Final Official Statement Dated July 24, 2012

Transcription

1 New Issue Book-Entry Only Non-Rated Final Official Statement Dated July 24, 2012 In the opinion of Ice Miller LLP, Indianapolis, Indiana, Bond Counsel under federal statutes, decisions, regulations, and rulings, interest on the Bonds (as hereinafter defined) is excludable for federal income tax purposes from gross income pursuant to Section 103 of the Internal Revenue Code of 1986, as amended and in effect on the date of issuance of the Bonds, is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations but is taken into account in determining adjusted current earnings for the purpose of computing the federal alternative minimum tax imposed on certain corporations. Such exclusion is conditioned on continuing compliance with the Tax Covenants (as herein after defined). Failure to comply with the Tax covenants could cause interest on the Bonds to lose the exclusion from gross income for federal tax purposes, retroactive to the date of issue. In the opinion of Ice Miller LLP, Indianapolis, Indiana, under existing laws, regulations, judicial decisions, and rulings, interest on the Bonds is exempt from income taxation in the State of Indiana. See TAX MATTERS and Appendix B herein. $1,995,000 CITY OF BEECH GROVE, INDIANA GENERAL OBLIGATION BONDS OF 2012 Original Date: Date of Delivery (August 7, 2012) Due: January 15 and July 15 as shown below The Bonds are issued as fully registered bonds. Principal on the Bonds is payable at maturity, upon the surrender thereof at the principal corporate trust office of the Registrar and Paying Agent, presently, Regions Bank. Interest on the Bonds will be paid by wire transfer on the interest payment date to the depositories shown as registered owners, as more fully described herein. The Bonds are issuable in denomination of $5,000 or any integral multiple thereof. The Bonds shall bear interest from the date of delivery at the rates per annum, and mature on the dates and in the principal amounts set forth below. The Bonds will be issued initially under a book-entry-only system, registered in the name of Cede & Co., as registered bondholder and nominee for the Depository Trust Company ( DTC ). DTC will act as securities depository for the Bonds. Individual purchasers of the book-entry interest in the Bonds will not receive certificates representing their interest in the Bonds. So long as Cede & Co., as nominee of DTC is the registered owner of the Bonds, references herein to the Holders, bondholders or registered owners shall mean Cede & Co., rather than the owners of the book-entry interests with respect to the Bonds, except for the purpose of giving certain bondholder consents. See Bonds herein. The Bonds and the interest thereon are a general obligation of the City of Beech Grove, Indiana (the City ) and will be payable from ad valorem personal and property taxes to be levied and collected on all taxable property in the City. The City has designated the Bonds as qualified tax-exempt obligations within the meaning of Section 265(b)(3) of the Internal Revenue Code of 1986, as amended. MATURITY SCHEDULE (Base CUSIP* ) Maturity Principal Interest Rate Yield CUSIP 7/15/ , % 0.70% FC7 1/15/ , % 0.75% FD5 7/15/ , % 0.80% FE3 1/15/ , % 0.85% FF0 7/15/ , % 0.95% FG8 1/15/ , % 1.05% FH6 7/15/ , % 1.10% FJ2 1/15/ , % 1.20% FK9 7/15/ , % 1.25% FL7 1/15/ , % 1.35% FM5 7/15/ , % 1.40% FN3 1/15/ , % 1.50% FP8 7/15/ , % 1.55% FQ6 1/15/ , % 1.70% FR4 7/15/ , % 1.75% FS2 1/15/ , % 1.90% FT0 7/15/ , % 2.00% FU7 1/15/ , % 2.10% FV5 7/15/ , % 2.20% FW3 1/15/ , % 2.30% FX1 This cover page contains certain information for quick reference only. It is not a summary of the issue. Investors must read the entire Official Statement to obtain information essential to the making of an informed investment decision.

2 The Bonds are offered when as and if issued and received by the Underwriter, subject to the approving legal opinion by Ice Miller LLP, Indianapolis, Indiana, Bond Counsel. Certain legal matters will be passed on for the City of Beech Grove by its counsel, Jackson Lewis LLP, Indianapolis, Indiana. See Legal Matters herein. No dealer, broker, salesman, or any other person has been authorized by the City, or the Underwriter to give any information or to make any representation other than as contained in this Official statement in connection with the offering of the Bonds, and, if given or made, such information or representation must not be relied upon as having been authorized by any of the foregoing. 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 a person to make such offer, solicitation or sale. The information and expressions of opinion herein are subject to change without notice and neither the delivery of this Official Statement nor any sale of the Bonds shall, under any circumstances, create any implication that there have been no changes in the information presented herein since the date hereof. However, upon delivery of the securities, the City will provide a certificate stating there have been no material changes in the information contained in the final official statement, since its delivery. IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER MAY OVERALLOT OR EFFECT TRANSACTIONS WHICH STABLIZE OR MAINTAIN THE MARKET PRICES OF THE BONDS AT LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABLIZATION, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. NIETHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THE BONDS OR PASSED UPON THE ADEQUACY OR ACCURACY OF THIS OFFICIAL STATEMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

3 TABLE OF CONTENTS Page Introduction to the Official Statement... 1 The Project Project Description. 3 Estimated Sources and Uses of Funds 3 Schedule of Amortization of Bonds... 3 Securities Being Offered Security for the Bonds 4 Intercept Program.. 4 The Bonds Redemption Provisions 4 Book-Entry-Only System 4 Procedures for Property Tax Assessment, Tax Levy and Collection 7 Continuing Disclosure.. 11 Tax Matters.. 13 Original Issue Discount 14 Amortizable Bond Premium. 15 Legal Opinions and Enforceability of Remedies. 16 Underwriting 16 Litigation. 17 Legal Matters.. 17 Appendices: A: General Information B: Legal Opinion C: Bond Ordinance

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5 PROJECT PERSONNEL Names and positions of City personnel and professionals who have taken part in the planning of this project and bond issue are: MAYOR Dennis Buckley COMMON COUNCIL Ed Bell, President Pro Tempore Mary Stewart Dave Harrison Dave Mobley Anthony Davidson Kathy Coates John Jennings CLERK-TREASURER Dan McMillan CITY ATTORNEY Craig Wiley Jackson Lewis LLP 10 West Market Street Indianapolis, IN BOND COUNSEL FINANCIAL ADVISOR Thomas K. Downs Jeffrey A. Peters, MPA, CPA(inactive) Ice Miller LLP Peters Municipal Consultants, LTD One American Square, Suite 2900 P.O. Box 542 Indianapolis, IN Greenwood, IN 46143

