OFFICIAL STATEMENT. Rating: Standard & Poor s AAA

Transcription

1 New Issue Book-Entry Only OFFICIAL STATEMENT Rating: Standard & Poor s AAA XL Capital Insured In the opinion of Stevens & Lee, a professional corporation, Forty Fort, Pennsylvania, Bond Counsel, assuming continuing compliance by the City, with certain covenants to comply with provisions of the Internal Revenue Code of 1986, as amended (the Code ) and any applicable regulations thereunder, interest on the Bonds is not includible in the gross income under Section 103(a) of the Code and interest on the Bonds is not an item of tax preference for purposes of the federal individual and corporate alternative minimum taxes, except as set forth under the heading Tax Exemption in this Official Statement. Other provisions of the Code may affect the purchasers of the Bonds. See TAX MATTERS - Federal Tax Laws herein for a brief description of these provisions. Under the laws of the Commonwealth of Pennsylvania, the Bonds and interest on the Bonds shall be free from taxation for State and local purposes within the Commonwealth of Pennsylvania, but this exemption does not extend to gift, estate, succession or inheritance taxes or any other taxes not levied or assessed directly on the Bonds or the interest thereon. Under the laws of the Commonwealth of Pennsylvania, profits, gains or income derived from the sale, exchange or other disposition of the Bonds shall be subject to State and local taxation within the Commonwealth of Pennsylvania. The City has designated and determined under and for purposes of Section 265(b)(3)(B) of the Code to qualify each of the Bonds as a qualified tax exempt obligation as such phrase is defined in the Code. $5,780,000 Aggregate principal amount CITY OF WILKES-BARRE Luzerne County, Pennsylvania General Obligation Bonds consisting of $4,735,000 General Obligation Bonds, Series A of 2007 $1,045,000 General Obligation Bonds, Series B of 2007 Dated: May 15, 2007 Interest Payable: May 15 and November 15 Due: November 15, as shown on inside cover First Interest Payment: November 15, 2007 Denominations: Integral multiples of $5,000 Form: Fully Registered MATURITY SCHEDULES (See inside cover) Legal Investment for Fiduciaries in Pennsylvania: The Bonds (hereinafter defined) are legal investment for fiduciaries in the Commonwealth of Pennsylvania under the Probate, Estate and Fiduciaries Code, Act of June 30, 1972, No. 164, P.L. 508 as amended and supplemented. Payable: The General Obligation Bonds, Series A of 2007, in the aggregate amount of $4,735,000 (the Series A Bonds ) and General Obligation Bonds, Series B of 2007, in the aggregate amount of $1,045,000 (the Series B Bonds, and collectively with the Series A Bonds, the Bonds or 2007 Bonds ) are being issued by the City of Wilkes-Barre, Luzerne County, Pennsylvania (the City ) pursuant to the Pennsylvania Local Government Unit Debt Act and under an Ordinance enacted by the City Council (the Ordinance ). The Bonds will be dated May 15, 2007 and will bear interest from May 15, 2007 payable semiannually on May 15 and November 15 of each year, commencing November 15, 2007, at the interest rates set forth above. The 2007 Bonds will be issued as fully registered bonds without coupons, and, when issued, will be registered in the name of CEDE & CO., as nominee for The Depository Trust Company, New York, New York ( DTC ), which will act as securities depository for the 2007 Bonds. Beneficial ownership interests in the 2007 Bonds will be recorded in book-entry only form in denominations of $5,000, or any integral multiple thereof. Principal of and interest on the 2007 Bonds are payable directly to CEDE & CO. for redistribution to DTC Participants and in turn to Beneficial Owners as described herein. Purchasers will not receive physical delivery of certificates representing their ownership interests in the 2007 Bonds purchased. For so long as any purchaser is the Beneficial Owner of a Bond, such purchaser must maintain an account with a broker or dealer who is, or acts through, a DTC Participant to receive payment of the principal of and interest on such Bonds. See Book-Entry Only System herein. Redemption: The Bonds are subject to redemption prior to their stated maturity dates as stated herein. Purpose: Proceeds of the Series A Bonds will be used to provide funds (1) for the design and construction of an intermodal transportation facility/parking garage in the City; and (2) to pay the costs of issuing and insuring the Series A Bonds. Proceeds of the Series B Bonds will be used to provide funds (1) for various capital projects within the City as approved by City Council; and (2) to pay the costs of issuing and insuring the Series B Bonds. Security: In the Ordinance, the City covenants with the holders of the Bonds that it will include the amount of the debt service to be paid on the Bonds for each fiscal year in which such sums are payable in its budget for that fiscal year, will appropriate such amounts to the payment of such debt service and will duly and punctually pay or cause to be paid the principal of every Bond and the interest thereon at the dates and places and in the manner stated in the Bonds, according to the true intent and meaning thereof, and for such budgeting, appropriation and payment, the City has pledged its full faith, credit and taxing power. As provided in the Pennsylvania Local Government Unit Debt Act, the foregoing covenant shall be specifically enforceable. Bond Insurance: The scheduled payment of principal of and interest on the Bonds when due will be guaranteed by a financial guaranty insurance policy to be issued concurrently with the delivery of the Bonds by XL Capital Assurance Inc. RBC Capital Markets The Bonds are offered for delivery when, as and if issued by City and received by the Underwriter, subject to the approving legal opinion of Stevens & Lee, a professional corporation, Forty Fort, Pennsylvania, Bond Counsel, to be furnished upon delivery of the Bonds. Certain legal matters will be passed upon by Timothy J. Henry, Esquire, Wilkes-Barre, Pennsylvania, Solicitor for the City. It is expected that the Bonds in definitive form will be available for delivery in New York, New York on or about May 15, The date of this Official Statement is April 12, 2007.

2 $5,780,000 Aggregate principal amount CITY OF WILKES-BARRE Luzerne County, Pennsylvania General Obligation Bonds, Series A and B of 2007 $4,735,000 General Obligation Bonds, Series A of 2007 Dated: May 15, 2007 Interest Payable: May 15 and November 15 Due: November 15, as shown below First Interest Payment: November 15, 2007 Denominations: Integral multiples of $5,000 Form: Fully Registered MATURITY SCHEDULE Year Amount Rate Price Year Amount Rate Price 2008 $ 5, % % 2013 $110, % % , , , , , , , , $ 415, % Term Bonds Due November 15, % $ 635, % Term Bonds Due November 15, % $ 550, % Term Bonds Due November 15, % $1,085, % Term Bonds Due November 15, % $1,050, % Term Bonds Due November 15, % $1,045,000 General Obligation Bonds, Series B of 2007 Dated: May 15, 2007 Interest Payable: May 15 and November 15 Due: November 15, as shown below First Interest Payment: November 15, 2007 Denominations: Integral multiples of $5,000 Form: Fully Registered MATURITY SCHEDULE Year Amount Rate Price Year Amount Rate Price 2008 $ 5, % % 2014 $ 70, % % , , , , , , , , , $ 355, % Term Bonds Due November 15, % ii

3 No dealer, broker, salesperson or other person has been authorized by the City of Wilkes-Barre, Luzerne County, Pennsylvania (the City ) or the Underwriter to give any information or make any representations with respect to the Bonds other than those contained in this Official Statement and if given or made, such information or representations must not be relied upon. 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 Bonds, by any person in any state or jurisdiction in which it is unlawful for such person to make such offer, solicitation or sale prior to registration or qualification of the Bonds pursuant to the applicable securities laws of any such state or jurisdiction. The information set forth herein has been obtained from the City and other sources that are believed to be reliable, but the Underwriter does not guarantee the accuracy or completeness of such information and such information is not to be construed as a representation by the Underwriter. Any statements herein involving matters of opinion or forecasts of the occurrence of future events or circumstances, whether or not expressly so stated, are intended as such and not as representation of fact. The information and expressions of opinion herein are subject to change without notice, and neither the delivery of this Official Statement nor any sale made hereunder shall, under any circumstances, create any implication that there have been no changes in the affairs of the City since the date hereof. IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER MAY OVER-ALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE 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 ORDER AND PLACEMENT OF MATERIALS IN THIS OFFICIAL STATEMENT, INCLUDING THE APPENDICES, ARE NOT TO BE DEEMED A DETERMINATION OF REVELENCE, MATERIALITY OR IMPORTANCE, AND THIS OFFICIAL STATEMENT, INCLUDING THE APPENDICIES MUST BE CONSIDERED IN ITS ENTIRETY. THE OFFERING OF THE BONDS IS MADE ONLY BY THE MEANS OF THIS ENTIRE OFFICIAL STATEMENT. THE UNDERWRITER HAS PROVIDED THE FOLLOWING SENTENCE FOR INCLUSION IN THIS OFFICIAL STATEMENT. THE UNDERWRITER HAS REVIEWED THE INFORMATION IN THIS OFFICIAL STATEMENT IN ACCORDANCE WITH, AND AS PART OF, ITS RESPONSIBILITIES TO INVESTORS UNDER THE 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. iii

4 TABLE OF CONTENTS SUMMARY STATEMENT...vi INTRODUCTION... 1 CITY OF WILKES-BARRE... 1 PURPOSE OF THE ISSUE... 2 THE PROJECT... 2 SOURCES AND USES OF FUNDS... 2 DESCRIPTION OF THE BONDS... 2 GENERAL DESCRIPTION... 2 PAYMENT OF PRINCIPAL AND INTEREST... 3 TRANSFER, EXCHANGE AND REGISTRATION... 3 OPTIONAL REDEMPTION... 3 MANDATORY REDEMPTION... 4 BOOK-ENTRY ONLY SYSTEM... 5 SECURITY FOR THE BONDS... 7 BOND INSURANCE... 7 BONDHOLDERS REMEDIES AND LIMITATIONS THEREON... 9 TAX MATTERS FEDERAL TAX LAWS TAX EXEMPTION REGULATIONS, FUTURE LEGISLATION LITIGATION LEGAL MATTERS LEGALITY FOR INVESTMENT CONTINUING DISCLOSURE UNDERTAKING MISCELLANEOUS CERTAIN MATTERS SUMMARIES OF FINANCIAL FACTORS OF THE CITY... 2 FINANCIAL REVIEW... 1 REVENUES... 3 REVENUES... 4 APPENDIX A SUMMARIES OF FINANCIAL FACTORS OF THE CITY...A 1 APPENDIX B DESCRIPTION OF THE CITY...B 1 APPENDIX C AUDITED FINANCIAL STATEMENT OF THE CITY YEAR ENDING DECEMBER 31, C 1 APPENDIX D PROPOSED FORM OF OPINION OF BOND COUNSEL...D 1 APPENDIX E SPECIMEN OF MUNICIPAL BOND INSURANCE POLICY...E 1 APPENDIX F BOND AMORTIZATION SCHEDULES... F 1 iv

5 CITY OF WILKES-BARRE (Luzerne County, Pennsylvania) 40 East Market Street Wilkes-Barre, PA City Council William C. Barrett...President Michael J. McGinley...Vice President Kathryn M. Kane... Council Member Phillip B. Latinski... Council Member James J. McCarthy... Council Member Anthony J. Thomas... Council Member Shirley A. Vitanovec... Council Member Administration Thomas M. Leighton...Mayor John J. Murphy... City Administrator James J. Ryan...City Clerk Bernard Mengeringhausen... Controller John J. Koval...Director of Finance City Solicitor Timothy J. Henry, Esquire Wilkes-Barre, Pennsylvania Bond Counsel Stevens & Lee, a professional corporation Forty Fort, Pennsylvania Underwriter RBC Capital Markets Philadelphia, Pennsylvania Paying Agent Manufacturers and Traders Trust Company Harrisburg, Pennsylvania v

