OKLAHOMA CITY WATER UTILITIES TRUST Oklahoma City, Oklahoma

Transcription

1 NEW ISSUE: BOOK-ENTRY-ONLY OFFICIAL STATEMENT Ratings: Standard and Poor s: AAA Moody s: Aa2 (See RATINGS herein.) In the opinion of Co-Bond Counsel, under existing statutes, regulations and court decisions, and subject to continuing compliance with the provisions of the Internal Revenue Code of 1986, as amended (the Code ), as described herein, interest on the Series 2009 Bonds (including any original issue discount properly allocable to an owner thereof) is excluded from gross income for federal income tax purposes and will not be treated as a specific item of tax preference for purposes of calculation of the federal alternative minimum tax. Interest on the Series 2009A Bonds will not be included in adjusted current earnings for purposes of the federal alternative minimum tax. However, interest on the Series 2009B Bonds will be included in adjusted current earnings of certain corporations for purposes of calculating the alternative minimum tax imposed on such corporations. The Issuer will not designate the Series 2009 Bonds as Qualified Tax-Exempt Obligations. See TAX MATTERS herein for a description of certain other provisions of law which may affect the federal tax treatment of interest on the Series 2009 Bonds. Interest on the Series 2009 Bonds is exempt from Oklahoma income taxation. OKLAHOMA CITY WATER UTILITIES TRUST Oklahoma City, Oklahoma $70,290,000 Water and Sewer System Revenue Bonds, Series 2009A $47,470,000 Water and Sewer System Revenue Refunding Bonds, Series 2009B Dated Date: Date of Delivery Due: July 1, as shown on inside cover The Water and Sewer System Revenue Bonds, Series 2009A (the Series 2009A Bonds ) and the Water and Sewer System Revenue Refunding Bonds, Series 2009B (the Series 2009B Bonds )(collectively, the Series 2009 Bonds ) are being issued by the Oklahoma City Water Utilities Trust (the Issuer ). The Series 2009A Bonds will provide funds to finance the construction, purchase, maintenance, repair or replacement of certain water and/or wastewater facilities and to recapture funds previously expended for water and/or wastewater facilities, to refund $29,000,000 of the Issuer s outstanding Tax-Exempt Commercial Paper Notes issued for the Water and Sewer System (the Refunded Notes ), thereby restoring the Issuer s available capacity under its commercial paper note program, establish a reserve fund or acquire a surety bond and pay the cost of issuance of the Series 2009A Bonds. The Water and Sewer System Revenue Refunding Bonds, Series 2009B (the Series 2009B Bonds) are being issued to refund the Water and Sewer Revenue Bonds, Series 1999A and the Water and Sewer Revenue Refunding Bonds, Series 1999B (See Appendix F Schedule of Refunded Bonds), in order to lower the overall senior lien debt service payments, establish a reserve fund or acquire a surety bond and to pay the costs of issuance of the Series 2009B Bonds. The Series 2009 Bonds are being issued under an Amended and Restated General Bond Indenture dated April 1, 1987 (the General Bond Indenture ), as supplemented by a Series 2004 Supplemental Bond Indenture dated as of June 1, 2004 (the Series 2004 Supplemental Bond Indenture ), as supplemented by a Series 2008 Supplemental Bond Indenture dated as of December 1, 2008 (the Series 2008 Supplemental Bond Indenture ), as supplemented by a Series 2009A and Series 2009B Supplemental Bond Indenture dated as of September 1, 2009 (the Series 2009A and Series 2009B Supplemental Bond Indenture ), by and between the Oklahoma City Water Utilities Trust (the Issuer ) and BancFirst, Oklahoma City, Oklahoma, as trustee (the Trustee ). The General Bond Indenture as so supplemented is herein referred to as the Indenture. The Series 2009 Bonds, together with the Issuer s Outstanding Bonds and any Additional Bonds issued under the Indenture, are limited and special obligations of the Issuer secured by and payable solely from the Trust Estate, as defined herein, including the Gross Revenues, as defined herein, derived by the Issuer from the operation of the System, as defined herein, and the monies received by the Issuer pursuant to the Lease Agreement, as defined herein. Neither the faith and credit nor the taxing power of the State of Oklahoma, any county, municipality, political subdivision or governmental unit or agency thereof or of the City of Oklahoma City, Oklahoma, is or shall be pledged to the payment of principal of or interest on the Series 2009 Bonds. THE ISSUER HAS NO TAXING POWER. The Series 2009 Bonds will be issued as fully registered bonds without coupons and, when issued, will be registered in the name of Cede & Co., as nominee of The Depository Trust Company ( DTC ). DTC will act as securities depository of the Series 2009 Bonds. Individual purchases may be made in book-entry form only, in the principal amount of $5,000 and integral multiples thereof. Purchasers will not receive certificates representing their interest in the Series 2009 Bonds purchased. Principal of, premium, if any, and interest on the Series 2009 Bonds will be payable by the Trustee, as Paying Agent and Registrar to DTC, which will remit such payments in accordance with its normal procedures, as described herein. See DESCRIPTION OF THE SERIES 2009 BONDS - Book-Entry-Only System herein. Principal of the Series 2009 Bonds, payable annually on each July 1, beginning July 1, 2010, and interest on the Series 2009 Bonds, payable initially on January 1, 2010, and thereafter on each July 1 and January 1, will be paid to DTC, which will in turn remit such principal and interest to its participants for subsequent disbursement to the beneficial owners of the Series 2009 Bonds as described herein. SEE INSIDE COVER PAGE FOR MATURITY SCHEDULE The Series 2009 Bonds maturing on and after July 1, 2020, shall be subject to redemption at the option of the Issuer in whole at any time or in part on any interest payment date on and after July 1, 2019, at a price of par plus accrued interest. The Series 2009 Bonds are also subject to special redemption as provided herein. The Series 2009 Bonds are offered when, as and if issued and received by the Underwriters, subject to prior sale, to withdrawal or modification of the offer without notice, and to the approval of legality by The Public Finance Law Group PLLC, and Williams, Box, Forshee & Bullard, P.C., Co-Bond Counsel, all of Oklahoma City, Oklahoma. Certain legal matters will be passed upon for the City by the Office of the Municipal Counselor, Oklahoma City, Oklahoma, and for the Underwriters by their Counsel, Kutak Rock LLP, Oklahoma City, Oklahoma. It is expected that the Series 2009 Bonds will be available for delivery to the Trustee on behalf of DTC on or about October 20, Capital West Securities, Incorporated The date of this Official Statement is September 24, CITI Wells, Nelson & Associates, LLC (THIS COVER PAGE CONTAINS CERTAIN INFORMATION FOR QUICK REFERENCE ONLY. IT IS NOT A SUMMARY OF THIS ISSUE. INVESTORS MUST READ THE ENTIRE OFFICIAL STATEMENT TO OBTAIN INFORMATION ESSENTIAL TO THE MAKING OF AN INFORMED INVESTMENT DECISION.)

2 OKLAHOMA CITY WATER UTILITIES TRUST Oklahoma City, Oklahoma $70,290,000 Water and Sewer System Revenue Bonds, Series 2009A Amounts, Maturities, Interest Rates and Yields Maturity (July 1) Principal Amount Interest Rate Yield CUSIP (1) Maturity (July 1) Principal Amount Interest Rate Yield CUSIP (1) 2011 $500, % 0.840% FR $1,835, % 2.710% FY , % 1.180% FS ,890, % 2.860% FZ , % 1.470% FT , % 2.980% GA , % 1.780% FU ,495, % 2.980% HN , % 2.040% FV , % 3.100% GB , % 2.280% FW ,390, % 3.100% HP , % 2.520% FX ,145, % 3.190% GC ,085, % 2.520% HM ,245, % 3.280% GD ,365, % 3.370% GE1 $1,500, % Term Series 2009A Bond maturing July 1, 2029 Yield 3.82%, CUSIP No GK7 $11,950, % Term Series 2009A Bond maturing July 1, 2029 Yield 3.82%, CUSIP No HQ3 $6,980, % Term Series 2009A Bond maturing July 1, 2034 Yield 4.12%, CUSIP No GQ4 $9,975, % Term Series 2009A Bond maturing July 1, 2034 Yield 4.12%, CUSIP No HR1 $14,465, % Term Series 2009A Bond maturing July 1, 2039 Yield 4.22%, CUSIP No GV3 $6,160, % Term Series 2009A Bond maturing July 1, 2039 Yield 4.22%, CUSIP No HS9 Priced at the stated yield to the July 1, 2019, optional redemption date at par. $47,470,000 Water and Sewer System Revenue Refunding Bonds, Series 2009B Amounts, Maturities, Interest Rates and Yields Maturity (July 1) Principal Amount Interest Rate Yield CUSIP (1) Maturity (July 1) Principal Amount Interest Rate Yield CUSIP (1) 2010 $3,000, % 0.550% GW $2,275, % 2.520% HD ,550, % 0.840% GX ,630, % 2.520% HV ,675, % 1.180% GY ,460, % 2.710% HE ,200, % 1.470% HY ,510, % 2.860% HF ,545, % 1.470% GZ ,445, % 2.980% HG ,000, % 1.780% HA ,495, % 3.100% HH ,390, % 2.040% HB ,600, % 3.190% HJ ,790, % 2.040% HT ,700, % 3.280% HK ,950, % 2.280% HC ,780, % 3.370% HL ,475, % 2.280% HU4 Priced at the stated yield to the July 1, 2019, optional redemption date at par. (1) CUSIP numbers have been assigned to this issue by Standard & Poor s CUSIP Service Bureau, a division of the McGraw-Hill Companies, Inc., and are included solely for the convenience of the Owners of the Series 2009 Bonds. Neither the Issuer nor the Underwriters shall be responsible for the selection or correctness of the CUSIP numbers set forth above. ii

3 CITY OF OKLAHOMA CITY, OKLAHOMA Elected Officials Name Position Mick Cornett... Mayor Gary Marrs... Ward 1 Sam Bowman... Ward 2 Larry McAtee, Jr... Ward 3 Pete White... Ward 4 J. Brian Walters... Ward 5 Margaret S. Meg Salyer... Ward 6 Ronald Skip Kelly... Ward 7 Patrick J. Ryan... Ward 8 OKLAHOMA CITY WATER UTILITIES TRUST Trustees Name Position Mick Cornett... Trustee Mayor Pete White, Chairman... Trustee Council Member James D. Couch... Trustee City Manager Carl E. Edwards, Jr... Citizen Trustee Cody Graves... Citizen Trustee Surrogate Trustees James Thompson... City Manager Surrogate Assistant City Manager Patrick Ryan... Mayor Surrogate Council Member Administration Marsha Slaughter... General Manager / Utilities Director Bret Weingart... Assistant Utilities Director Billy Little... Utilities Finance Section Manager Frances Kersey... Secretary City Clerk Sam Samandi... Engineering Manager Monroe T. Hannon... Water Quality Superintendent Perry Soltani... Wastewater Quality Superintendent Allen McDonald... Line Maintenance Superintendent Peet Loessberg... Utilities Customer Services Superintendent Co-Bond Counsel The Public Finance Law Group PLLC Oklahoma City, Oklahoma Williams, Box, Forshee & Bullard, P.C. Oklahoma City, Oklahoma Financial Advisor Public Financial Management Austin, Texas iii

4 REGARDING USE OF THE OFFICIAL STATEMENT This Official Statement does not constitute an offer to sell or a solicitation of an offer to buy within any jurisdiction or to any person to whom it is unlawful to make such offer or solicitation within such jurisdiction. In connection with the offering of the Series 2009 Bonds, no dealer, salesman or any other person has been authorized to give any information or to make any representation other than contained herein. If given or made, such information or representation must not be relied upon. The information contained in this Official Statement, including the cover page and appendices hereto, has been obtained from public officials, official records and from other sources which are deemed to be reliable. No warranty is made, however, as to the accuracy or completeness of such information and nothing contained in this Official Statement is or shall be relied upon as a promise by the Issuer. The delivery of this Official Statement does not at any time imply that information contained herein is correct as of any time subsequent to its date. Any statements contained in this Official Statement involving matters of opinion, estimations, or projections, whether or not expressly so stated, are intended as such and not as representation of facts. This Official Statement shall not be construed as a contract or agreement between the Issuer, and the purchasers or registered owners of any of the Series 2009 Bonds. iv

