$11,660,000 CITY OF OMAHA PUBLIC FACILITIES CORPORATION LEASE REVENUE REFUNDING BONDS (Omaha Parking Facilities Projects) Taxable Series 2009B

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1 NEW ISSUES BOOK-ENTRY-ONLY RATINGS: Moody s: Aa1 Standard & Poor s: AA+ (See RATINGS herein) In the opinion of Kutak Rock LLP, Bond Counsel, interest (including any original issue discount properly allocable to the Bonds) on the Bonds is not excluded from gross income of the owners thereof for federal income tax purposes See Certain Federal Income Tax Consideration herein for a more complete description of the opinions of Bond Counsel and additional federal tax law consequences.. $2,180,000 CITY OF OMAHA PUBLIC FACILITIES CORPORATION LEASE REVENUE BONDS (Omaha Library Projects) Taxable Series 2009A Build America Bonds Direct Payment $11,660,000 CITY OF OMAHA PUBLIC FACILITIES CORPORATION LEASE REVENUE REFUNDING BONDS (Omaha Parking Facilities Projects) Taxable Series 2009B Dated: Date of Delivery Due: As shown on reverse of Cover Page The above captioned two series of bonds (collectively, the Bonds ) are issuable in fully registered form in the denominations of $5,000 and integral multiples thereof. Interest is payable semiannually on June 1 and December 1 of each year, commencing June 1, 2010, by check, draft or wire on each interest payment date to the registered owner as of the applicable record date as shown on the books of registration of the City of Omaha Public Facilities Corporation, a Nebraska nonprofit corporation (the Corporation ), maintained by First National Bank of Omaha, as Trustee and Paying Agent. Principal of the Bonds is payable upon presentation and surrender of such Bonds at the principal corporate office of the Trustee in Omaha, Nebraska. The Bonds are subject to optional redemption, mandatory sinking fund redemption and extraordinary optional redemption prior to maturity, as more fully set forth herein. The Bonds initially will be registered in the name of Cede & Co., as nominee for The Depository Trust Company, New York, New York ( DTC ), which will act as securities depository for the Bonds. Purchases of the Bonds may be made only in book-entry form in authorized denominations by credit to participating broker-dealers and other institutions on the books of DTC as described herein. Purchasers will not receive certificates evidencing the Bonds. Principal of, premium, if any, and interest on the Bonds will be payable by the Paying Agent directly to DTC as the registered owner thereof. 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. Any purchaser of a beneficial interest in the Bonds must maintain an account with a broker or dealer who is, or acts through, a DTC Participant to receive payment of the principal of, premium, if any, and interest on such Bonds. See THE BONDSBook-Entry-Only System herein. The Lease Revenue Bonds are being issued to provide funds for the Corporation to pay all or a portion of the costs of acquiring, constructing, furnishing and equipping certain improvements to the City of Omaha s public library facilities in Omaha, Nebraska and the proceeds of the Lease Revenue Refunding Bonds will be used to refund certain outstanding indebtedness of the Omaha Parking Facilities Corporation, the proceeds of which were used to pay all or a portion of the costs of acquiring, constructing, furnishing and equipping certain improvements to the City of Omaha public parking facilities. MATURITY SCHEDULE (On Reverse of Cover Page) The Bonds are being issued pursuant to the provisions of an Indenture of Trust dated as of November 1, 2009 by and between the Corporation and the Trustee. THE BONDS ARE NOT A DEBT OF THE CITY OF OMAHA, NEBRASKA, OR A PLEDGE OF ITS FAITH AND CREDIT. THE BONDS ARE PAYABLE SOLELY FROM THE CASH RENTALS, TO BE PAID BY SUCH CITY UNDER THE LEASE-PURCHASE AGREEMENT DATED AS OF NOVEMBER 1, 2009 BY AND BETWEEN THE CORPORATION AND THE CITY AND FROM FEDERAL SUBSIDY PAYMENTS, AS DESCRIBED HEREIN. SEE SECURITY FOR THE BONDS HEREIN.. This cover page contains information for convenient reference only. It is not a summary of the Bonds. Investors must read the entire Official Statement to obtain information essential and material to the making of an informed investment decision. The Bonds are being offered when, as and if issued by the Corporation and accepted by the Underwriter, subject to the approval of legality of the Bonds by Kutak Rock LLP, Bond Counsel, and to certain other conditions. Certain legal matters will be passed upon for the City of Omaha by the City Law Department. Certain matters will be passed upon for the Underwriter by its counsel, Kutak Rock LLP. It is expected that delivery of the Bonds will be made on or about November 19, 2009 at DTC against payment therefor. Dated: November 10, 2009

2 MATURITY SCHEDULE $2,180,000 CITY OF OMAHA PUBLIC FACILITIES CORPORATION LEASE REVENUE BONDS (Omaha Library Projects) Taxable Series 2009A Build America Bonds Direct Payment Maturity Date Principal Amount Interest Rate Price CUSIP December 1, 2020 $105, % % DJ7 December 1, , DK4 December 1, , DL2 December 1, , DM0 $430, % Term Bond Due December 1, 2014 Price %; CUSIP DN8 $490, % Term Bond Due December 1, 2019 Price %; CUSIP DP3 $810, % Term Bond Due December 1, 2029 Price %; CUSIP DQ1 $11,660,000 CITY OF OMAHA PUBLIC FACILITIES CORPORATION LEASE REVENUE REFUNDING BONDS (Omaha Parking Facilities Projects) Taxable Series 2009B Maturity Date Principal Amount Interest Rate Price CUSIP June 1, 2010 $1,055, % % DR9 June 1, ,080, DS7 June 1, ,100, DT5 June 1, ,135, DU2 June 1, ,170, DV0 June 1, ,215, DW8 June 1, ,265, DX6 June 1, ,315, DY4 June 1, ,385, DZ1 June 1, , EA5 June 1, , EB3

3 No dealer, broker, salesperson or other person has been authorized by the City, the Corporations or the Underwriter to give any information or to make any representations in connection with the Bonds or the matters described herein, other than those contained in this Official Statement, and, if given or made, such other information or representations must be relied upon as having been authorized by the City, the Corporation or the Underwriter. This Official Statement does not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of the Bonds by any person in any jurisdiction in which it is unlawful for such person to make such offer, solicitation or sale. The information and expressions of opinion contained herein are subject to change, without notice, and neither the delivery of this Official Statement, nor any sale made hereunder, shall, under any circumstances, create any implication that there has been no change in the matters described herein since the date hereof. This Official Statement is submitted in connection with the sale of the Bonds referred to herein and may not be reproduced or used, in whole or in part, for any other purpose. The Underwriter may offer and sell Bonds to certain dealers and others at prices lower than the offering prices stated on the cover page hereof. The offering prices may be changed from time to time by the original purchasers. TABLE OF CONTENTS INTRODUCTION...1 THE CORPORATION...2 THE PROJECTS...2 SOURCES AND USES OF FUNDS...3 EXISTING LEASE-PURCHASE OBLIGATIONS...3 SECURITY FOR THE BONDS...4 General...4 Revision of State Property Tax System...5 THE BONDS...5 Description of the Bonds...5 Place of Payment...6 Build America Bonds...6 Book-Entry Only System...6 Optional Redemption...9 Sinking Fund Redemption...9 Extraordinary Optional Redemption...10 Additional Bonds...11 Refunding Bonds...11 THE LEASE...11 THE AGREEMENT...11 THE INDENTURE...13 UNDERWRITING...15 CONTINUING DISCLOSURE...15 LITIGATION...15 CERTAIN FEDERAL INCOME TAX CONSEQUENCES...16 Build America Bonds...16 Federal Tax Law...22 State Law...22 Future Legislation...22 Other Legal Matters...22 RATINGS...22 FINANCIAL STATEMENTS...23 MISCELLANEOUS...23 APPENDIX ACity of OmahaSelected Economic Indicators APPENDIX BCity of OmahaFinancial Information Part OneSelected City of Omaha Financial Information Part TwoIndependent Auditors Report and General Purpose Financial Statements APPENDIX CForm of Continuing Disclosure Letter Agreement APPENDIX DForm of Opinion of Bond Counsel IN CONNECTION WITH ITS REOFFERING OF THE BONDS, THE UNDERWRITER OF THE BONDS MAY OVERALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN MARKET PRICES OF THE BONDS AT LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.

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5 OFFICIAL STATEMENT $2,180,000 CITY OF OMAHA PUBLIC FACILITIES CORPORATION LEASE REVENUE BONDS (Omaha Library Projects) Taxable Series 2009A Build America Bonds Direct Payment $11,660,000 CITY OF OMAHA PUBLIC FACILITIES CORPORATION LEASE REVENUE REFUNDING BONDS (Omaha Parking Facilities Projects) Taxable Series 2009B INTRODUCTION This Official Statement and the cover page and reverse cover page (excluding prices) are furnished in connection with the offering by the City of Omaha Public Facilities Corporation, a nonprofit corporation organized under the laws of the State of Nebraska (the Corporation ) of $2,180,000 aggregate principal amount of its Lease Revenue Bonds (Omaha Library Projects) Taxable Series 2009A Build America Bonds Direct Payment (the Series 2009A Bonds ) and of $11,660,000 Lease Revenue Refunding Bonds (Omaha Parking Facilities Projects) Taxable Series 2009B (the Series 2009B Bonds and together with the Series 2009A Bonds, the Bonds ). The Bonds are to be issued pursuant to an Indenture of Trust (the Indenture ) dated as of November 1, 2009 by and between the Corporation and First National Bank of Omaha, as trustee and paying agent (the Trustee ). The proceeds of the Series 2009A Bonds will be provided to the Trustee for deposit in an Acquisition Fund pursuant to the Indenture and used to finance on behalf of the City of Omaha, Nebraska (the City ) all or a portion of the costs of the acquisition, construction, furnishing and equipping of capital improvements for certain public library facilities, including the W. Dale Clark, Swanson and Florence branches, each such branch being a City-owned public library facility (the Library Project ). The proceeds of the Series 2009B Bonds will be provided to the Trustee for deposit in the Redemption Escrow Fund pursuant to the Indenture and used to refund $7,270,000 aggregate principal amount of City of Omaha Parking Facilities Corporation Lease Revenue Bonds (OmahaPark Six Project) Series 1998 (the Series 1998 Parking Bonds ) and $3,920,000 aggregate principal amount of City of Omaha Parking Facilities Corporation Lease Revenue Bonds (OmahaPark Seven Project) Series 2000B (the Series 2000B Parking Bonds and collectively with the Series 1998 Parking Bonds, the Refunded Bonds ). Such Refunded Bonds were issued on behalf of the City to finance, respectively, the OmahaPark Six and OmahaPark Seven public parking structures located in Omaha, Nebraska (the Parking Project and collectively with the Library Project, the Projects ). The Bonds will be secured by the pledge of the cash rentals and the Federal Subsidy Payments, as defined herein, payable by the City under a Lease-Purchase Agreement (the Agreement ) dated as of November 1, 2009 by and between the Corporation and the City, and assigned by the Corporation to the Trustee under the Indenture. The Trustee will receive such cash rentals and Federal Subsidy Payments and act as Paying Agent for the Bonds. The Corporation previously has issued on behalf of the City and there remain outstanding $82,465,000 aggregate principal amount of lease revenue bonds. The Bonds are issued on a parity with such outstanding bonds (collectively, the Parity Bonds ). Other nonprofit corporations previously have issued lease revenue bonds on behalf of the City, of which bonds $57,395,000 aggregate principal amount remains outstanding, including the Refunded Bonds. SEE EXISTING LEASE-PURCHASE OBLIGATIONS and SECURITY FOR THE BONDSGeneral.

6 THE CORPORATION The Corporation was incorporated on May 20, 2005 under the Nebraska Nonprofit Corporation Act, Sections , R.R.S. Neb. as amended. The only purpose for which the Corporation was organized is to assist the City with the acquisition, construction, furnishing and equipping of public facilities. The Corporation has three directors, who serve without compensation. Their names and principal occupations are as follows: Name and Office Karen Klein, President Kimberly Harman, Vice President Donna Wiman, Secretary/Treasurer Occupation City Planner, City of Omaha Planning Department Manager of the Recreation Division, City of Omaha Parks Department Manager of the Budget and Accounting Division, City of Omaha Finance Department The directors hold office until death or resignation, in which case the City may designate a successor, but if the City does not designate a successor within 30 days after the death or resignation, the remaining directors shall appoint a successor. THE PROJECTS The Corporation will use the proceeds of the Series 2009A Bonds to pay (or reimburse itself for the payment of) all or a portion of the costs of acquiring, constructing, furnishing and equipping the Library Project on behalf of the City and the issuance costs of the Series 2009A Bonds. The Corporation will use the proceeds of the Series 2009B Bonds to refund and redeem the Refunded Bonds and to pay issuance costs associated with the issuance of the Series 2009A Bonds. The City will lease or sublease the sites of the Library Project and the Parking Project to the Corporation pursuant to a Ground Lease Agreement (the Lease ) dated as of November 1, 2009 by and between the City and the Corporation. (The City is leasing the Park Seven Project Site for a period of 99 years from First National Bank of Omaha pursuant to a Ground Lease dated as of December 6, Additionally, the W. Dale Clark Branch of the Omaha Public Library is subject to an existing lease from the City to the City of Omaha Northwest Library Facilities Corporation). The term of the Lease as it relates to each Project extends to the final maturity date of the corresponding series of Bonds. The Omaha Public Library Board will operate the Library Project on behalf of City, the lessee under the Agreement and ultimate titleholder of the Library Project. 2

7 SOURCES AND USES OF FUNDS Following are the aggregate sources and uses of the Bond proceeds (net of accrued interest, if any): Sources of Funds Bond Proceeds $13,828, Cash from City 241, Total $14,069, Uses of Funds Acquisition Fund Deposit $2,152, Redemption Escrow Fund Deposit 11,763, Underwriter s Discount and Costs of Issuance 153, Total $14,069, EXISTING LEASE-PURCHASE OBLIGATIONS The City previously has incurred lease-purchase obligations in addition to those relating to the Bonds and the Parity Bonds in conjunction with the issuance by several nonprofit corporations similar to the Corporation of lease revenue bonds for the acquisition of real and personal property on behalf of the City. See LONG-TERM CONTRACTUAL AGREEMENTS in Appendix B. Such lease revenue bonds, exclusive of the Bonds and the Parity Bonds, are outstanding in the aggregate principal amount of $57,385,000 and have a final stated maturity of March 1, In conjunction with such lease revenue bonds and related projects, the City, as lessor, and each related corporation, as lessee, entered into site lease agreements, and each such corporation, as lessor, and the City, as lessee, entered into lease-purchase agreements (collectively, the Outstanding Leases ). The Corporation was incorporated to consolidate into a single entity the functions hitherto performed on behalf of the City by the aforesaid nonprofit corporations. With the exception of refunding bonds, the City does not plan to request any such corporation to issue to any additional lease revenue bonds on behalf of the City. The Outstanding Leases and the corresponding indentures of trust contain substantially identical provisions as those in the Lease, the Agreement and the Indenture summarized herein under THE LEASE, THE AGREEMENT and THE INDENTURE, respectively. The obligations of the City under the Outstanding Leases are general obligations of the City payable from the City s General Fund without preference or priority over the City s obligation under the Agreement with respect to the Bonds. See SECURITY FOR THE BONDSGeneral. In the event, however, of a payment default by the City under an Outstanding Lease, and the exercise by the trustee for the related lease revenue bonds, as the case may be, of the remedy of sale, lease or taking over the operation of the project as described under THE INDENTUREDefault Remedies or by such nonprofit corporation of the remedy of taking possession of the project described under THE AGREEMENTDefault, the net proceeds of a sale, lease or operation by the trustee or such corporation of the related project would accrue to the benefit of the holders of such lease revenue bonds, ahead of the holders of the Bonds. Notwithstanding the foregoing, no such occurrence would relieve the City of its unconditional obligation to the Corporation to pay the cash rentals due under the Agreement. The W. Dale Clark Branch of the Omaha Public Library is subject to one such Outstanding Lease. In conjunction with its issuance on behalf of the City of the $5,750,000 City of Omaha Northwest Library 3

8 Facilities Corporation Lease Revenue Refunding Bonds (Omaha Public Library Projects) Series 2005, the City of Omaha Northwest Library Facilities Corporation agreed to lease the project site of the W. Dale Clark Branch from the City. Such lease remains in effect. General SECURITY FOR THE BONDS The Corporation and the City have entered into the Agreement whereby the Corporation has leased the Library Project and the Parking Project to the City for the period ending not later than the final maturity date of the Bonds. Under the Agreement, the City is obligated to pay, semiannually, cash rentals equal in amount to the principal of and interest on the Bonds, when added to the amount of Federal Subsidy Payments held by the Trustee, which cash rental payments will be due in such amounts and at such times as to provide sufficient funds to meet the principal and interest payments on the Bonds as the same become due. The City is also obligated to provide insurance and pay any taxes, maintenance expenses and other miscellaneous expenses so that the cash rentals are net to the Corporation. See THE AGREEMENT. The cash rentals due from the City will be assigned to and received by the Trustee for payment of principal of and interest on the Bonds. The Federal Subsidy Payments received by the Corporation will also be assigned to and received by the Trustee for payment of principal of and interest on the Bonds. Under Section 5.17 of the Home Rule Charter of the City of Omaha, 1956, as amended (the City Charter ), the City is specifically authorized to enter into lease-purchase agreements, and, under Section 5.27 of the City Charter, the amount of any such lease-purchase agreement is not chargeable against the City s debt limit. See APPENDIX B LONG-TERM CONTRACTUAL AGREEMENTS. The City s obligation under the Agreement is a general obligation of the City payable from the City s General Fund each year of the lease-purchase term on the same basis as operating expenses and other contractual obligations of the City. The Agreement is an unconditional obligation of the City and is not subject to annual renewal. The City is required to annually include in its General Fund budget appropriations for paying the lease-purchase obligation. See LONG TERM CONTRACTUAL AGREEMENTS in Appendix B. The City s primary sources of General Fund revenues are: (a) A general property tax not exceeding $ per $100 of actual taxable value plus certain other amounts more fully described under the caption AUTHORITY TO LEVY TAXES in Appendix B hereto. (b) A city sales and use tax of 1½%. See the captions CITY OF OMAHA GENERAL FUND and AUTHORITY TO LEVY TAXES in Appendix B for further details on the City s sources of revenue. The Bonds are payable from and secured solely by the cash rentals to be paid by the City under the Agreement and the Federal Subsidy Payments. With respect to the Bonds, the Corporation has no assets other than the related Projects, or revenues other than such cash rentals. Section 13 of the Agreement contains the following provision: City agrees that no delay, failure or insufficiency, for any reason whatsoever (including, in particular, but without limitation, an insufficiency in the amount of Bond proceeds to 4

9 pay the cost of the Project... ) in the acquisition, construction, equipping or operation of the Project, or any part thereof, shall entitle City to terminate this Agreement or operate in any way to suspend, abate or reduce the Rental Payments due or to become due under the terms of... this Agreement. Revision of State Property Tax System The State of Nebraska s system of assessing and taxing personal property for purposes of local ad valorem taxation for support of local political subdivisions, including the City, has been the subject in recent years of constitutional amendment, legislation and litigation the result of which has been to substantially resolve certain challenges to the validity of the tax system. Governmental units in Nebraska may not adopt budgets for fiscal years beginning on or after July 1, 1998, in excess of 102.5% of the prior fiscal year s budget plus allowable growth (which includes increases in taxable valuation for such things as new construction and annexations). However, such budgetary limitations do not apply to, among other things, revenue pledged to retire bonded indebtedness or budgeted for capital improvements. Governmental units may exceed the budget limit for a given fiscal year by up to an additional 1% upon the affirmative vote of at least 75% of the governing body or in such amount as is approved by a majority vote of the electorate. Effective July 1, 1998, the property tax levies of incorporated cities and villages, such as the City, are limited to a maximum of 45 /$100 of taxable valuation (plus an additional 5 /$100 to pay the municipality s share of revenue required under interlocal agreements). The levy limit does not apply to levies for preexisting lease-purchase contracts approved prior to July 1, 1998, to bonded indebtedness approved according to law and secured by a levy on property and to pay judgments. The Agreement was approved after July 1, 1998, and the City s levy limit does apply to its obligation under the Agreement. The City s 2010 General Fund levy, exclusive of such unlimited levies, is /$100 of taxable valuation. A political subdivision may exceed its levy limitation for a period of up to five years by majority vote of the electorate. There can be no assurance that Nebraska s system of assessing and taxing real and personal property will remain substantially unchanged, given the possibility of additional legislation, constitutional initiatives and referendums and litigation. Such changes could materially and adversely affect the amount of property tax and other revenues the City could collect in future years. The City does not believe, however, that the Nebraska Legislature, subject to any constitutional restrictions, would leave the City without adequate taxing resources to pay for its programs and meet its financial obligations, including the repayment of its bonds, lease-purchase obligations and other obligations. The opinion of Bond Counsel will be rendered based on the law existing as of the date of issuance of the Bonds and in reliance upon general legal presumptions in favor of the constitutionality of statutes and upon the holdings of existing case law. Description of the Bonds THE BONDS The Bonds will be issued as designated and in the aggregate principal amount set out on the cover page of this Official Statement. The Bonds will be dated the date of their delivery, will be issued in fully registered form and will mature as set forth on the reverse of the cover page of this Official Statement. Interest is payable semiannually on June 1 and December 1 of each year, commencing June 1,

10 Place of Payment The principal of the Bonds will be payable in lawful money of the United States of America at the principal corporate trust office of First National Bank of Omaha, as trustee and paying agent, in Omaha, Nebraska. Interest on the Bonds will be paid by wire transfer of the Trustee to the registered owner of $1,000,000 in aggregate principal amount of the Bonds of a series upon written notice by the registered owner given to the Trustee not later than the close of business on May 15 or November 15, as the case may be, or by check or draft mailed to the person in whose name a Bond is registered as of the May 15 or November 15, as the case may be, immediately preceding each interest payment date. Build America Bonds The America Recovery and Reinvestment Act of 2009 (the Recovery Act ) authorizes the Corporation to issue taxable bonds known as Build America Bonds to finance capital expenditures for which it could issue tax-exempt bonds and to elect to receive a subsidy payment (the Federal Subsidy Payment ) from the federal government equal to the amount of 35% of each interest payment on such taxable bonds. The Corporation and the City have elected to issue the Series 2009A Bonds as Build America Bonds. The Federal Subsidy Payments are pledged to the payment of the principal of and interest on the Bonds, and will be payable to the Corporation and assigned to the Trustee. No holders of Series 2009A Bonds will be entitled to a tax credit and interest paid to holders of Series 2009A Bonds will be subject to federal income tax. See CERTAIN FEDERAL INCOME TAX CONSEQUENCES herein. The Federal Subsidy Payments are not full faith and credit obligations of the United States. Book-Entry Only System The Bonds initially are being issued solely in book-entry form to be held in the book-entry only system maintained by The Depository Trust Company ( DTC ), New York, New York. So long as such book-entry system is used, only DTC will receive or have the right to receive physical delivery of Bonds and Beneficial Owners (as hereinafter defined) will not be or be considered to be, and will not have any rights as, owners or holders of the Bonds under the Indenture. The following information about the book-entry only system applicable to the Bonds has been supplied by DTC. Neither the Corporation nor the Trustee makes any representations, warranties or guarantees with respect to its accuracy or completeness. DTC will act as securities depository for the Bonds. The Bonds will be issued as fully-registered securities registered in the name of Cede & Co. (DTC s partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully-registered Bond certificate will be issued for each maturity of the Bonds, each in the aggregate principal amount of such maturity of each series of the Bonds and will be deposited with DTC. DTC, the world s largest depository, is a limited-purpose trust company organized under the New York Banking Law, a banking organization within the meaning of the New York Banking Law, a member of the Federal Reserve System, a clearing corporation within the meaning of the New York Uniform Commercial Code, and a clearing agency registered pursuant to the provisions of Section 17A of the Securities Exchange Act of DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non-u.s. equity, 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, 6

11 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 Bonds under the DTC system must be made by or through Direct Participants, which will receive a credit for the Bonds on DTC s records. The ownership interest of each actual purchaser of each Bond ( Beneficial Owner ) is in turn to be recorded on the Direct and Indirect Participants records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Bonds are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in Bonds, except in the event that use of the book-entry system for the Bonds is discontinued. To facilitate subsequent transfers, all 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 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 Bonds; DTC s records reflect only the identity of the Direct Participants to whose accounts such Bonds are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers. Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Beneficial Owners of Bonds may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the Bonds, such as redemptions, tenders, defaults, and proposed amendments to the Bond documents. For example, Beneficial Owners of Bonds may wish to ascertain that the nominee holding the Bonds for their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names and addresses to the Trustee and request that copies of notices be provided directly to them. Redemption notices shall be sent to DTC. If less than all of the Bonds within a series are being redeemed, DTC s practice is to determine by lot the amount of the interest of each Direct Participant in such series to be redeemed. Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to the Bonds unless authorized by a Direct Participant in accordance with DTC s MMI Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the City, as issuer of the Bonds, 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 Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy). 7

12 Principal and interest payments, redemption proceeds and distributions on the 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 Corporation or the Trustee, on payable dates 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 Bonds held for the accounts of customers in bearer form or registered in street name and will be the responsibility of such Participant and not of DTC, the Trustee or the Corporation, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of redemption proceeds, distributions, and interest payments to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the Corporation or the Trustee, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants. DTC may discontinue providing its services as depository with respect to the Bonds at any time by giving reasonable notice to the Corporation or the Trustee. Under such circumstances, in the event that a successor depository is not obtained, Bond certificates are required to be printed and delivered. The Corporation may decide to discontinue use of the system of book-entry transfers through DTC (or a successor securities depository). In that event, Bond certificates will be printed and delivered. NEITHER THE CORPORATION NOR THE TRUSTEE WILL HAVE ANY RESPONSIBILITY OR OBLIGATION TO ANY DIRECT PARTICIPANT, INDIRECT PARTICIPANT OR ANY BENEFICIAL OWNER OR ANY OTHER PERSON NOT SHOWN ON THE REGISTRATION BOOKS OF THE TRUSTEE AS BEING A HOLDER WITH RESPECT TO: (1) THE BONDS; (2) THE ACCURACY OF ANY RECORDS MAINTAINED BY DTC OR ANY DIRECT PARTICIPANT OR INDIRECT PARTICIPANT; (3) THE PAYMENT BY DTC OR ANY DIRECT PARTICIPANT OR INDIRECT PARTICIPANT OF ANY AMOUNT DUE TO ANY BENEFICIAL OWNER IN RESPECT OF THE PRINCIPAL OR REDEMPTION PRICE OF OR INTEREST ON THE BONDS; (4) THE DELIVERY BY ANY DIRECT PARTICIPANT OR INDIRECT PARTICIPANT OF ANY NOTICE TO ANY BENEFICIAL OWNER WHICH IS REQUIRED OR PERMITTED UNDER THE TERMS OF THE ORDINANCE TO BE GIVEN TO HOLDERS; (5) THE SELECTION OF THE BENEFICIAL OWNERS TO RECEIVE PAYMENT IN THE EVENT OF ANY PARTIAL REDEMPTION OF THE BONDS; OR (6) ANY CONSENT GIVEN OR OTHER ACTION TAKEN BY DTC AS HOLDER. Each Beneficial Owner for whom a Direct Participant or Indirect Participant acquires an interest in the Bonds, as nominee, may desire to make arrangements with such Direct Participant or Indirect Participant to receive a credit balance in the records of such Direct Participant or Indirect Participant, to have all notices of redemption, elections to tender Bonds or other communications to or by DTC which may affect such Beneficial Owner forwarded in writing by such Direct Participant or Indirect Participant, and to have notification made of all debt service payments. Beneficial Owners may be charged a sum sufficient to cover any tax, fee, or other governmental charge that may be imposed in relation to any transfer or exchange of their interests in the Bonds. SO LONG AS CEDE & CO., AS NOMINEE FOR DTC, IS THE REGISTERED OWNER OF THE BONDS, THE CITY AND THE PAYING AGENT WILL TREAT CEDE & CO. AS THE ONLY OWNER OF THE BONDS FOR ALL PURPOSES UNDER THE INDENTURE, INCLUDING RECEIPT OF ALL PAYMENTS OF PRINCIPAL OF, PREMIUM, IF ANY, AND INTEREST ON THE BONDS, RECEIPT OF NOTICES AND VOTING. 8

13 Upon (i) the written direction of a Corporation or (ii) the written consent of 100% of the Bondholders, the Trustee shall withdraw the affected Bonds from DTC and authenticate and deliver Bond certificates fully registered to the assignees of DTC or its nominee. If the request for such withdrawal is not the result of any Corporation action or inaction, such withdrawal, authorization and delivery shall be at the cost and expense of the persons requesting such withdrawal, authentication and delivery. THE CORPORATION AND TRUSTEE CANNOT AND DO NOT GIVE ANY ASSURANCES THAT THE DIRECT PARTICIPANTS OR THE INDIRECT PARTICIPANTS WILL DISTRIBUTE TO THE BENEFICIAL OWNERS OF THE BONDS (i) PAYMENTS OF PRINCIPAL OF AND INTEREST ON THE BONDS, (ii) BONDS REPRESENTING AN OWNERSHIP INTEREST OR OTHER CONFIRMATION OF BENEFICIAL OWNERSHIP INTERESTS IN THE BONDS OR (iii) REDEMPTION OR OTHER NOTICES SENT TO DTC OR CEDE & CO., ITS NOMINEE, AS THE REGISTERED OWNERS OF THE BONDS, OR THAT THEY WILL DO SO ON A TIMELY BASIS OR THAT DTC, DIRECT PARTICIPANTS OR INDIRECT PARTICIPANTS WILL SERVE AND ACT IN THE MANNER DESCRIBED IN THIS OFFICIAL STATEMENT. THE CURRENT RULES APPLICABLE TO DTC ARE ON FILE WITH THE SECURITIES AND EXCHANGE COMMISSION, AND THE CURRENT PROCEDURES OF DTC TO BE FOLLOWED IN DEALING WITH DIRECT PARTICIPANTS ARE ON FILE WITH DTC. Optional Redemption The Series 2009A Bonds maturing after December 1, 2019 are subject to redemption at the option of the Corporation from any source, in whole or in part at any time, in such order of maturities as determined by such Corporation (and by lot or other random selection method within a maturity) on or after December 1, 2019 at the redemption price of 100% of the principal amount to be redeemed, plus accrued interest to the date of redemption. The Series 2009B Bonds will not be subject to optional redemption. Sinking Fund Redemption The Series 2009A Bonds maturing on December 1, 2014, December 1, 2019 and December 1, 2029 are term bonds that are subject to mandatory sinking fund redemption from amounts on deposit in the Bond Fund from Basic Rent and Federal Subsidy Payments and available for sinking fund payments prior to their respective maturity dates, by lot (or other random selection method) selected by Trustee, at a price of par without premium on December 1 in the years and principal amounts set forth below: December 1, 2014 Term Bonds Year Principal Amount 2010 $80, , , , (maturity) 90,000 9

14 December 1, 2019 Term Bonds Year Principal Amount 2015 $90, , , , (maturity) 105,000 December 1, 2029 Term Bonds Year Principal Amount 2024 $120, , , , , (maturity) 150,000 To the extent that the Series 2009A Bonds have been previously called for redemption in part and otherwise than from the sinking fund, if any, each related aforesaid annual sinking fund payment for the Series 2009A Bonds shall be reduced by the amount obtained by multiplying the principal amount of such Series 2009A Bonds so called for redemption, by the ratio which each annual sinking fund payment for the Series 2009A Bonds bears to the total sinking fund payments of such Series 2009A Bonds subject to sinking fund redemption, and by rounding each sinking fund payment to the nearest $5,000 multiple. In case a Series 2009A Bond subject to sinking fund redemption is of a denomination larger than $5,000, a portion of such Series 2009A Bond ($5,000 or any multiple thereof) may be redeemed, but Series 2009A Bonds shall be redeemed only in the principal amount of $5,000 each or any integral multiple thereof. On or before the thirtieth day prior to each such sinking fund payment date, the Trustee shall proceed to select for redemption (by lot in such manner, as the Trustee may determine), from all outstanding Series 2009A Bonds subject to sinking fund redemption, a principal amount of such Series 2009A Bonds, equal to the aggregate principal amount of such Series 2009A Bonds redeemable with the required sinking fund payment, and shall call such Series 2009A Bonds or portions thereof ($5,000 or any integral multiple thereof) for redemption from such sinking fund on the next December 1, and give notice of such call. Extraordinary Optional Redemption The Bonds of each series are also subject to redemption at any time, in whole or in part, in the event of damage to or destruction of the related Project or condemnation award thereof and election by the City that the proceeds of such damage, destruction or condemnation award shall not be used to rebuild or restore the Project. Any such redemption shall be at a principal amount of the Bonds equal to the ratio of the dollar amount of such damage, destruction or condemnation award to the principal amount of the Bonds of each affected series then outstanding, without premium, plus accrued interest to the redemption date. 10

15 Additional Bonds Additional Bonds on parity with the Bonds may be issued only if the Agreement is amended to increase the cash rentals payable by the City to provide sufficient funds at the times and in the amounts necessary to pay principal of and interest when due on the outstanding Bonds, the Parity Bonds and the proposed Additional Bonds. Refunding Bonds Other Bonds to refund all or any of the Bonds may be issued at any time so long as the cash rentals payable by the City are sufficient to cover the principal and interest requirements on all Bonds of the series outstanding, including the refunding bonds. THE LEASE The following is a summary of certain provisions of the Lease. Reference should be made to the Lease itself for a complete statement of its provisions. Pursuant to the Lease, the City agrees to lease or sublease to the Corporation: the parcels of land and improvements thereon upon which the Library Project and Parking Project are located. In consideration for such leases and subleases the Corporation agrees to pay the City rent in the amount of $10.00 per year, to and including a termination date with respect to each Project not earlier than the final stated maturity date of the corresponding series of Bonds, when the Lease with respect to the related site expires by its terms. See THE PROJECTS. Upon the expiration of the Lease with respect to a Project, the Corporation will return the land, together with any buildings or improvements thereupon, relating to such Project to the City. The Lease is binding upon any successors or assigns of the City or the Corporation. THE AGREEMENT The following is a summary of certain common provisions of the Agreement. Reference should be made to the Agreement itself for a complete statement of its provisions. References in the following summary to the Project and the Bonds are to each Project and the related series of Bonds. Term. The term of the Agreement begins on November 1, 2009 and ends with respect to the Series 2009A Bonds on December 1, 2029 and, with respect to the Series 2009B Bonds, on June 1, Rental. The City agrees to pay to the Corporation cash basic rent in the amounts and on or before the dates shown in the Agreement. The due dates of the cash rental payments are the principal and interest payment dates of the Bonds, and the amount of each rental installment is equal to the principal and interest next due. The City agrees that the cash rent shall be net to the Corporation and that all costs, expenses and obligations of every kind which may arise or become due with respect to the Project during the term of the Agreement shall be paid by the City. Assignment of Rentals. The Trustee is the assignee of all of the Corporation s rights to collect basic rent due under the Agreement, and such basic rent shall be paid by the City directly to the Trustee for the benefit of the owners of the Bonds. 11