6 SUMMARY STATEMENT This Summary Statement is subject in all respects to more complete information in this Official Statement. No person is authorized to detach this Summary Statement from this Official Statement or otherwise use it without the entire Official Statement. Issuer... City of Wilkes-Barre, Luzerne County, Pennsylvania. Bonds... $4,735,000 aggregate principal amount of General Obligation Bonds, Series A of 2007 (the Series A Bonds ), dated May 15, 2007, maturing in various principal amounts (as herein described) on November 15, 2008, through November 15, 2017 and on November 15, 2020, November 15, 2024, November 15, 2027, November 15, 2032 and November 15, Interest is payable on May 15 and November 15, beginning November 15, $1,045,000 aggregate principal amount of General Obligation Bonds, Series B of 2007 (the Series B Bonds, and collectively with the Series A Bonds, the Bonds or 2007 Bonds ), dated May 15, 2007, maturing in various principal amounts (as herein described) on November 15, 2008, through November 15, 2018 and on November 15, Interest is payable on May 15 and November 15, beginning November 15, Redemption Provision... The Series A Bonds maturing on and after November 15, 2012, shall be subject to optional redemption in whole or in part prior to maturity on May 15, 2012, or any date thereafter. The Series B Bonds maturing on and after November 15, 2012, shall be subject to optional redemption in whole or in part prior to maturity on May 15, 2012, or any date thereafter Form... Application of Proceeds... Book-Entry form. Proceeds of the Series A Bonds will be used to provide funds (1) for the design and construction of an intermodal transportation facility/parking garage in the City; and (2) to pay the costs of issuing and insuring the Series A Bonds. Proceeds of the Series B Bonds will be used to provide funds (1) for various capital projects within the City as approved by City Council; and (2) to pay the costs of issuing and insuring the Series B Bonds. Security... Rating... Bond Insurance... The Bonds are general obligations of the City. See Rating herein. The Bonds carry the commitment of XL Capital Assurance Inc., which assures payment of principal and interest to the holders of the Bonds. See Bond Insurance herein. vi

7 OFFICIAL STATEMENT $5,780,000 Aggregate principal amount CITY OF WILKES-BARRE Luzerne County, Pennsylvania General Obligation Bonds consisting of $4,735,000 General Obligation Bonds, Series A of 2007 $1,045,000 General Obligation Bonds, Series B of 2007 INTRODUCTION This Official Statement is furnished by the City of Wilkes-Barre, Luzerne County, Pennsylvania (the City ), in connection with the offering of its General Obligation Bonds, Series of A 2007, in the aggregate principal amount of $4,735,000 (the Series A Bonds ) and the General Obligation Bonds, Series B of 2007, in the aggregate principal amount of $1,045,000 (the Series B Bonds, and collectively with the Series A Bonds, the Bonds or 2007 Bonds ). The Bonds are being issued under the provisions of the Pennsylvania Local Government Unit Debt Act, 53 Pa. C.S. Chs (the Act ), pursuant to an Ordinance duly enacted by the City Council on April 12, 2007 (the Ordinance ) and upon approval of the Department of Community and Economic Development of the Commonwealth, pursuant to the Act. The Bonds shall each be issued in fully registered form, without coupons, in the denomination of $5,000 or any integral multiple thereof. Interest on the Bonds is payable semiannually on May 15 and November 15 of each year, commencing November 15, Interest on any Bond is payable by check mailed to the registered owner at the address as it appears on the registration books on the appropriate Record Date (hereinafter defined). The principal of the Bonds is payable at the principal corporate trust office of Manufacturers and Traders Trust Company, located in Harrisburg, Pennsylvania (the Paying Agent ). The Bonds are only transferable on the registration books maintained by the Paying Agent upon presentation and surrender thereof (see "Description of the Bonds" herein). The Bonds are subject to redemption as stated herein. When issued, the Bonds will be registered in the name of Cede & Co., as nominee for The Depository Trust Company ( DTC ), New York, New York. Purchasers of the Bonds (the Beneficial Owners ) will not receive any physical delivery of bond certificates and beneficial ownership of the Bonds will be evidenced only by book entries. See BOOK-ENTRY ONLY SYSTEM herein. The information which follows contains summaries of the Ordinance, the City s Budget and the City s Financial Statements. Such summaries do not purport to be complete and reference is made to the Ordinance, the City s Budget and the City s Financial Statements, copies of which are on file and available for examination at the offices of the City. CITY OF WILKES-BARRE The City of Wilkes-Barre, a Third Class City, was chartered on May 4, The City operates under a Mayor- Council form of government. There are seven council members that are elected to serve four-year staggered terms. The City Administrator is appointed by the Mayor. On January 25, 1976 the voters elected to restructure the City government according to the Home Rule Charter. Beginning January 1, 2008, City Council will be reduced to five members, elected by districts. A further description of the City may be found in Appendix C. 1

8 PURPOSE OF THE ISSUE Proceeds of the Series A Bonds will be used to provide funds (1) for the design and construction of an intermodal transportation facility/parking garage in the City; and (2) to pay the costs of issuing and insuring the Series A Bonds. Proceeds of the Series B Bonds will be used to provide funds (1) for various capital projects within the City as approved by City Council; and (2) to pay the costs of issuing and insuring the Series B Bonds. THE PROJECT The City of Wilkes-Barre will develop land off South Washington Street to construct an intermodal transportation center to accommodate bus/taxi traffic coming into the downtown Wilkes-Barre. Above the bus facility, which will accommodate 15 buses, will be a parking structure providing spaces for 752 cars. In addition, a lobby area will be constructed inside an existing commercial property at 22 South Main Street to provide indoor shelter to bus ridership. SOURCES AND USES OF FUNDS Series A Bonds Series B Bonds Sources of Funds Proceeds of Series of 2007 Bonds... $4,735, $1,045, Less: Original Issue Discount... (18,057.65) (5,021.10) Total Sources of Funds... $4,716, $1,039, Uses of Funds Deposit to Project Fund... $4,500, $ Deposit to Capital Improvement Fund ,000, Costs of Issuance (1) , , Total Uses of Funds... $4,716, $1,039, (1) Includes legal fees, underwriter s discount, paying agent fees, rating fee, municipal bond insurance premium, printing costs and other miscellaneous fees. DESCRIPTION OF THE BONDS So long as Cede & Co., as nominee of DTC, is the registered owner of the Bonds, payments of principal of and interest on the Bonds, when due, are to be made to DTC and all such payments shall be valid and effective to satisfy fully and to discharge the obligations of the City with respect to, and to the extent of, principal and interest so paid. If the use of the Book-Entry Only System for the Bonds is discontinued for any reason, Bond certificates will be issued to the Beneficial Owners of the Bonds and payment of principal and interest on the Bonds shall be made as described in the following paragraphs. General Description The Series A Bonds and Series B Bonds are being issued in the aggregate principal amounts of $4,735,000 and $1,045,000, respectively, are dated as of May 15, 2007, and bear interest initially from that date at the rates shown on the inside cover page hereof, payable May 15 and November 15 of each year, commencing November 15, 2007 until maturity thereof or earlier call for redemption. The Bonds mature on November 15 of the years shown on the inside cover page hereof. Each Bond shall bear interest from the Interest Payment Date next preceding the date of registration and authentication of such Bonds, unless (a) such Bonds are registered and authenticated as of an Interest Payment Date, in which event such Bonds shall bear interest from said Interest Payment Date; or (b) the Bonds are registered and authenticated after a Regular Record Date (hereinafter defined) and before the next succeeding Interest Payment Date, or (c) the Bonds are registered and authenticated on or prior to the Regular Record date preceding November 15, 2007, in which event such Bonds shall bear interest from the dated date thereof, or (d) as shown by the records of the Paying Agent, interest on such Bonds shall be in default, in which event such Bonds shall bear interest form the date on which interest was last paid on the Bonds. 2

9 Payment of Principal and Interest The principal of, and premium, if any, on all Bonds will be payable at the designated corporate trust office of the Paying Agent to the registered owner of each Bond upon presentation thereof. Interest on the Bonds will be paid by a check or draft of the Paying Agent mailed to the person in whose name such Bond is registered at the close of business on the fifteen (15 th ) day (whether or not a business day) next preceding the relevant Interest Payment Date (the Record Date ). Such check or draft shall be mailed to such person at his or her address as it appears on the registration books maintained on behalf of the City (the Bond Register ), irrespective of any transfer or exchange of such Bond subsequent to such Record Date and prior to such Interest Payment Date. Any interest on the Bonds which is payable, but is not punctually paid or provided for on any Interest Payment Date, shall cease to be payable to the registered owner on the relevant Record Date, and such defaulted interest shall be paid to the registered owner in whose name the Bond is registered at the close of business on a special record date (the Special Record Date ) for the payment of such defaulted interest. The Paying Agent shall cause notice of the proposed payment of such defaulted to be mailed, first class postage prepaid, to each such registered owner at his or her address as it appears in the Bond Register, not less than ten (10) days prior to such Special Record Date. Such notice shall be mailed to the persons in whose names the Bonds are registered at the close of business on the fifth (5 th ) day preceding the date of mailing. Transfer, Exchange and Registration The Bonds may be transferred or exchanged only on the bond register (the Bond Register ) of the City maintained at the principal corporate trust office of Manufacturers and Traders Trust Company, Harrisburg, Pennsylvania, or its duly authorized successor (the Registrar, Paying Agent and Sinking Fund Depository hereinafter referred to as the Paying Agent ). No transfer or exchange of any Bond will be valid unless made at such office and registered on the Bond Register. The City and the Paying Agent shall not be required: to (i) issue or to register the transfer of or exchange any Bonds then considered for redemption during a period beginning at the close of business on the fifteenth (15 th ) day next preceding any date of selection of Bonds to be redeemed and ending at the close of business on the day on which the applicable notice of redemption is given, or (ii) to register the transfer of or exchange any portion of any Bond selected for redemption, in whole or in part until after the date fixed for redemption. Bonds may be exchanged for a like aggregate principal amount of Bonds or other authorized denominations of the same series, maturity, and interest rate. The Bonds shall be transferable or exchangeable by the registered owner thereof upon surrender thereof to the Paying Agent, at its corporate trust office, accompanied by a written instrument or instruments in form, with instructions, and with guaranty of signature satisfactory to the Paying Agent, duly executed by the registered owner thereof or his attorney-in-fact or legal representative. The Paying Agent shall enter any transfer of ownership of the Bonds in the registration books of the City maintained by the Paying Agent and shall authenticate and deliver in the name of the transferee or transferees new fully registered Bonds or authorized denominations of the same maturity for the aggregate amount which the transferee or transferees are entitled to received at the earliest practicable time. Optional Redemption The Series A Bonds stated to mature on or after November 15, 2012, are subject to redemption prior to maturity at the option of the City in whole or, from time to time, in part, in any order of maturities as the City shall select, at any time on or after May 15, 2012, at a price equal to 100% of the principal amount of the Series A Bonds to be redeemed plus accrued interest thereon to the date fixed for such optional redemption. In the event that less than all Series A Bonds of a particular maturity are to be redeemed, the Series A Bonds of such maturity shall be drawn by lot by the Paying Agent. The Series B Bonds stated to mature on or after November 15, 2012, are subject to redemption prior to maturity at the option of the City in whole or, from time to time, in part, in any order of maturities as the City shall select, at any time on or after May 15, 2012, at a price equal to 100% of the principal amount of the Series B Bonds to be redeemed plus accrued interest thereon to the date fixed for such optional redemption. In the event that less than all Series B Bonds of a particular maturity are to be redeemed, the Series B Bonds of such maturity shall be drawn by lot by the Paying Agent. 3