5 TABLE OF CONTENTS ELECTED OFFICIALS... iii SELECTED DATA FROM THE OFFICIAL STATEMENT... vii INTRODUCTION... 1 DESCRIPTION OF THE SERIES 2009 BONDS... 1 Authorization of the Series 2009 Bonds... 1 Purpose of the Series 2009 Bonds... 1 Estimated Sources and Uses of Funds - Table The Capital Improvement Program... 3 Security for the Series 2009 Bonds... 3 Additional Bonds... 5 Annual Operating Pledge and Debt Service Coverage... 5 Debt Coverage - Table Redemption... 6 Interest Computation... 7 Registration and Payment... 7 Book-Entry-Only System... 7 OKLAHOMA CITY WATER UTILITIES TRUST General Information Employees The Water and Wastewater System Rates Water Charges - Table Wastewater Charges - Table Water & Wastewater Usage by Customer Class - Table Top Ten Water Customers - Table INDEBTEDNESS Authority to Issue Debt; Outstanding Bonds Revenue Debt Outstanding by Issue - Table Agreements of Support SCHEDULE OF ANNUAL DEBT SERVICE -Table FINANCIAL INFORMATION Financial Information Results of Operations Budget Process STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS/RETAINED EARNINGS - Table RATINGS TAX MATTERS CERTIFICATIONS LEGAL MATTERS UNDERWRITING v

6 FINANCIAL ADVISOR INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS LITIGATION CONTINUING DISCLOSURE MISCELLANEOUS APPENDICES DEMOGRAPHIC AND ECONOMIC INFORMATION CONCERNING THE CITY OF OKLAHOMA CITY...APPENDIX A REPORT OF INDEPENDENT AUDITOR AND FINANCIAL STATEMENTS FOR FISCAL YEARS 2008 AND APPENDIX B EXCERPTS FROM THE AMENDED AND RESTATED BOND INDENTURE DATED AS OF APRIL 1, 1987, AS AMENDED AND SUPPLEMENTED FOR THE OKLAHOMA CITY MUNICIPAL IMPROVEMENT AUTHORITY PRESENTLY THE OKLAHOMA CITY WATER UTILITIES TRUST... APPENDIX C FORM OF CO-BOND COUNSEL OPINION...APPENDIX D CONTINUING DISCLOSURE AGREEMENT...APPENDIX E SCHEDULE OF REFUNDED BONDS... APPENDIX F vi

7 SELECTED DATA FROM THE OFFICIAL STATEMENT The following information is furnished solely to provide limited introductory information regarding Oklahoma City Water Utilities Trust s (the Issuer ) Water and Sewer System Revenue Bonds, Series 2009A (the Series 2009A Bonds ) and the Water and Sewer System Revenue Refunding Bonds, Series 2009B (the Series 2009B Bonds )(collectively, the Series 2009 Bonds ). All such information is qualified in its entirety by reference to the more detailed descriptions appearing in this Official Statement, including the Appendices hereto. The Issuer... Oklahoma City Water Utilities Trust (formerly Oklahoma City Municipal Improvement Authority). Authority for Issuance... The Series 2009 Bonds are issued pursuant to Title 60, Oklahoma Statutes, 2001, Sections 176 to as amended, an Amended and Restated General Bond Indenture dated April 1, 1987 (the General Bond Indenture ) as supplemented by a Series 2004 Supplemental Bond Indenture dated as of June 1, 2004 (the Series 2004 Supplemental Bond Indenture ), as supplemented by a Series 2008 Supplemental Bond Indenture dated as of December 1, 2008 (the Series 2008 Supplemental Bond Indenture ), as supplemented by a Series 2009A and Series 2009B Supplemental Bond Indenture dated as of September 1, 2009 (the Series 2009A and Series 2009B Supplemental Bond Indenture ), by and between the Oklahoma City Water Utilities Trust (the Issuer ) and BancFirst, Oklahoma City, Oklahoma, as trustee (the Trustee ). The General Bond Indenture as so supplemented is herein referred to as the Indenture. Security... Purpose... Optional Redemption... Mandatory Redemption... Special Redemption... The Series 2009 Bonds are secured on a parity with all other bonds outstanding under the Indenture by the Gross Revenues pledged from the Issuer s water and sewer system. The Water and Sewer System Revenue Bonds, Series 2009A (the Series 2009A Bonds ) will provide funds to finance the construction, purchase, maintenance, repair or replacement of certain water and/or wastewater facilities and to recapture funds previously expended for water and/or wastewater facilities, to refund $29,000,000 of the Issuer s outstanding Tax-Exempt Commercial Paper Notes issued for the Water and Sewer System (the Refunded Notes ), thereby restoring the Issuer s available capacity under its commercial paper note program, establish a reserve fund or acquire a surety bond and pay the cost of issuance of the Series 2009A Bonds. The Water and Sewer System Revenue Refunding Bonds, Series 2009B (the Series 2009B Bonds ) are being issued to refund the Water and Sewer Revenue Bonds, Series 1999A and the Water and Sewer Revenue Refunding Bonds, Series 1999B (See Appendix F Schedule of Refunded Bonds), in order to lower the overall senior lien debt service payments, establish a reserve fund or acquire a surety bond and to pay the costs of issuance of the Series 2009B Bonds. Series 2009 Bonds maturing on and after July 1, 2020 shall be subject to redemption on and after July 1, 2019 in whole at any time or in part on any interest payment date upon 30 days notice at par and accrued interest. Term Bonds shall be subject to mandatory redemption at par and by lot, in the amounts and on the dates of the consecutive maturities shown in the maturity schedule shown herein. See Mandatory Sinking Fund Redemption. In whole on any date and in part on any interest payment date, at the option of the Issuer, if payment is made from funds derived from special circumstances at par and accrued interest as more fully described herein. vii

8 Other Conditions Causing Acceleration of Principal Payments... Denominations... Record Date... Principal Payments... Interest Payments... Upon the occurrence of an Event of Default and upon written request of the holders of more than 51% of the principal amount of all bonds outstanding under the Indenture, the Trustee may declare all bonds immediately due and payable. $5,000 or integral multiples thereof. The 15th day of the month preceding the payment date. Annually commencing July 1, 2010, by check, draft or wire of the Registrar to the owner as of the record date. Semiannually on January 1, and July 1, commencing January 1, 2010, by check, draft or wire of the Registrar to the owner as of the record date. Timing of Notices to Securities Holders... Redemption: At least 30 days notice. Event of Default: Within 30 days after receipt of Notice of an Event of Default (unless the Event of Default has been cured). Tax Status... Generally exempt from federal income taxes. See TAX MATTERS. The Series 2009 Bonds will not be designated Qualified Tax-Exempt Obligations. Interest on the Series 2009 Bonds is exempt from Oklahoma income taxation. Professional Consultants... Financial Advisor: Public Financial Management Austin, Texas Co-Bond Counsel: The Public Finance Law Group PLLC and Underwriters Counsel: Trustee/Registrar: Williams, Box, Forshee & Bullard, P.C. Oklahoma City, Oklahoma Kutak Rock LLP, Oklahoma City, Oklahoma BancFirst, Oklahoma City, Oklahoma Legal Matters... Conditions Affecting Issuance of the Series 2009 Bonds... Legal matters incident to the authorization and issuance of the Series 2009 Bonds are subject to the opinion of The Public Finance Law Group PLLC, and Williams, Box, Forshee & Bullard, P.C., acting as Co-Bond Counsel (herein referred together as Bond Counsel ), as to validity and tax exemption. The opinion will be substantially in the form set forth in Appendix D hereto. Co-Bond Counsel have not participated in the preparation of this Official Statement except for information under the captions DESCRIPTION OF THE SERIES 2009 BONDS, TAX MATTERS, LEGAL MATTERS and CONTINUING DISCLOSURE and Appendices C, D and E hereto. The Series 2009 Bonds are offered when, as and if issued, subject to the approving legal opinion of Co-Bond Counsel. Delivery... On or about October 20, Payable in immediately available funds. Book-Entry Only... The Series 2009 Bonds will be issued as book entry only securities through The Depository Trust Company. viii

9 Limitations on Transfer of Securities... Limitations on Offering or Reoffering Securities... No Litigation... Continuing Disclosure... No dealer, broker, salesman or other person has been authorized by the Issuer, the Financial Advisor or the Underwriters to give any information or to make any representations other than those contained in this Official Statement and, if given or made, such information and representations must not be relied upon as having been authorized by the Issuer, the Financial Advisor or the Underwriters. This Official Statement does not constitute an offer to sell or solicitation of an offer to buy, nor shall there be any sale of the Series 2009 Bonds by any person in any jurisdiction in which it is unlawful for such person to make such offer, solicitation or sale. There is no litigation now pending or, to the knowledge of the Issuer s officials, threatened which questions the validity of the Series 2009 Bonds or of any proceedings of the Issuer taken with respect to the issuance or sale thereof. In order to assist the Underwriters in complying with the continuing disclosure requirements of SEC Rule 15c2-12, the Issuer will provide an executed copy of its Continuing Disclosure Agreement. See CONTINUING DISCLOSURE herein. Questions regarding the Series 2009 Bonds or the Official Statement can be directed to and additional copies of the Official Statement, the Issuer s audited financial reports and the Indenture may be obtained from Public Financial Management, 700 Lavaca, Suite 1500, Austin, Texas 78701, (512) , the Issuer s Financial Advisor, or Mr. Bret Weingart, Assistant Director, Oklahoma City Water Utilities Trust, 420 West Main Street, 5 th Floor, Oklahoma City, Oklahoma [The remainder of this page is intentionally left blank.] ix

10 (THIS PAGE LEFT BLANK INTENTIONALLY)

11 OFFICIAL STATEMENT relating to OKLAHOMA CITY WATER UTILITIES TRUST Oklahoma City, Oklahoma $70,290,000 Water and Sewer System Revenue Bonds, Series 2009A $47,470,000 Water and Sewer System Revenue Refunding Bonds, Series 2009B INTRODUCTION This Official Statement, which includes the cover page hereof, the Selected Data from the Official Statement and the Appendices hereto, provides certain information regarding the Oklahoma City Water Utilities Trust (the Issuer ) and the issuance by the Issuer of $70,290,000 Water and Sewer Revenue Bonds, Series 2009A (the Series 2009A Bonds ) and $47,470,000 Water and Sewer Revenue Refunding Bonds, Series 2009B (the Series 2009B Bonds )(collectively, the Series 2009 Bonds ). Capitalized terms used in this Official Statement have the same meanings assigned to such terms in the Indenture described herein, except as otherwise indicated herein. See Appendix C - Excerpts From the Amended and Restated Bond Indenture Dated as of April 1, 1987, as Amended and Supplemented for The Oklahoma City Municipal Improvement Authority presently the Oklahoma City Water Utilities Trust. There follows in this Official Statement descriptions of the Series 2009 Bonds and certain information regarding the Issuer and its finances. All descriptions of documents contained herein are only summaries and are qualified in their entirety by reference to each such document. Copies of such documents may be obtained from the Issuer s Financial Advisor, Public Financial Management, Austin, Texas. Authorization of the Series 2009 Bonds DESCRIPTION OF THE SERIES 2009 BONDS The Series 2009 Bonds are issued pursuant to the provisions of and in full compliance with the Constitution and Laws of the State of Oklahoma, particularly Title 60, Oklahoma Statutes, 2001, Sections 176 to 180.4, as amended. The Series 2009 Bonds are issued under and are equally and ratably secured as to principal and interest by an Amended and Restated General Bond Indenture, dated as of April 1, 1987 (the General Bond Indenture ) as supplemented by a Series 2004 Supplemental Bond Indenture dated as of June 1, 2004 (the Series 2004 Supplemental Bond Indenture ), as supplemented by a Series 2008 Supplemental Bond Indenture dated as of December 1, 2008 (the Series 2008 Supplemental Bond Indenture ), as supplemented by a Series 2009A and Series 2009B Supplemental Bond Indenture dated as of September 1, 2009 (the Series 2009A and Series 2009B Supplemental Bond Indenture ), by and between the Oklahoma City Water Utilities Trust (the Issuer ) and BancFirst, Oklahoma City, Oklahoma, as trustee (the Trustee ). The General Bond Indenture as so supplemented is herein referred to as the Indenture. Purpose of the Series 2009 Bonds The Series 2009A Bonds will provide funds to finance the construction, purchase, maintenance, repair or replacement of certain water and/or wastewater facilities and to recapture funds previously expended for water and/or wastewater facilities, to refund $29,000,000 of the Issuer s outstanding Tax-Exempt Commercial Paper Notes issued for the Water and Sewer System (the Refunded Notes ), thereby restoring the Issuer s available capacity under its commercial paper note program, establish a reserve fund or acquire a surety bond and pay the cost of issuance of the Series 2009A Bonds. The Series 2009B Bonds are being issued to refund the Water and Sewer Revenue Bonds, Series 1999A and the Water and Sewer Revenue Refunding Bonds, Series 1999B (See Appendix F Schedule of Refunded Bonds), in order to lower the overall senior lien debt service payments, establish a reserve fund or acquire a surety bond and to pay the costs of issuance of the Series 2009B Bonds. [The remainder of this page is intentionally left blank.]