16 Prepayment. The City has the right to prepay the basic rent at any time and without penalty and thereby purchase the Project upon 30 days prior written notice to the Corporation, provided that the City is not in default under the Agreement. Any such prepayment must be in an amount sufficient to pay the principal of all outstanding Bonds, plus redemption premium, if any, and accrued interest, if any, to the first permitted redemption date. Additional Payments by City. As additional rental, the City has agreed to pay all taxes on the Project and all utility charges incurred in the operation, maintenance and use of the Project, the fees and expenses of the Trustee under the Indenture and the expenses of any audit or examination of the Corporation s records requested by the City. Repairs and Maintenance. The City has agreed, at its own expense, to put and maintain the Project in good and safe order and condition and to make all necessary repairs required for any reason. Insurance, Damage or Destruction. The City has agreed: (a) to obtain and keep in force during the term of the Agreement fire and extended-coverage insurance with respect to the Project in an amount at least equal to the full insurable value thereof, with the City, the Corporation and the Trustee, as their interests may appear, to be named as insured parties, but with any loss to be adjusted by and paid to the City so long as the City is not in default; (b) that no damage to or destruction of any part of the Project by fire or other casualty shall entitle the City to terminate the Agreement or to violate any of its provisions or in any way to suspend, abate or reduce the rent then due or thereafter becoming due under the terms of the Agreement unless the City shall elect not to replace or restore the Project and shall provide to the Trustee funds sufficient to redeem a portion of the related series of the Bonds then outstanding in an amount equal to the ratio of the dollar amount of damage to or destruction of the Project; and The City may self-insure by means of an adequate self-insurance fund set aside and maintained out of its revenues if the City insures properties similar to the Project by self-insurance. Condemnation. No condemnation of all or any part of the Project shall in any way affect the liability of the City to pay the full rent due under the Agreement and proceeds of any such condemnation shall be paid to the Corporation and applied on the last unpaid rental installment, unless the City elects to have all or a portion of the series of Bonds relating to the affected Project redeemed in an amount equal to the ratio of the dollar amount of the condemnation award to the principal amount of such series of the Bonds then outstanding as provided by the Indenture. Indemnification of the Corporation. The City has agreed to indemnify the Corporation against all liabilities, penalties, damages and expenses which may be imposed upon, incurred by or asserted against the Corporation as a result of (a) the City s performance of, or the failure of the City to perform, any obligation of the City under the Agreement; (b) any use or condition of the Project or any part thereof or any street, alley, sidewalk, curb, passageway or space adjacent thereto; (c) any personal injury, including death resulting at any time therefrom, or property damage occurring on or about the Project or any adjacent street, alley, sidewalk, curb, passageway or space; (d) the failure of the City to comply with any requirement of any governmental authority; and (e) any construction lien or security agreement filed against the Project or any part thereof. 12

17 Alterations, Additions and Improvements. The City has the right to make any alterations, additions or improvements to the Project which will not diminish the value thereof, and any such alterations, additions or improvements shall become a part of the Project and shall be covered by the Agreement. Use of Premises. The Project may be used by the City for public library and parking purposes and other such uses as the City shall deem appropriate from time to time; provided, however, that any other use of the Project shall not impair the City s use of the Project as public library facilities and parking facilities, as the case may be. The City may sublet any part of the Project for any uses for a period not extending beyond the term of the Agreement. No Right of Surrender by the City. The City has no right to surrender the Project to the Corporation, and no abandonment of the Project or failure or inability of the City to use the Project at any time shall relieve the City of its obligation to pay the agreed rentals for the entire term of the Agreement. Conveyance of Project to the City. The Corporation has agreed to convey the Project to the City upon full payment of the rentals due under the Agreement. Default. The Corporation has the right to terminate the Agreement and take possession of the Project in the event the City defaults in the performance of any of its obligations under the Agreement and such default continues for a period of 30 days after written notice to the City. No such termination shall operate to relieve the City of its obligation to the Corporation to pay the cash rentals due under the Agreement, and the City shall continue to be liable for payment of the basic cash rent. Donations Held as Trust Fund. The City has agreed that any donation received by the City to assist in acquiring, constructing, furnishing and equipping the Project shall be held in trust and (unless the use is otherwise specified by the donor) used only to satisfy the City s obligations under the Agreement, to apply to the purchase of the Project from the Corporation and to pay costs of acquiring the Project. THE INDENTURE The following is a summary of certain provisions of the Indenture. Reference should be made to the Indenture itself for a complete statement of its provisions. Investment of Funds. All moneys held by the Trustee for the credit of any fund or account under the Indenture shall be invested and reinvested by the Trustee upon the written direction of the Corporation, but only in investments authorized by Reissue Revised Statutes of Nebraska, as amended, Section , viz. securities of the United States of America, the State of Nebraska, the City, Douglas County, Nebraska, a school district of the City, municipality owned and operated public utility property and plants of the City, and certificates of deposit from and time deposits in bank or capital stock financial institutions selected as depositories of City funds, provided that (i) moneys deposited in the Redemption Escrow Fund shall be invested only in irrevocable United States Government Obligations and (ii) moneys deposited from cash rental payments and Federal Subsidy Payments to the credit of the Bond Fund shall only be invested and reinvested by the Trustee in direct obligations of, or obligations the principal of and interest on which are unconditionally guaranteed by, the United States of America. Any such investment shall mature at such time and in such amounts so that funds will be available when required. Income from all investments shall be credited to the fund from which the investment was made. Amendment of Indenture. An amendment which would extend the maturity of or reduce the interest rate on any Bond or affect the pledge and assignment of the cash rentals payable by the City or permit any priority of any Bond over any other Bond or reduce the percentage of Bondholders required to 13

18 consent to any amendment of the Indenture requires the specific consent of the owner of each Bond which would be affected thereby. In the case of all other amendments, the Indenture may not be modified or amended without the consent of the owners of at least two-thirds of the principal amount of the Bonds outstanding, except to (i) correct an ambiguity or formal defect or omission, including any subsequent amendments thereto; (ii) grant and confer upon the Trustee for the benefit of the Bondholders any additional rights, remedies, powers, authority or security that may be lawfully granted to or conferred upon the Bondholders or the Trustee; (iii) issue Additional Bonds or refunding bonds; (iv) comply with such requirements of the Code as are necessary in the opinion of nationally recognized bond counsel to maintain the designation of the Series 2009A Bonds as Build America Bonds if so elected by the Corporation and affirmed by the City; or (v) modify, alter, amend or supplement the Indenture in any other respect which in the judgment of the Corporation, as concurred in by the Indenture, is not materially adverse to the Bondholders. Amendment of the Agreement. No amendment to the Agreement shall be made without the written consent of the Trustee. Amendments may be made with the consent of the owners of two-thirds of the principal amount of all Bonds outstanding, but in no event shall the cash rental payable by the City be reduced or the payment dates extended without the consent of the owners of all Bonds outstanding. Notice of Redemption of Bonds. If a Bond in book-entry-only form is called for redemption, notice shall be mailed to the Depository not less than 30 days or more than 60 days prior to the redemption date. If a Bond not in book-entry-only form is called for redemption, notice shall be given by mailing a copy of the redemption notice by first-class mail not less than 30 days prior to the date fixed for redemption to the registered owner of each Bond to be redeemed at the address shown on the registration books of the Corporation kept by the Trustee. Defeasance. The Corporation s obligation as to any Bond shall be discharged when there has been deposited with the Trustee, in trust solely for such purpose, cash or United States government direct or guaranteed obligations maturing in such amount and at such times as will provide funds sufficient to retire such Bond at maturity or earlier permitted redemption date and pay interest and premium, if any, thereon to such retirement date. Events of Default. The following constitute events of default under the Indenture: (a) default in the due and punctual payment of the principal of or the interest on any outstanding Bond and the continuance thereof for a period of five days; (b) default in the due and punctual payment of the basic cash rental payments to the Trustee and the continuance thereof for a period of 5 days; or (c) default in the performance or observance of any other of the covenants, agreements or conditions on the Corporation s part contained in the Indenture, or in the Bonds, and the continuance thereof for a period of 30 days after written notice thereof to the Corporation by the Trustee, or by the owners of not less than 20% in aggregate principal amount of Bonds outstanding. Default Remedies. Upon the occurrence of an event of default under the Indenture, the Trustee may, and upon the written request of the owners of 20% in aggregate principal amount of the Bonds outstanding, shall, accelerate the principal of and the interest on the Bonds. The Trustee may rescind its declaration of acceleration and waive any default under the Indenture under certain circumstances. The owners of not less than 20% in principal amount of Bonds then outstanding shall have the right to request the Trustee, upon being indemnified to its satisfaction, to exercise any remedies available under the 14

19 Agreement and, to the extent consistent therewith, may sell, lease or manage any portion of the Project and apply the net proceeds thereof as provided in the Indenture and, whether or not it has done so, proceed to take any other steps needful for its protection and that of the owners of the Bonds subject to the right in all events of the owners of a majority in principal amount of Bonds outstanding to direct the Trustee s action. UNDERWRITING Under a Bond Purchase Agreement (the Bond Purchase Agreement ) entered into by the Corporation and D.A. Davidson & Co., as Underwriter (the Underwriter ), the Bonds are being purchased at an aggregate price of $13,724, (the aggregate principal amount of the Bonds minus net original discount of $11,950.25, less $103, Underwriter s Discount). The Bond Purchase Agreement provides that the Underwriter will purchase all of the Bonds if any are purchased. The obligation of the Underwriter to accept delivery of the Bonds is subject to various conditions contained in the Bond Purchase Agreement, including the absence of pending or threatened litigation questioning the validity of the Bonds or any proceedings in connection with the issuance thereof and the absence of material adverse changes in the financial or business condition of the Corporation or the City. The Underwriter intends to offer the Bonds to the public initially at the offering prices set forth on the cover page of this Official Statement, which prices may subsequently change without any requirement of prior notice. The Underwriter reserves the right to join with dealers and other underwriters in offering the Bonds to the public. The Underwriter may offer and sell Bonds to certain dealers (including dealers depositing Bonds into investment trusts) at prices lower than the public offering price. CONTINUING DISCLOSURE The City has entered into an undertaking (the Undertaking ) for the benefit of the holders and beneficial owners of the Bonds to send certain financial information and operating data to the Municipal Securities Rulemaking Board ( MSRB ) annually and to provide notice to the MSRB of certain events, pursuant to the requirements of Section (b)(5)(i) of Securities and Exchange Commission Rule 15c2-12 (17 C.F.R c2-12) (the Rule ). See APPENDIX BFORM OF LETTER AGREEMENT. Except for the failure to provide notice of bond insurance related downgrades by the rating agencies of the ratings on the City s Sanitary Sewerage System Revenue Bonds, Series of 2006, the City has been in compliance with its continuing disclosure obligations under its existing undertakings entered into pursuant to the Rule. The City is now in compliance with each of its undertakings under the Rule. A failure by the City to comply with the Undertaking will not constitute an Event of Default under the Indenture or the Agreement, although any bondholder will have any available remedy at law or in equity, including seeking specific performance by court order, to cause the City to comply with its obligations under the Undertaking. Any such failure must be reported in accordance with the Rule and must be considered by any broker, dealer or municipal securities dealer before recommending the purchase or sale of the Bonds in the secondary market. Consequently, such a failure may adversely affect the transferability and liquidity of the Bonds and their market price. LITIGATION No litigation is pending or, to the knowledge of the Corporation, threatened in any court to restrain or enjoin the issuance or delivery of any of the Bonds or in any way contesting or affecting the validity of the Bonds, the related resolutions of the Corporation, the Agreement, the Indenture or the 15

20 City s Ordinance, or contesting the powers or authority of the Corporation to issue its Bonds or to adopt the resolutions or of the City to execute and deliver the Agreement or pass its related ordinance. CERTAIN FEDERAL INCOME TAX CONSEQUENCES Holders of the Series 2009A Bonds and the Series 2009B Bonds should be aware that: (a) the discussion in this Official Statement with respect to U.S. federal income tax consequences of owning the Bonds is not intended or written to be used, and cannot be used, by any taxpayer for the purpose of avoiding penalties that may be imposed on the taxpayer; (b) such discussion was written in connection with the promotion or marketing (within the meaning of Treasury Circular 230) of the transactions or matters addressed by such discussion; and (c) each taxpayer should seek advice based on its particular circumstances from an independent tax advisor. The following is a summary of certain material federal income tax consequences of the purchase, ownership and disposition of the Bonds for the investors described below and is based on the advice of Kutak Rock LLP, as Bond Counsel. This summary is based upon laws, regulations, rulings and decisions currently in effect, all of which are subject to change. The discussion does not deal with all federal tax consequences applicable to all categories of investors, some of which may be subject to special rules, including but not limited to, partnerships or entities treated as partnerships for federal income tax purposes, pension plans and foreign investors, except as otherwise indicated. In addition, this summary is generally limited to investors who will hold the Bonds as capital assets (generally, property held for investment) within the meaning of Section 1221 of the Internal Revenue Code of 1986, as amended (the Code ). Investors should consult their own tax advisors to determine the federal, state, local and other tax consequences of the purchase, ownership and disposition of Bonds. To ensure compliance with Treasury Circular 230, taxpayers are hereby notified that: (A) any discussion of U.S. federal tax issues in this Official Statement is not intended or written by bond counsel to be relied upon, and cannot be relied upon, by taxpayers for the purpose of avoiding penalties that may be imposed on taxpayers under the Code; (B) such discussion is written in connection with the promotion or marketing of the transactions or matters addressed herein; and (C) taxpayers should seek advice based on their particular circumstances from an independent tax advisor. Prospective investors should note that no rulings have been or will be sought from the Internal Revenue Service (the Service ) with respect to any of the federal income tax consequences discussed below, and no assurance can be given that the Service will not take contrary positions. Build America Bonds In General. The Corporation and the City have elected to designate the Series 2009A Bonds as taxable Build America Bonds pursuant to Section 54AA(d) of the Code and as Qualified Bonds pursuant to Section 54AA(g) of the Code. Although the Series 2009A Bonds are issued by the Corporation, interest on the Series 2009A Bonds (including original issue discount, as discussed below) is not excludable from gross income for federal income tax purposes under Section 103 of the Code. Interest on the Series 2009A Bonds will be fully subject to federal income taxation. Thus, owners of the Series 2009A Bonds generally must include interest (including original issue discount) on the Series 2009A Bonds in gross income for federal income tax purposes. Build America Bonds. The Series 2009A Bonds will be issued as taxable Build America Bonds as authorized by the Recovery Act. Pursuant to the Recovery Act, the Corporation will receive the Federal Subsidy Payments from the United States Treasury equal to 35% of the interest payable on the 16

21 Series 2009A Bonds. The Code imposes requirements on the Series 2009A Bonds that the Corporation and the City must continue to meet after the Series 2009A Bonds are issued in order to receive the Federal Subsidy Payments. These requirements generally involve the way that Series 2009A Bond proceeds must be invested and ultimately used. If the Corporation or the City do not meet these requirements, it is possible that the Corporation may not receive the Federal Subsidy Payments and the Series 2009A Bonds may fail to be Build America Bonds under Section 54AA(d) of the Code and Qualified Bonds under Section 54AA(g) of the Code retroactively to the date of issuance of the Series 2009A Bonds. In certain circumstances, the Federal Subsidy Payments may be reduced (offset) by amounts determined to be applicable under the Code and Regulations. For example, offsets may occur by reason of any past-due legally enforceable debt of the Corporation to any Federal agency. The amount of any such offsets is not predictable, and the Corporation does not currently expect that any such offsets will apply to the credits the Corporation expects to receive. Pledge of Federal Subsidy Payments. The Federal Subsidy Payments are pledged as security for the repayment of the Bonds. The priority of the U.S. Treasury making the Federal Subsidy Payments to the Corporation is the same as the refunding by the U.S. Treasury of overpayments of tax. The Federal Subsidy Payments are not full faith and credit obligations of the United States. If the Corporation does not receive the Federal Subsidy Payments from the U.S. Treasury in a timely fashion to pay 35% of the stated interest on the Series 2009A Bonds on each interest payment date for the Bonds, the City, nonetheless, is obligated to pay cash rental payments in the amount necessary to pay principal of and interest on the Bonds. Characterization of the Trust Estate. Kutak Rock LLP will render on the closing date, with respect to the Series 2009A Bonds, its opinion to the effect that the Series 2009A Bonds will be treated as debt of the Corporation, based in part on the current financial condition of the Corporation. There can be no assurances that the financial condition of the Corporation will not change over the term of the Series 2009A Bonds. If, alternatively, it were determined that the Series 2009A Bonds transaction created an entity which was classified as a corporation or a publicly traded partnership taxable as a corporation, such entity would be subject to federal income tax at corporate income tax rates on its income, which would reduce the amounts available for payment to the holders of the Series 2009A Bonds. Cash payments to the holders of the Series 2009A Bonds who are treated as equity owners generally would be treated as dividends for tax purposes to the extent of such corporation's accumulated and current earnings and profits. A similar result would apply if the holders of the Series 2009A Bonds were deemed to have acquired stock or other equity interests. However, as noted above, the Corporation has been advised that the Series 2009A Bonds will be treated as debt of the Corporation for federal income tax purposes and that the transaction will not be characterized as an association or publicly traded partnership taxable as a corporation. Characterization of the Bonds as Indebtedness. The Corporation intends that, for federal income tax purposes, the Series 2009A Bonds will be indebtedness of the Corporation created by the Indenture and approved by the City, secured by the pledge of the City s cash rental payments under the Agreement and the Federal Subsidy Payments. See SECURITY FOR THE BONDS herein. The owners of the Series 2009A Bonds, by accepting such Series 2009A Bonds, have agreed to treat the Series 2009A Bonds as indebtedness of the Corporation for federal income tax purposes. The Corporation intends to treat the Series 2009A Bond transactions as a financing reflecting the Series 2009A Bonds as its indebtedness for tax and financial accounting purposes. 17

22 In general, the characterization of a transaction as a sale of property or a secured loan, for federal income tax, is a question of fact, the resolution of which is based upon the economic substance of the transaction, rather than its form or the manner in which it is characterized for state law or other purposes. While the Service and the courts have set forth several factors to be taken into account in determining whether the substance of a transaction is a sale of property or a secured indebtedness, the primary factor in making this determination is whether the transferee has assumed the risk of loss or other economic burdens relating to the property and has obtained the benefits of ownership thereof. Notwithstanding the foregoing, in some instances, courts have held that a taxpayer is bound by the particular form it has chosen for a transaction, even if the substance of the transaction does not accord with its form. Taxation of Interest Income of the Bonds. Payments of interest with regard to the Series 2009A Bonds will be includible as ordinary income when received or accrued by the holders thereof in accordance with their respective methods of accounting and applicable provisions of the Code. If the Series 2009A Bonds are deemed to be issued with original issue discount, Section 1272 of the Code requires the current ratable inclusion in income of original issue discount greater than a specified de minimis amount using a constant yield method of accounting. In general, original issue discount is calculated, with regard to any accrual period, by applying the instrument s yield to its adjusted issue price at the beginning of the accrual period, reduced by any qualified stated interest (as defined below) allocable to the period. The aggregate original issue discount allocable to an accrual period is allocated to each day included in such period. The holder of a debt instrument must include in income the sum of the daily portions of original issue discount attributable to the number of days he owned the instrument. The legislative history of the original issue discount provisions indicates that the calculation and accrual of original issue discount should be based on the prepayment assumptions used by the parties in pricing the transaction. Original issue discount is the stated redemption price at maturity of a debt instrument over its issue price. The stated redemption price at maturity includes all payments with respect to an instrument other than interest unconditionally payable at a fixed rate or a qualified variable rate at fixed intervals of one year or less ( qualified stated interest ). Caps or floors may be ignored in determining whether an obligation bears interest at a qualified variable rate, if among other things, the cap or floor is fixed through the term of the obligation. The Corporation expects that interest payable with respect to the Series 2009A Bonds will constitute qualified stated interest and that the Series 2009A Bonds will not be issued with original issue discount. However, there can be no assurance that the Service would not assert that the interest payable with respect to the Series 2009A Bonds may not be qualified stated interest because such payments are not unconditional and or that the Series 2009A Bonds otherwise are issued with original issue discount. Payments of interest received with respect to the Series 2009A Bonds will also constitute investment income for purposes of certain limitations of the Code concerning the deductibility of investment interest expense. Potential holders of the Series 2009A Bonds should consult their own tax advisors concerning the treatment of interest payments with regard to the Series 2009A Bonds. A purchaser (other than a person who purchases a Series 2009A Bond upon issuance at the issue price) who buys a Series 2009A Bond at a discount from its principal amount (or its adjusted issue price if issued with original issue discount greater than a specified de minimis amount) will be subject to the market discount rules of the Code. In general, the market discount rules of the Code treat principal payments and gain on disposition of a debt instrument as ordinary income to the extent of accrued market discount. Although the accrued market discount on debt instruments such as the Series 2009A Bonds which are subject to prepayment based on the prepayment of other debt instruments is to be determined under regulations yet to be issued, the legislative history of the market discount provisions of the Code indicate that the same prepayment assumption used to calculate original issue discount should be utilized. 18

23 Each potential investor should consult his tax advisor concerning the application of the market discount rules to the Series 2009A Bonds. In the event that the Series 2009A Bonds are considered to be purchased by a holder at a price greater than their remaining stated redemption price at maturity, they will be considered to have been purchased at a premium. The holder of a Series 2009A Bond may elect to amortize such premium (as an offset to interest income), using a constant yield method, over the remaining term of the Series 2009A Bonds. Special rules apply to determine the amount of premium on a variable rate debt instrument and certain other debt instruments. Prospective holders of a Series 2009A Bond should consult their tax advisors regarding the amortization of bond premium. Sale or Exchange of Series 2009A Bonds. If a Bondholder sells a Series 2009A Bond, such person will recognize gain or loss equal to the difference between the amount realized on such sale and the Bondholder s basis in such Bond. Ordinarily, such gain or loss will be treated as a capital gain or loss. At the present time, the maximum capital gain rate for certain assets held for more than twelve months is 15%. However, if a Series 2009A Bond was subject to its initial issuance at a discount, a portion of such gain will be recharacterized as interest and therefore ordinary income. In February of 2009, President Barack Obama proposed increasing the long-term capital gains rate to 20%. The Corporation and Bond Counsel cannot predict whether this increase will receive Congressional approval. If the term of a Series 2009A Bond was materially modified, in certain circumstances, a new debt obligation would be deemed created and exchanged for the prior obligation in a taxable transaction. Among the modifications which may be treated as material are those which relate to redemption provisions and, in the case of a nonrecourse obligation, those which involve the substitution of collateral. Each potential holder of a Series 2009A Bond should consult its own tax advisor concerning the circumstances in which the Series 2009A Bonds would be deemed reissued and the likely effects, if any, of such reissuance. Backup Withholding. Certain purchasers may be subject to backup withholding at the application rate determined by statute with respect to interest paid with respect to the Series 2009A Bonds if the purchasers, upon issuance, fail to supply the indenture trustee or their brokers with their taxpayer identification numbers, furnish incorrect taxpayer identification numbers, fail to report interest, dividends or other reportable payments (as defined in the Code) properly, or, under certain circumstances, fail to provide the indenture trustee with a certified statement, under penalty of perjury, that they are not subject to backup withholding. Information returns will be sent annually to the Service and to each purchaser setting forth the amount of interest paid with respect to the Series 2009A Bonds and the amount of tax withheld thereon. State, Local or Foreign Taxation. The Corporation makes no representations regarding the tax consequences of purchase, ownership or disposition of the Series 2009A Bonds under the tax laws of any other state, locality or foreign jurisdiction. Investors considering an investment in the Series 2009A Bonds should consult their own tax advisors regarding such tax consequences. Tax-Exempt Investors. In general, an entity which is exempt from federal income tax under the provisions of Section 501 of the Code is subject to tax on its unrelated business taxable income. An unrelated trade or business is any trade or business which is not substantially related to the purpose which forms the basis for such entity s exemption. However, under the provisions of Section 512 of the Code, interest may be excluded from the calculation of unrelated business taxable income unless the obligation which gave rise to such interest is subject to acquisition indebtedness. However, as noted above, Bond Counsel has rendered its opinion that the Series 2009A Bonds will be characterized as debt for federal income tax purposes. Therefore, except to the extent any holder of a Series 2009A Bond incurs 19

24 acquisition indebtedness with respect to a Series 2009A Bond, interest paid or accrued with respect to such Bondholder may be excluded by such tax exempt Bondholder from the calculation of unrelated business taxable income. Each potential tax exempt holder of a Series 2009A Bond is urged to consult its own tax advisor regarding the application of these provisions. European Union Directive on the Taxation of Savings Income. The European Union adopted a directive (2003/48/EC) (the Directive ) regarding the taxation of savings income. The Directive requires a member state of the European Union (a Member State ) to provide to the tax authorities of another Member State details of payments of interest or other similar income payments made by a person within its jurisdiction for the immediate benefit of an individual or to certain non-corporate entities resident in that other Member State (or for certain payments secured for their benefit). However, Austria, Belgium, and Luxembourg have opted out of the reporting requirements and are instead applying a special withholding tax for a transitional period in relation to such payments of interest, deducting tax at rates increasing over time to 35% after July 1, The rate for 2009 is 20%. A number of non-european Union countries and certain dependent or associated territories of Member States have adopted similar measures (either provision of information or transitional withholding) in relation to payments of interest or other similar income payments made by a person in that jurisdiction for the immediate benefit of an individual or to certain non-corporate entities in any Member State. The Member States have entered into reciprocal provision of information or transitional special withholding tax arrangements with certain of those dependent or associated territories. These apply in the same way to payments by persons in any Member State to individuals or certain noncorporate residents in those territories. On November 13, 2008, the European Union proposed changes to the Directive which extended its scope so that it applies to interest payments to certain intermediate persons or structures interposed between the person making the payment and the individual who is the beneficial owner of the interest. It is proposed that a Member state intermediary that receives an interest payment be treated as a person making payment, so as to subject it to the exchange of information or withholding obligation in the Directive. Further, it is proposed that an interest payment made to an intermediary established outside the European Union be treated as a payment made directly to the individual beneficiary if the person making the payment knows that the individual beneficiary is European Union resident. No additional amounts will be payable with respect to the Series 2009A Bonds if a payment on such Series 2009A Bond is reduced as a result of any tax, assessment or other governmental charge that is required to be made pursuant to any European Union directive on the taxation of savings income or any law implementing or complying with, or introduced in order to conform to, any such directive. Holders of Series 2009A Bonds should consult their tax advisors regarding the implications of the Directive in their particular circumstances. Foreign Investors. A holder of a Series 2009A Bond which is not a U.S. person ( foreign holder ) will not be subject to U.S. federal income or withholding tax in respect of interest income or gain on the such Bonds if certain conditions are satisfied, including: (1) the foreign holder provides an appropriate statement, signed under penalties of perjury, identifying the foreign holder as the beneficial owner and stating, among other things, that the foreign holder is not a U.S. person, (2) the foreign holder is not a 10 percent shareholder or related controlled foreign corporation with respect to the Corporation, and (3) the interest income is not effectively connected with a United States trade or business of the Bondholder. The foregoing exemption does not apply to contingent interest or market discount. To the extent these conditions are not met, a 30% withholding tax will apply to interest income on the Series 2009A Bonds, unless an income tax treaty reduces or eliminates such tax or the interest is effectively connected with the conduct of a trade or business within the United States by such foreign 20

25 holder. In the latter case, such foreign holder will be subject to U.S. federal income tax with respect to all income from the Series 2009A Bonds at regular rates applicable to U.S. taxpayers, and may be subject to the branch profits tax if it is a corporation. A U.S. person is: (i) a citizen or resident of the United States, (ii) a corporation (or other entity that is treated as a corporation for U.S. federal tax purposes) that is created or organized in or under the laws of the United States or any state thereof (including the District of Columbia), (iii) an estate the income of which is subject to U.S. federal income taxation regardless of its source, or (iv) a trust, if a court within the United States is able to exercise primary supervision over its administration and one or more United States persons have the authority to control all of its substantial decisions. Generally, a foreign holder will not be subject to federal income tax on any amount which constitutes capital gain upon the sale, exchange, retirement or other disposition of a Series 2009A Bond unless such foreign holder is an individual present in the United States for 183 days or more in the taxable year of the sale, exchange, retirement or other disposition and certain other conditions are met, or unless the gain is effectively connected with the conduct of a trade or business in the United States by such foreign holder. If the gain is effectively connected with the conduct of a trade or business in the United States by such foreign holder, such holder will generally be subject to U.S. federal income tax with respect to such gain in the same manner as U.S. holders, as described above, and a foreign holder that is a corporation could be subject to a branch profits tax on such income as well. Tax Treatment of Original Issue Discount. The Series 2009A Bonds that have an original yield above their interest rate, as shown on the inside cover, are being sold at a discount (the Discounted Obligations ). The difference between the initial public offering prices, as set forth on the inside cover page hereof, of the Discounted Obligations and their stated amounts to be paid at maturity, constitutes original issue discount treated as interest which is not includible in gross income for federal income tax purposes. In the case of an owner of a Discounted Obligation, the amount of original issue discount which is treated as having accrued with respect to such Discounted Obligation is added to the cost basis of the owner in determining, for federal income tax purposes, gain or loss upon disposition of a Discounted Obligation (including its sale or payment at maturity). Amounts received upon disposition of a Discounted Obligation which are attributable to accrued original issue discount will be treated as taxable 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 Discounted Obligation, on days which are determined by reference to the maturity date of such Discounted Obligation. The amount treated as original issue discount on a Discounted Obligation for a particular semiannual accrual period is equal to (a) the product of (i) the yield to maturity for such Discounted Obligation (determined by compounding at the close of each accrual period) and (ii) the amount which would have been the tax basis of such Discounted Obligation at the beginning of the particular accrual period if held by the original purchaser, (b) less the amount of any interest payable for such Discounted Obligation during the accrual period. The tax basis is determined by adding to the initial public offering price on such Discounted Obligation the sum of the amounts which have been treated as original issue discount for such purposes during all prior periods. If a Discounted Obligation is sold between semiannual compounding dates, original issue discount which would have been 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. The Code contains additional provisions relating to the accrual of original issue discount in the case of owners of a Discounted Obligation who purchase such Discounted Obligations after the initial offering. Owners of Discounted Obligations including purchasers of the Discounted Obligations in the 21

26 secondary market should consult their own tax advisors with respect to the determination for federal income tax purposes of original issue discount accrued with respect to such obligations as of any date and with respect to the state and local tax consequences of owning a Discounted Obligation. Federal Tax Law Interest on the Bonds is not excluded from gross income for federal income tax purposes under Section 103 of the Code. Purchasers of the Bonds should consult their own tax advisors as to the tax consequences of purchasing or owning the Bonds. State Tax Law Under the existing laws of the State of Nebraska, the interest on the Bonds is not excluded from Nebraska state income taxation. Future Legislation 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 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 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 Bonds or the market value thereof would be impacted thereby. Purchasers of the Bonds should consult their tax advisors regarding any pending or proposed legislation, regulatory initiatives or litigation. The opinions expressed by Bond Counsel are based upon existing legislation and regulations as interpreted by relevant judicial and regulatory authorities as of the date of issuance and delivery of the Bonds and Bond Counsel has expressed no opinion as of any date subsequent thereto or with respect to any pending legislation, regulatory initiatives or litigation. Other Legal Matters Legal matters incident to the authorization and issuance of the Bonds are subject to the approving opinion of Kutak Rock LLP, Bond Counsel, a copy of whose approving opinion will be delivered with the Bonds, and the form of which opinion comprises Appendix D. Certain other legal matters will be passed upon for the City by the City Law Department, and for the Underwriter by Kutak Rock LLP, Counsel to the Underwriter. RATINGS Moody s Investors Service, Inc. ( Moody s ) and Standard & Poor s Ratings Services, a Division of The McGraw-Hill Companies, Inc. ( S&P ), have assigned the Bonds the ratings of Aa1 and AA+, respectively. Such credit ratings of the Bonds by Moody s and S&P reflect only the views of such credit rating agencies. An explanation of the significance of such credit ratings may be obtained from Moody s or S&P, as the case may be. There is no assurance that such credit ratings will continue for any given period of time or that they will not be reviewed or withdrawn entirely by such credit rating agencies, if in their judgment circumstances so warrant. Neither the City, the Corporation nor the Underwriter has undertaken any responsibility either to bring to the attention of the owners of the Bonds any proposed change in or withdrawal of such credit ratings or to oppose any such proposed revision. 22

27 Any such downward change in or withdrawal of such credit ratings may have an adverse effect on the market price of the Bonds. FINANCIAL STATEMENTS The general purpose financial statements of the City as and for the year ended December 31, 2008 included as Appendix B to this Official Statement have been audited by KPMG LLP, independent certified public accountants, as stated in its report appearing therein. KPMG LLP, the City s independent auditor, has not been engaged to perform and has not performed, since the date of its report included therein, any procedures on the financial statements addressed in that report. KPMG LLP also has not performed any procedures relating to this Official Statement. 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. This Official Statement is not to be construed as a contract or agreement between the Corporation and the purchasers or owners of any of the Bonds. The information contained in this Official Statement has been taken from the City, DTC and other sources considered to be reliable, but is not guaranteed. To the best of the knowledge of the undersigned, this Official Statement (insofar as it relates to the Bonds represented by the undersigned) does not include any untrue statement of a material fact, nor does it omit the statement of any material fact required to be stated therein, or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. The execution and delivery of this Official Statement have been duly authorized by the Corporation as of the date shown on the cover hereof. CITY OF OMAHA PUBLIC FACILITIES CORPORATION By /s/ Karen Klein President 23

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29 APPENDIX A CITY OF OMAHA SELECTED ECONOMIC INDICATORS Omaha MSA Population and Employment Population 1 Employment , , , , , , , , , , , , , , , , , , , , , , , , , , , ,400 Population and employment figures are for the previous five-county metropolitan statistical area. 1 Source: U.S. Census Bureau. 2 Source: Bureau of Labor Statistics: State and Area Employment, Hours, and Earnings. Omaha MSA (Eight Counties) Nonagricultural Wage and Salary Employment Average for 2007 Average for 2008 Number % of Total Number % of Total Construction and Mining 25, % 25, % Manufacturing 33, , Trade, Transportation and Utilities 100, , Information 12, , Financial Activities 39, , Professional and Business Services 64, , Education and Health Services 64, , Leisure and Hospitality 45, , Other Services 16, , Government 61, , Total Nonfarm Employment 462, % 468, % Source: Bureau of Labor Statistics: State and Area Employment, Hours and Earnings.