10 Mandatory Redemption The Series A Bonds maturing on November 15, 2020, November 15, 2024, November 15, 2027, November 15, 2032 and November 15, 2036 shall be subject to mandatory redemption prior to maturity as drawn by lot by the Paying Agent at a redemption price of par plus accrued interest to the date fixed for redemption, on November 15 of the years and in the aggregate amounts set forth in the following schedules: Series A Term Bonds due November 15, 2020 Series A Term Bonds due November 15, 2024 Year Amount Year Amount 2018 $130, $150, $140, $155, $145,000* 2023 $160, $170,000* Series A Term Bonds due November 15, 2027 Series A Term Bonds due November 15, 2032 Year Amount Year Amount 2025 $175, $200, $185, $210, $190,000* 2030 $215, $225, $235,000* Series A Term Bonds due November 15, 2036 Year Amount 2033 $245, $255, $270, $280,000* *At maturity Mandatory Redemption The Series B Bonds maturing on November 15, 2022 shall be subject to mandatory redemption prior to maturity as drawn by lot by the Paying Agent at a redemption price of par plus accrued interest to the date fixed for redemption, on November 15 of the years and in the aggregate amounts set forth in the following schedule: Series B Term Bonds due November 15, 2022 Year Amount 2019 $85, $85, $90, $95,000* *At maturity Notice of Redemption As provided in the Ordinance, notice of redemption of Bonds shall be given by mailing a copy of the redemption notice by first-class United States mail, postage prepaid, or by another method of giving notice which is acceptable to the Paying Agent and customarily used by fiduciaries for similar notices at the time such notice is given, at least thirty (30) days, nor more than sixty (60) days prior to the redemption date to the registered owners of Bonds to be redeemed at the addresses appearing on the registration books of the Paying Agent. Neither failure to mail such notice nor any defect in the notice so mailed or in the mailing thereof with respect to any one Bond will affect the validity of the proceedings for the redemption of any other Bond. If the City shall have duly given notice of redemption and shall have deposited with the Paying Agent funds 4

11 for the payment of the redemption price of the Bonds so called for redemption with accrued interest thereon to the date fixed for redemption, interest on such Bonds will cease to accrue after such redemption date. If at the time of the mailing of any notice of optional redemption of the City shall not have deposited with the Paying Agent money sufficient to redeem all the Bonds called for redemption, such notice shall state that it is conditional, that is, subject to the deposit or transfer of the redemption moneys with the Paying Agent not later than the opening of business on the redemption date, and that such notice shall be of not effect unless such moneys are so deposited. BOOK-ENTRY ONLY SYSTEM Portions of the following information concerning DTC and DTC's book-entry system have been obtained from DTC. The City and the Underwriter make no representation as to the accuracy of such information. DTC will act as Securities Depository for the 2007 Bonds. The 2007 Bonds will be issued as fully-registered securities registered in the name of Cede & Co. (DTC s partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully-registered Bond certificate will be issued for the 2007 Bonds, in the aggregate principal amount of such issue, and will be deposited with DTC. DTC, the world's largest depository, is a limited-purpose trust company organized under the New York Banking Law, a "banking organization" within the meaning of the New York Banking Law, a member of the Federal Reserve System, a "clearing corporation" within the meaning of the New York Uniform Commercial Code, and a "clearing agency" registered pursuant to the provisions of Section 17A of the Securities Exchange Act of DTC holds and provides asset servicing for over 2.2 million issues of U.S. and non-u.s. equity 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, in turn, is owned by a number of Direct Participants of DTC and Members of the National Securities Clearing Corporation, Fixed Income Clearing Corporation, and Emerging Markets Clearing Corporation, (NSCC, FICC, and EMCC, also subsidiaries of DTCC), as well as by the New York Stock Exchange, Inc., the American Stock Exchange LLC, and the National Association of Securities Dealers, Inc. Access to the DTC system is also available to others such as both U.S. and non-u.s. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly ( Indirect Participants ). DTC has Standard & Poor s highest rating: AAA. The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at and Purchases of Bonds under the DTC system must be made by or through Direct Participants, which will receive a credit for the 2007 Bonds on DTC's records. The ownership interest of each actual purchaser of each 2006 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 2007 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 Bonds, except in the event that use of the book-entry system for the 2007 Bonds is discontinued. To facilitate subsequent transfers, all Bonds deposited by Direct Participants with DTC are registered in the name of DTC's nominee name, Cede & Co., or such other name as may be requested by an authorized representative of DTC. The deposit of Bonds with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the 2007 Bonds; DTC's records reflect only the identity of the Direct Participants to whose accounts such 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. 5

12 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 Bonds may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the 2007 Bonds, such as redemptions, tenders, defaults, and proposed amendments to the 2006 Bond documents. For example Beneficial Owners of Bonds may with to ascertain that the nominee holding the 2007 Bonds for their benefit has agreed to obtain or transmit notices to Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names and addresses to the Paying Agent and request that copies of notices be provided directly to them. Redemption notices shall be sent to DTC. If less than all of the 2007 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 the 2007 Bonds, unless authorized by a Direct Participant in accordance with DTC's Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the Paying Agent 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 2007 Bonds are credited on the record date (identified in listing attached to the Omnibus Proxy). Redemption proceeds, distributions, and interest payments on the 2007 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 Paying Agent, on the payable date in accordance with their respective holdings shown on DTC s records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in street name, and will be the responsibility of such Participant and not of DTC (nor its nominee), the City or Paying Agent, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of redemption proceeds, distributions, and interest payments to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the City or the Paying Agent, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants. DTC may discontinue providing its services as depository with respect to the 2007 Bonds at any time by giving reasonable notice to the City and the Paying Agent. In addition, the City may decide to discontinue use of the system of book-entry transfers through DTC (or a successor Securities Depository). Under either of such circumstances, in the event that a successor Securities Depository is not obtained, Bond certificates are required to be printed and delivered. THE CITY AND THE PAYING AGENT HAVE NO RESPONSIBILITY OR OBLIGATION TO ANY SECURITIES DEPOSITORY, ANY PARTICIPANTS OR THE BENEFICIAL OWNERS WITH RESPECT TO (1) THE ACCURACY OF ANY RECORDS MAINTAINED BY DTC OR ANY PARTICIPANT OR THE MAINTENANCE OF ANY RECORDS; (2) THE PAYMENT BY DTC OR ANY PARTICIPANT OF ANY AMOUNT DUE TO ANY BENEFICIAL OWNER IN RESPECT OF THE BONDS, OR THE SENDING OF ANY TRANSACTION STATEMENTS; THE DELIVERY OR TIMELINESS OF DELIVERY BY DTC OR ANY PARTICIPANT OF ANY NOTICE TO ANY BENEFICIAL OWNER WHICH IS REQUIRED OR PERMITTED UNDER THE ORDINANCE TO BE GIVEN TO OWNERS; (4) THE SELECTION OF THE BENEFICIAL OWNERS TO RECEIVE PAYMENTS UPON ANY PARTIAL REDEMPTION OF THE BONDS; OR (5) ANY CONSENT GIVEN OR OTHER ACTION TAKEN BY DTC OR ITS NOMINEE AS THE REGISTERED OWNER OF THE BONDS, INCLUDING ANY ACTION TAKEN PURSUANT TO AN OMNIBUS PROXY. The information in this section concerning DTC and DTC s book entry system has been extracted from materials provided by DTC for such purpose and from sources the City believes to be reliable, but the City takes no responsibility for the accuracy thereof and such information is not guaranteed as to accuracy or completeness and is not to be construed as a representation by the City, the Paying Agent or the Underwriter. 6

13 SECURITY FOR THE BONDS The Bonds are general obligations of the City, and the full faith, credit and taxing power of the City are pledged for the punctual payment of the principal of and interest on the Bonds when due. The Bonds are payable from general revenues of the City from whatever sources derived, including a tax sufficient to pay interest and principal on any indebtedness incurred pursuant to the Act, on all taxable property in the City. In the Ordinance, the City covenants that it will include the amount of the debt service to be paid on the Bonds for each fiscal year in which such sums are payable in its budget for that fiscal year, will appropriate such amounts to the payment on such debt service and will duly and punctually pay, or cause to be paid, the principal of every Bond and the interest thereon at the dates and places and in the manner stated in the Bonds. According to the true intent and meaning thereof, and for such budgeting, appropriation and payment, the City has pledged its full faith, credit and taxing power. The Act provides that the foregoing covenant shall be specifically enforceable. The Sinking Funds Under the Ordinance, the City will create sinking funds, designated Sinking Fund City of Wilkes-Barre Series A of 2007 (the Series A Sinking Fund ) and Sinking Fund City of Wilkes-Barre Series B of 2007 (the Series B Sinking Fund and together with the Series A Sinking Fund, the Sinking Funds ), shall be held by the Paying Agent segregated from all other funds of the City. The City shall deposit in each Sinking Fund, not later than the date when principal of and/or interest is to become due on the respective Series of Bonds, an amount which, together with any other available funds therein, will be sufficient to provide for the payment of principal and/or interest becoming due on such Bonds. The Paying Agent is authorized and directed in the Ordinance to pay from the Sinking Funds the principal of and interest on the respective Series of Bonds when due and payable. BOND INSURANCE DESCRIPTION OF THE INSURER The following information has been supplied by the Insurer for inclusion in this Official Statement. No representation is made by Issuer/Underwriter as to the accuracy or completeness of the information. The Insurer accepts no responsibility for the accuracy or completeness of this Official Statement or any other information or disclosure contained herein, or omitted herefrom, other than with respect to the accuracy of the information regarding the Insurer and its affiliates set forth under this heading. In addition, the Insurer makes no representation regarding the Bonds or the advisability of investing in the Bonds. General XL Capital Assurance Inc. (the Insurer or XLCA ) is a monoline financial guaranty insurance company incorporated under the laws of the State of New York. The Insurer is currently licensed to do insurance business in, and is subject to the insurance regulation and supervision by, all 50 states, the District of Columbia, Puerto Rico, the U.S. Virgin Islands and Singapore. The Insurer is an indirect wholly owned subsidiary of Security Capital Assurance Ltd ( SCA ), a company organized under the laws of Bermuda. Through its subsidiaries, SCA provides credit enhancement and protection products to the public finance and structured finance markets throughout the United States and internationally. XL Capital Ltd beneficially owns approximately 63% of SCA s outstanding shares. The common shares of SCA are publicly traded in the United States and listed on the New York Stock Exchange (NYSE: SCA). SCA is not obligated to pay the debts of or claims against the Insurer. Financial Strength and Financial Enhancement Ratings of XLCA The Insurer's insurance financial strength is rated Aaa by Moody s and AAA by Standard & Poor s and Fitch, Inc. ( Fitch ). In addition, the Insurer has obtained a financial enhancement rating of AAA from Standard & Poor s. These ratings reflect Moody s, Standard & Poor s and Fitch's current assessment of the Insurer's creditworthiness and claims-paying ability as well as the reinsurance arrangement with XL Financial Assurance Ltd. ( XLFA ) described under "Reinsurance" below. 7