12 Table 1 Series 2009A Bonds Estimated Sources and Uses of Funds Sources of Funds Par Amount of the Series 2009A Bonds $70,290, Net Original Issue Premium 3,545, Total Sources $73,835, Uses of Funds Deposit to Construction Fund $40,000, Deposit to Commercial Paper Escrow 29,000, Deposit to Bond Reserve Account 4,417, Underwriters Discount 281, Cost of Issuance (1) 137, Total Uses $73,835, Series 2009B Bonds Estimated Sources and Uses of Funds Sources of Funds Par Amount of the Series 2009B Bonds $47,470, Net Original Issue Premium 3,499, Transfer from I&S Fund 2,042, Other Transfer 5,403, Total Sources $58,415, Uses of Funds Deposit to Refunded Bond Escrow $52,730, Deposit to Bond Reserve Account 5,403, Underwriters Discount 189, Cost of Issuance (1) 91, Total Uses $58,415, (1) Cost of issuance includes the fees and expenses paid by the Issuer including the following fees/expenses: Co-Bond Counsel, Financial Advisor, Trustee, Accountants, Rating Agencies, and Financial Printing.. [The remainder of this page is intentionally left blank.] 2

13 The Capital Improvement Program The following project list is part of the Issuer s ongoing commitment to maintain the System s infrastructure. The projects include treatment plant expansions, city-wide main replacements, line relocations, upsizing water mains and wastewater relief lines, repair and replacements at treatment plants, and storage tank rehabilitations. For fiscal years 2010 through 2014, the Issuer has adopted a capital improvement plan of approximately $482.1 million ($296.7 million for the Water System and $185.4 million for the Wastewater System). The Issuer anticipates funding these capital improvement needs through a combination of net operating revenues and proceeds from the issuance of debt obligations. For fiscal years 2010 and 2011 the estimated cost of these capital projects is $216.4 million. Revenue Bonds will fund approximately $125.0 million of the cost of capital for this two year period. Security for the Series 2009 Bonds Project FY 2010 FY 2011 Water System Facility Repair and Replacement, $18,820,000 $10,120,000 Transmission and Distribution Treatment Plant Expansion and System Improvements for Growth and Expansion 58,000,000 58,500,000 Subtotal Water System 76,820,000 68,620,000 Wastewater System Facility Repair and Replacement 12,470,000 20,684,000 Interceptors and System Improvements for Growth and Expansion 10,750,000 27,100,000 Subtotal Wastewater System 23,220,000 47,784,000 Total Water and Wastewater System $100,040,000 $116,404,000 The Series 2009 Bonds are being issued on a parity with the Issuer s outstanding bonds (the Outstanding Bonds ) described under the caption INDEBTEDNESS herein. The Series 2009 Bonds, the Outstanding Bonds and any Additional Bonds issued in the future on a parity therewith are collectively herein referred to as the Bonds. The Bonds shall be solely the obligations of the Issuer and not of the State of Oklahoma or the City of Oklahoma City. The Bonds are payable solely out of the Trust Estate, including the income, revenues and receipts derived or to be derived from the Issuer s leasehold interest in the water and sewer system of the City of Oklahoma City leased to the Issuer pursuant to separate lease agreements pertaining to both the water and sewer system, respectively. The Bonds are special obligations of the Issuer and do not constitute an obligation, either general or special, of the State of Oklahoma, or the City of Oklahoma City within the meaning of any constitutional or statutory provisions whatsoever. The Issuer has no taxing power. The Bonds are special and limited obligations of the Issuer payable from and secured by a pledge of the Trust Estate which consists of (i) the Gross Revenues derived from the Issuer s operation of the water system and sanitary sewer system (herein referred to collectively as the System ) of the City of Oklahoma City (the City ) leased to the Issuer pursuant to the Lease Agreement (hereinafter defined), (ii) all funds and accounts (except for the Operating Fund) established by the Indenture, including the income derived from the investment thereof, if any, (iii) the leasehold interest in and to the water system created by the Lease Agreement, as amended, initially dated August 1, 1960, whereby the City leased its water system to the Issuer and (iv) the leasehold interest in and to the sewer system created by the Sewer System Lease Agreement dated July 1, 1986, whereby the City leased its sewer system to the Issuer (the lease agreements described in clause (iii) above and this clause (iv) shall be hereinafter referred to collectively as the Lease Agreement ). The Lease Agreement is assigned pursuant to the Indenture and represents the interest of the Bondowners created, given, granted, assigned, pledged and conveyed by and subject to the terms of the Indenture, and all other contracts and agreements which are pledged to the Trustee under the Indenture as security for the Bonds. In May 2003, the City and the Issuer signed a Lease Extension which extended the term of the Water System and Sewer System Leases to the year 3

14 2050. Further, the Lease Agreement provides that it shall remain in effect as long as revenue bonds of the Issuer remain outstanding. Gross Revenues are defined as (i) all rates, fees, rentals, other charges, income, transfers in and monies properly allocable to the System in accordance with generally accepted accounting principles resulting from the ownership of a leasehold interest in and to the System and as derived by the Issuer from the operation of the System, except customer deposits and any other deposits subject to refund until such deposits have become the property of the Issuer, (ii) the proceeds of any insurance covering interruption or loss relating to the System, and (iii) interest on any monies or securities held in any fund or account established by the Indenture and pledged to the payment of the Bonds pursuant to the Indenture; but shall not include proceeds of insurance received with respect to damage or destruction to the System, the proceeds of borrowing or the proceeds of sale or disposition of the System. Indenture Funds and Accounts The following Funds and Accounts are held by the Trustee under the Indenture and shall be maintained by the Trustee so long as any Bonds remain outstanding for the equal and proportionate benefit of the owners of any of the Bonds from time to time outstanding. Additional Funds and Accounts may be created by any supplemental indenture authorizing a series of bonds to be utilized as set out in such supplemental indenture. 1) Construction Fund. The Construction Fund may be held by the Trustee or a separate Construction Fund Trustee as may be provided for in any supplemental indenture. Construction funds shall be used to pay project costs as established by the Indenture or by a duly adopted resolution of the Issuer. 2) Revenue Fund. The Revenue Fund shall be held by the Trustee and utilized to receive the Gross Revenues of the System and to make the transfers and payments required in the Indenture. 3) Bond Fund. The Bond Fund shall consist of an Interest Account, Principal Account and Bond Reserve Account. Funds in the Bond Fund shall be reserved for the payment of principal of and interest on the Bonds as more fully set out in the Indenture. The Reserve Requirement of the Bond Reserve Account shall be (i) in the case of a series of bonds with a final maturity of ten (10) years or less from the date of the bonds an amount equal to the maximum interest due in any bond year in respect to such series of bonds; and (ii) in the case of a series of bonds with a final maturity of more than ten (10) years an amount equal to the maximum principal and interest requirement on the bonds for any bond year in respect to such series of bonds; provided, however, that for the purposes of this definition the interest rate on variable rate bonds shall be calculated at the certified interest rate. Provided further, in no event shall the Reserve Requirement exceed the combined maximum annual principal and interest requirements for any bond year for all bonds outstanding. Provided further, notwithstanding the foregoing or any other provision of the Indenture, the Reserve Requirement may be represented by a surety bond or other insurance or similar agreement issued by a financial institution rated in the highest rating category by each rating agency rating any of the Bonds for any series of Bonds issued under the Indenture except the Series 1986C Bonds. 4) Renewal and Replacement Fund. The amounts in the Renewal and Replacement Fund shall be used to pay the cost of extraordinary and unanticipated renewals and replacements to the System. The Renewal and Replacement Fund shall be maintained with a minimum balance of $600,000 which may be increased by a Supplemental Indenture or by the Issuer s budget. Flow of Funds Under and pursuant to the terms of the Indenture and Lease Agreement, the Issuer shall deposit the Gross Revenues of the System as received to the credit of the Revenue Fund established by the Indenture. For purpose of the Issuer s books and records the Issuer may direct the Trustee to establish separate accounts within the Revenue Fund in respect to Gross Revenues derived from and attributable to the sewer portion and water portion of the System. Subject to the terms of the Indenture, not later than the 20th day of each calendar month (not later than the 28 th day of each month after the Series 1986C Bonds have been paid) the Issuer shall cause to be made the following transfers from the Revenue Fund in the order or priority set forth below: 4

15 (1) Bond Fund. a) Interest Account. 1/6th of the interest due on the Bonds or in all cases an amount sufficient to pay the interest due on the next succeeding interest payment date; b) Principal Account. 1/12th of the principal due on the Bonds or in all cases an amount sufficient to pay the principal due on the Bonds on the next succeeding principal payment date; c) Bond Reserve Account. The amounts, if any, required to be paid in equal monthly installments to reestablish a balance in the Bond Reserve Account equal to the Reserve Requirement within twenty-four months from the creation of any deficiency thereon; (2) Operation and Maintenance Expenses. Pay, or transfer to the City, the amount necessary to meet Operation and Maintenance Expenses; (3) Renewal and Replacement Fund. To the Renewal and Replacement Fund for credit thereto an amount, if any, which will cause the sum deposited therein to be equal to the required minimum balance; (4) Administrative Payments. Make payments to the City for administrative services; (5) Other Obligations. Make payments for other obligations such as the COTPA Support Agreement and McGee Creek Authority Support Agreement. For further information regarding the Indenture, please refer to Appendix C hereto. A copy of the Indenture, if needed, may be requested from Mr. Gary Bush, The Public Finance Law Group PLLC, 5657 North Classen, Suite 100, Oklahoma City, Oklahoma Additional Bonds Additional Bonds may be issued on a parity with all outstanding Bonds, including the Series 2009 Bonds, pursuant to supplemental indentures as set forth in the Indenture. Prior to the issuance of Additional Bonds the Issuer must provide an Accountant s Certificate reflecting that Net Revenues Available for Debt Service in twelve consecutive months of the eighteen months immediately preceding the issuance of Additional Bonds shall have been at least equal to 120% of the maximum annual aggregate debt service requirements for all bonds to be outstanding under the Indenture immediately after the delivery of such Additional Bonds. Such Net Revenues Available for Debt Service may be adjusted to reflect rate increases or system additions presented in an engineer s certificate as set forth in the Indenture. Annual Operating Pledge and Debt Service Coverage The Issuer shall prescribe and collect rates, fees and charges as may be necessary or proper in order that the Gross Revenues collected in respect to the System will at all times be adequate to maintain the System in good repair and sound operating condition and to pay all operating and maintenance expenses and such rates, fees and charges shall at all times be established and collected so as to render annual Net Revenues Available for Debt Service at least equal to 120% of the maximum annual principal of and interest on all Bonds and to comply in all respects with the terms and provisions of the Indenture. Net Revenues Available for Debt Service are defined as Gross Revenues less: the operating and maintenance expenses of the System (except that: (1) interest on any debt payable from the revenues of the System; (2) depreciation and any other items not requiring the expenditure of cash; (3) any amounts expended for capital replacement, repairs and maintenance not recurring annually (or shorter intervals) or reserves therefore; and (4) reserves for administration, operation and maintenance occurring in the normal course of business, shall not be included as Operation and Maintenance Expenses. [The remainder of this page is intentionally left blank.] 5

16 Table 2 presents Bond Debt Service coverage for parity debt not including the Series 2009 Bonds and for debt under the McGee Creek Support Agreement maintained by the Issuer for the last five years. Direct Operating Expenses Debt Coverage - Table 2 (Dollars are in thousands) Available for Debt Service Parity Debt Service(1) Parity Debt Coverage Debt Coverage with McGee Creek(2) Fiscal Year Gross Revenue 2004 $116,536 $67,063 $49,473 $13, ,838 69,833 55,005 17, ,351 78,196 59,155 20, ,218 77,075 59,143 20, ,179 82,151 54,028 20, (1) See INDEBTEDNESS - Authority to Issue Debt; Outstanding Bonds herein. (2) Transfers for McGee Creek debt service are not parity debt. See INDEBTEDNESS - Agreements of Support herein. Redemption Optional Redemption The Series 2009 Bonds maturing on or after July 1, 2020, shall be subject to redemption at the option of the Issuer, on at least thirty (30) days notice, in whole at any time, or in part on any interest payment date and by lot within a maturity, on and after July 1, 2019, at par plus accrued interest to the date fixed for redemption. Mandatory Sinking Fund Redemption The Series 2009A Bonds maturing on July 1, 2029, July 1, 2034, and July 1, 2039 are Term Bonds and are subject to mandatory Sinking Fund Payments and redemption by lot, in such manner as shall be designated by the Trustee, in principal increments of $5,000, at a price of par plus accrued interest without premium, on each July 1 in the years and amounts as follows: Term Bonds Due: July 1, 2029, $1,500,000 Term Bonds Due: July 1, 2029, $11,950,000 July 1 Payment Amounts July 1 Payment Amounts 2025 $300, $2,390, $300, $2,390, $300, $2,390, $300, $2,390, $300, $2,390,000 Term Bonds Due: July 1, 2034, $6,980,000 Term Bonds Due: July 1, 2034, $9,975,000 July 1 Payment Amounts July 1 Payment Amounts 2030 $1,400, $1,995, $1,395, $1,995, $1,395, $1,995, $1,395, $1,995, $1,395, $1,995,000 Term Bonds Due: July 1, 2039, $14,465,000 Term Bonds Due: July 1, 2039, $6,160,000 July 1 Payment Amounts July 1 Payment Amounts 2035 $2,900, $1,880, $2,895, $1,050, $2,890, ,225, $2,890, ,410, $2,890, ,595,000 6