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7 FINAL OFFICIAL STATEMENT $1,995,000 CITY OF BEECH GROVE, MARION COUNTY, INDIANA GENERAL OBLIGATION BONDS OF 2012 INTRODUCTION TO THE OFFICIAL STATEMENT City of Beech Grove, Marion County, Indiana (the City ) is issuing General Obligation Bonds of 2012 (the Bonds ), in the aggregate principal amount of $1,995,000. SECURITY FOR THE BONDS The Bonds and the interest thereon are general obligations of the City and will be payable from ad valorem taxes levied by the City to be collected on all taxable personal and real property within the City. PURPOSE The Bonds are being used by the City to acquire a fire truck and an ambulance, improving several municipal building roofs and various infrastructure improvements and updates and the incidental expenses in connection therewith. REDEMPTION PROVISIONS The Bonds shall not be subject to redemption prior to maturity. DENOMINATIONS The Bonds are being issued in the denominations of $5,000 or integral multiples thereof. DTC/BOOK- ENTRY The Bonds shall initially be issued and held in book-entry form. The Depository Trust Company New York, New York ( DTC ), will act as securities depository for the Bonds. The Bonds will be fullyregistered in the name of Cede & Co. (DTC s partnership nominee). See Book-Entry-Only System herein. PROVISIONS FOR PAYMENT Interest on the Bonds is payable semiannually on January 15 and July 15 of each year, commencing July 15, When issued, the Bonds will be registered in the name of and held by Cede & Co., as nominee for DTC. Purchases of beneficial interests in the Bonds will be made in book-entryonly form. Purchasers of beneficial interests in the Bonds (the Beneficial Owners ) will not receive physical delivery of certificates representing their interests in the Bonds. For so long as the Bonds are held in book-entry-only form, payments of principal of and interest on the Bonds will be paid by Regions Bank (The Registrar and the Paying Agent ) only to DTC or its nominee. Neither the City nor the Paying Agent will have any responsibility for a Beneficial Owner s receipt from DTC or its nominee, or from any Direct Participant (as hereinafter defined) or Indirect Participant (as hereinafter defined), of any payments of principal of or interest on any Bonds. See Book-Entry-Only System herein. 1

8 TAX MATTERS In the opinion of Ice Miller LLP, Indianapolis, Indiana ( Bond Counsel ), under existing laws, interest on the Bonds is excludable from gross income for federal income tax purposes under Section 103 of the Internal Revenue Code of 1986, as amended and in effect on the date of issuance of the Bonds (the Code ), is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations, but is taken into account in determining adjusted current earnings for the purpose of computing the federal alternative minimum tax imposed on certain corporations. This opinion is conditioned on continuing compliance by the City with the Tax Covenants (hereinafter defined). Failure to comply with the Tax Covenants could cause interest on the Bonds to lose the exclusion from gross income for federal income tax purposes retroactive to the date of issue. In the opinion of Ice Miller LLP, Indianapolis, Indiana, Bond Counsel, under existing laws, regulations, judicial decisions and rulings, interest on the Bonds is exempt from income taxation in the State of Indiana (the "State"). This opinion relates only to the exemption of interest on the Bonds for State income tax purposes. See Appendix B for the form of opinion of Bond Counsel. The Bonds have been designated as qualified tax-exempt obligations for purposes of Section 265(b)(3) of the Code. AUTHORITY AND DATE OF DELIVERY The Bonds are to be issued under the authority of Indiana law, including, without limitation, Indiana Code , as amended, and Ordinance No. 18, 2012, adopted by the Beech Grove Common Council on July 2, 2012 (the Bond Ordinance ). The Bonds are anticipated to be available for delivery to DTC in New York, New York on or about August 7, MISCELLANEOUS The information contained in this Official Statement has been compiled from City officials and other sources deemed to be reliable. The Official Statement speaks only as of its date, and the information contained herein is subject to change. 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 does not constitute a contract with the owners of the Bonds. 2

9 THE PROJECT The City is issuing the Bonds in the aggregate principal amount of $1,995,000 pursuant to Indiana Code , as amended, and the Bond Ordinance. PROJECT DESCRIPTION The proceeds from the Bonds will be used by the City, to acquire a fire truck and an ambulance, improving several municipal building roofs and various infrastructure improvements and updates and the incidental expenses in connection therewith. ESTIMATED SOURCES AND USES OF FUNDS Sources of Funds Principal Amount of the Bonds $ 1,995, Net Original Issue Premium (OIP) $ 2, $ 1,997, Use of Funds Underwriters Discount (includes OIP) $ 32, Bond Counsel $ 27, Financial Advisor $ 15, Other (advertisement, printing, etc.) $ 10, Capital Projects Total $ 1,912, $ 1,997, SCHEDULE OF AMORTIZATION OF BONDS Principal Interest Total Principal Interest Total Payment Date Outstanding Principal Rate Interest Debt Service Payment Date Outstanding Principal Rate Interest Debt Service 7/15/2013 1,950,000 45, % 28, , /15/2018 1,000, , % 10, , /15/2014 1,865,000 85, % 15, , /15/ , , % 9, , /15/2014 1,775,000 90, % 14, , /15/ , , % 8, , /15/2015 1,685,000 90, % 14, , /15/ , , % 7, , /15/2015 1,590,000 95, % 13, , /15/ , , % 7, , /15/2016 1,495,000 95, % 13, , /15/ , , % 6, , /15/2016 1,400,000 95, % 12, , /15/ , , % 5, , /15/2017 1,305,000 95, % 12, , /15/ , , % 3, , /15/2017 1,205, , % 11, , /15/ , , % 2, , /15/2018 1,105, , % 10, , /15/ , % 1, ,

