APPENDIX C
AUDITED FINANCIAL STATEMENTS
CITY OF MARYSVILLE, OHIO
FOR THE FISCAL YEAR ENDED DECEMBER 31, 2018
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CITY OF MARYSVILLE, OHIO
Single Audit Reports
December 31, 2018
PLATTENBURG Certified Public Accountants
Efficient Effective Transparent
Honorable Mayor and City Council City of Marysville 209 S. Main Street Marysville, Ohio 43040 We have reviewed the Independent Auditor’s Report of the City of Marysville, Union County, prepared by Plattenburg & Associates, Inc., for the audit period January 1, 2018 through December 31, 2018. Based upon this review, we have accepted these reports in lieu of the audit required by Section 117.11, Revised Code. The Auditor of State did not audit the accompanying financial statements and, accordingly, we are unable to express, and do not express an opinion on them. Our review was made in reference to the applicable sections of legislative criteria, as reflected by the Ohio Constitution, and the Revised Code, policies, procedures and guidelines of the Auditor of State, regulations and grant requirements. The City of Marysville is responsible for compliance with these laws and regulations. Keith Faber Auditor of State Columbus, Ohio July 18, 2019
rakelly
Faber
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Federal Grantor/Pass Through Grantor/ Pass Through Entity CFDA
Program Grant Title Number Number Expenditures
US DEPARTMENT OF TRANSPORTATIONPassed through Ohio Department of Transportation
Highway Planning and Construction Cluster:Marysville Fifth St Sidewalk PID 99923 20.205 156,518$ State Route 31 Small Cities Grant PID 101063 20.205 1,304,181 US-33 Smart Mobility Grant PID 106432 20.205 131,105
Total Highway Planning and Construction Cluster 1,591,804
Total US Department of Transportation 1,591,804
UNITED STATES DEPARTMENT OF JUSTICEDirect:
Bulletproof Vest Partnership Program N/A 16.607 1,428
Total United States Department of Justice 1,428
Total Expenditures of Federal Awards 1,593,232$
NOTES TO THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
NOTE A - SIGNIFICANT ACCOUNTING POLICIES
CITY OF MARYSVILLESchedule of Expenditures of Federal Awards
For The Year Ended December 31, 2018
The accompanying schedule of expenditures of federal awards is a summary of the activity of the City's federal award programs. The schedule has been prepared using the cash basis of accounting. The information in this schedule is presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). The City did not elect to use the 10-percent de minimis indirect cost rate as allowed under the Uniform Guidance.
PLATTENBURG Certified Public Accountants
8260 NORTHCREEK DRIVE, SUITE 330 / CINCINNATI, OH 45236 (513) 891-2722 FAX (513) 891-2760 TWO PRESTIGE PLACE, SUITE 240 / DAYTON, OH 45342 (937) 433-0400 FAX (937) 433-0429
www.plattenburg.com
INDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
Honorable Mayor and City Council City of Marysville
We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the financial statements of the governmental activities, the business‐type activities, each major fund, and the aggregate remaining fund information of the City of Marysville (the City), as of and for the year ended December 31, 2018, and the related notes to the financial statements, which collectively comprise the City’s basic financial statements, and have issued our report thereon dated June 14, 2019, wherein we noted the City adopted GASB No. 75 as disclosed in Note 2.
Internal Control over Financial Reporting
In planning and performing our audit of the financial statements, we considered the City’s internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the City’s internal control. Accordingly, we do not express an opinion on the effectiveness of the City’s internal control.
A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity's financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance.
Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or, significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified.
Compliance and Other Matters
As part of obtaining reasonable assurance about whether the City’s financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards.
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PLATTENBURG Certified Public Accountants
Purpose of this Report The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the entity's internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity's internal control and compliance. Accordingly, this communication is not suitable for any other purpose. Plattenburg & Associates, Inc. Cincinnati, Ohio June 14, 2019
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PLATTENBURG Certified Public Accountants
8260 NORTHCREEK DRIVE, SUITE 330 / CINCINNATI, OH 45236 (513) 891-2722 FAX (513) 891-2760 TWO PRESTIGE PLACE, SUITE 240 / DAYTON, OH 45342 (937) 433-0400 FAX (937) 433-0429
www.plattenburg.com
INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE FOR EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE AND REPORT ON SCHEDULE OF EXPENDITURES OF
FEDERAL AWARDS REQUIRED BY THE UNIFORM GUIDANCE
Honorable Mayor and City Council City of Marysville
Report on Compliance for Each Major Federal Program
We have audited the City of Marysville’s (the City) compliance with the types of compliance requirements described in the OMB Compliance Supplement that could have a direct and material effect on each of the City’s major federal programs for the year ended December 31, 2018. The City’s major federal programs are identified in the summary of auditor's results section of the accompanying schedule of findings and questioned costs.
Management's Responsibility
Management is responsible for compliance with federal statutes, regulations, and the terms and conditions of its federal awards applicable to its federal programs.
Auditor's Responsibility
Our responsibility is to express an opinion on compliance for each of the City’s major federal programs based on our audit of the types of compliance requirements referred to above. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and the audit requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Those standards and the Uniform Guidance require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about the City’s compliance with those requirements and performing such other procedures, as we considered necessary in the circumstances.
We believe that our audit provides a reasonable basis for our opinion on compliance for each major federal program. However, our audit does not provide a legal determination of the City’s compliance.
Opinion on Each Major Federal Program
In our opinion, the City, complied, in all material respects, with the types of compliance requirements referred to above that could have a direct and material effect on each of its major federal programs for the year ended December 31, 2018.
Report on Internal Control over Compliance
Management of the City is responsible for establishing and maintaining effective internal control over compliance with the types of compliance requirements referred to above. In planning and performing our audit of compliance, we considered the City’s internal control over compliance with the types of requirements
4
PLATTENBURG Certified Public Accountants
that could have a direct and material effect on each major federal program to determine the auditing procedures that are appropriate in the circumstances for the purpose of expressing an opinion on compliance for each major federal program and to test and report on internal control over compliance in accordance with the Uniform Guidance, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the City’s internal control over compliance.
A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a federal program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance.
Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified.
The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of the Uniform Guidance. Accordingly, this report is not suitable for any other purpose.
Report on Schedule of Expenditures of Federal Awards Required by the Uniform Guidance
We have audited the financial statements of the governmental activities, the business‐type activities, each major fund, and the aggregate remaining fund information of the City, as of and for the year ended December 31, 2018, and the related notes to the financial statements, which collectively comprise the City’s basic financial statements. We issued our report thereon dated June 14, 2019, which contained unmodified opinions on those financial statements, wherein we noted the City adopted GASB No. 75 as disclosed in Note 2. Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the basic financial statements. The accompanying schedule of expenditures of federal awards is presented for purposes of additional analysis as required by the Uniform Guidance and is not a required part of the basic financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the schedule of expenditures of federal awards is fairly stated in all material respects in relation to the basic financial statements as a whole.
Plattenburg & Associates, Inc. Cincinnati, Ohio June 14, 2019
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CITY OF MARYSVILLE SCHEDULE OF FINDINGS AND QUESTIONED COSTS
Year Ended December 31, 2018
Section I – Summary of Auditor’s Results
Financial Statements
Type of auditor’s report issued on whether the financial statements audited were prepared in accordance with GAAP: Unmodified
To the City Council and the Citizens of the City of Marysville, Ohio:
We are pleased to present the Comprehensive Annual Financial Report (CAFR) of the City of Marysville, Ohio, (the City) for the year ended December 31, 2018. The report has been prepared in accordance with Generally Accepted Accounting Principles (GAAP) established by statements of the Governmental Accounting Standards Board (GASB), other authoritative pronouncements and guidelines recommended by the Government Finance Officers Association (GFOA) of the United States and Canada, and audited in accordance with Generally Accepted Auditing Standards (GAAS). GAAP requires a narrative introduction, overview, and analysis called the Management’s Discussion and Analysis (MD&A) to accompany the basic financial statements. This Letter of Transmittal (LOT) is designed to complement the MD&A and should be read in conjunction with it. The City’s MD&A can be found immediately following the report of the independent auditors.
THE REPORT
State law, along with Administrative Rules of the Auditor of State, requires all City governments to publish an Annual Report within 150 days of the close of each fiscal year. This report must present a complete set of financial statements presented in conformity with GAAP. Various City debt service Trust Agreements require Audited Annual Reports in accordance with GAAS. Pursuant to these requirements, we hereby issue the CAFR of the City of Marysville, Ohio, for the fiscal year ended December 31, 2018.
While there is no legal requirement for the preparation of a CAFR, it represents a commitment by the City, and its officers, to conform to nationally recognized standards of excellence in financial reporting. This report consists of management’s representations concerning the finances of the City. Responsibility for both the accuracy of the presented data and the completeness and reliability of the presentation, including all disclosures, rests with City management.
City Management has established various internal controls designed to compile reliable information for the preparation of the Annual Financial Statements in conformity with GAAP. Because the cost of internal controls should not outweigh their benefits, the City’s various internal controls are designed to provide reasonable rather than absolute assurance that the financial statements will be free from material misstatement. We believe the data, as presented, is accurate in all material respects; that it is presented in a manner designed to fairly set forth the financial position and results of operations of the City; and that all disclosures necessary to enable the reader to gain an understanding of the City's financial activity have been presented.
TWO PRESTIGE PLACE, SUITE 240 / DAYTON, OH 45342 (937) 433-0400 FAX (937) 433-0429 www.plattenburg.com
INDEPENDENT AUDITOR’S REPORT
Honorable Mayor and City Council City of Marysville
Report on the Financial Statements
We have audited the accompanying financial statements of the governmental activities, the business‐type activities, each major fund, and the aggregate remaining fund information of the City of Marysville (the City) as of and for the year ended December 31, 2018, and the related notes to the financial statements, which collectively comprise the City's basic financial statements.
Management's Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.
Auditor's Responsibility
Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.
Opinions
In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business‐type activities, each major fund and the aggregate remaining fund information of the City, as of December 31, 2018, and the respective changes in financial position, and, where applicable, cash flows thereof and the budgetary comparison for the General Fund for the year then ended in accordance with accounting principles generally accepted in the United States of America. Emphasis of Matter
As discussed in Note 2 to the financial statements, during the year ended December 31, 2018, the City adopted the provisions of Governmental Accounting Standards Board Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other Than Pension. We did not modify our opinion regarding this matter.
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PLATTENBURG Certified Public Accountants
Other Matters
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the management's discussion and analysis and schedules of pension information and other postemployment information to be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.
Supplementary and Other Information
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City's basic financial statements. The introductory section, combining and individual nonmajor fund financial statements and schedules and statistical section, are presented for purposes of additional analysis and are not a required part of the basic financial statements.
The combining and individual nonmajor fund financial statements and schedules are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the combining and individual nonmajor fund financial statements and schedules are fairly stated in all material respects in relation to the basic financial statements as a whole.
The introductory and statistical sections have not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we do not express an opinion or provide any assurance on them.
Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued our report dated June 14, 2019, on our consideration of the City's internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City's internal control over financial reporting and compliance.
Plattenburg & Associates, Inc. Cincinnati, Ohio June 14, 2019
CITY OF MARYSVILLE, OHIO
Management’s Discussion and Analysis For the Year Ended December 31, 2018 Unaudited
DRAFT - 3 - 6/17/2019
The discussion and analysis of the City of Marysville’s (City) financial performance provides an overall review of the City’s financial activities for the fiscal year ended December 31, 2018. The intent of this discussion and analysis is to look at the City’s financial performance as a whole; readers should also review the transmittal letter, notes to the basic financial statements and financial statements to enhance their understanding of the City’s financial performance.
FINANCIAL HIGHLIGHTS
Key financial highlights for 2018 are as follows:
In total, net position increased $10,183,463, a 9.8% increase from 2017. The net position of governmental activities increased $1,030,570, a 4.6% increase from 2017; and the net position of business-type activities increased $9,152,893 from 2017.
Total revenues were $65,648,601. $30.1 million was general revenues, or 46% of the total revenues; and $35.5 million was program specific revenues in the form of charges for services and sales, operating grants and contributions and capital grants and contributions, or roughly 54% of the total revenues.
The City had $30.6 million in program expenses related to governmental activities; only $6.8 million of these expenses were offset by program specific revenues. General revenues (primarily taxes) of $24.9 million were adequate to provide for the balance on these programs.
Among major funds, the General Fund had $24.6 million in revenues and $17.9 million in expenditures. The General Fund’s fund balance, including transfers, increased $5,406 to $9,432,925.
Net position for the proprietary funds increased by $9,152,893.
The City maintained a bond credit rating of Aa3, as issued by Moody’s Investors Services.
OVERVIEW OF THE FINANCIAL STATEMENTS
This annual report consists of three parts – management’s discussion and analysis, the basic financial statements, and an optional section that presents combining statements for nonmajor governmental funds. The basic financial statements include two kinds of statements that present different views of the City:
These statements are as follows:
1. The Government-Wide Financial Statements – These statements provide both long-term and short-term information about the City’s overall financial status.
2. The Fund Financial Statements – These statements focus on individual parts of the City, reporting the City’s operations in more detail than the government-wide statements.
CITY OF MARYSVILLE, OHIO
Management’s Discussion and Analysis
For the Year Ended December 31, 2018 Unaudited
DRAFT - 4 - 5/30/2019
The financial statements also include notes that explain some of the information in the financial
statements and provide more detailed data. The statements are followed by a section of required
supplementary information that further explains and supports the information in the financial statements.
Government-wide Statements
The government-wide statements report information about the City as a whole using accepted methods
similar to those used by private-sector companies. The Statement of Net Position includes all of the
government’s assets, deferred outflows of resources, liabilities and deferred inflows of resources. All of
the current year’s revenues and expenses are accounted for in the statement of activities regardless of
when cash is received or paid.
The two government-wide statements report the City’s net position and how they have changed. Net-
position (the difference between the City’s assets plus deferred outflows of resources and liabilities plus
deferred inflows of resources) is one way to measure the City’s financial health or position.
Over time, increases or decreases in the City’s net position is an indicator of whether its financial
health is improving or deteriorating, respectively.
To assess the overall health of the City you need to consider additional nonfinancial factors such as
property tax base, current property tax laws, conditions of the City’s streets and general infrastructure
and status of growth within the City.
The government-wide financial statements of the City are divided into two categories:
Governmental Activities – Most of the City’s programs and services are reported here including
security of persons and property, public health and welfare services, leisure time activities,
community environment, transportation and general government.
Business-Type Activities – These services are provided on a charge for goods or services basis to
recover all of the expenses of the goods or services provided. The City’s water, sewer, stormwater
and sanitation services are reported as business-type activities.
Fund Financial Statements
The fund financial statements provide more detailed information about the City’s most significant funds,
not the City as a whole. Funds are accounting devices that the City uses to keep track of specific sources
of funding and spending for particular purposes.
Governmental Funds – Most of the City’s activities are reported in governmental funds, which focus on
how money flows into and out of those funds and the balances left at year-end available for spending in
future periods. These funds are reported using an accounting method called modified accrual accounting,
which measures cash and all other financial assets that can readily be converted to cash. The
governmental fund statements provide a detailed short-term view of the City’s general government
operations and the basic services it provides. Governmental fund information helps you determine
whether there are more or fewer financial resources that can be spent in the near future to finance
programs. The relationship (or differences) between governmental activities (reported in the Statement of
Net Position and the Statement of Activities) and governmental funds are reconciled in the financial
statements.
CITY OF MARYSVILLE, OHIO
Management’s Discussion and Analysis
For the Year Ended December 31, 2018 Unaudited
DRAFT - 5 - 5/30/2019
Proprietary Funds – Proprietary funds use the same basis of accounting as business-type activities;
therefore, these statements will essentially match.
Fiduciary Funds – Fiduciary funds are used to account for resources held for the benefit of parties outside
the government. Fiduciary funds are not reflected in the government-wide financial statements because
the resources of those funds are not available to support the City’s own programs. All of the City’s
fiduciary activities are reported in the separate Fiduciary Statement of Assets and Liabilities.
FINANCIAL ANALYSIS OF THE CITY AS A WHOLE
The following table provides a comparison of net position between 2018 and 2017:
Governmental Business-type
Activities Activities Total
Restated Restated Restated
2018 2017 2018 2017 2018 2017
Current and other assets $21,215,845 $22,273,115 $62,276,942 $51,457,780 $83,492,787 $73,730,895
Capital assets, Net 74,486,893 70,207,782 182,816,625 187,774,290 257,303,518 257,982,072
Total assets 95,702,738 92,480,897 245,093,567 239,232,070 340,796,305 331,712,967
Deferred outflows of resources 7,689,338 5,864,639 5,385,348 6,109,146 13,074,686 11,973,785
Net pension liability 21,828,080 22,807,669 2,711,901 3,762,845 24,539,981 26,570,514
Net OPEB liability 19,285,358 15,382,785 1,952,080 1,742,544 21,237,438 17,125,329
Other long-term liabilities 28,314,515 27,933,392 152,657,161 156,139,648 180,971,676 184,073,040
Other liabilities 5,709,984 6,294,659 1,824,745 2,266,361 7,534,729 8,561,020
Total liabilities 75,137,937 72,418,505 159,145,887 163,911,398 234,283,824 236,329,903
Deferred inflows of resources 5,021,910 3,725,372 790,148 39,831 5,812,058 3,765,203
Net position (deficit):
Net investment in capital assets 43,776,985 39,732,395 34,996,804 36,233,245 78,773,789 75,965,640
Total expenses 30,643,171 28,970,765 24,821,967 23,917,975 55,465,138 52,888,740
Change in Net Position Before Transfers 1,030,570 (847,155) 9,152,893 6,952,410 10,183,463 6,105,255
Transfers 0 373,064 0 (373,064) 0 0
Total Change in Net Position 1,030,570 (474,091) 9,152,893 6,579,346 10,183,463 6,105,255
Beginning Net Position, Restated 22,201,659 N/A 81,389,987 N/A 103,591,646 N/A
Ending Net Position $23,232,229 $22,201,659 $90,542,880 $81,389,987 $113,775,109 $103,591,646
CITY OF MARYSVILLE, OHIO
Management’s Discussion and Analysis
For the Year Ended December 31, 2018 Unaudited
DRAFT - 8 - 5/30/2019
Governmental Activities
The information necessary to restate the 2017 beginning balances and the 2017 OPEB expense amounts
for the effects of the initial implementation of GASB 75 is not available. Therefore, 2017 functional
expenses still include OPEB expense of $65,870 for Governmental Activities and $22,109 for Business-
type Activities computed under GASB 45. GASB 45 required recognizing OPEB expense equal to the
contractually required contributions to the plan. Under GASB 75, OPEB expense represents additional
amounts earned, adjusted by deferred inflows/outflows.
The contractually required contribution is no longer a component of OPEB expense. Under GASB 75, the
2018 statements report OPEB expense of $1,677,157 for Governmental Activities and $183,946 for
Business-type Activities.
Consequently, in order to compare 2018 total program expenses to 2017, the following adjustments are
needed:
Governmental Business-type
Activities Activities
Total 2018 program expenses under GASB 75 $30,643,175 $24,821,967
OPEB expense under GASB 75 (1,677,157) (183,946)
2018 contractually required contribution 32,365 0
Adjusted 2018 program expenses 28,998,383 24,638,021
Total 2017 program expenses under GASB 45 28,970,765 23,917,975
Change in program expenses not related to OPEB $27,618 $720,046
CITY OF MARYSVILLE, OHIO
Management’s Discussion and Analysis For the Year Ended December 31, 2018 Unaudited
DRAFT - 9 - 6/17/2019
Governmental Activities
Net position of the City’s governmental activities had an increase of $1,030,570 from 2017. Municipal income tax receipts decreased $443,979, on a full accrual basis from 2017. The City receives an income tax based on a percentage of all salaries, wages, commissions and other compensation earned from residents living within the City and from nonresidents for work done or services performed or rendered in the City. In addition, interest income for the General Fund increased $159,977 from 2017 in relation to four increases to the federal funds target rate that were instituted by the Federal Open Market Committee in 2018.
Charges for Services increased by $532,215 from 2017. This was primarily due to an increase in permits and inspection fees collected in the governmental activity funds as compared to the 2017 fiscal year.
Capital grants and contributions increased by $1,243,537 from 2017 due to the City receiving capital grants in 2018 for the State Route 31 Phase 1 project along with the receipt of the ATCMTD grant for the Smart Mobility project along the NW 33 Corridor.
Security of Persons and Property expenses increased $324,539 from 2017. This increase is related to cost of living, merit wage and health insurance cost increases that were realized within the Police, Fire and Municipal Court departments for which expenditures are posted to this fund.
Transportation expenses decreased $417,549 from 2017. This expense category represents the activity of the public works department. This decrease is primarily due to less road improvements occurring in 2018 as compared to 2017.
General Government expenses decreased $962,113 from 2017. This is associated with the decrease in expenditures as previously noted for Transportation expenses.
Property taxes and income taxes made up 5.6% and 58.1% respectively of revenues for governmental activities for the City in fiscal year 2018. The City’s reliance upon tax revenues is demonstrated by the following graph indicating 73.27% of total revenues from general tax revenues:
Percent
Revenue Sources 2018 of TotalGrants and Entitlements not Restricted to Specific Programs $874,366 2.76%Program Revenues 6,800,927 21.47%General Tax Revenues 23,205,768 73.27%General Other 792,680 2.50%
Total Revenue $31,673,741 100.00%2.76%
21.47%
73.27%
2.50%
CITY OF MARYSVILLE, OHIO
Management’s Discussion and Analysis For the Year Ended December 31, 2018 Unaudited
DRAFT - 10 - 6/17/2019
Business-Type Activities
Net position of the business-type activities increased by $9,152,893 from 2017. This is due in part to an increase of $5,028,200 in the net position of Water.
The City’s business-type activities are its sanitation, sewer, water, and stormwater departments. The water and wastewater treatment plants provide services to a resident base in excess of 23,000. The City also provides wastewater treatment for the Village of Milford Center and several small unincorporated areas outside the City limits. The wastewater treatment plant generated operating revenues of $15,405,998 and had operating expenses of $11,176,994. The water plant generated operating revenues of $10,777,054 and had operating expenses of $5,430,567. The City’s goal is to cover the costs of operations as well as building a cash balance in these funds equivalent to one-third of the department’s annual operating budget. The City is also generating funds for additional capital expansion to ensure continued capacity and capacity improvements for future growth and development.