17 If Term Bonds are purchased by the Issuer prior to the due date of any Mandatory Sinking Fund Payment, such Term Bonds so purchased may, at the option of the Issuer, be applied as a credit against any subsequent Mandatory Sinking Fund Payment with respect to such Term Bonds of the series and maturity otherwise to be redeemed, such credit to be equal to the principal amount of such purchased Term Bonds, provided that the Issuer shall have delivered to the Trustee not less than sixty (60) days prior to such redemption date written notice stating its election to apply such Term Bonds as such a credit. In such case, the Trustee shall reduce the amount of the Mandatory Sinking Fund Payment to be made on the Mandatory Sinking Fund Payment Dated specified in such Issuer notice by the principal amount of such Term Bonds of the series and maturity so purchased. Any credit given to Mandatory Sinking Fund Payments shall not affect any other Mandatory Sinking Fund Payments, which shall remain payable as otherwise provided in the Indenture, unless and until another credit is given in accordance with the provisions of the Indenture. Special Redemption The Series 2009 Bonds are subject to redemption at the option of the Issuer from available monies in whole on any date and in part on any interest payment date, if such redemption is made from: (a) insurance proceeds; (b) expropriation awards; (c) the proceeds of the sale of all or part of the System; or (d) payments received from the Issuer pursuant to an Event of Default as defined in the Indenture. In the event that such redemption is made, such redemption shall be made at the principal amount so redeemed and the interest accrued thereon to the redemption date, but without premium. Notice and Other Redemption Provisions Notice of any redemption shall be given by the Trustee, not less than 30 days before the redemption date, by notice by first class mail (postage prepaid) or electronic mail with receipt confirmation to the holder or holders of the Series 2009 Bonds to be redeemed, directed to the addresses shown on the registration books maintained by the paying agent bank. During the period in which the Series 2009 Bonds are registered in the name of DTC or its nominee, notice of any redemption will be given to DTC or its nominee as registered Owner of the Series 2009 Bonds in accordance with the provisions of the Securities Depository Letter Agreement with DTC. No interest shall accrue on any Series 2009 Bonds called for redemption after the redemption date if the amount of the redemption price and accrued interest to the redemption date for those Series 2009 Bonds has been duly deposited with the Trustee. Interest Computation Interest on the Series 2009 Bonds will be computed on a 360-day year, 30-day month basis. non-business day will be paid the following business day. Payments coming due on a Registration and Payment The Series 2009 Bonds will be initially registered in the name of CEDE & Co., as nominee of The Depository Trust Company, New York, New York ( DTC ) which will act as securities depository for the Series 2009 Bonds. Principal and interest on the Series 2009 Bonds will be paid by the Issuer s Paying Agent-Registrar bank to DTC. Disbursement of such payments to the DTC participants is the responsibility of DTC and disbursement of such payments to the beneficial owners is the responsibility of the DTC participants and the Indirect Participants, as more fully described herein. See BOOK-ENTRY-ONLY SYSTEM. Book-Entry-Only System THE INFORMATION IN THIS SECTION, BOOK-ENTRY-ONLY SYSTEM, HAS BEEN FURNISHED BY THE DEPOSITORY TRUST COMPANY. NO REPRESENTATION IS MADE BY THE ISSUER AS TO THE COMPLETENESS OR ACCURACY OF SUCH INFORMATION OR AS TO THE ABSENCE OR MATERIAL ADVERSE CHANGES IN SUCH INFORMATION SUBSEQUENT TO THE DATE HEREOF. NO ATTEMPT HAS BEEN MADE BY THE ISSUER TO DETERMINE WHETHER DTC IS OR WILL BE FINANCIALLY OR OTHERWISE CAPABLE OF FULFILLING ITS OBLIGATIONS. THE ISSUER SHALL HAVE NO RESPONSIBILITY OR OBLIGATION TO DTC PARTICIPANTS, INDIRECT PARTICIPANTS OR THE PERSONS FOR WHICH THEY ACT AS NOMINEES WITH RESPECT TO THE SERIES 2009 BONDS, OR 7

18 FOR ANY PRINCIPAL, PREMIUM, IF ANY, OR INTEREST PAYMENT THEREOF. The Depository Trust Company ( DTC ), New York, NY, will act as securities depository for the Series 2009 Bonds. The Series 2009 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 fullyregistered Security certificate will be issued for each issue of the Series 2009 Bonds, each in an aggregate principal amount of such issue, and will be deposited with DTC. DTC, the world s largest securities depository, is a limited-purpose trust company organized under the New York Banking Law, a banking organization within the meaning of the New York Banking Law, a member of the Federal Reserve System, a clearing corporation within the meaning of the New York Uniform Commercial Code, and a clearing agency registered pursuant to the provisions of Section 17A of the Securities Exchange Act of DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non-u.s. equity issues, corporate and municipal debt issues, and money market instruments (from over 100 countries) that DTC s participants ( Direct Participants ) deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book-entry transfers and pledges between Direct Participants accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non-u.s. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation ( DTCC ). DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non-u.s. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly 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 Series 2009 Bonds under the DTC system must be made by or through Direct Participants, which will receive a credit for the Series 2009 Bonds on DTC s records. The ownership interest of each actual purchaser of each Bond ( Beneficial Owner ) is in turn to be recorded on the Direct and Indirect Participants records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered in to the transaction. Transfers of ownership interests in the Series 2009 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 Series 2009 Bonds, except in the event that use of the book-entry system for the Series 2009 Bonds is discontinued. To facilitate subsequent transfers, all Series 2009 Bonds deposited by Direct Participants with DTC are registered in the name of DTC s partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of DTC. The deposit of Series 2009 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 Series 2009 Bonds; DTC s records reflect only the identity of the Direct Participants to whose accounts such Series 2009 Bonds are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers. Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Beneficial Owners of Series 2009 Bonds may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the Series 2009 Bonds, such as redemptions, tenders, defaults, and proposed amendments to the Bond documents. For example, Beneficial Owners of Series 2009 Bonds may wish to ascertain that the nominee holding the Series 2009 Bonds for their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names and addresses to the registrar and request that copies of notices be provided directly to them. 8

19 Redemption notices shall be sent to DTC. If less than all of the Series 2009 Bonds within an issue are being redeemed, DTC s practice is to determine by lot the amount of the interest of each Direct Participant in such issue to be redeemed. Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to Series 2009 Bonds unless authorized by a Direct Participant in accordance with DTC s MMI Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the Issuer 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 Series 2009 Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy). Redemption proceeds, distributions, and dividend payments on the Series 2009 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 Issuer or Paying Agent, on payable date in accordance with their respective holdings shown on DTC s records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in street name, and will be the responsibility of such Participant and not of DTC, the Paying Agent, or the Issuer, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of redemption proceeds, distributions, and dividend payments to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the Issuer or 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. A Beneficial Owner shall give notice to elect to have its Series 2009 Bonds purchased or tendered, through its Participant, to the Paying Agent, and shall effect delivery of such Series 2009 Bonds by causing the Direct Participant to transfer the Participant s interest in the Series 2009 Bonds, on DTC s records, to the Paying Agent. The requirement for physical delivery of Series 2009 Bonds in connection with an optional tender or a mandatory purchase will be deemed satisfied when the ownership rights in the Series 2009 Bonds are transferred by Direct Participants on DTC s records and followed by a book-entry credit of tendered Series 2009 Bonds to the Paying Agent s DTC account. DTC may discontinue providing its services as depository with respect to the Series 2009 Bonds at any time by giving reasonable notice to the Issuer or the Paying Agent. Under such circumstances, in the event that a successor depository is not obtained, Bond certificates are required to be printed and delivered. The Issuer may decide to discontinue use of the system of book-entry-only transfers through DTC (or a successor securities depository). In that event, Bond certificates will be printed and delivered to DTC. The information in this section concerning DTC and DTC s book-entry system has been obtained from sources that the Issuer believes to be reliable, but the Issuer takes no responsibility for the accuracy thereof. [The remainder of this page is intentionally left blank.] 9

20 OKLAHOMA CITY WATER UTILITIES TRUST General Information The Oklahoma City Water Utilities Trust (the Issuer ), formerly the Oklahoma City Municipal Improvement Authority, was created as a public trust pursuant to Title 60 of the Oklahoma Statues 2001, Section 176, et seq., as amended. The Issuer was established pursuant to a Trust Indenture dated as of August 1, 1960, as amended, on behalf of The City of Oklahoma City (the City ), which is beneficiary of the Issuer. The purpose of the Issuer is generally to provide financing, through loans and the issuance of revenue bonds or other debt instruments, for the construction and acquisition of water and sewer facilities and other general improvements to and for the extension, repair and replacement of the water and sewer system serving the City. The provisions of the Trust Indenture, as amended, provide that the Issuer will lease or otherwise manage the related water and sewer system. The Issuer will receive all revenues generated from the water and sewer system to pay the debt service requirements on revenue bonds or other debt instruments issued by the Issuer plus costs and expenses incident to operating and maintaining the water and sewer system. The City Manager, the Mayor, one Council person, and two citizens of the City who are appointed by the City Council serve as trustees of the Issuer. The Issuer does not have the power to levy taxes. The City has no obligation for debt issued by the Issuer. Lease Agreement An agreement dated August 1, 1960, amended July 1, 1986 (the Water Lease ), between the Issuer and the City basically provides that all City-owned water system assets (as of the date of the Water Lease, as well as property acquired thereafter) would be leased to the Issuer. An agreement dated July 1, 1986 (the Sewer Lease ) between the Issuer and the City, basically provides that all City owned sanitary sewer assets (as of the date of the Sewer Lease, as well as property acquired thereafter) would be leased to the Issuer. The Water Lease and Sewer Lease are referred to herein as the Lease Agreement. The Lease Agreement also provides that all revenue generated by these assets will accrue to the Issuer. The Issuer is responsible for payment of all debt service requirements and expenses incident to the management and conservation of the Issuer, as well as for paying or providing for the payment of all costs and expenses of operating, maintaining, and improving the water and sewer system. In May 2003, the City and the Issuer signed a Lease Extension which extended the term of the Water System and Sewer System Leases to the year Further, the Lease Agreement provides that it shall remain in effect as long as revenue bonds of the Issuer remain outstanding. Operating Expenses The Issuer has chosen to provide for the operations, maintenance, and improvements of the water and sewer system through the City s Utilities Department. The City Council of the City of Oklahoma City approves budgets for water and wastewater operations separately. These budgets are set up in separate funds apart from the City s General Fund. The Issuer prefunds water and sewer operations as necessary in amounts not to exceed approved budgets. Appropriations not expended during a fiscal year remain in the fund for future use by the utility and are not forfeited to the City. The Issuer pays a fee to The City of Oklahoma City calculated on two percent of receipts from inside Oklahoma City customers. A franchise fee is also paid to the City of Warr Acres and the city of The Village based on the same calculation for customers in each respective city. In addition, as consideration for the Lease Extension entered into in May 2003, the Issuer has agreed to pay an administrative fee to the City. For the fiscal year ending June 30, 2003, the fee was $1,000,000. For all remaining fiscal years through 2050, the fee will be equal to 1% of receipts from residential and commercial utility sales. [The remainder of this page is intentionally left blank.] 10