10 SECURITIES BEING OFFERED SECURITY FOR THE BONDS The Bonds are general obligations of the City and will be payable from ad valorem taxes levied by the City to be collected on all of the taxable personal and real property within the City. STATE INTERCEPT Indiana Code Title 6, Article 1.1, Chapter 20.6, Section 10, requires taxing units to fully fund the payment of outstanding debt service or lease rental obligations payable from ad valorem property taxes, regardless of any reduction in property tax collections due to the application of the Circuit Breaker Tax Credit. If property tax collections are insufficient to fully fund debt service or lease rental payments due to the Circuit Breaker Tax Credit, taxing units must use non-property tax revenues or revenues from property tax levies for other funds (including operating) to offset revenue loss to the debt service fund. Indiana Code Title 6, Article 1.1, Chapter 20.6, Section 10, applicable to all political subdivisions, provides that if property tax revenues are not sufficient to pay debt service on bonds or leases payable from property taxes, the State must intercept local option income tax distributions and available distributions of other State monies for the benefit of bondholders. This application of property tax revenues may impact the ability of political subdivisions to provide existing levels of service and, in extreme cases, the ability to make debt service or lease rental payments. NO REDEMPTION THE BONDS The Bonds shall not be subject to redemption prior to maturity. BOOK-ENTRY-ONLY SYSTEM 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, and will be deposited with DTC. DTC, the world s largest securities depository, is a limited-purpose trust company organized under the New York Banking Law, a banking organization within the meaning of the New York Banking Law, a member of the Federal Reserve System, a clearing corporation within the meaning of the New York Uniform Commercial Code, and a clearing agency registered pursuant to the provisions of Section 17A of the Securities Exchange Act of DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non-u.s. equity issues, corporate and municipal debt issues, and money market instruments (from over 100 countries) that DTC s participants ( Direct Participants ) deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book-entry transfers and pledges between Direct Participants accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non-u.s. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation ( DTCC ). DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which 4

11 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 the 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 the 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 and proposed amendments to the Bond Ordinance. For example, Beneficial Owners of the 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 Registrar 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 maturity are being redeemed, DTC s practice is to determine by lot the amount of the interest of each Direct Participant in such maturity 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 soon as possible after the Record Date. The Omnibus Proxy assigns Cede & Co. s consenting or voting rights to those Direct Participants to whose accounts the Bonds are credited on the Record Date (identified in a listing attached to the Omnibus Proxy). 5

12 Principal, premium and interest payments 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 City or the Paying Agent on payable date in accordance with their respective holdings shown on DTC s records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in street name, and will be the responsibility of such Participant and not of DTC, the Paying Agent or the City, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of principal, premium and interest to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the City or the Paying Agent, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants. DTC may discontinue providing its services as depository with respect to the Bonds at any time by giving reasonable notice to the City or the Registrar. Under such circumstances, in the event that a successor depository is not obtained, Bond certificates are required to be printed and delivered. The City may decide to discontinue use of the system of book-entry-only transfers through DTC (or a successor securities depository). In that event, Bond certificates will be printed and delivered. The information in this subcaption concerning DTC and DTC s book-entry system has been obtained from sources that the City believes to be reliable, but the City takes no responsibility for the accuracy thereof. Discontinuation of Book-Entry System In the event that the book-entry system for the Bonds is discontinued, the Registrar would provide for the registration of the Bonds in the name of the Beneficial Owners thereof. The City and the Registrar would treat the person in whose name any Bond is registered as the absolute owner of such Bond for the purposes of making and receiving payment of the principal thereof and interest thereon, and for all other purposes, except as otherwise described under the caption, CONTINUING DISCLOSURE, and neither the City nor the Registrar would be bound by any notice or knowledge to the contrary. Each Bond would be transferable or exchangeable only upon the presentation and surrender thereof at the corporate trust office of the Registrar, duly endorsed for transfer or exchange, or accompanied by a written assignment duly executed by the owner or its authorized representative in form satisfactory to the Registrar. Upon due presentation of any Bonds for transfer or exchange, the Registrar would authenticate and deliver in exchange therefor, within a reasonable time after such presentation, a new Bond or Bonds, registered in the name of the transferee or transferees (in the case of a transfer), or the owner (in the case of an exchange), in authorized denominations and of the same maturity and aggregate principal amount and bearing interest at the same rate as the Bond or Bonds so presented. The City or the Registrar would require the owner of any Bonds to pay a sum sufficient to cover any tax, fee or other governmental charge required to be paid in connection with the transfer or exchange of such Bonds. 6

13 PROCEDURES FOR PROPERTY ASSESSMENT AND TAX LEVY AND COLLECTION Real and personal property in the State of Indiana (the State ) is assessed each year as of March 1. On or before August 1 each year, each county auditor must submit to each underlying political subdivision located within that county a statement containing: (1) information concerning the assessed valuation of the political subdivisions for the next calendar year; (2) an estimate of the taxes to be distributed to the political subdivision during the last six months of the current calendar year; (3) the current assessed valuation as shown on the abstract of charges; (4) the average growth in assessed valuation in the political subdivision over the preceding three budget years, excluding years in which a general reassessment occurs, determined according to procedures established by the Department of Local Government Finance (the DLGF ); and (5) any other information at the disposal of the county auditor that might affect the assessed value as shown on the most recent abstract of property. By statute, the budget, tax rate and levy of a local political subdivision must be established no later than November 1. The budget, tax levy and tax rate are subject to review, revision, reduction or increase by the DLGF. The DLGF must complete its actions on or before February 15 of the immediately succeeding calendar year. On or before March 15, each county auditor prepares and delivers to the Auditor of State and the county treasurer the final abstract of property taxes within that county. The county treasurer mails tax statements the following April (but mailing may be delayed due to reassessment or other factors). Unless the mailing of tax bills is delayed, property taxes are due and payable to the county treasurer in two installments on May 10 and November 10. If an installment of taxes is not completely paid on or before the due date, a penalty of 10% of the amount delinquent is added to the amount due; provided, that so long as the installment is completely paid within 30 days of the due date and the taxpayer is not liable for delinquent property taxes first due and payable in a previous year for the same parcel, the amount of the penalty is five percent of the amount of the delinquent taxes. On May 11 and November 11 of each year after one year of delinquency, an additional penalty equal to 10% of any taxes remaining unpaid is added. The penalties are imposed only on the principal amount of the delinquency. Real property becomes subject to tax sale procedures on July 1 if a delinquency then exists with respect to an installment due on or before May 10 of the prior year. With respect to delinquent personal property taxes, each county treasurer shall serve a demand upon each county resident who is delinquent in the payment of personal property taxes after November 10, but before August 1 of the succeeding year. Each county auditor distributes property taxes collected to the various political subdivisions on or before the June 30 or December 31 after the due date of the tax payment. Under State law, personal property is assessed at its actual historical cost less depreciation, whereas real property assessed after February 28, 2011, must be assessed in accordance with the 2011 Real Property Assessment Manual (the Manual ) and the Real Property Assessment Guideline (the Guidelines ), both published by the DLGF, pursuant to 50 Indiana Administrative Code 2.4 (the Rule ). The purpose of the Rule is to accurately determine true tax value as defined in the Manual and the Guidelines, not to mandate that any specific assessment method be followed. The Manual defines true tax value for all real property, other than agricultural property, as the market value in use of a property for its current use, as reflected by the utility received by the owner or a similar user from that property. In the case of agricultural land, true tax value shall be the value determined in accordance with the Guidelines and certain provisions of the Indiana Code. The Manual permits assessing officials in each county to choose any acceptable mass appraisal method to determine true tax value, taking into consideration the ease in administration and the uniformity of the assessments produced by that method. The Guidelines were adopted to provide assessing officials with an acceptable appraisal methodology, although the Manual makes it clear that assessing officials are free to select from any number of appraisal methods, provided that they are capable of producing accurate and uniform values throughout the 7