FINANCIAL ANALYSIS OF THE CITY’S GOVERNMENTAL FUNDS
The City’s governmental funds reported a combined fund balance of $10,406,836, which is an increase of $338,944 from last year’s balance of $10,067,892. The schedule below indicates the fund balance and the total change in fund balance by fund type as of December 31, 2018 and 2017:
Fund Balance Fund Balance IncreaseDecember 31, 2018 December 31, 2017 (Decrease)
General Fund – The City’s General Fund balance increased due to many factors. The tables that follow assist in illustrating the financial activities of the General Fund:
2018 2017 IncreaseRevenues Revenues (Decrease)
Taxes (Income, Property and Other) $20,637,245 $20,346,700 $290,545Intergovernmental Revenue 370,485 348,210 22,275Charges for Services 2,508,839 2,285,732 223,107Licenses and Permits 154,937 151,919 3,018Investment Earnings 290,125 121,774 168,351Fines and Forfietures 648,152 666,790 (18,638)Donations 1 0 1All Other Revenue 33,527 127,154 (93,627)
Total $24,643,311 $24,048,279 $595,032
CITY OF MARYSVILLE, OHIO
Management’s Discussion and Analysis
For the Year Ended December 31, 2018 Unaudited
DRAFT - 11 - 5/30/2019
General Fund revenues in 2018 increased approximately 2.5% compared to revenues in fiscal year 2017.
The most significant factor contributing to this increase was in taxes reflecting the overall increase in
business, employee withholdings, and self-employed income taxes.
2018 2017 Increase
Expenditures Expenditures (Decrease)
Security of Persons and Property $11,545,316 $11,106,986 $438,330
Public Health and Welfare Services 361,226 413,767 (52,541)
Community Environment 1,289,818 1,039,969 249,849
General Government 4,743,525 4,918,232 (174,707)
Total $17,939,885 $17,478,954 $460,931
General Fund expenditures increased by $460,931 or about 2.6% when compared to the prior year of
2017. The largest increase was in Security of Persons and Property, an increase of $438,330. This is
associated with increases in cost of living, merit and health insurance costs that were applied to
employees with the Police, Fire and Municipal Court departments for which operating expenditures for
these departments are posted to this fund.
The Debt Service fund balance decreased $101,874 from 2017. This is due to increased principal and
interest payments on existing General Obligation debt in 2018 as compared to the prior year.
The Coleman’s Crossing TIF fund balance decreased $218,179 from 2017. This decline is attributed to a
capital project for the installation of a traffic signal on Coleman’s Crossing for which expenditures were
posted to this fund.
The Capital Improvement Project (CIP) fund balance increased $125,843 from 2017. This is due to
receiving more income tax revenue and expending less in debt expenditures in 2018.
CITY OF MARYSVILLE, OHIO
Management’s Discussion and Analysis
For the Year Ended December 31, 2018 Unaudited
DRAFT - 12 - 5/30/2019
The City’s budget is prepared according to Ohio law and is based on accounting for certain transactions
on a basis of cash receipts, disbursements and encumbrances. The most significant budgeted fund is the
General Fund. During the course of fiscal year 2018 the City amended its General Fund budget several
times.
In the General Fund, the final budget basis for revenue was $23.9 million, slightly higher than the original
conservative budget estimates of $23 million. Municipal Income Tax revenues exceeded the final budget
mainly due to an increase in employer withheld taxes and self-employed residents. Also, the General
Fund originally budgeted $23.5 million for expenditures, including transfers and advances, and the final
budgeted expenditures were approximately $26.6 million. Transfer out exceeded the original budget as
the City was able to not only expend more funds on capital projects and but also reduce principal
payments on outstanding debt.
CAPITAL ASSETS AND DEBT ADMINISTRATION
Capital Assets
At the end of fiscal 2018 the City had $257,303,518 net of accumulated depreciation invested in land,
improvements, infrastructure, buildings, machinery and equipment, vehicles and construction in progress.
Of this total, $74,486,893 was related to governmental activities and $182,816,625 to the business-type
activities. The following table shows fiscal year 2018 and 2017 balances:
Governmental Increase
Activities (Decrease)
2018 2017
Land $6,308,349 $6,308,349 $0
Construction in Progress 4,837,010 2,478,350 2,358,660
Buildings 29,407,526 29,407,526 0
Improvements Other Than Buildings 8,180,482 7,840,288 340,194
Machinery and Equipment 3,361,231 2,808,291 552,940
Total Long-Term Liabilities 132,457,536 20,797,591 365,238
Total Liabilities 135,835,523 22,229,493 486,779
Deferred Inflows of Resources:
Pension 273,910 276,801 49,673
OPEB 61,782 62,419 11,205
Total Deferred Inflows of Resources 335,692 339,220 60,878
Net Position:
Net Investment in Capital Assets 7,070,881 26,317,263 1,441,792
Restricted For:
Debt Service 3,901,174 0 0
Unrestricted 24,555,383 26,473,183 628,842
Total Net Position 35,527,438$ 52,790,446$ 2,070,634$
See accompanying notes to the basic financial statements
Business-Type Activities
Enterprise Funds
CITY OF MARYSVILLE, OHIO
DRAFT - 35 - 5/30/2019
Sanitation Total
9,628 272,428
186,714 2,711,901
134,400 1,952,080
0 475,292
0 9,445,000
0 138,769,155
0 325,251
330,742 153,951,107
594,092 159,145,887
44,346 644,730
10,012 145,418
54,358 790,148
166,868 34,996,804
0 3,901,174
(12,506) 51,644,902
154,362$ 90,542,880$
CITY OF MARYSVILLE, OHIO
DRAFT - 36 - 5/30/2019
Statement of Revenues, Expenses and Changes in Fund Net Position
Proprietary Funds
For the Year Ended December 31, 2018
Sewer Water Stormwater
Operating Revenues:
Charges for Services 15,405,998$ 10,777,054$ 976,068$
Other Operating Revenue 0 0 11,172
Total Operating Revenues 15,405,998 10,777,054 987,240
Operating Expenses:
Personal Services 1,968,721 1,892,348 352,765
Contractual Services 2,954,605 886,801 260,848
Materials and Supplies 649,431 777,810 73,864
Utilities 945,121 148,963 3,626
Depreciation 4,659,116 1,724,645 112,514
Total Operating Expenses 11,176,994 5,430,567 803,617
Operating Income (Loss) 4,229,004 5,346,487 183,623
Nonoperating Revenue (Expenses):
Investment Earnings 270,630 331,216 0
Interest Expense (4,950,096) (649,503) 0
Payments in Lieu of Taxes 4,620,956 0 0
Total Nonoperating Revenues (Expenses) (58,510) (318,287) 0
Change in Net Position 4,170,494 5,028,200 183,623
Net Position Beginning of Year, as Restated 31,356,944 47,762,246 1,887,011
Net Position End of Year 35,527,438$ 52,790,446$ 2,070,634$
See accompanying notes to the basic financial statements
Business-Type Activities
Enterprise Funds
CITY OF MARYSVILLE, OHIO
DRAFT - 37 - 5/30/2019
Sanitation Total
1,581,710$ 28,740,830$
56 11,228
1,581,766 28,752,058
320,591 4,534,425
1,421,515 5,523,769
35,825 1,536,930
4,421 1,102,131
28,838 6,525,113
1,811,190 19,222,368
(229,424) 9,529,690
0 601,846
0 (5,599,599)
0 4,620,956
0 (376,797)
(229,424) 9,152,893
383,786 81,389,987
154,362$ 90,542,880$
CITY OF MARYSVILLE, OHIO
DRAFT - 38 - 5/30/2019
Statement of Cash Flows
Proprietary Funds
For the Year Ended December 31, 2018
Sewer Water Stormwater
Cash Flows from Operating Activities:
Cash Received from Customers $15,580,388 $10,820,743 $982,727
Cash Payments for Goods and Services (4,534,721) (1,857,732) (366,080)
Cash Payments to Employees (1,735,770) (1,699,956) (313,919)
Net Cash Provided (Used)
by Operating Activities 9,309,897 7,263,055 302,728
Cash Flows from Capital and
Related Financing Activities:
Acquisition and Construction of Assets (722,905) (1,152,007) (271,938)
Payments in Lieu of Taxes 3,825,941 0 0
Principal Paid on General Obligation Bonds (210,000) 0 0
Principal Paid on Mortgage Revenue Bonds (2,045,000) (875,000) 0
Principal Paid on
Ohio Public Works Commission Loan 0 (29,568) 0
Interest Paid on All Debt (5,004,014) (688,703) 0
Net Cash Used for Capital
and Related Financing Activities (4,155,978) (2,745,278) (271,938)
Cash Flows from Investing Activities:
Fair Value Markdown of Investments (69,557) 0 0
Investments Purchased (1,077,504) 0 0
Receipts of Interest 242,139 312,336 0
Net Cash Provided (Used)
by Investing Activities (904,922) 312,336 0
Net Increase (Decrease) in Cash and Cash Equivalents 4,248,997 4,830,113 30,790
Cash and Cash Equivalents at Beginning of Year 18,861,088 22,931,088 886,372
Cash and Cash Equivalents at End of Year $23,110,085 $27,761,201 $917,162
Business-Type Activities
Enterprise Funds
CITY OF MARYSVILLE, OHIO
DRAFT - 39 - 5/30/2019
Sanitation Totals
$1,577,369 $28,961,227
(1,311,181) (8,069,714)
(278,281) (4,027,926)
(12,093) 16,863,587
0 (2,146,850)
0 3,825,941
0 (210,000)
0 (2,920,000)
0 (29,568)
0 (5,692,717)
0 (7,173,194)
0 (69,557)
0 (1,077,504)
0 554,475
0 (592,586)
(12,093) 9,097,807
316,511 42,995,059
$304,418 $52,092,866
(Continued)
CITY OF MARYSVILLE, OHIO
DRAFT - 40 - 5/30/2019
Statement of Cash Flows
Proprietary Funds
For the Year Ended December 31, 2018
Sewer Water Stormwater
Reconciliation of Operating Income (Loss) to Net Cash
Provided (Used) by Operating Activities:
Operating Income (Loss) $4,229,004 $5,346,487 $183,623
Adjustments to Reconcile Operating Income (Loss)
to Net Cash Provided (Used) by Operating Activities:
Depreciation Expense 4,659,116 1,724,645 112,514
Changes in Assets and Liabilities:
Decrease (Increase) in Accounts Receivable 174,424 43,718 (4,507)
Decrease in Deferred Outflows of Resources 227,596 240,900 40,474
Increase in Prepaids (15,864) (2,234) (3,043)
Increase (Decrease) in Accounts Payable 34,612 (40,654) (25,223)
Increase (Decrease) in Accrued
Wages and Benefits 24,852 385 (532)
Increase in Compensated Absences 11,319 13,653 3,724
Decrease in Net Pension Liability (442,992) (475,648) (78,285)
Increase in Net OPEB Liability 89,023 89,941 16,146
Increase in Deferred Inflows of Resources 318,807 321,862 57,837
Total Adjustments 5,080,893 1,916,568 119,105
Net Cash Provided (Used)
by Operating Activities $9,309,897 $7,263,055 $302,728
Schedule of Noncash Investing, Capital and Financing Activities:
As of December 31, 2018, the Sewer Fund, Water Fund and Stormwater Fund had outstanding liabilities of
liabilities of $112,251, $95,925 and $57,975 , for the purchase of certain capital assets.
See accompanying notes to the basic financial statements
Business-Type Activities
Enterprise Funds
CITY OF MARYSVILLE, OHIO
DRAFT - 41 - 5/30/2019
Sanitation Totals
($229,424) $9,529,690
28,838 6,525,113
(4,391) 209,244
29,951 538,921
(2,625) (23,766)
152,687 121,422
46 24,751
607 29,303
(54,019) (1,050,944)
14,426 209,536
51,811 750,317
217,331 7,333,897
($12,093) $16,863,587
CITY OF MARYSVILLE, OHIO
DRAFT - 42 - 5/30/2019
Statement of Assets and Liabilities
Fiduciary Funds
December 31, 2018
Agency
Assets:
Cash and Cash Equivalents 821,537$
Total Assets 821,537
Liabilities:
Due to Others 821,537
Total Liabilities 821,537$
See accompanying notes to the basic financial statements
CITY OF MARYSVILLE, OHIO
Notes to the Basic Financial Statements
For the Year Ended December 31, 2018
DRAFT - 43 - 5/30/2019
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The City of Marysville is a charter municipal corporation founded in 1837, with the charter adopted by
the electors on December 1, 1960, and most recently updated on November 3, 2009. The City may
exercise all powers of home rule granted under Article XVIII, Section 3 of the Ohio Constitution not in
conflict with applicable general laws of Ohio.
The City operates under a council/mayor/administrator form of government. Services provided include
general administration as well as police, fire, ambulance, municipal court, engineering, planning and
zoning, street maintenance and repair, parks and recreation, a cemetery, and sanitation, sewer, water, and
storm-water utilities.
The financial statements are presented as of December 31, 2018 and for the year then ended and have
been prepared in conformity with generally accepted accounting principles (GAAP) applicable to local
governments. The Governmental Accounting Standards Board (the "GASB") is the standard-setting body
for establishing governmental accounting and financial reporting principles, which are primarily set forth
in the GASB's Codification of Governmental Accounting and Financial Reporting Standards (GASB
Codification).
A. Reporting Entity
The accompanying basic financial statements comply with the provisions of the GASB Statement
No. 14, "The Financial Reporting Entity," as amended by GASB Statement No. 39 "Determining
Whether Certain Organizations are Component Units," and GASB Statement No. 61 “The
Financial Reporting Entity: Omnibus; an amendment of GASB Statements No. 14 and No. 34,” in
that the financial statements include all organizations, activities, functions and component units
for which the City (the primary government) is financially accountable. Financial accountability
is defined as the appointment of a voting majority of a legally separate organization's governing
body and either (1) the City's ability to impose its will over the organization, or (2) the potential
that the organization will provide a financial benefit to or impose a financial burden on the City.
Based on the foregoing, the City's financial reporting entity has no component units but includes
all funds, agencies, boards and commissions that are part of the primary government, which
include the following services: police and fire protection, parks and recreation, planning, zoning,
street maintenance and other governmental services. In addition, the City owns and operates a
water treatment and distribution system, a wastewater treatment and collection system and
provides refuse collection services all of which are reported as enterprise funds.
The City is associated with the Marysville/Union County Joint Recreation District, the Union
County Community Improvement Corporation, the Mid-Ohio Regional Planning Commission,
the Union County Council of Governments and the Marysville/Union County Port Authority;
each is a jointly governed organization. These organizations are more fully described in Note 20
to the basic financial statements.
CITY OF MARYSVILLE, OHIO
Notes to the Basic Financial Statements
For the Year Ended December 31, 2018
DRAFT - 44 - 5/30/2019
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
B. Basis of Presentation - Fund Accounting
The accounting policies and financial reporting practices of the City conform to generally
accepted accounting principles as applicable to governmental units.
The accounting system is organized and operated on the basis of funds, each of which is
considered a separate accounting entity. The operations of each fund are accounted for with a
separate set of self-balancing accounts that comprise its assets, deferred outflows of resources,
liabilities, deferred inflows of resources, fund equity, revenues and expenditures (expenses). The
various funds are summarized by type in the basic financial statements. The following fund types
are used by the City:
Governmental Funds
Governmental Funds - Governmental funds are those funds through which most governmental
functions are typically financed. The acquisition, use and balances of the City's expendable
financial resources and the related current liabilities and deferred inflows of resources (except
those accounted for in the proprietary funds) are accounted for through governmental funds. The
measurement focus is upon determination of "financial flow" (sources, uses and balances of
financial resources). The following are the City's major governmental funds:
General Fund - This fund is used to account for all financial resources except those accounted for
in another fund. The General Fund balance is available to the City for any purpose provided it is
expended or transferred according to the general laws of Ohio and the limitations of the City
Charter.
Debt Service Fund – This fund is used to account for resources that are used for payment of
principal, interest and fiscal charges on general obligation debt.
Coleman’s Crossing TIF Fund – This fund is used to account for the debt proceeds used for and
the payments in lieu of tax receipts realized by the development of the Coleman’s Crossing area.
These proceeds will be utilized to repay the debt issued for completion of this project, along with
the compensation payment to the Marysville Exempted School District. Also, with the addition
on the Cook’s Pointe TIF in 2018, this fund was utilized to account for community environment
investments within the northern boundaries of the City.
Capital Improvements Project Fund (CIP) – This fund is used to account for the accumulation of
funds for the acquisition of capital assets and/or the construction of major capital facilities.
The other governmental funds of the City account for grants and other resources whose use is
restricted to a particular purpose.
CITY OF MARYSVILLE, OHIO
Notes to the Basic Financial Statements
For the Year Ended December 31, 2018
DRAFT - 45 - 5/30/2019
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
B. Basis of Presentation - Fund Accounting (Continued)
Proprietary Funds
All proprietary funds are accounted for on an "economic resources" measurement focus. This
measurement focus provides that all assets and deferred outflows of resources and all liabilities
and deferred inflows of resources associated with the operation of these funds are included on the
Statement of Net Position. Proprietary fund type operating statements present increases (i.e.,
revenues) and decreases (i.e., expenses) in total net position.
Enterprise Funds - These funds are used to account for operations that are financed and operated
in a manner similar to private business enterprises, whereby the intent of the governing body is
that the costs (expenses, including depreciation) of providing goods or services to the general
public on a continuing basis be financed or recovered primarily through user charges. The City’s
major enterprise funds are:
Sewer Fund – This fund is used to account for the operation of the City’s sanitary sewer service.
Water Fund – This fund is used to account for the operation of the City’s water service.
Stormwater Fund – This fund is used to account for the operation of the City’s surface water
drainage system.
Sanitation Fund – This fund is used to account for the operation of the City’s sanitation (refuse)
pickup and disposal service.
Fiduciary Funds
Fiduciary fund reporting focuses on net position and changes in net position. The fiduciary
category is split into four classifications: pension trust funds, investment trust funds, private-
purpose trust funds and agency funds. Trust funds are used to account for assets held by the City
under a trust agreement for individuals, private organizations or other governments and therefore
not available to support the City’s own programs. The agency funds are custodial in nature
(assets equal liabilities) and do not involve the measurement of results of operation. These funds
operate on a full accrual basis of accounting. The City has five agency funds. These funds are
used to account for monies received by the City in situations where the City’s role is purely
custodial in nature. The five funds are the Municipal Court Fund, which accounts for monies that
flow through the municipal court office, the Law Library Fund, which is used to account for
monies collected from traffic fines until they are remitted to other entities, the Unclaimed Monies
Fund, where the City is holding unclaimed funds due to others, the Union County Port Authority
Fund and the US 33 Council of Governments Fund.
CITY OF MARYSVILLE, OHIO
Notes to the Basic Financial Statements
For the Year Ended December 31, 2018
DRAFT - 46 - 5/30/2019
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
C. Basis of Presentation – Financial Statements
Government-wide Financial Statements – The Statement of Net Position and the Statement of
Activities display information about the City as a whole. These statements include the financial
activities of the primary government, except for fiduciary funds. The statements distinguish
between those activities of the City that are governmental and those that are considered business-
type activities.
The government-wide statements are prepared using the economic resources measurement focus.
This is the same approach used in the preparation of the proprietary fund financial statements but
differs from the manner in which governmental fund financial statements are prepared.
Governmental fund financial statements therefore include a reconciliation with brief explanations
to better identify the relationship between the government-wide statements and the statements for
governmental funds.
The government-wide Statement of Activities presents a comparison between direct expenses and
program revenues for each segment of the business-type activities of the City and for each
function or program of the City’s governmental activities. Direct expenses are those that are
specifically associated with a service, program or department and therefore clearly identifiable to
a particular function. Program revenues include charges paid by the recipient of the goods or
services offered by the program and grants and contributions that are restricted to meeting the
operational or capital requirements of a particular program. Revenues which are not classified as
program revenues are presented as general revenues of the City, with certain limited exceptions.
The comparison of direct expenses with program revenues identifies the extent to which each
business segment or governmental function is self-financing or draws from the general revenues
of the City.
Fund Financial Statements – Fund financial statements report detailed information about the
City. The focus of governmental fund financial statements is on major funds rather than reporting
funds by type. Each major fund is presented in a separate column. Nonmajor funds are
aggregated and presented in a single column. Fiduciary funds are reported by fund type.
The accounting and financial reporting treatment applied to a fund is determined by its
measurement focus. All governmental fund types are accounted for using a flow of current
financial resources measurement focus. The financial statements for governmental funds are a
balance sheet, which generally includes only current assets and deferred outflows of resources
and current liabilities and deferred inflows of resources, and a statement of revenues,
expenditures and changes in fund balances, which reports on the sources (i.e., revenues and other
financing sources) and uses (i.e., expenditures and other financing uses) of current financial
resources.
CITY OF MARYSVILLE, OHIO
Notes to the Basic Financial Statements
For the Year Ended December 31, 2018
DRAFT - 47 - 5/30/2019
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
C. Basis of Presentation – Financial Statements (Continued)
All proprietary fund types are accounted for on a flow of economic resources measurement focus.
With this measurement focus, all assets and deferred outflows of resources and all liabilities and
deferred inflows of resources associated with the operation of these funds are included on the
Statement of Net Position. The Statement of Revenues, Expenses and Changes in Fund Net
Position presents increases (i.e., revenues) and decreases (i.e., expenses) in total net position. The
Statement of Cash Flows provides information about how the City finances and meets the cash
flow needs of its proprietary activities.
D. Basis of Accounting
Basis of accounting represents the methodology utilized in the recognition of revenues and
expenditures or expenses in the accounts and reported in the financial statements, and relates to
the timing of the measurements made. The accounting and reporting treatment applied to a fund
is determined by its measurement focus.
The modified accrual basis of accounting is followed by the governmental funds. Under the
modified accrual basis of accounting, revenues are recorded when susceptible to accrual, i.e., both
measurable and available. Revenue resulting from exchange transactions, in which each party
gives and receives essentially equal value, is recorded on the modified accrual basis when the
exchange takes place and the resources are available. The term "available" means collectible
within the current period or soon enough thereafter to be used to pay liabilities of the current
period, which for the City is 60 days after year end. Expenditures are recognized in the
accounting period in which the fund liability is incurred, if measurable, except for unmatured
interest on general long-term debt which is recognized when due.