30 Omaha MSA Personal Income (per capita) Year Personal Income Per Capita Personal Income U.S. Per Capita Personal Income $ 2,547,642 6,648,387 13,293,632 24,230,391 25,179,787 26,207,762 27,237,083 29,022,926 30,637,080 32,461,000 34,476,294 $4,097 10,151 19,325 31,506 32,479 33,507 34,466 36,272 37,816 39,631 41,655 $4,085 10,144 19,477 29,547 30,582 30,838 31,530 33,157 34,690 36,794 38,615 Source: Bureau of Economic Analysis, SA1-3, CA1-3. Omaha MSA 1 Net Taxable Sales Year Total Net Taxable Sales (000) Net Taxable Sales of Motor Vehicles (000) 1980 $2,589,068 $223, ,055, , ,006, , ,241,327 1,133, ,331,540 1,164, ,667,430 1,171, ,365,580 1,124, ,669,035 1,055, ,796,364 1,013, ,116,077 1,092, ,235,201 1,093, ,649, ,140 Source: Nebraska Department of Revenue. 1 Includes the five Nebraska Counties in the eight County MSA. 2 Nebraska Counties of MSA (Cass, Douglas, Sarpy, Washington, Saunders (1997-present)) through October Through May A-2

31 Value of Building PermitsCity of Omaha Year Amount Year Amount $ 24,105,401 46,927,523 61,626, ,736, ,473, ,849,942 1,558,867, * $701,502, ,542, ,481, ,153, ,536, ,007, ,783, ,072,639 Source: Division of Permits and Inspections, City of Omaha. * Through September 30, 2009 Largest EmployersCity of Omaha Metro Area December 2008 Employer Number of Employees 1. Offutt Air Force Base * 12, Omaha Public Schools 7, Alegent Health 5, Methodist Health System 5, First Data 5, First National Bank of Nebraska 2, Union Pacific Corp. 2, University of Nebraska Medical Center 2, The Nebraska Medical Center 2, ConAgra Foods 2, Mutual of Omaha 2, Oriental Trading Co. 2, PayPal 2, University of Nebraska Omaha 2, Creighton University 2, Millard Public Schools 2,500 Located in Sarpy County (immediately south of Omaha). Source: Greater Omaha Chamber of Commerce Top 25 Employer List, 2008 (Ranked by Number of Employees). A-3

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33 APPENDIX B CITY OF OMAHAFINANCIAL INFORMATION Part One Selected City of Omaha Financial Information Part Two Independent Auditors Report and General Purpose Financial Statements

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35 APPENDIX B CITY OF OMAHAFINANCIAL INFORMATION PART ONE Selected City of Omaha Financial Information

36 CITY OF OMAHA, NEBRASKA GENERAL FUND STATEMENT OF REVENUE, EXPENDITURES AND CHANGES IN FUND BALANCE Five Years Ended December 31, Revenue: General Property Tax $ 47,304,855 $ 50,000,897 $ 52,205,484 $ 55,126,392 $ 61,795,651 Motor Vehicle Taxes 8,814,977 8,808,677 8,818,011 8,825,629 9,374,405 City sales & use tax 109,662, ,954, ,633, ,680, ,532,796 Business taxes 27,000,112 26,845,997 28,781,008 30,778,878 32,921,017 Licenses & permits 8,645,623 8,248,962 8,216,565 8,150,481 8,155,504 Intergovernmental revenue 7,521,860 9,956,560 8,388,815 9,246,268 9,437,282 Charges for services 15,323,915 15,616,713 16,285,001 18,568,340 19,842,674 Investment income 846,374 1,292,491 4,170,840 5,671,876 3,847,009 Rents & royalties 113, , , , ,961 Miscellaneous 920,544 1,215,451 1,189,362 4,915,605 1,685,643 Revenue from Stadium 909,777 Total Revenue $226,154,026 $235,048,232 $241,848,733 $260,084,928 $269,606,719 Expenditures: Legislative & Executive $ 2,476,555 $ 2,587,929 $ 2,458,360 $ 2,621,744 $ 2,540,850 Law, Personnel & Human Relations 5,587,167 5,673,577 5,490,058 5,887,846 5,824,839 Finance 3,392,483 2,819,299 2,340,491 2,389,924 2,276,814 Administrative Services 1,518, Planning 5,255,516 6,599,159 5,115,735 5,755,897 6,612,669 Parks, Recreation & Public Property 15,846,920 15,265,292 14,899,544 16,483,949 17,887,259 Public Safety 133,803, ,765, ,289, ,245, ,503,353 Public Works 12,264,237 13,630,679 14,227,826 15,140,836 14,988,397 Convention and Tourism , ,000 0 Public Library 8,080,267 8,406,738 7,600,999 8,356,835 8,173,587 Retiree Benefits 15,994,880 15,163,968 16,372,920 17,410,910 19,359,233 Agency & Other Accounts 18,877,442 23,225,076 23,083,677 22,869,002 23,861,550 Downtown Stadium ,776 Total Expenditures 223,097, ,136, ,135, ,411, ,938,327 Excess (deficit) of revenues over expenditures: $ 3,056,686 $ 1,911,447 $ (1,286,345) $ (327,030) (1,331,608) Other sources (uses) of financial resources: Initial credit $ 1,333 $ 489,111 $ 3,762,999 $ 2,643,828 $ 3,249,743 Operating transfers and encumbrance adjustments (net) 704, , ,684 1,579, ,751 Net other sources (uses) of financial resources 706, ,380 3,945,683 4,223,140 3,795,494 Excess (deficiency) of revenues over expenditures & other sources (uses) of financial resources* $ 3,762,999 $ 2,643,827 $ 2,659,338 $ 3,896,110 $ 2,463,886 Fund balance, beginning of yr. 490,444 4,252,110 6,406,811 5,303,150 6,555,432 Less initial credit ( 1,333) (489,111) (3,762,999) (2,643,828) (3,249,743) Fund balance, end of yr. $ 4,252,110 $ 6,406,811 $ 5,303,150 $ 6,555,432 $ 5,769,575 Source: Records of the Finance Department, City of Omaha *City of Omaha procedure in General Fund budgeting is as follows: at the end of each fiscal year, the excess, if any, of revenues and adjustments over expenditures and encumbrances is determined. Any such excess, less extraordinary transfers out, if any, is used as the initial credit to the General Fund Budget for the second year following the year in which the excess has arisen. B-2

37 CITY OF OMAHA, NEBRASKA GENERAL DEBT SERVICE FUND STATEMENT OF REVENUE, EXPENDITURES AND CHANGES IN FUND BALANCE Five Years Ended December 31, Revenue: Taxes $ 34,494,562 $ 35,631,565 $ 37,751,458 $ 39,700,167 $ 44,536,697 In lieu-of-taxes 74,594 74,594 92,735 88,094 74,594 Interest income 596, , , , ,097 Tax allocation revenue 6,418, Parking fees 1,187,866 1,168,532 1,026,585 1,243,110 $1,328,971 Seat tax 433, , , , ,927 State turn back revenue 318, , , ,636 2,404,735 Total revenue $43,523,870 $ 38,485,985 $ 40,030,410 $ 42,369,587 $49,142,021 Contributions from annexed areas 8,193, , ,325 14,467,116 10,568,138 Total revenue & contributions $ 51,717,006 $ 39,308,211 $ 40,374,735 $ 56,836,703 $59,710,159 Expenditures: Outside services: Professional fees & liabilities $ 4,747,872 $ 562,771 $ 292,396 $ 1,848,730 $ 2,071,744 Collection fees 349, , , , ,385 Total outside services $ 5,097,129 $ 938,454 $ 669,450 $ 2,274,064 $ 2,518,129 General obligation bonds: Interest expense $ 56,237,576 $ 21,883,212 $ 23,008,972 $ 37,631,606 $ 28,463,687 Bonds retired 234,975,000 21,150,000 35,125,000 39,725, ,871,890 Total general obligation bonds 291,212,576 $ 43,033,212 $ 58,133,972 $ 77,356,840 $ 138,335,577 Total expenditures 296,309,705 $ 43,971,666 $ 58,803,422 $ 79,630,904 $140,853,706 Excess (deficit) of revenues & contributions over (under) expenditures $(244,592,699) $ (4,663,455) $(18,428,687) $(22,794,201) $(81,143,547) Other financing sources (uses): Refunding Bonds 257,091,159-11,425,000 27,397,421 83,628,251 Excess (deficit) of revenues & contributions over (under) expenditures & other financing sources (uses) $ 12,498,460 $ (4,663,455) $ (7,003,687) $ 4,603,220 $ 2,484,704 Fund balance at beginning of year 11,057,002 23,555,462 18,892,007 11,888,320 16,491,540 Fund balance at end of year $ 23,555,462 $ 18,892,007 $ 11,888,320 $ 16,491,540 $ 18,976,244 B-3

38 CITY OF OMAHA SPECIAL TAX REVENUE REDEVELOPMENT AND SPECIAL OBLIGATION DEBT SERVICE FUND Five Years Ended December 31, Revenues: Property tax revenue 1,757,854 1,815,671 1,924,414 1,987,825 2,266,497 Tax allocation revenue 985,556 1,632,230 1,752,414 3,926,399 2,270,964 State cigarette tax 1,500,328 1,500,000 1,500,000 1,500,000 1,500,000 NRD Miller Park contribution 200, , , , Douglas County Miller Park contribution 282, , , , ,177 Rolling River , , Naming rights convention center 1,990, , , , ,000 Land sales 1,015,257 1,656, ,260 77,500 Refunding Bonds\Other Income 207, ,596,567 Sewer Revenue Fees* 1,519,081 1,520,149 1,519,551 1,517,971 1,518,584 Total revenues 9,458,090 9,346,661 7,862,555 10,434,206 49,196,289 Expenditures: Agency and other accounts 16,718 26,119 47,445 20,842 56,122 Principal payment 1,481,024 1,746,813 2,003,542 4,315,527 35,949,182 Interest 4,526,330 5,459,700 5,281,609 5,094,062 5,454,753 Sewer Special Obligation debt service* 1,519,081 1,520,149 1,519,551 1,517,971 1,518,584 Professional fees 12, , , ,275 6,330,887 Total expenditures 7,555,962 8,895,577 8,967,064 11,116,677 49,309,528 Excess (deficit) of revenues over expenditures 1,902, ,084 (1,104,509) (682,471) (113,239) Fund balance, beginning of year: Fund balance 6,541,296 8,443,424 8,894,508 7,789,999 7,107,528 Fund balance, end of year: Fund balance 8,443,424 8,894,508 7,789,999 7,107,528 6,994,289 This redevelopment levy is used to pay bond and interest payments on Redevelopment Bonds. The levy for 2004, 2005, 2006, 2007 and 2008 is.894 cents per $100 of taxable valuation. The State Community Development Law authorizes a taxing authority of 2.6 cents on each $100 upon actual value of all taxable property in the City. The Omaha Special Tax Revenue Redevelopment and Special Obligation Debt Service Fund services the following issuances: Name Date of Issue Retirement Date ConAgra Riverfront Redevelopment Downtown Redevelopment Redevelopment ( Stockyards & Downtown )** Special Obligation ( Riverfront ) ** Performing Arts Redevelopment Special Tax Revenue Redevelopment Special Tax & Tax Allocation Revenue Redevelopment A Special Tax & Tax Allocation Revenue Redevelopment B Redevelopment (Stockyards & Downtown) Special Obligation ( Riverfront ) Special Tax Revenue Redevelopment In 2002, the 2002 Special Obligation Bonds were issued. These bonds are serviced by a variety of revenue sources, including Property Tax Revenue, Tax Allocation Revenue, State Cigarette Tax, NRD Miller Park Contribution, Douglas County Miller Park Contribution, Sewer Fees and Land Sales. *The debt service for these 2002 Special Obligation Bonds is paid directly from the Sewer Revenue Enterprise Fund. **Refunded on March 25, 2008 upon the issuance of the corresponding 2008 Redevelopment and 2008 Special Obligation issuances. B-4

39 CITY OF OMAHA, NEBRASKA GENERAL FUND Fiscal Year 2009 Budget and 2010 Budget Budgeted Budgeted Revenues: General Property Tax $ 64,378,978 $ 70,322,657 Motor Vehicle Taxes 9,020,000 9,300,000 City Sales and Use Tax 136,087, ,454,000 Less: LB 775 Refunds (8,000,000) (7,500,000) Business Taxes 32,655,095 34,932,000 Licenses and Permits 8,437,700 8,544,362 Intergovernmental Revenues 9,869,300 9,303,000 Charges for Services 18,894,974 19,386,252 Investment Income 2,825,400 2,850,000 Miscellaneous 2,535,692 1,370,000 Prior Year Balance 3,896,110 1,873,465 Total Revenue $ 280,600,749 $ 280,835,736 Expenditures: Legislative & Executive 2,801,834 2,697,014 Law, Personnel & Human Relations 6,421,625 6,229,540 Finance 2,450,432 2,505,735 Planning 6,524,621 6,784,881 Parks, Recreation and Public Property 18,576,407 18,297,135 Fire 69,096,544 68,782,298 Police 94,008,933 98,289,052 Public Works 15,359,629 16,272,610 Convention and Tourism 500, ,000 Public Library 8,631,805 10,294,689 Benefits 22,015,412 23,252,805 Agency and Other Accounts 34,213,507 26,929,977 Total Expenditures $ 280,600,749 $ 280,835,736 Source: Finance Department, City of Omaha. The major portion of the City's day-to-day operations, some annual capital improvements and various lease-purchase agreements are financed by the General Fund. Appropriations are also made from the fund for operating the Public Library System. Further appropriations are provided for the City's contribution to employee benefit plans including pension systems, hospitalization and life insurance and social security taxes. The 2010 Budget was formulated from revised projections for budget year Budget projections anticipate an increase of $0.2 million over 2009 Budget or an increase of 0.1%. B-5

40 DEBT SERVICE REQUIREMENTS The annual debt service requirements on outstanding Lease Revenue Bonds, including the Parity Bonds, are shown below, together with the annual debt service requirements on the Bonds. For Year Ending December 31 Debt Service on Outstanding Lease Revenue Bonds Annual Principal Annual Interest Annual Debt Service 1 Principal Interest Debt Service on the Bonds Less Federal Credit 2 Total Principal and Net Interest Total Debt Service 2010 $3,625,000 $6,058,505 $9,683,505 $1,135,000 $522,079 $-40,452 $1,616,627 $11,300, ,495,000 5,897,683 10,392,683 1,165, ,459-38,226 1,614,233 12,006, ,740,000 5,722,155 10,462,155 1,185, ,537-37,248 1,610,289 12,072, ,985,000 5,537,744 10,522,744 1,225, ,760-36,270 1,618,490 12,141, ,045,000 5,331,758 10,376,758 1,260, ,541-35,234 1,615,306 11,992, ,235,000 5,118,429 10,353,429 1,305, ,246-34,199 1,617,047 11,970, ,370,000 4,896,154 9,266,154 1,360, ,655-32,659 1,620,996 10,887, ,420,000 4,689,587 9,109,587 1,415, ,755-31,034 1,616,721 10,726, ,665,000 4,472,058 9,137,058 1,485, ,544-29,323 1,620,221 10,757, ,105,000 4,250,852 8,355, , ,027-27, ,414 9,008, ,360,000 4,054,630 8,414, ,000 86,091-25, ,275 9,059, ,235,000 3,833,191 8,068, ,000 68,417-23, ,471 8,222, ,980,000 3,614,136 7,594, ,000 62,710-21, ,762 7,749, ,265,000 3,407,027 7,672, ,000 56,629-19, ,809 7,828, ,500,000 3,196,774 7,696, ,000 50,163-17, ,606 7,849, ,795,000 2,985,309 7,780, ,000 42,732-14, ,776 7,933, ,870,000 2,745,981 7,615, ,000 34,990-12, ,744 7,768, ,995,000 2,496,967 7,491, ,000 26,940-9, ,511 7,649, ,965,000 2,249,869 7,214, ,000 18,269-6, ,875 7,371, ,755,000 2,002,420 6,757, ,000 9,290-3, ,038 6,913, ,080,000 1,756,592 6,836, ,836, ,405,000 1,485,670 6,890, ,890, ,745,000 1,197,595 6,942, ,942, ,105, ,460 6,996, ,996, ,600, ,750 5,218, ,218, ,890, ,500 5,271, ,271, ,185, ,625 5,314, ,314,625 TOTALS $128,415,000 $89,022,417 $217,437,417 $13,840,000 $3,900,833 -$497,622 $17,243,210 $234,680,627 1 Less principal and interest on Refunded Bonds 2 Build America Bonds 35% federal interest credit B-6

41 SUMMARY OF 2009 GENERAL FUND REVENUES AND EXPENDITURES BY SOURCE as of June 30, Actual Projected Projected Over Budgeted 6/30/ /31/2009 (Under) Budget Revenues: General Property Tax $ 64,378,978 $ 37,179,644 $ 64,578,978 $ 200,000 Motor Vehicle Taxes 9,020,000 4,464,363 9,250, ,000 City Sales and Use Tax 128,087,500 60,293, ,025,978 (8,061,522) Business Taxes 32,655,095 13,317,687 34,792,865 2,137,770 Licenses and Permits 8,437,700 3,404,162 6,965,000 (1,472,700) Intergovernmental Revenues 9,869,300 4,168,383 8,458,000 (1,411,300) Charges for Services 18,894,974 8,726,087 19,878, ,462 Investment Income 2,825, ,314 1,300,000 (1,525,400) Miscellaneous 2,535,692 1,134,937 2,535,692 0 Prior Year General Fund Balance 3,896,110 3,896,110 3,896,110 0 Total General Fund Revenue $280,600,749 $137,373,770 $271,681,059 $(8,919,690) Expenditures: Legislative & Executive $ 2,801,834 $ 1,920,655 $ 2,709,044 $ (92,790) Law, Personnel & Human Relations 6,421,625 2,785,258 5,832,258 (589,367) Finance 2,450,432 1,130,357 2,389,188 (61,244) Planning 6,524,621 2,888,264 6,434,060 (90,561) Parks, Recreation and Public Property 18,576,407 9,123,557 17,718,874 (857,533) Public Safety 163,105,477 45,409, ,678,304 5,572,827 Public Works 15,359,629 6,301,637 15,907, ,204 Convention & Tourism 500, (500,000) Public Library 8,631,805 3,902,622 8,231,765 (400,040) Benefits 22,015,412 12,765,835 22,975, ,635 Outside Agency Accounts 19,422,158 11,537,890 18,090,966 (1,331,192) Contingency and Other Accounts 14,791,349 3,043,833 12,746,332 (2,045,017) Total General Fund Expenditures $280,600,749 $100,809,638 $281,713,671 $ 1,112,922 Excess Revenues over Expenditures Overage $(10,032,612) Projected 2008 General Fund Budget Carryover Reserve $(10,032,612) Source: Unaudited records and projections of the Finance Department, City of Omaha as of June 30, These records and projections have not been reviewed by the City's outside auditors: projections are projections only. Actual results as the result of the Year 2009 year-end audit may differ significantly. Since this June 30, 2009 projection, the City has initiated several expenditure reduction initiatives and increased fees to enhance revenues. See SOURCES OF CITY REVENUES. B-7

42 PROPERTY VALUATIONS AND DEBT RATIOS As of December Actual Valuation 1 $20,091,391,760 $21,495,123,660 $22,265,984,445 $25,302,239,770 $26,509,935,870 Net Direct General Obligation Bonded Debt 439,551, ,864, ,368, ,334, ,086,218 % of Net Direct General Obligation Bonded Debt to Actual Valuation 2.19% 2.03% 2.09% 2.06% 2.03% 1 Source: Records of Accounting Department, Office of the Douglas County Clerk. Year Population Population, Net General Bonded Debt and Per Capita Debt 251, , , , , , , , , , , , , ,691 Net Direct General Obligation Bonded Debt 2,3 $ 11,100,500 30,697,871 71,586,248 73,939, ,435, ,103, ,338, ,421, ,869, ,551, ,864, ,368, ,334, ,312,795 Per Capita Net Direct General Obligation Bonded Debt $ , , , , , , , , , Source: United States Census and Metropolitan Area Planning Agency, City of Omaha. 2 Records of the Finance Department, City of Omaha. 3 In 1982, the City of Omaha inaugurated a new annexation policy. The current annexation policy is designed to create annual, balanced annexation packages and establish consistency from year to year. Such annexation packages combine areas with relatively high outstanding indebtedness in relation to assessed valuation with other areas that have a more positive financial picture. These balanced packages can then be added to the City without tax increase to cover retirement of the additional debt assumed by the City. Under this approach, Omaha has grown by approximately 126,780 people and 39 square miles as a result of annexations since B-8

43 OVERLAPPING DEBT Listed below are the political subdivisions which have the power to levy taxes and the amount of net bonded indebtedness of each, as reported to the State of Nebraska Auditor of Public Accounts on January 2, 2009, applicable to the taxable property within the City of Omaha: Bonds Outstanding % Applicable to City of Omaha $ Amount Applicable Douglas County 1 $ 80,045, % $ 63,273,885 Omaha-Douglas Public Building Commission 2 26,820, ,195,460 School District of Omaha 3 241,561, ,707,405 School District of Ralston 3 27,855, ,024,959 School District of Millard 3 157,785, ,073,201 School District of Elkhorn 3 120,190, ,760,795 School District No. 66 of Douglas County 3 17,960, ,960,000 Total $672,216,949 $487,195,706 1 Douglas County, under various lease purchase agreements, is obligated to provide for annual rental payments. The annual payments on those lease purchase agreements, mostly short-term, are in each case $500,000 or less. 2 Payable from certain property tax revenues and payments to be made to it by the City of Omaha and Douglas County under certain contractual agreements. Actual rental payments by the City for 2008 were $1,358,426. The Act authorizing issuance of bonds by the Omaha-Douglas Public Building Commission (the Commission ) permits the Commission to levy a tax of $.017 per $100 of actual valuation on all the taxable property in Douglas County; the levy for is $ per $100 of actual valuation. However, although the same Act authorizes the City to levy a tax on all the taxable property in the City, except intangible property, of $.017 per $100 of actual valuation in excess of the Charter limitation described under AUTHORITY TO LEVY TAXES, if and to the extent necessary to make the City s payments to the Commission, no such levy has ever been made by the City for such purpose. 3 Tax levies for general obligation bond sinking fund purposes are unlimited as to amount. Residents of the City reside in one of the five school districts and pay taxes only to that school district. These numbers represent bonds outstanding as of August 31, The City s ratio of direct and overlapping debt ($944,669,629) to its 2009/2010 property valuation ($27,077,712,200) is 3.489%. LONG-TERM CONTRACTUAL AGREEMENTS The City of Omaha, under certain existing contractual agreements (including lease purchase agreements), is obligated to provide for annual payments which are a charge on the General Fund and the Parking Revenue Fund. From 2009 to 2036, the highest annual payment is $13,055,473 (in 2012), the lowest is $5,218,750 (in 2034), and the average annual payment is $9,074,259. Such annual payments are included as General Fund budgetary items for which annual appropriations are required. Under the Charter of the City of Omaha, the outstanding amount of any lease purchase agreements executed by the City as vendee or as lessee is not chargeable against the City debt limit. B-9

44 City of Omaha and Local Authorities and Districts Revenue and Special Obligation Bonds Outstanding 1 as of December 31, 2008 City of Omaha: Tax Increment Bonds and Notes $ 261,573,649 Special Tax Revenue Bonds 44,000,000 Highway Allocation Revenue Bonds 2,210,000 Convention Center Hotel Revenue Bonds 109,750,000 Special Obligation Bonds 83,825,000 Omaha Public Power District 1,902,403,000 Airport Authority of the City of Omaha 28,564,382 Sanitary Sewerage System Revenue Bonds 52,235,000 Nebraska Department of Environmental Control Sewer Revenue Notes 35,270,961 Metropolitan Utilities District 195,102,930 1 Revenue bond indebtedness is not general obligation debt of the City. Principal and interest are paid solely from revenues arising from operations of the respective City facilities or of the Authority or District issuing such revenue bonds. No taxes are levied for payment of either principal or interest. Nor are the Tax Increment Bonds and Notes and Special Tax Revenue Bonds referred to above general obligations of the City. Principal and interest are paid (1) either from that portion of the ad valorem tax on real property in a redevelopment project which is in excess of that portion of the ad valorem tax upon real property in such redevelopment project produced by the levy at the rate fixed each year by or for each public body levying a tax in such redevelopment project on the valuation for assessment of the taxable real property as last certified for the year prior to the providing for division of such taxes pursuant to the redevelopment plan or (2) from special tax revenues collected pursuant to redevelopment laws. AUTHORITY TO LEVY TAXES Under the City Charter, the tax levy of the City in any year for all purposes shall not exceed the total of (i) $.6125 per $100 of actual taxable value plus (ii) whatever tax levy is necessary to provide for principal and interest payments on the indebtedness of the City, for the administrative expenses incurred in issuing and maintaining bonds, and for the satisfaction of judgments and litigation expenses in connection therewith, plus (iii) whatever amount is required to finance certain overtime and holiday pay for members of the police force. In addition, the Omaha-Douglas Public Building Commission Act, pursuant to which the Commission issues bonds empowers the City to levy a tax on all the taxable property in the City, except intangible property, of $.0175 per $100 of actual valuation in excess of the Charter limitation if and to the extent necessary to make the City s payments to the Commission. Effective July 1, 1998, the tax levy of the City (exclusive of levies for preexisting lease-purchase contracts and bonded indebtedness approved according to law and secured by a levy on property) is limited by state law to 45 /$100 of taxable valuation. See THE BONDSRevision of State Property Tax System herein. The City s tax levy during its current fiscal year ending December 31, 2009 is cents per $100, plus cents per $100 for payment of the City s general obligation indebtedness, plus cents per $100 for satisfaction of judgments and cents per $100 for payment on the City s Special Redevelopment Levy, for a total levy of cents per $100. A detailed summary of the property tax levied on real and personal property in the City appears in the table entitled Total Property Tax Levies in the City of Omaha in Appendix B. The City s tax levy for its next fiscal year ending December 31, 2010 is cents per $100, plus cents per $100 for payment of the City s general obligation indebtedness, plus cents per $100 for satisfaction of judgments and cents per $100 for payment on the City s Special Redevelopment Levy, for a total levy of cents per $100. B-10

45 TOTAL PROPERTY TAX LEVIES IN THE CITY OF OMAHA (Levied on Real and Tangible Personal Property) City of Omaha General Fund Debt Service Fund Judgment Fund Redevelopment Fund Total for City of Omaha Amount per $100 of actual Valuation (Rounded to four decimals) $.2431 $.2431 $.2431 $.2431 $.2431 $ $.4339 $.4339 $.4339 $.4339 $.4339 $ Amount per $100 of actual Valuation Other Taxing Units M.U.D.Water Hydrants $.0070 $ -0- $ -0- $ -0- $ -0- Douglas County Library-(Unincorporated Areas Only) School District of Omaha School District No. 66 of Douglas County School District of Ralston School District of Millard School District of Elkhorn State Educational Service Units Omaha-Douglas Public Building Commission Papio Missouri River Natural Resources District Metropolitan Technical Community College Omaha Transit Authority Residents in Omaha reside in one of the above five school districts and pay taxes only to that school district. 2 Residents residing in school districts other than the School District of Omaha pay $ for years , $ for years , $ for years and $ for years B-11

46 MAJOR TAXPAYERS The following are firms located within the City of Omaha with real estate valuations in excess of $25,000,000 as of August 30, Taxpayer Value of Real Property OAK VIEW MALL LLC $102,718,100 UNITED OF OMAHA LIFE INS 95,101,200 WESTROADS MALL LLC 82,092, TH AND DODGE LP 75,647,800 IRET-MR9 LLC 55,005,100 CLF LANDMARK OMAHA LLC 54,550,200 FIRST DATA RESOURCES INC 53,282,900 COMMERCIAL FEDERAL SAVINGS & LOAN 52,086,500 OPIS REALTY CO ETAL 43,994,900 W O W LIFE INS SOC 40,000,000 CREIGHTON ST JOSEPH REGIONAL 39,000,000 CONNECTICUT NATL BANK TR 38,856,300 FIRST NATIONAL BANK OMAHA 36,710,100 WAL-MART REAL ESTATE BUS TR 36,617,800 OMAHA PLAZA INVESTMENTS LLC 36,287,300 CAGR LLC 34,761,700 TARGET CORPORATION 34,244,100 WACHOVIA DEVELOPMENT CORPORATION 34,060,000 COLE MT OMAHA 33,341,600 DOUGLAS BUILDING LLC 31,580,300 LVP OAKVIEW STRIP CENTER LLC 31,183,200 GUARANTEE MUTUAL LIFE 31,132,000 SECURITY NATL PROPERTIES FUND 30,946,000 WEST TELESERVICES CORP 30,006,900 ALEGENT HEALTH 29,706,500 BISHOP CLARKSON MEMORIAL HOSPITAL 28,762,100 REGENCY LAKESIDE ASSOC LLC 28,750,800 IRET PROPERTIES 28,644,600 FIRST NATL OF NEBR INC 28,216,300 CONNECTIVITY SOLUTIONS MANUFACTURING 28,020,600 CFO2 OMAHA LLC 27,484,300 NEBRASKA FURNITURE MART INC. 27,121,100 LOZIER CORP 26,943,500 WAL-MART REAL ESTATE BUSINESS 26,213,000 L STREET MARKETPLACE LLC 25,677,200 ROE NORTH PARK II LLC 25,623,300 VANDERBILT LTD 25,606,400 Source: Records of the Tax Control Supervisor, Office of the Douglas County Clerk. B-12

47 PROPERTY TAX COLLECTIONS Property Taxes Property taxes on tangible property, real and personal, are levied by the City of Omaha, collected by the Douglas County Treasurer and remitted to the City. Real property taxes are levied September 1 of each year and become due December 31. The first half of tax payable becomes delinquent the following April 1 and the second half August 1. Personal property taxes also are levied September 1 of each year, become due the following December 31 and become delinquent in halves on the succeeding April 1 and August 1. Taxes for Year Shown Amount % Total Certified Collected Collected Collections 1998 $68,915,674 $67,373, $1,604,868 $68,978, ,024,257 70,529, ,651,123 72,180, ,109,264 75,432, ,771,124 77,204, ,293,126 74,827, ,529,927 76,357, ,926,571 78,176, ,061,170 79,237, ,464,501 80,538, ,479,940 82,018, ,165,599 83,107, ,623,450 84,730, ,170,521 85,897, ,762,734 88,660, ,260,893 91,592, ,572,719 93,165, ,605,427 96,518, ,623,515 98,142, ,888, ,891, ,021, ,912, Year Ended December 31 Source: Records of Finance Department, City of Omaha. Prior Years Taxes Collected Property Valuations and Property Tax Levies % of Total Collections to Current Year Taxes Actual Valuation $21,495,123,660 $22,265,984,445 $25,302,239,770 $26,509,935,870 $27,077,712,200 Levy (per $100 actual valuation) Source: Records and Projections of Finance Department, City of Omaha. City of Omaha taxable property valuations have increased nearly 35% from 2004 to 2009 The property tax base has been enhanced through orderly annexation of developed sanitary and improvement districts contiguous to the City and also by the annexation of the former City of Elkhorn. City Sales and Use Taxes The City s sales tax rate of 1.5%, authorized under the provisions of the Nebraska Revenue Act of 1967, has remained unchanged since July 1, Net sales tax collections have increased by 4.4% and by 2.4%, respectively, over the past two years. However, sales tax receipts for 2009 have been B-13

48 adversely affected by the economy. Through August 2009, actual City sales tax receipts were down 2.8 compared to the same period in When compared to budget, the estimated reduction for 2009 revenue attributed to these conditions is $8.0 million. City Business Taxes Receipts for telephone occupation tax are projected at $16,500,000 for The Omaha Public Power District Occupation Tax rate is 5% of revenues resulting from the sale of electricity within the corporate limits of the City of Omaha. The 2009 projection of $4,117,000 is based upon the assumption that weather conditions will be normal. The Cable Television Franchise Fee rate is 5% of gross receipts generated from the operation of cable television within the City of Omaha. The 2009 revenue estimates are $5,100,000. Vehicle Occupation Tax for 2009 is $8 per rental. The 2008 revenues are projected at $1,800,000. Based on the 5½% per night occupation tax for hotels/motels, the City estimates that the Hotel/Motel Tax will generate $4,600,000 for the General Fund in Other Revenues The City receives intergovernmental revenues from a number of sources. Federal and state grants-in-aid and matching funds are received by the City to help fund specific programs and projects. State tax distributions are appropriated by the Nebraska Legislature according to a formula comparing its population to the total population of all incorporated municipalities within the State. The Metropolitan Utilities District pays a payment in lieu of taxes equal to 2% of the annual gross revenue derived from all retail sales of water and gas sold within the City. The Omaha Public Power District makes payments in lieu of taxes at the 1957 in-lieu-of-tax levels as dictated by Section , Reissue Revised Statutes of Nebraska, as amended. Economic Factors and 2009 and 2010 Budgets The following factors were considered in preparing the City s budget for the 2009 fiscal year.: The increase in the City s property tax base provided by real growth which includes annexations was estimated at 3.7% for Total growth, including revaluations of current property, was estimated at 4.8%. Overall General Fund revenue growth for 2009 was projected at 1.6% due primarily to revenue generated by newly annexed areas. Because of the shortfall in sales tax receipts described under City Sales and Use Taxes, the City is in the process of reducing its budget for the 2009 fiscal year by approximately $10.0 million, of which $5.0 million already has been implemented. The reduction of sales tax receipts was a significant factor in the preparation of the City s budget for the 2010 fiscal year. To offset the reduction revenue enhancements and expenditure reductions have been implemented, including a tax levy increase as described under SOURCES OF CITY REVENUESAuthority to Levy Taxes. See the table, GENERAL FUNDFiscal Year 2009 Budget and 2010 Budget in Appendix B. At the end of 2008, the unreserved fund balance in the General Fund was $28.9 million. The City appropriated $3.9 million of this amount for spending in the 2009 fiscal year budget and $1.9 million for spending in the 2010 fiscal year budget. These amounts represent the 2007 and 2008 Budget Balance Carried Forward. The City Charter requires that the General Fund Budget Balance, as of the close of any particular fiscal year, shall be applied as General Fund revenue in the budget for the fiscal year two years subsequent to that fiscal year. B-14

49 DEBT MANAGEMENT General Obligation Debt Margin Article V, Section 5.27, Home Rule Charter of the City of Omaha, 1956, as amended, provides: The total amount of general obligation indebtedness outstanding at any time, which shall include bonds issued but shall not include bonds authorized until they are issued, shall not exceed 3.5 per cent of the actual value of taxable real and personal property in the city. Computation of the general obligation debt margin as defined in the Home Rule Charter, based upon 2007 valuations, reflects the following: Maximum debt limit (3.5% of total assessed valuation) $927,847,755 General obligation bonds outstanding 558,062,463 Less balance in General Obligation Debt Service Fund December 31, 2008 (18,976,244) (539,086,219) General obligation debt margin $388,761,536 Revenue bond indebtedness, special obligation bonds, general obligation notes and lease-purchase agreements are not chargeable against the general obligation debt margin. The City of Omaha has no general obligation notes outstanding. Revenue and special obligation bond indebtedness and lease purchase agreement obligations are set forth herein under the captions OVERLAPPING DEBT and LONG-TERM CONTRACTUAL AGREEMENTSCity of Omaha and Local Authorities and Districts Revenue and Special Obligation Bonds Outstanding. Debt Payment Record The City of Omaha has never defaulted on its obligations to pay principal of or interest on its indebtedness. General Obligation Bonds Authorized But Unissued Upon the issuance of the Bonds, the City has $35,146,000 of general obligation bonds authorized but unissued. The City anticipates that these bonds will be issued in varying amounts annually through CASH RESERVE FUND At a special City election held on November 6, 1984, voters of the City approved an amendment to Section 5.03 of the City Charter to provide in subsection (10) for the establishment of a cash reserve fund ( Cash Reserve Fund ) for the purpose of meeting emergencies arising from: (a) (b) act of God; the loss or partial loss of a revenue source; an unanticipated expenditure demand due to a natural disaster, casualty loss or B-15

50 (c) expenditure demand for the satisfaction of judgments and litigation expenses when the Judgment Levy Fund balance is inadequate; or (d) occurred. conditions wherein serious loss of life, health or property is threatened or has The 1984 amendment to the City Charter authorized the appropriation at the close of any fiscal year for credit to the Cash Reserve Fund of any amount, or portion thereof, held as General Fund surplus. Income earned on amounts credited to the Cash Reserve Fund is retained in the fund. The maximum size of the Cash Reserve Fund was established at an amount equal to 4% of General Fund appropriations. The ordinance adopted by the City Council to close Fiscal 1984 Accounts provided that the sum of $1,600,000 be transferred from 1984 available budgetary balances as the initial credit to the Cash Reserve Fund to be held as provided in Section 5.03(10) of the City Charter interest earnings of $168,683 increased the balance as of December 31, 2008 to $5,586,001. EMPLOYEE RELATIONS: RETIREMENT SYSTEMS The City of Omaha negotiates with four major unions: The Civilian Management Professional and Technical Employees Council; The Omaha City Employees, Local No. 251; The Omaha Association of Firefighters, Local No. 385; and The Omaha Police Union, Local No. 1. Current agreements with the four unions expire as follows: The Civilian Management Professional and Technical Employees CouncilDecember 31, 2008; Omaha Association of Firefighters, Local No. 385December 29, 2008; Omaha City Employees, Local No. 251December 31, 2008; and Omaha Police Union, Local No. 1 December 30, The negotiating procedure involves meeting with the designated union representatives and discussing economic and noneconomic items regarding contractual agreements. At any time, should an impasse be reached, Nebraska law provides that either party may appeal to the Nebraska Commission of Industrial Relations. Either party may appeal the decision of such Commission to the Nebraska Supreme Court, whose decision is final. CITY OF OMAHA EMPLOYEES RETIREMENT SYSTEM The City of Omaha Employees Retirement System became effective on January 1, Certain of its provisions, which are governed by Chapter of the Omaha Municipal Code, are summarized herein. All city employees except the following are covered by the plan: police; firefighters; persons paid on a contractual or fee basis; seasonal, temporary and part-time employees; and elected officials who do not make written application to the plan. B-16