14 jurisdiction and across all classes of real property. The Manual specifies the standards for accuracy and validation that the DLGF will use to determine the acceptability of any alternate appraisal method. The intent of the DLGF is that an assessment determined by an assessing official in accordance with the Rule and the Manual and Guidelines shall be presumed to be correct. Any evidence relevant to the true tax value of the real property as of the assessment date may be presented to rebut the presumption of correctness of the assessment. Such evidence may include an appraisal prepared in accordance with generally recognized appraisal standards; however, there is no requirement that an appraisal be presented either to support or to rebut an assessment. Instead, the validity of the assessment shall be evaluated on the basis of all relevant evidence presented. Whether an assessment is correct shall be determined on the basis of whether, in light of the relevant evidence, it reflects the real property s true tax value. There are certain credits, deductions and exemptions available for various classes of property. For instance, real property may be eligible for certain deductions for mortgages, solar energy heating or cooling systems, wind power devices, hydroelectric power devices and geothermal energy heating or cooling devices and if such property is owned by the aged. Residential real property may be eligible for certain deductions for rehabilitation. Real property, which is the principal residence of the owner thereof, is entitled to certain deductions and may be eligible for additional deductions, and if such owner is blind or disabled, such property may also be eligible for additional deductions. Buildings designed and constructed to systematically use coal combustion products throughout the building may be eligible for certain deductions. Tangible property consisting of coal conversion systems and resource recovery systems may be eligible for certain deductions. Tangible property or real property owned by disabled veterans and their surviving spouses may be eligible for certain deductions. Commercial and industrial real property, new manufacturing equipment and research and development equipment may be entitled to economic revitalization area deductions. Government-owned properties and properties owned, used and occupied for charitable, educational or religious purposes may be entitled to exemptions from tax. Assessed value or assessed valuation means an amount equal to the true tax value of property, which represents the gross assessed value of such property, less any deductions, credits and exemptions applicable to such property, and is the value used for taxing purposes in the determination of tax rates. Changes in assessed values of real property occur periodically as a result of general reassessments scheduled by the State General Assembly, as well as when changes occur in the property due to new construction or demolition of improvements. The most recent scheduled reassessment became effective as of the March 1, 2002 assessment date, and affects taxes payable beginning in The next scheduled reassessment will be effective as of the March 1, 2012 assessment date, and will affect taxes payable beginning in The assessed value of real property will be annually adjusted to reflect changes in market value, based, in part, on comparable sales data, in order to account for changes in value that occur between general reassessments. This process is generally known as Trending. When a change in assessed value occurs, a written notification is sent to the affected property owner. If the owner wishes to appeal this action, the owner must first request in writing a preliminary conference with the county or township official who sent the owner such written notification. That request must be filed with such official within 45 days after the written notification is given to the taxpayer. That preliminary conference is a prerequisite to a review of the assessment by the county property tax assessment board of appeals. While the appeal is pending: (1) any taxes on real property which become due on the property in question must be paid in an amount based on the immediately preceding year s assessment, or it may be paid based on the amount that is billed; and (2) any taxes on personal property which become due on the property in question must be paid in an amount based on the assessed value reported by the taxpayer on the taxpayer s personal property tax return, or it may be paid based on the amount billed. 8

15 Prior to February 15 of each year for taxes to be collected during that year, the DLGF is required to review the proposed budgets, tax rates and tax levies of each political subdivision, including the City, and the proposed appropriations from those levies to pay principal of and interest on each political subdivision s outstanding funding, refunding, judgment funding or other outstanding obligations, to pay judgments rendered against the political subdivision and to pay the political subdivision's outstanding lease rental obligations (collectively bond and lease obligations ) to be due and payable in the next calendar year. If it determines that the proposed levies and appropriations are insufficient to pay the bond and lease obligations, the DLGF may at any time increase the tax rate and tax levy of a political subdivision to pay such bond and lease obligations. The State General Assembly has enacted legislation, which provides taxpayers with a tax credit for all property taxes in an amount that exceeds a percentage of the gross assessed value of real and personal property eligible for the credit ( Circuit Breaker Tax Credit ). A person is entitled to the Circuit Breaker Tax Credit against the person s property tax liability for property taxes first due and payable after 2009 in the amount by which the person s property tax liability attributable to the person s: (1) homestead would otherwise exceed 1%; (2) residential rental property would otherwise exceed 2%; (3) long term care property would otherwise exceed 2%; (4) agricultural land would otherwise exceed 2%; (5) nonresidential real property would otherwise exceed 3%; or (6) personal property would otherwise exceed 3%; of the assessed value of the property in any one county, which is the basis for determination of property taxes payable with respect to property in that county for that calendar year. Property taxes imposed after being approved by the voters in a referendum or local public question will not be considered for purposes of calculating a person s Circuit Breaker Tax Credit. Certain senior citizens with annual income below specified levels or their surviving spouses may be entitled to additional credits with respect to their property tax liability attributable to their homesteads. The application of the Circuit Breaker Tax Credit will result in a reduction of property tax collections for each political subdivision in which the Circuit Breaker Tax Credit is applied. A political subdivision may not increase its property tax levy or borrow money to make up for any property tax revenue shortfall due to the application of the Circuit Breaker Tax Credit. Property taxes collected by a political subdivision must first be applied to pay debt service or lease rental obligations on all outstanding bonds or lease rental bonds payable from ad valorem property taxes. If property tax collections are insufficient to fully fund debt service or lease rental levies due to the Circuit Breaker Tax Credit, political subdivisions must use nonproperty tax revenues or revenues from property tax levies for other funds (including operating) to offset revenue loss to the debt service fund. This application of property tax revenues may impact the ability of political subdivisions to provide existing levels of service and, in extreme cases, the ability to make debt service or lease rental payments. Upon the failure of a political subdivision to pay any of the political subdivision s outstanding bonds or lease rental bonds, the Treasurer of State, upon being notified of the failure by a claimant, shall pay such unpaid obligations from money in possession of the State that would otherwise be available for distribution to the political subdivision under any other law, deducting such payment from the amount distributed. 9