Non-exchange transactions, in which the City receives value without directly giving equal value
in return, include income taxes, property taxes, payments in lieu of taxes, grants, entitlements and
donations. Revenue from income taxes is recognized in the period in which the income is earned
and is available. Revenue from grants, entitlements and donations is recognized in the fiscal year
in which all eligibility requirements have been satisfied and the revenue is available. Eligibility
requirements include timing requirements, which specify the year when the resources are required
to be used or the year when use is first permitted, matching requirements, in which the City must
provide local resources to be used for a specific purpose, and expenditure requirements, in which
the resources are provided to the City on a reimbursement basis. Revenue considered susceptible
to accrual at year end includes income taxes withheld by employers, interest on investments, state
levied locally shared taxes (including motor vehicle license fees and local government
assistance). Licenses, permits, charges for service and other miscellaneous revenues are recorded
as revenue when received in cash because generally this revenue is not measurable until received.
CITY OF MARYSVILLE, OHIO
Notes to the Basic Financial Statements
For the Year Ended December 31, 2018
DRAFT - 48 - 5/30/2019
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
D. Basis of Accounting (Continued)
Special assessment installments, which are measurable, but not available at December 31, are
recorded as deferred inflow of resources – unavailable amount. Property taxes measurable as of
December 31, 2018, but which are not intended to finance 2018 operations and delinquent
property taxes, whose availability is indeterminate, are recorded as deferred inflow of resources
as further described in Note 6 “Taxes”.
The accrual basis of accounting is utilized for reporting purposes by the proprietary funds and
fiduciary funds. Revenues are recognized when they are earned and expenses recognized when
incurred.
E. Deferred Inflows/Outflows of Resources
In addition to assets, the statements of financial position will sometimes report a separate section
for deferred outflows of resources. Deferred outflows of resources, represents a consumption of
net position that applies to a future period and will not be recognized as an outflow of resources
(expenses/expenditures) until then. For the City, deferred outflows related to pension/OPEB are
explained in notes 11 and 12.
In addition to liabilities, the statement of financial position will sometimes report a separate
section for deferred inflows of resources. This separate financial statement element, deferred
inflows of resources, represents an acquisition of net position that applies to a future period(s) and
so will not be recognized as an inflow of resources (revenue) until that time. On the government-
wide statement of net position and governmental funds balance sheet, property taxes that are
intended to finance future fiscal periods are reported as deferred inflows. In addition, the
governmental funds balance sheet reports deferred inflows which arise only under a modified
accrual basis of accounting. Accordingly, the item, unavailable amounts, is reported only in the
governmental funds balance sheet. The governmental funds report unavailable amounts for
delinquent property taxes, income taxes, special assessments, charges for services, interest and
state levied shared taxes. These amounts are deferred and recognized as an inflow of resources in
the period that the amounts become available. Deferred inflows of resources related to
pension/OPEB are reported on the government-wide statement of net position. (See Note 11 and
12)
CITY OF MARYSVILLE, OHIO
Notes to the Basic Financial Statements
For the Year Ended December 31, 2018
DRAFT - 49 - 5/30/2019
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
F. Budgetary Process
The budgetary process is prescribed by provisions of the Ohio Revised Code and entails the
preparation of budgetary documents within an established timetable. The major documents
prepared are the tax budget, the certificate of estimated resources and the appropriation
ordinance, all of which are prepared on the budgetary basis of accounting. The certificate of
estimated resources and the appropriation ordinance are subject to amendment throughout the
year.
All funds other than agency funds are legally required to be budgeted and appropriated; however,
only governmental funds are required to be reported. The only funds required to be reported in
the basic financial statements are the General Fund and any major special revenue funds. The
primary level of budgetary control is at the object level within each department. Budgetary
modifications may be made only by ordinance of the City Council.
1. Tax Budget
The Director of Finance and the City Manager submit an annual tax budget for the following
fiscal year to City Council by July 15 for consideration and passage. The adopted budget is
submitted to the County Auditor, as Secretary of the County Budget Commission, by July 20 of
each year for the period January 1 to December 31 of the following year.
The budget commission has waived the filing of the budget.
CITY OF MARYSVILLE, OHIO
Notes to the Basic Financial Statements
For the Year Ended December 31, 2018
DRAFT - 50 - 5/30/2019
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
F. Budgetary Process (Continued)
2. Estimated Resources
The County Budget Commission reviews estimated revenue and determines if the budget
substantiates a need to levy all or part of previously authorized taxes. The Budget Commission
then certifies its actions to the City by October 1 of each year. As part of the certification
process, the City receives an official certificate of estimated resources stating the projected
receipts by fund. Prior to December 31, the City must revise its budget so that the total
contemplated expenditures from any fund during the ensuing fiscal year do not exceed the
amount available as stated in the certificate of estimated resources. The revised budget then
serves as the basis for the annual appropriations measure. On or about January 1, the certificate
of estimated resources is amended to include any unencumbered fund balances from the
preceding year. The certificate may be further amended during the year if a new source of
revenue is identified or if actual receipts exceed current estimates. The amounts reported on the
budgetary statement reflect the amounts in the final amended official certificate of estimated
resources issued during 2018.
3. Appropriations
A temporary appropriation ordinance to control expenditures may be passed on or about January
1 of each year for the period January 1 through March 31. An annual appropriation ordinance
must be passed by April 1 of each year for the period January 1 through December 31. The
appropriation ordinance establishes spending controls at the fund, department and object level,
the legal level of control. The appropriation ordinance may be amended during the year as
additional information becomes available, provided that total fund appropriations do not exceed
the current estimated resources as certified by the County Budget Commission. The allocation of
appropriations among departments and objects within a fund may be modified during the year by
an ordinance of City Council. During 2018, several supplemental appropriations were necessary
to budget the use of contingency funds, intergovernmental grant proceeds and capital
improvement projects. Administrative control is maintained through the establishment of more
detailed line-item budgets. The budgetary figures which appear in the "Statement of Revenues,
Expenditures, and Changes in Fund Balances--Budget and Actual--General Fund" are provided
on the budgetary basis to provide a comparison of actual results with the final budget, including
all amendments and modifications.
4. Encumbrances
As part of formal budgetary control, purchase orders, contracts and other commitments for
expenditures are encumbered and recorded as the equivalent of expenditures (budget basis) in
order to reserve that portion of the applicable appropriation and to determine and maintain legal
compliance. However, on the GAAP basis of accounting, encumbrances do not constitute
expenditures or liabilities and are reported as part of fund balances in the accompanying basic
financial statements.
CITY OF MARYSVILLE, OHIO
Notes to the Basic Financial Statements
For the Year Ended December 31, 2018
DRAFT - 51 - 5/30/2019
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
F. Budgetary Process (Continued)
5. Lapsing of Appropriations
At the close of each fiscal year, the unencumbered balance of each appropriation reverts to the
respective fund from which it was appropriated and becomes subject to future appropriations.
The encumbered appropriation balance is carried forward to the subsequent fiscal year and need
not be reappropriated.
6. Budgetary Basis of Accounting
The City's budgetary process accounts for certain transactions on a basis other than generally
accepted accounting principles (GAAP). The major differences between the budgetary basis and
the GAAP basis lie in the manner in which revenues and expenditures are recorded. Under the
budgetary basis, revenues and expenditures are recognized on a cash basis. Utilizing the cash
basis, revenues are recorded when received in cash and expenditures when paid. Under the
GAAP basis, revenues and expenditures are recorded on the modified accrual basis of accounting.
On the budgetary basis investment earnings are recognized when realized, whereas on a GAAP
basis unrealized gains and losses are recognized when investments are adjusted to fair value.
This space intentionally left blank.
CITY OF MARYSVILLE, OHIO
Notes to the Basic Financial Statements
For the Year Ended December 31, 2018
DRAFT - 52 - 5/30/2019
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
F. Budgetary Process (Continued)
6. Budgetary Basis of Accounting (Continued)
The following table summarizes the adjustments necessary to reconcile the GAAP basis
statements to the budgetary basis statements for the General Fund: Net Change In Fund Balance
General
Fund
GAAP Basis (as reported) $5,406
Increase (Decrease):
Accrued Revenues at
December 31, 2018
received during 2019 (2,377,349)
Accrued Revenues at
December 31, 2017
received during 2018 2,408,510
Accrued Expenditures at
December 31, 2018
paid during 2019 994,904
Accrued Expenditures at
December 31, 2017
paid during 2018 (1,142,523)
2017 Prepaids for 2018 133,999
2018 Prepaids for 2019 (249,327)
2017 Adjustment to Fair Value (97,260)
2018 Adjustment to Fair Value 49,788
Outstanding Encumbrances (215,364)
2017 Cash With Fiscal Agent 112,306
2018 Cash With Fiscal Agent (96,909)
Perspective Difference:
Activity of Funds Reclassified
for GAAP Reporting Purposes 11,108
Budget Basis ($462,711)
CITY OF MARYSVILLE, OHIO
Notes to the Basic Financial Statements
For the Year Ended December 31, 2018
DRAFT - 53 - 5/30/2019
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
G. Cash and Cash Equivalents
Cash and cash equivalents include amounts in demand deposits, the State Treasury Asset Reserve
(STAR Ohio) and certificates of deposit with original maturity dates of three months or less. The
STAR Ohio is considered an investment for purposes of GASB Statement No. 3, but it is reported
as a cash equivalent in the basic financial statements because it is a highly liquid instrument
which is readily convertible to cash. The City also invests in STAR Plus, a federally insured cash
account powered by the Federally Insured Cash Account (FICA) program. STAR Plus enables
political subdivisions to generate a competitive yield on cash deposits in a network of carefully
selected FDIC-insured banks via a single, convenient account. All deposits with STAR Plus have
full FDIC insurance, with no term commitment on deposits. The City pools its cash for
investment and resource management purposes. Each fund's equity in pooled cash and
investments represents the balance on hand as if each fund maintained its own cash and
investment account. For purposes of the Statement of Cash Flows, the proprietary funds' shares
of equity in pooled certificates of deposit are considered to be cash equivalents. See Note 5,
"Cash, Cash Equivalents and Investments." Investment earnings of $255,119 earned by other
funds were credited to the General Fund as required by local statute.
H. Investments
Investment procedures and interest allocations are restricted by provisions of the Ohio
Constitution and the Ohio Revised Code. The City allocates interest among certain funds based
upon percentages mandated by City ordinance. In accordance with GASB Statement No. 31,
“Accounting and Financial Reporting for Certain Investments and for External Investment
Pools”, the City records all its investments at fair value except for nonparticipating investment
contracts (certificates of deposit) which are reported at cost, which approximates fair value. All
investments, other than certificates of deposit, are considered, including those with a maturity of
one year or less, and included in the calculation of the change in fair value. Fair value is
determined by quoted market prices. See Note 5, "Cash, Cash Equivalents and Investments."
The City has invested funds in the STAR Ohio during 2018. STAR Ohio is an investment pool
managed by the State Treasurer’s Office which allows governments within the State to pool their
funds for investment purposes. STAR Ohio is not registered with the SEC as an investment
company, but does operate in a manner consistent with Rule 2a7 of the Investment Company Act
of 1940. Investments in STAR Ohio are valued at STAR Ohio’s share price which is the price
the investment could be sold for on December 31, 2018.
I. Prepaid Items
Payments made to vendors for services that will benefit periods beyond December 31, 2018, are
recorded as prepaid items using the consumption method. A current asset for the prepaid amount
is recorded at the time of the purchase and an expenditure/expense is reported in the year in
which services are consumed.
CITY OF MARYSVILLE, OHIO
Notes to the Basic Financial Statements For the Year Ended December 31, 2018
DRAFT - 54 - 6/17/2019
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
J. Capital Assets and Depreciation
Capital assets are defined by the City as assets with an initial, individual cost of more than $5,000.
1. Property, Plant and Equipment - Governmental Activities
Governmental activities capital assets are those not directly related to the business type funds. These generally are acquired or constructed for governmental activities and are recorded as expenditures in the governmental funds and are capitalized at cost (or estimated historical cost for assets not purchased in recent years). These assets are reported in the Governmental Activities column of the Government-wide Statement of Net Position, but they are not reported in the Fund Financial Statements. All infrastructure acquired prior to the implementation of GASB Statement No. 34, “Basic Financial Statements – and Management’s Discussion and Analysis – for State and Local Governments”, has been reported.
Donated capital assets are recorded at acquisition value at the date received. Capital assets include land, construction in progress, buildings, building improvements, machinery, equipment and infrastructure. Infrastructure is defined as long-lived capital assets that normally are stationary in nature and normally can be preserved for a significant number of years. Examples of infrastructure include roads, bridges, curbs and gutters, streets and sidewalks, drainage systems and lighting systems. Estimated historical costs for governmental activities capital asset values were initially determined by identifying historical costs when such information was available. In cases where information supporting original cost was not obtainable, estimated historical costs were developed. For certain capital assets, the estimates were arrived at by indexing estimated current costs back to the estimated year of acquisition.
2. Property, Plant and Equipment – Business Type Activities
Contributed capital assets are recorded at acquisition value at the date received. Capital assets include land, construction in progress, buildings, building improvements, machinery, equipment, vehicles and infrastructure. Infrastructure is defined as long-lived capital assets that normally are stationary in nature and normally can be preserved for a significant number of years. Examples of infrastructure include roads, bridges, curbs and gutters, streets and sidewalks, drainage systems and lighting systems.
Property, plant and equipment acquired by the proprietary funds are stated at cost (or estimated historical cost), including interest capitalized during construction and architectural and engineering fees where applicable. Contributed capital assets are recorded at acquisition value at the date received. These assets are reported in both the Business-Type Activities column of the Government-wide Statement of Net Position and in the respective funds.
CITY OF MARYSVILLE, OHIO
Notes to the Basic Financial Statements
For the Year Ended December 31, 2018
DRAFT - 55 - 5/30/2019
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
J. Capital Assets and Depreciation (Continued)
3. Depreciation
All capital assets are depreciated, excluding land and construction in progress. Depreciation has
been provided using the straight-line method over the following estimated useful lives:
Description
Governmental and
Business-Type Activities
Estimated Lives (in years)
Buildings 40
Improvements other than Buildings/Infrastructure 10 - 15
Infrastructure 10 - 40
Machinery and Equipment 5 - 10
Vehicles 5 – 10
K. Long-Term Debt
Long-term liabilities are being repaid from the following funds:
Obligation Fund
General Obligation Bonds Debt Service Fund
Mortgage Revenue Bonds Water Fund
Sewer Fund
Capital Leases General Fund
Long-Term Loan Payable
Debt Service Fund
Long-Term Notes Payable
Debt Service Fund
Ohio Public Works
Commission Loans
Water Fund
Sewer Fund
Compensated Absences General Fund
Street Maintenance Fund
Water Fund
Sewer Fund
Sanitation Fund
Stormwater Fund
Pension and OPEB Liabilities
General Fund
Water Fund
Sewer Fund
Sanitation Fund
Stormwater Fund
CITY OF MARYSVILLE, OHIO
Notes to the Basic Financial Statements
For the Year Ended December 31, 2018
DRAFT - 56 - 5/30/2019
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
L. Compensated Absences
Employees of the City earn vacation leave at various rates within limits specified under collective
bargaining agreements or under statute.
The rate of cash compensation for sick leave payout varies within specified limits under
collective bargaining agreements or under law. Employees are paid 25% of the accumulated sick
time upon retirement. Employees are eligible for retirement at any age with at least 10 years of
service. Compensation for sick leave is paid at the employee's full rate of pay at the time of
termination or retirement.
In accordance with GASB Statement No. 16, "Accounting for Compensated Absences," the City
records a liability for vacation time and sick leave when the obligation is attributable to services
previously rendered or to rights that vest or accumulate, and when payment of the obligation is
probable and can be reasonably determined.
For governmental funds, that portion of unpaid compensated absences that has matured is
reported as an expenditure in the fund from which the individual earning the leave is paid, and a
corresponding liability is reflected in the account “Compensated Absences Payable.” In the
government wide Statement of Net Position, “Compensated Absences Payable” is recorded
within the “Due Within One Year” account and the long-term portion of the liability is recorded
within the “Due in More Than One Year” account. Compensated absences are expensed in the
proprietary funds when earned and the related liability is reported within the fund.
M. Net Position
Net position represents the difference between assets plus deferred outflows of resources and
liabilities plus deferred inflow of resources. Net investment in capital assets consists of capital
assets, net of accumulated depreciation, reduced by the outstanding balances of any borrowings
used for the acquisition, construction of improvement of those assets. Net position is reported as
restricted when there are limitations imposed on their use either through the enabling legislation
adopted by the City or through external restrictions imposed by creditors, grantors or laws or
regulations of other governments.
The City applies restricted resources when an expense is incurred for purposes for which both
restricted and unrestricted net position is available.
CITY OF MARYSVILLE, OHIO
Notes to the Basic Financial Statements For the Year Ended December 31, 2018
DRAFT - 57 - 6/17/2019
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
N. Fund Balances
In the fund financial statements, fund balance for governmental funds is reported in classifications that comprise a hierarchy based primarily on the extent to which the City is bound to honor constraints on the specific purpose for which amounts in the funds can be spent. Fund balance is reported in five components – nonspendable, restricted, committed, assigned and unassigned.
Nonspendable – Nonspendable fund balance includes amounts that cannot be spent because they are either not in spendable form or legally contractually required to be maintained intact.
Restricted – Restricted fund balance consists of amounts that have constraints placed on them either externally by third parties (creditors, grantors, contributors, or laws or regulations of other governments) or by law through constitutional provisions or enabling legislation. Enabling legislation authorizes the City to assess, levy, charge or otherwise mandate payment of resources (from external resource providers) and includes a legally enforceable requirement (compelled by external parties) that those resources be used only for the specific purposes stipulated in the legislation.
Committed – Committed fund balance consists of amounts that can only be used for specific purposes pursuant to constraints imposed by formal action of the City’s highest level of decision making authority. For the City, these constraints consist of ordinances passed by City Council. Committed amounts cannot be used for any other purpose unless the City removes or changes the specified use by taking the same type of action (ordinance) it employed previously to commit those amounts.
Assigned – Assigned fund balance consists of amounts that are constrained by the City’s intent to be used for specific purposes, but are neither restricted nor committed. The City has no formal policy authorizing a body or official to assign amounts for specific purposes.
Unassigned – Unassigned fund balance consists of amounts that have not been restricted, committed or assigned to specific purposes within the General Fund as well as negative fund balances in all other governmental funds.
When both restricted and unrestricted resources are available for use, it is the City’s policy to use restricted resources first, then unrestricted resources (committed, assigned and unassigned) as they are needed. The City has a target minimum fund balance policy for the General Fund of $3.5 million.
O. Pensions/Other Postemployment Benefits (OPEB)
For purposes of measuring the net pension/OPEB liability, deferred outflows of resources and deferred inflows of resources related to pensions/OPEB, and pension/OPEB expense, information about the fiduciary net position of the pension/OPEB plans and additions to/deductions from their fiduciary net positon have been determined on the same basis as they are reported by the pension/OPEB plan. For this purpose, benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms. The pension/OPEB plans report investments at fair value.
CITY OF MARYSVILLE, OHIO
Notes to the Basic Financial Statements
For the Year Ended December 31, 2018
DRAFT - 58 - 5/30/2019
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
P. Interfund Activity
Exchange transactions between funds are reported as revenues in the seller funds and as
expenditures/expenses in the purchaser funds. Flows of cash or goods from one fund to another
without a requirement for repayment are reported as interfund transfers. Interfund transfers are
reported as other financing sources/uses in governmental funds and after nonoperating
revenues/expenses in proprietary funds. Repayments from funds responsible for particular
expenditures/expenses to the funds that initially paid for them are not presented on the financial
statements. Interfund services provided and used are not eliminated in the process of
consolidation.
Transfers between governmental and business-type activities on the government-wide statements
are reported in the same manner as general revenues. In addition, interfund transfers between
governmental funds are eliminated for reporting on the government-wide financial statements.
Only transfers between governmental activities and business-type activities are reported on the
Statement of Activities.
Q. Estimates
The preparation of financial statements in conformity with generally accepted accounting
principles requires management to make estimates and assumptions that affect the amounts
reported in the financial statements and accompanying notes. Actual results may differ from
those estimates.
R. Operating Revenues and Expenses
Proprietary funds distinguish operating revenues and expenses from nonoperating items.
Operating revenues are those revenues that are generated directly from the primary activity of the
proprietary funds. For the City, these revenues are charges for services for water treatment and
distribution, wastewater collection and treatment, maintenance of storm water collection systems,
and collection of solid waste refuse. Operating expenses are necessary costs incurred to provide
the good or service that is the primary activity of the fund. All revenues and expenses not
meeting this definition are reported as nonoperating revenues and expenses.
S. Extraordinary and Special Items
Extraordinary items are transactions or events that are both unusual in nature and infrequent in
occurrence. Special items are transactions or events that are within the control of the City
Council and that are either unusual in nature or infrequent in occurrence. Neither type of
transaction occurred during fiscal year 2018.
U. Fair Value
The City categorizes its fair value measurements within the fair value hierarchy established by
generally accepted accounting principles. The hierarchy is based on the valuation inputs used to
measure the fair value of the asset. Level 1 inputs are quoted prices in active markets for
identical assets; Level 2 inputs are significant other observable inputs; Level 3 inputs are
significant unobservable inputs.
CITY OF MARYSVILLE, OHIO
Notes to the Basic Financial Statements
For the Year Ended December 31, 2018
DRAFT - 59 - 5/30/2019
NOTE 2 – CHANGE IN ACCOUNTING PRINCIPLE AND RESTATEMENT OF NET
POSITION/FUND BALANCE
For 2018, the City implemented Governmental Accounting Standards Board (GASB) Statement No. 75,
“Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions,” Statement No.