21 Employees The Issuer does not have any employees. A majority of operations are performed by City employees. Veolia, a private contractor, operates the four wastewater treatment facilities. Veolia is under a multiyear contract which terminates at the end of 2011 with mutual agreement for one, four year renewal thereafter. There are 617 employee positions providing service in the Utilities Department. The employees are allocated as follows: Water, 358 and Wastewater, 259. The American Federation of State, County and Municipal Employees (AFSCME) represent 468 water and wastewater system employees. AFSCME s current contract expires June 30, The Water and Wastewater System Service Area The Service Area of the Issuer includes all of the areas within the corporate limits of the City, certain areas outside the City and certain outlying communities. The Water System currently provides treated water to Tinker Air Force Base and the adjacent communities of The Village, Warr Acres, Canadian County Rural Water District #3, Blanchard, Moore, Yukon, Bethany, Piedmont, Mustang, Deer Creek, Edmond, Norman and El Reno, and raw water to the City of Atoka, Pottawatomie County Rural Water District and Shawnee (as needed). The wastewater system currently provides wastewater treatment to Tinker Air Force Base and the adjacent communities of The Village, Moore, Mustang, Nichols Hills, and a number of developments in unincorporated areas. Supply Oklahoma City receives water from two sources. First, the North Canadian River and Canton Reservoir provide raw water to Lakes Overholser and Hefner, and second, Lake Draper receives raw water via a 100-mile conduit from Lake Atoka and McGee Creek Reservoir, in southeastern Oklahoma. The Issuer has taken steps to guarantee that water supply will be adequate in the years to come. Canton Reservoir is a federal multipurpose facility located upstream of Oklahoma City on the North Canadian River. In 1991, the Issuer contracted with the United States Corps of Engineers for storage in Canton Reservoir to supplement owned storage in Lakes Overholser and Hefner. The Issuer owns and has the vast majority of the water rights in Lake Atoka. Additionally, the Issuer is a participant and beneficiary of the McGee Creek Authority, an owner of storage rights in McGee Creek Reservoir, assuring an additional southeastern water supply that can be transported via Lake Atoka s pipeline. Water System Facilities and Distribution The water treatment and pumping facilities consist of: 1) The Lake Overholser Water Treatment Plant which has maximum filtering capacity of 28 m.g.d. The maximum pumping rate to the distribution system is 53 m.g.d.; 2) The Lake Hefner Water Treatment Plant which has a maximum filtering rate of 75 m.g.d. The maximum pumping rate to the distribution system is 120 m.g.d.; and 3) The Lake Draper Water Treatment Plant was placed in operation in 1964 with a maximum filtering rate of 30 m.g.d. Additions to the plant have increased this capacity to 150 m.g.d. The maximum pumping capacity is 165 m.g.d. Treated water is distributed throughout the Water System through 2,800 miles of pipe ranging in size from 2-inch to 72- inch diameters. Service is provided to all major developed areas within the City and to water users of most adjacent cities. Eleven elevated and ground tanks provide a total storage on the distribution system of million gallons. Ten remotely controlled booster pumping stations maintain line pressured for service to outlying areas. Wastewater System Facilities Chisholm Creek Plant - a 5 m.g.d. tertiary wastewater treatment plant with a 7.5 m.g.d. peak loading range. The plant accomplishes primary treatment by sedimentation, secondary treatment by activated sludge process, ammonia removal 11

22 by biological means followed by gravity filters. The plant was placed in service in October, 1978, and is presently treating 4.9 m.g.d. dry weather flow. Construction of facilities expanding the plant s capacity to 10 m.g.d is underway. Deer Creek Plant - a 15 m.g.d. tertiary wastewater treatment plant with a 22.5 m.g.d. peak loading range. The plant accomplishes primary treatment by sedimentation, secondary treatment by Bio Disc, ammonia removal utilizing biological means and followed by gravity filters. The plant was placed in service in July, 1981, and is presently treating 10.6 m.g.d. dry weather flow. North Canadian Plant - a 80 m.g.d. activated sludge wastewater treatment plant with peak loading rate of 120 m.g.d. It is a secondary activated sludge plant presently designed for carbonaceous and nitrogenous removal. The plant accomplishes primary treatment utilizing sedimentation; secondary treatment is accomplished utilizing activated sludge processes. The plant includes final effluent filtration with sand filters. The facility is presently treating 54 m.g.d. dry weather flow. South Canadian Plant - a 6 m.g.d. sequential batch reactor wastewater treatment plant with peak flow rate range of 9 m.g.d. The plant is designed to remove ammonia as well as carbonaceous material and the final effluent is filtered with sand filters. The plant is presently treating 3.5 m.g.d. dry weather flow. The plant was placed in service in July, Billing, Collections and Enforcement Procedures All water and sewer service charges are billed and collected by the Customer Services Division of the Utilities Department, using an in-house computerized billing system. Bills are collected in conjunction with the City s own billing and collection ordinances and procedures. Utility bills based on metered use are mailed to each customer monthly. Billing amounts are determined by the volume of water used by each customer since the previous reading date. Readings are made on a monthly interval and customers are billed monthly. Payment is due on water service bills within fifteen days of the billing date, and any bills outstanding thereafter are considered delinquent. City ordinances provide that any person, firm or corporation who has not established credit make a minimum security deposit of $50 to guarantee payment for service to each premise served. The security deposit is credited to the account, if current, after twelve months of consecutive payments to the City. The security deposit does not relieve the customer of the obligation of paying service charges. The ordinances also provide that in the event any water service charges remain unpaid four days past the due date, a late charge of 1.5% of the bill is assessed. After an account is thirty days delinquent the Issuer may shut off the supply of water to any premises serviced by the City. A $15 fee is assessed for providing 48 hour notice of water supply shut off. Once water service is shut off, an additional $15 fee is charged to the account. If the services are still unpaid at the next billing cycle and the services have been turned on illegally and/or the meter reflects registration since the previous shut-off, the meter will be pulled and/or padlocked and the customer is assessed a $50 fee. Payment plans are available for customers experiencing financial hardship, and can be arranged in person or by telephone contact with the office. As long as the terms of the agreement are kept, service is not terminated. The Utilities Customer Services Division closely monitors bulk water usage through fire hydrant meters. Persons taking water from fire hydrants without using a meter are subject to a fine. All companies utilizing hydrant meters are now in compliance with the permit and reading requirements. [The remainder of this page is intentionally left blank.] 12

23 Rates In 2008, a study was undertaken to determine the adequacy of revenues to meet operational and capital requirements. Projections indicate revenue requirements for fiscal year 2009 and 2010 may be fully satisfied by adjusting retail water consumption rates by 5.00% and wastewater consumption rates by 5.00% on October 1, 2008 and October 1, 2009 as well as increasing the water service base charge and implementing a wastewater service base charge. In addition, several miscellaneous fees and charges were adjusted as of October 1, A history of water charges for FY appears in Table 3. Water Charges - Table 3 Oklahoma City Customers Suburban Customers Year Monthly Charge Meter Size(1) Quantity Charge Monthly Charge Meter Size(1) Quantity 2009 $7.02 X MM /Kgal. $8.80 X MM /Kgal X MM /Kgal X MM /Kgal X MM /Kgal X MM /Kgal X MM /Kgal X MM /Kgal X MM /Kgal X MM /Kgal. (1) MM indicates meter multiplier. Wastewater Discharge Calculation Residential wastewater charges are calculated on a winter period consumption base, which is the average monthly amount of the metered water consumed by a residential unit during a four month period falling between November 1 and March 1. Water from private sources is metered as set forth in City ordinances and the wastewater service charges are billed accordingly. All customer classes incur the same wastewater user charges. In addition, industrial waste contributors are assessed a surcharge for waste exceeding concentrations greater than domestic wastewater as defined by City ordinances. The surcharges per million gallons (MG) recover costs of treatment and encourage businesses to reduce their discharge concentration through pre-treatment or other alternatives. Surcharges include biodegradable oxygen demand (BOD) and suspended solids (SS). A history of wastewater charges for FY appear in the Table 4: Wastewater Charges - Table 4 Monthly Oklahoma City Customers Suburban Customers Surcharges for Applicable Commercial and Industrial Fiscal Year Charge Quantity Charge Quantity Charge BOD$/MG SS$/MG 2009 $ /Kgal. 2.81/Kgal /Kgal. 2.68/Kgal /Kgal. 2.58/Kgal /Kgal. 2.49/Kgal /Kgal. 2.49/Kgal Customers As of June 30, 2009, the Water System had an average of 186,415 active accounts, nearly a 1% increase over the average of 184,685 accounts for the previous June 30. The average annual daily amount of water pumped into the distribution system in fiscal year 2009 was million gallons, a 1.98% increase over the million gallons pumped in On July 20, 2003 a peak demand of million gallons was pumped through the system, representing the highest daily demand for the year and of record to date. The largest class of Water System customers is single family customers representing approximately 45.8% of the total usage. The second largest class of customers was commercial and industrial customers representing approximately 13

24 41.4% of the current total consumption. Multi-family customers represent 12.8% of the total. Total water consumption is expected to increase as population in the metropolitan area increases. As of June 30, 2009, the Wastewater System had an average 178,044 customers, a 1.99% increase over the average of 174,572 accounts for the prior June 30. The average annual daily amount of wastewater treated in the collection system was 64.5 m.g.d., a 13.9% decrease from the 74.9 m.g.d. treated in The largest class of Wastewater System customers is single family customers representing approximately 46.8% of the current total consumption. The second largest class of customers was commercial and industrial customers representing approximately 37.4% of the total usage. Multi-family customers represent approximately 15.8% of the total. Table 5 presents water and wastewater consumption by customer class for fiscal years 2004 through Water and Wastewater Usage by Customer Class - Table 5 (in Thousand Gallons) FY FY FY FY FY Water Single residence 13,390,205 14,641,659 15,053,176 12,955,910 14,157,692 Commercial/Industrial 12,096,072 12,153,929 12,057,400 10,677,622 10,823,490 Multi-family 3,751,938 3,795,742 3,889,920 3,765,981 3,555,915 Total 29,238,215 30,591,330 31,000,496 27,399,513 28,537,097 Wastewater Single residence 8,990,637 8,579,043 8,455,883 8,375,665 8,429,342 Commercial/Industrial 7,185,349 7,160,588 7,587,939 7,193,229 7,783,052 Multi-family 3,038,105 3,029,659 3,046,473 3,014,175 2,881,605 Total 19,214,091 18,769,290 19,090,295 18,583,069 19,093,999 Source: The City of Oklahoma City, Utilities Department. The ten largest industrial and institutional water customers (based on FY 2008 consumption) are listed below. Top Ten Water Customers - Table 6 (In Thousand Gallons) Entity City of Moore 911, , , , ,675 City of Yukon 532, , ,570 85, ,998 City of Blanchard 164, , , , ,890 Power Smith Co-Generation 152, , , , ,940 Georgia Gulf Corporation 138, , , , ,215 City of Norman 103, ,350 66,240 2,700 56,100 Great Plains Coca-Cola 101,165 89,963 96,159 82,037 85,045 Oklahoma County Jail 95, ,377 99, ,362 91,237 Lopez Foods, Inc. 94,375 94, ,365 82,969 84,052 Mustang Improvement Authority 80,217 97, ,305 98, ,742 Source: The City of Oklahoma City, Utilities Department. [The remainder of this page is intentionally left blank.] 14

25 INDEBTEDNESS Authority to Issue Debt; Outstanding Bonds Revenue debt is issuable by the Issuer upon a majority vote of the Trustees and upon approval of 2/3 of the City Council. Revenue debt may be issued on a parity with the outstanding Bonds subject to the provisions of the Indenture as further set forth herein. Table 7 presents a listing of the Issuer s outstanding revenue debt as it was on June 30, 2009, which is prior to the issuance of the Series 2009 Bonds. (Table 8 presents annual principal and interest payments on all Bonds outstanding following the issuance of the Series 2009 Bonds). Revenue Debt Outstanding by Issue - Table 7 (Dollars are in thousands) Issue Dated Maturity Date Amount Issued(1) Amount Outstanding August 15, 2009 Series 1986C-deferred interest 08/01/ $22,760 $9,353 Series 1999A 02/01/ ,955 24,210 Series 1999B 02/01/ ,530 27,760 Series /09/ ,000 70,000 Series /18/ ,605 49,605 Total $180,928 (1) Excludes bonds that have been defeased by the placement of sufficient funds in irrevocable trust. Agreements of Support McGee Creek Authority McGee Creek Reservoir is located 118 miles southeast of Oklahoma City. The reservoir was constructed by the Bureau of Reclamation as a multi-purpose flood control, municipal water supply and recreation project. Congress authorized construction of the reservoir in 1976, and in August, 1977 the McGee Creek Authority was established for the principal purposes of acting as the contracting party for the repayment of project costs and financing, operating, and maintaining the water supply and related facilities. Oklahoma City is a primary beneficiary of the McGee Creek Authority trust and has state permitted rights to 40,000 ac-ft/year. Other member participants are Atoka County (8,000 ac-ft/year); City of Atoka (8,000 ac-ft/year); and the Southern Oklahoma Development Trust (4,000 ac-ft/year). The McGee Creek Authority took over operation of the water delivery systems in September, 1990, and in December 1992, the McGee Creek Authority ( MCA ) sold McGee Creek Authority Water Revenue Bonds, Series 1992, (MCA Bonds) in the amount of $91.86 million to finance the prepayment of the project costs. The MCA Bonds are secured by an Agreement of Support between the MCA and the Issuer pursuant to which the Issuer granted a security interest in the Net Revenues Available for Support which generally means the Issuer's Gross Revenues remaining after payment of debt service, reserve replenishment and operations and maintenance expenses. The Issuer transfers funds necessary to pay the principal and interest on the MCA Bonds and such transfers are the sole source of repayment of the MCA Bonds. The Issuer is further required to maintain or revise its schedule of rates, rentals and charges for use and services at or to a level sufficient to provide adequate Net Revenues Available for Support. Central Oklahoma Transportation and Parking Authority (COTPA) The Issuer and the Central Oklahoma Transportation and Parking Authority (COTPA) entered into an Agreement of Support dated September 1, 1996 in conjunction with the issuance of COTPA s $43,435,000 Parking System Revenue and Refunding Bonds, Series 1996 and entered into a second Agreement of Support dated July 11, 2003 in conjunction with the issuance of COTPA s $26,715,000 Parking System Revenue Bonds, Series 2003 and entered in to a third Agreement of Support dated August 1, 2005 in conjunction with the issuance of COTPA s $24,835,000 Parking System Revenue Refunding Bonds, Series 2006 (the COTPA Agreements and the COTPA Bonds ). The COTPA 15