16 The State General Assembly, in its 2010 session, adopted a joint resolution to amend the State Constitution for the purpose of including therein provisions very similar to those which provide for the application of the Circuit Breaker Tax Credit (the Amendment ). The Amendment was also agreed to in a joint resolution adopted by the prior State General Assembly. As a result, the Amendment was submitted to the electors of the State at the general election held on November 2, A majority of the electors voted to ratify the Amendment; the Amendment become a part of the State Constitution. In particular, under the Amendment, with respect to property taxes first due and payable in 2012 and thereafter, the State General Assembly is required to limit a taxpayer s property tax liability as follows: (1) A taxpayer s property tax liability on tangible property, including curtilage, used as a principal place of residence by an: (a) owner of property; (b) individual who is buying the tangible property under a contract; or (c) individual who has a beneficial interest in the owner of the tangible property (collectively, Tangible Property ); may not exceed 1% of the gross assessed value of the property that is the basis for the determination of property taxes. (2) A taxpayer s property tax liability on other residential property may not exceed 2% of the gross assessed value of the property that is the basis for the determination of property taxes. (3) A taxpayer s property tax liability on agricultural property may not exceed 2% of the gross assessed value of the property that is the basis for the determination of property taxes. (4) A taxpayer s property tax liability on other real property may not exceed 3% of the gross assessed value of the property that is the basis for the determination of property taxes. (5) A taxpayer s property tax liability on personal property (other than personal property that is Tangible Property or personal property that is other residential property) within a particular taxing district may not exceed 3% of the gross assessed value of the taxpayer s personal property that is the basis for the determination of property taxes within the taxing district. The Amendment provides that, with respect to property taxes first due and payable in 2012 and thereafter, property taxes imposed after being approved by the voters in a referendum would not be considered for purposes of calculating the limits to property tax liability under the provisions of the Amendment described in the preceding paragraphs. The City of Beech Grove cannot predict the timing, likelihood or impact on property tax collections of any future judicial actions, amendments to the State Constitution, including the Amendment, legislation, regulations or rulings taken, enacted, promulgated or issued to implement the regulations or statutes described above or of future property tax reform in general. In addition, there can be no assurance as to future events or legislation that may impact such regulations or statutes or the collection of property taxes by the City of Beech Grove. 10

17 CONTINUING DISCLOSURE General The following is a summary of certain provisions of the Continuing Disclosure Agreement. This summary does not purport to be complete or definitive and is qualified in its entirety by reference to the full terms of the Continuing Disclosure Agreement. The City will covenant for the benefit of the Bondholders and the Beneficial Owners (as hereinafter defined under this caption only), pursuant to the Continuing Disclosure Agreement to be delivered on the date of issuance of the Bonds (the Disclosure Agreement ), to provide or cause to be provided: (1) each year, certain financial information and operating data relating to the City for its preceding fiscal year (the Annual Report ) by not later than the date six months after the first day of its fiscal year, commencing with the Annual Report for its fiscal year ended December 31, 2012; provided, however, that if the audited financial statements of the City are not available by such date, they will be provided when and if available; and (2) timely notices of the occurrence of certain enumerated events. Currently, the City s fiscal year commences on January 1. Beneficial Owner means, under this caption only, any person which has or shares power, directly or indirectly, to make investment decisions concerning the ownership of any Bonds (including any person holding Bonds through nominees, depositories or other intermediaries). The Annual Report will be provided by the City to the Municipal Securities Rulemaking Board (the MSRB ). If the City is unable to provide to the MSRB an Annual Report by the date required, the City shall provide, in a timely manner, to the MSRB, a notice of the failure to file the Annual Report by such date. The notices of material events will be provided by the City to the MSRB. Each Annual Report and each of the foregoing notices shall be provided in an electronic format and accompanied by identifying information as prescribed by the MSRB. Those covenants have been made in order to assist the purchaser of the Bonds and registered brokers, dealers and municipal securities dealers in complying with the requirements of subsection (d)(2) of Rule 15c2-12 promulgated by the Securities and Exchange Commission (the SEC ) pursuant to the Securities Exchange Act of 1934, as amended ( Rule 15c2-12 ). By its payment for and acceptance of a Bond, the holders and Beneficial Owners thereof accept and assent to the Disclosure Agreement and the exchange of such payment and acceptance for such promises. Content of Annual Report The Annual Report will contain or include by reference at least the following items: The audited financial statements of the City for its fiscal year, immediately preceding the due date of the Annual Report. Such financial statements, however, shall not be included if State law does not require the City to prepare such statements for its immediately preceding fiscal year by the due date of the Annual Report for such fiscal year. The City s financial statements (1) shall be audited and prepared pursuant to accounting and reporting policies conforming in all material respects to generally accepted accounting principles as applicable to governments with such changes as may be required from time to time in accordance with 11