14 The above ratings are not recommendations to buy, sell or hold securities, including the Bonds and are subject to revision or withdrawal at any time by Moody s, Standard & Poor s or Fitch. Any downward revision or withdrawal of these ratings may have an adverse effect on the market price of the Bonds. The Insurer does not guaranty the market price of the Bonds nor does it guaranty that the ratings on the Bonds will not be revised or withdrawn. Reinsurance The Insurer has entered into a facultative quota share reinsurance agreement with XLFA, an insurance company organized under the laws of Bermuda, and an affiliate of the Insurer. Pursuant to this reinsurance agreement, the Insurer expects to cede up to 75% of its business to XLFA. The Insurer may also cede reinsurance to third parties on a transactionspecific basis, which cessions may be any or a combination of quota share, first loss or excess of loss. Such reinsurance is used by the Insurer as a risk management device and to comply with statutory and rating agency requirements and does not alter or limit the Insurer's obligations under any financial guaranty insurance policy. With respect to any transaction insured by XLCA, the percentage of risk ceded to XLFA may be less than 75% depending on certain factors including, without limitation, whether XLCA has obtained third party reinsurance covering the risk. As a result, there can be no assurance as to the percentage reinsured by XLFA of any given financial guaranty insurance policy issued by XLCA, including the Policy. Based on the audited financial statements of XLFA, as of December 31, 2006, XLFA had total assets, liabilities, redeemable preferred shares and shareholders equity of $2,007,395,000, $874,028,000, $54,016,000 and $1,079,351,000, respectively, determined in accordance with generally accepted accounting principles in the United States ( US GAAP ). XLFA s insurance financial strength is rated Aaa by Moody s and AAA by S&P and Fitch Inc. In addition, XLFA has obtained a financial enhancement rating of AAA from S&P. The ratings of XLFA or any other member of the SCA group of companies are not recommendations to buy, sell or hold securities, including the Bonds and are subject to revision or withdrawal at any time by Moody s, Standard & Poor s or Fitch. Notwithstanding the capital support provided to the Insurer described in this section, the Bondholders will have direct recourse against the Insurer only, and XLFA will not be directly liable to the Bondholders. Capitalization of the Insurer Based on the audited financial statements of XLCA, as of December 31, 2006, XLCA had total assets, liabilities, and shareholder s equity of $1,224,735,000, $974,230,000, and $250,505,000, respectively, determined in accordance with U.S. GAAP. Based on the unaudited statutory financial statements for XLCA as of December 31, 2006 filed with the State of New York Insurance Department, XLCA has total admitted assets of $429,073,000, total liabilities of $222,060,000, total capital and surplus of $207,013,000 and total contingency reserves of $20,876,000 determined in accordance with statutory accounting practices prescribed or permitted by insurance regulatory authorities ( SAP ). Based on the audited statutory financial statements for XLCA as of December 31, 2005 filed with the State of New York Insurance Department, XLCA has total admitted assets of $328,231,000, total liabilities of $139,392,000, total capital and surplus of $188,839,000 and total contingency reserves of $13,031,000 determined in accordance with SAP. Incorporation by Reference of Financials For further information concerning XLCA and XLFA, see the financial statements of XLCA and XLFA, and the notes thereto, incorporated by reference in this Official Statement. The financial statements of XLCA and XLFA are included as exhibits to the periodic reports filed with the Securities and Exchange Commission (the Commission ) by SCA and may be reviewed at the EDGAR website maintained by the Commission. All financial statements of XLCA and XLFA included in, or as exhibits to, documents filed by SCA or XL Capital Ltd pursuant to Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934 on or prior to the date of this Official Statement, or after the date of this Official Statement but prior to termination of the offering of the Bonds, shall be deemed incorporated by reference in this Official Statement. Except for the financial statements of XLCA and XLFA, no other information contained in the reports filed with the Commission by SCA or XL Capital Ltd is incorporated by reference. Copies of the statutory quarterly and annual statements filed with the State of New York Insurance Department by XLCA are available upon request to the State of New York Insurance Department. 8

15 Regulation of the Insurer The Insurer is regulated by the Superintendent of Insurance of the State of New York. In addition, the Insurer is subject to regulation by the insurance laws and regulations of the other jurisdictions in which it is licensed. As a financial guaranty insurance company licensed in the State of New York, the Insurer is subject to Article 69 of the New York Insurance Law, which, among other things, limits the business of each insurer to financial guaranty insurance and related lines, prescribes minimum standards of solvency, including minimum capital requirements, establishes contingency, loss and unearned premium reserve requirements, requires the maintenance of minimum surplus to policyholders and limits the aggregate amount of insurance which may be written and the maximum size of any single risk exposure which may be assumed. The Insurer is also required to file detailed annual financial statements with the New York Insurance Department and similar supervisory agencies in each of the other jurisdictions in which it is licensed. The extent of state insurance regulation and supervision varies by jurisdiction, but New York and most other jurisdictions have laws and regulations prescribing permitted investments and governing the payment of dividends, transactions with affiliates, mergers, consolidations, acquisitions or sales of assets and incurrence of liabilities for borrowings. THE FINANCIAL GUARANTY INSURANCE POLICIES ISSUED BY THE INSURER, INCLUDING THE INSURANCE POLICY, ARE NOT COVERED BY THE PROPERTY/CASUALTY INSURANCE SECURITY FUND SPECIFIED IN ARTICLE 76 OF THE NEW YORK INSURANCE LAW. The principal executive offices of the Insurer are located at 1221 Avenue of the Americas, New York, New York and its telephone number at this address is (212) BONDHOLDERS REMEDIES AND LIMITATIONS THEREON The remedies available to registered bondholders upon failure to pay principal of or interest on the Bonds when due include those prescribed in the Act. If such failure should continue for 30 days the registered owners (subject to certain priorities) may bring suit for the amount due in the Court of Common Pleas for Luzerne County, Pennsylvania. The Act provides that any judgment shall have an appropriate priority upon the moneys next coming into the treasury of the City. If the City defaults in the payment of principal of or interest on the Bonds and such default continues for 30 days, or the City fails to comply with any provision of the Bonds or the Ordinance, the registered owners of 25% in aggregate principal amount of the Bonds may also appoint a trustee to represent the registered owners. Such trustee may, and upon written request of the owners of 25% on aggregate principal amount of the Bonds and being furnished with satisfactory indemnity shall take one or more of the following actions: (i) bring suit to enforce all rights of the registered owners, (ii) bring suit on the Bonds, (iii) petition the court to levy on property subject to ad valorem taxation for the amount due on the Bonds, (iv) after 30 days prior written notice to the City, declare the unpaid principal of the Bonds to be immediately due and payable with interest to the date of payment (which may be annulled as described in the Act), and (v) by suit in equity, enjoin any acts or things which may be unlawful or in violation of the rights of registered owners all as set forth more fully in the Act. The taking of such action by such trustee shall preclude the taking of similar action by individual registered owners of the Bonds. Pennsylvania s Municipalities Financial Recovery Act, Act No , as amended and supplemented ( Act 47 ) became effective on September 8, Under Act 47, upon a determination that a municipality is financially distressed (one indication of which is a default of the payment of principal of or interest on any bonds or notes), the Pennsylvania Secretary of the Department of Community and Economic Development shall appoint a coordinator who shall prepare a plan for restoring financial integrity to the municipality. All creditors are entitled to notice of the plans adoption by the municipality s governing body. The intent of Act 47 is to provide for the adjustment of municipal debt by negotiated agreement with creditors. The plan, however, may recommend that the municipality file for relief under Chapter 9 of the United States Bankruptcy Code. The municipality s governing body is also authorized, subject to certain preconditions including insolvency or an inability to meet its debts, to independently file for bankruptcy. A bankruptcy filing would operate as an automatic stay of the commencement or continuation of any judicial or other proceeding against the municipality and its property. A plan for the adjustment of debts filed by a municipality in such a proceeding could include provisions modifying or altering the rights of creditors, including the registered owners of the Bonds. Such a plan, if confirmed by a court, binds all creditors who had notice or knowledge of the plan and discharges all claims against the municipality in the plan. 9

16 The rights and remedies of bondholders are also subject to the provisions of Chapter 9 of the United States Bankruptcy Code. In general, the Chapter permits, under prescribed circumstances, a political subdivision of a state to file a petition for relief in a bankruptcy court of the United States if it is insolvent or unable to meet its debts as they mature and desires to effect a plan to adjust its debt. Such plan may, on being approved by a certain percentage of creditors and the court, include provisions modifying or altering the rights of creditors. Any reference herein to Act 47 or the United States Bankruptcy Code should not be taken as any indication that the City intends to proceed under either of those statutes. Federal Tax Laws TAX MATTERS Numerous provisions of the Internal Revenue Code of 1986, as amended (the Code ), affect the issuers of state and local government unit bonds, such as the City, and impair or restrict the ability of the City to finance projects on a tax exempt basis. Failure on the part of the City to comply with any one or more of such provisions of the Code, or any regulations under the Code, could render interest on the Bonds includable in the gross income of the owners thereof for purposes of federal income tax retroactively to the date of issuance of the Bonds. Among these provisions are more restrictive rules relating to: (a) investment of funds treated as proceeds of the Bonds; (b) the advance refunding of taxexempt bonds; and (c) the use of proceeds of the Bonds to benefit private activities. In addition, under the Code, the City is required to file an information return with respect to the Bonds and, if applicable, to rebate to the federal government certain arbitrage profits on an ongoing basis throughout the term of the issue constituting the Bonds. Bond Counsel has not undertaken to determine (or to inform any person) whether any action taken (or not taken) or events occurring (or not occurring) after the date of issuance of the Bonds may affect the tax status of interest on the Bonds. Other provisions of the Code affect the purchasers and holders of certain state and local government bonds such as the Bonds. Prospective purchasers of the Bonds should be aware that: (i) Section 265 of the Code denies a deduction for interest on (a) indebtedness incurred or continued to purchase or carry certain state or local government bonds, such as the Bonds, or, (b) in the case of a financial institution, that portion of a financial institution s interest expense allocated to interest on certain state or local government bonds, such as the Bonds, unless the issuer of the state or local government bonds designates the bonds as qualified tax-exempt obligations for the purpose and effect contemplated by Section 265(b)(3)(B) of the Code (the City has designated the Bonds as qualified tax exempt obligations under Section 265(b)(3)(B) of the Code, as such phrase is defined in the Code); (ii) certain corporations must take into account interest on certain state or local government bonds, such as the Bonds, in determining adjusted current earnings for the purpose of computing the alternative minimum tax imposed on such corporations; (iii) with respect to insurance companies subject to the tax imposed by Section 831 of the Code, Section 832(b)(5)(B)(1) reduces the deduction for loss reserves by 15% of the sum of certain items, including interest and amounts treated as such on certain state or local government bonds such as the Bonds; (iv) interest on certain state or local government bonds, such as the Bonds, earned by certain foreign corporations doing business in the United States could be subject to a branch profits tax imposed by Section 884 of the Code; (v) if a Subchapter S corporation has passive investment income (which passive investment income will include interest on state and local government bonds such as the Bonds) exceeding 25% of such Subchapter S corporation s gross receipts and if such Subchapter S corporation has Subchapter C earnings and profits, then interest income derived from state and local government bonds, such as the Bonds, may be subject to federal income tax under Section 1375 of the Code; and (vi) Section 86 of the Code requires recipients of certain Social Security and certain Railroad Retirement benefits to take into account, in determining gross income receipts or accruals of interest on certain state or local government bonds such as the Bonds. Tax Exemption In the opinion of Bond Counsel, assuming continuing compliance by the City with certain certifications and agreements relating to the use of Bond proceeds and covenants to comply with provisions of the Code and any applicable regulations thereunder, now or hereafter enacted, interest on the Bonds is not includable in the gross income of the holders of the Bonds under Section 103(a) of the Code and interest on the Bonds is not an item of tax preference for purposes of the federal individual and corporate alternative minimum taxes, except as described above under the caption Federal Tax Laws above. The tax exemption described above does not extend to corporations required to include interest on the Bonds in the calculation of alternative minimum taxable income within the meaning provided in Section 56 of the Code. Other provisions of the Code will affect certain purchasers and holders of the Bonds. See Federal Tax Laws above. 10

