I-1 - Preliminary Official Statement - UR Loan Agreement

The City has pledged future sewer customer receipts, net of specified operating disbursements, to repay $5,338,261 of sewer revenue bonds issued in May 2018, $2,159,901 of sewer revenue bonds issued in September 2017, and $521,315 of sewer revenue bonds issued in September 1999. Annual principal and interest payments on the bonds are expected to require less than 91% of net receipts. There is no remaining principal and interest to be paid as of June 30, 2019 on the September 1999 bonds. For the current year, the principal and interest paid on the sewer bonds and total customer net receipts were $518,270 and $570,965, respectively. The City has pledged future water customer receipts, net of specified operating disbursements, to repay $340,000 of revenue bonds issued in July 2003. Proceeds from the bonds provided financing for the construction of improvements to the municipal water utility. The bonds are payable solely from water customer net receipts and are payable through 2023. Annual principal and interest payments on the water revenue bonds are expected to require less than 22% of net receipts. The total principal and interest remaining to be paid on the bonds is $88,780. For the current year, principal and interest paid and total customer net receipts were $21,838 and $103,517, respectively. On June 1, 2014, the Iowa Finance Authority reduced the interest rate on the water revenue bonds to 1.75% per annum. The resolutions providing for the issuance of the water and sewer revenue bonds include the following provisions: (a) The bonds will only be redeemed from the future earnings of the enterprise activity and the bond holders hold a lien on the future earnings of the funds. (b) Sufficient monthly transfers shall be made to separate water and sewer revenue bond sinking accounts within the Enterprise Funds for the purpose of making the note principal and interest payments when due. (c) User rates shall be established at a level which produces and maintains net revenues at a level not less than 110% of the amount of principal and interest on the bonds falling due in the same year. (d) The City shall cause the books and accounts of the sewer and water utilities to be audited annually. (e) All users of the system, including the City, shall pay for usage. The City does not pay for use of the systems as required by the water and sewer revenue bond resolutions. (4) Pension Plan Plan Description – IPERS membership is mandatory for employees of the City, except for those covered by another retirement system. Employees of the City are provided with pensions through a cost-sharing multiple employer defined benefit pension plan administered by the Iowa Public Employees’ Retirement System (IPERS). IPERS issues a stand-alone financial report which is available to the public by mail at PO Box 9117, Des Moines, Iowa 50306-9117 or at www.ipers.org. IPERS benefits are established under Iowa Code Chapter 97B and the administrative rules thereunder. Chapter 97B and the administrative rules are the official plan documents. The following brief description is provided for general informational purposes only. Refer to the plan documents for more information. 27