18 State law, or (2) shall be audited (only if required by State law) and prepared in accordance with State law. Any or all of the items listed above may be included by specific reference to documents available to the public on the MSRB s Internet Web site or filed with the SEC. The City shall clearly identify each such other document so included by reference. Reportable Events In a timely manner, within 10 business days of the occurrence, to the MSRB through EMMA (an Internet-based electronic filing system called the Electronic Municipal Market Access system as described in 1934 Act Release No and maintained by the MSRB), notice of the following events, if material, with respect to the Bonds (which determination of materiality shall be made by the City): 1. non-payment related defaults; 2. modifications to rights of Bondholders; 3. bond calls; 4. release, substitution or sale of property securing repayment of the Bonds; 5. the consummation of a merger, consolidation, or acquisition, or certain asset sales, involving the obligated person, or entry into or termination of a definitive agreement relating to the foregoing; and 6. appointment of a successor or additional trustee or the change of name of a trustee. Within ten business days, to EMMA, notice of the following events, regardless of materiality: Failure to Disclose. 1. principal and interest payment delinquencies; 2. unscheduled draws on debt service reserves reflecting fmancial difficulties; 3. unscheduled draws on credit enhancements reflecting financial difficulties; 4. substitution of credit or liquidity providers, or their failure to perform; 5. defeasances; 6. rating changes; 7. adverse tax opinions or other material events affecting the tax-exempt status of the Bonds; the issuance by the IRS of proposed or final determinations of taxability, Notices of Proposed Issue (IRS Form 5701-TEB) or other material events, notices or determinations with respect to the tax status of the securities; 8. tender offers; and 9. bankruptcy, insolvency, receivership or similar event of the obligated person. In a timely manner, to the MSRB through EMMA, notice of the City failing to provide the annual financial information as described above. Beneficiaries of Disclosure Agreement Nothing expressed or implied in the Disclosure Agreement is intended to give, or gives, to the SEC or any obligated person, or any underwriters, brokers or dealers, or any other person, other than the City and each Bondholder and Beneficial Owner, any legal or equitable right, remedy or claim under or with respect to the Disclosure Agreement or any rights or obligations thereunder. The Disclosure Agreement and the rights and obligations thereunder are intended to be, and are, for the sole and exclusive benefit of the City, the participating underwriters and each Bondholder and Beneficial Owner. 12

19 Amendment of Disclosure Agreement The Disclosure Agreement may be amended, without notice to or consent from any Bondholder or Beneficial Owner, provided that the following conditions are satisfied: (1) (a) such amendment is made in connection with a change in circumstances that arises from a change in legal requirements, change in law or change in the identity, nature or status of the City, or type of business conducted; (b) the Disclosure Agreement, after giving effect to such amendment, would have complied with the requirements of Rule 15c2-12 on the date hereof, after taking into account any amendments or interpretations of Rule 15c2-12, as well as any change in circumstances; and (c) such amendment does not materially impair the interests of any Bondholder or Beneficial Owner, as determined either by (i) any person selected by the City that is unaffiliated with the City (such as Bond Counsel) or (ii) an approving vote of the Bondholders pursuant to the terms of Bond Ordinance at the time of such amendment; or (2) such amendment is otherwise permitted by Rule 15c2-12. Termination of Reporting Obligations The obligation to provide annual financial information and notices of material events, as set forth above, shall terminate with respect to the City, if and when the City no longer remains an obligated person with respect to the Bonds within the meaning of Rule 15c2-12. Compliance with Previous Undertakings In the previous five years, the City has never failed to comply, in all material respects, with any previous undertakings in a written contract or agreement that it entered into pursuant to subsection (b)(5) of Rule 15c2-12. TAX MATTERS In the opinion of Ice Miller LLP, Indianapolis, Indiana, Bond Counsel, under federal statutes, decisions, regulations and rulings, interest on the Bonds is excludable for federal income tax purposes from gross income under Section103 of the Internal Revenue Code of 1986, as amended (the "Code"), is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations, but is taken into account in determining adjusted current earnings for the purpose of computing the federal alternative minimum tax imposed on certain corporations. This opinion is conditioned on continuing compliance by the City with the Tax Covenants (hereinafter defined). Failure to comply with the Tax Covenants could cause interest on the Bonds to lose the exclusion from gross income for federal income tax purposes retroactive to the date of issue. In the opinion of Ice Miller LLP, Indianapolis, Indiana, Bond Counsel, under existing laws, regulations, judicial decisions and rulings, interest on the Bonds is exempt from income taxation in the State of Indiana (the "State"). This opinion relates only to the exemption of interest on the Bonds for State income tax purposes. See Appendix B for the form of opinion of Bond Counsel. 13

20 The Code imposes certain requirements which must be met subsequent to the issuance of the Bonds as a condition to the exclusion from gross income of interest on the Bonds for federal income tax purposes. The City will covenant not to take any action, within its power and control, nor fail to take any action with respect to the Bonds that would result in the loss of the exclusion from gross income for federal income tax purposes of interest on the Bonds pursuant to Section 103 of the Code (collectively, the "Tax Covenants"). The Bond Ordinance and certain certificates and agreements to be delivered on the date of delivery of the Bonds establish procedures to permit compliance with the requirements of the Code. It is not an event of default under the Bond Ordinance if interest on the Bonds is not excludable from gross income for federal tax purposes or otherwise pursuant to any provision of the Code which is not in effect on the issue date of the Bonds. IC imposes a franchise tax on certain taxpayers (as defined in IC 6-5.5) which, in general, include all corporations which are transacting the business of a financial institution in Indiana. The franchise tax will be measured in part by interest excluded from gross income under Section 103 of the Code minus associated expenses disallowed under Section 265 of the Code. Taxpayers should consult their own tax advisors regarding the impact of this legislation on their ownership of the Bonds. Although Bond Counsel will render an opinion in the form attached as Appendix C hereto, the accrual or receipt of interest on the Bonds may otherwise affect a bondholder's federal income tax or state tax liability. The nature and extent of these other tax consequences will depend upon the bondholder's particular tax status and a bondholder's other items of income or deduction. Taxpayers who may be affected by such other tax consequences include, without limitation, financial institutions, certain insurance companies, S corporations, certain foreign corporations, individual recipients of Social Security or railroad retirement benefits and taxpayers who may be deemed to have incurred (or continued) indebtedness to purchase or carry the Bonds. Bond Counsel expresses no opinion regarding any other such tax consequences. Prospective purchasers of the Bonds should consult their own tax advisors with regard to the other federal and state tax consequences of owning the Bonds other than those consequences set forth in the form of opinion of Bond Counsel. Under existing laws, judicial decisions, regulations and rulings, the Bonds have been designated as "qualified tax-exempt obligations" for purposes of Section 265(b)(3) of the Code relating to the disallowance of the deduction for interest expense allocable to interest on tax-exempt obligations acquired by financial institutions. The designation is conditioned on continuing compliance with the Tax Covenants. ORIGINAL ISSUE DISCOUNT The initial public offering prices of the Bonds maturing on July 15, 2019 (collectively the Discount Bonds ), are less than the principal amounts thereof payable at maturity. As a result, the Discount Bonds will be considered to be issued with original issue discount. The difference between the initial public offering price of each maturity of the Discount Bonds, as set forth on the cover page of this Official Statement (assuming it is the first price at which a substantial amount of that maturity is sold) (the Issue Price for such maturity), and the amount payable at its maturity, will be treated as original issue discount. The original issue discount on each of the Discount Bonds is treated as accruing daily over the term of such Discount Bond on the basis of the yield to maturity determined on the basis of compounding at the end of each six-month period (or shorter period from the date of the original issue) ending on January 15 and July 15 (with straight line interpolation between compounding dates). An owner who purchases a Discount Bond in the initial public offering at the Issue Price for such maturity will treat the accrued amount of original issue discount as interest which is excludable from the gross income of the owner of that Discount Bond for federal income tax purposes. 14