26 Agreements provide for financial support of COTPA s parking system from the monthly Net Revenues, as defined therein, of the Issuer s System. The Issuer is required to replenish COTPA s bond reserve account if the balance in such account remains below the minimum required amount for a period of eleven months. The Issuer is further required to maintain or revise its schedule of rates, rentals and charges for use and services at or to a level sufficient to provide adequate Gross Revenues to ensure that such support is available. Nothing in the COTPA Agreements shall alter or impair the rights and privileges of the holders of Issuer s Bonds. On June 29, 1988, the Issuer advanced funds pursuant to the COTPA Agreements. COTPA is obligated under the Agreement to repay advances (without interest) from excess revenues after all funds, reserves, and accounts of COTPA created by its Indenture have been reestablished at their minimum required levels. In order to fund the advance, the Issuer issued 1988 Water and Sewer System Revenue Anticipation Notes. These notes matured and were paid off June 29, A Repayment Agreement between the Issuer and COTPA, dated July 27, 2001, provides for the repayment of the balance of the advanced funds ($2,425,000) with equal monthly payments of $10, ($121,250/year) for 20 years, beginning July 29, 2001 and ending June 29, No further contributions from the Issuer have been required under the Repayment Agreement. [The remainder of this page is intentionally left blank. 16

27 SCHEDULE OF ANNUAL DEBT SERVICE Oklahoma City Water Utilities Trust (September 30, 2009) - Table 8 Parity Debt Total Parity Subordinate Fiscal Series 2009A (a) Series 2009B (a) Debt Service Obligations Year Outstanding Debt Principal Interest Total Principal Interest Total Requirements McGee Creek Total 2010 $ 17,091,236 $ - $ 2,160,644 $ 2,160,644 $ 3,000,000 $ 1,148,499 $ 4,148,499 $ 23,400,379 $ 6,560,700 $ 29,961, ,671, ,000 3,098,931 3,598,931 4,550,000 1,587,250 6,137,250 28,407,368 6,558,900 34,966, ,674, ,000 3,088,931 3,588,931 4,675,000 1,496,250 6,171,250 28,434,738 6,551,150 34,985, ,672, ,000 3,078,931 3,578,931 4,745,000 1,402,750 6,147,750 28,398,988 6,546,850 34,945, ,674, ,000 3,068,931 3,568,931 5,000,000 1,234,950 6,234,950 28,478,425 6,540,250 35,018, ,675, ,000 3,058,931 3,558,931 5,180,000 1,059,950 6,239,950 28,474,325 6,530,750 35,005, ,680, ,000 3,046,431 3,546,431 5,425, ,800 6,246,800 28,473,250 6,522,600 34,995, ,486,225 1,760,000 3,033,931 4,793,931 3,905, ,800 4,484,800 17,764,956 6,514,900 24,279, ,487,525 1,835,000 2,959,431 4,794,431 1,460, ,050 1,890,050 15,172,006 6,511,600 21,683, ,493,963 1,890,000 2,904,381 4,794,381 1,510, ,250 1,896,250 15,184,594 6,501,800 21,686, ,493,713 1,965,000 2,828,781 4,793,781 1,445, ,950 1,785,950 15,073,444 6,489,750 21,563, ,494,713 2,055,000 2,739,931 4,794,931 1,495, ,600 1,792,600 15,082,244 6,484,250 21,566, ,496,463 2,145,000 2,650,481 4,795,481 1,600, ,850 1,822,850 15,114,794 6,474,100 21,588, ,498,463 2,245,000 2,543,231 4,788,231 1,700, ,850 1,842,850 15,129,544 6,463,250 21,592, ,500,213 2,365,000 2,430,981 4,795,981 1,780,000 57,850 1,837,850 15,134,044-15,134, ,760,531 2,690,000 2,336,381 5,026, ,786,913-13,786, ,766,031 2,690,000 2,205,631 4,895, ,661,663-13,661, ,763,194 2,690,000 2,074,881 4,764, ,528,075-13,528, ,766,769 2,690,000 1,944,131 4,634, ,400,900-13,400, ,775,719 2,690,000 1,813,381 4,503, ,279,100-13,279, ,194,063 3,395,000 1,682,631 5,077, ,271,694-13,271, ,199,938 3,390,000 1,526,881 4,916, ,116,819-13,116, ,204,531 3,390,000 1,371,331 4,761, ,965,863-12,965, ,202,094 3,390,000 1,215,781 4,605, ,807,875-12,807, ,212,063 3,390,000 1,060,231 4,450, ,662,294-12,662, ,467,875 3,780, ,681 4,684, ,152,556-8,152, ,471,219 3,945, ,056 4,686, ,157,275-8,157, ,475,563 4,115, ,138 4,684, ,159,700-8,159, ,480,344 4,300, ,675 4,688, ,169,019-8,169, ,485, ,963 4,683, ,683,963-4,683,963 $ 295,830,498 $ 70,290,000 $ 62,726,657 $ 133,016,657 $ 47,470,000 $ 11,209,649 $ 58,679,649 $ 487,526,803 $ 91,250,850 $ 578,777,653 17

28 FINANCIAL INFORMATION Financial Information The financial statements for the Issuer are prepared in accordance with Generally Accepted Accounting Principles (GAAP). The Issuer applies all relevant Governmental Accounting Standards Board (GASB) pronouncements as well as Financial Accounting Standards Board (FASB) pronouncements and Accounting Principles Board (APB) Opinions issued on or before November 30, 1989, unless those pronouncements conflict with or contradict GASB pronouncements, in which case, GASB prevails. For reporting purposes, the Issuer is treated as a component unit of the City and is included in the City s financial reporting entity. As such, the financial activity of the Issuer is reported in the City s CAFR. The Water and Wastewater Enterprise Funds include all the transactions of the Issuer, as well as water and wastewater related services provided by the City through its other funds. The Issuer accounts for financial activity as an enterprise fund and uses the accrual basis of accounting for reporting purposes. Under the accrual basis of accounting, revenues are recognized when earned and expenses are recorded when incurred. Beginning in fiscal year ending June 30, 2001, the Issuer has adopted Governmental Accounting Standards Board Statement No. 34, Basic Financial Statements and Management s Discussion and Analysis for State and Local Governments ( GASB 34 ). Because of the new reporting model standards resulting from GASB 34, comparability of financial statements for fiscal years prior to 2001 is affected. Results of Operations Table 9 presents the statements of revenues, expenses and changes in net assets/retained earnings for the fiscal years 2004 through The statements have been organized in such a manner as to facilitate year to year comparisons. Budget Process The City s Utilities Department (the Department ) prepares an annual budget for the System in conformity with the City s requirements and procedures. The budget is a financial plan which sets forth estimated revenues and expenses by Department, Division and Section. Appropriations are made for each account under individual sections. Appropriation increases must be funded by transfer from other appropriations within the Department s funds. The annual budget is sent to the City s Office of Management & Budget for review before submission to the Trustees and City Council for approval. The entire preparation and review process takes approximately six months and the final budget is approved during June, to be effective July 1 of each year. [The remainder of this page is intentionally left blank.] 18

29 Statement of Revenues, Expenses and Changes in Net Assets/Retained Earnings Oklahoma City Water Utilities Trust (Fiscal Years Ending June 30) Table 9 OPERATING REVENUES 2009 (1) Charges for services: Water charges $82,680,840 $75,456,915 $75,056,330 $75,898,664 $64,647,509 Wastewater charges 62,456,176 55,845,228 54,144,296 52,683,417 49,522,821 Concessions 180, Total charges for services 145,317, ,302, ,200, ,582, ,170,818 Lease and rental income 412, , , , ,323 Other 1,652, , , , ,417 Total operating revenues 147,382, ,938, ,693, ,242, ,533,558 OPERATING EXPENSES Personal services 36,848,801 34,283,037 32,563,475 31,833,035 28,675,528 Maintenance, operations, and contractual services 42,916,887 38,821,549 35,468,641 37,196,407 33,975,940 Materials and supplies 10,084,525 9,046,193 9,043,042 9,167,846 7,180,987 Amortization of water rights - - 2,126,090 2,126,090 2,126,090 Depreciation 20,165,171 22,376,988 18,436,177 16,561,472 14,500,314 Total operating expenses 110,015, ,527,767 97,637,425 96,884,850 86,458,859 Operating income 37,367,261 27,410,420 32,056,217 32,357,415 28,074,699 NON-OPERATING REVENUE (EXPENSES) Grant income ,174 Investment income 2,411,694 4,241,327 5,240,583 3,850,025 3,523,058 Interest on bonds and lease obligations (12,975,732) (8,184,645) (9,497,976) (6,553,989) (8,959,906) Amortization (54,793) (54,866) (50,256) (41,589) (30,072) Oil and gas royalties 103, , , ,871 95,103 Payments (to) from the City of Oklahoma City: General Fund 1,594,020 (2,313,155) (2,317,065) (2,231,706) (2,049,995) General Obligation Bond Fund - (500,000) Capital Improvement Fund (80,960) (40,000) Special Purpose Fund , ,000 - Water Fund 2,747,910 1,418,162 (466,025) 2,098, ,997 Grants Management Fund - - (118,627) (3,900) - Payments to the Oklahoma City Municipal Facilities Authority (302,207) (1,230,841) (717,895) Payments to the Oklahoma City Public Property Authority - (131,250) Payments to the McGee Creek Authority (3,550,984) (4,281,907) (4,020,513) (4,052,630) (5,081,915) Other revenue (3,425,568) (724,801) 141,023 76, ,624 Total non-operating expense (13,231,269) (10,430,465) (11,266,477) (7,277,990) (11,579,827) Income before contributions 24,135,992 16,979,955 20,789,740 25,079,425 16,494,872 Capital contributions from other governments 1,423,911-1,032,286 4,055,129 5,921,296 Changes in net assets 25,559,903 16,979,955 21,822,026 29,134,554 22,416,168 Total net assets, beginning 383,330, ,350, ,528, ,393, ,977,476 Total net assets, ending $408,890,082 $383,330,179 $366,350,224 $344,528,198 $315,393,644 (1) Unaudited 19