Notes to the Basic Financial Statements For the Year Ended December 31, 2018
DRAFT - 76 - 6/17/2019
NOTE 11 – DEFINED BENEFIT PENSION PLANS (Continued)
Funding Policy - The Ohio Revised Code (ORC) provides statutory authority for member and employer contributions as follows:
Police Firefighters2018 Statutory Maximum Contribution Rates
Employer 19.50 % 24.00 %Employee:
January 1, 2018 through December 31, 2018 12.25 % 12.25 %
2018 Actual Contribution RatesEmployer:
Pension 19.00 % 23.50 %Post-employment Health Care Benefits 0.50 0.50
Total Employer 19.50 % 24.00 %
Employee:January 1, 2018 through December 31, 2018 12.25 % 12.25 %
Employer contribution rates are expressed as a percentage of covered payroll. The City’s contractually required contribution to OPF was $1,387,580 for 2018.
Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions
The net pension liability for OPERS was measured as of December 31, 2017, and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of that date. OPF’s total pension liability was measured as of December 31, 2017, and was determined by rolling forward the total pension liability as of January 1, 2017, to December 31, 2017. The City's proportion of the net pension liability was based on the City's share of contributions to the pension plan relative to the contributions of all participating entities. Following is information related to the proportionate share and pension expense:
OPERS OP&F TotalProportionate Share of the Net Pension Liability $6,968,253 $17,571,728 $24,539,981
Proportion of the Net Pension Liability-Current Measurement Date 0.044418% 0.286303%Proportion of the Net Pension Liability-Prior Measurement Date 0.042688% 0.266451%Percentage Change 0.001730% 0.019852%
Pension Expense $2,115,462 $2,382,309 $4,497,771
CITY OF MARYSVILLE, OHIO
Notes to the Basic Financial Statements
For the Year Ended December 31, 2018
DRAFT - 77 - 5/30/2019
NOTE 11 – DEFINED BENEFIT PENSION PLANS (Continued)
At December 31, 2018, the City reported deferred outflows of resources and deferred inflows of resources
related to pensions from the following sources:
OPERS OP&F Total
Deferred Outflows of Resources
Changes in assumptions $832,753 $765,694 $1,598,447
Differences between expected and
actual experience 7,117 266,662 273,779
Change in proportionate share 191,979 1,367,793 1,559,772
City contributions subsequent to the
measurement date 869,072 1,387,580 2,256,652
Total Deferred Outflows of Resources $1,900,921 $3,787,729 $5,688,650
Deferred Inflows of Resources
Net difference between projected and
actual earnings on pension plan investments $1,495,992 $607,848 $2,103,840
Differences between expected and
actual experience 137,324 31,787 169,111
Change in proportionate share 23,385 98,499 121,884
Total Deferred Inflows of Resources $1,656,701 $738,134 $2,394,835
$2,256,652 reported as deferred outflows of resources related to pension resulting from City contributions
subsequent to the measurement date will be recognized as a reduction of the net pension liability in the
year ending December 31, 2019. Other amounts reported as deferred outflows of resources and deferred
inflows of resources related to pension will be recognized in pension expense as follows:
OPERS OP&F Total
Year Ending December 31:
2019 $760,269 $722,645 $1,482,914
2020 (111,640) 629,660 518,020
2021 (658,754) (95,564) (754,318)
2022 (614,727) (61,824) (676,551)
2023 0 376,242 376,242
2024 0 90,856 90,856
Total ($624,852) $1,662,015 $1,037,163
Actuarial Assumptions - OPERS
Actuarial valuations of an ongoing plan involve estimates of the values of reported amounts and
assumptions about the probability of occurrence of events far into the future. Examples include
assumptions about future employment, mortality, and cost trends. Actuarially determined amounts are
subject to continual review or modification as actual results are compared with past expectations and new
estimates are made about the future.
CITY OF MARYSVILLE, OHIO
Notes to the Basic Financial Statements
For the Year Ended December 31, 2018
DRAFT - 78 - 5/30/2019
NOTE 11 – DEFINED BENEFIT PENSION PLANS (Continued)
Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as
understood by the employers and plan members) and include the types of benefits provided at the time of
each valuation. The total pension liability in the December 31, 2017 actuarial valuation was determined
using the following actuarial assumptions, applied to all periods included in the measurement:
Wage Inflation 3.25 percent
Future Salary Increases, including inflation 3.25 to 10.75 percent including wage inflation
COLA or Ad Hoc COLA (Pre 1/7/13 retirees) 3 percent simple
COLA or Ad Hoc COLA (Post 1/7/13 retirees) 3 percent simple through 2018. 2.15 percent simple, thereafter
Investment Rate of Return 7.5 percent
Actuarial Cost Method Individual Entry Age
Mortality rates are based on the RP-2014 Healthy Annuitant mortality table. For males, Healthy
Annuitant Mortality tables were used, adjusted for mortality improvement back to the observation period
base of 2006 and then established the base year as 2015. For females, Healthy Annuitant Mortality tables
were used, adjusted for mortality improvements back to the observation period base year of 2006 and then
established the base year as 2010. The mortality rates used in evaluating disability allowances were based
on the RP-2014 Disabled mortality tables, adjusted for mortality improvement back to the observation
base year of 2006 and then established the base year as 2015 for males and 2010 for females. Mortality
rates for a particular calendar year for both healthy and disabled retiree mortality tables are determined by
applying the MP-2015 mortality improvement scale to the above described tables.
The most recent experience study was completed for the five year period ended December 31, 2015.
The long-term rate of return on defined benefit investment assets was determined using a building-block
method in which best-estimate ranges of expected future real rates of return are developed for each major
asset class. These ranges are combined to produce the long-term expected real rate of return by weighting
the expected future real rates of return by the target asset allocation percentage, adjusted for inflation.
During 2017, OPERS managed investments in three investment portfolios: the Defined Benefit portfolio,
the Health Care portfolio, and the Defined Contribution portfolio. The Defined Benefit portfolio contains
the investment assets for the Traditional Pension Plan, the defined benefit component of the Combined
Plan and the annuitized accounts of the Member-Directed Plan. Within the Defined Benefit portfolio,
contributions into the plans are all recorded at the same time, and benefit payments all occur on the first
of the month. Accordingly, the money-weighted rate of return is considered to be the same for all plans
within the portfolio. The annual money-weighted rate of return expressing investment performance, net of
investment expenses and adjusted for the changing amounts actually invested, for the Defined Benefit
portfolio was 16.82% for 2017.
CITY OF MARYSVILLE, OHIO
Notes to the Basic Financial Statements For the Year Ended December 31, 2018
DRAFT - 79 - 6/17/2019
NOTE 11 – DEFINED BENEFIT PENSION PLANS (Continued)
The allocation of investment assets with the Defined Benefit portfolio is approved by the Board of Trustees as outlined in the annual investment plan. Plan assets are managed on a total return basis with a long-term objective of achieving and maintaining a fully funded status for the benefits provided through the defined benefit pension plans. The table below displays the Board-approved asset allocation policy for 2017 and the long-term expected real rates of return:
Weighted AverageLong-Term ExpectedReal Rate of Return
Discount Rate The discount rate used to measure the total pension liability was 7.5 percent. The projection of cash flows used to determine the discount rate assumed that contributions from plan members and those of the contributing employers are made at the statutorily required rates. Based on those assumptions, the pension plan’s fiduciary net position was projected to be available to make all projected future benefits payments of current plan members. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability.
Sensitivity of the City’s Proportionate Share of the Net Pension Liability to Changes in the Discount Rate The following table presents the City’s proportionate share of the net pension liability calculated using the current period discount rate assumption of 7.5 percent, as well as what the City’s proportionate share of the net pension liability would be if it were calculated using a discount rate that is one-percentage-point lower (6.5 percent) or one-percentage-point higher (8.5 percent) than the current rate:
Current1% Decrease Discount Rate 1% Increase
(6.50%) (7.50%) (8.50%)City's proportionate share of the net pension liability $12,373,842 $6,968,253 $2,461,621
Changes Between Measurement Date and Report Date In October 2018, the OPERS Board adopted certain assumption changes which will impact their valuation prepared as of January 1, 2018. The most significant change is a reduction in the assumed actuarial rate of return from 7.50 percent to 7.20 percent. Although the exact amount of these changes is not known, it has the potential to impact the City’s net pension liability.
CITY OF MARYSVILLE, OHIO
Notes to the Basic Financial Statements For the Year Ended December 31, 2018
DRAFT - 80 - 6/17/2019
NOTE 11 – DEFINED BENEFIT PENSION PLANS (Continued)
Actuarial Assumptions – OPF
OPF’s total pension liability as of December 31, 2017 is based on the results of an actuarial valuation date of January 1, 2017, and rolled-forward using generally accepted actuarial procedures. The total pension liability is determined by OPF’s actuaries in accordance with GASB Statement No. 67, as part of their annual valuation. Actuarial valuations of an ongoing plan involve estimates of reported amounts and assumptions about probability of occurrence of events far into the future. Examples include assumptions about future employment mortality, salary increases, disabilities, retirements and employment terminations. Actuarially determined amounts are subject to continual review and potential modifications, as actual results are compared with past expectations and new estimates are made about the future. Assumptions considered were: withdrawal rates, disability retirement, service retirement, DROP elections, mortality, percent married and forms of the payment, DROP interest rate, CPI-based COLA, investment returns, salary increases and payroll growth.
Key methods and assumptions used in calculating the total pension liability in the latest actuarial valuation, prepared as of January 1, 2017, are presented below:
Valuation Date January 1, 2017 January 1, 2016Actuarial Cost Method Entry Age Normal Entry Age NormalInvestment Rate of Return 8.00 percent 8.25 percent Projected Salary Increases 3.75 percent to 10.5 percent 4.25 percent to 11 percentPayroll Increases 3.25 percent 3.75 percentInflation Assumptions 2.75 percent 3.25 percentCost of Living Adjustments 3.00 percent simple; 3.00 percent simple;
2.2 percent for increases based on 2.6 percent for increases based onthe lesser of the increase in CPI and 3%. the lesser of the increase in CPI and 3%.
Mortality for non-disabled participants is based on the RP-2014 Total Employee and Healthy Annuitant Mortality Tables rolled back to 2006, adjusted according to the rates in the following table, and projected with the Conduent Modified 2016 Improvement Scale. Rates for surviving beneficiaries are adjusted by 120%. Mortality for disabled retirees is based on the RP-2014 Disabled Mortality Tables rolled back to 2006, adjusted according to the rates in the following table, and projected with the Conduent Modified
2016 Improvement Scale.
Age Police Fire
Healthy Mortality67 or less 77% 68%
68-77 105% 87%78 and up 115% 120%
Disabled Mortality59 or less 35% 35%
60-69 60% 45%70-79 75% 70%
80 and up 100% 90%
The most recent experience study was completed for the five year period ended December 31, 2016.
CITY OF MARYSVILLE, OHIO
Notes to the Basic Financial Statements For the Year Ended December 31, 2018
DRAFT - 81 - 6/17/2019
NOTE 11 – DEFINED BENEFIT PENSION PLANS (Continued)
The long-term expected rate of return on pension plan investments was determined using a building-block approach and assumes a time horizon, as defined in the Statement of Investment Policy. A forecasted rate of inflation serves as the baseline for the return expectation. Various real return premiums over the baseline inflation rate have been established for each asset class. The long-term expected nominal rate of return has been determined by calculating a weighted averaged of the expected real return premiums for each asset class, adding the projected inflation rate and adding the expected return from rebalancing uncorrelated asset classes.
Best estimates of the long-term expected geometric real rates of return for each major asset class included in OPF’s target asset allocation as of December 31, 2017 are summarized below:
OPF’s Board of Trustees has incorporated the “risk parity” concept into OPF’s asset liability valuation with the goal of reducing equity risk exposure, which reduces overall Total Portfolio risk without sacrificing return, and creating a more risk-balanced portfolio based on their relationship between asset classes and economic environments. From the notional portfolio perspective above, the Total Portfolio may be levered up to 1.2 times due to the application of leverage in certain fixed income asset classes.
Discount Rate The total pension liability was calculated using the discount rate of 8.00 percent. The discount rate for 2016 was 8.25 percent. The projection of cash flows used to determine the discount rate assumed the contributions from employers and from the members would be computed based on contribution requirements as stipulated by State statute. Projected inflows from investment earning were calculated using the longer-term assumed investment rate of return 8.00 percent. Based on those assumptions, the plan’s fiduciary net position was projected to be available to make all future benefit payments of current plan members. Therefore, a long-term expected rate of return on pension plan investments was applied to all periods of projected benefits to determine the total pension liability.
CITY OF MARYSVILLE, OHIO
Notes to the Basic Financial Statements
For the Year Ended December 31, 2018
DRAFT - 82 - 5/30/2019
NOTE 11 – DEFINED BENEFIT PENSION PLANS (Continued)
Sensitivity of the City's Proportionate Share of the Net Pension Liability to Changes in the Discount
Rate Net pension liability is sensitive to changes in the discount rate, and to illustrate the potential impact
the following table presents the net pension liability calculated using the discount rate of 8.00 percent, as
well as what the net pension liability would be if it were calculated using a discount rate that is one
percentage point lower (7.00 percent), or one percentage point higher (9.00 percent) than the current rate.
Current
1% Decrease Discount Rate 1% Increase
(7.00%) (8.00%) (9.00%)
City's proportionate share
of the net pension liability $24,359,023 $17,571,728 $12,036,068
NOTE 12 - DEFINED BENEFIT OPEB PLANS
Net OPEB Liability
The net OPEB liability reported on the statement of net position represents a liability to employees for
OPEB. OPEB is a component of exchange transactions-–between an employer and its employees—of
salaries and benefits for employee services. OPEB are provided to an employee—on a deferred-payment
basis—as part of the total compensation package offered by an employer for employee services each
financial period. The obligation to sacrifice resources for OPEB is a present obligation because it was
created as a result of employment exchanges that already have occurred.
The net OPEB liability represents the City’s proportionate share of each OPEB plan’s collective actuarial
present value of projected benefit payments attributable to past periods of service, net of each OPEB
plan’s fiduciary net position. The net OPEB liability calculation is dependent on critical long-term
variables, including estimated average life expectancies, earnings on investments, cost of living
adjustments and others. While these estimates use the best information available, unknowable future
events require adjusting these estimates annually.
Ohio Revised Code limits the City’s obligation for this liability to annually required payments. The City
cannot control benefit terms or the manner in which OPEB are financed; however, the City does receive
the benefit of employees’ services in exchange for compensation including OPEB.
GASB 75 assumes the liability is solely the obligation of the employer, because they benefit from
employee services. OPEB contributions come from these employers and health care plan enrollees which
pay a portion of the health care costs in the form of a monthly premium. The Ohio revised Code permits,
but does not require the retirement systems to provide healthcare to eligible benefit recipients. Any
change to benefits or funding could significantly affect the net OPEB liability. Resulting adjustments to
the net OPEB liability would be effective when the changes are legally enforceable. The retirement
systems may allocate a portion of the employer contributions to provide for these OPEB benefits.
The proportionate share of each plan’s unfunded benefits is presented as a long-term net OPEB liability
on the accrual basis of accounting. Any liability for the contractually-required OPEB contribution
outstanding at the end of the year is included in intergovernmental payable on both the accrual and
modified accrual bases of accounting.
CITY OF MARYSVILLE, OHIO
Notes to the Basic Financial Statements
For the Year Ended December 31, 2018
DRAFT - 83 - 5/30/2019
NOTE 12 - DEFINED BENEFIT OPEB PLANS (Continued)
Plan Description – Ohio Public Employees Retirement System (OPERS)
Plan Description - The Ohio Public Employees Retirement System (OPERS) administers three separate
pension plans: the traditional pension plan, a cost-sharing, multiple-employer defined benefit pension
plan; the member-directed plan, a defined contribution plan; and the combined plan, a cost-sharing,
multiple-employer defined benefit pension plan that has elements of both a defined benefit and defined
contribution plan.
OPERS maintains a cost-sharing, multiple-employer defined benefit post-employment health care trust,
which funds multiple health care plans including medical coverage, prescription drug coverage and
deposits to a Health Reimbursement Arrangement to qualifying benefit recipients of both the traditional
pension and the combined plans. This trust is also used to fund health care for member-directed plan
participants, in the form of a Retiree Medical Account (RMA). At retirement or refund, member directed
plan participants may be eligible for reimbursement of qualified medical expenses from their vested RMA
balance.
In order to qualify for postemployment health care coverage, age and service retirees under the traditional
pension and combined plans must have twenty or more years of qualifying Ohio service credit. Health
care coverage for disability benefit recipients and qualified survivor benefit recipients is available. The
health care coverage provided by OPERS meets the definition of an Other Post Employment Benefit
(OPEB) as described in GASB Statement 75. See OPERS’ CAFR referenced below for additional
information.
The Ohio Revised Code permits, but does not require OPERS to provide health care to its eligible benefit
recipients. Authority to establish and amend health care coverage is provided to the Board in Chapter 145
of the Ohio Revised Code.
Disclosures for the health care plan are presented separately in the OPERS financial report. Interested
parties may obtain a copy by visiting https://www.opers.org/financial/reports.shtml, by writing to
OPERS, 277 East Town Street, Columbus, Ohio 43215-4642, or by calling (614) 222-5601 or 800-222-
7377.
Funding Policy - The Ohio Revised Code provides the statutory authority requiring public employers to
fund postemployment health care through their contributions to OPERS. When funding is approved by
OPERS Board of Trustees, a portion of each employer’s contribution to OPERS is set aside to fund
OPERS health care plans.
Employer contribution rates are expressed as a percentage of the earnable salary of active members. In
2018, state and local employers contributed at a rate of 14.0 percent of earnable salary and public safety
and law enforcement employers contributed at 18.1 percent. These are the maximum employer
contribution rates permitted by the Ohio Revised Code. Active member contributions do not fund health
Notes to the Basic Financial Statements For the Year Ended December 31, 2018
DRAFT - 85 - 6/17/2019
NOTE 12 - DEFINED BENEFIT OPEB PLANS (Continued)
OP&F maintains funds for health care in two separate accounts. There is one account for health care benefits and one account for Medicare Part B reimbursements. A separate health care trust accrual account is maintained for health care benefits under IRS Code Section 115 trust. An Internal Revenue Code 401(h) account is maintained for Medicare Part B reimbursements.
The Board of Trustees is authorized to allocate a portion of the total employer contributions made into the pension plan to the Section 115 trust and the Section 401(h) account as the employer contribution for retiree health care benefits. For 2018, the portion of employer contributions allocated to health care was 0.5 percent of covered payroll. The amount of employer contributions allocated to the health care plan each year is subject to the Trustees’ primary responsibility to ensure that pension benefits are adequately funded and is limited by the provisions of Sections 115 and 401(h).
The OP&F Board of Trustees is also authorized to establish requirements for contributions to the health care plan by retirees and their eligible dependents or their surviving beneficiaries. Payment amounts vary depending on the number of covered dependents and the coverage selected.
The City’s contractually required contribution to OP&F was $32,365 for 2018.
OPEB Liabilities, OPEB Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to OPEB
The net OPEB liability and total OPEB liability for OPERS were determined by an actuarial valuation as of December 31, 2016, rolled forward to the measurement date of December 31, 2017, by incorporating the expected value of health care cost accruals, the actual health care payment, and interest accruals during the year. OP&F’s total OPEB liability was measured as of December 31, 2017, and was determined by rolling forward the total OPEB liability as of January 1, 2017, to December 31, 2017. The City's proportion of the net OPEB liability was based on the City's share of contributions to the retirement plan relative to the contributions of all participating entities. Following is information related to the proportionate share and OPEB expense:
OPERS OP&F TotalProportionate Share of the Net OPEB Liability $5,015,892 $16,221,546 $21,237,438
Proportion of the Net OPEB Liability-Current Measurement Date 0.046190% 0.286303%Proportion of the Net OPEB Liability-Prior Measurement Date 0.044330% 0.266451%Percentage Change 0.001860% 0.019852%
OPEB Expense $472,800 $1,388,303 $1,861,103
CITY OF MARYSVILLE, OHIO
Notes to the Basic Financial Statements
For the Year Ended December 31, 2018
DRAFT - 86 - 5/30/2019
NOTE 12 - DEFINED BENEFIT OPEB PLANS (Continued)
At December 31, 2018, the City reported deferred outflows of resources and deferred inflows of resources
related to OPEB from the following sources:
OPERS OP&F Total
Deferred Outflows of Resources
Changes in assumptions $365,210 $1,582,878 $1,948,088
Differences between expected and
actual experience 3,907 0 3,907
Change in proportionate share 127,099 822,134 949,233
City contributions subsequent to the
measurement date 0 32,365 32,365
Total Deferred Outflows of Resources $496,216 $2,437,377 $2,933,593
Deferred Inflows of Resources
Net difference between projected and
actual earnings on pension plan investments $373,651 $106,777 $480,428
Differences between expected and
actual experience 0 81,815 81,815
Total Deferred Inflows of Resources $373,651 $188,592 $562,243
$32,365 reported as deferred outflows of resources related to OPEB resulting from City contributions
subsequent to the measurement date will be recognized as a reduction of the net OPEB liability in 2019.
Other amounts reported as deferred outflows of resources and deferred inflows of resources related to
OPEB will be recognized in OPEB expense as follows:
OPERS OP&F Total
Year Ending December 31:
2019 $143,829 $312,956 $456,785
2020 143,829 312,956 456,785
2021 (71,682) 312,956 241,274
2022 (93,411) 312,955 219,544
2023 0 339,650 339,650
2024 0 339,650 339,650
2025 0 285,297 285,297
Total $122,565 $2,216,420 $2,338,985
CITY OF MARYSVILLE, OHIO
Notes to the Basic Financial Statements
For the Year Ended December 31, 2018
DRAFT - 87 - 5/30/2019
NOTE 12 - DEFINED BENEFIT OPEB PLANS (Continued)
Actuarial Assumptions - OPERS
Actuarial valuations of an ongoing plan involve estimates of the values of reported amounts and
assumptions about the probability of occurrence of events far into the future. Examples include
assumptions about future employment, mortality, and cost trends. Actuarially determined amounts are
subject to continual review or modification as actual results are compared with past expectations and new
estimates are made about the future.