51 The historical and negotiated employee and City contributions rates based on an employee s compensation are as follows: Period Employee Rate City Rate 07/01/72-01/31/ % 5.20% 02/01/98-06/18/ /19/01-12/23/ /24/01-12/21/ /22/02-12/20/ /21/03-07/29/ /30/06-12/16/ /17/06-12/15/ /16/07-12/27/ Prior service credit is granted for employment with the City before January 1, 1949, and membership service credit is granted for employment thereafter. Compulsory military duty and voluntary military duty in time of war count as service. Early retirement is permitted at age 50 with five years of service, with the accrued benefit reduced 8% per year for retirement prior to age 60. For employees whose age plus service equals or exceeds 80, the 8% per year reduction is eliminated. An employee s monthly pension is equal to 2.25% of average final monthly compensation for each year of service. Following is a cash flow analysis of the System for the last five fiscal years: Receipts Employee Contributions $ 3,627,681 $ 3,643,131 $ 3,532,487 $ 4,262,326 $4,695,162 Employer Contributions 4,449,203 4,500,192 4,145,033 4,975,039 5,374,082 Investment Income 30,056,366 18,008,146 30,714,663 17,158,906 (74,148,690) Security Lending Income 101,171 92, , , ,023 Total Receipts $38,234,421 $26,243,941 $38,518,355 $26,595,491 ($63,948,423) Disbursements Retirement Pensions $15,215,239 $17,647,999 $21,159,087 $22,230,727 $23,359,337 Death Benefits 173, ,338 75,698 11, ,610 Refunds 431, , , , ,075 Other Disbursements 1,635,149 1,777,885 1,912,828 2,047,699 1,750,227 Total Disbursements 17,455,607 19,956,224 23,603,611 24,541,924 25,693,249 Excess of Receipts Over Disbursements $20,778,814 $ 6,287,717 $ 14,914,744 $ 2,053,567 ($89,641,672) Source: Records of Finance Department, City of Omaha. B-17

52 The latest actuarial study by the firm of Milliman Consultants and Actuaries was for the period ended January 1, 2008 and included an 8.0% investment rate of return assumption. Summarized below is financial information concerning the System for the last five fiscal years System Total Assets 1 $270,838,150 $277,125,867 $292,040,611 $294,094,178 $204,452,506 Employee Contributions 1 3,627,681 3,643,131 3,532,487 4,262,326 4,695,162 Employer Contributions 1 4,449,203 4,500,192 4,145,033 4,975,039 5,374,082 Net Pension Obligation 2 (5,778,439) (8,100,275) (10,080,703) (13,910,207) (17,626,003) Unfunded Actuarial Accrued Liability 57,100,000 74,900,000 69,700,000 74,300, ,200,000 1 System Total Assets, Employee Contributions and Employer Contributions figures are taken from City of Omaha records as of December 31 of each year. 2 Complete Actuarial Valuations are performed every year, the last being for the period ended January 1, The net pension asset and unfunded accrued liability figures are taken from reports of Milliman Consultants and Actuaries and annual City audits. The City s annual pension cost and net pension obligation to the Civilian Plan for the fiscal year ended December 31, 2008 are as follows: City of Omaha Employees Retirement System Annual Pension Cost and Net Pension Obligation December 31, 2008 Annual required contribution $ 9,212,669 Interest on net pension asset 1,112,817 Adjustment to annual required contribution (1,235,608) Annual pension cost 9,089,878 Contributions made 5,374,082 Increase in net pension obligation 3,715,796 Net pension obligation, beginning of year (13,910,207) Net pension obligation, end of year $(17,626,003) Three-year trend information is as follows: Fiscal year ending Annual pension cost (APC) Percentage of APC contributed Net pension obligation 12/31/2008 $9,089,878 59% $(17,626,003) 12/31/2007 8,794, (13,910,207) 12/31/2006 6,135, (10,090,703) B-18

53 POLICE AND FIRE RETIREMENT SYSTEM The City of Omaha Police and Fire Retirement System became effective on July 1, Certain of its provisions, which are governed by Chapter of the Omaha Municipal Code, are summarized herein. Membership in the System is limited to and shall include only probationary and regular uniformed personnel of the Police and Fire Departments. Retirement is optional at age at age 45 with 20 years of service with a lifetime monthly service retirement benefit equal to 53% of average final monthly compensation. With 25 years of service or more, an employee can retire at the minimum age of 45 with a lifetime monthly retirement benefit equal to 75% of average final monthly compensation. Following is a cash flow analysis of the system for the last five fiscal years: Receipts Employee Contributions $10,712,955 $11,558,030 $13,468,182 $14,996,443 $14,858,953 Employer Contributions 15,387,900 16,434,609 19,020,836 20,699,211 20,373,206 Prior Service Contributions 1,327,600 1,327,600 1,327,600 1,327,000 1,327,000 Investment Income 43,980,340 39,095,219 58,197,853 28,888,051 (148,242,515) Security Lending Income 102,444 85,792 84, , ,804 $71,511,239 $68,501,250 $92,099,231 $66,060,925 ($111,234,552) Disbursements Retirement Pensions $30,994,359 $31,973,122 $33,918,970 $39,653,439 $49,426,367 Death Benefits 23,900 66,463 1,000 56,898 13,000 Refunds 195, , , , ,824 Other Disbursements 3,679,805 3,365,627 3,574,750 3,799,517 3,103,770 34,894,045 35,526,732 37,813,459 43,745,665 52,764,961 Excess of Receipts Over Disbursements $36,617,194 $32,974,518 $54,285,772 $22,315,260 ($163,999,513) Source: Records of Finance Department, City of Omaha. B-19

54 The latest actuarial study by the firm of Milliman Consultants and Actuaries was for the period ended January 1, 2008 and included an 8.0% rate of return investment assumption. Summarized below is financial information concerning the System for the last five years System Total Assets 1 $420,348,491 $453,323,009 $507,608,781 $529,923,390 $365,923,877 Employee Contributions 1 10,712,955 11,558,030 13,468,182 14,996,211 14,858,953 Employer Contributions 1 16,715,500 17,762,209 20,348,436 22,026,211 21,700,206 Net Pension Obligation 2 (12,500,861) (20,884,106) (31,630,196) (45,494,051) (61,464,670) Unfunded Actuarial Accrued Liability 2 $123,600,000 $250,500,000 $293,500, ,900, ,700,000 1 System Total Assets, Employee Contributions and Employer Contributions figures are taken from City of Omaha records as of December 31 of each year. 2 Complete Actuarial Valuations are performed every year, the last being for the period ended January 1, The net pension asset and unfunded accrued liability figures are taken from reports of Milliman Consultants and Actuaries and annual City audits. During 1977, on the basis of an actuarial balance sheet prepared as of January 1, 1977, the District Court of Douglas County, Nebraska made a determination relative to the unfunded liability for past service credits and the method of funding such amount. The City had adopted a policy whereby the employer contributions each year exceeded the matching requirements and served to amortize in part the past service costs. Commencing in 1979, the City contributes to the Police and Firemen s Retirement System the sum of $1,327,600 per year for 50 years to provide for the amortization of the prior service cost. The City s annual pension cost and net pension obligation to the Uniform Plan for the year ended December 31, 2008 are as follows: Police and Firemen s Retirement System Annual Pension Cost and Net Pension Obligation December 31, 2008 Annual required contribution $ 38,073,021 Interest on net pension obligation 3,639,524 Adjustment to annual required contribution (4,041,720) Annual pension cost 37,670,825 Contributions made 21,700,206 Increase in net pension obligation 15,970,619 Net pension obligation, beginning of year (45,494,051) Net pension obligation, end of year $(61,464,670) B-20

55 Three-year trend information is as follows: Fiscal year ending Annual pension cost (APC) Percentage of APC contributed Net pension obligation 12/31/2008 $37,671,425 58% $(61,464,670) 12/31/ ,563, (45,494,051) 12/31/ ,917, (31,630,196) Implementation of GASB Statements OTHER POST EMPLOYMENT BENEFITS The Government Accounting Standards Board ( GASB ) has issued Statements No. 43 ( GASB 43 ), Financial Reporting for Post Employment Benefit Plans Other Than Pension Plans ( OPEBs ), and No. 45 ( GASB 45 ), Accounting and Financial Reporting by Employers for Post Employment Benefits Other Than Pensions. GASB 43 was implemented by the City for fiscal year ending December 31, 2006 and GASB 45 was implemented by the City for fiscal year ending December 31, GASB 45 requires the accounting for the annual cost of OPEB and the related outstanding liability using an actuarial approach similar to pensions. The City implemented prospectively (zero net obligation at transition). Plan Description The City provides certain postemployment health care benefits to eligible retirees and their dependents in accordance with provisions established in Chapter 23 of the Omaha Municipal Code. The plan is a single-employer defined benefit health care plan administered by the City. The plan does not issue separate financial statements. Funding Policy The contribution requirements of plan members and the City are established through labor negotiations, with the Omaha Police Union Local No. 101 (the Police Union ), the Professional Firefighters Association of Omaha Local No. 385 (the Firefighters Union ), the Omaha City Employees Local No. 251, and other classified civilian and sworn employees. All agreements are approved and can be amended by the Omaha City Council. Contributions are made to the plan based on a pay-as-you-go basis and the City self-insures this benefit. For the year ended December 31, 2008, the City paid $15,479,325 for 1,201 retirees. Retiree contribution rates vary from 0% to 5% of an annual estimated premium depending on the bargaining group date of retirement. Retiree contributions for 2008 were $400,564. Annual OPEB Cost and Net OPEB Obligation The City s annual OPEB expense is calculated based on the annual required contribution of the employer ( ARC ), an amount actuarially determined in accordance with the parameters of GASB 45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and amortize any unfunded actuarial liabilities (or funding excess) over a period not to exceed 30 years. The City s annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the net OPEB obligation for 2008 are as follows (unaudited): B-21

56 Annual OPEB cost Percentage of annual OPEB contributed Net OPEB Fiscal year ended: December 31, 2008 $37,600, % $38,012,952 The following tables (unaudited) show (1) the components of the City s annual OPEB cost for the year, the amount actually contributed to the plan, and changes in the City s net OPEB obligation and (2) the funded status of the plan: (1) Annual required contribution $37,600,000 Contributions made 15,479,325 Increase in OPEB obligation 22,120,675 Net OPEB obligation beginning of year 15,892,277 Net OPEB obligation end of year $38,012,952 (2) The funded status of the plan as of March 1, 2006 is as follows: Actuarial accrued liability (AAL) $388,500,000 Actuarial value of plan assets Unfunded actuarial accrued liability (UAAL) $388,500,000 Funded ratio % Covered payroll $ 155,900,000 UAAL as a percentage of covered payroll 249% Source: Finance Department, City of Omaha. Actuarial Methods and Assumptions Actuarial valuations on an ongoing plan involve estimates of the value-reported amounts and assumptions about the probability of occurrence of events far into the future. Examples include assumptions about future employment, mortality and the health care cost trend. Amounts determined regarding the funded status of the plan and the annual required contributions of the employer are subject to continual revision as actual results are compared with past expectations and new estimates are made about the future. The following Schedule of Funding Progress presents multiyear trend information about whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liabilities for benefits. B-22

57 Actuarial valuation date Actuarial value of assets (a) CITY OF OMAHA, NEBRASKA Schedule of Funding Progress (unaudited) Year ended December 31, 2008 Post-Retirement Obligations Schedule of Funding Progress and Trend Information Actuarial liability (AL) (b) (Dollar amounts in millions) Unfunded AL (UAL) (b-a) Funded ratio (a/b) Covered payroll (c) UAL as a percentage of covered payroll ((b-a)/(c) March 1, 2006 $ - $307,500,000 $307,500,000 -% $153,600, % March 1, 2008 $ - 388,500, ,500,000 -% 155,900, % Fiscal year ending Schedule of Employer Contributions Annual required contribution (a) Total employer contribution (b) Percentage of ARC contribution (b/c) December 31, 2007 $28,600,000 $12,707, % December 31, ,600,000 15,892, % Source: Finance Department, City of Omaha. Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as understood by the employer and the plan members) and include benefits provided at the time of each valuation and the historical pattern of sharing benefit costs between the employer and plan member to that point. The actuarial methods used include techniques that are designed to reduce the effects of short-term volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the long-term perspective of the calculations. In the March 1, 2008 actuarial valuation, the unit credit actuarial cost method was used. The actuarial assumptions included a 4% projected investment rate of return and an annual health care cost trend of 7.88% initially, reduced by decrements to an ultimate rate of 5% after five years. Both rates include a 3.25% inflation assumption. The amortization of the unfunded actuarial accrued liability is calculated assuming 29 annual payments increasing at 4% per year. The actuarial study was prepared by Milliman Consultants and Actuaries for the period ending March 1, B-23

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59 APPENDIX B CITY OF OMAHAFINANCIAL INFORMATION PART TWO Independent Auditors Report and General Purpose Financial Statements

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61 CITY OF OMAHA, NEBRASKA Basic Financial Statements and A-133 Reports December 31, 2008 c1 (With Independent Auditors Report Thereon)

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63 General Fiduciary Pension Governmental Budget Budget CITY OF OMAHA, NEBRASKA Table of Contents Page Independent Auditors Report 1 2 Management s Discussion and Analysis3 14 Basic Financial Statements: Governmentwide Financial Statements: Statement of Net Assets 15 Statement 16 of Activities Fund Financial Statements: Governmental Funds: Balance Sheet 17 Statement the Statement and Changes in Fund Balances to the Governmentwide Statement Activities 19 Reconciliation of Proprietary Funds: Statement Statement Statement Fiduciary Funds: Statement Statement of Revenues, Expenditures, and Changes in Fund Balances18 of Revenues, Expenditures, of Activities of Fund Net Assets20 of Revenues, Expenses, and Changes in Fund Net Assets21 of Cash Flows Proprietary Funds 22 of Fiduciary Net Assets of Changes in Fiduciary Net Assets Funds23 Trust Funds24 Notes to Basic Financial Statements Required Supplementary Information (Other than MD&A): Schedule and Actual General Fund Notes to Schedules and 82 Actual Fund of Revenues, Expenditures, and Changes in Fund Balances of Revenues, Expenditures, and Changes in Fund Balances Schedule Civilian Plan 85 Uniformed Plan 86 Postretirement Obligation 87 of Funding Progress and Employer Contributions:

64 Table of Contents Single Audit Section: Independent Auditors Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Schedule of Expenditures of Federal Awards 88 Notes to Schedule of Expenditures of Federal Awards 89 Accordance with Government Auditing Standards 90 Independent Auditors Report on Compliance with Requirements Applicable to Each Major Program and on Internal Control over Compliance in Accordance with Schedule of Findings and Questioned Costs MB Circular A Page CITY OF OMAHA, NEBRASKA

65 Omaha, NE Lincoln, NE Two Central Park Plaza 233 South 1 3 Street KMG LLP, a U.S imited hasty partnerspp, bs the U.S. member firm of KPMG loternational, a Swiss cooperative. GASB Statements No. 25 and No. 27. Accounting Standards Board (GASB) Statement No. 50, Pension Disclosures, an amendment of As described in note 1 to the basic financial statements, the City adopted the provisions of Governmental in conformity with U.S. generally accepted accounting principles. above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, the discretely presented component unit, each major fund, and the aggregate remaining fund information of the City of Omaha, Nebraska as of December 31, 2008, and the respective changes in financial position and cash flows, where applicable, thereof for the year then ended, In our opinion, based on our audit and the report of other auditors, the financial statements referred to America and the standards applicable to financial audits contained in Government Auditing Standards, misstatement. The financial statements of MECA were not audited in accordance with Government issued by the Comptroller General of the United States. Those standards require that we plan and perform Auditing Standards. An audit includes consideration of internal control over financial reporting as a basis expressing an opinion on the effectiveness of the City s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles presentation. We believe that our audit and the report of other auditors provide a reasonable basis for our used and significant estimates made by management, as well as evaluating the overall financial statement opinions. the audit to obtain reasonable assurance about whether the financial statements are free of material We conducted our audit in accordance with auditing standards generally accepted in the United States of for designing audit procedures that are appropriate in the circumstances, but not for the purpose of and revenues of the discretely presented component unit. Those financial statements were audited by other activities, the discretely presented component unit, each major fund, and the aggregate remaining fund information of the City of Omaha, Nebraska (the City) as of and for the year ended December 31, 2008, which collectively comprise the City s basic financial statements as listed in the table of contents. These financial statements are the responsibility of the management of the City. Our responsibility is to express opinions on these financial statements based on our audit. We did not audit the financial statements of auditors whose report thereon has been furnished to us, and our opinion, insofar as it relates to the amounts Metropolitan Entertainment and Convention Authority (MECA), which represent 100% of the total assets included for MECA, is based on the report of the other auditors. We have audited the accompanying financial statements of the governmental activities, the business-type City of Omaha, Nebraska: of the City Council The Honorable Mayor and Members Independent Auditors Report Suite 1501 Suite 1600 KPMG LLP

66 The purpose of that report is to describe the scope of our testing of internal control over financial reporting compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. 2 August 26, 2009 Omaha, Nebraska LCP comprise the City s basic financial statements. The accompanying schedule of expenditures of federal Our audit was conducted for the purpose of forming opinions on the financial statements that collectively awards on page 88 is presented for purposes of additional analysis as required by U.S. Office of federal awards has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated, in all material respects, in relation to the basic financial statements taken as a whole. Organizations, and is not a required part of the basic financial statements. The schedule of expenditures of ianagement and Budget Circular A-133, Audits of States, Local Governments, and Non-Profit the information and express no opinion on it. of measurement and presentation of the required supplementary information. However, we did not audit Management s discussion and analysis on pages 3 through 14 and the Required Supplementary Information on pages 82 through 87 are not a required part of the basic financial statements, but are supplementary information required by U.S. generally accepted accounting principles. We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods financial reporting or on compliance. That report is an integral part of an audit performed in accordance and compliance and the results of that testing, and not to provide an opinion on the internal control over with Government Auditing Standards and should be considered in assessing the results of our audit. on our consideration of the City s internal control over financial reporting and on our tests of its In accordance with Govermnent Auditing Standards, we have also issued a report dated August 26, 2009

67 Management s Discussion and Analysis (Unaudited) Year ended December 31, (Continued) The first two statements are governmentwide statements that provide both long-term and short-term information about the City s overall financial status. The basic financial statements include two kinds of statements that present different views of the City: City s basic financial statements comprise three components: (1) governmentwide financial statements, (2) fund financial statements, and (3) notes to the financial statements. This report also contains other supplementary information in addition to the basic financial statements themselves. This discussion and analysis is intended to serve as an introduction to the City s basic financial statements. The Overview of the Financial Statements was a decrease in governmental activities and $5.8 million was a decrease in business-type activities. The $77.6 million, a decrease of $31.8 million in comparison with the prior year. Construction of capital assets and the major Debt Service Fund balance of $2.5 million. Of the combined governmental funds ending fund balances, approximately 42%, or $32.6 million, is unreserved. and expenditures over budget, lapsed encumbrances, a shortfall in the initial credit and year-end transfers 9.3% of general fund expenditures. At the end of the current fiscal year, the unreserved fund balance for the general fund was S28.9 million, or in the amount of $1.9 million account for a 2008 year-end carryover reserve of S 1.9 million. of $1.4 million and the loss by the Sewer Fund in the amount of $2.6 million. for net pension and postretirement benefits obligations in the amount of $39.9 million. The decrease in The City s total net assets decreased by $22.7 million from the prior year. Of this amount, $16.9 million decrease in net assets related to governmental activities is primarily attributable to current year increases business-type activities is primarily attributable to the loss by the Convention Center Hotel in the amount As of December 31, 2008, the City s govemmental funds reported combined ending fund balances of account for $25.8 million of this reduction and non-major special revenue funds accounted for a $9.6 million reduction. These decreases were offset by increases in the General Fund balance of S2.7 million The general fund, on a current fiscal resources basis, reported a shortfall of revenues over expenditures, lapsed encumbrances, and transfers of $.8 million. Revenues above budget in the amount of $3.8 million The City s bond rating from Standard & Poor s was AAA and Moody s Investors Service rated the City s bonds AA1. The assets of the City, on a governmentwide basis excluding component units, exceeded its liabilities at the close of fiscal year 2008 by S574.4 million (net assets). Of this amount, $23.4 million is unrestricted, while purposes. $531.6 million is invested in capital assets net of related debt and $19.4 million is restricted for specific Financial Highlights for Fiscal Year 2008 analysis is to look at the City s financial performance as a whole. Readers should also review the basic financial statements to enhance their understanding of the City s financial performance. of the City s financial activities for the fiscal year ended December 31, The intent of this discussion and The discussion and analysis of the City of Omaha s (the City) financial performance provides an overall review CITY OF OMAHA, NEBRASKA

68 Management s Discussion and Analysis Year ended December 31, 2008 (Unaudited) 4 (Continued) services it provides. The City s sewer system, air quality control enforcement, compost operation, marina, hotel are included here. Business-Type Activities golf courses, tennis operation, parking facilities, printing services, river plaza facility, citywide sports, and These two govemmentwide statements report the City s net assets and how they have changed. Net assets difference between the City s assets and liabilities Governmental Proprietary Fiduciary is the The City charges fees to customers in order to cover the costs of certain public works, parks and recreation, and general administration departments. Taxes and intergovernmental revenues principally support these functions. Governmental Activities Most of the City s basic services are included here, such as the police, fire, In the statement of net assets and the statement of activities, the City is divided into three categories: the City. condition of the City s roads and other infrastructure, may need to be considered to assess the overall health of one way to measure the City s financial health or financial is improving or deteriorating. Other nonfinancial factors, such as changes in the City s property tax base and the position. Over time, increases or decreases in the City s net assets are an indicator of whether its financial health finances, using accounting methods similar to those used by private sector companies. The statement of net assets The govemmentwide financial statements are designed to provide readers with a broad overview of the City s and the statement of activities, which are the governmentwide statements, include the City s assets and liabilities All changes in net assets are reported as soon as the underlying event giving rise to the change occurs, regardless leave). using the accrual basis of accounting, which is similar to the accounting used by most private sector companies. that will only result in cash flows in future fiscal periods (e.g., uncollected taxes and earned but unused vacation Governmentwide Financial Statements of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items The financial statements also include notes that explain some of the information in the financial statements and provide more detailed data. The statements arc followed by a section of required supplementary information that further explains and supports the information in the financial statements. the government operates like a business, such as the City s sewage treatment plants or convention in the short term, as well as what amounts remain for future spending. fund statements tell how general government services like public safety were financed fund statements offer short-term and long-term financial information about the activities center hotel. fund statements provide information about financial relationships in which the City acts solely as a trustee or agent for the benefit of others, to whom the pertaining resources belong. government, reporting the City s operations in more detail than the govemmcntwide statements. The remaining statements are fund financial statements that focus on individual parts of the City s CITY OF OMAHA, NEBRASKA

69 (Unaudited) Year ended December 31, 2008 Management s Discussion and Analysis Proprietary funds Governmental funds The fund financial statements provide more detailed information about the City s most significant funds Fund Financial Statements Entertainment and Convention Authority. Although legally separate, this component unit is important because the City is financially accountable for it and provides debt service funding for the arena and convention center (see note 1). Component Unit The not Most Services 5 (Continued) proprietary funds. Proprietary funds, like the governmentwide statements, provide both short- and govemmentwide financial statements. The City uses enterprise funds to account for its sewer system, air fund. Enterprise funds are used to report the same functions presented as business-type activities in the for which the City charges customers a fee are generally reported in long-term financial information. The City maintains 11 enterprise funds, which are a type of proprietary The basic governmental fund financial statements can be found on pages 17 through 19 of this report. of the statement. differs from the modified accrual basis used in the funds statements, a reconciliation is provided at the end and (d) the variance between the final budget and actual results. Because the budgetary basis of accounting comparison statement is presented for the general fund using the City s budgetary basis of accounting. This statement reflects the following: (a) the original budget, (b) the final budget as amended, (c) actual results, The City adopts an annual budget for the general fund, as required by the City Charter. A budgetary balance sheet and in the governmental fund statement of revenues, expenditures, and changes in fund balances for the general fund and debt service fund, which are considered to be major funds. Data from the other governmental funds are combined into a single, aggregated presentation. The City maintains 86 governmental funds. Information is presented separately in the governmental fund there are more or fewer financial resources that can be spent in the near future to finance the City s (2) the balances remaining at year-end that are available for spending. These funds are reported using the on (1) the flow in and out of cash and other financial assets that can readily be converted to cash and of the City s basic services are included in governmental funds, which focus modified accrual accounting basis and a current financial resources measurement focus. Consequently, the governmental fund statements provide a detailed short-term view that helps the reader determine whether programs. The relationship between governmental activities (reported in the statement of net assets and the statement of activities) and governmental funds is described in a reconciliation that follows the governmental fund financial statements. The City has three kinds of funds: and spending for particular purposes. The City Charter, state law, and bond covenants require some funds. The the City as a whole. Funds are accounting mechanisms that the City uses to keep track of specific sources of funding City Council or Administration establishes other funds to control and manage money for particular purposes or to show that the City is properly using certain taxes and grants. City includes one separate legal entity in its report, the Metropolitan The govemmentwide financial statements can be found on pages 15 and 16 of this report. CITY OF OMAHA, NEBRASKA

70 Management s Discussion and Analysis Year ended December 31, 2008 (Unaudited) 6 (Continued) financial position. In the case of the City, assets exceeded liabilities by $575 million at the close of fiscal year building, equipment, and infrastructure), less accumulated depreciation, and less any related outstanding debt must be provided from other sources. used to acquire those assets. The City uses these assets to provide services to its citizens, and consequently, these assets are not available for future spending. The resources needed to repay the debt related to these capital assets By far, the largest portion of the City s net assets (93%) reflects its investment in capital assets (e.g., land, As noted earlier, net assets (assets over liabilities) may serve over time as a useful indicator of a government s City Governmentwide Financial Analysis on pages 82 through 87 of this report. supplementary information concerning the City s 2008 budget information and the City s progress in funding its obligation in both pension and other postemployment benefits. Required supplementary information can be found In addition to the basic financial statements and accompanying notes, this report also presents certain required Other Information through 81 of this report. The notes provide additional information that is essential to a full understanding of the data provided in the Notes to the Financial Statements govcmmentwide and fund financial statements. The notes to the financial statements can be found on pages 25 The fiduciary fund financial statements can be found on pages 23 and 24 of this report. The accounting used for fiduciary funds is much like that used for proprietary funds. its governmentwide financial statements because the City cannot use these assets to finance its operations. responsible for ensuring that the assets reported in these funds are used for their intended purpose, These other assets that, because of a trust arrangement, can be used only for the trust beneficiaries. The City is activities are reported in a separate statement of fiduciary net assets. The City excludes this activity from Fiduciary funds The City is the trustee, or fiduciary, for certain donated funds. It is also responsible for The basic proprietary fund financial statements can be found on pages 20 through 22 of this report. parking facilities, printing services, citywide sports, and hotel. quality control enforcement, compost operation, marina, golf courses, tennis operation, river plaza facility, CITY OF OMAHA, NEBRASKA

71 Management s Discussion and Analysis Year ended December 31, 2008 (Unaudited) 7 (Continued) The net assets of the City s business-type activities decreased from approximately $269 million to $264 million. key element of this decrease is the $2.6 million loss incurred by the Sewer Revenue Fund. The City generally can only use these net assets to finance the continuing operation of its enterprise operations. A Business-Type Activities due. having long-term commitments that are greater than current available resources. Specifically, the City did not included in past annual budgets the full amounts needed to finance future liabilities arising from compensated post-employment benefits ($36 million). The City will include these amounts in future years as they become Net assets of the City s governmental activities decreased $17 million (5%) to $311 million. This deficit does not mean that the City does not have the resources available to pay its current liabilities. Rather, it is the result of absences ($65 million), Civilian employees, Policemen s and Firemen s net pension obligation ($76 million) and Governmental Activities meet the government s ongoing obligations to citizens and creditors. Approximately 3%, or $19 million, of the City s net assets represent resources that are subject to external restrictions on their use. The remaining balance of unrestricted net assets, 4/o or S23 million, tnay be used to Invested in capital assets net of Total net assets Net assets: related debt Current and other liabilities Unrestricted net assets Total assets Total liabilities Total liabilities and net assets Current and other assets Capital assets Long-term liabilities Restricted net assets ,242 1, ,191 1, ,489 1, ,817 1,761 $ $ 1,272 1,208 $ , $ 1, ,817 1, (1) activities Governmental Business-type activities government Total primary SurnTnarv of Net Assets City of Omaha The following table reflects the condensed summary of net assets (in millions): CITY OF OMAHA, NEBRASKA

72 Net assets Other Total revenues 2008 (0.1) 2007 CITY OF OMAHA, NEBRASKA Management s Discussion and Analysis Year ended December 31, 2008 (Unaudited) The following table shows the revenue and expense of the governmental and business-type activities: City of Omaha s Changes in Net Assets Governmental activities (in millions) Revenues: Program revenues: Charges for services $ Operating grants and contributions Capital grants and contributions General revenues: Sales and use tax Property tax Other taxes Unrestricted investment earnings Other (0.1) Expenses: General government Public safety Transportation services Other public services Community development Culture and parks Interest on long-term debt Convention Center Hotel Sewage treatment Total expenses Increase (decrease) in net assets before transfers Transfers Increase (decrease) in net assets at beginning of year Net assets at end of year Business-type activities (16.3) (6.4) (4.0) Total primary government (22,7) 2.6 (0.6) (16.9) 15.0 (5.8) 3.1 (22.7) Governmental Activities The City s total revenues from governmental activities were $466.7 million for the fiscal year ended December 31, The largest source of revenue ($124.5 million for fiscal year 2008) for the City is sales and use tax. Net sales and use tax increased by $8.4 million (7.2%) during In 2008, property tax revenue increased by $4.1 million when compared to The City has maintained the same real estate tax rate ( cents per $100 of assessed value) since Property tax valuations for 2008 increased 4.7% when compared to 2007 valuations. 8 (Continued)

73 CITY OF OMAHA, NEBRASKA Management s Discussion and Analysis Year ended December 3 1, 2008 (Unaudited) The City s expenses for cover a wide range services, with 43%, or $205.8 million, for fiscal 2008 related to public safety and 13%, or $60.7 million, for fiscal 2008 for transportation services. Overall, the expenses for activities increased by 10% or $38.8 million in 2008, which can be largely, attributed to a $22.9 million increase in public safety expenses, $7.5 million increase in transportation services expenses and $6.2 million increase in development expenses. year govemmental activities governmental community of year Business-Type Activities Net assets the City s business-type activities decreased by $5.8 million. assets by the major enterprise funds and the other enterprise funds. of nonmajor Presented below is the change of net Fund Amount Convention Center Hotel$ Facilities Parking Sewer Revenue Other nonmajor enterprise funds (1,398,702) (684,343) (2,581,570) (1,144,991) The convention center hotel fund began operations in April The City believes that future operations the Hotel will eliminate this deficit. Annual from the City will subsidize any debt service shortfall. appropriations The parking facilities fund was established as a tool to manage the City s eight parking structures and various surface lots throughout the City. Lease purchase debt has been issued to finance the construction the structures. Annual appropriations from the City s general fund to subsidize the payment this debt will eliminate this deficit. of of of parking In May 2009 the City Council enacted an ordinance increasing sewer use fees 9% annually in 2010 through The action will eliminate future deficits and provide funding for the sewer system s capital improvements. beginning The City s enterprise operations are reviewed on an ongoing basis. and expenses are adjusted as necessary to maintain an adequate amount working capital. Annual may also be used to subsidize these funds. The City has decided to for these activities by the use enterprise accounting to identify the cost the services and for better of of account better management control. Revenues appropriations of Financial Analysis of the Government s Funds As noted earlier, the City uses fund accounting to ensure and demonstrate compliance with requirements. finance-related legal Governmental Funds The focus the City s governmental funds is to provide information on inflows, outflows, and balances spendable resources. Such information is useful in assessing the City s financing requirements. In particular, unreserved fund balances may serve as a useful measure a net resources available for spending at the end the fiscal year, except where by the City Charter. For the fiscal year ended of of of prohibited of near-term government s 9 (Continued)

74 Management s Discussion and Analysis Year ended December 31, 2008 (Unaudited) 10 (Continued) statements, but in more detail. The City s proprietary funds provide the same type of information found in the governmentwide financial Proprietary Funds The other major governmental fund is the Debt Service Fund. The Debt Service Fund has a total fund balance of $19.0 million, all of which will be used to for either payment of debt service on the City s general obligation debt or payment of debt issuance costs. of $3.9 million and $1.9 million, respectively, are available for appropriation for governmental use. Liquidate contracts and purchase orders of the prior period ($15.6 million) Pay debt service ($26.0 million) Provide income for the purpose of maintaining the City s coin collection and a variety of other restricted purposes ($2.8 million). expenditures. The unreserved fund balance represents 11% of the total fund balance to total fund expenditures, while the total fund balance represents 12% of that same amount. The total fund balance of the general fund increased by $2.7 million for fiscal year For budgeting purposes only, the 2007 and 2008 budget surpluses it may be useful to compare both the unreserved fund balance and the total fund balance to total fund The general fund s unreserved fund balance at December 31, 2008, not designated for a specific purpose, is $28.9 million. The General Fund is the City s chief operating fund. As a measure of the general fund s liquidity, Approximately 42%, or $32.6 million of the combined fund balance constitutes unreserved fund balance, which generally is available for spending at the City s discretion. The remainder of the fund balance is reserved to indicate that it is not available for new spending, because it has already been committed to: of $14.6 million accounted for the remainder of this reduction. Increases in the General Fund and major Debt of fund balance in capital funds of 26.1 million and an increase in deferred revenues in the special revenue funds December 31, 2008, the governmental funds reported combined ending fund balances of $77.5 million, a decrease of $31.8 million in comparison with the prior year. The construction of capital assets caused a reduction Service Fund in the aggregate amount of $5.2 million offset this reduction. CITY OF OMAHA, NEBRASKA

75 Management s Discussion and Analysis Year ended December 31, 2008 (Unaudited) 11 (Continued) Sales tax revenue was $.5 million below budget. Business taxes were $1.2 million above budget. Charges for services were $1.5 million above budget. The Mayor s Office, City Clerk, Law, Human Rights and Relations, Public Works Library departments, Retiree Benefits, Outside Agencies and Contingency & Other collectively were $5.6 million below budget. Interest earnings was $.6 million below budget. are summarized as follows: Significant variances between the general fund s actual revenues and expenditures and the final amended budget compensated leave payoffs. any time, transfer an unencumbered appropriation balance or portion thereof between appropriations of the same 2008, one transfer occurred. It appropriated funds from the wage adjustment to the Fire Department to fund There are three types of budget transfers, each requiring a successive level of authority. First, the Mayor may, at division. Second, transfers between divisions in the same department may be authorized by resolution of the City Council. Third, transfers between departments/agencies may be authorized by ordinance of the City Council. In Revenues: Taxes Intergovernmental Other Total Expenditures, lapsed encumbrances, Total Changes in fund balance $ (3.2) (3.2) (1.3) and transfers $ Original Final budget budget Actual (In millions) December 31, 2008 General Fund Budgetary Highlights the discussion of the City s business-type activities. enterprise funds amounted to ($25.2) million, ($5.8) million, $291.0 million, and $3.9 million, respectively, at December 31, Additional discussion concerning the finances of these funds has already been addressed in Net assets of the Convention Center Hotel Fund, Parking Facilities Fund, Sewer Revenue Fund, and other CITY OF OMAHA, NEBRASKA

76 Management s Discussion and Analysis Year ended December 3 1, 2008 (Unaudited) City of Omaha s Capital Assets (Net of accumulated depreciation) (In millions) Governmental Business-type activities activities Total Land $ Cultural assets Construction in progress Buildings Machinery and equipment 23.0 l Infrastructure Total $ 1, , , (Continued) $3.8 million. Construction began on the Downtown Ballpark Project; current year expenditures were $10.6 million. Construction continues on the City s Public Safety Training Center; current year expenditures were were $1.5 million. Construction continued on the Americans with Disabilities Street Ramp Project; current year expenditures were $4.1 million. Construction continued on the City s sewer system including the Combined Sewer Overflow Program with Construction continued on the Saddlebrook Community Center / Library Project; current year expenditures capital outlays of $22.4 million. Construction continued on the Harrison Street $4.3 million. th to St streets; current year expenditures were Construction began the L Street Interstate 80 to 126 th Project; current year expenditures were $4.1 million. Major capital asset events during 2008 included the following: wastewater treatment plants. The total change in the City s investment in capital assets for the current year was a improvements, machinery and equipment, streets, bridges, storni sewers, sanitary sewers, event facilities, and net increase of 5.7% (an increase of 7.8% for governmental activities and an increase of 1.6% for business-type activities). is $1.5 billion (net of accumulated depreciation). This investment in capital assets includes land, buildings, The City s investment in capital assets for its governmental and business-type activities as of December 31, 2008 Capital Assets Capital Asset and Debt Administration Departments were $6.7 million above budget. City Council, Human Resources, Finance, Planning, Parks, Recreation and Public Property, Fire and Police CITY OF OMAHA, NEBRASKA