17 The City has designated and determined under and for purposes of Section 265(b)(3)(B) of the Code to qualify each of the Bonds as a qualified tax-exempt obligation as such phrase is defined in the Code. In the opinion of Bond Counsel under the laws of the Commonwealth, the Bonds and interest on the Bonds shall at all times be free from taxation for State and local purposes within the Commonwealth, but this exemption shall not extend to gift, estate, succession or inheritance taxes or any other taxes not levied directly on the Bonds or the interest thereon. Under the laws of the Commonwealth, profits, gains or income derived from the sale, exchange or other disposition of the Bonds are subject to State and local taxation within the Commonwealth of Pennsylvania. The City will issue its certificate regarding the facts, estimates and circumstances in existence on the date of delivery of the Bonds and regarding the anticipated use of the proceeds of the Bonds. The City will certify that, on the basis of the facts, estimates and circumstances in existence on the date of issuance of the Bonds, the City does not reasonably expect to use the proceeds of the Bonds in a manner that would cause the Bonds to be or become arbitrage bonds or private activity bonds as those terms are defined in Section 148 and Section 141 of the Code. THE ABOVE SUMMARY OF POSSIBLE TAX CONSEQUENCES IS NOT EXHAUSTIVE. ALL PURCHASERS OF THE BONDS SHOULD CONSULT THEIR TAX ADVISORS REGARDING THE POSSIBLE FEDERAL INCOME TAX CONSEQUENCES OF OWNERSHIP OF THE BONDS. ANY STATEMENTS REGARDING TAX MATTERS HEREIN CANNOT BE RELIED UPON BY ANY PERSON TO AVIOD TAX PENALTIES. Regulations, Future Legislation Under the provisions of the Code the Treasury Department is authorized and empowered to promulgate regulations implementing the intent of Congress under the Code, which could affect the tax-exemption and/or tax consequences of holding tax-exempt obligations, such as the Bonds. In addition, legislation may be introduced and enacted in the future which could change the provisions of the Code relating to tax-exempt bonds of a state or local government unit, such as the City, or the taxability of interest in general. No representation is made or can be made by the City, or any other party associated with the issuance of the Bonds as to whether or not any other legislation now or hereafter introduced and enacted will be applied retroactively so as to subject interest on the Bonds to federal income taxes or so as to otherwise affect the marketability or market value of the Bonds. EACH PURCHASER OF THE BONDS SHOULD CONSULT HIS OR HER OWN TAX ADVISOR REGARDING ANY CHANGES IN THE STATUS OF PENDING OR PROPOSED FEDERAL TAX LEGISLATION. LITIGATION There is no litigation of any nature pending or, to the knowledge of City officials, threatened against the City at the date of this Official Statement seeking to restrain or enjoin the issuance, sale, execution or delivery of the Bonds, or, in any way contesting or affecting the validity of the Bonds or any proceedings of the City taken with respect to the issuance or the sale thereof, or the pledge or application of any moneys or security provided for the payment of the Bonds, or the existence or powers of the City. LEGAL MATTERS Certain legal matters incident to the authorization, issuance and sale of the Bonds will be passed upon by Stevens & Lee, a professional corporation, Forty Fort, Pennsylvania, Bond Counsel, whose approving opinion will be on file at the office of the Paying Agent. Certain legal matters will be passed upon for the City by Timothy J. Henry, Esquire, Wilkes- Barre, Pennsylvania, City Solicitor. The various legal opinions to be delivered concurrently with the delivery of the Bonds express the professional judgment of the attorneys rendering the opinions as to the legal issues explicitly addressed therein. In rendering a legal opinion, the attorney does not become an insurer or guarantor of that expression of professional judgment of the transaction opined upon, or the future performance of the parties to the transaction, nor does rendering a legal opinion guarantee the outcome of any legal dispute that may arise out of the transaction. 11

18 LEGALITY FOR INVESTMENT Applicable laws of the Commonwealth of Pennsylvania provide that the Bonds are legal investments for funds held by, among others, banks, savings banks, trust companies, insurance companies or associations and fiduciaries. The Bonds are authorized security for deposits of funds of the Commonwealth of Pennsylvania and any political subdivision thereof. CONTINUING DISCLOSURE UNDERTAKING The City has covenanted for the benefit of the holders of the Bonds to provide certain financial information, including audited financial statements and operating data relating to the City by not later than one year after the end of each fiscal year of the city, commencing with the fiscal year ended December 31, 2007 (the "Annual Report"). In addition, the City has covenanted to provide notices of the occurrence of certain enumerated events, if deemed by the City to be material. The Annual Report will be filed by the City with each Nationally Recognized Municipal Securities Information Repository ("NRMSIR") and with the applicable state information depository (if any). The notices of material events will be filed by the City with the Municipal Securities Rulemaking Board ("MSRB") or each NRMSIR and with the applicable state information depositor (if any). These covenants have been made in order to assist the Underwriter in complying with S.E.C. Rule 15c2-12(b)(5). The City reserves the right to forward the information required to be provided under the Continuing Disclosure Certificate to the repositories, instead to DisclosureUSA (or any successor Central Post Office approved by the SEC for this purpose.) The Continuing Disclosure Certificate contains provisions regarding amendment, default and remedies for failure to perform thereunder. A copy of the Continuing Disclosure Certificate is on file at the office of the Paying Agent. The City failed to timely file its financial information and operating data required under previous Continuing Disclosure Agreements, for its fiscal years ended December 31, 2004 and The City s 2004 fiscal year filing was completed on April 2, Within 30 days of the date of this Official Statement, the City will file with the NRMSIRs its audited financial statements for its 2005 fiscal year, and related financial information. The City will then be current in its filing with the NRMSIRs. Rating MISCELLANEOUS Standard & Poor s Corporation ( S & P ) has assigned their municipal bond rating of AAA to this issue of Bonds with the understanding that upon delivery of the Bonds, a municipal bond insurance policy insuring the payment when due of the principal of and interest on the Bonds will be issued by XL Capital Assurance Inc. Underwriting The underwriter of the Series A Bonds is RBC Dain Rauscher Inc., doing business under the name RBC Capital Markets (the Underwriter ). The Underwriter has agreed, subject to certain conditions, to purchase the Series A Bonds from the City at an aggregate discount price of $4,680, (which reflects $36, in Underwriter s discount and $18, in original issue discount) from the principal amount of the Series A Bonds. The Underwriter's obligation is subject to certain conditions precedent, and the Underwriter will be obligated to purchase all of the Series A Bonds if any such Series A Bonds are purchased. The Series A Bonds may be offered and sold to certain dealers and others (including dealers depositing such Series A Bonds into investment trusts) at prices lower than the public offering prices. Any such public offering prices may be changed, from time to time, by the Underwriter. The underwriter of the Series B Bonds is RBC Dain Rauscher Inc., doing business under the name RBC Capital Markets (the Underwriter ). The Underwriter has agreed, subject to certain conditions, to purchase the Series B Bonds from the City at an aggregate discount price of $1,031, (which reflects $8, in Underwriter s discount and $5, in original issue discount) from the principal amount of the Series B Bonds. The Underwriter's obligation is subject to certain conditions precedent, and the Underwriter will be obligated to purchase all of the Series B Bonds if any such Series B Bonds are purchased. The Series B Bonds may be offered and sold to certain dealers and others (including dealers depositing such Series B Bonds into investment trusts) at prices lower than the public offering prices. Any such public offering prices may be changed, from time to time, by the Underwriter. 12

19 CERTAIN MATTERS The execution and delivery of this Official Statement has been duly authorized by the City. Certain information contained in this Official Statement has been obtained from sources other than the City. All of the summaries and references of the provisions of the Bonds contained in this Official Statement and all other summaries and references to the Act and to other materials not purporting to be quoted in full, are only brief outlines of certain provisions thereof, and do not constitute complete statements. This Official Statement is not to be construed as a contract or agreement between the City and the Underwriter or the purchasers or holders of any of the Bonds. Any statements made in this Official Statement involving matters of opinion, whether or not expressly so stated, are intended merely as opinions and not as representations of fact. The information and expressions of opinion herein are subject to change without notice and neither the delivery of this Official Statement nor any sale made hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of the City since the date hereof. The information contained in the Official Statement that has been obtained from sources other than the City is not guaranteed as to accuracy or completeness. CITY OF WILKES-BARRE, Luzerne County, Pennsylvania By: /s/ Thomas M. Leighton Mayor 13

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21 APPENDIX A Summaries of Financial Factors of the City

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23 FINANCIAL REVIEW Preparation of the Proposed Budget On or before the fifteenth day of October of each year, the Mayor submits to the Council a budget for the ensuing year. The Council adopts the budget on or before the thirty-first day of December of the fiscal year currently ending. Should Council fail to adopt a budget, the City Charter mandates that the budget as last submitted by the Mayor shall stand adopted. The following Schedules on page A-2 and on page A-3 are summaries only and are not intended to be a complete report. For more complete information, the individual financial statements and the 2006 Budget of the City should be reviewed at the Offices of the City of Wilkes-Barre, Wilkes-Barre, Pennsylvania. Audited Financial Statements for Fiscal Years 2002 through 2005 and the 2006 and 2007 Budgets The schedule on page A-2 and A-3 are summaries of the City s General Fund financial condition for the years ending December 31, 2002 through The figures have been arranged in a form believed to be convenient for the purposes of this Official Statement. The 2005 audit referenced in this document (see also Appendix C) is a draft in near final form, with no material changes expected. The accounts of the City are organized on the basis of funds and account groups, each of which is considered a separate accounting entity. The City maintains its financial statements on the modified accrual basis of accounting. For reporting purposes the statements are on the accrual or modified accrual basis of accounting as required by generally accepted accounting principals. The City s Annual Audit and Financial Reports filed with the Department of Community and Economic Development are audited annually by a firm of independent certified public accountants. Snyder & Clemente, Accountant and Consultants, Kingston, Pennsylvania currently serves as the City s auditor. The City's financial statements are prepared using the modified accrual basis of accounting. Under the modified accrual basis of accounting, revenues are recorded when susceptible to accrual; i.e., both measurable and available. Available means collectible within the current period or soon enough thereafter to be used to pay liabilities of the current period. Expenditures are generally recognized under the modified accrual basis of accounting when the related liability is incurred. The exception to this general rule is that principal and interest on general obligation long-term debt, if any, is recognized when used. [THIS SECTION OF PAGE INTENTIONALLY LEFT BLANK] A-1