Projections of benefits for financial reporting purposes are based on the substantive plan and include the
types of coverage provided at the time of each valuation and the historical pattern of sharing of costs
between OPERS and plan members. The total OPEB liability was determined by an actuarial valuation
as of December 31, 2016, rolled forward to the measurement date of December 31, 2017. The actuarial
valuation used the following actuarial assumptions applied to all prior periods included in the
measurement in accordance with the requirements of GASB 74:
Wage Inflation 3.25 percent
Projected Salary Increases, 3.25 to 10.75 percent
including inflation including wage inflation
Single Discount Rate:
Current measurement date 3.85 percent
Prior Measurement date 4.23 percent
Investment Rate of Return 6.50 percent
Municipal Bond Rate 3.31 percent
Health Care Cost Trend Rate 7.5 percent, initial
3.25 percent, ultimate in 2028
Actuarial Cost Method Individual Entry Age
Pre-retirement mortality rates are based on the RP-2014 Employees mortality table for males and females,
adjusted for mortality improvement back to the observation period base year of 2006. The base year for
males and females was then established to be 2015 and 2010, respectively. Post-retirement mortality rates
are based on the RP-2014 Healthy Annuitant mortality table for males and females, adjusted for mortality
improvement back to the observation period base year of 2006. The base year for males and females was
then established to be 2015 and 2010, respectively. Post-retirement mortality rates for disabled retirees
are based on the RP-2014 Disabled mortality table for males and females, adjusted for mortality
improvement back to the observation period base year of 2006. The base year for males and females was
then established to be 2015 and 2010, respectively. Mortality rates for a particular calendar year are
determined by applying the MP-2015 mortality improvement scale to all of the above described tables.
The most recent experience study was completed for the five year period ended December 31, 2015.
The long-term expected rate of return on health care investment assets was determined using a building-
block method in which best-estimate ranges of expected future real rates of return are developed for each
major asset class. These ranges are combined to produce the long-term expected real rate of return by
weighting the expected future real rates of return by the target asset allocation percentage, adjusted for
inflation.
CITY OF MARYSVILLE, OHIO
Notes to the Basic Financial Statements
For the Year Ended December 31, 2018
DRAFT - 88 - 5/30/2019
NOTE 12 - DEFINED BENEFIT OPEB PLANS (Continued)
During 2017, OPERS managed investments in three investment portfolios: the Defined Benefit portfolio,
the Health Care portfolio and the Defined Contribution portfolio. The Health Care portfolio includes the
assets for health care expenses for the Traditional Pension Plan, Combined Plan and Member-Directed
Plan eligible members. Within the Health Care portfolio, contributions into the plans are assumed to be
received continuously throughout the year based on the actual payroll payable at the time contributions
are made, and health care-related payments are assumed to occur mid-year. Accordingly, the money-
weighted rate of return is considered to be the same for all plans within the portfolio. The annual money-
weighted rate of return expressing investment performance, net of investment expenses and adjusted for
the changing amounts actually invested, for the Health Care portfolio is 15.2 percent for 2017.
The allocation of investment assets with the Health Care portfolio is approved by the Board of Trustees as
outlined in the annual investment plan. Assets are managed on a total return basis with a long-term
objective of continuing to offer a sustainable health care program for current and future retirees. OPERS’
primary goal is to achieve and maintain a fully funded status for the benefits provided through the defined
pension plans. Health care is a discretionary benefit. The table below displays the Board-approved asset
allocation policy for 2017 and the long-term expected real rates of return:
Target
Asset Class Allocation
Fixed Income 34.00 % 1.88 %
Domestic Equities 21.00 6.37
Real Estate Investment Trust 6.00 5.91
International Equities 22.00 7.88
Other investments 17.00 5.39
Total 100.00 % 4.98 %
(Arithmetic)
Weighted Average
Long-Term Expected
Real Rate of Return
Discount Rate A single discount rate of 3.85 percent was used to measure the OPEB liability on the
measurement date of December 31, 2017. A single discount rate of 4.23 percent was used to measure
the OPEB liability on the measurement date of December 31, 2016. Projected benefit payments are
required to be discounted to their actuarial present value using a single discount rate that reflects (1) a
long-term expected rate of return on OPEB plan investments (to the extent that the health care fiduciary
net position is projected to be sufficient to pay benefits), and (2) tax-exempt municipal bond rate based
on an index of 20-year general obligation bonds with an average AA credit rating as of the
measurement date (to the extent that the contributions for use with the long-term expected rate are not
met). This single discount rate was based on an expected rate of return on the health care investment
portfolio of 6.50 percent and a municipal bond rate of 3.31 percent. The projection of cash flows used
to determine this single discount rate assumed that employer contributions will be made at rates equal
to the actuarially determined contribution rate. Based on these assumptions, the health care fiduciary
net position and future contributions were sufficient to finance health care costs through 2034. As a
result, the long-term expected rate of return on health care investments was applied to projected costs
through the year 2034, and the municipal bond rate was applied to all health care costs after that date.
CITY OF MARYSVILLE, OHIO
Notes to the Basic Financial Statements For the Year Ended December 31, 2018
DRAFT - 89 - 6/17/2019
NOTE 12 - DEFINED BENEFIT OPEB PLANS (Continued)
Sensitivity of the City’s Proportionate Share of the Net OPEB Liability to Changes in the Discount Rate The following table presents the City’s proportionate share of the net OPEB liability calculated using the single discount rate of 3.85 percent, as well as what the City’s proportionate share of the net OPEB liability would be if it were calculated using a discount rate that is one-percentage-point lower (2.85 percent) or one-percentage-point higher (4.85 percent) than the current rate:
Current1% Decrease Discount Rate 1% Increase
(2.85%) (3.85%) (4.85%)City's proportionate share of the net OPEB liability $6,663,831 $5,015,892 $3,682,728
Sensitivity of the City’s Proportionate Share of the Net OPEB Liability to Changes in the Health Care Cost Trend Rate Changes in the health care cost trend rate may also have a significant impact on the net OPEB liability. The following table presents the net OPEB liability calculated using the assumed trend rates, and the expected net OPEB liability if it were calculated using a health care cost trend rate that is 1.0 percent lower or 1.0 percent higher than the current rate.
Retiree health care valuations use a health care cost-trend assumption that changes over several years built into the assumption. The near-term rates reflect increases in the current cost of health care; the trend starting in 2018 is 7.50 percent. If this trend continues for future years, the projection indicates that years from now virtually all expenditures will be for health care. A more reasonable alternative is that in the not-too-distant future, the health plan cost trend will decrease to a level at, or near, wage inflation. On this basis, the actuaries project premium rate increases will continue to exceed wage inflation for approximately the next decade, but by less each year, until leveling off at an ultimate rate, assumed to be 3.25 percent in the most recent valuation.
Current Health CareCost Trend Rate
1% Decrease Assumption 1% IncreaseCity's proportionate share of the net OPEB liability $4,799,141 $5,015,892 $5,239,793
Changes Between Measurement Date and Report Date In October 2018, the OPERS Board adopted a change in the investment return assumption, reducing it from 6.5 percent to 6.0 percent. This change will be effective for the 2018 valuation. The exact amount of the impact to the City’s net OPEB liability is not known.
CITY OF MARYSVILLE, OHIO
Notes to the Basic Financial Statements For the Year Ended December 31, 2018
DRAFT - 90 - 6/17/2019
NOTE 12 - DEFINED BENEFIT OPEB PLANS (Continued)
Actuarial Assumptions – OP&F
OP&F’s total OPEB liability as of December 31, 2017, is based on the results of an actuarial valuation date of January 1, 2017, and rolled-forward using generally accepted actuarial procedures. The total OPEB liability is determined by OP&F’s actuaries in accordance with GASB Statement No. 74, as part of their annual valuation. Actuarial valuations of an ongoing plan involve estimates of reported amounts and assumptions about probability of occurrence of events far into the future. Examples include assumptions about future employment mortality, salary increases, disabilities, retirements and employment terminations. Actuarially determined amounts are subject to continual review and potential modifications, as actual results are compared with past expectations and new estimates are made about the future.
Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as understood by the employers and plan members) and include the types of benefits provided at the time of each valuation and the historical pattern of sharing benefit costs between the employers and plan members to that point. The projection of benefits for financial reporting purposes does not explicitly incorporate the potential effects of legal or contractual funding limitations.
Actuarial calculations reflect a long-term perspective. For a newly hired employee, actuarial calculations will take into account the employee’s entire career with the employer and also take into consideration the benefits, if any, paid to the employee after termination of employment until the death of the employee and any applicable contingent annuitant. In many cases, actuarial calculations reflect several decades of service with the employer and the payment of benefits after termination.
Key methods and assumptions used in the latest actuarial valuation, reflecting experience study results, are presented below.
Valuation Date January 1, 2017, with actuarial liabilities
rolled forward to December 31, 2017
Actuarial Cost Method Entry Age Normal
Investment Rate of Return 8.0 percent
Projected Salary Increases 3.75 percent to 10.5 percentPayroll Growth Inflation rate of 2.75 percent plus
productivity increase rate of 0.5 percent
Single discount rate:
Currrent measurement date 3.24 percent Prior measurement date 3.79 percent
Cost of Living Adjustments 3.00 percent simple; 2.2 percent simple
for increased based on the lesser of the
increase in CPI and 3 percent
Mortality for non-disabled participants is based on the RP-2014 Total Employee and Healthy Annuitant Mortality Tables rolled back to 2006, adjusted according to the rates in the following table, and projected with the Conduent Modified 2016 Improvement Scale. Rates for surviving beneficiaries are adjusted by 120 percent.
Age Police Fire
67 or less 77 % 68 %68-77 105 87
78 and up 115 120
CITY OF MARYSVILLE, OHIO
Notes to the Basic Financial Statements
For the Year Ended December 31, 2018
DRAFT - 91 - 5/30/2019
NOTE 12 - DEFINED BENEFIT OPEB PLANS (Continued)
Mortality for disabled retirees is based on the RP-2014 Disabled Mortality Tables rolled back to 2006,
adjusted according to the rates in the following table, and projected with the Conduent Modified 2016
Improvement Scale.
Age Police Fire
59 or less 35 % 35 %
60-69 60 45
70-79 75 70
80 and up 100 90
The most recent experience study was completed for the five year period ended December 31, 2016. The
prior experience study was completed December 31, 2011.
The long-term expected rate of return on OPEB plan investments was determined using a building-block
approach and assumes a time horizon, as defined in the Statement of Investment Policy. A forecasted rate
of inflation serves as the baseline for the return expected. Various real return premiums over the baseline
inflation rate have been established for each asset class. The long-term expected nominal rate of return
has been determined by calculating a weighted averaged of the expected real return premiums for each
asset class, adding the projected inflation rate and adding the expected return from rebalancing
uncorrelated asset classes. Best estimates of the long-term expected geometric real rates of return for each
major asset class included in OP&F’s target asset allocation as of December 31, 2017, are summarized
below:
Target
Asset Class Allocation
Cash and Cash Equivalents - % 0.00 %
Domestic Equity 16.00 5.21
Non-US Equity 16.00 5.40
Core Fixed Income * 20.00 2.37
Global Inflation Protected Securities* 20.00 2.33
High Yield 15.00 4.48
Real Estate 12.00 5.65
Private Markets 8.00 7.99
Timber 5.00 6.87
Master Limited Partnerships 8.00 7.36
Total 120.00 %
Note: Assumptions are geometric.
* levered 2x
Long-Term Expected
Real Rate of Return
CITY OF MARYSVILLE, OHIO
Notes to the Basic Financial Statements
For the Year Ended December 31, 2018
DRAFT - 92 - 5/30/2019
NOTE 12 - DEFINED BENEFIT OPEB PLANS (Continued)
OP&F’s Board of Trustees has incorporated the risk parity concept into OP&F’s asset liability valuation
with the goal of reducing equity risk exposure, which reduces overall Total Portfolio risk without
sacrificing return, and creating a more risk-balanced portfolio based on the relationship between asset
classes and economic environments. From the notional portfolio perspective above, the Total Portfolio
may be levered up to 1.2 times due to the application of leverage in certain fixed income asset classes.
Discount Rate The total OPEB liability was calculated using the discount rate of 3.24 percent. The
projection of cash flows used to determine the discount rate assumed the contribution from employers and
from members would be computed based on contribution requirements as stipulated by state statute.
Projected inflows from investment earnings were calculated using the longer-term assumed investment
rate of return 8 percent. Based on those assumptions, OP&F’s fiduciary net position was projected to not
be able to make all future benefit payments of current plan members. Therefore, a municipal bond rate of
3.16 percent at December 31, 2017 and 3.71 percent at December 31, 2016, was blended with the long-
term rate of 8 percent, which resulted in a blended discount rate of 3.24 percent. The municipal bond rate
was determined using the S&P Municipal Bond 20 Year High Grade Rate Index. The OPEB plan’s
fiduciary net position was projected to be available to make all projected OPEB payments until 2025.
The long-term expected rate of return on health care investments was applied to projected costs through
2025, and the municipal bond rate was applied to all health care costs after that date.
Sensitivity of the City's Proportionate Share of the Net OPEB Liability to Changes in the Discount
Rate Net OPEB liability is sensitive to changes in the discount rate, and to illustrate the potential impact
the following table presents the net OPEB liability calculated using the discount rate of 3.24 percent, as
well as what the net OPEB liability would be if it were calculated using a discount rate that is one
percentage point lower (2.24 percent), or one percentage point higher (4.24 percent) than the current rate.
Current
1% Decrease Discount Rate 1% Increase
(2.24%) (3.24%) (4.24%)
City's proportionate share
of the net OPEB liability $20,277,128 $16,221,546 $13,100,953
CITY OF MARYSVILLE, OHIO
Notes to the Basic Financial Statements
For the Year Ended December 31, 2018
DRAFT - 93 - 5/30/2019
NOTE 12 - DEFINED BENEFIT OPEB PLANS (Continued)
Sensitivity of the City’s Proportionate Share of the Net OPEB Liability to Changes in the Health Care
Cost Trend Rate Net OPEB liability is sensitive to changes in the health care cost trend rate. The trend
rate is the annual rate at which the cost of covered medical services is assumed to increase from the
current year to the next year. Beginning in 2017, the per-capita costs are assumed to change by the
following percentages each year:
Medicare
Non-Medicare Non-AARP AARP Rx Drug Part B
Year
2017 -0.47% -2.50% 4.50% -0.47% 5.20%
2018 7.00% 7.00% 4.50% 7.00% 5.10%
2019 6.50% 6.50% 4.50% 6.50% 5.00%
2020 6.00% 6.00% 4.50% 6.00% 5.00%
2021 5.50% 5.50% 4.50% 5.50% 5.00%
2022 5.00% 5.00% 4.50% 5.00% 5.00%
2023 and Later 4.50% 4.50% 4.50% 4.50% 5.00%
To illustrate the potential impact, the following table presents the net OPEB liability calculated using the
current healthcare cost trend current rates as outlined in the table above, a one percent decrease in the
trend rates and a one percent increase in the trend rates.
Current
1% Decrease Rates 1% Increase
City's proportionate share
of the net OPEB liability $12,601,188 $16,221,546 $21,100,562
Changes between Measurement Date and Report Date
In March 2018, the OP&F Board of Trustees approved the implementation date and framework for a new
health care model. Beginning January 1, 2019, the current self-insured health care plan will no longer be
offered. In its place is a stipend-based health care model. A stipend funded by OP&F will be placed in
individual Health Reimbursement Accounts that retirees will use to be reimbursed for health care
expenses. The impact to the City’s NOL is not known.
CITY OF MARYSVILLE, OHIO
Notes to the Basic Financial Statements
For the Year Ended December 31, 2018
DRAFT - 94 - 5/30/2019
NOTE 13 – COMPENSATED ABSENCES
In accordance with GASB Statement No. 16, "Accounting for Compensated Absences," vacation and
compensatory time are accrued as liabilities when an employee's right to receive compensation is
attributable to services already rendered and it is probable the employee will be compensated through
paid time off or some other means, such as cash payments at termination or retirement. Leave time that
has been earned but is unavailable for use as paid time off or as some other form of compensation because
an employee has not met the minimum service time requirement, is accrued to the extent that it is
considered to be probable that the conditions for compensation will be met in the future.
Sick leave is accrued using the vesting method, whereby the liability is recorded on the basis of leave
accumulated by employees who are eligible to receive termination payments as of the balance sheet date,
and on leave balances accumulated by other employees who are expected to become eligible in the future
to receive such payments.
At December 31, 2018, the City's accumulated, unpaid compensated absences amounted to $2,320,227, of
which $1,784,262 is recorded as a liability of the Governmental Activities and $535,965 is recorded as a
liability of the Business-Type Activities.
This space intentionally left blank.
CITY OF MARYSVILLE, OHIO
Notes to the Basic Financial Statements
For the Year Ended December 31, 2018
DRAFT - 95 - 5/30/2019
NOTE 14 - NOTES PAYABLE
The Ohio Revised Code provides that notes including renewal notes issued in anticipation of the issuance
of general obligation bonds may be issued and outstanding from time to time up to a maximum period of
20 years from the date of issuance of the original notes. The maximum maturity for notes anticipating
general obligation bonds payable from special assessments is five years. Any period in excess of five
years must be deducted from the permitted maximum maturity of the bonds anticipated, and portions of
the principal amount of notes outstanding for more than five years must be retired in amounts at least
equal to and payable no later than those principal maturities required if the bonds had been issued at the
expiration of the initial five year period.
Balance Balance
Issue December 31, Issued December 31,
Date 2017 (Retired) 2018
Governmental Activities:
Debt Service Funds Notes Payable:
2.50% MSC BAN 3/29/18 $0 $100,000 $100,000
Capital Projects Fund Note Payable:
1.75% MSC BAN 8/28/17 $3,885,000 ($3,885,000) $0
2.50% MSC BAN 8/28/18 0 3,035,000 3,035,000
Total Capital Project Fund Notes Payable: 3,885,000 (850,000) 3,035,000
Total Governmental Notes Payable $3,885,000 ($750,000) $3,135,000
The 2017 MSCBAN Notes of $3,885,000 bearing a rate of 1.75% matured on August 28, 2018 and were
reissued as 2018 MSCBAN Notes of $3,035,000 bearing a rate of 2.5%. The notes were issued to finance
the cost of construction of the new Municipal Service Complex. These notes will be retired from the
City’s Capital Improvement Fund.
CITY OF MARYSVILLE, OHIO
Notes to the Basic Financial Statements
For the Year Ended December 31, 2018
DRAFT - 96 - 5/30/2019
NOTE 15 - LONG-TERM DEBT
Long-term debt of the City at December 31, 2018 was as follows:
Balance Balance Amount Due
Date December 31, December 31, Within
Purchased Description 2017 Additions (Reductions) 2018 One Year
Governmental Activities:
Bond Anticipation Note2017 MSC BAN $2,000,000 $1,800,000 ($2,000,000) $1,800,000 $1,800,000
General Obligation Bonds:2007 Various Purpose Refunding Bonds 2,175,000 0 (690,000) 1,485,000 725,000
Total General Obligation Bonds 23,147,971 0 (1,761,875) 21,386,096 1,831,875
Special Obligation Bond:
2018 TIF Bonds 0 2,489,293 0 2,489,293 0
Long-Term Loan:
2014 Park Construction/Improvement 900,000 0 (110,000) 790,000 120,000
Other Long-Term Obligations: Compensated Absences Payable 1,630,683 1,784,262 (1,630,683) 1,784,262 1,009,871 Capital Leases Payable 254,738 0 (189,874) 64,864 64,864 Net Pension Liability 22,807,669 0 (979,589) 21,828,080 0 Net OPEB Liability 15,382,785 3,902,573 0 19,285,358 0
Total Other Long-Term Obligations 40,075,875 5,686,835 (2,800,146) 42,962,564 1,074,735
Total Governmental Activities Long-Term Debt $66,123,846 $9,976,128 ($6,672,021) $69,427,953 $4,826,610
2018 MSC Bond Anticipation Notes
In March 2019, the City issued $1,800,000 of 2019 bond anticipation notes payable to renew the 2018
MSC bond anticipation notes payable, less $100,000 of principal retirement. As the new notes extended
the maturity date of the bond anticipation notes past 12 months after the date of the financial statements,
the bond anticipation notes will be treated as long-term obligations of the City.
2007 Various Improvement Refunding Bonds
The Various Improvement general obligation bonds are serial bonds issued for the purpose of advance
refunding a portion of the 2000 Various Improvement Bonds issued November 1, 2000 ($6,225,000).
The refunding was undertaken for the purpose of reducing interest rates and debt service on the prior
bonds. The 2007 bonds are not subject to redemption prior to maturity. The bonds mature on December
1, 2007 through December 1, 2017, and December 1, 2020 in the amount of $6,515,000, at a redemption
price equal to 100 percent of the principal plus accrued interest to the redemption date. The amount of
$6,673,981 from the 2007 bonds was placed in an escrow fund to defease the 2000 bonds which was
redeemed each June 1 and December 1 annually between 2007 and 2010. Bonds bear an interest rate
from 4.00 to 5.00%. These bonds will be retired from the City’s Debt Service Fund. $1,533,843 was
outstanding as of December 31, 2018.
CITY OF MARYSVILLE, OHIO
Notes to the Basic Financial Statements For the Year Ended December 31, 2018
DRAFT - 97 - 6/17/2019
NOTE 15- LONG-TERM DEBT (Continued)
2011 Facility Construction Bonds The Facility Construction general obligation bonds are serial bonds issued for the purpose of paying costs associated with designing, constructing, furnishing, and equipping a new police station and municipal courthouse facility. The bonds mature on December 1, 2020 through December 1, 2031, and December 1, 2020 in the amount of $14,585,000, at a redemption price equal to 100 percent of the principal plus accrued interest to the redemption date. Bonds bear an interest rate from 2.00 to 4.375%. These bonds will be retired from the City’s Debt Service Fund. $10,611,389 was outstanding as of December 31, 2018.
2014 Coleman’s Crossing Tax Increment Financing Bonds The Coleman’s Tax Increment Financing general obligation bonds are serial bonds issued for the purpose of financing certain public improvements within the Coleman’s Crossing Tax Increment Financing District. The bonds mature on December 1, 2034 in the amount of $10,730,000, at a redemption price equal to 100 percent of the principal plus accrued interest to the redemption date. Bonds bear an interest rate from 3.00 to 4.00%. These bonds will be retired from the City’s Coleman’s Crossing TIF Fund. $9,240,864 was outstanding as of December 31, 2018.