77 Management s Discussion and Analysis Year ended December 31, 2008 (Unaudited) 13 (Continued) Under the City s Home Rule Charter, the total amount of general obligation indebtedness outstanding at any time December 31, 2008 is $388.8 million. shall not exceed 3.5% of the actual value of taxable real and personal property in the City. The debt margin as of Bonds from Aa- to Aa. Service on general obligation bonds. In 2009, Standard & Poor s upgraded its rating of the Sewer Revenue The City maintains a AAA rating from Standard & Poor s Corporation and a Aaa rating from Moody s Investors areas. Upon annexation, the City assumed $37.7 million of SID debt. The annexation of these areas accounts for the increase. During 2008, the City s total debt increased by $29.1 million (3%). In 2008, the City annexed 12 Sanitary Improvement Districts (SID). At the time of annexation, the City assumed all assets and debts of the annexed General obligation bonds $ Special tax revenue bonds Total S Notes payable Specialobligationbonds Leasepurchasebonds activities activities Total Revenuebonds Governmental Business-type (In millions) City of Omaha s Outstanding Debt bonds backed by a variety of revenue sources, including sales tax and property tax; $44.0 million of special tax revenue bonds backed by a redevelopment property tax levy; $87.6 million of lease purchase bonds backed by annual General Fund appropriations; and $38.5 million of notes payable backed by a variety of revenue sources. $165.2 million of revenue bonds secured solely by specified revenue sources; $83.8 million of special obligation Of this amount, $558.1 million is general obligation debt backed by the full faith and credit of the City; At December 31, 2008, the City had total bonded debt outstanding of $977.2 million (including notes payable). Long-Term Debt Construction in progress city wide totaled $65.4 million. The City provided $1.8 million of funding for the seating expansion project on the Qwest Convention Center and Arena. Annual city wide depreciation expense for governmental activities in 2008 amounted to $31.9 million. Additional information on the City s capital assets can be found in note 10 to the financial statements on pages 65 through 69 of this report. CITY OF OMAHA, NEBRASKA

78 Management s Discussion and Analysis (Unaudited) Year ended December 31, be addressed to the City of Omaha, Finance Department, Suite 1004, 1819 Farnam Street, Omaha, NE overview of the City s finances and to demonstrate the City s accountability for the funds it receives. Questions concerning any of the information provided in this report or requests for additional financial information should This financial report is designed to provide citizens, taxpayers, customers, investors, and creditors with a general Requests for Information $3.9 million of this amount for spending in the 2009 fiscal year budget and $1.9 million will be appropriated for forward. The City Charter requires that the general fund budget balance, as of the close of any particular fiscal year, shall be applied as general fund revenue in the budget for the fiscal year two years subsequent to that fiscal year. During 2008, the unreserved fund balance in the general fund was $28.9 million. The City appropriated spending in the 2010 fiscal year budget. This amount represents the 2007 and 2008 budget balance carried All of these factors were considered in preparing the City s budget for the 2010 fiscal year of 1.3%. due primarily Sales tax receipts. The City s projected property tax base for 2010 is $26.9 billion. This is a slight increase over 2009 of $364 million or 1.3%. This includes revaluations of existing properties and new growth within the City. No annexations are planned in Budget basis net Sales tax collections have increased by 4.4% and 2.4% over each of the past two years, respectively, with current net collections through August 2009 showing an increase over the same period in Overall general fund revenue collections for 2009 are projected to be $8.9 million below budget or 3.2% Economic Factors and Next Year s Budgets and Rates Additional information on the City s long-term debt can be found in notes 6 and 7 to the financial statements on pages 40 through 55 of this report. CITY OF OMAHA, NEBRASKA

79 Primary government unit Governmental Business-type Component December Statement of Net Assets 15 See accompanying notes to basic financial statements. Liabilities and Net Assets Due from other govemments 56,972,034 53,224 57,025,258 Total assets S 1,271,590, ,162,318 1,816,752,777 44,302,098 Receivables (net of allowance for uncollectibles) 139,685,901 4,397, ,083, ,177 Accrued interest 516, , ,022 Deferred charges and other assets 6,596,299 3,274,925 9,871,224 1,696,524 Restricted assets: Capital assets: Nondepreciable 158,360,082 51,523, ,883,351 Depreciable 846,583, , ,279,563,387 17,229,426 Accrued interest payable 7,687,640 3,598,437 11,286,077 Compensated absences: Restricted for: Post retirement benefit obligation 35,844,583 2,168,369 38,012,952 Due within one year 3,398,254 90,038 3,488,292 Due in more than one year 64,566,820 1,876,961 66,443,781 Due within one year 2,600,000 in Due more than one year 2,175,000 Bonds, notes, and leases payable: Due in more than one year , , ,171,189 6,814,757 Total liabilities 961,003, ,309,122 1,242,312,965 20,880,385 Due to other governments 1,698,364 1,698,364 Due within one year 1,917,000 Due within one year 8,407, ,596 8,987,374 Due within one year 37,411,854 6,133, ,893 1,002,226 Due in more than one year 12,498, ,124 13,184,032 Cash and cash equivalents $ 30,863,874 23,041,214 53,905,088 10,346,088 Assets activities activities Total MECA Pooled investments 25,413,441 6,690,323 32,103,764 14,476,883 Inventories 647, ,553 1,439,349 Deposits with trustee 5,951,028 18,903,511 24,854,539 3,309,677 Liabilities: Accounts payable and other $ 31,316,143 6,157,079 37,473,222 1,734,675 Unearned revenue 240,116 Long-term liabilities: Other liabilities 2,175, ,116 2,600,000 1,917,000 11,328,727 Expendable 4,525 Nonexpendable 2.775,389 2,775,389 Community improvement and judgments 5,189,598 Unrestricted (540,888) 23,937,327 23,396,439 14,009,269 4,525 5,189,598 Debt service 4,248,375 Invested in capital assets, net of related debt 295,937, ,667, ,605,191 9,412,444 Perpetual care: 4,248,375 Pooled investments - Net assets: Net pension obligation 76,060,855 3,029,818 79,090,673 Grants payable: Claims and judgments: Workers compensation and healthcare claims: Highway and streets 7,220,295 Total liabilities and net assets S 1,271,590, ,162,318 1,816,752,777 44,302,098 7,220,295 Total net assets 310,586, ,853, ,439,812 23,421,713 3,309,677 CITY OF OMAHA, NEBRASKA

80 Program revenues Net revenue (expense) and changes in net assets (178,541,620) (10,602,622) (2,196,555) 4,565, (131,234) ( ) ( ,620) ( ) (10,602,622) 20,818 15, (36,519,588) Total general revenues and transfers , (7.949,596) 33,963,566 5,898,722 Change in net assets (16, ) (5,809,606) (22,689,348) 5,453,332 Net assets beginning of year , Netassetsendofyear S ,6)6 263, ,812 23, CITY OF OMAHA, NEBRASKA Statement of Activities Year ended December Component Operating Capital Primars government unit Charges for grants and grants and Governmental Business-type Functions/programs: Primary government: Governmental activities: Expenses services contributions contributions activities activities [otal MECA General government S ,600 9, (80,398,475) Public safety 205,824,014 15,812,344 11,470,050 Transportation services ,765 18,848,115 1, ,664,619 (23.243,249) Other public services 17, ,205, ,000 Community development ,397, , ,818 Culture and parks 40, ,845 41,524, ,699 15,556,931 Interest on long-term debt ( ) Total governmental activities 483,011,850 56,539, ,753 30, (313,727,805) Business-type activities: Convention center hotel 11,114, ,038 Parking 4, ,1)5,81) Sewer 49,533,194 41,194,630 Dodge Park ,236 Tennis 398, Golf 4, ,441,617. Citywide Sports ,420 River Front Plaza and Marina Air quality 656, ,037 Compost 898, ,151 Printing and gtaphics 460, ,339 Total business-type activities 72,803,190 60,288,312 (3)3,727,805) (2,196,555) (693,383) (3, ) (3,773,282) (693,383) ( ) 26,987 (34.876). (147,681) (337,56)) 83, ( ) (819,778) 26,987 (34.876) ( ) (337,561) 83,230 ( ) Total primary government S 555, ) , ,557 (313,727,805) (7,949,596) ( ,40)) Component unit: MtiA S 27, , General revenues: Property taxes 1)8,979, ,979, Motor vehicle taxes 9,374,405 - Sales and use taxes 124,470,354 Business taxes 33, Payments in lieu of taxes 5.898,722 9,374, ,470,354 Unrestricted investment earnings 4,720,079 1,581,389 6,301, Tmnsfers ( ) 558,601 See accompanying notes to basic financtal statements. 16

81 service governmental governmental Debt Other Total Governmental Funds December 31, 2008 Balance Sheet ,031 2,713,817 Investments 4,777,593 25,413,441 for 78,555,523 Receivables, net of allowance uncollectibles 50,034, , ,685,901 assets 7,612 Other assets: Restricted Liabilities: Accounts payable and other $ 21,700, ,980 8,496,271 30,374,477 Liabilities and Fund Balances Cash and cash equivalents $ 16, ,792,736 30, Due from other governments 22,956, ,693 33,664,523 56,972,034 Inventories 647,796 Deposits with tmstee ,951,028 Total assets S ,170,282 70,324, ,058,496 Due to funds , ,667 Due to other 1,698,364 other governments 1,698,364 Deferred revenue 240, , ,630, , Fund balances: Total liabilities 88,897,128 50,194,038 43,420, , Debt 18,968,264 Perpetual service care Unearned revenue 240,116 for: Reserved Encumbrances 2,162,667 7,980 13,432,100 15,602, ,796 Inventories Unreserved, reported in: Permanent funds General fund 28,855,951 Special funds 19,190,703 Capital revenue projects funds 647,796 6,994,290 25,962,554 2,775,389 4,525 28,855,951 19,190,703 4,525 Total fund balances 3 1, ,976, ,975 77,546,633 Total liabilities and fund balances $ 120,563,542 69,170,282 70,324,672 Amounts reported for governmental activities in the statement Capital assets used in governmental activities are not financial resources and, therefore, are not Revenues earned during the current period are not as deferred revenue in the funds 149,257,239 Bond costs issuance of are capitalized at the the related bottds 6,588,688 are not due and payable in the current period and, therefore, are not reported in the funds (927,749,220) Net assets ofgoventmental activities $ 310,586,616 See accompanying notes to basic financial statements. 17 Longterm liabilities, including bonds and interest payable, available as resources and, therefore, are recognized governrnentwide level and amortized over the life of of net assets are different because: Assets General fund funds funds Accrued interest 473,762 43,048 (15,493,032) (15,493,032) reported in the funds 1,004,943, ,810 CITY OF OMAHA, NEBRASKA

82 Debt Other Total Year ended December 3 1, 2008 See accompanying notes to basic financial statements. Fund balances Transfers in over expenditures Proceeds from sale of bonds Payment to refunded bond escrow agent Fund balances beginning end Total expenditures Total other financing sources Net change in fund balances of year Other financing sources (uses): Transfers out Proceeds/payments from bond premium/discount of year Sale of capital assets Excess (deficiency) of revenues Community development Transportation services Other public services Public safety Debt service: Current: General government Bond issuance costs Capital outlay Expenditures: Culture and parks Principal Interest Total revenues Special assessments Rents and royalties In lieu Motor vehicle Intergovernmental Investment income Revenue from Keno Contributions and grants Taxes: City sales and use Charges for services Revenues: Property Business Licenses and permits Statement of Revenues, Expenditures, and Changes in Fund Balances Governmental Funds CITY OF OMAHA, NEBRASKA 18 $ 31,666,414 4,408,251 (79,064,654) (200,000) 2,697,760 28,968,654 4,563,597 2,484, ,162 79,220,000 (1,237,839) 421,700 4,350,806 (79,064,654) (31,794,613) 122,162 67,263,605 66,947,097 63,881,052 26,903,975 16,491,540 18,976,244 71,632,856 77,546, ,483,605 (1,037,839) 679, , , ,700 (57,445) (36,977,077) 2,575,598 (2,078,893) (103,924,174) (103,427,469) 1,264,300 25,519,033 33,751,890 61,789, , ,601,063 3,91 5,747 2,640,599 5,519,894 82,160 75,778, ,207,805 72,787,515 34,954, ,597,920 1,346,460 36,395,026 76,692,920 15,565,896 47,691,207 5,765,441 18,427,767 3,093,024 34,654,790 24,556,217 25,035,148 30,321, ,542, ,525 13,836,939 6,607,381 1,253,829 16,888,582 52,797,201 16,929,963 48,623, ,108,649 8,022,731 33, ,817,788 3,619,494 3,479,394 4,720, ,022 34,249,571 8,022, , ,470,354 9,374,405 5,898,722 41,275,818 7,455,212 45,347,323 2,726, ,186 $ 61,795, ,384, ,470, ,170,451 22,933, , ,814 74,595 44,536,698 2,404, , ,591 6, ,005 35,251,588 7,455,212 46,943,803 6,052, ,283,631 1,790,604 19,842,674 2,570,653 9,871, ,176,661 59,710,159 General fund funds funds service governmental governmental

83 Statement of Activities Governmental Activities Year ended December 31, 2008 and Changes in Fund Balances to the Governmentwide 19 See accompanying notes to basic financial statements. the governmental funds. Net change in fund balances total governmental funds useful lives and reported as depreciation expense. This is the amount by which The issuance of long-term debt (e.g., bonds, leases) provides current financial funds. Neither transaction, however, has any effect on net assets. Also, and similar items when debt is first issued, whereas these amounts are deferred and amortized in the statement of activities. This amount is the net effect of these differences in the treatment of long-term debt and related items. Some expenses reported in the statement of activities do not require the use of of long-term debt consumes the current financial resources of governmental are different because: Amounts reported for governmental activities in the statement of activities Governmental funds report capital outlays as expenditures. However, in the statement of activities, the cost of those assets is allocated over their estimated capital outlays exceeded depreciation expense in the current period. Revenues in the statement of activities that do not provide current financial resources are not reported as revenues in the funds. resources to governmental funds, while the repayment of the principal governmental funds report the effect of issuance costs, premiums, discounts, current financial resources and, therefore, are not reported as expenditures in Change in net assets of governmental activities Reconciliation of the Statement of Revenues, Expenditures, CITY OF OMAHA, NEBRASKA $ (16,879,742) (38,187,957) (33,032,604) 41,342,911 44,792,521 $ (31,794,613)

84 Center hotel facilities revenue funds funds Convention Parking Sewer enterprise proprietary Other Total - Statement of Fund Net Assets Proprietary Funds December 31, See accompanying notes to basic financial statements. for uncollectibles) 4,289,930 Cash and cash equivalents S Due from other funds Due from other govemmcnts 53,224 Accrued interest payable 2, , ,539 Compensated absences Capital assets: Land 2,473,344 2,682,270 Prepaidassets 974, ,436 Current assets: Investments Accounts receivable (net of allowance Accrued interest receivable Inventories 53, , ,217 Assets fund fund fund funds funds 98, ,288 9,264 2, Total current assets 974, , ,285 36,622,027 Total noncurrent assets 19, , ,811 Noncurrent assets: 3,319 6,690, , , ,553 6,690,323 22,754, ,749 23, ,001 Restricted assets: Deposits with trustee 18,628, ,189 18,903,511 Investments 3,309,677 Deferred charges 1,057, ,134 Construction in progress - 45, ,380 45, S Accounts payable and other 3, , ,974 6, ,968,039 25,000 6,133, , ,596 2,029,643 24, ,155,614 Buildings and systems 71,258,240 61,006, ,380,528 9,558, ,203,487 Furniture and fixtures 6,833,038 Machinery and equipment 3,633,542 Cultural assets 498,366 Current liabilities: Liabilities and Net Assets 12,704 16,907, ,223,186 63,479, ,754,623 13,336, ,794,397 Capital assets, net 65, ,952, ,099, , ,503,460 Current installments of long-term debt Pension obligation Workers compensation and healthcare claims Noncurrent liabilities: Long-term debt, excluding Current installments 108,518, , ,583, , ,990,661 Postretirement benefit obligation Total Current liabilities 2,387,778 3,323,659 10, ,741 16,764,189 Compensatedabsences 73, ,420 2,140,000 3,598, ,441 24, Total noncurrent assets 84,686,876 40,436, , ,449, ,746,291 Workers compensation and healthcare claims 437,679 6, ,309,677 1, Less accumulated depreciation 17,221,865 23,526, ,654,681 6,887, , Total assets S 85,661,404 40,987, ,910,898 6,808, ,368,318 Due to other funds 206,001 16, ,759 1, ,396, , , ,205 1,876,961 Total noncurrent liabilities 108,518,531 43,466, ,201,716 2,563, ,750,933 Total net assets (25,244,905) (5.803,032) ,171 3, , Total liabilities and net assets S 85,661,404 40,987, , , ,3 18 Total liabilities 110,906,309 46,790, ,939, ,515,122 Unrestricted 49,119 (424,314) 26,445,583 (2,133,061) 23,937, ,398 3, Net assets: Invested in capital assets, net of related debt (29,267,210) (5.653,907) 264,586, , ,667,494 4,248,375 Restricted for debt service 3,973, , , ,124 CITY OF OMAHA, NEBRASKA

85 center hotel facilities revenue enterprise proprietary Convention Parking Sewer Other Total Year ended December Statement of Revenues, Expenses. and Changes in Fund Net Assets Proprietary Funds 21 See accompanying notes to basic financial statements. Personal services 82, ,710 4,017,873 15,021, ,224 6,065,856 Charges fbr services $ 8,918,038 4,115,811 41,194,630 6,059,832 60,288,311 Outside services 236,739 - Operation and maintenance 1,556,957 2, , ,426 14, Investment earnings 797,854 9, ,496 Transfers out 1,581,389 Nonoperating revenues (expenses): Total operating expenses 5,902,803 4, ,378,560 7,342,664 62, Cost of sales and services 159, ,902 4,002,463 5,479,893 Operating revenues: Operating expenses: 3,206,721 Administration 2, , ,767 Depreciation and amortization 3,946,367 2, ,997, ,372 21,832,798 Operating income (loss) 3,015,235 (660,518) (3,183,930) (1,282,832) (2,112,045) Miscellaneous rents and royalties Transfers in Interest expense (5, ) (32.864) (5,154,634) (3,544) (10,402,833) net (4,413,937) (23,825) (4,366,783) (3,544) (8,808,089) Capital contributions 4,551,927 4, and transfers (1,398,702) (684,343) (7,550,713) (1.286,376) (10,920,134) Total nonoperating expenses, Loss before contributions 13, , , ,148 Change in net assets (1,398,702) (684,343) (2, ) (1,144,991) (5, ) Net assets at end of year $ (25,244,905) (5,803,032) 291,032,171 3,868, ,853,196 (86,932) (8,615) (95,547) Net assets at beginning ofyear (23,846,203) (5,118,689) 293,613, , ,662,802 13,355 fund fund fund funds funds CITY OF OMAHA, NEBRASKA

86 center hotel facilities revenue enterprise proprietary Convention Parking Sewer Other Total fund fund fund funds funds Year ended December 31, 2008 Statement of Cash Flows Proprietary Funds CITY OF OMAHA. NEBRASKA 22 See accompanying notes to basic financial statements. (6,206,994) (2, ) (54,511) (1 52,066) 171, ,665,932 (338,157) 23, (24.216,711) (6,501) ( ) (2, ) (5,080,556) (991) ( ) (5,288) (116,160) (9, ) (3,473,111) (12,998,196) (116,062) ( ) 445,000 (3.870,818) (2,176,864) ,355 (24,932,095) 445,000 (11, ) , ,685 Net cash provided by operating activities Payments to employees 141, ,601 Advances from (to) other funds 171,169 (116,062) (28,348) 6,325 33,084 Miscellaneous rents and royalties activities (822,461) ,259,772 (2.660) 11,672,982 Operating inconse (loss) $ 3, ( ) (3,183,930) (1,282,832) (2,112,045) Postretirement benefit obligation Cash flows from capital and related financing activities: Receipts from customers Payments to suppliers Transfers injout Deferred charges Proceeds from sale of fixed assets Payments on long-term debt Issuance of long-term debt Premium received on issuance of long-term debt Issuance of notes payable Reconciliation of operating loss to net cash provided by Adjustments to reconcile operating income (loss) to net Cash flows from investing activities: Sale (purchase) of investment securities (1,620,315) 229,292 I 1,494,540 Cash and cash equivalents, beginning of year cash equivalents 28,562, ,224,096 Depreciation and amortization 3, , ,997, Accounts receivable ( ) (51.656) (201,174) Prepsid assets Inventories 965 (83,573) Accounts payable and other cash provided by operating activities: Due from other governments (27.647) (27,647) 363,662 1,306,314 (1,317) (35,386) (70.638) Net cash provided by operating activities $ 6, ,053, ( ) 23,342,831 Accruedexpenses Cash flows impacted by changes in: Pension obligation Claimspayable (5, ) (472,704) (6, ) (84,538) 10, (1956,214) (2,1 63,305) (16,753,147) (2,845,575) (23,718,241) S 8,918,038 4,332,697 40,828,004 5,980,529 60,059,268 Cash flows from operating activities: ( ash flows from noncapital financing activities: Capital expenditures Capital contributions Interest paid Net cash provided by (used in) noncapital financing activities Net cash used in capital and related financing activities ) (2.077,1 56) (33, ) ( ) (41,790,380) Interest received 797, ,232 (2.660) Net cash provided by (used in) investing Net increase (decrease) in cash and Cash and cash equivalents, end ofyear S - (used in) operating activities: 98,345 22,754, ,749 23,041, ,007 (33,935) , , , , ,790,904 (12,121) 1,

87 Statement of Fiduciary Net Assets Fiduciary Funds December 31, See accompanying notes to basic financial statements. Assets: Cash and cash equivalents Receivables: Accrued interest Other Pooled investments Investments Liabilities: Warrants payable Accounts payable Deposits payable Net assets held in trust for pension benefits 1,719,315 1,007,983 2,034, ,809, ,424,724 40,357 $ 1,860,866 $ 570,376,384 Total assets Total liabilities 1,048,340 Funds Pension Trust CITY OF OMAHA, NEBRASKA 570,376,384 1,678,849 10,485,582 11,156,448 12,204, ,866 10,485,582 40, ,809,966 1,383,333 1,383,333 16,852 1,736,167 2,554 2,037,131 11,156, ,581,172 9,753,709 11,614,575 Agency Total

88 Year ended December 31, 2008 Pension Trust Funds 24 See accompanying notes to basic financial statements. Net assets, end of year Change in net assets Net assets, beginning of year Net change in the fair value of investments Additions: Total investment earnings and losses Less investment expenses Contributions: Employer Employee Total contributions Investment earnings and losses: Dividends and interest Deductions: Benefits Net investment earnings and losses Total additions, net of investment losses Statement of Changes in Fiduciary Net Assets CITY OF OMAHA, NEBRASKA $ 570,376,384 74,171, ,017,568 (253,641,184) (239,986,157) (221,811,977) (4,286,704) (226,098,681) (179,469,678) 18,174,180 46,629,003 19,554,115 $ 27,074,888

89 December 31, 2008 Notes to Basic Financial Statements 25 (Continued) MECA is a separate nonprofit corporation that is responsible for the operation of the Omaha Convention Center/Arena. MECA began operations on August 25, Title to the facility and all related infrastructure assets are vested with the City. Construction activities were principally funded appointed by the City. The financial statements for MECA included herein are for the year ended Nebraska June 30, MECA s separate financial statements are available at 1819 Farnam Street, Omaha, by private donations and general obligation bonds of the City. Board members of MECA are MECA government. The City s basic financial statements discretely present the financial position and activities of the Metropolitan Entertainment and Convention Authority (MECA). governmentwide financial statements to emphasize that it is legally separate from the primary The discretely presented component unit, on the other hand, is reported in a separate column in the substance, part of the City s operations, and data from these units are basic with data of the primary government. The City s basic financial statements blend the activity of the City of Omaha Parking Facilities Corporation, the City of Omaha Impound Facilities Corporation, the City of Omaha Stadium Facilities Corporation, City of Omaha Northwest Library Facilities Corporation, the City of Omaha Facilities Corporation, and City of Omaha Convention Hotel Corporation. The City is financially accountable for these organizations. The City reports its respective ownership percentage Omaha, NE presented component unit. The blended component units, although legally separate entities, are, in Commission (the Commission). Separate financial statements are available at 1819 Farnam Street, of the assets, liabilities, net assets and operating activity of the Omaha-Douglas Public Building The basic financial statements include both blended component units and the City s discretely (i) either the City s ability to impose its will on the organization or (ii) there is potential for the that exclusion would cause the City s financial statements to be misleading or incomplete. Financial accountable or other organizations whose nature and significant relationship with the City are such accountability is defined as the appointment of a voting majority of the component unit s board and organization to provide financial benefit to or impose a financial burden on the City. The governmental reporting entity consists of the City (the primary government) and its component units. Component units are legally separate organizations for which the City is financially and members of the council are elected through popular vote to four-year terms. The City is a chief executive, the Mayor, and an elected legislative body, the council, composed of seven under a Rome Rule Charter and has a mayor council form of government with an elected full-time members. The seven council members each represent one of the City s seven districts. The Mayor political subdivision of the State of Nebraska and is exempt from state and federal income taxes. The City of Omaha, Nebraska (the City) was incorporated on February 2, The City operates (a) Reporting Entity (1) Summary of Significant Accounting Policies CITY OF OMAHA, NEBRASKA

90 Related Organizations December 31, 2008 Notes to Basic Financial Statements 26 (Continued) The fund financial statements provide information about the City s funds, including fiduciary funds. each displayed in a separate colunm. All remaining governmental funds are separately aggregated Separate statements for each fund category and reported as nonmajor funds. proprietary, and fiduciary presented. The emphasis of fund financial statements is on major governmental and enterprise funds, governmental, are Fund Financial Statements The statement of activities presents a comparison between direct expenses and program revenues for not classified as program revenues, including all taxes, are presented as general revenues. Direct expenses are those that are specifically associated with a program or function and, therefore, recipients of goods or services offered by the programs and (2) grants and contributions that are restricted to meeting the operation or capital requirements of a particular program. Revenues that are are clearly identifiable to a particular function. Program revenues include (1) charges paid by the the business-type activities of the City and for each function of the City s governmental activities. government and its component unit. These statements include the financial activities of the overall government, except for fiduciary activities. Eliminations have been made to minimize interfund business-type activities, which rely to a significant extent on fees charged to external parties. activities. These statements distinguish between the governmental and business-type activities of the which normally are supported by taxes and intergovernmental revenues, are reported separately from The statement of net assets and statement of activities display information about the primary City and between the City and its discretely presented component unit. Governmental activities, Governmentwide Financial Statements (b) Basis ofpresentation 18th Street, Omaha, Nebraska representatives appointed to the Board. DOT.Comm has control over its operations and fiscal matters is to increase the cooperative efforts of the County and the City in connection with electronic Airport Authority, and the Metro Area Transit Authority. The City is not financially accountable for these organizations. The Douglas Omaha Technology Commission (DOT.Comm) is a governmental entity formed by an services. The City appoints two members to the DOT.Comm board, which has a total of seven and holds title to its assets. DOT.Comm s revenues are primarily derived from maintenance fees from the City and County. Separate financial statements can be obtained from its office at 408 South interlocal agreement between the City and Douglas County (the County). The purpose of this entity information, voice, and data communication services for governmental operations, and public members. The Mayor (or designee) and the City Council President (or designee) are the City the City s accountability for these organizations does not extend beyond making the appointments. The City s officials are responsible for appointing members of the boards of other organizations, but The Mayor or City Council appoints board members of the Omaha Housing Authority, the Omaha CITY OF OMAHA, NEBRASKA

91 December 31, 2008 Notes to Basic Financial Statements 27 (Continued) for capital maintenance, public policy, management control, accountability, or other purposes. providing goods or services to the general public on a continuing basis is financed or recovered primarily through user charges or (b) where the governing body has decided that periodic determination of revenues earned, expenses incurred, and/or net income is appropriate The enterprisefunds account for operations that are financed and operated in a manner similar to private business enterprises: (a) where the intent of the governing body is that the costs of and trust funds). The pension trust funds accumulate contributions from the City and its employees and earnings from the funds investments. Disbursements are made from the funds for retirement. The agency fluids account for assets held by the City as an agent for various local governments. The permanent funds are used to report resources that are legally restricted to the extent that earnings, and not principal, may be used for purposes that support the City s programs for the benefit of the City or its citizemy. The capital projects funds account for all resources received and used for the acquisition or restricted to expenditures for specified purposes. development of major capital improvements (other than those financed by proprietary funds The special revenue funds account for the proceeds from specific revenue sources that are The City reports the following additional fund types: The sewer revenue fluid accounts for activity from sewer service charges, construction grants, and operation of the Convention Center Hotel. for operation, maintenance, and construction of parking garages. and related expenditures for operation, maintenance, and capital improvements of the sanitary The convention center hotel fund is used to account for costs associated with the construction The parkingfacilitiesflnd accounts for activity from parking revenue and related expenditures sewerage system and wastewater treatment plants. The City reports the following major proprietary funds: The general Jiind is used to account for all revenues and expenditures necessary to carry Out basic governmental activities of the City that are not accounted for through other funds. The debt service fluid is used to account for the resources for, and the payment of, general long-term debt principal, interest, and related costs. The City reports the following major governmental funds: Proprietary fund operating revenues, such as charges for services, result from exchange transactions associated with the principal activity of the fund. Exchange transactions are those in which each party receives and gives up essentially equal values. Nonoperating revenues, such as investment earnings, result from nonexchange transactions, or ancillary activities. CITY OF OMAHA, NEBRASKA

92 (c) Basis ofaccounting December 31, 2008 Notes to Basic Financial Statements 28 (Continued) custody of the City Treasurer. Each fund reports its undistributed interest in the principal balance of The City maintains a pooled cash and investment account for all funds. These funds are placed in the (e) Pooled Cash and In vestments Encumbrance accounting is employed in the governmental funds. Under encumbrance accounting, purchase orders, contracts, and other commitments for the expenditures of funds are recorded in order to reserve that portion of the applicable appropriation. Encumbrances are reported as reservations of net assets since they do not constitute liability. Encumbrances are reported as expenditures on the budget basis schedule. ( d,) Encumbrances revenues and expenses generally result from providing services and producing and delivering goods include the cost of sales and service, administrative expenses, and depreciation on capital assets. All Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating revenues of the enterprise funds are charges to customers for goods and services. Operating expenses revenues and expenses not meeting this definition are reported as nonoperating revenues and expenses. in connection with a proprietary fund s principal ongoing operations. The principal operating same limitation. The City has elected not to follow subsequent private sector guidance. Private sector standards of accounting and financial reporting issued prior to December 1, 1989 generally are followed in both the governmentwide and proprietary fund financial statements to the extent that those standards do not conflict with or contradict guidance of the Governmental Accounting Standards Board (GASB). Governments also have the option of following subsequent private sector guidance for their business-type activities and their enterprise funds, subject to this funds. Proceeds and payments of long-term debt are reported as other financing sources and uses. only when due. General capital assets acquisitions are reported as expenditures in governmental so as to be both measurable and available. Expenditures are generally recorded when a liability is and available. Property and sales taxes, interest, certain state and federal grants, and charges for Governmental funds are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Under this method, revenues are recognized when measurable services are accrued when their receipt occurs within 60 days after the end of the accounting period incurred, except for debt service expenditures and other long-term liabilities, which are recorded are recognized in the fiscal year in which all eligible requirements have been met. in the fiscal year for which the taxes are levied. Revenues from grants, entitlements, and donations economic resources measurement focus and the accrual basis of accounting. Revenues are recorded related cash flows take place. Nonexchange transactions, in which the City gives (or receives) value without directly receiving (or giving) equal value in exchange, include property and sales taxes, The governmentwide, proprietary, and fiduciary fund financial statements are reported using the when earned and expenses arc recorded at the time liabilities are incurred, regardless of when the grants, entitlements, and donations. On an accrual basis, revenue from property taxes is recognized CITY OF OMAHA, NEBRASKA

93 December 31, 2008 Notes to Basic Financial Statements 29 (Continued) The tax levies for all political subdivisions in Douglas County are certified by the county board on or before October 15. Real estate taxes are due and become an enforceable lien on property on becomes delinquent on August 1 following the levy date. Personal property taxes are due on taxes bear 14% interest. December 31. The first half of real estate taxes becomes delinquent on April 1 and the second half December 31 and become delinquent on April 1 and August 1 following the levy date. Delinquent The Home Rule Charter of the City imposes a tax ceiling for general revenue purposes. The tax levy and litigation expenses in connection therewith. The 2008 general tax levy ($ per $100 of which the 2008 levy was based was $25,302,239,770. certified in any year shall not exceed $ per $100 of actual valuation plus whatever tax levy is necessary to provide for principal and interest payments on the indebtedness of the City for assessed valuation) was below the legal limit by $0.3698, or $93,567,683. The assessed value upon administrative expenses incurred in issuing and maintaining bonds and for satisfaction of judgments $100 of assessed valuation) was below the legal limit by $ , or $52,345,274. Nebraska LB 1114 imposes a tax ceiling for general revenue purposes, The tax levy certified in any year shall not exceed $0.45 per $100 of actual valuation. The 2008 general tax levy ($ per (I) Property Taxes Inventories of materials and supplies are stated at the lower of cost or market using the first-in, first-out method. The costs of governmental fund inventories are recorded as assets when purchased and expended as used. (h) Inventories Investments are stated at fair value. Securities traded on a national or international exchange are income from investments not included in pooled cash and investments that are held by the individual valued at the last reported sales prices at current exchange rates where marketable securities are not listed on an exchange, quotations are obtained from brokerage firms or national pricing services. funds is recorded in the respective funds as it is earned. (g) Investments highly liquid debt instruments with an original maturity of three months or less when purchased to be For purposes of the accompanying statement of cash flows, the City enterprise funds consider all cash equivalents. (j9 Cash and Cash Equivalents enforcement block grant funds, and western heritage fund. fund, sewer construction fund, and aksarben bond fund, which are credited directly to the respective funds. Interest is imputed and transferred to the keno funds, police seized assets funds, law dodge park marina fund, western heritage/byron reed fund, asarco remediation fund, sewer revenue the pool. Interest earned on the City s pooled cash and investments is credited to the general fund of the City, except for the don hayes memorial fund, ralph anderson memorial fund, cash reserve fund, CITY OF OMAHA, NEBRASKA

94 December 31, 2008 Notes to Basic Financial Statements 30 (Continued) maximum of 320 hours, plus the current year leave balance. Upon retirement, death, or resignation after 20 years, police employees receive 1 for I for the first 1,200 hours of accumulated sick leave and 1 for 4 hours thereafter up to a maximum of 3,200 hours (1,700 hours). Police employees may accrue a maximum of 360 hours of compensatory time. In the event of termination, Fire Department In the event of termination, police employees are reimbursed for accumulated vacation time up to a This balance is the total of a yearly carryover, up to a maximum of 280 hours for civilian bargaining Employees earn annual vacation and sick leave at various specific rates during their period of and civilian management employees, plus the current year s leave balance. Civilian management and cash out the compensatory leave balance at any time. employment. In the event of termination, an employee is reimbursed for accumulated vacation time. bargaining employees are reimbursed for a percentage of accumulated sick leave up to a maximum compensatory leave time at a rate of one and one half times the actual hours worked in lieu of the payment of overtime. Employees may accrue a maximum of 120 hours of compensatory time. The compensatory time must be taken within three months after the end of the calendar year in which it is earned and any remaining amounts are paid Out in cash. However, the employee retains the right to of 2,000 hours (612.5 hours). Civilian and management employees have the option of accruing (I) Compensated Absences Infrastructure 15 Buildings and systems 15 Improvements 5 Machinery and equipment 5 20 years Vehicles years years years years The estimated useful lives are as follows: in excess of one year. Capital assets used in operations are depreciated or amortized using the not available. Contributed fixed assets are valued at their estimated fair market value on the date of infrastructure, are recorded at historical cost or at estimated historical cost if actual historical cost is straight-line method over the lesser of the capital lease period or their estimated useful lives in the governmentwide and proprietary fund financial statements. Assets are depreciated using the half-year convention in the first and last years of the asset s useful life. Within the governmentwide and proprietary fund financial statements, capital assets, including donation. Capital assets include public domain infrastructure, including roads and bridges. The City defines capital assets as assets with individual costs of more than $5,000 and estimated useful lives (k) CapitalAssets from the issuance of revenue and general obligation bonds are deferred and amortized over the For governmentwide financial statements and proprietary fund financial statements, charges resulting remaining life of the bonds on a straight-line basis. j) Deferred Charges Motor vehicle taxes are due when an application is made for registration of a motor vehicle. CITY OF OMAHA, NEBRASKA