24 CITY OF WILKES-BARRE General Fund Statement of Net Assets Fiscal Year Ending December 31, ASSETS Cash and Cash Equivalents... $ 324,172 $ 56,363 $ 1,609,671 $ 1,451,912 Cash and Cash Equivalents - Restricted ,632 1,356,926 Taxes Receivable... 3,289,413 3,399,916 3,556,159 3,665,824 Other/Accounts Receivables... 1,247,489 1,623, , ,806 Notes , ,000 Due from Other Funds ,844 67,348 1,086,698 1,727,095 Due from Fiduciary Funds ,203 Due from Other Governments... 1,402,179 3,737, , ,453 Due from Component Unit ,567,316 3,207,851 Other Assets... 13,360 13,360 13, ,678 TOTAL ASSETS... $ 6,525,457 $ 8,898,237 $ 11,880,679 $ 13,896,748 LIABILITIES AND FUND EQUITIES Liabilities Tax Anticipation Note Payable... $ 1,460,000 $ 6,280,000 $ 0 $ 0 Accounts Payable... 1,745,524 2,219, , ,943 Accrued Interest Payable , Accrued Liabilities , , , ,477 Deposits... 10, Due to Other Governments ,965 Due to Other Funds ,364 3,624, ,391 45,124 Deferred Revenues... 2,514,018 2,823,578 2,099, ,996 Other ) ,873 Total Liabilities... 7,292,723 15,339,216 3,041,679 1,715,378 Fund Equities (Deficit) Unreserved... (767,266) (6,441,230) 8,839,000 12,181,370 Total Fund Equities... (767,266) (6,441,230) 8,839,000 12,181,370 TOTAL LIABILITIES AND FUND BALANCE... $ 6,525,457, $ 8,898,236 $11,880,679 $13,896,748 Source: City s audited financial statements. A-2

25 CITY OF WILKES-BARRE Summary of General Fund Revenues, Expenses and Fund Balance Revenues Audited 2002 Fiscal Year Ending December 31, Audited 2003 Audited 2004 Audited 2005 Taxes... $ 18,373,418 $ 17,258,464 $ 19,417,781 $ 21,736,397 Permits, Licenses and Fines , , , ,450 Departmental Revenues ,491 3,771,701 5,450,125 5,114,106 Intergovernmental Revenues... 3,796,112 4,191,654 2,165,903 2,532,620 Refunds and Reimbursements... 1,603, , , ,122 Interest and Rents... 24,504 10,002 62, ,786 Other Income... 9, ,292 Total Revenues... $ 25,324,528 $ 26,571,906 $ 28,462,847 $ 30,853,773 Expenditures General Government/Administration... $ 3,356,517 $ 3,812,006 $ 2,860,269 $ 2,771,308 Public Safety... 9,201,830 10,423,773 9,838,551 11,202,329 Public Works, Culture and Recreation... 5,021,755 4,875,405 3,873,381 4,617,508 General Expenditures... 4,358,725 8,257,021 6,368,187 6,836,316 Community Development Grant Expenditures Other Expenditures Debt Service Principal... 6,017 6,338 11,576 56,169 Debt Service Interest ,469 1,970 3, Capital Outlay , ,758 0 Total Expenditures... 22,386,313 27,437,921 23,482,807 25,484,546 Revenues Over (Under) Expenditures... 2,938,215 (866,015) 4,980,040 5,369,227 Other Financing Sources (Uses) Tax Anticipation Borrowing... 5,383,000 8,080,000 14,114,000 4,000,000 Tax Anticipation Repayment... (5,383,000) (8,080,000) (14,114,000) (4,000,000) Interest Income on Tax Anticipation Note... (318,828) (98,512) (288,060) (44,853) Proceeds from Sale of Fixed Assets... (41,389) 0 143, ,840 Capital Lease Proceeds , ,602 Proceeds from Bond Issuance... 2,993, Bond Issuance Costs... (76,124) Operating Transfers In , ,819 10,547,574 0 Operating Transfers Out... (7,478,911) (4,813,254) (1,343,021) (2,383,446) Net Other Sources (Uses)... (4,620,517) (4,807,947) 9,076,297 (2,026,857) Revenues & Other Sources Over (Under) Expenditures and Other Uses... (1,682,302) (5,673,962) 14,056,337 3,342,370 Fund Balance, Beginning of Year ,036 (767,266) (6,441,228) 8,839,000 Period Adjustment ,223,891 0 Fund Balance, Beginning of Year, Restated 915,036 (767,266) (5,217,337) 8,839,000 Fund Balance, End of Year... $ (767,266) $ (6,441,228) $ 8,839,000 $ 12,181,370 Source: City s audited financial statements. A-3

26 CITY OF WILKES-BARRE Summary of General Fund Budgets Fiscal Years 2006 and 2007 Revenues Fiscal Year Ending December 31, Budget 2006 Budget 2007 Taxes... $ 20,997,600 $ 21,771,600 Permits, Licenses and Fines... 2,352,900 2,509,900 Departmental Earnings... 4,632,350 4,549,250 Intergovernmental Revenues... 1,874,100 1,906,100 Refunds and Reimbursements... 1,824,061 2,266,866 Interest and Investments... 87, ,200 Sale/Rental of Property... 51, ,040 Other Income... 90, ,000 Tax Anticipation Borrowing... 4,000,000 4,000,000 Operating Transfers , ,000 Total Revenues... $ 36,749,211 $ 37,724,956 Expenditures Legislative Branch... $ 464,559 $ 466,130 Office of Audit and Controller , ,888 Executive Branch... 35,894,511 36,849,353 Bureau of Law , ,585 Total Expenditures... $ 36,749,211 $ 37,724,956 Source: City s 2006 &-2007 budgets. A-4

27 LABOR RELATIONS The City employees approximately 303 employees. Of the full-time employees, approximately 91 are policemen represented by the Police Benevolent Association, and 79 are firefighters represented by the International Association of Firefighters. Police and firemen in Pennsylvania do not have a right to strike and if there is a dispute at the termination of any contract concerning wages and working conditions which the parties cannot voluntarily resolve, the dispute must be submitted to final and binding arbitration. The balance of the work force is divided between two bargaining units. These employees have a right to strike subject to being enjoined if "the strike creates a clear and present danger or threat to the health, safety or welfare of the public." The City has characterized its labor relations as favorable, having had successive contracts with all four unions since No employees of the City have ever engaged in a strike against the City. The police officers are represented by the Police Benevolent Association, and have a contract which expires December 31, The City s fire fighters are represented by International Association of Firefighters and have a contract which expires December 31, Non-uniformed employees include all Public Works Department, Parks Department, management, administrative, supervisory, and clerical personnel. The Department of Public Works is represented by Teamsters Local #401. The agreement for the 39 members expires December 31, The remaining non-uniformed employees are represented by the Public Service Employee Local Union #1300 and have a contract which expires on December 31, CITY PENSION PROGRAM The City has five single employer defined pension plans, the Paid Fireman's Pension Fund, the Policemen's Pension Fund, the Bureau of Firemen's Relief Pension Fund, the Bureau of Policemen's Relief Pension Fund and the Nonuniformed Employees Pension Fund (the first two plans cover uniformed employees hired before July 8, 1976). The plans provide for retirement, disability, vested and death benefits to plan members and their beneficiaries. Cost of living adjustments are provided at the discretion of the individual pension boards. All full-time City employees are eligible to participate in these plans. According to the 2005 Actuarial Valuation Report (1), the City estimates its unfunded actuarial accrued liability with respect to its pension plans is $2,154,271. A summary of the pension funds is as follows: Pension Fund Actuarial Liability Actuarial Value of Assets Unfunded Actuarial Accrued Liability Percentage Funded Paid Police Pension $ 19,986,048 $ 20,089,814 $ (103,766) % Police Relief Pension 9,996,763 11,055,891 (1,059,128) Paid Fire Pension 21,477,691 19,665,386 1,812, Fire Relief Pension 10,995,917 13,500,000 (2,504,703) Non-Uniformed Pension 33,778,268 29,768,705 4,009, Total $ 96,234,687 $ 94,079,796 $ 2,154, % Source: City officials. (1) The City of Wilkes-Barre is a bi-annual reporter. The City is currently performing valuations for January 1, A-5

28 BORROWING POWER OF THE CITY The Act establishes debt limits for local government units. The basis for determining nonelectoral borrowing capacity is related to adjusted revenues received over the most recent three calendar years. The following is a calculation of the current "borrowing base", which is the arithmetic average of the total revenues of the City after adjustments by the exclusion of certain subsidies, reimbursements, pledged revenues and non-recurring items: Calculation of Borrowing Base (1) Net Revenues Received from All Government Funds $ 29,465,346 $ 31,555,215 $31,600,000 Total Net Revenues for Three Years... $ $92,620,561 Borrowing Base Average Net Revenues for Three-Year Period... $ 30,873,520 (1) Unaudited. Borrowing Capacity Under the Act as presently in effect, (i) new nonelectoral debt may not be incurred if the net amount of such new nonelectoral debt plus all outstanding new nonelectoral debt would cause total net nonelectoral debt to exceed 250% of the Borrowing Base and (ii) new lease rental debt or new nonelectoral debt may not be incurred if the net amount of such new debt plus all outstanding new nonelectoral debt and net lease rental would cause the total net nonelectoral plus net lease rental debt to exceed 350% of the Borrowing Base. The application of the aforesaid percentages to the City s Borrowing Base produces the following: Legal Limit Net Debt Outstanding (1) Borrowing Capacity Net Nonelectoral Debt Limit $ 77,183,800 $ 66,378,285 $ 10,805,515 (250% of Borrowing Base) Net Nonelectoral and Lease Rental Debt Limit $ 108,057,320 $ 66,378,285 $ 41,679,035 (350% of Borrowing Base) (1) Includes the Bonds. CITY FINANCIAL HISTORY On December 13, 2002, the City of Wilkes-Barre had a scheduled payroll coupled with a payment of holiday pay for its police officers. With a low cash balance, the former Mayor made the decision to pay both the regularly scheduled payroll and the extra holiday pay instead of a bond payment that was due at the same time for a City of Wilkes-Barre Redevelopment Authority s bond issue, guaranteed by the City, which was used to construct the Corporate Call Center building. The City had been forced to make payments on the Authority s behalf due to the loss of a major tenant in the building. This decision delayed the City's bond payment obligation for four days and resulted in a default. The City has subsequently sold the Call Center property to Wilkes-University. The status of the City s present indebtedness is shown in the table entitled City Financings, on page A-11. A-6