2014 Partners’ Park Construction Loan The Park Construction Loan is a loan issued for the purpose of constructing a new park called the Partners’ Park in the City of Marysville. Local businesses have agreed to make payments to the City over the next nine years in order to pay off the balance of the loan along with the City of Marysville. The final payment on the loan is scheduled for 2024 and the loan carries an interest rate of 3.99%. The loan had an outstanding balance of $790,000 at December 31, 2018.
2018 Cook’s Pointe Tax Increment Financing Special Obligation Bonds The Cook’s Pointe Tax Increment Financing special obligation bonds are serial bonds issued for the purpose of financing certain public improvements within the Cook’s Pointe Tax Increment Financing District. The bonds mature on December 1, 2049. The bonds are purchased at 100% of the principal amount advanced by the original purchaser, pursuant to the terms of the bonds, with the principal to be advanced not to exceed $4,870,000, with the initial draw in the amount of $128,532. The bonds shall be subject to redemption at the option of the City, either in whole or in part, in such order of maturity as the City shall determine, on any date prior to maturity at a redemption price equal to 100% of the principal amount redeemed plus, in each case, accrued interest to the dated fixed for redemption. The bonds bear an interest rate from 4.75%. These bonds will be retired from the City’s Coleman’s Crossing TIF Fund. $2,489,293 was outstanding as of December 31, 2018 with only interest paid during the year.
CITY OF MARYSVILLE, OHIO
Notes to the Basic Financial Statements
For the Year Ended December 31, 2018
DRAFT - 98 - 5/30/2019
NOTE 15- LONG-TERM DEBT (Continued)
Balance Balance Amount Due
Date December 31, December 31, Within
Purchased Description 2017 Additions (Reductions) 2018 One Year
Business-Type Activities:
General Obligation Bond:
2015 Sewer System $9,865,000 $0 ($210,000) $9,655,000 $210,000
Mortgage Revenue Bonds:
2015 Sewer System Refunding 29,495,000 0 (990,000) 28,505,000 1,035,000
Premium on Sale of Bonds 1,513,252 0 (79,645) 1,433,607 79,645
2015 Sewer System Refunding 14,410,000 0 (245,000) 14,165,000 255,000
Premium on Sale of Bonds 868,054 0 (45,687) 822,367 45,687
2016 Sewer System Refunding 67,095,000 0 (460,000) 66,635,000 475,000
Premium on Sale of Bonds 2,090,428 0 (80,412) 2,010,016 80,412
2016 Sewer System Refunding 8,760,000 0 (350,000) 8,410,000 350,000
Premium on Sale of Bonds 959,137 0 (55,396) 903,741 55,396
2016 Water System Refunding 18,280,000 0 (875,000) 17,405,000 875,000
Premium on Sale of Bonds 1,912,728 0 (91,082) 1,821,646 91,082
Total Mortgage Revenue Bonds 145,383,599 0 (3,272,222) 142,111,377 3,342,222
Ohio Public Works Commission Loan:
Cherry Street and Ninth Street Water 384,387 0 (29,568) 354,819 29,568
The special obligation bond in the amount of $2,489,293 is not included in the above maturity tables. The construction has started, but a final amortization schedule will not be generated until the construction is completed. At that time, final principal and interest payments will be determined.
CITY OF MARYSVILLE, OHIO
Notes to the Basic Financial Statements
For the Year Ended December 31, 2018
DRAFT - 102 - 5/30/2019
NOTE 15 - LONG-TERM DEBT (Continued)
A. Future Long-Term Financing Requirements (Continued)
Business-Type Activities
General Obligation Bonds Mortgage Revenue Bonds OPWC Loans
Years Principal Interest Principal Interest Principal Interest
The City leases equipment under two capital leases. The original cost of the equipment was $691,341 and
the related liability is reported in the Government-Wide Statement of Net Position.
The following is a schedule of future minimum lease payments under the capital lease together with the
present value of the net minimum lease payments as of December 31, 2018:
Capital
Year Ending December 31, Lease
2019 $66,077
Less amount representing
interest at the City's incremental
borrowing rate of interest (1,213)
Present value of minimum lease payments $64,864
CITY OF MARYSVILLE, OHIO
Notes to the Basic Financial Statements
For the Year Ended December 31, 2018
DRAFT - 103 - 5/30/2019
NOTE 17 - RISK MANAGEMENT
The City is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets;
errors and omissions; injuries to employees; and natural disasters. During 2018, the City contracted for
the following insurance coverage:
Type of Coverage Coverage Limit Deductible
Buildings $157,292,541 $5,000
Personal Property 5,513,648 5,000
Boiler and Machinery 100,000,000 5,000
Builders Risk 14,600,000 5,000
General Liability 5,000,000 0
Miscellaneous Property 3,097,265 500
Employee Benefit Liability 1,000,000 1,000
Wrongful Acts 5,000,000 1,000
Law Enforcement 5,000,000 2,000
Automobile Liability 5,000,000 0
Electronic Data Processing 25,000 – 1,882,062 500
Settled claims have not exceeded this commercial coverage in any of the past three years, and there has
not been any significant reduction in coverage from the prior year.
Workers’ Compensation claims are covered through the City’s participation in the State of Ohio’s
program. The City pays the State Workers’ Compensation System a premium based upon a rate per $100
of payroll. The rate is determined based on accident history and administrative costs. The City also pays
unemployment claims to the State of Ohio as incurred.
This space intentionally left blank.
CITY OF MARYSVILLE, OHIO
Notes to the Basic Financial Statements For the Year Ended December 31, 2018
DRAFT - 104 - 6/17/2019
NOTE 18 - CONSTRUCTION COMMITMENTS
As of December 31, 2018, the City had the following commitments with respect to capital projects:
Remaining ExpectedConstruction Date of
Capital Projects Commitment Completion
Colemans Crossing Traffic Signal $93,443 2019Mill Wood Blvd Extension 2,347,128 2019Smart Mobility Grant 262,210 2019West 5th Street Design 63,343 2019SR 31 Widening 1,651,961 2019Innovation Park Signage 240,242 2019Plum Street and Park Design 81,925 2019MUNIS Utility Billing Module 10,654 2019Pump Station 2 Design 2,119 2019West 5th Street Sanitary 152,815 2019Stone for Capital Project 5,714 2019Stormwater Design Improvements 15,213 2019
Total $4,926,767
NOTE 19 - CONTINGENCIES
The City is a party to various legal proceedings, which seek damages or injunctive relief generally incidental to its operations and pending projects. The City's management is of the opinion that the ultimate disposition of various claims and legal proceedings will not have a material effect, if any, on the financial condition of the City.
CITY OF MARYSVILLE, OHIO
Notes to the Basic Financial Statements
For the Year Ended December 31, 2018
DRAFT - 105 - 5/30/2019
NOTE 20 - JOINTLY GOVERNED ORGANIZATIONS
Marysville/Union County Joint Recreation District
The Marysville/Union County Joint Recreation District (the District) is a jointly governed organization
involving the City of Marysville, Union County, and Paris Township. The District was established for
acquiring, developing, operating, and maintaining a sports complex and bicycle/walking trail in Union
County. The District’s Board of Trustees consists of seven members, three appointed by the Mayor of
Marysville, three appointed by the County Commissioners, and one appointed by the Paris Township
Board of Trustees.
Union County Community Improvement Corporation
The Union County Community Improvement Corporation (the Corporation), a non-profit corporation,
was established to assist in the financing of economic and industrial development in Union County. It is
the responsibility of the Corporation to provide building, zoning, and land controls for the County,
townships, and municipal corporations. The Board of Trustees consists of not less than three nor more
than twenty-five trustees as such number is fixed by the members from time to time. Two-fifths of the
Board of Trustees are composed of appointed or elected officers of such political subdivisions. The
Corporation can issue its own debt and is not fiscally dependent on the City. The City of Marysville does
not have an ongoing financial interest and/or responsibility with this organization.
Mid-Ohio Regional Planning Commission
The City is a participant in the Mid-Ohio Regional Planning Commission (MORPC), a jointly governed
organization. MORPC is composed of 74 representatives appointed by member governments who make
up the commission, the policy-making body of MORPC, and the oversight board. MORPC is a voluntary
association of local governments in central and south-central Ohio and a regional planning agency whose
membership includes 42 political subdivisions in and around Franklin, Ross, Fayette, Delaware,
Pickaway, Madison, Licking, and Fairfield counties, Ohio. The purpose of the organization is to improve
the quality of life for member communities by improving housing conditions, to promote and support
livability/sustainability measures as a means of addressing regional growth challenges, and to administer
and facilitate the availability of regional environmental infrastructure program funding to the full
advantage of MORPC’s members.
Marysville/Union County Port Authority
The Marysville/Union County Port Authority (the Authority) is a jointly governed organization involving
the City of Marysville and Union County. The Authority was established to enhance, foster, aid, provide
or promote transportation, economic development, housing, recreation, education, governmental
operations, culture, research, and the creation and preservation of jobs and employment opportunities in
Union County. The Authority’s Board of Trustees consists of seven members, three appointed by the
Mayor of Marysville with the advice and consent of City Council, three appointed by the County
Commissioners, and one appointed by the Mayor of Marysville with the advice and consent of the City
Council and the County Commissioners.
Union County Council of Governments (COG) – The Council of Governments (COG) is a jointly
governed organization involving the City of Marysville, Union County, and Marysville Exempted Village
School District. The COG was established to work together in an innovative and collaborative way and
bring new technology and shared services to each member of the Council of Governments to meet current
and future needs. The COG’s board consist of one member from each entity.
CITY OF MARYSVILLE, OHIO
Notes to the Basic Financial Statements
For the Year Ended December 31, 2018
DRAFT - 106 - 5/30/2019
NOTE 21 – SIGNIFICANT COMMITMENTS
Significant encumbrances outstanding at year-end in the General Fund are $134,468 and are reported as
assigned fund balance. Also, in the Street Maintenance Fund (special revenue fund), and in the CIP Fund
(capital projects fund) there are significant encumbrances outstanding in the amounts of $42,691 and
$1,066,906, respectively. These amounts are reported as part of the restricted and unassigned fund
balances, respectively.
NOTE 22 - SUBSEQUENT EVENT
On March 27, 2019 the City issued $1,800,000 in one year General Obligation Notes to pay for Various
Improvements within the City. The notes, which mature on March 27, 2020, have an interest rate of
3.0%.
CITY OF MARYSVILLE, OHIO
DRAFT - 107 - 5/30/2019
REQUIRED SUPPLEMENTAL INFORMATION
CITY OF MARYSVILLE, OHIO
DRAFT - 108 - 5/30/2019
Schedule of City’s Proportionate Share of the Net Pension Liability
Contributions as a percentage of 17.08% 20.36% 20.09%
covered payroll
Source: Finance Director's Office and the Ohio Police and Fire Pension Fund
Notes: The City implemented GASB Statement 68 in 2015.
Information prior to 2013 is not available.
See accompanying notes to required supplementary information
CITY OF MARYSVILLE, OHIO
DRAFT - 111 - 5/30/2019
2016 2017 2018
$673,192 $740,428 $869,072
673,192 740,428 869,072
$0 $0 $0
$5,609,933 $5,695,600 $6,207,657
12.00% 13.00% 14.00%
2016 2017 2018
$1,290,809 $1,330,145 $1,387,580
1,290,809 1,330,145 1,387,580
$0 $0 $0
$6,425,132 $6,620,931 $6,906,819
20.09% 20.09% 20.09%
CITY OF MARYSVILLE, OHIO
DRAFT - 112 - 5/30/2019
CITY OF MARYSVILLE, OHIO
DRAFT - 113 - 6/17/2019
Schedule of City’s Proportionate Share of the Net Other Postemployment Benefits (OPEB) Liability Last Two Years
Year 2017 2018
City's proportion of the net OPEBliability (asset) 0.044330% 0.046190%
City's proportionate share of the netOPEB liability (asset) $4,477,483 $5,015,892
City's covered payroll $5,609,933 $5,695,600
City's proportionate share of the netOPEB liability (asset) as a percentageof its covered payroll 79.81% 88.07%
Plan fiduciary net position as apercentage of the total OPEBliability 54.50% 54.14%
Source: Finance Director's Office and the Ohio Public Employees Retirement System
Year 2017 2018
City's proportion of the net OPEBliability (asset) 0.266451% 0.286303%
City's proportionate share of the netOPEB liability (asset) $12,647,846 $16,221,546
City's covered payroll $6,425,132 $6,620,931
City's proportionate share of the netOPEB liability (asset) as a percentageof its covered payroll 196.85% 245.00%
Plan fiduciary net position as apercentage of the total OPEBliability 15.96% 14.13%
Source: Finance Director's Office and the Ohio Police and Fire Pension Fund
Notes: The City implemented GASB Statement 75 in 2018. Information prior to 2017 is not available. The schedule is reported as of the measurement date of the Net OPEB Liability.
See accompanying notes to required supplementary information
Ohio Public Employees Retirement System
Ohio Police and Fire Pension Fund
CITY OF MARYSVILLE, OHIO
DRAFT - 114 - 5/30/2019
Schedule of City’s Other Postemployment Benefit (OPEB) Contributions
Contributions as a percentage of 0.50% 0.50% 0.50%
covered payroll
Source: Finance Director's Office and the Ohio Police and Fire Pension Fund
Notes: The City implemented GASB Statement 75 in 2018.
Information prior to 2013 is not available.
See accompanying notes to required supplementary information
CITY OF MARYSVILLE, OHIO
DRAFT - 115 - 5/30/2019
2016 2017 2018
$112,199 $56,956 $0
112,199 56,956 0
$0 $0 $0
$5,609,933 $5,695,600 $6,207,657
2.00% 1.00% 0.00%
2016 2017 2018
$32,126 $31,023 $32,365
32,126 31,023 32,365
$0 $0 $0
$6,425,132 $6,620,931 $6,906,819
0.50% 0.50% 0.50%
CITY OF MARYSVILLE, OHIO
Notes to the Required Supplemental Information
For the Year Ended December 31, 2018
DRAFT - 116 - 5/30/2019
OHIO PUBLIC EMPLOYEES RETIREMENT SYSTEM (OPERS)
Changes in benefit terms: There were no changes in benefit terms for the period 2014-2018.
Changes in assumptions:
2014-2016: There were no changes in methods and assumptions used in the calculation of actuarial
determined contributions.
2017: The following were the most significant changes of assumptions that affected total pension
liability since the prior measurement date
- Reduction in actuarial assumed rate of return from 8.00% to 7.50%
- Decrease in wage inflation from 3.75% to 3.25%
- Change in future salary increases from a range of 4.25%-10.02% to 3.25%-10.75%
2018: There were no changes in methods and assumptions used in the calculation of actuarial determined
contributions.
OHIO POLICE AND FIRE (OP&F) PENSION FUND
Changes in benefit terms: There were no changes in benefit terms for the period 2014-2018.
Changes in assumptions:
2014-2017: There were no changes in methods and assumptions used in the calculation of actuarial
determined contributions.
2018: The following were the most significant changes of assumptions that affected total pension
liability since the prior measurement date.
- Reduction in actuarial assumed rate of return from 8.25% to 8.00%
- Decrease salary increases from 3.75% to 3.25%
- Change in payroll growth from 3.75% to 3.25%
- Reduce DROP interest rate from 4.5% to 4.0%
- Reduce CPI-based COLA from 2.6% to 2.2%
- Inflation component reduced from 3.25% to 2.75%
CITY OF MARYSVILLE, OHIO
Notes to the Required Supplemental Information
For the Year Ended December 31, 2018
DRAFT - 117 - 5/30/2019
NET OPEB LIABILITY
OHIO PUBLIC EMPLOYEES RETIREMENT SYSTEM (OPERS)
Changes in benefit terms: For 2018, there were no changes in benefit terms.
Changes in assumptions: For 2018, the single discount rate changed from 4.23% to 3.85%.
OHIO POLICE AND FIRE (OP&F)
Changes in benefit terms: For 2018, there were no changes in benefit terms.
Changes in assumptions: For 2018, the single discount rate changed from 3.79% to 3.24%.
CITY OF MARYSVILLE, OHIO
DRAFT - 118 - 5/30/2019
CITY OF MARYSVILLE, OHIO
DRAFT - 119 - 5/30/2019
COMBINING AND INDIVIDUAL FUND
STATEMENTS AND SCHEDULES
THE FOLLOWING COMBINING STATEMENTS AND SCHEDULES INCLUDE
THE MAJOR AND NONMAJOR GOVERNMENTAL FUNDS, AND
FIDUCIARY FUNDS.
CITY OF MARYSVILLE, OHIO
DRAFT - 120 - 5/30/2019
Nonmajor Governmental Funds
Special Revenue Funds
Special Revenue Funds are used to account for the proceeds of specific revenue sources (other
than amounts relating to major capital projects) that are legally restricted or committed to
expenditures for specified purposes.
Veyance Incentive Fund To account for the transfer of non-tax revenues to be expended as revenue sharing for a
financial incentive negotiated with the Veyance Company(The Balance Sheet and
Statement of Revenues, Expenditures and Changes in Fund Balances are not presented
because this fund is reported as part of the General Fund on a GAAP basis.)
Univenture Financial Incentive Fund To account for the transfer of non-tax revenues to be expended as revenue sharing for a
financial incentive negotiated with the Univenture Company. (The Balance Sheet and
Statement of Revenues, Expenditures and Changes in Fund Balances are not presented
because this fund is reported as part of the General Fund on a GAAP basis.)
Enterprise Zone Revenue Fund To account for the Enterprise Zone Agreement between the City of Marysville and the
Marysville School District. (The Balance Sheet and Statement of Revenues, Expenditures
and Changes in Fund Balances are not presented because this fund is reported as part of
the General Fund on a GAAP basis.)
Street Tree Fund To accumulate dedicated revenues for the financial support of expenditures associated
with the Urban Forestry Program.
Pool Fund To account for specific revenues and expenditures necessary to operate the municipal
pool.
City Events Fund To account for all revenues and expenditures associated with City sponsored events.
Police Pension Fund To account for property taxes levied for the partial payment of the current and accrued
liability for police disability and pension.
Fire Pension Fund To account for property taxes levied for the partial payment of the current and accrued
liability for fire disability and pension.
(Continued)
CITY OF MARYSVILLE, OHIO
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Special Revenue Funds (Continued)
Police Grant Fund To account for grant revenues and expenditures associated with the Police Department.
Fire Grant Fund To account for grant revenues and expenditures associated with the Fire Department.
Street Maintenance Fund To account for that portion of the state levied and controlled gasoline tax and motor
vehicle license fees designated for local street construction, maintenance and repair.
Ninety-two and one-half percent of the tax and fees are allocated to this fund.
Law Enforcement Trust Fund To account for the proceeds from the confiscation of contraband.
Mandatory Drug Fine Fund To account for mandatory fines collected for drug agencies.
Driving Under the Influence (DUI) Alcohol Education And Enforcement Fund To account for fines imposed on DUI offenders. Under state law, disbursements may be
made from this fund for law enforcement purposes related to informing the public of laws
governing the operation of a motor vehicle while under the influence of alcohol.
Driving Under the Influence (DUI) Indigent Drivers Treatment Fund To account for fines imposed on DUI offenders. Under state law, disbursements may be
made from this fund for law enforcement purposes related to treatment services for those
persons who cannot afford such services.
State Highway Fund To account for that portion of the state levied and controlled gasoline tax and motor
vehicle license fees designated for the maintenance and repair of state highways within
the City. Seven and one-half percent of the tax and fees are allocated to this fund.
Court Computer and Research Fund To account for revenues from fines to be used for providing information technology
systems to the Municipal Court and for periodic upgrades to these systems.
Municipal Court Computer Fund To account for revenues from fines to be used for providing information technology
systems to the Municipal Court and for periodic upgrades to these systems.
(Continued)
CITY OF MARYSVILLE, OHIO
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Special Revenue Funds (Continued)
Municipal Court Special Projects Fund To account for revenues from fines to be used for providing for other specific items that
may arise.
Court Probation Fee Fund To account for fees designated to the Municipal Court for the operation of the probation
program.
Eljer Park Fund To account for the insurance liability for Eljer Park.
Cemetery Maintenance Fund To provide funding for the maintenance of the city owned cemetery.
Cemetery Endowment Fund To account for donations to the cemetery whose use is specified for cemetery operations.
Municipal Court Local Interlock Fund To account for the fines assessed by the City of Marysville for certain DUI cases.
Monies collected are to be used for the purchase and installation of an
interlock/immobilization device to prevent usage of a motor vehicle by intoxicated
drivers.
Municipal Court State Interlock Fund To account for the fines assessed by the State of Ohio for certain DUI cases. Monies
collected are to be used for the purchase and installation of an interlock/immobilization
device to prevent usage of a motor vehicle by intoxicated drivers.
Community Housing Improvement Program (CHIP) Grant Fund To account for grant revenues and expenditures associated with the CHIP program.
Federal Law Enforcement Fund To account for federal proceeds from the confiscation of contraband.
(Continued)
CITY OF MARYSVILLE, OHIO
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Debt Service Funds
The Debt Service Funds are used to account for the accumulation of resources and payment of
general obligation bond principal and interest from governmental resources and special
assessment levies when the government is obligated in some manner for the payment.
Partners Park Fund To account for monies pledged by area businesses for the construction of Partners Park
(Only the Balance Sheet is presented for this fund as there is no activity for the year in the
Statement of Revenues, Expenditures and Changes in Fund Balances. This fund is not
part of the City’s appropriated budget; therefore no budgetary schedule is presented.)
Capital Projects Funds
The Capital Projects Funds are used to account for the financial resources to be used for the
acquisition or construction of major capital facilities, other than those financed by proprietary
or trust funds.
Parkland Development Fund To account for park impact/capacity fees collected to be used to provide neighborhood
parks and to make capital improvements to land provided to the City by developers.
ODNR Grant Fund To account for grant revenues and expenditures associated with the ODNR program.
OPWC Grant Fund To account for grant revenues and expenditures associated with the OPWC program.
Community Development Block Grant (CDBG) Formula Grant Fund To account for grant revenues and expenditures associated with the CDBG Formula
program.
(Continued)
CITY OF MARYSVILLE, OHIO
DRAFT - 124 - 5/30/2019
Capital Projects Funds (Continued)
The Capital Projects Funds are used to account for the financial resources to be used for the
acquisition or construction of major capital facilities, other than those financed by proprietary
or trust funds.