95 CITY OF OMAHA, NEBRASKA Notes to Basic Financial Statements December 31, hour shift employees are reimbursed for accumulated vacation time up to a maximum of 360 hours, plus current year accumulation. Upon retirement or resignation, Fire Bargaining 24-hour shift employees are reimbursed for accumulated sick leave 1 for 1 for the first 1,200 hours and 3 for 4 for all hours greater than 1,201 to 2,400 for a maximum 2,100 hours. In the event of termination, Fire Management employees are reimbursed for accumulated vacation time up to a maximum of 280 hours, plus current year accumulation. Upon retirement, Fire Management employees are reimbursed for accumulated sick leave 1 for I for the first 1,200 hours and I for 4 for all hours greater than 1,201 to 3,200 for a maximum 1,700. in the event of termination, Fire Department 40-hour shift employees are reimbursed for accumulated vacation time up to a maximum of 240 hours, plus current year accumulation. Upon retirement or resignation, 40-hour shift employees are converted to 24-hour shift employees reimbursed for accumulated sick leave as above. For the governmentwide, proprietary, and fiduciary fund financial statements, vacation leave and other compensated absences with similar characteristics are accrued as the benefits arc earned if the leave is attributable to past service and it is probable that the City will compensate the employees for such benefits. Such accruals are based on current salary rates and include salary-related payments, such as the employer s matching Social Security and Medicare costs, associated with payments made for compensated absences on termination. In the governmental funds, a liability for these amounts is reported only if they have matured. ( m) SelfInsurance The City self-insures all claims related to personal liability and property damage for City-owned vehicles, medical, dental, and workers compensation and the first $100,000 of buildings and contents coverage. The City has purchased separate commercial insurance to cover losses in excess of $100,000 on buildings and contents. The City has purchased separate commercial liability insurance to cover helicopters used by the Police Department. (n) Long-Term Obligations in the govemmentwide financial statements and proprietary fund types in the fund financial statements, long-term debt and other long-term obligations are reported as liabilities in the applicable governmental activities, business-type activities, or proprietary fund type statement of net assets. Bond premiums and discounts, as well as issuance costs, are deferred and amortized over the life of the bonds. Bonds payable are reported net of the applicable bond premium or discount. Bond issuance costs are reported as deferred charges and amortized over the term of the related debt. In the fund financial statements, governmental fund types recognize bond premiums and discounts, as well as bond issuance costs, during the current period. The face amount of debt issued is reported as other financing sources. Premiums received on debt issuances arc reported as other financing sources, while discounts on debt issuances are reported as financing uses, issuance costs, whether or not withheld from the actual debt proceeds received, are reported as current expenditures. 31 (Continued)

96 CITY OF OMAHA, NEBRASKA Notes to Basic Financial Statements December 31, 2008 (o) Inrerfund Transactions Interfund transactions are reflected as either loans, services provided, reimbursements, or transfers. Loans, which are reported as receivables and payables, are subject to elimination upon consolidation and are referred to as either due to/from other funds or advances to/from other funds. Services provided, deemed to be at market or near market rates, are treated as revenues and expenditures/expenses. Reimbursements are when one fund incurs a cost, charges the appropriate benefiting fund, and reduces its related cost as a reimbursement. All other interfund transactions are treated as transfers. Transfers between govemmental or proprietary funds are netted as part of the reconciliation to the governmentwide presentation. (p) (q) Restricted Assets Restricted assets include deposits with trustees of various enterprise funds and capital projects. Accounting Pronouncements Adopted In November 2006, GASB issued Statement No. 49, Accounting and Financial Reporting for Pollution Remediation Obligations. This statement was adopted by the City during The statement requires the City to recognize a pollution-remediation obligation liability when it knows or reasonably believes a site is polluted and one of five obligating events has occurred. The adoption of the statement did not have a financial statement impact during fiscal year In May 2007, GASB issued Statement No. 50, Pension Disclosures, an amendment of GASB Statements No. 25 and No. 27. This statement more closely aligns the financial reporting requirements for pensions with those for other postemployment benefits (OPEB) and, in doing so, enhances information disclosed in notes to financial statements or presented as required supplementary information (RS1) by pension plans and by employers that provide pension benefits. The City adopted this statement in (r) Recent Accounting Pronouncements Issued In June 2007, GASB issued Statement No. 51, Accounting and Financial Reporting for Intangible Assets. This statement requires that all intangible assets not specifically excluded by its scope provisions be classified as capital assets. Accordingly, existing authoritative guidance related to the accounting and financial reporting for capital assets should be applied to these intangible assets, as applicable. This statement also provides authoritative guidance that specifically addresses the nature of these intangible assets. This statement is effective for fiscal years beginning after June 15, The City has not completed its assessment of the impact of the adoption of this statement. In November 2007, GASB Statement No. 52, Land and Other Real Estate Held as Investments by Endowments, requires that real estate held by endowments should be reported at fair value. This statement is applicable to the City in 2009; however, management believes that it will have no effect on the financial statements of the City. 32 (Continued)

97 December 31, (Continued) (3) payments between funds are made. All amounts are expected to be paid within one year. provided or reimbursable expenditures occur, (2) transactions are recorded in the accounting system, and All remaining balances result from the time lag between the dates that (1) interfund goods and services are Individual interfund receivables and payables at December 31, 2008 are as follows: Uniformed Pension Fund $ 770,172 General Fund Civilian Pension Fund 117,501 General Fund Civilian Pension Fund 26,759 Sewer Revenue Fund Civilian Pension Fund 6,325 Nonmajor enterprise funds Sewer Revenue Fund 206,001 Convention Center Hotel Fund Civilian Pension Fund 53,994 Nonmajor governmental funds Receivable fund Amount Payable fund (2) Interfund Receivables, Payables, and Transfers principles (GAAP) requires management to make estimates and assumptions that affect the reported reporting period. Actual results could differ from those estimates. amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenditures/expenses during the The preparation of the financial statements in confonriity with U.S. generally accepted accounting (s) Use of Estimates the adoption of this statement. However, the City currently does not have investments in derivative periods beginning after June 15, The City has not completed its assessment of the impact of instruments. Type Definitions. This statement provides clearer fund balance classifications and is effective for In February 2009, GASB issued Statement No. 54, Fund Balance Reporting and Governmental Fund local governments that enter into derivatives. The City has not completed its assessment of the impact of the adoption of this statement, which is required in histrwnents. This statement establishes accounting and financial reporting standards for all state and In June 2008, GASB issued Statement No. 53, Accounting and Financial Reporting for Derivative Notes to Basic Financial Statements CITY OF OMAHA, NEBRASKA

98 200,000 CITY OF OMAHA, NEBRASKA Notes to Basic Financial Statements December 31, 2008 Transfers are related to funding for capital projects, lease payments, debt service, or reallocations of special revenues. The following schedule briefly summarizes the City s transfer activity: Transfer in General Nonmajor Nonmajor Fund Governmental Enterprise Sewer Total Major Governmental Funds: General Fund Major Enterprise Funds: $ a Sewer 86,932 Nonmajor Governmental 322,162 61,529 Nonmajor Enterprise - 8, , ,148 86,932 1,037,839 8,615 Total $ 322, , , ,148 1,333,386 (3) Deposits and Investments The City has generally pooled the cash resources of the various funds, except the pension trust fund, for investment purposes. interest earned on pooled funds is credited to the City s general fund in accordance with Nebraska State Statute Section , R.R.S (a) Deposits Custodial credit risk is the risk that in the event of a bank failure, the City will not be able to recover its deposits. As of December 31, 2008, all of the City s deposits were collateralized with securities held by the City s agent in the City s name. (b) City Investments Investments are stated at fair value. City funds are invested in conformity with the public funds Security Act, Chapter 77, Article 23, specifically , of the Nebraska Revised Statutes. Allowable investments include U.S. government bonds, U.S. treasury bills and notes, U.S. agency bonds and notes, certain state and political subdivision bonds, repurchase agreements, warrants of the State of Nebraska and Nebraska political subdivisions, and certain instruments of the FHLM, federal farm credit system, FHLB, FNMA, and the Small Business Administration. The government money market mutual fund consists of only those securities that are allowed by N.R.S Custodial Credit Risk Custodial credit risk is the risk that, in the event of the failure of the counterparty, the City would not be able to recover the value of its investments or collateral securities that are in the possession of an outside party. Interest Rate Risk interest rate risk is the risk that the fair value of the City s investments will decrease as a result of an increase in interest rates. The City s investment policy related to maturity is as follows: U.S. treasury securities cannot exceed five years; Zero-coupon or stripped coupon U.S. treasury notes or bonds cannot exceed two years; Certificates of deposit issued by commercial banks cannot exceed 12 months; all other investments not mentioned above cannot exceed a five-year maturity from the date of purchase. 34 (Continued)

99 December 31, 2008 Notes to Basic Financial Statements 35 (Continued) of credit risk is the risk of loss attributed to the magnitude of the City s investment in a single issuer. State statute does not restrict the concentration Concentration of Credit Risk Concentration $ 3,584,375 Guaranteed investment contract Government securities 716,875 S 2,867,500 NA 716,875 Investment type Fair value rating AAA Quality The deposits with trustees quality rating is as follows: U.S. agencies U.S. treasury bills $ 34,082,957 $ 36,796,774 2,713,817 34,082,957 2,713,817 Investment type Fair value rating AAA Quality The pooled investment s quality rating is as follows: Credit Risk Credit risk is the risk that the City will not recover its investments due to the inability specific investment vehicles. There is no statutory requirement for investments to meet a certain quality rating. of the counterparty to fulfill their obligation. State statute limits investment options to certain $ 3,584,375 Guaranteed investment contract Government securities 716, ,875 $ 2,867,500 Investment type Fair value 1 year 1 5 years Less than 2,867,500 Investment term The City had the following maturities for investments held by trustees: $ 36,796,774 U.S. agencies U.S. treasury bills 2,713,817 2,713,817 $ 34,082,957 Investment type Fair value 1 year Less than 16,138, years 17,944,637 Investment term The City had the following maturities for pooled investments: CITY OF OMAHA, NEBRASKA

100 Notes to Basic Financial Statements December 31, (Continued) Cash and cash equivalents Deposits with trustee Pooled investments Restricted pooled investments Deposits Trustee accounts Imprest funds Pooled investments Foreign Currency Risk Summary Guaranteed investment contract Government securities 716,875 Investment type Fair value table: Concentrations of investment by issuer for deposits held by trustees are displayed in the following U.S. agencies U.S. treasury bills 2,713, $ 34,082,957 $ 2,867,500 The Foreign $ 63,590,144 S 125,310,110 $ 53,905,088 $ 114,173,068 32,103,764 24,854,539 3,309,677 1,383,333 11,137,042 9,753,709 63,658,797 33,487,097 24,854,539 3,309, ,310,110 Investment type net assets statement of Governmentwide funds net assets Total Fiduciary statement of are reflected in the financial statements as follows: The deposits and investments of the City, excluding the pension trust fund, at December 31, 2008, 68,653 36,796,774 24,854,539 Investment type Fair value following is a complete listing of deposits and investments of the City: adversely impact the fair value of an investment. The City does not have a policy related to foreign currency risk. Currency Risk is the risk that changes in exchange rates will 80.0% 20.0 Percent 92.6% Investment type Fair value Percent Concentrations of investment by issuer for pooled investments are displayed in the following table: its agencies. be invested in the issuance of any single institution other than securities of the U.S. government and of investment in any issuer. The City s policy states that no more than 25% of the total portfolio will CITY OF OMAHA, NEBRASKA

101 (c) Pension Trust Funds Notes to Basic Financial Statements December 31, (Continued) l0+years 6.4 Investment type 1 year 1 Percent l5years 64.8 Maturity range (years) Maturity of total 6l0years lyears 8.1% Less than Bond mutual funds - Corporate bonds U.S. treasuries % 5.3% 14.5% 4.7% U.S. agencies Managed accounts 12% and 28%. Fixed income investments are held in six accounts managed by five managers: Investment Committee approves fund manager agreements. These management agreements outline Interest Rate Risk The Pension Board of each plan with the recommendation from the respective specific investment policies each manager must adhere to. The Retirement Committees do restrict assets is between 16% and 28% of the portfolio value and the civilian plan fund s range is between $137.7 million in managed accounts and $41 million in two bond mutual funds. Maturities of the securities in these commingled funds are as follows: the general asset allocation to fixed income. The uniformed plan fund s target range for fixed income the parties responsible for managing the investment process, establish both broad and specific pension programs operate in compliance with Omaha Municipal Code Chapter 22 and Nebraska quarterly by each plan s Investment Committee. The plans define the purposes of the assets, identify guidelines for the investment of the fund s assets, and establish criteria to monitor and evaluate the performance of the investment managers. The plan authorizes investments in common and preferred money market funds, bank short-term investment funds, GICs, BICs, and government bonds. They The pension trust funds consist of two funds: the Civilian Plan and the Uniformed Plan. These State Statute City pension funds are invested according to a plan developed and reviewed stocks, corporate bonds, cash-equivalent securities, certificates of deposits of insured institutions, can be in mutual funds or privately managed accounts. CITY OF OMAHA, NEBRASKA

102 December 31, 2008 Notes to Basic Financial Statements 38 (Continued) $ 111,424, % $ 565,809, % 67,237, ,393, ,806, Government securities Corporate bonds Domestic equities International equities Domestic real estate securities Total Cash and cash equivalents 75,067, ,880, Investment type Fair value allocated Percent each portfolio. Combined target allocation for fixed income securities shall be 12% to 28% of the 35%), small cap domestics (10% to 20%), and international equities (5% to 15%). Domestic real Concentration of Credit Risk Fixed income securities guidelines are governed by each manager s estate securities shall be 2% to 20% of the portfolio. They may be held individually or commingled single issuer. in mutual funds and investment pools. There are no individual investments greater than 5% with a individual management contract. This allows a wide variety of management styles, thus diversifying portfolio. Equity investments shall be 30% to 55% of the portfolio with large cap domestics (20% to BBB/Ba2 2.5 N/R 3.9 AA-i-/A AAAJAaa % of total Percent Corporate bonds AAAJA Corporate bonds BAA l/bbb 7.4 Corporate bonds N/R 0.4 TSY/AGY Ratini! Bond mutual funds U.S. treasuries AAA 25.2% U.S. agencies AAAIAA Percent of Managed accounts Investment type Ratings total The quality ratings of the securities in these commingled funds are as follows: by five managers: $137.7 million in managed accounts and $42.7 million in two bond mutual funds. income investments. The Investment Committees of each plan monitor and select fixed fund managers based on an investment policy that diversifies the plan s risks. Each manager employs a Credit Risk Credit risk involves the potential of loss of fair value due to the quality of the fixed varying type of investment style. Fixed income investments are held in six accounts and are managed CITY OF OMAHA, NEBRASKA

103 Foreign Currency Risk December 31, 2008 Notes to basic Financial Statements 39 (Continued) at an interest rate of 5.21%. The note will be repaid from collections of special assessments. be assessed to the benefited property owners. The term of the note is one year, in the amount of $706,000, assessment fund for the purpose of meeting obligations to contractors for work in place that will ultimately The City obtained a note dated December 18, 2008 to fund the current requirements in the special (5) Special Assessment Note Payable Encumbrances not been received. Inventories Debt service Perpetual care available or have been earmarked for specific purposes. The various reserves are established by actions of December 31, 2008, reservations of fund balance are described below: the Council and management and can be increased, reduced, or eliminated by similar actions. As of In the fund financial statements, reservations segregate portions of fund balance that are either not the balance in this category. of debt that are attributable to the acquisition, construction, or improvement of these assets reduce infrastructure, into one component of net assets. Accumulated depreciation and outstanding balances Restricted Net Assets contributors, or laws or regulations of other governments and restrictions imposed by law through constitutional provisions or enabling legislation. project or other purpose. Unrestricted Net Assets This This Invested in Capital Assets, Net of Related Debt This to to to reflect the portion of assets that are held for payment of debt service. reflect the portion of assets that are held for perpetual care costs. to reflect the portion of assets that do not represent available spendable resources. reflect the outstanding contractual obligations for which goods and services have category groups all capital assets, including category presents external restrictions imposed by creditors, grantors, category represents net assets of the City not restricted for any (4) Net Assets/Fund Balances have policy related to foreign currency risk. All international equities are denominated in U.s. dollars. The governmentwide and business-type activities fund financial statements utilize a net assets presentation. risk that changes in exchange rates will adversely impact the fair value of an investment. The City does not Net assets are categorized as invested in capital assets (net of related debt), restricted, and unrestricted. The City is exposed to foreign currency risk related to international equities. Foreign currency risk is the CITY OF OMAHA, NEBRASKA

104 CITY OF OMAHA, NEBRASKA Notes to Basic Financial Statements December 31, 2008 (6) Bonds Payable and Other Long-Term Obligations The following is a summary of long-term liability transactions for the year ended December 31, 2008: Governmental activities: Bonds payable: General obligation bonds Annexed general obligation bonds Special tax revenue bonds Special obligation bonds Revenue bonds Deferred amounts: Unamortized premium Unamortized discount Loss on refunding Total bonds payable Special assessment notes payable Lease-purchase contracts payable Notes payable Grants payable Compensated absences Workers compensation and healthcare claims Claims and judgments payable Net pension obligation Postretirement benefit obligation Total governmental long-term liabilities carryforward Balances at January 1, 2008 $ 472,720,000 64,106,472 40,385,000 58,654,877 2,350,000 30,826,972 (48,563) (33,504,417) 635,490, ,000 37,418,224 3,096,263 8,215,000 62,698,592 18,898,927 1,464,500 56,981,670 15,030,222 Issuances or other additions Retirements or other reductions Balances at December 31, 2008 Amount due within one year 93, ,105, ,035,000 26,710, ,865,000 38,535,000 4,412,423 (61,615) (2,944,654) 177,914, ,000 6,957, ,000 5,266,482 2,007, ,500 19, ,814, ,890 3,250,000 32,699, ,000 1,908,303 (4,984) (2,153,348) 145,711, ,063, ,460 4,240,000 49,027,463 44,000,000 64,490,695 2,210,000 33,331,092 (105,194) J4,295,723) 667,693, ,312,246 2,880,803 4,775,000 67,965,074 20,906,686 1,917,000 76,060,855 35,844, ,269 1,730,000 1,442, ,761, ,000 2,722, ,570 2,600,000 3,398,254 8,407,778 1,917, ,508, ,997, ,445, ,580 53,734, (Continued)

105 December 31, 2008 Total all funds S 1,114,571,765 activities 275, Total business-type 1,910,285 Compensated absences healthcare claims Pension obligation Postretirement benefit obligation Nonmajor business-type activities: Unamortized premium Compensated absences Postretirement benefit obligation Plus unamortized premium Special obligation bonds Plus unamortized premium Revenue bonds Sewer Revenue Fund: Notes payable Workers compensation and Lease purchase contracts payable Pension obligation Revenue bonds Deferred amounts healthcare claims Workers compensation and 620, ,000, ,368 1,471, , , , ,305 19,855, ,139 1,744,283 54,430, , ,896 payable Loss on refunding Loss on refunding Revenue bonds Deferred amounts: Parking Facilities Fund: Deferred amounts: Compensated absences Brought forward Business-type activities: Convention Center Hotel: Unamortized premium Lease-purchase contracts Unamortized premium 108,470,001 33,935 (4,403,239) 47,815,000 3,123,240 (234,098) 109,750,000 67,059 $ 839,508, January 1, Balances at CITY OF OMAHA, NEBRASKA 41 (Continued) 2,550, ,548, ,504,625 6,059,539 1,191,615, ,553,606 60,571,959 6,802, ,030 2,747,372 49, ,662 1,035, , , , , , ,917 8,461 43, ,730 16,525 2, , , ,000 25, ,000 1,514,172 3,834, ,680,947 4,479, , , ,137 2,184, , ,679 1,387 1,470,269 73, , ,818 19,334, , , ,283 2,250, ,361 1,135,000 53,295,000 1,175, ,140 45,606,756 2,140,000 33,935 (25,822) (208,276) 7,027 60,032 2,060,000 45,755, ,000 (48,530) 108,518,531 (166,947) 118,417 (4,236,292) 3,004, ,750, ,997, ,445, ,061,580 53,769,286 additions reductions 2008 year or other or other Issuances December 31, Retirements Balances at Amount due within one Notes to Basic Financial Statements

106 defeasance defeasance defeasance defeasance defeasance CITY OF OMAHA, NEBRASKA Notes to Basic Financial Statements December 31, 2008 Governmental Activities Long-term debt at December 31, 2008 comprises the following individual issues: General Obligation Bonds Original Amount issued Issue Effective interest rate payable semiannually First Series date December 31, due callable 2008 S 26,475,000 27,120,000 25,445,000 36, ,000,000 24,165,000 21,000,000 16, , ,875,000 31,660, ,625,000 46,785,000 17,880,000 75,540, Various purpose refund series GO. bonds Various purpose refund series Various purpose refund series Various purpose bonds Various purpose Various purpose GO. -- bonds GO. - bonds Various purpose refund series Various purpose - refund series Various purpose refund series Various purpose refund series Various purpose refund series ,0. bonds 4.50% 5.00% S 1,425,000 8,005,000 3,765,000 6, ,000, ,000 13,650,000 11,775,000 19,940, ,875,000 22,265, , ,005,000 17,880,000 75,540,000 Total general obligation bonds , (Continued)

107 General Obligation Bonds December 31, 2008 Notes to Basic Financial Statements 43 (Continued) Total general obligation and annexed area bonds $ 558,062,463 Total annexed area bonds 49,027,463 2,500, S.T.D. # ,090,000 2,400, S.I.D, # ,255,000 3,270, S.I.D. # ,080,000 3,800, S.I.D. # ,000 2, S.I.D. # ,000 3,250, S.J.D. # ,680,000 3,500, S.J.D. # ,000 7,600, S.1.D. # ,000 2,950, S.1.D. # ,000 5,100, S.J.D. # ,595,000 3,000, S.LD. # ,560,000 3, S.I.D. # ,700,000 2,750, S.I.D. # ,695, , S.1.D.# ,615,000 2,000, S.I.D. # ,830,000 2,500, S.1.D, # ,335, , Various Purpose Elkhorn 652, S.1.D.# None 441, S.1.D. # , S.I.D. # , ,000 4,350, S.I.D, # ,590,000 4, S.1.D. # ,000 4,150, S.1.D.# ,130,000 2,825, S.I.D. # ,825, None 285,509 1,890, S.I.D. # ,220,000 1,245, S.1.D. # ,245,000 1,835, S.1.D. # ,225,000 1, S.1.D. # ,035,000 1,750, S.1.D. # ,000 1,500, S.I.D. # ,000 1, S.1.D.# ,000 2, S.1.D.# ,000 $ 130, S.I.D. #151 35%4.80% S 45,000 Annexed Area Bonds Amount issued Issue semiannually due callable 2008 Original payable Series date December 31, interest rate First Effective CITY OF OMAHA, NEBRASKA

108 Special Tax Revenue Bonds December 31, 2008 Notes to Basic Financial Statements 44 (Continued) S 2,210,000 1,420, Highway Allocation , Highway Allocation ,000 1,420, , Highway Allocation 4.40% 5.20% $ 220,000 Amount issued Issue payable Series semiannually due callable 2008 Original date December 31, interest rate First Effective Governmental Activities Revenue Bonds S 44,000,000 Special Tax Revenue Special Tax Revenue Redevelopment Project Redevelopment Bonds Project Series 2007A Redevelopment Series 2007 Redevelopment Series ,000 Downtown Northeast Riverfront Redevelopment Project Series 2002A Performing Arts Complex Homeland Redevelopment Homeland Redevelopment Project Series 2007B Various Projects Refunding Series ,095, ,000 20,325,000 2, ,195,000 4,075,000 4,865, % ,670, ,000 4,060,000 2,000,000 4,865,000 1,095,000 18,675,000 Various None N one 6.25% 2009 None $ 4,160,000 Amount issued callable 2008 payable date December 31, interest rate First Effective Issue semiannually due Original Series CITY OF OMAHA, NEBRASKA

109 December 31, 2008 Notes to Basic Financial Statements 45 (Continued) Project Series 2002A 4.00% date December 31, callable 2008 First Special Obligation Bonds Refund Series ,535,000 $ 29,800,000 2/1/02 3/25/08 Riverfront Redevelopment Project Series 2002A Riverfront Redevelopment 4.00% Amount issued Issue Original date December 31, callable 2008 First Special Obligation Bonds S 163,045, ,235, S 1,060, , Sanitary Sewer System Elkhorn Sewer Revenue Revenue Bonds Series 2006 Convention Center Hotel Revenue, Series 2007A ,750,000 53,170,000 S Governmental 5.50% S ,695 Business-type $ 22,200,000 2/1/02 Riverfront Redevelopment 5.50% ,334, S 19,334,305 Amount issued Issue semiannually due Original payable Series interest rate Effective activities (Sewer Revenue Fund) Long-term debt at December 31, 2008 comprises the following individual issues: Business- Type Activities 2012 $ 25,955, ,000 semiannually due interest rate Effective activities payable Series /15/06 05/20/03 05/15/07 Amount issued Issue semiannually due Original payable Series date December 31, callable 2008 First Enterprise Funds Revenue Bonds CITY OF OMAHA, NEBRASKA

110 CITY OF OMAHA, NEBRASKA Notes to Basic Financial Statements December 31, 2008 As years are as follows: of December 31, 2008, the debt service requirements of the City for principal and interest in future Governmental activities Principal Interest Total Years ending December 31: 2009 $ 33,761,106 31,970,832 65,731, ,860,686 30,648,091 62,508, ,437,540 29,356,991 62,794, ,305,380 27,675,113 64,980, ,446,264 25,958, ,263, ,513, ,777, ,288,764 59,289, ,578, ,836,701 18,740, ,577, ,562,890 2,094,118 21,657,008 64,404,594 S 668,763, ,246, ,010,128 Business-type activities Principal Interest Total Years ending December 31: 2009 $ 1,717,163 8,536,460 10,253, ,098,508 8,460,848 10,559, ,319,122 8,372,024 10,691, ,569,736 8,267,854 10,837, ,167,485 8,143,451 11,310, ,231,343 38,339,888 56,571, ,175,000 33,644,428 56,819, ,951,163 26,847,325 65,798, ,319,785 15,209,999 70,529, ,830,000 2,274,842 37,104,842 $ 182,379, ,097, ,476,424 General obligation bonds have been approved by the voters and issued by the City for various improvements. These bonds indebtedness supported by the full faith and credit the City. represent of municipal 46 (Continued)

111 Notes Payable December 31, 2008 Notes to Basic Financial Statements 47 (Continued) $ 2,600,000 $ 4,775,000 1,800, , ,000 The City has entered into various agreements with not-for-profit organizations to provide grant funds as follows: Grants Payable $ 34,879,283 11,217,474 46,096,757 Years ending December 31: ,008,515 3,578,835 11,587, ,611,204 1,976,146 11,587, ,222, ,405 5,519, ,488, ,820 3,482, ,563, ,065 3,472, ,406,636 1,075,748 3,482, $ 2,250,876 1,231,508 3,482, ,327,437 1,154,947 3,482,384 Principal Interest Total Business-type activities $ 2,880, ,011 3,660, Years ending December , , , , , ,870 90,877 75,447 68, ,169 $ 222,570 98,223 83, , , , , , ,793 1,080,746 1,080,747 Principal Interest Total Governmental activities Notes payable consist of a loan contract between the City and the U.S. Army Corps of Engineers and four interest rates ranging from 3% to 5%. Maturities of the notes payable are as follows: loan contracts between the City and the Nebraska Department of Environmental Quality (NDEQ) with CITY OF OMAHA, NEBRASKA

112 December 31, 2008 Notes to Basic Financial Statements 48 (Continued) $ 1,210,000 Riverfront Hotel A 4.00% $ 231, lA , ,655, ,300 14,515,000 FNB Tower Project Series 1999A ,510,000 Riverfront Hotel 3,440,000 FNB Data Center 600,000 FNB Data Center Series Series Series Series Series 1 1,585,000 Convention Center Hotel Redevelopment ,420,380 Riverfront Redevelopment 3,500,000 FNB Tower Project Series 1999B ,000 Child Care Facility Project ,700 2A ,240 2B ,760 9,460, ,600 Kellom Heights ,830 1,224,000 Westin Aquila ,496 95, Jackson St. Partnership ,377 4,649,620 Riverfront Redevelopment 581,820 Farnam Park ,318 30,000 Kohlls Drug , ,000 Midlands Recycling , ,000 Orchard Manor 143,943 1,725,000 Millard Refrigerated Svc/NE Beef ,246, , HameyLLC , ,000 Lozier III , ,000 Drake Williams Steel , ,000 Rivergate Apartments ,855 2,650,000 First Data Resources ,419,273 94,140 Caidwell Limited Partnership , , HarneyLLP ,970 1,135,000 Food Services of America ,443,322 88,830 Kellom Plaza (26th St. Limited Ptr.) , ,000 Upstream Brewing Co , ,000 Securities Building Ltd. Partnership ,748 Series Series ,085,000 2,185, ,015 National Building ,970 amount Issue at issuance 2008 Original interest rate December 31, Effective Tax Increment Notes and Bonds Tax increment notes and bonds outstanding at December 31, 2008 comprise the following individual issues listed below and on the following pages: this liability is limited only to remittance of paid taxes. related tax increment districts are not component units of the City; therefore, the City is not liable for the outstanding debt. The creation of the related tax increment district requires that any increase in taxes due to valuation increases following creation of the district, be remitted to the lender. The City s responsibility for Tax Increment Financing Notes and Bonds At December 31, 2008, $265,746,930 of tax increment financing notes and bonds was outstanding. The CITY OF OMAHA, NEBRASKA

113 December 31, 2008 CITY OF OMAHA, NEBRASKA 42, , ,000 7,200, , , , , , ,600 76, , , , ,600 2,087,400 5,972,725 2,098,000 77, , ,000 4,100,000 1,519, , , , , , , , ,000 1,553,000 50,000 71, , , , ,000 $ 500,000 Original amount 49 (Continued) Bull Durham Premier Place Development Ames/Fontenelic LLC Downtown Northeast Grace Plaza/Twentieth Plaza Riverview Meadows Campus for Hope American Laboratories Quality Refrigerated Services Inc. Aksarben Future Trust Ford Warehouse Apartments-NuStyle Cannonball Express #3 Spagetti Building Development Riley Building LLC Village Development Lake Street LLC Immaculate Conception School Robbins School LLP L&R Holdings, LLC Joslyn Lofis Limited Partnership Airlite Plastics Company 1234 South 13th Street LLC E.A. Pedersen Redevelopment 1023 Jones Street LLP 707 South 11th Street Limited Prtnr. St. Joseph Terrace Apts. LLC Bemis Company, Inc. South Omaha Affordable Housing Corp Ames Center/Benson Plaza Hilton Garden Inn Roman Marble Products, Inc. Abbot Drive Plaza Redevelopment T&B Properties, LLC Omaha World Herald Chanell Construction Big Jim s Plus Gas & Convenience Store 1613 Farnam Street LLC Meredith Manor Cox/Suburban Electric Redevelopment Cohen Squared LLC % Issue at issuance ,127, , , , , , ,359 1,462, ,922 85, ,463 1,073,796 8,751,781 1,115,654 4,617, , ,728 77, ,499 38, ,097 2,033, , , ,017 85, ,462 3,350, , ,013 91,198 55, , ,955 1,203,671 52,731 75, ,505 S 565,590 interest rate December 31, Effective Tax Increment Notes and Bonds Notes to Basic Financial Statements

114 December 31, (Continued) 150,000 Redevelopment , ,000 Underwood Properties, Inc ,653 O Keefe Elevator Company Inc. 285,000 Redevelopment , ,200 Ames Avenue LLC , ,000 Village Development , ,000 Turner Park LLC Redevelopment ,324 Cintas Group (North Omaha 553,000 Business Park) , ,498 Signa Development Svcs (Omaha Club) , ,000 King s Heritage Estates I , ,800 Bradford Investment Group (Benson) ,961 1,600,000 Drake Court Apts. (710 S 20th LLC) ,674, ,000 Kellom Villa Limited , ,000 Kellom Gardens Limited ,796 86,600 Armored Knights ,794 1,108,538 Phillips Realty LLC , , Dodge Street LLC ,421 1,800,000 Livestock Exchange Building LLC ,711, ,000 Miami Heights Area Development ,340 1,335,000 Greater Omaha Packing II ,567,525 QRS (Quality Refrigerated Svcs) 150,000 Redevelopment II , , South 15thLLC , ,000 Airlite Plastics Company II 526,000 California Housing LLC , ,000 Hy-Vee, Inc. Redevelopment ,053 1,495,000 National Parks Service Redevelopment 1,840,000 Model T Ford Building LLC ,897,276 1,000,000 T.S. McShane LLC (P.E. her Bldg) ,316, South 28th Street LLC 600,000 Twenty Fourth & Hamilton LLC ,138 2,750,000 Courtland Place No. I LLC ,166,592 4,200,000 Riverfront Partners LLC ,677, ,000 Kaneko) ,014, ,000 DTG LLC & Jobbers Canyon LLC ,537 8,490,000 Sorenson Park Plaza Commercial ,883, ,750 Sutherlands Plaza LLC , ,000 U.S. Food Service , ,000 The Village at Omaha LP , Jones Street LLC (Museum 545,678 1,299,243 $ 150,000 Fullwood Square Apartments Ltd Ptnrshp 8.75% $ 192,912 Original interest rate December 31, amount Issue at issuance 2008 Effective Tax Increment Notes and Bonds Notes to Basic Financial Statements CITY OF OMAHA, NEBRASKA

115 December 31, 2008 Notes to Basic Financial Statements 51 (Continued) 566,000 BM & J Holdings LLC ,254 1,950,000 Jackson Lofts LLC Redevelopment ,331,960 1,349,000 Bushido University LLC ,627, ,000 Nathan LP/Nathan Development LLC ,551 1,800,000 River City Lodging LLC ,047,846 1,949,000 North Central Group Redev Phase I ,314, ,000 DEEL Investments LLC ,783 1,100,000 Kimball Lofts LLC ,321,929 15,639,284 Towers) ,216,839 Rycan, Inc. d!b/a West & Willy 389,000 Redevelopment , ,000 St Clair Condos LLC , ,000 Grover Street Acquisition LLC ,214,363 3,440,000 BOCA Development ,438,587 9,750,000 Brandeis Lofts LLC Condominiums ,448,551 2,709,950 Benson Park Plaza Redev Phase II ,383, ,817 LaCuadraLLC , ,000 The Hill Condo Conversions ,655 2,315,500 North Central Group Redev Phase II ,749,725 2,528,000 DMK Investments LLC ,955,115 86,000 CF Studio ,254 1,000,000 Downtown Dodge Developers LLC ,097,393 1,546,998 Zone 5 LLC (Aksarben Village) ,734,773 3,500,000 jlofts Condominiums ,962, ,000 James Tinsley Villas LLC , ,535 P&AMcGi11LLC , ,000 Columbo LLC (Aksarben Place) , ,625 Noddle AV2 LLC (Aksarben Project 1A) , ,805 Noddle AV3 LLC (Aksarben Project 1B) ,033 Zone Three Commons LLC (Aksarben Townsend Investments (Walistreet 406,410 Project ID) , ,000 Studios) ,993 RHW Management Inc. (Aksarben 416,000 Graham Ice Cream Building ,927 1,502,460 Noddle AV4 LLC (Aksarben Project 1C) ,687,826 1,370,000 ProjectS) ,536,291 S&S Properties LLC (Heartland Scenic $ 4,000,000 Shamrock Parking LLC 7.50% $ 6,181,492 Original interest rate December 31, amount Issue at issuance 2008 Effective Tax Increment Notes and Bonds CITY OF OMAHA, NEBRASKA