21 Section 1288 of the Code provides, with respect to tax-exempt obligations such as the Discount Bonds, that the amount of original issue discount accruing each period will be added to the owner s tax basis for the Discount Bonds. Such adjusted tax basis will be used to determine taxable gain or loss upon disposition of the Discount Bonds (including sale, redemption or payment at maturity). Owners of Discount Bonds who dispose of Discount Bonds prior to maturity should consult their tax advisors concerning the amount of original issue discount accrued over the period held and the amount of taxable gain or loss upon the sale or other disposition of such Discount Bonds prior to maturity. The original issue discount that accrues in each year to an owner of a Discount Bond may result in certain collateral federal income tax consequences. Owners of any Discount Bonds should be aware that the accrual of original issue discount in each year may result in a tax liability from these collateral tax consequences even though the owners of such Discount Bonds will not receive a corresponding cash payment until a later year. Owners who purchase Discount Bonds in the initial public offering but at a price different from the Issue Price for such maturity should consult their own tax advisors with respect to the tax consequences of the ownership of the Discount Bonds. The Code contains certain provisions relating to the accrual of original issue discount in the case of subsequent purchasers of bonds such as the Discount Bonds. Owners who do not purchase Discount Bonds in the initial public offering should consult their own tax advisors with respect to the tax consequences of the ownership of the Discount Bonds. Owners of Discount Bonds should consult their own tax advisors with respect to the state and local tax consequences of owning the Discount Bonds. It is possible under the applicable provisions governing the determination of state or local income taxes that accrued interest on the Discount Bonds may be deemed to be received in the year of accrual even though there will not be a corresponding cash payment until a later year. AMORTIZABLE BOND PREMIUM The initial public offering prices of the Bonds maturing on July 15, 2013, through and including January 15, 2017 (collectively, the Premium Bonds ), are greater than the principal amounts thereof payable at maturity. As a result, the Premium Bonds will be considered to be issued with amortizable bond premium (the Bond Premium ). An owner who acquires a Premium Bond in the initial public offering will be required to adjust the owner s basis in the Premium Bond downward as a result of the amortization of the Bond Premium, pursuant to Section 1016(a)(5) of the Code. Such adjusted tax basis will be used to determine taxable gain or loss upon the disposition of the Premium Bonds (including sale, redemption or payment at maturity). The amount of amortizable Bond Premium will be computed on the basis of the taxpayer s yield to maturity, with compounding at the end of each accrual period. Rules for determining (i) the amount of amortizable Bond Premium and (ii) the amount amortizable in a particular year are set forth in Section 171(b) of the Code. No income tax deduction for the amount of amortizable Bond Premium will be allowed pursuant to Section 171(a)(2) of the Code, but amortization of Bond Premium may be taken into account as a reduction in the amount of tax-exempt income for purposes of determining other tax consequences of owning the Premium Bonds. Owners of the Premium Bonds should consult their tax advisors with respect to the precise determination for federal income tax purposes of the treatment of Bond Premium upon the sale or other disposition of such Premium Bonds and with respect to the state and local tax consequences of owning and disposing of the Premium Bonds. 15

22 Special rules governing the treatment of Bond Premium, which are applicable to dealers in taxexempt securities, are found in Section 75 of the Code. Dealers in tax-exempt securities are urged to consult their own tax advisors concerning the treatment of Bond Premium. LEGAL OPNIONS AND ENFORCEABLITY OF REMEDIES The various legal opinions to be delivered concurrently with the delivery of the Bonds express the professional judgment of the attorneys rendering the opinions on the legal issues explicitly addressed therein. By rendering a legal opinion, the opinion giver does not become an insurer or guarantor of that expression of professional judgment, of the transaction opined upon, or of the future performance of parties to such transaction. Nor does the rendering of an opinion guarantee the outcome of any legal dispute that may arise out of the transaction. The remedies available to the bondholders upon a default under the Bond Ordinance are in many respects dependent upon judicial actions which are often subject to discretion and delay. Under existing constitutional and statutory law and judicial decisions, including specifically Title 11 of the United States Code (the federal bankruptcy code), the remedies provided in the Bond Ordinance may not be readily available or may be limited. Under federal and State environmental laws certain liens may be imposed on property of the City from time to time, but the City has no reason to believe, under existing law, that any such lien would have priority over the lien on the property taxes pledged to the payment of debt service on the Bonds. The various legal opinions to be delivered concurrently with the delivery of the Bonds will be qualified as to the enforceability of the various legal instruments by the valid exercise of the constitutional powers of the City, the State of Indiana and the United States of America and bankruptcy, reorganization, insolvency, moratorium or other similar laws affecting the rights of creditors generally, and by general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law). These exceptions would encompass any exercise of federal, State or local police powers (including the police powers of the City), in a manner consistent with the public health and welfare. Enforceability of the Bond Ordinance in a situation where such enforcement may adversely affect public health and welfare may be subject to these police powers. UNDERWRITING The Bonds are being purchased by City Securities Corporation. (the "Underwriter"). The Underwriter has agreed to purchase the Bonds at a price of $1,964, (representing the principal amount of the Bonds ($1,995,000) and less an underwriter s discount of $30,436.80). The Underwriter will purchase all of the Bonds if any are purchased. The initial offering prices may be changed, from time to time, by the Underwriter. The Underwriter may offer and sell the Bond to certain dealers (including dealers depositing the Bonds into investment trusts) and others at prices lower than the offering prices set forth on the cover page hereof. 16