Pedestrian Bridge Fund To account for the activity related to the construction of a pedestrian bridge over US 33.
Safe Routes to Schools Grant Fund To account for the activity related to the capital improvements funded by the Safe Routes
to School Grant.
Town Run Restoration Fund To account for grant revenues and expenditures associated with the Town Run
Restoration project.
City Development Grant Fund To account for grant proceeds to be used for City wide developments.
NW 33 Grant Fund To account for grant revenues and expenditures associated with the Route 33
Construction project.
State Route 31 Fund To account for grant proceeds to be used for State Route 31 improvements.
CITY OF MARYSVILLE, OHIO
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CITY OF MARYSVILLE, OHIO
DRAFT - 126 - 5/30/2019
Combining Balance Sheet
Nonmajor Governmental Funds
December 31, 2018
Nonmajor
Special Revenue
Funds
Nonmajor Debt
Service Fund
Nonmajor
Capital Projects
Funds
Total Nonmajor
Governmental
Funds
Assets:
Cash and Cash Equivalents 2,715,972$ 0$ 1,143,356$ 3,859,328$
Receivables:
Accounts 436 337,500 0 337,936
Intergovernmental 485,925 0 2,796 488,721
Property Taxes 251,384 0 0 251,384
Prepaid Items 32,401 0 0 32,401
Total Assets 3,486,118$ 337,500$ 1,146,152$ 4,969,770$
Liabilities:
Accounts Payable 141,406$ 0$ 0$ 141,406$
Accrued Wages and Benefits Payable 10,339 0 0 10,339
Intergovernmental Payable 8,688 0 0 8,688
Contracts Payable 0 0 89,460 89,460
Interfund Loans Payable 0 0 336,592 336,592
Total Liabilities 160,433 0 426,052 586,485
Deferred Inflows of Resources:
Unavailable Amounts 341,175 337,500 0 678,675
Property Tax Levy for Next Fiscal Year 238,802 0 0 238,802
Total Deferred Inflows of Resources 579,977 337,500 0 917,477
Fund Balances:
Nonspendable 32,401 0 0 32,401
Restricted 2,473,284 0 501,574 2,974,858
Committed 272,219 0 218,526 490,745
Unassigned (32,196) 0 0 (32,196)
Total Fund Balances 2,745,708 0 720,100 3,465,808
Total Liabilities, Deferred Inflows of Resources
and Fund Balances 3,486,118$ 337,500$ 1,146,152$ 4,969,770$
CITY OF MARYSVILLE, OHIO
DRAFT - 127 - 5/30/2019
Combining Statement of Revenues, Expenditures and Changes in Fund Balance
Total Expenditures 1,358,038 1,458,391 1,332,469 125,922
Excess (Deficiency) of Revenues
Over (Under) Expenditures (505,217) (605,570) (376,268) 229,302
Other Financing Sources (Uses):
Transfers In 550,000 550,000 102,500 (447,500)
Total Other Financing Sources (Uses) 550,000 550,000 102,500 (447,500)
Net Change In Fund Balance 44,783 (55,570) (273,768) (218,198)
Fund Balance at Beginning of Year 155,430 155,430 155,430 0
Prior Year Encumbrances 118,432 118,432 118,432 0
Fund Balance at End of Year 318,645$ 218,292$ 94$ (218,198)$
STREET MAINTENANCE FUND
CITY OF MARYSVILLE, OHIO
Schedule of Revenues, Expenditures and Changes in Fund Balance – Budget and Actual (Non-GAAP Budgetary Basis) Nonmajor Special Revenue Funds For the Year Ended December 31, 2018
DRAFT - 162 - 6/17/2019
Original Budget Final Budget Actual
Variance with Final Budget
Positive (Negative)
Revenues:
All Other Revenues 500$ 500$ 83,092$ 82,592$
Total Revenues 500 500 83,092 82,592
Expenditures:
Security of Persons and Property - Police:
Materials and Supplies 1,000 1,636 1,211 425
Capital Outlay 22,000 190,443 169,393 21,050
Total Expenditures 23,000 192,079 170,604 21,475
Excess (Deficiency) of Revenues
Over (Under) Expenditures (22,500) (191,579) (87,512) 104,067
Other Financing Sources (Uses):
Transfers In 0 75,078 0 (75,078)
Total Other Financing Sources (Uses) 0 75,078 0 (75,078)
Net Change In Fund Balance (22,500) (116,501) (87,512) 28,989
Fund Balance at Beginning of Year 120,848 120,848 120,848 0
Prior Year Encumbrances 6,251 6,251 6,251 0
Fund Balance at End of Year 104,599$ 10,598$ 39,587$ 28,989$
LAW ENFORCEMENT TRUST FUND
CITY OF MARYSVILLE, OHIO
Schedule of Revenues, Expenditures and Changes in
Fund Balance – Budget and Actual (Non-GAAP Budgetary Basis)
Nonmajor Special Revenue Funds
For the Year Ended December 31, 2018
DRAFT - 163 - 5/30/2019
Original
Budget Final Budget Actual
Variance with
Final Budget
Positive
(Negative)
Revenues:
Fines and Forfeitures 12,000$ 12,000$ 3,455$ (8,545)$
Total Revenues 12,000 12,000 3,455 (8,545)
Expenditures:
Security of Persons and Property - Police:
Materials and Supplies 3,000 3,000 0 3,000
Total Expenditures 3,000 3,000 0 3,000
Excess (Deficiency) of Revenues
Over (Under) Expenditures 9,000 9,000 3,455 (5,545)
Fund Balance at Beginning of Year 110,175 110,175 110,175 0
Fund Balance at End of Year 119,175$ 119,175$ 113,630$ (5,545)$
MANDATORY DRUG FINE FUND
CITY OF MARYSVILLE, OHIO
Schedule of Revenues, Expenditures and Changes in
Fund Balance – Budget and Actual (Non-GAAP Budgetary Basis)
Nonmajor Special Revenue Funds
For the Year Ended December 31, 2018
DRAFT - 164 - 5/30/2019
Original
Budget Final Budget Actual
Variance with
Final Budget
Positive
(Negative)
Revenues:
Fines and Forfeitures 1,500$ 1,500$ 1,067$ (433)$
Total Revenues 1,500 1,500 1,067 (433)
Expenditures:
Security of Persons and Property - Police:
Contractual Services 750 750 100 650
Total Expenditures 750 750 100 650
Excess (Deficiency) of Revenues
Over (Under) Expenditures 750 750 967 217
Fund Balance at Beginning of Year 32,057 32,057 32,057 0
Fund Balance at End of Year 32,807$ 32,807$ 33,024$ 217$
DUI ALCOHOL EDUCATION AND ENFORCEMENT FUND
CITY OF MARYSVILLE, OHIO
Schedule of Revenues, Expenditures and Changes in
Fund Balance – Budget and Actual (Non-GAAP Budgetary Basis)
Nonmajor Special Revenue Funds
For the Year Ended December 31, 2018
DRAFT - 165 - 5/30/2019
Original
Budget Final Budget Actual
Variance with
Final Budget
Positive
(Negative)
Revenues:
Total Revenues 0$ 0$ 0$ 0$
Expenditures:
Total Expenditures 0 0 0 0
Excess (Deficiency) of Revenues
Over (Under) Expenditures 0 0 0 0
Fund Balance at Beginning of Year 169,406 169,406 169,406 0
Fund Balance at End of Year 169,406$ 169,406$ 169,406$ 0$
DUI INDIGENT DRIVERS TREATMENT FUND
CITY OF MARYSVILLE, OHIO
Schedule of Revenues, Expenditures and Changes in
Fund Balance – Budget and Actual (Non-GAAP Budgetary Basis)
Number of Emergency Responses 1,964 1,986 2,002 2,131 2,183
Number of Fire Responses 814 855 884 783 756
Number of Fire Inspections n/a n/a 984 991 1,042
Transportation
Street
Number of times streets needed snow removed 16 46 27 28 59
Tons of salt used 426 1,806 1,907 633 2,339
Number of locations marked for OUPS 123 238 65 112 97
Number of new signs installed 123 188 201 326 302
Number of hours mowing grass 310 639 761 683 572
Community Environment
Number of Plot Grade Utility reviews 68 57 47 78 92
Number of Project Inspections 108 87 75 100 338
Number of Capital Improvement Projects 8 3 8 10 8
Business-Type Activities
Water / Sewer
Number of Water accounts 6,880 6,924 7,002 7,020 7,297
Number of Sewer accounts 6,814 6,853 6,950 6,984 7,057
Water Main Breaks 29 9 12 12 11
Daily Average Consumption (1,000 of gallons) 2,009 1,933 2,035 2,101 1,961
Number of work orders 2,685 2,547 2,224 3,396 4,203
Number of fire hydrants painted 142 61 189 578 400
Sanitation
Number of Customers Served 5,030 5,052 5,071 5,194 5,264
Source: Finance Director's Office
n/a - Data is not available
CITY OF MARYSVILLE, OHIO
Operating Indicators by Function
Last Ten Years
- S 34 -
2014 2015 2016 2017 2018
6,693 8,889 9,589 7,697 6,954
747 772 1,069 1,074 1,186
1,079 1,038 1,297 1,412 1,439
170 143 196 194 138
16 9 10 15 40
1,933 2,260 2,278 2,396 1,906
490 590 669 585 580
53 117 43 120 36
627 498 544 705 663
3,343 3,664 3,165 2,322 3,184
77 43 44 43 61
2,430 2,696 1,674 2,681 3,020
764 852 866 854 926
1,035 1,038 1,024 1,020 834
41 51 39 24 37
2,027 1,660 929 932 1,070
68 42 67 127 13,600
357 244 334 421 334
629 428 521 1,000 5,000
138 149 181 189 138
440 463 743 1,483 1,086
4 4 4 4 8
7,612 7,870 8,459 8,326 9,074
7,123 7,510 8,109 8,220 8,733
8 14 10 7 4
2,112 2,228 2,323 2,372 3
3,007 3,063 2,867 2,363 2,600
321 150 100 50 40
5,375 5,485 5,774 5,920 6,102
CITY OF MARYSVILLE, OHIO
- S 35 -
2009 2010 2011 2012 2013
Governmental Activities
General Government
Public Buildings 6 6 6 6 7
Security of Persons and Property
Police
Stations 1 1 1 1 1
Patrol Cruisers 28 21 18 19 18
Fire
Stations 1 1 1 1 2
Emergency Vehicles 11 11 11 11 12
Transportation
Street
Streets (linear miles) n/a 114 117 118 119
Street Lights n/a 1,951 1,951 1,958 2,034
Leisure Time Activities
Recreation
Land (acres) 231 231 231 231 231
Buildings 21 21 21 21 21
Parks 15 15 15 15 15
Business-Type Activities
Utilities
Water
Waterlines (Miles) n/a 148 150 152 159
Number of Hydrants 1,414 1,422 1,481 1,530 1,593
Sewer
Sewerlines (Miles) n/a 135 138 140 141
Manholes n/a 943 2,434 2,472 2,494
Storm Water Drainage
Storm Drains (Miles) n/a 70 70 71 72
Source: Finance Director's Office
n/a - Data is not available
Capital Asset Statistics by Function
Last Ten Years
CITY OF MARYSVILLE, OHIO
- S 36 -
2014 2015 2016 2017 2018
7 7 7 7 7
1 1 1 1 1
18 13 19 14 15
2 2 2 2 2
12 12 11 11 11
121 123 126 114 142
1,949 2,012 2,110 2,103 2,103
231 238 238 238 238
21 21 21 21 21
15 18 18 18 18
162 164 166 168 198
1,675 1,925 2,039 2,212 2,212
143 144 148 151 263
2,507 2,518 2,618 2,697 2,697
75 76 78 143 260
CITY OF MARYSVILLE, OHIO
- S 37 -
CITY OF MARYSVILLE, OHIO
- S 38 -
88 East Broad Street, Columbus, Ohio 43215 Phone: 614-466-4514 or 800-282-0370
www.ohioauditor.gov
CITY OF MARYSVILLE
UNION COUNTY
CLERK’S CERTIFICATION
This is a true and correct copy of the report which is required to be filed in the Office of the Auditor of State pursuant to Section 117.26, Revised Code, and which is filed in Columbus, Ohio.
FORM OF APPROVING LEGAL OPINION OF BRICKER & ECKLER LLP
Stifel, Nicolaus & Company, Incorporated Columbus, Ohio Build America Mutual Assurance Company New York, New York
We have acted as bond counsel to the City of Marysville, Ohio (the "City") in connection with the issuance by the City of $40,465,000 Water System Mortgage Revenue Bonds, Series 2020, dated May 20, 2020 (the "Series 2020 Bonds"). In such capacity, we have examined such law and such certified proceedings, certifications and other documents as we have deemed necessary to render this opinion.
The Series 2020 Bonds are issued pursuant to an ordinance adopted by the Council of the City on February 10, 2020, and are secured by an Indenture of Mortgage, dated as of June 1, 1991, as amended and supplemented by a First Supplemental Indenture of Mortgage, dated as of November 15, 1993, a Second Supplemental Indenture of Mortgage, dated as of April 1, 2002, a Third Supplemental Indenture of Mortgage, dated as of November 1, 2003, a Fourth Supplemental Indenture of Mortgage, dated as of October 15, 2007, a Fifth Supplemental Indenture of Mortgage, dated as of June 15, 2016 and a Sixth Supplemental Indenture Mortgage, dated as of May 20, 2020 (collectively, the "Indenture"), between the City and The Huntington National Bank, as Trustee.
Regarding questions of fact material to our opinion, we have relied on the certified proceedings and other certifications of public officials and others furnished to us without undertaking to verify the same by independent investigation.
Based upon the foregoing, we are of the opinion that, under existing law:
1. The Series 2020 Bonds are valid and binding special obligations of the City, and the principal of and premium, if any, and interest on the Series 2020 Bonds are payable solely from revenues and other moneys pledged and assigned by the Indenture to secure that payment. The Series 2020 Bonds are not general obligations, debt or bonded indebtedness of the City, and the holders or owners of the Series 2020 Bonds do not have the right to have excises or taxes levied by the City, the State of Ohio, or any political subdivision thereof for the payment of principal of or premium, if any, or interest on the Series 2020 Bonds.
2. The Indenture has been duly authorized, executed and delivered by the City and constitutes a valid, binding and enforceable obligation of the City.
3. The interest on the Series 2020 Bonds is excluded from gross income for federal income tax
purposes under Section 103(a) of the Internal Revenue Code of 1986, as amended (the "Code"), and is not treated as an item of tax preference under Section 57 of the Code for purposes of the alternative minimum tax. The opinion set forth in the preceding sentence is subject to the condition that the City comply with all requirements of the Code that must be satisfied subsequent to the issuance of the Series 2020 Bonds in order that the interest thereon be, and continue to be, excludable from gross income for federal income tax purposes. The City has
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covenanted to comply with all such requirements. Failure to comply with certain of such requirements may cause interest on the Series 2020 Bonds to be included in gross income for federal income tax purposes retroactively to the date of issuance of the Series 2020 Bonds.
4. Interest on the Series 2020 Bonds, the transfer thereof, and any profit made on their sale,
exchange or other disposition, are exempt from the Ohio personal income tax, the Ohio commercial activity tax, the net income base of the Ohio corporate franchise tax, and municipal, school district, and joint economic development district income taxes in Ohio.
Although we have participated in the preparation of portions of the Official Statement dated April
29, 2020 relating to the Series 2020 Bonds, we have not been engaged or undertaken to review the accuracy, completeness or sufficiency of the Official Statement (except to the extent, if any, stated in the Official Statement) or other offering material relating to the Series 2020 Bonds and we express no opinion and make no representation relating thereto (excepting only the matters set forth as our opinion in the Official Statement). Further, we express no opinion regarding tax consequences arising with respect to the Series 2020 Bonds other than as expressly set forth herein.
Please be advised that the rights of the holders of the Series 2020 Bonds and the enforceability thereof are limited by bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors' rights generally, and by equitable principles, whether considered at law or in equity.
This opinion is given as of the date hereof, and we assume no obligation to revise or supplement this opinion to reflect any facts or circumstances that may hereafter come to our attention, or any changes in law that may hereafter occur. We bring to your attention the fact that our legal opinions are an expression of our professional judgment and are not a guarantee of a result.
Very truly yours,
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APPENDIX E (1 of 2)
FORM OF CLOSING CERTIFICATE
$40,465,000 City of Marysville, Ohio
Water System Mortgage Revenue Bonds, Series 2020 Dated May 20, 2020
To Stifel, Nicolaus & Company, Incorporated: It is my understanding that, in considering whether to purchase the above-captioned obligations, you have relied on the Official Statement for such issue dated April 29, 2020 (the "Official Statement"), which Official Statement was prepared and executed by and for the City of Marysville, Ohio (the "City") under the direction of its City Council. In connection with your reliance as stated above, I hereby certify that:
1. I have reviewed the Official Statement and have made such investigation and inquiries as
I deemed necessary in the circumstances; 2. The statements and information contained in the Official Statement are correct and
complete in all material respects, and they do not omit any statement or information necessary in order to make the statements and information therein, in light of the circumstances under which they were made, not misleading or incomplete in any material respect; and
3. To the best of my knowledge, since the date of the Official Statement, nothing has occurred
which has caused, or which might reasonably be expected to cause, a material adverse change in the condition or prospects of the City.
Date: May 20, 2020
Director of Finance City of Marysville, Ohio
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APPENDIX E (2 of 2)
FORM OF CLOSING CERTIFICATE
$40,465,000 City of Marysville, Ohio
Water System Mortgage Revenue Bonds, Series 2020 Dated May 20, 2020
To Stifel, Nicolaus & Company, Incorporated: It is my understanding that, in considering whether to purchase the above-captioned issue, you have relied on the Official Statement for such issue dated April 29, 2020 (the "Official Statement"), which Official Statement was prepared and executed by and for the City of Marysville, Ohio (the "City") under the direction of its City Council. In connection with your reliance as stated above, I hereby certify that:
1. I have reviewed the section of the Official Statement captioned "LITIGATION" and have made such investigation and inquiries as I deemed necessary in the circumstances;
2. The statements and information contained in the section of the Official Statement captioned
"LITIGATION" are correct and complete in all material respects, and they do not omit any statement or information necessary in order to make the statements and information therein, in light of the circumstances under which they were made, not misleading or incomplete in any material respect; and
3. To the best of my knowledge, since the date of the Official Statement, nothing has occurred
which has caused, or which might reasonably be expected to cause, a material adverse change in the condition or prospects of the City.
Date: May 20, 2020 Law Director City of Marysville, Ohio
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APPENDIX F
FORM OF CONTINUING DISCLOSURE CERTIFICATE
$40,465,000 City of Marysville, Ohio
Water System Mortgage Revenue Bonds, Series 2020 Dated May 20, 2020
This Continuing Disclosure Certificate (the "Disclosure Certificate") is executed and delivered by the Director of Finance of the City of Marysville, Ohio (the "City") pursuant to an ordinance of the City Council of the City authorizing the issuance and sale of $40,465,000 Water System Mortgage Revenue Bonds, Series 2020, dated May 20, 2020 (the "Series 2020 Bonds"). The City covenants and agrees as follows: Section 1. Definitions. The following capitalized terms shall have the following meanings: "Annual Report" means any Annual Report provided by the City referred to in this Official Statement and any appendix hereto. "EMMA" shall mean the Electronic Municipal Market Access system of the MSRB for use in the collection and dissemination of information pursuant to the Rule. The current website address for EMMA is http://emma.msrb.org. "Filing Date" means the last day of the ninth month following the end of each Fiscal Year (or the next succeeding business day if that day is not a business day), beginning September 30, 2020.
"Financial Obligation" means a (i) debt obligation; (ii) derivative instrument entered into in connection with, or pledged as security or a source of payment for, an existing or planned debt obligation; or (iii) guarantee of (i) or (ii). The term Financial Obligation shall not include municipal securities as to which a final official statement has been provided to the MSRB consistent with the Rule.
"Fiscal Year" means the 12-month period beginning on January 1 that ends on December 31 of the same calendar year, or such other 12-month period as the City shall subsequently adopt as its fiscal year. "Listed Events" shall mean any of the events listed in Section 5 of this Disclosure Certificate. "MSRB" shall mean the Municipal Securities Rulemaking Board (www.msrb.org). "Official Statement" shall mean the Official Statement prepared in connection with the sale of the Series 2020 Bonds. "Participating Underwriter" shall mean any of the original underwriters of the Bonds required to comply with the Rule in connection with the offering of the Series 2020 Bonds. "Rule" shall mean Rule 15c2-12 adopted by the United States Securities and Exchange Commission under the Securities Exchange Act of 1934, as the same may be amended from time to time.
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Section 2. Purpose of the Disclosure Certificate. This Disclosure Certificate is being executed and delivered by the City for the benefit of the holders and beneficial owners of the Series 2020 Bonds and in order to assist the Participating Underwriter in complying with the Rule. Section 3. Provision of Annual Reports.
(a) The City shall provide to the MSRB, not later than the Filing Date, an Annual Report for the immediately preceding fiscal year, which Annual Report shall be consistent with the requirements of Section 4 of this Disclosure Certificate.
(b) If the City fails to provide an Annual Report to the MSRB by the date set forth in subsection
(a) of this Section 3, the City shall send in a timely manner to the MSRB notice of such failure, which shall include a statement as to the date by which the City anticipates that the Annual Report will be provided to the MSRB.
Section 4. Contents of the Annual Report.
(a) The Annual Report shall contain or incorporate by reference the following:
(1) Audited financial statements of the City.
(2) Fiscal year-end data for the table entitled "Largest Taxpayers" contained in APPENDIX A to the Official Statement under the caption "CITY TAX BASE – Largest Taxpayers in the City."