116 December 31, 2008 Notes to Basic Financial Statements 52 (Continued) $ 265,746, ,000 1,370, ,000 1,000,000 1,240,000 12,000,200 2,196, ,000 2,845, , , ,000 4,123, , , , , , , ,000 1,357, , , ,871 1,303,053 2,134,003 2,473, , ,289 3,222, ,346 39,173,759 1,485, , ,456 3,902, ,000 4,234, , , , , , , ,371 1,750,000 Ontrack Development LLC 180,000 Row House) 1,751,982 1,044,199 1,396,345 $ 5,000, % $ 5,606,902 12,054,448 Broadmoor Development (Aksarben Georgetown Properties (Aksarben Project 3) 215,000 Salem Village Giovanna 6th & Pierce Project 4) Redevelopment Dial-Kinseth Development (Marriott Residence Inn) Anzaldo Second Addition Redev Caniglia Little Italy LLC Redev OB-GYN) East Campus Realty (Midtown Skyline Retirement Community 1,642,118 Equipment Company) ALDI, Inc. (Sutherlands Plaza South 72nd Street Associates LLC Clarinda Condos 37,439,000 Turner Park) DEEL Investments LLC (18th Street Sheppard Heights (Incontro Enterprises 539,000 LLC) 3,603,000 Development Creighton University (Modern Sutherlands Plaza LLC Storage Canada LLC (Dm0 s Storage) DLR AK5 LLC (DLR Group Building) Redevelopment Greenview Estates LLC Redevelopment Riverfront Compus Developers II LLC Blues Lofts, Inc. Redevelopment No Man s Land LLC (24th & Paul St.) ALDI, Inc. Quad Tech LLC (Blue Cross Centre) Building 500 LLC (500 South 18th St.) Courtland Place No. 2 LLC 901 Land LLC S&R Development LLC (Metro Original interest rate December 31, Effective Tax Increment Notes and Bonds CITY OF OMAHA, NEBRASKA

117 CITY OF OMAHA, NEBRASKA Notes to Basic Financial Statements December 31, 2008 Debt Margin/Covenants According to the City Charter, the total amount bonds) outstanding at any time, which shall include bonds issued, but shall not include bonds authorized until they are issued, shall not exceed 3.5% the actual value taxable real and personal property in the City. Debt margin as of of December 31, 2008 is calculated as follows: of general obligation indebtedness (including annexed area Debt limit $ 927,847,755 General debt 558,062,463 General debt service fund balance 18,976,244 obligation 539,086,219 Debt margin $ 388,761,536 of Revenue bonds and other long-term obligations are the obligation specific Enterprise funds and are solely from the revenues the respective funds. Provisions in the revenue bond ordinances contain limitations and on annual debt service requirements, and flow moneys through various accounts, and minimum amounts to be maintained in various accounts. It is management s opinion the City is in compliance with all such significant provisions. payable certain restrictions restricted of of maintenance of of In Substance Defeasance On July 24, 2008, the City issued $75,540,000 general obligation refunding bonds to provide resources to purchase investment securities that were placed in an irrevocable trust for the generating resources for all future debt service payments $76,120,000 refunded bonds are to be defeased and the liability has been removed from the governmental activities column the net assets. The price exceeded the net carrying amount the old debt by $2,944,654. This amount is being netted against the new debt and over the shorter the life the debt or original debt. This refunding was to reduce total debt service payments over the next 20 years by $3,912,275 and resulted in an economic gain $2,650,746. of of of of considered statement of refunded of of reacquisition purpose of of general obligation bonds. As a result, the undertaken amortized of 53 (Continued)

118 December 31, 2008 Notes to Basic Financial Statements 54 (Continued) requirements of certain nonprofit organizations that financed the construction of the facilities. The City has various times through 2033, at which time title will be conveyed to the City. The net book value of leased unpaid lease obligations to the lessor at that time. an option to purchase the facilities at any time by paying an amount equal to the total of all remaining The City is leasing libraries and other facilities under noncancelable lease-purchase agreements expiring at assets is approximately $43 million. The rental payments are designed to equal the debt service (7) Leases Total General Obligation Bonds Total $ 253,995, Convention Center Hotel Bond S.LD. #379 S.LD. #384 S.LD. #423 S.I.D. #433 S.LD. #449 S.I.D. #461 S.LD. #423 S.LD. #203 S.LD. #470 Annexed Area Bonds Business-Type Revenue Bonds 1999 Various Purpose & Refunding 2004 Convention Center Series A 2000 Defeasance & Refunding 2000 Various Purpose 11,500,000 10,030,000 2,430, ,195,000 3,515,000 2,670,000 2,520,000 2,380,000 1,695,000 1,450,000 1,200,000 1,705,000 1,390,000 18,525, ,720, ,275,000 $ 109,235,000 General Obligation Bonds the trust account assets and the liability for the defeased bonds are not included in the City s financial bonds in an irrevocable trust to provide for all future debt service payments on the old bonds. Accordingly, statements. The amount of in substance defeased debt outstanding at December 31, 2008 is shown below: In prior years, the City defeased certain general obligation and other bonds by placing the proceeds of new CITY OF OMAHA, NEBRASKA

119 December 31, 2008 Notes to Basic Financial Statements 55 (Continued) that expires only upon payment of all outstanding bonds of the Commission. The annual rental payments payments for 2008 were approximately $1,412,486. The City leases space in the Omaha Douglas Civic Center and the adjoining Hall of Justice under a lease arc determined based upon actual space occupied by the City for operation and maintenance. Actual rental Fiscal year ending: Total minimum lease payments Less amount representing interest Total principal obligation under capital leases with rates of interest from 2.00% to 7.98% $ 4,568,529 $ 41,312,246 4,604,555 4,579,392 4,413,493 4,546,087 56,547,380 19,968,779 9,277,211 15,235,134 11,999,996 4,5 89,334 4,700,426 4,702,827 4,705,118 4,691,538 4,695,156 9,124,965 20,612,910 74,927,627 28,727,627 46,200,000 9,694,691 activities Governmental Business-type activities together with the present value of the net minimum lease payments as of December 31, 2008: The following schedule reflects future minimum lease payments under the lease purchase agreements CITY OF OMAHA, NEBRASKA

120 (8) Receivables December 31, 2008 Notes to Basic Financial Statements 56 (Continued) Substantially all City employees are covered by one of two single employer contributory defined-benefit retirement plans. The City of Omaha Employees Retirement System (the Civilian Plan) and the City of Omaha Police and Firefighters Retirement System (the Uniformed Plan), as described below, are accounted for by the city as pension trust funds. (9) Employees Retirement Plans Property tax receivable (general fund) Property tax receivable (debt service fund) Special assessments (debt service fund) Special assessments (other governmental funds) Grants (general fund) Grants (other governmental funds) Property tax receivable (other governmental funds) $ 63,428,978 $ 149,257,239 4,147,881 2,484,821 1,181,887 28,247,671 45,868,177 3,897, , ,116 Unavailable Unearned Governmental funds report deferred revenues in connection with receivables for revenues not considered available to liquidate liabilities of the current period. At December , the various components of deferred revenue and unearned revenue are as follows: Hotel motel and other Occupation tax Telephone occupation tax occupation tax Charges tbr services Property taxes Cable TV and Gas franchise fee in OPPD lieu of tax Motor vehicle tax Total receivables Receivables: Vehicle rental MUD in lieu of tax Special assessment State aid distribution 1,243,758 25,688 1,023, , ,351 3,028, , ,127 45, , ,127 6,632,702 32, , ,758 1,023,034 3,028, ,351 $ 63,428,978 45,868,177 3,897, , ,194,979 $ 78,555,523 50,034,634 11,095, ,685,901 4,289, ,287 4,397, ,083,118 7,103,993 4,678,718 General service Debt governmental Nonmajor activities Sewer fund Nonmajor activities businesstype 3, , ,289, ,287 4,397,217 16,179,928 18,576 1,579 4,147,881 2,484, ,351 1,243, ,953 45,843 Total Total Total 788,127 6,632,702 1,023,034 Receivables at December 31, 2008 of the City s major funds and nonmajor funds in the aggregate, including the applicable allowances for uncollectible accounts, are as follows: CITY OF OMAHA, NEBRASKA

121 (a) Civilian Plan December 31, 2008 Notes to Basic Financial Statements 57 (Continued) Retirement Income Security Act of 1974 or the maximum funding standards of the Employee Retirement Income Security Act of 1974 or the maximum funding limitations. Funding standards are actuarially determined using the entry age-normal cost method. The Civilian Plan is not subject to either the minimum funding standards of the Employee Number of: Active members 1,121 Service retirements 892 Surviving spouses and children 253 Total participants 2,439 Disabled 92 Deferred vested 81 Membership of the Civilian Plan consists of the following at January 1, 2009: Participant Data rate of 9.525% of annual covered salary. Administrative costs for management of the investment funds are financed through investment earnings. Other administrative costs of the Civilian Plan are Funding Policy is provided for members who retired prior to January 28, 1998 after a five-year waiting period. The at the discretion of the City in accordance with plan provisions. A cost of living adjustment currently not make written application. Cost of living adjustments are provided to members and beneficiaries The Civilian Plan provides retirement benefits to plan members and beneficiaries. All eligible City employees, except the following, are covered by the plan: police; firefighters; persons paid on a contractual or fee basis; seasonal, temporary, and part-time employees; and elected officials who do Pension Board of the City administers the Civilian Plan. The Pension Board is responsible for establishing or amending plan provisions. The Civilian Plan does not issue separate financial statements. Plan Description The Effective December 16, 2007, Civilian Plan members are required to contribute, by payroll deduction, 8.325% of their annual covered salary and the City is required to contribute at a paid by the city s general fund. Contributions to the Civilian Plan totaled $4,695,162 for the employees and $5,374,082 for the employer for the year ended December 31, Civilian Plan is a single employer contributory defined-benefit pension plan. CITY OF OMAHA, NEBRASKA

122 December 31, 2008 Notes to Basic Financial Statements 58 (Continued) Fiscal year ended: 8,794, (13,910,207) 6,135, (10,090,703) S 9,089,878 59% (17,626,003) cost (APC) contributed obligation Schedule of employer contributions pension of APC pension Annual Percentage Net obligation for 2008, 2007, and 2006 are as follows: The annual pension costs, the percentage of annual pension cost contributed, and the net pension Annual Pension Cost and ivet Pension Obligation obligation to the Civilian Plan for the fiscal year ended December 31, 2008 are as follows: Adjustment to annual required contribution Contributions made Annual required contribution Interest on net pension obligation Annual pension cost Increase in net pension obligation Net pension obligation, beginning of year Net pension obligation, end of year $ 9,212,669 $ (17,626,003) (1,235,608) 9,089,878 (5,374,082) 3,715,796 (13,910,207) 1,112,817 The City s annual pension cost and net pension Cost of living adjustments Actuarial cost method Valuation date Amortization method Remaining amortization period Asset valuation method Actuarial assumptions: Projected salary increases Investment rate of return 8% per year 24 years Level percent closed Entry age normal method 75% of expected value, plus 25% of January 1, 2008 Adjusted value of plan assets market value 4.5% per year Lesser of 3% or $50 per month information was determined as part of the actuarial valuation at the date indicated. Additional information as of the latest actuarial valuation follows: The information presented in the notes to financial statements and required supplementary CITY OF OMAHA, NEBRASKA

123 December 31, 2008 Notes to Basic Financial Statements 59 (Continued) Receivables: Accrued interest Other Investments Due from other funds Warrants payable Accounts payable Net assets: Total liabilities Assets Total liabilities and net assets Due to other funds Total assets Held in trust for pension benefits Liabilities Net Assets 755, ,002 1,479,955 1,912, ,222, ,178 Summary financial information for the Civilian Plan is as follows: Funding Status and Funding Progress quoted market prices. Method Used to Value Investments Plan assets are invested in readily marketable securities and are carried at fair value. Investments in securities traded on a national securities exchange are valued at the latest quoted market prices. Unlisted investments are valued at latest of the City. Plan member and employer contributions are recognized in the period in which the accounting and are presented as a pension trust fund in the accompanying basic financial statements Basis ofaccounting contributions are due. Benefits are provided based on a percentage of the member s final average compensation and are recognized when due and payable. The Civilian The $ 204,579 $ 206,364,983 S 22,344 $ 206,364, ,452, Actuarial valuation date (a) (b) 52.7% % assets value of liability (AAL) (b-a) (a/b) (c) Actuarial accrued Actuarial entry age (UAAL) ratio AAL Unfunded Funded Covered payroll UAAL as a ((b-a)ic) of covered percentage payroll funding status and funding progress is as follows: Civilian Plan s financial statements are prepared using the accrual basis of CITY OF OMAHA, NEBRASKA

124 CITY OF OMAHA, NEBRASKA Notes to Basic Financial Statements December 31, 2008 Additions: Contributions: Employer Employee Total contributions Investment income (loss): Dividends and interest Net depreciation in fair value of investments Investment expenses Deductions: Benefit payments Net investment loss Total additions Change in net assets Net assets held in trust for pension benefits, beginning of year Net assets held in trust for pension benefits, end of year $ 5,374,082 4,695,162 10,069,244 5,013,141 (79,030,808) (1,739,834) (75,757,501) (65,688,257) 23,953,415 (89,641,672) 294,094,178 S 204,452,506 (b) Uniformed Plan Plan Description The Uniformed Plan is a single employer contributory defined-benefit pension plan. The Uniformed Plan covers all eligible probationary and regular sworn personnel of the Police and Fire departments of the City. The Uniformed Plan provides retirement, disability, and death benefits to plan members and beneficiaries. Cost of living adjustments are provided to members and beneficiaries at the discretion of the City in accordance with plan provisions. The City Council has the authority to negotiate, set, and amend contribution rates for the employer and employees. The Pension Board of the City administers the Uniformed Plan. The Pension Board is responsible for establishing or amending plan provisions. The Uniformed Plan does not issue separate financial statements. Funding Policy Uniformed Plan members are required to contribute, by payroll deduction, a percentage of their annual covered salary and the City is also required to contribute as follows: Fire Sworn Fire Management Police Sworn Police Management Barainin Group Employee rate City rate 15.40% 21.02% (Continued)

125 December 31, 2008 Notes to Basic Financial Statements 61 (Continued) Valuation date information was determined as part of the actuarial valuation at the date indicated. Additional information as of the latest actuarial valuation follows: Actuarial cost method Asset valuation method Amortization method Remaining amortization period Actuarial assumptions: Investment rate of return Final year wage adjustment Cost of living adjustments Projected annual salary increases January 1, 2008 Actuarial value of assets One-third of market value, plus two-thirds of expected asset value Entry age normal method varying 4% through 6.5% Lesser of 3% or $50 per month The information presented in the notes to financial statements and required supplementary Level percent of pay June 30, 2007) ($65 for fire retirements after 10.0% 8% per year 25 years Retirement Income Security Act of 1974 or the maximum funding standards of the Employee Retirement Income Security Act of 1974 or the maximum funding limitations. Funding standards are actuarially determined using the entry age-normal cost method. The Uniformed Plan is not subject to either the minimum funding standards of the Employee Total participants 2,831 Active members Service retirements Surviving spouses and children Disabled Number of: Deferred vested 11 1, Membership of the Uniformed Plan consists of the following at January 1, 2009: Participant Data administrative costs of the Uniformed Plan are paid by the city s general fund. Contributions to the year ended December 31, Uniformed Plan totaled $14,858,953 for the employees and $21,700,806 for the employer for the costs for management of the investment funds are financed through investment earnings. Other In addition, the City will make contributions of $1,327,600 annually through Administrative CITY OF OMAHA, NEBRASKA

126 December 31, 2008 Notes to Basic Financial Statements 62 (Continued) Basis of Accounting statements of the City. Plan member and employer contributions are recognized in the period in average compensation and are recognized when due and payable. 34,563, (45,494,051) 30,917, (31,630,196) cost (APC) contributed obligation Schedule of employer contributions pension of APC pension Annual Percentage Net of year i et pension obligation, end of year Adjustment to annual required contribution Annual required contribution Interest on net pension obligation Contributions made obligation Annual pension cost Increase in net pension Net pension obligation, beginning 3,639,524 (4,041,120) (21,700,806) (45,494,051) 37,671,425 15,970,619 Annual Pension Cost and Net Pension Obligation obligation to the Uniformed Plan for the year ended December 31, 2008 are as follows: The $ 38,073,021 $ (61,464,670) $ 37,671,425 58% $ (61,464,670) The Uniformed Plan s financial statements are prepared using the accrual basis of accounting and are presented as a pension trust fund in the accompanying financial which the contributions are due. Benefits are provided based on a percentage of the member s final Fiscal year ended: obligation for 2008, 2007, and 2006 are as follows: The annual pension costs, the percentage of annual pension cost contributed, and the net pension Funding Status and Progress The Actuarial valuation date Actuarial Actuarial accrued Unfunded value of liability (AAL) AAL Funded assets entry age (UAAL) ratio (a) (b) (b-a) (a/b) Covered payroll (c) UAAL as a percentage of covered payroll ((b-a)ic) % % funding status and funding progress is as follows: City s annual pension cost and net pension CITY OF OMAHA, NEBRASKA

127 December 31, 2008 Notes to Basic Financial Statements 63 (Continued) Cash and cash equivalents Receivables: Receivables: Accrued interest Other Investments Warrants payable Accounts payable Net assets: Total liabilities Total liabilities and net assets Liabilities Total assets Due from other funds $ 1,860,866 $ 366,539,696 $ 366,539,696 Held in trust for pension benefits iet Assets 1,279,204 Assets 2,250, ,587, , , , ,923,878 $ 18,014 Summary financial information for the Uniformed Plan is as follows: Method Used to Value Investments Uniformed Plan assets are invested in readily marketable securities and are carried at fair value, investments in securities traded on a national securities exchange are valued at the latest quoted market prices. Unlisted investments are valued at latest quoted market prices. CITY OF OMAHA, NEBRASKA

128 December 31, 2008 Notes to Basic Financial Statements 64 (Continued) Additions: Contributions: Employer investment income (loss): Employee Total contributions Dividends and interest Net appreciation in fair value of investments Investment expenses Deductions: Benefit payments Total additions Net investment income Change in net assets Net assets held in trust for pension benefits, beginning of year Net assets held in trust for pension benefits, end of year (157,072,909) 36,559,759 9,278,599 (2,546,870) (150,341,180) (113,781,421) (163,999,512) 529,923,390 14,858,953 50,218,091 $ 21,700,806 $ 365,923,878 CITY OF OMAHA, NEBRASKA

129 December 31, 2008 Notes to Basic Financial Statements CITY OF OMAHA, NEBRASKA 65 (Continued) Capital assets, not being Cultural assets Capital assets, being depreciated: Total capital assets, Total capital assets, depreciation Construction in progress Machinery and equipment Infrastructure being depreciated Machinery and equipment Infrastructure Less accumulated depreciation for: Land not being depreciated Governmental activities: depreciated: Buildings Buildings Total capital assets, Total accumulated being depreciated, net 5,833, , ,499, ,847,346 capital assets, net $ 931,917,292 73,994, ,066 1, ,276 Governmental activities 1,991,187 1,206,945,461 1,443,587 71,598, ,059,230 22,987, ,017, ,829, , ,360,082 45,808,549 4,193,314 1,367,321 48,634, ,645, ,561, , ,583,194 68,503, ,546,207 23,889, ,271,933 (40,567,651) 164,210,375 17,081,632 64,133,542 8,908,983 5,833,600 (49,021,603) 19,482, ,292,007 1,049,2 10, ,726,158 $ 124,934,430 8,453, , ,044, ,565,131 45,164,457 1,367, ,362, ,435,718 balances Increases Decreases balances Beginning Ending Capital asset activity for the year ended December 31, 2008 is as follows: (10) Capital Assets

130 December 31, 2008 Notes to Basic Financial Statements 66 (Continued) Furniture and fixtures Buildings Furniture and fixtures Machinery and equipment 6,792,766 3,557,743 71,222,245 35,995 being depreciated 81,572, ,066 Total accumulated assets, net S 68,715,552 (3,714,231) Less accumulated depreciation for: Fund capital Machinery and equipment 2,401, ,638 3,108,818 65,001,321 Buildings Total capital assets, Total capital assets, being depreciated, net 68,217,186 Convention Center Hotel depreciation 13,355,568 3,866,297 75,799 40,272 6,833,038 71,258,240 3,633,542 81,724,820 (3,714,231) 64,502,955 17,221,865 4,745,396 1,374,070 6,119,466 6,208,992 1,784,589 7,993,581 Capital assets, not being Cultural assets Capital assets, being depreciated: S 498, ,366 depreciated: Convention Center Hotel Fund: balances Increases Decreases balances Beginning Ending Capital asset activity of each major enterprise fund is as follows: General government Public safety Community development Culture and parks Total depreciation expense governmental Governmental activities: Ecological services Transportation services 12,095, ,841 3,403, ,026 14,279,300 $ 640,540 $ 31,900,399 Depreciation expense was charged to functions/programs as follows: CITY OF OMAHA, NEBRASKA

131 Decreases December 31, 2008 Parking Facilities Fund capital assets, net being depreciated, net Total capital assets, depreciation Total accumulated Buildings Less accumulated depreciation for: Leased buildings being depreciated Total capital assets, Buildings Leased buildings Capital assets, being depreciated: Total capital assets, not being depreciated depreciated: Capital assets, not being Land Parking Facilities Fund: 67 $ 42,351,642 39,878,298 21,128,002 3,796,509 17,331,493 61,006,300 4,567,229 56,439,071 2,473,344 $ 2,473,344 balances Beginning Notes to Basic Financial Statements CiTY OF OMAHA, NEBRASKA (2,398,793) (2,398,793) 2,398,793 2,398,793 Increases (Continued) 39,952,849 37,479,505 23,526,795 3,796,509 19,730,286 61,006,300 4,567,229 56,439,071 2,473,344 2,473,344 Ending balances

132 Notes to Basic Financial Statements December 31, (Continued) capital assets, net $ 359,328,573 22,895,266 9,123, ,099,942 Sewer Revenue Fund being depreciated, net 324,586,639 47, ,633,763 Total capital assets, depreciation 253,774,816 16,879, ,654,681 Total accumulated Machinery and equipment 13,206, ,976 13,712,023 Utility plant 240,568,769 16,373, ,942,658 Less accumulated depreciation for: being depreciated 578,361,455 16,926, ,288,444 Total capital assets, Utility plant Machinery and equipment 562,405,901 15,974,627 15,955, ,362 16,907, ,380,528 Capital assets, being depreciated: not being depreciated 34,741,934 22,848,142 9,123,897 48,466,179 Total capital assets, Land depreciated: Construction in progress 32,216,512 22,691,294 9,123,897 45,783,909 $ 2,525, ,848 2,682,270 Capital assets, not being Sewer Revenue Fund: balances Increases Decreases balances Beginning Ending CITY OF OMAHA, NEBRASKA

133 December 31, 2008 capital assets, net Nonmajor Enterprise depreciation Total accumulated Machinery and equipment Building and systems Less accumulated depreciation for: being depreciated Total capital assets, Construction in progress Machinery and equipment depreciated: Buildings and systems Capital assets, not being Capital assets, being depreciated: Nonmajor Enterprise Funds: CITY OF Oi AHA, NEBRASKA 69 (Continued) $ 6,376,405 72,943 6,449,348 6,397, ,375 6,887,596 3,393,017 3,004, ,510 3,149, ,865 3,737,882 12,773, ,938 13,251,564 9,571,123 3,202, ,938 3,680,441 9,571,123 $ 85,380 85,380 balances Increases Decreases balances Beginning Ending Notes to Basic Financial Statements

134 Joint CITY OF OMAHA, NEBRASKA Notes to Basic Financial Statements December 31, 2008 (11) Fund Deficits Fund deficits exist in the following funds: Major Enterprise Funds: Parking Facilities S 5,803,032 Convention Center Hotel 25,244,905 Nonmajor Enterprise Fund: Printing and Graphics 72,972 Air Quality 158,700 Golf Operations 713,653 Compost 29,671 Nonmajor Capital Projects Funds: Missouri River Pedestrian Bridge 5,415,630 Back to the River Project 1,405,000 City Capital Improvement 623, Street & Highway 2001 #1 5, Transportation 406,496 Downtown Stadium & Companion Projects 10,633,158 Pedestrian Trail Bridge use Omaha/Council Bluffs 414 Downtown Development 3,523,045 Capital Special Assessment 106,808 Nonmajor Special Revenue Funds: Park Development 2,988,133 Nebraska Affordable Housing Trust 972,781 Local Law Enforcement Block Grant 80,812 Lead-Based Paint Hazard Grant 142,261 School Related Grant 122,504 COPS More ,894 Metro Drug Task Force Grants 99,341 Comprehensive Communities Program 8,755 COPS More Equipment Grant 3,268,036 COPS Phase One Grant 8,493 Juvenile Detention Grant 7,933 Weed Seed Phase Four 273,321 Fire Department Grants 606,252 Home Program Grant 886,510 Community Development Block Grant 2,003,524 EPA Administration Grants 43,567 Economic Development Incentive Grant 288,325 HUD Shelter Plus Care 7,489 Keno/Lottery Proceeds 56,732 Federal Emergency Management Agency 4,106,607 Emergency Shelter Grant 43,477 Lead NDEQ State Grant 80, (Continued)

135 CITY OF OMAHA, NEBRASKA Notes to Basic Financial Statements December 31, 2008 Domestic Violence Grants$ 82 Police Department Grants66,199 Initiative Grant 9,224 Federal Fire Grant 230,489 Neighborhood (a) Major Enterprise Funds The Parking Facilities Fund was established as a tool to manage the City s eight structures and various surface lots throughout the City. Lease purchase debt has been issued to finance the the parking structures. Annual appropriations from the City s General Fund to subsidize the this debt will eliminate this deficit. construction of payment of parking The Convention Hotel began operations in April The City projects that future operations the hotel will eliminate this deficit. Annual appropriations from the City will subsidize any debt service shortfall. of Center (b) (c) (d) Nonmajor Enterprise Funds The deficit in the and Graphics, eliminated by fec increases and Printing Nonmajor Capital Funds The elimination receipt of Golf Operations, Compost and Air Quality Funds will be reduction of expenses. fund deficits in the Nonmajor Capital Projects Funds will be special assessments. of deferred revenues, issuance of bonds and the collection of Noninajor Special Revenue Funds accomplished by the The Park Development Fund s deficit is a result the acquisition two large land purchases. These sites are outside the City and have been selected as future regional parks. A park fee has been established, which will be from Sanitary Improvement Districts to fund these acquisitions. The other Nonmajor Special Revenue Fund deficits will be eliminated upon collection of collected of neighboring of deferred revenues from the sponsoring grantor agency. of development (12) Postretirement Healthcare Benefits Plan Descr:ption The City sponsors a defined benefit healthcare plan that provides certain healthcare benefits to eligible retirees and their dependents up to age 65 when they would be Medicare eligible in accordance with in Chapter 23 the Omaha Municipal Code. The benefits include medical and coverage. The rates paid by retirees are substantially lower than they would be individual health insurance policies. This difference is an implicit rate subsidy and considered an Other does not issue separate financial statements. under single-employer, provisions established prescription of postemployment Postemployment Benefit (OPEB). The plan is administered by the City. The plan 71 (Continued)

136 Funding Policy December 31, 2008 Notes to Basic Financial Statements 72 (Continued) enterprise funds. The net OPEB cost is allocated to governmental activities, sewer enterprise fund, and other nonmajor Net OPEB obligation, end of year Normal cost Amortization of unfunded actuarial accrued liability Interest on net OPEB obligation Adjustments to annual required obligation Contributions made by employer Net OPEB obligation, beginning of year Annual OPEB Change in net OPEB obligations $ 23,600,000 $ 38,012,952 13,900,000 15,892, ,000 (500,000) 37,600,000 (15,479,325) 22,120,675 to exceed 30 years. The remaining amortization period is 29 years. The following table shows the No. 45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover the changes in the City s net OPEB obligation: employer (ARC), an amount actuarially determined in accordance with the parameters of GASB Statement normal cost each year and amortize any unfunded actuarial liabilities (or funding excess) over a period not components of the City s annual OPEB costs for the year, the amount actually contributed to the plan, and The City s annual other OPEB cost (expense) is calculated based on the annual required contribution of the Annual OPEB Cost and Net OPEB Obligation No. 385, the Omaha City Employees Local No. 251, and other classified civilian and sworn employees. All with the Omaha Police Union Local No. 101, the Professional Firefighters Association of Omaha Local 2008, the City paid $15,479,325 for 1,201 retirees. Retiree contribution rates vary from 0% to 5% of an agreements are approved and can be amended by the Omaha City Council. Contributions are made to the plan based on a pay-as-you-go basis and the City self-insures this benefit. For the year ended December 31, annual estimated premium depending on the bargaining group. Retiree contributions for 2008 were $400,564. The contribution requirements of plan members and the City are established through labor negotiations, CITY OF OMAHA, NEBRASKA

137 CITY OF OMAHA, NEBRASKA Notes to Basic Financial Statements December 31, 2008 The annual OPEB costs, the percentage of annual OPEB cost contributed and the net OPEB obligation for 2008 are as follows: Fiscal year ended: Percentage of Annual OPEB annual OPEB cost contributed Net OPEB $ 37,600,000 28,600,000 41% $ 38,012, ,892,277 The following table shows the components of the City s annual OPEB cost for the year, the amount actually contributed to the plan, and changes in the City s net OPEB obligation: Funded Status and Funding Progress The funded status of the plan as of March 1, 2008 and 2007 is as follows: Actuarial accrued liability (AAL) Actuarial value of plan assets Unfunded actuarial accrued liability (UAAL) Funded ratio Covered payroll UAAL as a percentage of covered payroll 2008 $ 388,500,000 $ 388,500,000 % $ , % ,500, ,500,000 % 153,600, % Actuarial Methods and Assumptions Actuarial valuations on an ongoing plan involve estimates of the value of reported amounts and assumptions about the probability of occurrence of events far into the future. Examples include assumptions about future employment, mortality, and the healthcare cost trend. Amounts determined regarding the funded status of the plan and the annual required contributions of the employer are subject to continual revision as actual results are compared with past expectations and new estimates are made about the future. The schedule of funding progress, presented as required supplementary information following the notes to the financial statements, presents multiyear trend information about whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liabilities for benefits. Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as understood by the employer and the plan members) and include benefits provided at the time of each valuation and the historical pattern of sharing benefit costs between the employer and plan member to that point. The actuarial methods used include techniques that are designed to reduce the effects of short-term volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the long-term perspective of the calculations. In the March actuarial valuation, the unit credit actuarial cost method was used. The actuarial assumptions included a 4% projected investment rate of retum and an annual healthcarc cost trend of 7.88% initially, reduced by decrements to an ultimate rate of 5% after five 73 (Continued)

138 December 3 1, 2008 Notes to Basic Financial Statements 74 (Continued) The City participates in a number of federally assisted grant programs, principally Federal Highway city management does not believe that such amounts, if any, would be significant. Construction Grants, Community Development Block Grant, Workforce Investment Act, and other local improvement programs. The programs are subject to financial and compliance audits. The amount of expenditures, if any, that may be disallowed by granting agencies is not determinable at this time; however, $6.8 million. there is a possibility that the City will incur additional losses on these lawsuits of approximately $1,917,000 recorded by the City as claims and judgments payable, the City Attorney is of the opinion that The City is a defendant in a number of lawsuits in its normal course of operations. In addition to the (14) Commitments ,253,513 44,171,173 37,441,815 19,982, $ 19,982,871 47,177,910 44,989,375 22,171,406 Beginning Current End liability claims payments liability of year year Claim of year fund services all claims for risk of loss to which the City is exposed, including general liability, property, and casualty up to $100,000 per occurrence; workers compensation; employee health and accident; 2007 are as follows: exposed except for general liability for helicopters. Instead, the City management believes it is more economical to manage its risks internally and set aside assets for claim settlement in the general fund. This environmental; and antitrust. Changes in the balance of claims liabilities during the fiscal years 2008 and It is the policy of the City not to purchase commercial insurance for the risks of losses to which it is (13) Self-Insurance liability is calculated assuming 30 annual payments increasing at 4% per year. years. Both rates include a 3.25% inflation assumption. The amortization of the unfunded actuarial accrued CITY OF OMAHA, NEBRASKA

139 75 (Continued) CITY OF OMAHA, NEBRASKA Notes to Basic Financial Statements December 31, 2008 (15) Pledged Revenues GASB Statement No. 48 requires disclosures pertaining to future revenues that have been pledged or sold, The City has pledged specific revenues streams to secure the repayment of certain outstanding debt issues. The following table lists those revenues and the corresponding debt issue along with the purpose of the debt, the amount and term of the pledge remaining, the current fiscal year principal and interest on the debt, the amount of pledged revenue recognized during the current fiscal year and the approximate percentage of the revenue stream that has been committed if estimable: Issue Special tax revenue redevelopment ( series 1998, 1999, 2002A, 2002B. 2004, 2007, 2007A, 2007B, 2008, 2008 refunding) Special obligation (series riverfront 2002A, 2002B and 2008 refunding) Highway allocation (series 1999, 2004, 2006) Convention Center Hotel (series 2007A) Sanitary sewer system (series 2003, 2006) and NE Department of Environmental Quality (series C3l7079. C317319, C ) Type revenue pledged Community redevelopment property tax Cigarette tax. TIP revenues. Sewer revenue, land sales and sales tax Street & highway gasoline taxes Net operating revenue of the hotel Operating revenue of the sanitary sewer system Amount of revenue pledged S 68,578,837 General nuroose for debt To finance infrastructure and capital improvements in redevelopment areas throughout the City 149,625,348 To finance infrastructure and capital improvements in the Riverfront Business Park 3,093,994 To finance street improvements 211,461,966 To finance the construction of the Convention Center Hotel ,9 18 To finance the construction and rehabilitation of the sanitary sewer system Term of commitment Through 2028 Through 2032 Various Through 2026 Through 2035 Through 2036 Principal and interest Percentage for the of year ended revenue December 31, pledged % S 3,309,680 Recognized for the year ended December 31, 2008 S 2, , ,578 29, , ,715, ,394,390 41,969,126

140 CITY OF OMAHA, NEBRASKA Notes to Basic Financial Statements December 31, 2008 (16) Subsequent Events On June 3, 2009, the City issued City of Omaha Public Facilities Corporation Lease Revenue Bonds in the amount of $65,000,000 bearing interest at 4.66%. Bond proceeds will be used to pay a portion of the costs of acquiring, constructing, furnishing and equipping a new 25,000-seat City of Omaha Baseball Stadium adjacent to the Qwest Center. The National Collegiate Athletic Association (NCAA) and College World Series of Omaha, Inc (CWS) have entered into a 26-year agreement whereby the NCAA commits to continue to hold the NCAA Division I Men s College World Series in Omaha, Nebraska and CWS will continue to conduct the event at the new Stadium. The City anticipates that the entire cost of the Stadium will be approximately $128,000,000, of which approximately $31,000,000 will be paid from private donations; $2,000,000 will be paid from the future concession agreement with the stadium s concessionaire; $65,000,000 will be paid from the proceeds of the debt issue and $30,000,000 will be paid from the proceeds of a series of completion bonds to be issued in early The project is scheduled for completion in early On April 16, 2009, the City issued General Obligation Refunding Bonds in the amount of $37,050,000 bearing interest at 3.11%. Bond proceeds will be used to refund $37,460,000 of previously issued General Obligation bonds. This refunding was undertaken to reduce total debt service payments over the next 17 years by $1,825,108 and resulted in an economic gain of $721,236. The loan provides for annual principal payment ranging from $785,493 to $8,314,762 and semiannual interest payments each April 15 and October 15 through (17) MECA (a) Nature of Operations MECA was incorporated under the Nebraska Nonprofit Corporation Act, Neb. Stat , et seq. in the State of Nebraska. Formal operations of MECA commenced on August 25, 2000, when the City approved an Agreement and Lease between the City and MECA to implement the Convention Center/Arena Redevelopment Plan, to provide bond funds to MECA, to allow MECA to supervise the design and construction of the Convention Center/Arena Facility, to allow MECA to operate the Convention Center/Arena and Parking Facility for 99 years, and to provide a multiyear operating subvention from the City. The agreement and lease required the City to make annual subvention payments to MECA, initially to fund start-up, pre-construction, planning and other pre-operational activities, and thereafter to help offset anticipated annual operating losses. In 2004, MECA amended its agreement and lease with the City to provide for the repayment of construction funds. In 2006, MECA further amended the agreement and lease. Under the amended agreement and lease, the City agreed to transfer to MECA the final subvention amount of $1,815,000 in Title to the facility and all related infrastructure assets are vested with the City. Construction activities were principally funded by private donations and general obligation bonds of the City (the Project Funds). Construction costs, bond proceeds, and payments are not reflected in MECA s financial statements as these assets, liabilities, revenues, and expenditures are accounted for separately by the City. 76 (Continued)