30 RATINGS Ratings of Aa2 and AAA have been assigned from Moody s Investor s Service, Inc. ( Moody s ) and Standard & Poor s Ratings Services, a division of the McGraw-Hill Companies, Inc. (S&P), respectively. Each such rating reflects only the views of such rating organization. An explanation of the significance of such rating may be obtained from such rating organization. The Issuer, the Financial Advisor and the Underwriters make no representation as to the appropriateness of such rating. The Issuer furnished each rating agency with certain information and materials relating to the Series 2009 Bonds that have not been included in this Official Statement. Generally, rating agencies base their ratings on the information and materials so furnished and on investigations, studies and assumptions by the rating agencies. There is no assurance that a particular rating will be maintained for any given period of time or that it will not be lowered or withdrawn entirely if, in the judgment of the agency originally establishing such rating, circumstances so warrant. Neither the Underwriters nor the Financial Advisor has undertaken any responsibility to bring to the attention of the owners of the Series 2009 Bonds any proposed revision or withdrawal of a rating of the Series 2009 Bonds or to oppose any such proposed revision or withdrawal. Any such revision or withdrawal of such a rating could have an adverse effect on the market price and marketability of the Series 2009 Bonds. TAX MATTERS The Internal Revenue Code of 1986, as amended (the Code ), establishes certain requirements that must be met subsequent to the issuance and delivery of the Series 2009 Bonds in order that interest on the Series 2009 Bonds will be and remain excludable from gross income for federal income tax purposes under Section 103 of the Code. The No Arbitrage Certificate of the Authority, which will be delivered concurrently with the delivery of the Series 2009 Bonds, will contain provisions and procedures relating to compliance with the requirements of the Code. The Authority, in executing its No Arbitrage Certificate, will certify to the effect that it will comply with the provisions and procedures set forth therein and that it will do and perform all acts and things necessary or desirable to assure that interest paid on the Series 2009 Bonds is excludable from gross income, under Section 103 of the Code. Noncompliance by the Authority with such provisions and procedures may require inclusion in gross income of interest on the Series 2009 Bonds retroactive to the date of issuance of the Series 2009 Bonds, regardless of when such noncompliance occurs. Assuming that the Authority complies with the provisions and procedures set forth in the No Arbitrage Certificate, in the opinion of Co-Bond Counsel, under existing statutes, regulations, rulings and court decisions, interest on the Series 2009 Bonds (including original issue discount, if any, allocable to an owner thereof) is excludable from the gross income of the recipients thereof pursuant to Section 103 of the Code for federal income tax purposes, and interest on the Series 2009 Bonds is not treated as a specific item of tax preference for purposes of the federal alternative minimum tax. Interest on the Series 2009A Bonds is not included in adjusted current earnings for purposes of the federal alternative minimum tax. However, interest on the Series 2009B Bonds generally will be included in adjusted current earnings of certain corporations for purposes of calculating the alternative minimum tax imposed on such corporations. The adjusted current earnings of a corporation will include the amount of any income received that is otherwise exempt from taxes, such as interest on the Series 2009B Bonds. The accrual or receipt of such interest may otherwise affect the federal income tax liability of certain recipients such as banks, thrift institutions, property and casualty insurance companies, corporations (including S corporations and foreign corporations operating branches in the United States), Social Security or Railroad Retirement benefit recipients or taxpayers otherwise entitled to claim the earned income credit and taxpayers who may be deemed to have incurred (or continued) indebtedness to purchase or carry tax-exempt obligations, among others. The extent of these other tax consequences will depend upon the recipient s particular tax status or other items of income or deduction. Co-Bond Counsel will express no opinion regarding any such consequences and investors should consult their own tax advisors regarding the tax consequences of purchasing or holding the Series 2009 Bonds. From time to time, there are legislative proposals in the Congress and in the states that, if enacted, could alter or amend the federal and state tax matters referred to above or adversely affect the market value of the Series 2009 Bonds. It cannot be predicted whether or in what form any such proposal might be enacted or whether if enacted, it would apply to bonds issued prior to enactment. In addition, regulatory actions are from time to time announced or proposed and litigation is threatened or commenced which, if implemented or concluded in a particular manner, could adversely affect the market value of the Series 2009 Bonds. It cannot be predicted whether any such regulatory action will be implemented, how any particular litigation or judicial action will be resolved or whether the Series 2009 Bonds or the market value thereof would be impacted thereby. Purchasers of the Series 2009 Bonds should consult their tax 20

31 advisors regarding any pending or proposed legislation, regulatory initiatives or litigation. The opinions expressed by Co-Bond Counsel will be based upon existing legislation and regulations as interpreted by relevant judicial and regulatory authorities as of the date of issuance and delivery of the Series 2009 Bonds and Co-Bond Counsel will express no opinion as of any date subsequent thereto or with respect to any pending legislation, regulatory initiatives or litigation. As a result of the enactment of the Tax Increase Prevention and Reconciliation Act of 2005, interest on tax-exempt obligations such as the Series 2009 Bonds is subject to information reporting in a manner similar to interest paid on taxable obligations. Backup withholding may be imposed on payments made after March 31, 2007, to any bondholder who fails to provide certain required information including an accurate taxpayer identification number to any person required to collect such information pursuant to Section 6049 of the Code. The new reporting requirement does not in and of itself affect or alter the excludability of interest on the Series 2009 Bonds from gross income for federal income tax purposes or any other federal tax consequence of purchasing, holding or selling tax-exempt obligations. The Series 2009 Bonds will not be qualified tax-exempt obligations for purposes of Section 265(b)(3) of the Code relating to the ability of financial institutions to deduct from gross income for federal income tax purposes interest expense that is allocable to carrying and acquiring tax-exempt obligations. The Series 2009 Bonds that were offered at a price less than the principal amount thereof resulting in a yield greater than the interest rate for each such maturity as shown on the inside cover page hereof are herein referred to as the OID Bonds. The difference between such initial offering price and the principal payable at maturity constitutes original issue discount treated as interest which is excluded from gross income for federal income tax purposes. In the case of an owner of an OID Bond, the amount of original issue discount which is treated as having accrued with respect to such OID Bond is added to the cost basis of the owner in determining, for federal income tax purposes, gain or loss upon disposition of such OID Bond (including its sale, redemption or payment at maturity). Amounts received upon disposition of such OID Bond which are attributable to accrued original issue discount will be treated as tax-exempt interest, rather than as taxable gain, for federal income tax purposes. Original issue discount is treated as compounding semiannually, at a rate determined by reference to the yield to maturity of each individual OID Bond, on days which are determined by reference to the maturity of such OID Bond. The amount treated as original issue discount on such OID Bond for a particular semiannual accrual period is equal to (a) the product of (i) the yield to maturity for such OID Bond and (ii) the amount which would have been the tax basis of such OID Bond at the beginning of the particular accrual period if held by the original purchaser, (b) less the amount of any payments of qualified stated interest on such OID Bond during the accrual period. The tax basis is determined by adding to the initial public offering price on such OID Bond the sum of the amounts which would have been treated as original issue discount for such purposes during all prior periods. If such OID Bond is sold between semiannual compounding dates, original issue discount which would have accrued for that semiannual compounding period for federal income tax purposes is to be apportioned in equal amounts among the days in such compounding period. An owner of an OID Bond should consult his or her own tax advisor with respect to the determination for federal income purposes of original issue discount accrued with respect to such OID Bond as of any date, with respect to the accrual of original issue discount for such OID Bond purchased in the secondary market and with respect to the state and local tax consequences of owning such OID Bond. The Series 2009 Bonds that were offered at a price in excess of the principal amount thereof resulting in a yield less than the interest rate for each such maturity as shown on the inside cover page hereof are herein referred to as the Premium Bonds. Under the Code, the difference between the principal amount of a Premium Bond and the cost basis of such Premium Bond to an owner thereof is bond premium. Under the Code, bond premium is amortized over the term of a Premium Bond (i.e., the maturity date of a Premium Bond or its earlier call date) for federal income tax purposes. An owner of a Premium Bond is required to decrease his or her basis in such Premium Bond by the amount of the amortizable bond premium attributable to each taxable year (or portion thereof) he or she owns such Premium Bond. The amount of the amortizable bond premium attributable to each taxable year is determined on an actuarial basis at a constant interest rate determined with respect to the yield on a Premium Bond compounded on each interest payment date. The amortizable bond premium attributable to a taxable year is not deductible for federal income tax purposes. Owners of Premium Bonds (including purchasers of Premium Bonds in the secondary market) should consult their own tax advisors with respect to the precise determination for federal income tax purposes of the treatment of bond premium upon sale, redemption or other disposition of such Premium Bonds and with respect to the state and local consequences of owning and disposing of such Premium Bonds. Interest on the Series 2009 Bonds is exempt from State of Oklahoma income taxation. 21

32 CERTIFICATIONS The Issuer will furnish a statement to the effect that this Official Statement, to the best of its knowledge and belief as of the date of sale and the date of delivery, is true and correct in all material respects and does not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements made herein, in light of the circumstances under which they were made not misleading. LEGAL MATTERS Legal matters incident to the authorization and issuance of the Series 2009 Bonds are subject to the opinion of The Public Finance Law Group PLLC and Williams, Box, Forshee & Bullard, P.C., as Co-Bond Counsel to the Issuer, as to validity and tax exemption. The opinion will be in substantially the form as set forth in Appendix D hereto. Co- Bond Counsel have not participated in the preparation of this Official Statement except for the captions DESCRIPTION OF THE SERIES 2009 BONDS, TAX MATTERS, LEGAL MATTERS and CONTINUING DISCLOSURE and Appendices C, D and E hereto. Certain legal matters will be passed upon for the Issuer by the Office of the Municipal Counselor, Oklahoma City, Oklahoma, and for the Underwriters by Kutak Rock LLP. UNDERWRITING The Series 2009A Bonds are to be purchased by the Underwriters identified on the cover hereof for whom BOSC, Inc., A subsidiary of BOK Financial Corp. is acting as Representative (the Underwriters ), pursuant to a Bond Purchase Agreement with the Issuer (the Bond Purchase Agreement ). The Underwriters have agreed to purchase the Series 2009A Bonds at a price of $73,554, (representing the principal amount thereof less underwriter s discount of $281, and plus net original issue premium of $3,545,754.20). The Bond Purchase Agreement provides that the Underwriters will not be obligated to purchase any Series 2009A Bonds if all Series 2009A Bonds are not available for purchase, and requires the Issuer to indemnify the Underwriters against losses, claims, damages and liabilities arising out of any incorrect or incomplete statements or information contained in this Official Statement pertaining to the Issuer and other matters. The initial public offering prices set forth on the inside cover page hereof may be changed by the Underwriters. The Series 2009B Bonds are to be purchased by the Underwriters identified on the cover hereof for whom BOSC, Inc., A subsidiary of BOK Financial Corp. is acting as Representative (the Underwriters ), pursuant to a Bond Purchase Agreement with the Issuer (the Bond Purchase Agreement ). The Underwriters have agreed to purchase the Series 2009B Bonds at a price of $50,779, (representing the principal amount thereof less underwriter s discount of $189, and plus net original issue premium of $3,499,602.50). The Bond Purchase Agreement provides that the Underwriters will not be obligated to purchase any Series 2009B Bonds if all Series 2009B Bonds are not available for purchase, and requires the Issuer to indemnify the Underwriters against losses, claims, damages and liabilities arising out of any incorrect or incomplete statements or information contained in this Official Statement pertaining to the Issuer and other matters. The initial public offering prices set forth on the inside cover page hereof may be changed by the Underwriters. One of the Underwriters of the Series 2009 Bonds is BOSC, Inc., A subsidiary of BOK Financial Corp. ( BOSC ). BOSC and Bank of Oklahoma, N.A. ( BOK N.A. ) are both wholly-owned subsidiaries of BOK Financial Corp., a bank holding company organized under the laws of the State of Oklahoma ( BOK ). Thus, BOSC and BOK N.A. are affiliated, but BOSC is not a bank. The Series 2009 Bonds are not deposits of any bank and are not insured by the Federal Deposit Insurance Corporation ( FDIC ). BOK Financial and BOK N.A. are not responsible for the obligations of BOSC. FINANCIAL ADVISOR Public Financial Management, Inc., was retained by the Issuer to act as Financial Advisor in connection with this financing and has assisted in the preparation of certain information in this Official Statement. Such firm will receive compensation for its services as Financial Advisor. The Financial Advisor is not a public accounting firm and has not been engaged by the Issuer to compile, review, examine or audit any information in this Official Statement in accordance with accounting standards. The Financial Advisor is an independent advisory firm and is not engaged in the business 22

33 of underwriting, trading or distributing municipal securities or other public securities and therefore will not participate in the underwriting of the Series 2009 Bonds. INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS The basic financial statements of The Oklahoma City Water Utilities Trust as of and for the years ended June 30, 2008 and 2007, included in this Official Statement as APPENDIX B, have been audited by Grant Thornton LLP, independent certified public accountants, as stated in their report appearing in APPENDIX B. LITIGATION There is no litigation now pending, or to the knowledge of City officials, threatened which questions the validity of the Series 2009 Bonds or any proceedings of the Issuer taken with respect to the sale thereof. CONTINUING DISCLOSURE The Issuer has covenanted for the benefit of the holders of the Series 2009 Bonds to provide certain financial information and operating data relating to the Issuer by not later than 180 days following the end of its fiscal year ending June 30, 2009 (the Annual Report ), and to provide notices of the occurrence of certain enumerated events, if deemed by the Issuer to be material. The Annual Report will be filed by the Issuer to provide the information only to the Municipal Securities Rulemaking Board (the MSRB ), accompanied by identifying information and in an electronic format, as prescribed by the MSRB. The MSRB has prescribed that such information must be filed with the MSRB pursuant to its Electronic Municipal Market Access ( EMMA ) System. The MSRB intends to make the information available to the public without charge and investors will be able to access continuing disclosure information filed with the MSRB at The notices of material events will be filed by the Issuer with the MSRB. The specific nature of the information to be contained in the Annual Report or the notices of material events is set forth in the form of continuing disclosure agreement attached as Appendix E hereto. These covenants have been made in order to assist the Underwriters in complying with Securities and Exchange Commission Rule 15c2-12(b)(5). The Issuer has not failed to comply in any material respect with any previous continuing disclosure undertaking by it under the Rule. MISCELLANEOUS Any statements made in this Official Statement involving matters of opinion or of estimates, whether or not so expressly stated, are set forth as such and not as representations of fact, and no representation is made that any of the estimates will be realized. The execution and delivery of this Official Statement by its Chairman has been duly authorized by the Issuer. ATTEST: /s/ Pete White Chairman Oklahoma City Water Utilities Trust Oklahoma City, Oklahoma /s/ Frances Kersey Secretary Oklahoma City Water Utilities Trust Oklahoma City, Oklahoma 23