(3) Fiscal year-end data for the table entitled "Historical Property Tax Collections" contained in APPENDIX A to the Official Statement under the caption "CITY TAX BASE – Property Tax Revenues." (4) Fiscal year-end data for the table entitled "Historical Income Tax Revenues" contained in APPENDIX A to the Official Statement under the caption "CITY TAX BASE – Income Tax Revenues." (5) Fiscal year-end data for the table entitled "General Fund – Major Tax Revenue Sources" contained in APPENDIX A to the Official Statement under the caption "FINANCES OF THE CITY – General Fund Revenue Sources." (6) Fiscal year-end data for the table entitled "Top Ten Utility Customers" contained in APPENDIX A to the Official Statement under the caption "THE UTILITY – Customer Base." (7) Fiscal year-end data for the table entitled "Historical and Projected Revenues and Expenditures of the Utility" contained in APPENDIX A to the Official Statement under the caption "THE UTILITY – Historical and Projected Revenues and Expenditures of the Utility."
(8) Fiscal year-end data for the table entitled "Historical Demand of the Utility" contained in APPENDIX A to the Official Statement under the caption "THE UTILITY – Historical and Future Growth of Use of the Utility."
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(9) Fiscal year-end data for the table entitled "Capacity and Average Daily Flow of the Utility" contained in APPENDIX A to the Official Statement under the caption "THE UTILITY – Historical and Future Growth of Use of the Utility."
(10) Fiscal year-end data for the table entitled "Classification of Users of the Utility" contained in Appendix A to the Official Statement under the caption "THE UTILITY – Customer Base."
(11) Fiscal year-end data for the table entitled "Rates for the Utility" contained in Appendix A to the Official Statement under the caption "THE UTILITY – Utility Rates and Charges."
(12) Fiscal year-end data for the table entitled "Capacity Fees for the Utility" contained in Appendix A to the Official Statement under the caption "THE UTILITY – Utility Rates and Charges." All or any of the items listed above may be incorporated by specific reference from other documents which have previously been provided to the MSRB. If the document incorporated by reference is a final official statement, it must be available from the MSRB. If this City prepares a Comprehensive Annual Financial Report ("CAFR") that includes each of the items listed above, the City may designate the CAFR as the Annual Report.
(b) The audited financial statements of the City to be included in the Annual Report shall be
initially prepared in accordance with generally accepted accounting principles (provided, however, that if the City shall subsequently change its accounting method, the audited financial statements shall indicate the accounting method then in use) and shall be accompanied by a report of the Auditor of the State of Ohio, or, if applicable, the independent certified public accountants who audited the financial statements; provided, however, if such audited financial statements are not available to the City at the time of providing the Annual Report to the MSRB as provided in Section 3 of this Disclosure Certificate, the City will provide such audited financial statements to the MSRB as provided in Section 3 of this Disclosure Certificate as soon as they are available.
Section 5. Reporting of Significant Events. The City shall provide to the MSRB in a timely manner not in excess of ten business days after the occurrence of the event notice of any of the following events with respect to the Series 2020 Bonds:
(a) Principal and interest payment delinquencies;
(b) Non-payment related defaults, if material;
(c) Unscheduled draws on debt service reserves reflecting financial difficulties;
(d) Unscheduled draws on credit enhancements reflecting financial difficulties;
(e) Substitution of credit or liquidity providers, or their failure to perform;
(f) 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
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material notices or determinations with respect to the tax status of the Series 2020 Bonds, or other material events affecting the tax status of the Series 2020 Bonds;
(g) Modifications to rights of holders of the Series 2020 Bonds, if material;
(h) (1) Calls for redemption of the Series 2020 Bonds, if material, other than calls pursuant to the mandatory sinking fund provisions of the Series 2020 Bonds, if any, and (2) tender offers;
(i) Defeasances;
(j) Release, substitution or sale of property securing repayment of the Series 2020 Bonds, if material;
(k) Rating changes;
(l) Bankruptcy, insolvency, receivership or similar event of the City;
(m) The consummation of a merger, consolidation, or acquisition involving the City or the sale of all or substantially all of the assets of the City, 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;
(n) Appointment of a successor or additional trustee or the change of name of a trustee, if material;
(o) Incurrence of a Financial Obligation of the City, if material, or agreement to covenants, events of default, remedies, priority rights, or other similar terms of a Financial Obligation of the City, any of which affect holders of the Bonds, if material; and
(p) Default, event of acceleration, termination event, modification of terms, or other similar events under the terms of a Financial Obligation of the City, any of which reflect financial difficulties.
For the purposes of subsection (l), above, the event is considered to occur when any of the following occur: the appointment of a receiver, fiscal agent or similar officer for the City 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 or business of the City, 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 City. Section 6. Means of Reporting Information. The City shall provide information to the MSRB according to the MSRB's prescribed reporting requirements, as the same may be amended from time to time. The MSRB currently requires that all filings made pursuant to the Rule be submitted thought the MSRB's EMMA system. As of the date hereof, submissions to EMMA must be by electronic submission in an electronic portable document format ("PDF") that shall have a word-search function permitting a user to search the document.
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Section 7. Termination of Reporting Obligation. The City's obligations under this Disclosure Certificate shall terminate upon the defeasance, redemption or payment in full of all of the Series 2020 Bonds. Section 8. Amendment; Waiver. Notwithstanding any other provision of this Disclosure Certificate, the City may amend this Disclosure Certificate, and any provision of this Disclosure Certificate may be waived, if the City has received an opinion of counsel knowledgeable in federal securities laws to the effect that such amendment or waiver would not, in and of itself, cause the undertakings herein to violate the Rule if such amendment or waiver had been effective on the date hereof but taking into account any subsequent change in or official interpretation of the Rule. Section 9. Additional Information. Nothing in this Disclosure Certificate shall be deemed to prevent the City from disseminating any other information (using the means of dissemination set forth in this Disclosure Certificate or any other means of communication) or including any other information in any Annual Report or providing notice of occurrence of events, in addition to that which is required by this Disclosure Certificate. If the City chooses to include any information in an Annual Report or provide notice of occurrence of events which are not Listed Events in addition to that which is specifically required by this Disclosure Certificate, the City shall have no obligation to update such information or include it in any future Annual Report or notice of occurrence of a Listed Event. Section 10. Default; Remedies. Failure of the City to perform any of its undertakings contained in this Disclosure Certificate shall not constitute an event of default with respect to the Series 2020 Bonds. The exclusive remedy for any such failure shall be enforcement of the City's obligations to so perform by actions or proceedings taken in accordance with Ohio Revised Code Section 133.25(B)(4)(b) or Section 133.25(C)(1). Section 11. Beneficiaries. This Disclosure Certificate shall inure solely to the benefit of the City, the Participating Underwriter and the holders of the Series 2020 Bonds, and shall create no rights in any other person or entity. Date: May 20, 2020 CITY OF MARYSVILLE, OHIO By: Title: Director of Finance
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APPENDIX G
SPECIMEN MUNICIPAL BOND INSURANCE POLICY &
SPECIMEN MUNICIPAL BOND DEBT SERVICE RESERVE INSURANCE POLICY
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MUNICIPAL BOND INSURANCE POLICY
ISSUER: [NAME OF ISSUER] Policy No: _____ MEMBER: [NAME OF MEMBER] BONDS: $__________ in aggregate principal Effective Date: _________ amount of [NAME OF TRANSACTION] [and maturing on]
Risk Premium: $__________ Member Surplus Contribution: $ _________
Total Insurance Payment: $_________ BUILD AMERICA MUTUAL ASSURANCE COMPANY (“BAM”), for consideration received, hereby UNCONDITIONALLY AND
IRREVOCABLY agrees to pay to the trustee (the “Trustee”) or paying agent (the “Paying Agent”) for the Bonds named above (as set forth in the documentation providing for the issuance and securing of the Bonds), for the benefit of the Owners or, at the election of BAM, directly to each Owner, subject only to the terms of this Policy (which includes each endorsement hereto), that portion of the principal of and interest on the Bonds that shall become Due for Payment but shall be unpaid by reason of Nonpayment by the Issuer.
On the later of the day on which such principal and interest becomes Due for Payment or the first Business Day following the Business Day on which BAM shall have received Notice of Nonpayment, BAM will disburse (but without duplication in the case of duplicate claims for the same Nonpayment) to or for the benefit of each Owner of the Bonds, the face amount of principal of and interest on the Bonds that is then Due for Payment but is then unpaid by reason of Nonpayment by the Issuer, but only upon receipt by BAM, in a form reasonably satisfactory to it, of (a) evidence of the Owner’s right to receive payment of such principal or interest then Due for Payment and (b) evidence, including any appropriate instruments of assignment, that all of the Owner’s rights with respect to payment of such principal or interest that is Due for Payment shall thereupon vest in BAM. A Notice of Nonpayment will be deemed received on a given Business Day if it is received prior to 1:00 p.m. (New York time) on such Business Day; otherwise, it will be deemed received on the next Business Day. If any Notice of Nonpayment received by BAM is incomplete, it shall be deemed not to have been received by BAM for purposes of the preceding sentence, and BAM shall promptly so advise the Trustee, Paying Agent or Owner, as appropriate, any of whom may submit an amended Notice of Nonpayment. Upon disbursement under this Policy in respect of a Bond and to the extent of such payment, BAM shall become the owner of such Bond, any appurtenant coupon to such Bond and right to receipt of payment of principal of or interest on such Bond and shall be fully subrogated to the rights of the Owner, including the Owner’s right to receive payments under such Bond. Payment by BAM either to the Trustee or Paying Agent for the benefit of the Owners, or directly to the Owners, on account of any Nonpayment shall discharge the obligation of BAM under this Policy with respect to said Nonpayment.
Except to the extent expressly modified by an endorsement hereto, the following terms shall have the meanings specified for all purposes of this Policy. “Business Day” means any day other than (a) a Saturday or Sunday or (b) a day on which banking institutions in the State of New York or the Insurer’s Fiscal Agent (as defined herein) are authorized or required by law or executive order to remain closed. “Due for Payment” means (a) when referring to the principal of a Bond, payable on the stated maturity date thereof or the date on which the same shall have been duly called for mandatory sinking fund redemption and does not refer to any earlier date on which payment is due by reason of call for redemption (other than by mandatory sinking fund redemption), acceleration or other advancement of maturity (unless BAM shall elect, in its sole discretion, to pay such principal due upon such acceleration together with any accrued interest to the date of acceleration) and (b) when referring to interest on a Bond, payable on the stated date for payment of interest. “Nonpayment” means, in respect of a Bond, the failure of the Issuer to have provided sufficient funds to the Trustee or, if there is no Trustee, to the Paying Agent for payment in full of all principal and interest that is Due for Payment on such Bond. “Nonpayment” shall also include, in respect of a Bond, any payment made to an Owner by or on behalf of the Issuer of principal or interest that is Due for Payment, which payment has been recovered from such Owner pursuant to the United States Bankruptcy Code in accordance with a final, nonappealable order of a court having competent jurisdiction. “Notice” means delivery to BAM of a notice of claim and certificate, by certified mail, email or telecopy as set forth on the attached Schedule or other acceptable electronic delivery, in a form satisfactory to BAM, from and signed by an Owner, the Trustee or the Paying Agent, which notice shall specify (a) the person or entity making the claim, (b) the Policy Number, (c) the claimed amount, (d) payment instructions and (e) the date such claimed amount becomes or became Due for Payment. “Owner” means, in respect of a Bond, the person or entity who, at the time of Nonpayment, is entitled under the terms of such Bond to payment thereof, except that “Owner” shall not include the Issuer, the Member or any other person or entity whose direct or indirect obligation constitutes the underlying security for the Bonds.
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BAM may appoint a fiscal agent (the “Insurer’s Fiscal Agent”) for purposes of this Policy by giving written notice to the Trustee, the Paying Agent, the Member and the Issuer specifying the name and notice address of the Insurer’s Fiscal Agent. From and after the date of receipt of such notice by the Trustee, the Paying Agent, the Member or the Issuer (a) copies of all notices required to be delivered to BAM pursuant to this Policy shall be simultaneously delivered to the Insurer’s Fiscal Agent and to BAM and shall not be deemed received until received by both and (b) all payments required to be made by BAM under this Policy may be made directly by BAM or by the Insurer’s Fiscal Agent on behalf of BAM. The Insurer’s Fiscal Agent is the agent of BAM only, and the Insurer’s Fiscal Agent shall in no event be liable to the Trustee, Paying Agent or any Owner for any act of the Insurer’s Fiscal Agent or any failure of BAM to deposit or cause to be deposited sufficient funds to make payments due under this Policy.
To the fullest extent permitted by applicable law, BAM agrees not to assert, and hereby waives, only for the benefit of each Owner, all rights (whether by counterclaim, setoff or otherwise) and defenses (including, without limitation, the defense of fraud), whether acquired by subrogation, assignment or otherwise, to the extent that such rights and defenses may be available to BAM to avoid payment of its obligations under this Policy in accordance with the express provisions of this Policy. This Policy may not be canceled or revoked.
This Policy sets forth in full the undertaking of BAM and shall not be modified, altered or affected by any other agreement or instrument, including any modification or amendment thereto. Except to the extent expressly modified by an endorsement hereto, any premium paid in respect of this Policy is nonrefundable for any reason whatsoever, including payment, or provision being made for payment, of the Bonds prior to maturity. THIS POLICY IS NOT COVERED BY THE PROPERTY/CASUALTY INSURANCE SECURITY FUND SPECIFIED IN ARTICLE 76 OF THE NEW YORK INSURANCE LAW. THIS POLICY IS ISSUED WITHOUT CONTINGENT MUTUAL LIABILITY FOR ASSESSMENT.
In witness whereof, BUILD AMERICA MUTUAL ASSURANCE COMPANY has caused this Policy to be executed on its behalf by its
Authorized Officer.
BUILD AMERICA MUTUAL ASSURANCE COMPANY By: _______________________________________ Authorized Officer
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Notices (Unless Otherwise Specified by BAM) Email: [email protected] Address: 200 Liberty Street, 27th floor New York, New York 10281 Telecopy: 212-962-1524 (attention: Claims)
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MUNICIPAL BOND DEBT SERVICE RESERVE INSURANCE POLICY
ISSUER: ISSUER_NAME, STATE_NAME
MEMBER: MEMBER_COMPANY, STATE_NAME
BONDS: $_______________ in aggregate principal amount of , Maximum Policy Limit: $
Policy No:
Effective Date:
Risk Premium: $________ Member Surplus Contribution: $________
Total Insurance Payment: $________
BUILD AMERICA MUTUAL ASSURANCE COMPANY (“BAM”), for consideration received, hereby UNCONDITIONALLY AND IRREVOCABLY agrees to pay to the trustee (the “Trustee”) or paying agent (the “Paying Agent”) for the Bonds named above under the Security Documents, subject only to the terms of this Policy (which includes each endorsement hereto), that portion of the principal of and interest on the Bonds that shall become Due for Payment but shall be unpaid by reason of Nonpayment by the Issuer.
BAM will make payment as provided in this Policy to the Trustee or Paying Agent on the later of (i) the Business Day on which such principal and interest becomes Due for Payment and (ii) the first Business Day following the Business Day on which BAM shall have received a completed Notice of Nonpayment in a form reasonably satisfactory to it. A Notice of Nonpayment will be deemed received on a given Business Day if it is received prior to 1:00 p.m. (New York time) on such Business Day; otherwise, it will be deemed received on the next Business Day. If any Notice of Nonpayment received by BAM is incomplete, it shall be deemed not to have been received by BAM for purposes of this paragraph, and BAM shall promptly so advise the Trustee or Paying Agent who may submit an amended Notice of Nonpayment.
Payment by BAM to the Trustee or Paying Agent for the benefit of the Owners shall, to the extent thereof, discharge the obligation of BAM under this Policy. Upon disbursement under this Policy in respect of a Bond and to the extent of such payment, (a) BAM shall become the owner of such Bond, any appurtenant coupon to such Bond and right to receipt of payment of principal of or interest on such Bond and shall be fully subrogated to the rights of the Owner, including the Owner’s right to receive payments under such Bond and (b) BAM shall become entitled to reimbursement of the amount so paid (together with interest and expenses) pursuant to the Security Documents and Debt Service Reserve Agreement.
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The amount available under this Policy for payment shall not exceed the Policy Limit. The amount available at any particular time to be paid to the Trustee or Paying Agent under the terms of this Policy shall automatically be reduced by and to the extent of any payment under this Policy. However, after such payment, the amount available under this Policy shall be reinstated in full or in part, but only up to the Policy Limit, to the extent of the reimbursement of such payment (after taking into account the payment of interest and expenses) to BAM by or on behalf of the Issuer. Within three (3) Business Days of such reimbursement, BAM shall provide the Trustee or the Paying Agent with Notice of Reinstatement, in the form of Exhibit A attached hereto, and such reinstatement shall be effective as of the date BAM gives such notice.
Payment under this Policy shall not be available with respect to (a) any Nonpayment that occurs prior to the Effective Date or after the end of the Term of this Policy or (b) Bonds that are not outstanding under the Security Documents. If the amount payable under this Policy is also payable under another BAM issued policy insuring the Bonds, payment first shall be made under this Policy to the extent of the amount available under this Policy up to the Policy Limit. In no event shall BAM incur duplicate liability for the same amounts owing with respect to the Bonds that are covered under this Policy and any other BAM issued insurance policy.
Except to the extent expressly modified by an endorsement hereto, the following terms shall have the meanings specified for all purposes of this Policy. “Business Day” means any day other than (a) a Saturday or Sunday or (b) a day on which banking institutions in the State of New York or the Insurer’s Fiscal Agent (as hereinafter defined) are authorized or required by law or executive order to remain closed. “Debt Service Reserve Agreement” means the Debt Service Reserve Agreement, if any, dated as of the effective date hereof, in respect of this Policy, as the same may be amended or supplemented from time to time. “Due for Payment” means (a) when referring to the principal of a Bond, payable on the stated maturity date thereof or the date on which the same shall have been duly called for mandatory sinking fund redemption and does not refer to any earlier date on which payment is due by reason of call for redemption (other than by mandatory sinking fund redemption), acceleration or other advancement of maturity (unless BAM shall elect, in its sole discretion, to pay such principal due upon such acceleration together with any accrued interest to the date of acceleration) and (b) when referring to interest on a Bond, payable on the stated date for payment of interest. “Nonpayment” means, in respect of a Bond, the failure of the Issuer to have provided sufficient funds to the Trustee or, if there is no Trustee, to the Paying Agent for payment in full of all principal and interest that is Due for Payment on such Bond. “Nonpayment” shall also include, in respect of a Bond, any payment made to an Owner by or on behalf of the Issuer of principal or interest that is Due for Payment, which payment has been recovered from such Owner pursuant to the United States Bankruptcy Code in accordance with a final, nonappealable order of a court having competent jurisdiction. “Notice” means delivery to BAM of a notice of claim and certificate, by certified mail, email or telecopy as set forth on the attached Schedule or other acceptable electronic delivery, in a form satisfactory to BAM, from and signed by the Trustee or the Paying Agent, which notice shall specify (a) the person or entity making the claim, (b) the Policy Number, (c) the claimed amount, (d) payment instructions and (e) the date such claimed amount becomes or became Due for Payment. “Owner” means, in respect of a Bond, the person or entity who, at the time of Nonpayment, is entitled under the terms of such Bond to payment thereof, except that “Owner” shall not include the Issuer, the Member or any person or entity whose direct or indirect obligation constitutes the underlying security for the Bonds. “Policy Limit” means the dollar amount of the debt service reserve fund required to be maintained for the
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Bonds by the Security Documents from time to time (the “Reserve Account Requirement”), or the portion of the Reserve Account Requirement for the Bonds provided by this Policy as specified in the Security Documents or Debt Service Reserve Agreement, if any, but in no event shall the Policy Limit exceed the Maximum Policy Limit set forth above. The Policy Limit shall automatically and irrevocably be reduced from time to time by the amount of or, if this Policy is only providing a portion of the Reserve Account Requirement, in the same proportion as, each reduction in the Reserve Account Requirement, as provided in the Security Documents or Debt Service Reserve Agreement. “Security Documents” means any resolution, ordinance, trust agreement, trust indenture, loan agreement and/or lease agreement and any additional or supplemental document executed in connection with the Bonds. “Term” means the period from and including the Effective Date until the earlier of (i) the maturity date for the Bonds and (ii) the date on which the Bonds are no longer outstanding under the Security Documents.
BAM may appoint a fiscal agent (the “Insurer’s Fiscal Agent”) for purposes of this Policy by giving written notice to the Trustee and the Paying Agent specifying the name and notice address of the Insurer’s Fiscal Agent. From and after the date of receipt of such notice by the Trustee and the Paying Agent, (a) copies of all notices required to be delivered to BAM pursuant to this Policy shall be simultaneously delivered to the Insurer’s Fiscal Agent and to BAM and shall not be deemed received until received by both and (b) all payments required to be made by BAM under this Policy may be made directly by BAM or by the Insurer’s Fiscal Agent on behalf of BAM. The Insurer’s Fiscal Agent is the agent of BAM only, and the Insurer’s Fiscal Agent shall in no event be liable to the Trustee, Paying Agent or any Owner for any act of the Insurer’s Fiscal Agent or any failure of BAM to deposit or cause to be deposited sufficient funds to make payments due under this Policy.
To the fullest extent permitted by applicable law, BAM agrees not to assert, and hereby waives, only for the benefit of each Owner, all rights (whether by counterclaim, setoff or otherwise) and defenses (including, without limitation, the defense of fraud), whether acquired by subrogation, assignment or otherwise, to the extent that such rights and defenses may be available to BAM to avoid payment of its obligations under this Policy in accordance with the express provisions of this Policy. This Policy may not be canceled or revoked.
This Policy is being issued under and pursuant to and shall be construed under and governed by the laws of the State of New York, without regard to conflict of law provisions.
This Policy sets forth in full the undertaking of BAM and shall not be modified, altered or affected by any other agreement or instrument, including any modification or amendment thereto. Except to the extent expressly modified by an endorsement hereto, any premium paid in respect of this Policy is nonrefundable for any reason whatsoever, including payment, or provision being made for payment, of the Bonds prior to maturity. THIS POLICY IS NOT COVERED BY THE PROPERTY/CASUALTY INSURANCE SECURITY FUND SPECIFIED IN ARTICLE 76 OF THE NEW YORK INSURANCE LAW. THIS POLICY IS ISSUED WITHOUT CONTINGENT MUTUAL LIABILITY FOR ASSESSMENT.
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In witness whereof, BUILD AMERICA MUTUAL ASSURANCE COMPANY has caused this Policy to be executed on its behalf by its Authorized Officer.