29 TAXING POWERS OF THE CITY The Third Class City Code of the Commonwealth provides that cities of the third class may levy taxes within the following limitations: Potential Tax Sources Legal Limit (1) Potential Tax Sources Legal Limit (1) GENERAL PURPOSE TAX LEVIES SPECIAL PURPOSE TAXES Real Estate 25 mills (2) Bonded Debt and Sinking Fund no limit Residence $5 Recreation no limit Business License $100 Library no limit Act 511 Taxes* Shade Trees 1/10 mill Per Capita $10 (3) Support Bureau of Charity 10 mills Occupation (Flat Rate) (4) $10 (3) Community Colleges (8) Occupation (Millage) (4) no limit Open Space (real estate or earned income) (9) set by voters Occupation Privilege $10 (3) Distressed Pension System Recovery Program no limit Earned Income 1 % (3) Municipalities Financial Recovery Program (10) no limit Deed Transfer 1 % (3) Mechanical Devices 10 % (3) Amusement (5) 10 % (3) Business Gross Receipts (6) 1 mill wholesale (3) 1 ½ mill retail (3) no limit other businesses Emergency & Municipal Svs. (7) $52 Act 24 Earned Income (4) Set by referendum Source: Taxation Manual, Pennsylvania Department of Community and Economic Development. (1) Home rule municipalities may set rates higher than the limits provided in state law for property taxes and for personal taxes levied on residents. They may not create new subjects of taxation. (2) Five additional mills available with court approval. (3) Maximum rate subject to sharing with school district. (4) If a municipality raises the rate of the earned income tax through a referendum authorized by Act 24 of 2001, it cannot levy an occupation tax (5) For taxes first levied after December 31, 1997, maximum rate is 5%. (6) Only if enacted before December 1, (7) If a municipality imposes the combined Emergency and Municipal Services Tax as authorized by Act 222 of 2004, it replaces the occupational privilege tax. (8) Local sponsors may levy any tax permitted by law to support a community college. Revenues from the tax cannot exceed 5 mills of the market price of real estate. (9) Requires approval of voters in referendum. (10) Levied only on court order. *Under Act of December 31, 1965, P.L No. 511, effective January 1, 1966 (The Local Tax Enabling Act), additional taxes may be levied by cities of the third class (subject to division with other political subdivisions to levy similar taxes on the same person, subject, business, transaction or privilege), subject to the following limitations: The aggregate amount of taxes under the Local Tax Enabling Act shall not, in the case of any political subdivision, including school districts of the second, third and fourth classes, exceed an amount equal to the product of twelve mills on the latest total market value of real estate as determined by the board of assessment and revision of taxes or any similar board established by the assessment laws which determined market values of real estate within the political subdivision. If no such board has determined such values, then the values as certified by the State Tax Equalization Board shall be used. A-7

30 Largest Taxpayers in City The ten largest real estate taxpayers in the City and the 2006 assessed valuation of their real estate are as follows: Taxpayer Assessed Valuation Auto Properties, LLC Automobile Dealership $1,101,978 JPJP 10 East South Residential Housing 943,100 Interfaith Heights Association Residential Housing 587,494 Wilkes-Barre IDA/Ramada Inn Hotel 540,886 Home Depot USA Hardware/Building Supply 525,325 Warp Processing Pool Manufacturing 516,441 SHIRA Properties LLC Residential Housing 515,200 Time Leader Newspaper 514,010 Brookside Heights Apartments Residential Housing 509,997 Washington Street Renewal Assoc. Office Building 476,000 $5,670,431 Percentage of Total 2006 City Assessed Tax Value, $86,378,353 (1) 6.56% Source: City Officials. (1) As stated by City officials. Currently not certified by State Tax Equalization Board ( STEB ) Trends in Assessed Valuation The trend in assessed valuation of real estate in the City for the last six fiscal years is shown below: Year Assessed Valuation Market Value Common Level Ratio 2000 $75,123,675 $1,001,649, % ,540, ,794, ,501, ,558, ,096, ,613, ,173, ,519, ,768,895 1,026,013, Source: STEB certified Assessed Valuations. Market Values based upon the Common Level Ratio for Luzerne County. Certified 2006 Assessed Valuations will not available from STEB until July 1, A-8

31 Tax Collection Record The City s realty tax collection record for the previous seven fiscal years is shown below: Percent Collected (Current) Percent Collected (Total) Fiscal Year Millage Tax Levy Current Year Collections Prior Years Collections Total Collections $ 4,809,212 $ 4,169, % $ 559,736 $ 4,729, % ,766,256 4,099, ,625 4,682, ,618,224 4,031, ,514 4,511, ,609,466 4,040, ,531 4,786, ,594,093 3,997, ,618 4,413, ,404,236 5,695, ,899 6,102, ,368,650 5,641, ,117 6,209, ,360,038 5,643, ,311 6,285, Source: City Officials Tax Rates Real Estate Taxes (Mills) City School District (1) County Total Sources: PA Department of Community and Economic Development (DCED). (1) 2006/07 School Year. Emergency & Municipal Services Real Estate Transfer Non-Realty Tax Rates Earned Income Per Capita Mercantile/Business Privilege (mills) Retail Wholesale Other City $ % 2.35% $ School District % 0.50% Source: PA Department of Community and Economic Development (DCED). A-9

32 Outstanding Debt Previous City Financings Date of Issue Original Amount Final Maturity Amount Outstanding General Obligations: Series of 1993 Bonds (1) 9/1/1993 $ 5,866,248 9/15/2011 $ 551,248 Series A of 2002 Bonds 6/1/2002 3,000,000 10/15/ ,000 Series B of 2002 Bonds 6/1/2002 2,490,000 10/15/2021 2,100,000 Series of 2004 Bonds 2/15/2004 4,615,000 11/15/2017 4,615,000 Series B of 2004, Variable Rate Demand Bonds 9/30/ ,800,000 9/15/2014 9,740,000 Series B of 2005 Notes 2/15/2005 3,700,000 11/15/2017 3,700,000 Series C of 2005, Federally Taxable Notes 8/15/ ,740,000 11/15/ ,635,000 Series A of 2006 Notes 1/ , ,919 Series B of 2006 Notes 9/14/2006 4,200,000 10/14/2026 4,135,118 Series C of 2006 Notes 12/2006 3,000,000 3,000,000 (1) $5,866, Consisting of $5,315,000 Current Interest Bonds ( CIBs ) and $551, Capital Appreciation Bonds ( CABs ). The Series of 1993 Bonds that remain outstanding are the CABs. Overlapping Indebtedness Residents of the City are responsible for the following debt, indicated below and on the following page, as of May 15, 2007, the scheduled settlement date for the Bonds. Amount Outstanding Direct Debt (1) : General Obligation Debt (2) : Series of A 2007 Bonds... $ 4,735,000 Series of B 2007 Bonds... 1,045,000 Series of 2007 Note (3)... 1,000,000 Series A of 2006 Note ,919 Series B of 2006 Note... 4,135,118 Series C of 2006 Note... 3,000,000 Series B of 2005 Note... 3,700,000 Series C of 2005 Federally Taxable Note... 30,635,000 Series of 2004 Bonds... 4,615,000 Series B of 2004, Variable Rate Demand Bonds... 9,740,000 Series A of 2002 Bonds ,000 Series B of 2002 Bonds... 2,100,000 Series of 1993 CABs ,248 Total Direct Debt... $ 66,378,285 Overlapping Debt: Luzerne County (4)... $ 16,800,847 Wilkes-Barre Area School District (5)... 21,452,025 Total Overlapping Debt... $ 38,252,872 Total Net Direct & Overlapping Debt $ 104,631,157 (1) See also Previous City Financings. (2) Includes the Bonds. (3) Pending state approval. (4) The Net General Obligation and Lease Rental Debt of Luzerne County totals $204,389,870. The City s proportionate share, 8.22%, is determined by dividing the City s 2005 assessed value of $69,768,895, by the 2005 assessed value of all the municipalities within the County of $848,473,287. (5) The Net Direct Debt of Wilkes-Barre Area School District totals $42,270,000. The City s proportionate share, 50.75%, is determined by dividing the City s 2005 assessed value as stated above, by $137,488,662, the 2005 assessed value of the School District. A-10

33 Financial Factors of the City STEB (1) Market Value of Real Estate (2005)... $ 1,026,013,162 STEB (1) Assessed Value of Real Estate (2005)... 69,768,895 Ratio of Assessed Valuation to Market Value % Population 2000 U.S. Census... 43,123 Direct Debt General Obligation Bonds (2)... $ 23,701,248 General Obligation Notes (3)... 42,677,037 Total Net Direct Debt... $ 66,378,285 Ratio of Total Net Direct Debt to: Market Value of Real Estate % Assessed Valuation of Real Estate % Population (2000)... $ 1, Overlapping Debt (4) School District General Obligation... $ 21,452,025 County General Obligation... 16,800,847 Total Overlapping Debt... 38,252,872 Total Direct and Overlapping Debt (Total Debt)... $ 104,631,157 Ratio of Total Debt to: Market Value of Real Estate % Assessed Valuation of Real Estate % Population (2000)... $ 2, Ratio of Population (2000) of: Market Value of Real Estate... $ 23, Assessed Valuation of Real Estate... $ 1, (1) State Tax Equalization Board. Valuations certified June Market Value based upon the Common Level Ratio as reported by STEB. (2) Includes the Bonds issued herein. (3) Includes $1,000,000 Series of 2007 Note, which is pending state approval. (4) City s proportionate share for Luzerne County and Wilkes-Barre Area School District. A-11

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35 APPENDIX B Description of the City

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37 DESCRIPTION OF THE CITY The City of Wilkes-Barre (the City) is located in Luzerne County (the County ) in Northeastern Pennsylvania. The City encompasses approximately 7.2 square miles, and is the largest municipality in the County, serving as the County seat. The City serves as the business and finance center for the County and has received national recognition for its downtown area which now contains many new, multi-story commercial buildings, a major department store. The City is bordered on the north and east by the Township of Plains, on the west by the Boroughs of Kingston, Edwardsville and Larksville, on the south by Hanover Township, and on the east by the Township of Wilkes-Barre. The City is approximately 110 miles north of Philadelphia and 125 miles west of New York City. Government The City was incorporated on May 4, 1871, as a third class city under the laws of the Commonwealth of Pennsylvania. On January 5, 1976, the voters of the City chose to restructure the City Government according to the Home Rule Charter and Optional Plans Law of Pennsylvania, Act 62 of 1972, and adopted a Home Rule Charter for the City, Article XI, Section 11:01 of the Charter provides for the adoption of an Administrative Code which establishes the organizational structure and general operating procedures for the City Government and appointed officer of the City. The City is governed by an elected seven-member council and a mayor; all serve four-year terms (1). The Mayor is given the overall executive responsibility for administering the municipal affairs. The Mayor's responsibilities include, among other things, the enforcement of City ordinances and resolutions, supervision of the City departments, and supervision of the financial condition of the City. The Mayor also appoints certain officers including the Director of Administrative Services. The Council operates as a legislative unit and its responsibilities include, among other things, the enactment of ordinances and resolutions. The Council also has the authority to make appropriations, incur debt, levy taxes, adopt a budget, hire an independent auditor, and make certain appointments. (1) Beginning January 1, 2008, City Council will be reduced to five members, elected by districts. History The Wyoming Valley was first inhabited by the Shawanese and Delaware Indian tribes in the early 1700s. By 1769, a group of settlers, led by John Durkee, became the first Europeans to reach the area. The settlement was named Wilkes-Barre, after John Wilkes and Isaac Barre, two British members of Parliament who supported colonial America. The initial settlers were aligned with Connecticut, which had a claim on the land that rivaled Pennsylvania s. Armed men loyal to Pennsylvania twice attempted to evict the residents of Wilkes-Barre in what came to be known as the Pennamite Wars. After the American Revolution, the conflict was resolved so that the settlers retained title to their lands but transferred their allegiance to Pennsylvania. Anthracite coal was discovered in the 1800s, which gave the city the nickname of The Diamond City. Hundreds of thousands of immigrants flocked to the city, seeking jobs in the numerous mines and collieries that sprung up. Most coal operations left Wilkes-Barre by the end of World War II as a result of the gradual change in energy sources, as well as a series of mine disasters. Demographic Characteristics Population The City s population decreased by 9.3% from 1990 to The table below shows population comparisons for the City, Luzerne County, Pennsylvania and the United States. Percentage Increase/(Decrease) Wilkes-Barre City 47,523 43,123 (9.3) Luzerne County 328, ,250 (2.7) Pennsylvania 11,881,643 12,281, U.S. 248,709, ,421, Source: Pennsylvania State Data Center; U.S. Bureau of Census. B-1