34 (THIS PAGE LEFT BLANK INTENTIONALLY)

35 APPENDIX A DEMOGRAPHIC AND ECONOMIC INFORMATION CONCERNING THE CITY OF OKLAHOMA CITY

36 (THIS PAGE LEFT BLANK INTENTIONALLY)

37 DEMOGRAPHIC AND ECONOMIC INFORMATION CONCERNING THE CITY OF OKLAHOMA CITY AREA AND POPULATION Historically, the City has pursued a policy of annexation, and is one of the largest cities in land area in the United States with a total area of approximately 621 square miles. The City had a 2008 estimated population of 554,000, ranking it as the nation s 31st largest city based on 2007 Census estimates. With a six county Metropolitan Statistical Area (MSA) of approximately 1.2 million, Oklahoma City ranks 44 th in the nation based on 2007 Census estimates. Table A-1 City, MSA, and State Population Estimates Oklahoma Oklahoma State of City City MSA Oklahoma , ,721 2,328, , ,825 2,559, , ,969 3,025, , ,538 3,148, ,100 1,085,282 3,453, ,800 1,092,342 3,460, ,700 1,106,200 3,486, ,300 1,117,260 3,511, ,000 1,140,300 3,523, ,000 1,144,400 3,576, ,000 1,169,600 3,579, ,000 1,188,000 3,617, ,000 1,200,000 3,680,700 Source: U.S. Bureau of Census, Oklahoma Employment Security Commission, Research Department, City of Oklahoma, and OSU Center for Applied Economic Research. TRANSPORTATION The City is served by Interstate Highways 35, 40, 44, 235, and 240. Freight railroad transport is provided by three major railway lines; it is the headquarters for several motor freight lines, and bus service is provided by the major passenger carriers. Will Rogers World Airport is a major airport classed by the Federal Aviation Administration (FAA) as a small hub, multi-purpose airport with runways and facilities capable of handling all present operating aircraft. Will Rogers handled approximately 3.84 million passengers in Fiscal Year 2008 with seven major airlines providing service to every part of the United States. The City also operates two general aviation airports, Wiley Post and Clarence E. Page. DOWNTOWN REVITALIZATION In December 1993, the voters of Oklahoma City approved a one-cent, five-year temporary sales tax to fund a visionary and comprehensive package of nine public facility upgrades and new construction. The projects were selected to stimulate the revitalization of downtown, promote tourism and improve the quality of life in Oklahoma City. Construction is complete on all of the projects which include the AT&T Bricktown Ballpark, the Bricktown Canal, the Cox Business Services Convention Center expansion, Civic Center Music Hall, the Ford Arena, improvements at the Fairgrounds, a new Downtown Library/Learning Center and river dams. These projects have created new private investment in downtown Oklahoma City evidenced by the construction of a new Marriott Renaissance Hotel Downtown, a Marriott Courtyard Hotel and the redevelopment of the Colcord Hotel. In addition, the Sheraton Hotel, which was the only downtown hotel in times past, has received an extensive renovation. Two additional hotels came online during The 225-room Skirvin Hilton Hotel and the 150-room Residence Inn bring the total number of rooms in downtown to more than 1,400. In addition, a Hampton Inn is under construction A1

38 just beyond the centerfield fence of the AT&T Bricktown Ballpark. With Bass Pro Shops as the anchor tenant in the Bricktown area, entertainment venues such as the Harkins Theater, Toby Keith's I Love this Bar and Grill and other restaurants and retail attractions are now a part of Bricktown. A recent report commissioned by the Greater Oklahoma City Chamber of Commerce estimated that the Metropolitan Area Projects (MAPS) program stimulated approximately $2 billion in private and public investment in Bricktown and Downtown. New residential and mixed-use developments are now completed or underway including the construction of 300 for-rent apartments at Legacy at Arts Quarter, several hundred for-sale residential units north of Bricktown, and the renovation and conversion to residential of office buildings in the core of downtown. METROPOLITAN AREA PUBLIC SCHOOLS (MAPS) FOR KIDS The MAPS for Kids is an innovative partnership between the City of Oklahoma City and surrounding school districts. Based on the successful MAPS program, the new MAPS for Kids seeks to restore discipline to the classroom, improve student performance, rebuild and renovate school buildings, and make sure that citizens get the most from their school tax dollars. A trust appointed by the City Council and the Oklahoma City Public Schools Board will oversee the proceeds of a dedicated sales tax and bond issue approved by Oklahoma City residents on November 13, The dedicated sales tax was collected for 7 years. An estimated $512 million in sales tax was collected for capital improvements in 24 school districts that overlap Oklahoma City limits. Oklahoma City schools will also receive an additional $180 million from the approved school district bond issue. Through a pro-active partnership with other governmental agencies, the private sector and concerned citizens, Oklahoma City has positioned itself to make tangible improvements in education and to improve the public perception of the school system. Ultimately, these long-range efforts are intended to increase the attractiveness of the inner-city core as a desirable place for families to live and raise their children. CULTURAL, EDUCATIONAL, AND HEALTH FACILITIES The City is a regional cultural and art center. The Oklahoma Art Center, Ballet Oklahoma, the Stage Center, and the Arts Council of Oklahoma City host renowned artists each year and provide opportunities for local musicians and artists. The Oklahoma City Philharmonic Orchestra performs in Oklahoma City and tours other communities each season. The City has 143 public parks that provide playgrounds, community recreation centers, gymnasiums, tennis, golf, and nature gardens. Other attractions include the Zoo with more than 2,000 animals, the National Cowboy and Western Heritage Museum, the Omniplex which features scientific museums, the National Softball Hall of Fame, the Oklahoma Firefighters Museum, and the 45th Infantry Division Museum. There are several major institutions of higher learning in the metropolitan area including Oklahoma City University, the University of Oklahoma at Norman, the University of Oklahoma School of Medicine, the University of Central Oklahoma in Edmond, Oklahoma Baptist University in Shawnee, Southern Nazarene University, Oklahoma Christian University of Science and Arts, Oklahoma City Community College, and Rose State College. There are also many business and technical schools in the area. The City is a regional center for health care. The Oklahoma Health Sciences Center is located in a 200-acre complex near downtown which includes: the University of Oklahoma School of Medicine, Oklahoma Memorial Hospital, University Medical Research Foundation, Columbia Presbyterian Hospital, Oklahoma Children s Memorial Hospital, the Veterans Administration Hospital, the State Department of Health, and the State Department of Human Services. Other hospitals located in the City include: Baptist Medical Center of Oklahoma, Mercy Health Center, St. Anthony Hospital, Southwest Medical Center, Deaconess Hospital, and Hillcrest Health Center. A2

39 EMPLOYMENT The relative stability of the economy is derived from the diversity of its economic base. Declines in energy production from the boom of the early 1980 s have been offset by increases in the service sector, mirroring national economic trends. Oklahoma City is the home of Chesapeake Energy and Devon Energy Corporation s headquarters as well as many other energy related companies. Manufacturing of communications equipment, computers, electronics, oil and gas well supplies and equipment accounts for much of the area s industrial activity. The City is a major market for the State s livestock industry with major processing plants for both livestock and agricultural products. In addition, Oklahoma City is a regional center for health care services, including two federal medical institutions. There are approximately 65,000 employees involved in providing health care services in the metropolitan area. Other major private sector employers in the area include Hertz, AT&T and Dell. There are in excess of 90 private employers in the metropolitan area who each employ over 250 persons involved in manufacturing, retail, and services. Along with the private sector employment, the City has several major governmental employers. The Federal, State, County, and City governments are all major employers. As the capitol city of Oklahoma, the City is the home to numerous state agencies and over 41,000 state employees. Tinker Air Force Base and the Oklahoma City Air Logistics Center, located in the southeast part of the City, have approximately 27,000 total civilian and military employees. The Federal Aviation Administration s Mike Monroney Aeronautical Center is located in the City at Will Rogers World Airport which is in the southwest part of the City. This Center employs approximately 3,500 permanent employees, plus an additional 1,500 students. Table A-2 Oklahoma City MSA Annual Average Non-Agricultural Employment Natural Resources & Mining 15,740 14,030 10,270 8,700 8,200 Construction 28,770 27,530 26,550 24,700 23,400 Manufacturing 36,510 37,830 37,690 37,800 38,700 Trade, Transportation & Utilities 103, , ,950 97,300 96,300 Information 12,240 13,770 13,540 13,800 13,200 Financial Activities 34,310 34,840 35,690 35,900 35,400 Professional & Business Services 75,350 73,510 73,180 69,000 66,500 Education & Health Services 75,450 73,090 71,020 68,100 67,900 Leisure & Hospitality 57,630 58,140 55,870 55,200 53,300 Other Services 23,220 28,670 27,310 28,200 28,000 Government 111, , , , ,700 Total Non-agricultural 574, , , , ,600 Source: U.S. Department of Labor, Bureau of Labor Statistics; OSU Center for Applied Economic Research A3

40 Table A-3 Oklahoma City MSA Major Employers - Private and Public Oklahoma City Metropolitan Area Estimated Number of Employees (1) Employer (2) US Postal Service 8, Integris Baptist Medical Center (3) 7,000 6,200 6,200 5,850 5,436 Oklahoma City Public Schools 5,900 5,900 4,600 5,900 5,300 FAA Aeronautical Center 5,600 5,600 5,600 5,600 4,400 City of Oklahoma City 4,700 4,320 4,500 4,535 4,535 Oklahoma University Health Science Center 4,200 4,200 4, Oklahoma University Medical Center 3,250 3,250 3,200 3,200 3,773 Oklahoma Gas & Electric 3,123 2, AT&T 3,000 3,193 3,400 3,560 - Chesapeake Energy Corporation 2, Government (2) Federal 27,100 27,000 27,400 27,400 25,000 State 41,388 38,000 38,000 38,400 37,987 Local 50,695 42,100 41,000 40,800 44,100 Tinker Air Force Base (4) 27,000 24,000 26,000 26,000 24,000 (1) Information on employers is revised annually to provide the ten largest employers for the current year regardless of employment in prior years reported. Therefore, prior years may have no employment reported for some employers. This is not an indication of their prior year employment status. (2) Information was provided by the Oklahoma City Chamber of Commerce. (3) Includes Integris Baptist Medical Center and Integris Southwest Medical Center of Oklahoma. (4) Information was provided by the Chamber of Commerce and has civilian and non-civilian combined. [The remainder of this page is intentionally left blank.] A4

41 UNEMPLOYMENT The Oklahoma City MSA has consistently maintained a lower unemployment rate over the past ten years than the State of Oklahoma and the United States. Table A-4 Oklahoma City MSA Average Annual Unemployment As a Percent of Labor Force Year Oklahoma City MSA State of Oklahoma United States Source: U.S. Department of Labor, Bureau of Labor Statistics and Oklahoma State University. BUILDING ACTIVITY AND PROPERTY Residential building activity and commercial building activity are summarized for the past ten years. Table A-5 City of Oklahoma City Building Activity Commercial Residential Construction Construction Year Permits Costs(1) Permits Costs(1) , ,256 5, , , ,851 6, , , ,803 5, , , ,327 5, , , ,988 6, , ,906 1,215,649 7, , ,817 1,050,568 7, , , ,307 7, , ,854 3,471,090 5,559 1,047, ,798 1,972,096 4,562 1,496,917 (1) Dollars in thousands. Source: The source of this information is the Oklahoma City Public Works Department annual building permits reports. A5

42 INCOME AND RETAIL SALES The trends of per capita income and median household effective buying income (EBI) for Oklahoma City MSA and retail sales for the Oklahoma City MSA are presented in the tables below. Table A-6 Oklahoma City MSA Median Effective Buying Income and Per Capita Income Year Household Median EBI Per Capita Income 2004 $38,000 $31, ,769 33, ,170 35, ,565 37, ,018 39,000 Source: City of Oklahoma City Table A-7 Oklahoma City MSA Per Capita Retail Sales and Retail Trade Year Per Capita Retail Sales Retail Trade (in $000) 1999 $7,370 $7,599, ,507 8,146, ,947 8,725, ,937 8,817, ,341 9,008, ,392 15,270, ,452 16,631, ,855 17,257, ,697 18,450, ,008 19,209,756 Source: University of Oklahoma, Center for Economic and Management Research, Business Bulletin, and Sales and Marketing Management, Survey of Buying Power. A6

43 APPENDIX B REPORT OF INDEPENDENT AUDITOR AND FINANCIAL STATEMENTS FOR FISCAL YEARS 2008 AND 2007

44 (THIS PAGE LEFT BLANK INTENTIONALLY)

45 The City of Oklahoma City Oklahoma City Water Utilities Trust A n n u a l F i n a nc i a l R e p or t fo r t h e F is c a l Ye a r E nded J un e 30, 200 8