141 December 3 1, 2008 Notes to Basic Financial Statements 77 (Continued) pronouncements of the GASB. in addition, MECA follows the pronouncements of all applicable Financial Accounting Standards Board (FASB) Statements and Interpretations, Accounting Principles Board (APB) Opinions and Accounting Research Bulletins (ARBs) of the Committee on contradict GASB pronouncements. Accounting Procedure issued on or before November 30, 1989, unless they conflict with or Accounting Standards Measurement Focus Basis of Accounting Reporting Entity MECA MECA In its accounting and financial reporting, MECA follows the accounts for its operations on the flow of economic resources measurement focus and uses the accrual basis of accounting. Under this method, revenues are recorded when earned and expenses are recorded at the time liabilities are incurred. MECA s financial statements are included in the City s financial statements as a discretely presented component unit. voting majority, imposition of will, financial benefit to or burden on a primary government, and financial accountability as a result of fiscal dependency. The extent of financial accountability is based upon several criteria including: appointment of a require the inclusion of the transactions of government organizations for which an organization is financially accountable. GASB establishes the criteria used in determining which organizations should be included in financial statements. Accounting principles generally accepted in the United States of America is a component unit of the City, for financial reporting purposes. The (b) Summary ofsignificant Accounting Policies into agreements with the City, the National Collegiate Athletic Association, and College World MECA, to allow MECA to operate the Omaha Baseball Stadium and additional parking areas. Series, Inc. to clarify the terms by which the Men s College World Series Baseball Championship will be held at the Omaha Baseball Stadium for a 26-year term. to MECA under the agreement to provide adequate parking, to provide bond and donation funds to implement the Downtown Omaha Stadium Project Plan by expanding the property currently leased Construction of the stadium is expected to be completed by MECA also concurrently entered In May 2008, MECA entered into the Sixth Amendment to the Agreement and Lease with the City to City and MECA are required under the agreement to make advances to fund Civic Auditorium (collectively referred to as the Civic Auditorium) for a three-year period beginning July 1, The operating profits of the Civic Auditorium or through a subvention payment by the City in in in June 2004, MECA Authority entered into a facility management services and lease agreement with the City, to manage and operate the Civic Auditorium, the Music Hall, and the Mancuso Center operations. Any advances made by MECA during the term of this agreement will be repaid through March 2006, MECA and the City extended the Civic Auditorium lease agreement through June 30, fiscal Construction was completed and operations commenced for the Qwest Center Omaha facility during CITY OF OMAHA, NEBRASKA

142 December 31, 2008 Notes to Basic Financial Statements 78 (Continued) definition of invested in capital assets, net of related debt. Unrestricted Net Assets Net Assets Compensated Absences Capital and Intangible Assets, Net Accounts Receivable Cash and Cash Equivalents maturity of three months or less to be cash equivalents. make estimates and assumptions that affect the reported amounts of assets and liabilities and amounts of revenues and expenses during the reporting period. Actual results could differ from those principles generally accepted in the United States of America requires MECA s management to disclosure of contingent assets and liabilities at the date of the financial statements and reported estimates. Use of Estimates -. The preparation of MECA s financial statements in conformity with accounting of services to be provided to the licensee, as determined by management. Amounts received in Revenue Recognition MECA MECA Accounts Capital Eligible Invested in Capital Assets, Net of Related Debt This This component of net assets consists of net assets not meeting the of capital assets, net of accumulated depreciation and related debt. component of net assets consists 35 days. MECA accrues accumulated unpaid time-off pay when earned by the employee. employees are entitled to an all purpose time-off policy to use for vacation, illness or injury, and any personal business. The amount of paid-time off employees receive each year increases with the length of their employment, with a maximum accrual of Depreciation is provided in amounts sufficient to relate the cost of the depreciable assets to operations over their estimated service lives on the straight-line method. Building rights are amortized over 15 years, leasehold improvements are depreciated over 2 to 25 years and furniture, fixtures, and equipment are depreciated over 5 to 10 years. the appropriate asset and contra-asset accounts, with the resulting gain or loss recognized. as incurred. The cost and related accumulated depreciation of assets retired or sold is removed from assets are recorded at cost. Additions, renewals, and betterments are capitalized and recorded at cost. Expenses for maintenance and repairs are expensed events. MECA provides an allowance for doubtful accounts equal to the estimated uncollectible receivable consist primarily of amounts receivable from various amounts. Management regularly reviews the accounts receivable listing to determine uncollectible amounts, at which time, any uncollectible receivables will be written off. Recoveries of accounts receivable previously written off are recorded when received. considers all highly liquid investments with an original recognizes its suite license and club seat revenues over the life of the excess of the fair value are recorded as donation revenue when received. Advance ticket sales, parking, facility rental deposits, and other event revenue received in advance arc initially recorded as agreements. Amounts received in advance are recorded as deferred revenues based on the fair value deferred revenues, which are recognized as revenues as the events take place or services are provided. Naming rights and advertising revenues will be recognized ratably over the life of the agreements. CITY OF OMAHA, NEBRASKA

143 December 31, 2008 Notes to Basic Financial Statements 79 (Continued) securities with various maturity dates. During 2008, the auctions for these investments failed and the Investments At June 30, 2008, MECA s investments consist of numerous variable rate preferred market became defunct. These investments remain valued at cost based on the par redemptions various mutual fund investments in a deferred compensation account. MECA has received to date and upon advice of MECA s financial advisors. In addition, MECA has Deposits per bank $ 462,854 Money market 9,872,140 Total deposits 10,334,994 Uninsured and uncoliateralized $ 10,234,994 FDIC coverage 100,000 Bank Deposits MECA s bank deposits are collateralized at June 30, 2008 as follows: (c) Deposits and Investments tax (UBIT). that the revenues derived from the facility s operations are not subject to unrelated business income by managing the operations of Qwest Center Omaha. As a result of this finding, the IRS determined is a tax exempt 501(c)(3) nonprofit corporation. In April 2006, MECA received a favorable ruling from the Internal Revenue Service (IRS) in response to a Private Letter Ruling request filed in July The ruling found that MECA is lessening the burdens of the City Income Taxes MECA for upgrade/improvement projects in excess of $100,000. MECA board also established a Repair and fund future upgrades and improvements to the facility. Expenditures from this reserve will be made fiscal year beginning in June 2008, Fifteen percent (15%) of MECA s net operating profit shall be 50% of the Civic s cash basis net profit. Capita! Improvements and Repair and Civic Reserves established a Capital Improvement Reserve in the amount of $6,000,000. This reserve will be used to asset purchases that are under $100,000. Amounts will be added to the Reserves at the end of each Replacement Reserve in the amount of $2,500,000. This fund will be used for all other capitalized allocated to the Capital Improvement Reserve and twenty percent (20%) of MECA s net operating profit shall be allocated to the Repair and Replacement Reserve, with a minimum funding requirement of $600,000 per year broken out as follows: $270,000 to the Capital Improvement Reserve and $330,000 to the Repair and Replacement Reserve. On June 19, 2008, the MECA Board resolved to add $2,000,000 to the reserve in June Of this amount, 45%, or $900,000, was added to the Capital Improvement Reserve and 55%, or $1,100,000 was added to the Repair and Replacement Reserve. The Civic Auditorium also has a reserve established, which is calculated at As of June 30, 2007, the MECA board CITY OF OMAHA, NEBRASKA

144 December 31, 2008 Notes to Basic Financial Statements 80 (Continued) loan from the contractor for the purchase of food service equipment and leasehold improvements. The loan is to be repaid over the 10-year period of the contract, which began in July Under a long-term contract for food service operations, MECA received a $4 million interest-free Through the amended agreement and lease with the City, MECA agreed to exercise good faith and provided by the City for the construction of the facility. Proceeds from the sale of Naming Rights best efforts to raise and pay over to the City the sum of $14,000,000 to offset additional funds which terminates on September 1, As a result, the obligation for the repayment of this portion Communications International, Inc. under a Convention Center/Arena Naming Rights Agreement, intangible Building Rights. of the construction funds has been recorded as long-term debt payable to the City offset by recording were specifically identified as a source of repayment. The Naming Rights have been sold to Qwest $ 8,962,921 2,101,407 $ 6,861,514 (675,946) (469,992) (1,145,938) City Total Food service contract 6,185,568 July 1, 2007 Balance Additions Reductions ,816,983 1,631,415 June 30, Balance MECA s long-term debt activity for the year ended June 30, 2008 is as follows: (e) Long-Term Debt and amortization Total Leasehold improvements Furniture, fixtures, and equipment Building rights Construction in progress Accumulated depreciation 112,071 8,595,327 $ 4,243,981 $ 18,390,884 (1,049,387) (112,071) ,079,196 23,030,575 10,079, ,872 4,646, ,667 23,657,716 (6,428,290) 336, , ,229,426 (112,071) (112,071) (4,639,691) (1,788,599) Additions Dispositions July 1, June 30, Activity for the year ended June 30, 2008 for property, equipment, and intangible assets and accumulated depreciation are as follows: (d) Property, Equipment, and Intangible Assets CITY OF OMAHA, NEBRASKA

145 December 31, 2008 Notes to Basic Financial Statements 81 $76, 883 and is included in investments. Effective November 18, 2004, certain MECA employees were able to participate in a nonqualified deferred compensation plan in the form of a Rabbi Trust. The Plan is intended to qualify as a plan described in Section 201(2) of the Employee Retirement Security Act and is maintained primarily for annual basis. The value of debt and equity securities held in the Rabbit Trust at June 30, 2008 was compensated employees. MECA contributes a specified amount to the employees accounts on an the purpose of providing deferred compensation for a select group of management or highly (i) Deferred Compensation MECA has established a 401(k) profit sharing plan for all employees. Participants can contribute up matching contributions equal to a discretionary percentage of the participant s elective deferrals to be determined by MECA. MECA, at its discretion, may also make profit sharing contributions. No profit sharing contributions were made to the plan during the year ended June 30, to 15% of their pretax compensation, subject to IRS limitations. MECA, at its discretion, may make (Ii) Employee Benefits MECA leases energy systems equipment and other various equipment. Lease expense was $1,129 for result of the lease being paid in full during January 2007, MECA has recorded a prepaid expense, which will be amortized to lease expense over the remaining term of the original lease. the year ended June 30, The energy systems lease was paid in full during January As a (g Lease Agreements $672,663 for the year ended June 30, There are incentive provisions in the contract that may June 30, of the contract commit MECA to a 10-year CPI indexed annual payment to the contractor of MECA entered into a long-term contract for food service operations in November The terms result in additional payments to the contractor. Such incentives totaled $168,166 for the year ended (/) Commitments and Contingencies $ 7,816,983 1,664, ,805, , ,002, , ,002, ,054 Years: 2009 $ 1,002, , ,002, , ,002, ,054 Principal Interest Debt service payments for the City and food service contract debt are as follows: CITY OF OMAHA, NEBRASKA

146 REQUIRED SUPPLEMENTARY INFORMATION (Other than MD&A)

147 Year ended December 31, 2008 Schedule of Revenues, Expenditures, and -- Changes in Fund Balances Fund Budget and Actual General 82 See accompanying notes to schedule of revenues, expenditures, and changes in fund balances Business taxes 31,767, ,000 32,921,017 1,154,017 Charges forservices 18,306,119 18,306,119 19,842,674 1,536,555 General government: Total revenues 265,796, ,796, ,606,719 3,810,283 Human resources 1,686,182 1,686,182 1,690,591 (4,409) Other agencies 30,425,288 27,893,388 24,771,327 3,122,061 Public safety: Public works: Total general government 67,971,453 65,439,553 61,385,732 4,053,821 Street and highway 1,746,872 1,746,872 2, (494,668) Total public works 15,212,307 15, ,988, ,910 Parks and recreation 17,400,010 17,400,010 17,887,259 (487,249) Fund balances Law 3,611,722 3,611,722 3,327, ,649 Citycouncil 1,042,918 1,042,918 1,045,114 (2,196) Interest income 4,400,000 4,400,000 3,847,009 (552,991) Rent and royalties 150, ,961 (45,039) Human rights andrelations 885, , ,175 78,341 lntergovemmental revenues 8,946,200 8,946,200 9, ,082 Licenses and permits 8,732,400 8,732,400 8,155,504 (576,896) Miscellaneous 1, ,566,000 1,685, ,643 Revenue from annexation 909, ,777 Employee benefits 20,204,634 20,204,634 19,359, ,401 Environmental 13,465,435 13,465,435 12,746, ,578 Culture and recreation: Convention and tourism Transfer Contingency end budget and actual General Fund. Police 91,931,522 91,931,522 93, (1,666,420) Total public safety 160,149, ,681, ,503,353 (5,821,631) Fund balances beginning of year: 3,249,743 3,249,743 6,555,432 (3.305,689) of year S Transfer Stormwater Fund 322,162 (322,162) (Deficiency) excess of revenues Total culture and recreation 25,712,597 25,712,597 26,060,846 (348,249) Total expenditures 269,046, ,046, ,938,328 (1,892, l49j over expenditures (3,249,743) (3,249,743) (1,331,609) (1,918,134) Fire 68,218,300 70,750,200 74,905,411 (4,155,2 1 I) Revenues: Property tax $ 60,919,217 60,919,217 61,795, ,434 Motor vehicle taxes 9, ,009,500 9,374, City sales and use tax , ,000, ,532,796 (467,204) Expenditures: Mayor s office $ 1,036,451 1,036, ,949 89,502 City clerks 642, , ,787 93,397 Finance 2,247,498 2,247,498 2,276,814 (29,316) Planning 6,189,060 6,189,060 6,612,669 (423,609) Libraries 8,312,587 8,312,587 8,173, ,000. Net changes in fund balances (3,249,743) (3,249,743) (1,331,609) (1,918,134) Lapsed encumbrances Liability Fund 423,589 (200,000) 5,769, ,000 (5,769,574) (423,589) Budgeted amounts positive Variance with final budget Original Final Actual (negative) CITY OF OMAHA, NEBRASKA Schedule

148 and General CITY OF OMAHA, NEBRASKA Notes to Schedule of Revenues, Expenditures, and Changes in Fund Balances Actual Fund Year ended December 31, 2008 (1) Budget and Budgetary Accounting The Mayor is required by the City Charter to prepare and submit an annual budget to the City Council. A budget is prepared for the general fund and all special revenue funds, exclusive of all grant funds and the service-type special assessments fund. These budgets are prepared primarily on a cash basis for revenues and modified accrual basis for expenditures. The budget presented reflects the original budget and the revised budget prior to the closing ordinance. In addition, encumbrances are reported as expenditures for budgetary purposes. Under this system, purchase orders, contracts, and other commitments for the expenditure of funds are recorded as encumbrances in order to reserve a portion of the applicable appropriation. Budgetary control is maintained by department/division and by the following category of expenditures: personnel services, nonpersonnel services, capital outlay, and debt service. All budget amendments must be approved by the Mayor and/or City Council. Unencumbered appropriations lapse at the end of the fiscal year. Encumbered funds are carried over to the ensuing fiscal year until utilized or canceled. The City Charter also requires the City Council each year to make an ad valorem tax levy for a sinking fund (debt service fund) that shall provide for principal and interest payments on the general obligation bonded indebtedness of the City. Appropriations for certain special revenue funds and capital projects funds are controlled on a project basis and are carried forward each year until the project is completed or grant funds are expended. Budgets are also prepared for the proprietary funds as a management control device. The budgets for these funds are prepared on a revenue and expenditure basis similar to the budgets for the governmental fund types. (2) Reconciliation of Budget-Basis Revenues and Expenditures to GAAP Revenue and expenditures presented on a non-gaap budget basis of accounting differ from the revenues and expenditures presented in accordance with GAAP because of the different treatment of encumbrances and accruals (revenue recognition). In addition, Section 5.14 of the City of Omaha s Home Rule Charter requires, in relevant part, that the year-end general fund balance... be applied as general fund revenue in the budget for the fiscal year two years subsequent to that fiscal year. Therefore, the amount of the general fund carryover coming into a particular fiscal year has already been determined. Any general fund encumbrances at the end of a fiscal year are not included in the year-end general fund balance because those encumbrances will normally need to be paid in the following fiscal year and cannot be held until the fiscal year two years subsequent to the fiscal year when the encumbrance was incurred. 83 (Continued)

149 Notes to Schedule of Revenues, Expenditures, Year ended December 31, 2008 and Changes in Fund Balances and Actual General Fund 84 General fund: Planning City council Human resources Finance Public safety: Police Public works: Street and highway Fire Parks and recreation (4,409) (29,316) (423,609) (4,155,211) (1,666,420) (494,668) (487,249) $ (2,196) Department/division Amount Budgeted expenditures were exceeded in the following departments/divisions: (3) Expenditures in Excess of Budget 2007 carryover to carryover to 2010 Total budget basis Budget basis: Basis differences: Taxes accrued Accrued interest Encumbrances Inventories GAAP basis 5,769,574 22,612, ,762 2,162, ,796 1,873,464 $ 3,896,110 $ 31,666,414 fund General A reconciliation of the differences between the budgetary versus GAAP is presented below: allows those funds to be kept separate from the year-end general fund balance. Therefore, when the actual payments to the vendors are required in the following fiscal year, there are general fund moneys available. All general fund encumbrances are charged to the appropriate accounts at the end of the fiscal year. This CITY OF OMAHA, NEBRASKA

150 Schedule of Funding Progress and Employer Contributions Year ended December 31, (Continued) ,794,542 6,176,321 6,135,462 6,822,028 6,815, $ 9,089,878 59% $ (17,626,003) (13,910,207) (10,090,703) (8,100,275) (5,778,439) (3,411,896) Civilian Plan Schedule of Employer Contributions (Unaudited) Fiscal year ended cost (APC) contributed pension of APC Annual Required Supplementary Information Percentage Net pension obligation $ % $ % Actuarial valuation date (a) (b) (b-a) (a/b) (c) ((b-a)/c) assets entry age (UAAL) ratio payroll payroll value of liability (AAL) AAL Funded Covered of covered Actuarial UAAL as a Actuarial accrued Unfunded percentage (Dollars in millions) Civilian Plan Schedule of Funding Progress (Unaudited) CITY OF OMAHA, NEBRASKA

151 (Continued) 34,563,067 30,917,700 26,145,454 22,487,399 23,323, $ 37,671,425 58% $ Fiscal year ended cost (APC) (61,464,670) (45,494,051) (31,630,196) (20,884,106) (12,500,861) (6,788,891) contributed pension of APC obligation Uniformed Plan Schedule of Employer Contributions (Unaudited) Annual Percentage Net pension $ % $ / valuation date (a) (b) (b-a) (a/b) (c) ((b-a)/c) Actuarial assets value of liability (AAL) AAL Funded Covered of covered Actuarial entry age (UAAL) ratio payroll payroll accrued Unfunded percentage Actuarial UAAL as a (Dollars in millions) Uniformed Plan Schedule of Funding Progress (Unaudited) Schedule of Funding Progress and Employer Contributions Year ended December 31, 2008 CITY OF OMAHA, NEBRASKA

152 CITY OF OMAHA, NEBRASKA Schedule of Funding Progress and Employer Contributions Year ended December 31, 2008 Postretirement Obligation Schedule of Funding Progress Schedule of Funding Progress (Unaudited) UAAL as a Actuarial Actuarial Unfunded percentage value of accrued AAL Covered of covered Actuarial assets liability (AAL) (UAAL) Funded ratio payroll payroll valuation date (a) (b) (b-a) (a/b) (c) ((b-a)/c) March 1, 2008 $ 388,500, ,500,000 % $ 153,600, % March 1, ,500, ,500, ,700,

153 SINGLE AUDIT SECTION

154 High-Intensity CITY OF OMAHA, NEBRASKA Schedule of Expenditures of Federal Awards Year ended December Schedule Federal grantor/pass-through CFDA 2008 grantor/program title Grant number number expenditures U.S. Department of Health and Human Services: Direct program: Metropolitan Medical Response System N/A $ 785,717 U.S. Department of Homeland Security: Direct program: Assistance to Fire Fighters Grant Various ,523 Interoperable Communications Equipment 2004-IN WX ,507 Passed through Nebraska Emergency Management Agency: Urban Area Security Initiative 2005-GET ,224 Urban Area Security Initiative 2006-GET ,046,707 Federal Disaster Declaration 1770 Declaration ,412 Federal Disaster Declaration 1779 Declaration , Total U.S. Department of Homeland Security 13, U.S. Department of Housing and Urban Development: Direct programs: Community Development Block Grants/Entitlement Grants B-04/05-MC-3l ,013,177 Emergency Shelter Grants Program S-00/0I -MC ,496 HOME Investment Partnership Program M-95/Ol-MC/DC-3l ,783,059 Economic Development Incentive Various ,434 Fair Housing Assistance Program FF2O7KOO/0l ,644 Lead-Based Paint Hazard Control Various ,391,444 Shelter Plus Care N/A ,750 Neighborhood Development Incentives B-0 I -NI-NE-OM ,954 Total U.S. Department of Housing and Urban Development 12,090,958 U.S. Department of Interior: Passed through Nebraska State Historical Society Ilistoric Preservation Fund Grants-in-Aid ,400 U.S. Department of Justice: Direct programs: Juvenile Justice & Delinquency 2006-JLFX-K Rural Domestic Violence & Child Victimization 2006-WRAX ,680 Grants to Encourage Arrest Policies 2005-WEAX , ,049 Public Safety Partnership and Community Policing Grants (COPS) Various Weed& Seed Various G.R.E.A.T. Grant Various 16, Justice Assistance Grant Various ,574 Paul Coverdell Forensic Sciences Improvement Grant Program 2007-CDBX-002l , Edward Byrne Memorial Discretionary Grants Program 2007-DDBX ,764 Passed through State of Nebraska Commission on Law Enforcement and Criminal Justice: Juvenile Accountability Incentive Block Grants 06-JA-60l & 05-JA-60l ,419 Project Safe Neighborhoods Various ,892 Metro Drug Task Force 06-DA-307 & 07-DA ,052 Total U.S. Department of Justice 3,440,255 U.S. Department of Transportation: Passed through State of Nebraska Department of Roads: Highway Planning and Construction Various ,342,456 NOHS Mini Grant-Motorcycle Wireless Equipment C ,648 NOHS Mini Grant-Digital In-CarCameras Total U.S. Department of Transportation 9,384,104 U.S. Environmental Protection Agency: Passed through State of Nebraska Department of Environmental Quality: Air Pollution Control Program Support BG Al ,500 Office of National Drug Control Policy: Direct Programs Drug Trafficking Area Various NA 273,481 Total expenditures of federal awards $ 39,121,173 See accompanying independent auditors report and notes to schedule of expenditures of federal awards.

155 (1) Reporting Entity Notes to Schedule of Expenditures and Federal Awards Year ended December 31, year ended December 31, 2008 in the amount of $9,229,284. The City granted federal awards in the form of pass-through awards to various subrecipients during the (4) Subrecipients informational purposes only. * The City has no continuing compliance requirements for these loans outstanding and is presented for Zorinsky Project Total Capitalization Grants for Clean Water State Revolving Funds $ 391,677 $ 35,270,961 34,879,284 The following is a list of outstanding principal balances of capitalization grants for state revolving funds and related program loans at December 31, 2008: Current year loans of $0 are included in the SEFA. HOME Investment Partnership Program S 1,232,159 December 31, 2008: The following is the outstanding principal balance of the HOME Investment Partnership Program at Community Development Block Grant $ 460,975 related program loans due at December 31, 2008: The following is a list of the outstanding principal balances of Community Development Block Grant and (3) Outstanding Loan Principal Balances Amounts reported in the SEFA are on the accrual basis, while the amounts reported on federal financial reports are primarily on a cash basis. (2) Basis of Accounting disclosed in note I to the financial statements, except for MECA which is audited separately. The reporting entity for the schedule of expenditures of federal awards (SEFA) is the same as that CITY OF O1 AHA, NEBRASKA

156 Omaha, NE Lincoln, NE Two Central Park Plaza 233 South 13 1h Street member fimi of KPMG International, a Swiss cooperative KPMG LLP, a u S. imited liability partnership, is the US. 90 preceding paragraph and was not designed to identify all deficiencies in internal control over financial reporting that might be significant deficiencies or material weaknesses and therefore, there can be no Our consideration of internal control over financial reporting was for the limited purpose described in the assurance that all deficiencies, significant deficiencies, or material weaknesses have been identified. However, as discussed below, we identified certain deficiencies in internal control over financial reporting that we consider to be material weaknesses and other deficiencies that we consider to be significant deficiencies. prevent, or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the entity s financial statements will not be prevented, or detected and corrected on a timely basis. We consider the deficiency in the City s internal control over does not allow management or employees, in the normal course of performing their assigned functions, to A deficiency in internal control over financial reporting exists when the design or operation of a control statements, but not for the purpose of expressing an opinion on the effectiveness of the City s internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of the City s internal control over financial reporting. a basis for designing our auditing procedures for the purpose of expressing our opinions on the financial In planning and performing our audit, we considered the City s internal control over financial reporting as Internal Control over Financial Reporting discretely presented component unit, each major fund, and the aggregate remaining fund information of the comprise the City s basic financial statements, and have issued our report thereon dated August 26, Our report was modified to include a reference to other auditors and the adoption of Governmental Accounting Standards Board Statement No. 50. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United Authority (MECA), the discretely presented component unit, as described in our report on the City s financial statements. The financial statements of MECA were not audited in accordance with Government Auditing Standards. This report does not include the results of the other auditors testing of internal control over financial reporting or compliance or other matters that are reported on separately by those auditors. We have audited the financial statements of the governmental activities, the businesstype activities, the City of Omaha, Nebraska (the City) as of and for the year ended December 31, 2008, which collectively States. Other auditors audited the financial statements of Metropolitan Entertainment and Convention of the City Council The Honorable Mayor and Members City of Omaha, Nebraska: Financial Statements Performed in Accordance with Government Auditing Standards Independent Auditors Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Suite 1501 Suite 1600 KPMG LLP

157 91 August 26, 2009 Omaha, Nebraska This report is intended solely for the information and use of the Mayor, members of the City Council, not be, used by anyone other than these specified parties. management, and federal awarding agencies and pass-through entities and is not intended to be, and should findings and questioned costs. We did not audit the City s response, and accordingly, we express no opinion on it. The City s response to the findings identified in our audit is described in the accompanying schedule of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The reported under Government Auditing Standards. results of our tests disclosed no instances of noncompliance or other matters that are required to be As part of obtaining reasonable assurance about whether the City s basic financial statements are free of Compliance and Other Matters #08-02). and questioned costs to be a significant deficiency in internal control over financial reporting (Finding reporting that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. We consider the deficiency described in the accompanying schedule of findings A significant deficiency is a deficiency, or combination of deficiencies, in internal control over financial financial reporting described in the accompanying schedule of findings and questioned costs to be a material weakness (Finding #08-01).

158 KPMG LLP Suite 1501 Suite 1600 Two Central Park Plaza 233 South 13 Street Omaha, NE Lincoln, NE Independent Auditors Report on Compliance with Requirements Applicable to Each Major Program and on Internal Control over Compliance in Accordance with 0MB Circular A-133 The Honorable Mayor and Members of the City Council City of Omaha, Nebraska: Compliance We have audited the compliance of the City of Omaha, Nebraska (the City) with the types of compliance requirements described in the U.S. Office of Management and Budget (0MB) Circular A-133 Compliance Supplement that are applicable to each of its major federal programs for the year ended December 31, The City s major federal programs are identified in the summary of auditors results section of the accompanying schedule of findings and questioned costs. Compliance with the requirements of laws, regulations, contracts, and grants applicable to each of its major federal programs is the responsibility of the City s management. Our responsibility is to express an opinion on the City s compliance based on our audit. The City s financial statements include the operations of a discretely presented component unit, Metropolitan Entertainment and Convention Authority (MECA). Our audit, described below, did not include the operations of MECA. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and 0MB Circular A- 133, Audits of States, Local Governments, and Non-Profit Organizations. Those standards and 0MB Circular A- 133 require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about the City s compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Our audit does not provide a legal determination on the City s compliance with those requirements. In our opinion, the City complied, in all material respects, with the requirements referred to above that are applicable to each of its major federal programs for the year ended December 31, Internal Control over Compliance The management of the City is responsible for establishing and maintaining effective internal control over compliance with requirements of laws, regulations, contracts, and grants applicable to federal programs. In planning and performing our audit, we considered the City s internal control over compliance with requirements that could have a direct and material effect on a major federal program in order to determine our auditing procedures for the purpose of expressing our opinion on compliance, but not for the purpose 92 KPMG LLP, a U.S limited liability partnership, is the U.S member firm of KPMG International, a Swiss cooperative.

159 93 August 26, 2009 Omaha, Nebraska LCP The City s response to the findings identified in our audit is described in the accompanying schedule of This report is intended solely for the information and use of the Mayor, members of the City Council, not be used by anyone other than these specified parties. findings and questioned costs. We did not audit the City s response, and accordingly, we express no opinion on it. management, and federal awarding agencies and pass-through entities and is not intended to be, and should more than a remote likelihood that material noncompliance with a type of compliance requirement of a federal program will not be prevented or detected by the entity s internal control. We did not consider any weaknesses. of the deficiencies described in the accompanying schedule of findings and questioned costs to be material A material weakness is a significant deficiency, or combination of significant deficiencies, that results in the deficiencies in internal control over compliance described in the accompanying schedule of findings on a timely basis. A significant deficiency is a control deficiency, or combination of control deficiencies, that adversely affects the entity s ability to administer a federal program such that there is more than a and questioned costs as item and to be significant deficiencies. functions, to prevent or detect noncompliance with a type of compliance requirement of a federal program remote likelihood that noncompliance with a type of compliance requirement of a federal program that is more than inconsequential will not be prevented or detected by the entity s internal control. We consider a control does not allow management or employees, in the normal course of performing their assigned A control deficiency in an entity s internal control over compliance exists when the design or operation of we identified certain deficiencies in internal control over compliance that we consider to be significant Our consideration of internal control over compliance was for the limited purpose described in the preceding paragraph and would not necessarily identify all deficiencies in the City s internal control that might be significant deficiencies or material weaknesses as defined below. However, as discussed below, deficiencies. express an opinion on the effectiveness of the City s internal control over compliance. of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not

160 CiTY OF OMAHA, NEBRASKA Notes to Schedule of Findings and Questioned Costs Year ended December 31, 2008 (1) Summary of Auditors Results (a) (b) The type of report issued on the basic financial statements: Unqualified opinions Material weaknesses in internal control were disclosed by the audit of the basic financial statements: Yes Significant deficiencies in internal control were disclosed which were not material weaknesses: Yes (c) (d) Noncompliance which is material to the basic financial statements: No Material weaknesses in internal control over major programs: No Significant deficiencies in internal control over major programs which were not material weaknesses: Yes (e) The type of report issued on compliance for major programs: Unqualified opinions (f) Any audit findings which are required to be reported under Section 510(a) of 0MB Circular A- 133: No (g) Major programs: Highway Planning and Construction (20.205); Lead-Based Paint Hazard Control (14.900); Interoperable Communications Equipment (97.055); Urban Area Security Initiative (97.067); and Public Assistance Grants (97.036) (h) Dollar threshold used to distinguish between Type A and Type B programs: $1,173,960 (i) Auditee qualified as a low-risk auditee under Section 530 of 0MB Circular A-133: No (2) Findings Related to the Basic Financial Statements Reported in Accordance with Government Auditing Standards Finding #08-01 Program: Not applicable. Federal Grantor Agency: Not applicable. Criteria: Governments are required to establish internal controls over access to IT systems. Condition: The City s IT service provider did not have adequate controls over access to financial systems. Specifically, 20 active accounts had system administrator responsibilities. Twelve terminated employees had access to the system. Password complexity was not enforced. User accounts did not have password expirations. Questioned Costs: None. Context: IT general internal controls were determined to be ineffective. Cause: The service provider has not effectively monitored access. 94 (Continued)

161 Notes to Schedule of Findings and Questioned Costs Year ended December 3 1, (Continued) Federal Disaster Declarations 1770 and Assistance to Firefighters Grant; grant number EMW 2006 FG 07794, 02653, 02660, and FF 04370, and Programs: Highway Planning and Construction; pass-through grant number , Finding #08-03 (3) Findings and Questioned Costs Relating to Federal Awards Responsible Official: Al Herink run a report of all year-end payment in excess of $25,000 and perform an additional review. thorough and quite extensive. After year-end payments are initially approved for payment by the receiving department, payments are then reviewed by trained disbursements personnel. Payments in excess of $25,000 are reviewed and approve by the project accountant. In the future, the Finance Department will Management Response: The City s controls for monitoring and recording year-end expenditures are Recommendation: The review process over disbursements needs to be strengthened. Effect: The financial statements were misstated. Cause: The City s internal controls failed to catch a material error. Context: An audit adjustment of $3,291,965 was made. Questioned Costs: None. City s 2008 financial statements, however, it should not have been recorded until Condition: An invoice for $3,291,965 for a transfer of land was recorded as an accrued liability in the Criteria: The City should have internal controls in place to record expenses in the correct year. Federal Grantor Agency: Not applicable. Program: Not applicable. Finding #08-02 Responsible Official: Al Herink System. Annually, all user accounts are reviewed by the City to ensure the appropriate people have access to the Management Response: The service provider has adopted additional access controls during June individuals. Password complexity should be enforced. Terminated employees should be removed from the system. to IT information systems. Access to the system administrator function should be limited to a few Recommendation: We recommend that the City s service provider establish internal controls over access Effect: Errors were not identified and audit procedures were adjusted accordingly. CITY OF OMAHA, NEBRASKA

162 Year ended December 31, 2008 Notes to Schedule of Findings and Questioned Costs 96 (Continued) Recommendation: Procedures should be established to obtain subrecipient audit reports. Effect: Noncompliance or control deficiencies at subrecipients could go undetected. subrccipient A-133 reports for two out of two subrecipients selected for review. Cause/Context: Internal controls over subrecipient monitoring are ineffective. The City did not obtain Questioned Costs: None. Condition: The City did not have internal controls in place to obtain and review subrecipient audits. Federal awards have met the audit requirements of 0MB Circular A-l33. Criteria: The City is required to ensure that subrecipients expending more than $500,000 or more in Federal Grantor Agency: U.S. Department of Homeland Security. Programs: Urban Area Security (97.067) grants 2005 GET and 2006 GET Finding #08-04 Responsible Official: Al Herink awards with any fiscal year activity. This report will be reconciled with the SEFA schedule by the City s Accounting Manager. Corrective action will be completed by December Grant Accountant. After the SEFA schedule is completed, a final review will be preformed by the the Schedule of Expenditures of Federal Awards. A financial system report will be prepared that lists all Management Response: The City s Grant Accountant will be responsible to coordinate the completion of Recommendation: We recommend the City assign responsibility to review the SEFA after preparation. understated by $4.61 million. The SEFA was subsequently corrected. Effect: CFDA No was overstated by $5.77 million and CFDA Nos and were Cause/Context: Internal controls over preparation of the SEFA are ineffective. Questioned Costs: None. understatement of $4.61 million. and expenditures for CFDA Nos and were omitted from the SEFA, resulting in an Condition: The City incorrectly stated expenditures on the SEFA for CFDA No by $5.77 million, accordance with 0MB Circular Al33. Criteria: The City is responsible to prepare the Schedule of Expenditures of Federal Awards (SEFA) in Security. Federal Grantor Agency: U.S. Department of Transportation and U.S. Department of Homeland CITY OF OMAHA, NEBRASKA