38 Age Composition (2000) Median Age Percent Under 18 Percent Percent 65 and Over Wilkes-Barre City % 59.5% 20.6% Luzerne County Pennsylvania U.S Source: Pennsylvania State Data Center; U.S. Bureau of Census Per Capita Income Income (2000) 2000 Household Median 2000 Family Median Percentage of Families in Poverty Wilkes-Barre City $ 15,050 $ 26,711 $ 36, % Luzerne County 18,228 33,771 43, Pennsylvania 20,880 40,106 49, U.S. 21,587 41,994 50, Source: Pennsylvania State Data Center; U.S. Bureau of Census. Housing Characteristics (2000) Total Housing Units Percent Occupied Percent Vacant (1) Median Value Owner Occupied Wilkes-Barre City 20, % 11.5% $ 64,700 Luzerne County 144, ,800 Pennsylvania 5,249, ,000 U.S. 115,904, ,600 Source: Pennsylvania State Data Center; U.S. Bureau of Census. (1) Includes seasonal, recreational or occasional use housing units. Occupied Housing (2000) Total Occupied Housing Total Owner Occupied Total Renter Occupied Units Units % of Total Units % of Total Wilkes-Barre City 17,961 9, % 8, % Luzerne County 130,687 91, , Pennsylvania 4,777,003 3,406, ,370, U.S. 105,480,101 69,815, ,664, Source: Pennsylvania State Data Center; U.S. Bureau of Census. B-2

39 Medical facilities There are 5 general acute care hospitals, one rehabilitation hospital, one psychiatric hospital, one Veterans Administration hospital and two uncategorized hospital that serve Luzerne County. These hospitals, their licensed bed capacities and number of full-time and part-time employees are as follows: Institution Location Licensed Beds Staff Full-Time Part-Time First Hospital Wyoming Valley Wilkes-Barre Geisinger Wyoming Valley Wilkes-Barre Hazleton General Hospital Hazleton Hazleton St. Joseph Medical Center Hazleton John Heinz Institute of Rehab Medicine Wilkes-Barre Kindred Hospital Wyoming Valley Wilkes-Barre Mercy Hospital Wilkes-Barre (1) Wilkes-Barre Mercy Special Care Hospital Nanticoke VA Medical Center Wilkes-Barre 139* 1, WVHCS Hospital Wilkes-Barre 412 1, Source: Pennsylvania Department of Health, Bureau of Health Statistics; reporting period. (1) In 2005, Mercy Hospital-Wilkes-Barre was sold to the Geisinger Health System and renamed Geisinger South Wilkes- Barre. *Set up and staffed. Federal Hospitals are not licensed/approved by either the Dept. of Health or Dept. of Welfare. Transportation Highways. Interstate 81 and the Northeast Extension of the Pennsylvania Turnpike traverse vicinity of the City north and south, giving access to Interstate 380 and Interstate 84. The City is also serviced by Routes 309 and 115 Bus Service. The City is served by the Luzerne County Transportation Authority Bus Service. Long distance bus service is available through Martz and Greyhound Bus Lines. Air Service. The Wilkes-Barre/Scranton International Airport provides passenger and freight service to all parts of the United States, plus many international destinations. The Wilkes-Barre Wyoming Valley Airport, located in Forty Fort, provides service for small aircraft. Utilities and Communications Sewer. Sewer service is provided to City households by the Wyoming Valley Sanitary Authority. Water. Water service to residents of the City is provided by Pennsylvania-American Water Company Electricity and Gas. Electricity is provided to the City residents by UGI Utilities. Gas is provided by UGI Penn Natural Gas. Telephone. Telephone service is provided by Verizon and by other telephone companies. Educational Facilities Public Schools: The City is served by the Wilkes-Barre Area School District. The School District s current enrollment is approximately 6,900 students. B-3

40 Higher Education. Luzerne County is endowed with a good range of institutions of higher learning. They include six degree granting institutions. The larger, private institutions offering undergraduate and graduate degrees in the area are Kings College and Wilkes University in Wilkes-Barre and College Misericordia in Dallas, which currently report approximate enrollments of 2,200, 1,500 and 1,650 respectively. Luzerne County Community College, a public, two-year community college, operates from its main campus in Nanticoke, with over 6,000 students attending classes there and at its 14 off-campus sites throughout northeastern Pennsylvania. Also, within easy access to School District residents, are Pennsylvania State University Wilkes-Barre Campus, located in Lehman and the Pennsylvania State University Hazleton Campus. Recreation School District Residents have access to a variety of recreational facilities through public, private and quasi-public agencies. These include a wide range of recreational facilities featuring, the Scranton/Wilkes-Barre Red Barons Triple A baseball team, the Wilkes-Barre/Scranton Penguins of the American Hockey League, a Convention Center/Civic Arena, over 40 golf courses, parks, playgrounds, outdoor tennis courts, 17 Pocono Mountain ski resorts, Pocono Downs harness racing, and the nearby Pocono International Raceway which hosts NASCAR, SCCA, and IMSA racing. Police Protection The Wilkes-Barre Police Department provides 24 hour-a-day coverage to the City, consisting of 91 police officers. ECONOMY Trends in Luzerne County Employment and Unemployment Civilian Labor Force Total Employment Percentage Unemployed Year Luzerne Luzerne Luzerne Pennsylvania U.S , , % 7.1% 6.9% , , , , , , , , , , , , , , , , , , , , , , , , , , (Feb.) 157, , Source: Pennsylvania Department of Labor & Industry ( L&I ). B-4

41 Classification of Employment by Industry The following is a breakdown of employment in Luzerne County for 2004 from the Pennsylvania Department of Labor & Industry. Average annual earnings for workers are included. Luzerne County Average Average Percent Total Percent Change Average Percent Change Quarterly Monthly Change From Wages From Previous Quarterly From Previous Units Employment Previous Year (in 1000s) Year Wage Year Total (Excludes Federal Gov't) 7, , % $4,275, % 31, % Agriculture, forestry, fishing and hunting % 1, % 13, % Construction 739 5, % 201, % 36, % Mining % 12, % 40, % Utilities * * * * * * * Manufacturing , % 741, % 39, % Food Manufacturing 36 2, % 87, % 37, % Beverage and Tobacco Product Manufacturing % 25, % 45, % Textile Mills % 26, % 27, % Textile Product Mills % 4, % 29, % Apparel Manufacturing % % 20, % Leather and Allied Product Manufacturing * * * * * * * Wood Product Manufacturing % 3, % 25, % Paper Manufacturing 17 1, % 56, % 37, % Printing and Related Support Activities 47 1, % 50, % 36, % Petroleum and Coal Products Manufacturing * * * * * * * Chemical Manufacturing % 20, % 39, % Plastics and Rubber Products Manufacturing 26 2, % 108, % 38, % Nonmetallic Mineral Product Manufacturing % 53, % 59, % Primary Metal Manufacturing % 18, % 40, % Fabricated Metal Product Manufacturing 80 3, % 127, % 38, % Machinery Manufacturing % 28, % 41, % Computer and Electronic Product Manufacturing % 24, % 57, % Electrical Equipment, Appliance, and Component Mfg % 7, % 42, % Transportation Equipment Manufacturing % 28, % 50, % Furniture and Related Product Manufacturing % 12, % 32, % Miscellaneous Manufacturing 32 1, % 48, % 35, % Retail trade 1,238 17, % 370, % 20, % Transportation and warehousing 255 7, % 231, % 29, % Wholesale trade 431 6, % 263, % 39, % Administrative and waste services 386 8, % 173, % 19, % Finance and insurance 472 6, % 286, % 47, % Information 96 3, % 165, % 41, % Management of companies and enterprises 33 1, % 94, % 73, % Professional and technical services 606 3, % 154, % 41, % Real estate and rental and leasing 216 1, % 33, % 28, % Educational services 89 2, % 84, % 30, % Health care and social assistance 1,009 21, % 677, % 31, % Accommodation and food services , % 140, % 12, % Arts, entertainment, and recreation 90 1, % 19, % 16, % Other services, except public administration 801 4, % 82, % 19, % Unclassified * * * * * * * Federal Government (not included in Totals) 61 3, % 193, % 54, % Local Government , % 372, % 33, % State Government 37 3, % 155, % 44, % Source: Pennsylvania Department of Labor & Industry, report completed Spring * Data that might be identified with an individual employer and/or data involving fewer than twenty-five employees are not published. B-5

42 Non-Farm Employment Luzerne County is included in the Scranton/Wilkes-Barre Metropolitan Statistical Area. The following table shows the latest non-farm employment statistics available from the Pennsylvania Department of Labor and Industry. Industry Number Employed Percent Number Employed Total Non-Farm 259,000 Total Private 226,800 Goods Producing Industries Construction, Natural Resources & Mining 9,600 Manufacturing 34,000 Total Goods Producing Industries 43, % Service Producing Industries Transportation, Warehousing & Utilities 14,100 Wholesale & Retail Trade 44,400 Information 6,400 Financial Activities 12,800 Professional & Business Service 23,800 Educational & Health Service 51,200 Leisure & Hospitality Service 21,000 Other Services 9,500 Government Federal Government 4,600 State & Local Government 27,600 Total Service Producing Industries 215, % Source: Pennsylvania Department of Labor and Industry ( L & I ), February 2007 data % B-6

43 Top 10 Private Sector Employers in Luzerne County Employer Product/Service Employment Wyoming Valley Health Care System Hospitals/Healthcare 3,500 Procter & Gamble Paper Products Co. Paper Products 2,450 Keystone Automotive Operations, Inc. Automotive Parts/Supplies 1,425 Commonwealth Telephone Company Telecommunications Services 1,340 Transcontinental Refrigerated Lines Trucking/Distribution 1,269 Pride Mobility Products Corporation Manufacturer-Home Medical Equip. 1,200 Berwick Offray LLC Ribbons & Bows 1,100 Geisinger-Wyoming Valley Medical Center Hospitals/Healthcare 1,100 Bank of America Financial Information/Services 1,050 PPL Susquehanna LLC Electric Utility 1,000 Source: Greater Wilkes-Barre Chamber of Business and Industry, B-7

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45 APPENDIX C Audited Financial Statement of the City Year Ending December 31, 2005

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