23 LITIGATION To the knowledge of the City, there is no litigation pending or threatened against the City which questions or affects the validity of the Bonds or any proceedings or transactions relating to the issuance, sale or delivery thereof. LEGAL MATTERS Legal matters incident to the authorization and issuance of the Bonds are subject to the unqualified approving opinion of Ice Miller LLP, Indianapolis, Indiana, Bond Counsel, whose approving opinion will be available at the time of delivery of the Bonds. Ice Miller LLP has not been asked nor has it undertaken to review the accuracy or sufficiency of this Official Statement, and will express no opinion thereon. The form of opinion of Bond Counsel is included as Appendix B of this Official Statement. 17

24 Execution of this Official Statement has been duly authorized by the City. City of Beech Grove, Indiana, By its Mayor /s/ Dennis Buckley, Mayor Attest: /s/ Dan McMillan, Clerk-Treasurer 18

25 APPENDIX A

26 TABLE OF CONTENTS Page The Project 3 Ad Valorem Taxes 3 The City Debt Information 5 The City General Information 6 The City- Financial Information 8 The City 9 2

27 The Project The proceeds from the General Obligation Bonds of 2012 (the Bonds ) will be used by the City of Beech Grove, Indiana ( the City ), in acquiring a fire truck and an ambulance, improving several municipal building roofs and various infrastructure improvements and updates and the incidental expenses in connection therewith. Beech Grove The City of Beech Grove, Marion County, is located in southeastern Marion County, encompassing 4.3 square miles. Ad Valorem Taxes NV RE Utilities NV Personal Prop Total NV of Taxables ,652,229 10,554,920 57,539, ,746, ,089,665 11,528,030 57,185, ,803, ,934,208 11,246,280 85,203, ,384, ,347,626 11,972,327 56,324, ,644, ,608,147 11,831,750 53,363, ,803,855 Source: Marion County Abstracts Ten Largest Taxpayers: Among the largest payers of ad valorem taxes within the City, based on the assessed valuation of their property for the taxes payable in 2012, are: Name 2012 Gross Assessed Value Wal-Mart Real Estate 14,115,200 Lowe's Home Centers, Inc. 9,119,300 ADM Milling Co 7,426,390 Beech Meadow 7,323,200 NTP-Indianapolis LLC 7,279,400 Willow Glen Apartments 6,704,900 McGregor Woods 6,449,600 Bre/Us Industrial 6,267,200 Community Reinvestment 5,338,000 Emerson Industrial Park 5,261,300 Source: Marion County Treasurer 3

28 Property Tax Collections: The following table shows the ad valorem property taxes levied and collected for the City unit for years indicated: Collection Year Taxes Levied* Circuit Breaker Tax Credit Tax Levied Net of Circuit Breaker Tax Credit Taxes Collected Collected as a Percentage of Gross Levy Collected as Percentage of Net Levy ,428, ,428,951 5,348,367 99% 99% ,671, ,995 4,870,066 4,559,717 80% 94% ,576,089 1,525,296 4,050,793 3,904,485 70% 96% ,919,048 1,930,730 3,988,318 3,802,662 64% 95% ,733,035 1,844,726 3,888,309 * Levied amount taken from budget orders certified by the Department of Local Government Finance. Ad Valorem Property Tax Rates: The table below sets forth the rates, in dollars and cents per $100 of assessed valuation, of ad valorem taxation for The City, and the highest overlapping ad valorem taxation rate within the City in each of the last five years (collection years 2008 through 2012). City Property Tax Rates General Fund Debt Service Fire Pension Police Pension Motor Vehicle Highway Fund Cumulative Capital Development Fund Local Road and Street Total for County Tax Rates for Taxing District with Highest Assessed Value Year District State County Twp School Library City Special Total 2008 Beech Grove Perry Twp Beech Grove Perry Twp Beech Grove - Perry Twp Beech Grove - Perry Twp Beech Grove Perry Twp The total tax rate for all overlapping taxing districts is reduced. These reductions are known as property tax replacement credits (PTRC), homestead credits, County Option Income Tax (COIT) homestead credits, Local Option Income Tax (LOIT) homestead credits, and COIT Property Tax Replacement under Indiana Code The revenue loss resulting from these credits was replaced by the State from its Property Tax Replacement Fund, and is replaced by the County from its COIT and LOIT Homestead Credit Funds and COIT Property Tax Replacement Fund. The Auditor of the County distributes these property tax replacement moneys as current property tax collections to the various political subdivisions in the County. The COIT Property Tax Replacement is applied during the initial computation of tax rate and is therefore not applied as a credit rate like the other forms of property tax relief shown below. The reduced tax rate is charged per applicable property type for overlapping taxing districts. 4

29 Year District Non-Business PTRC % Business PTRC % State Homestead Credit % COIT Homestead Credit % LOIT Homestead Credit % HB State Credit % 2008 Beech Grove Perry Twp Beech Grove Perry Twp Beech Grove Perry Twp Beech Grove Perry Twp Beech Grove Perry Twp *Source: Marion County Auditor s Abstract Debt Limitation: The City Debt Information Article 13, Section 1 of the Indiana Constitution and the Indiana Code impose a limitation on the amount of indebtedness that maybe incurred by political subdivisions, including cities. That provision generally limits the indebtedness which a political subdivision may incur to an amount equal to 2% of the total value of taxable property within the political subdivision determined by the last previous assessment for tax purposes divided by three (3). Based on current assessed valuation, the total non-exempt debt that the City of Beech Grove could issue subject to the foregoing limitation is $2,714,312. The City of Beech Grove currently has outstanding debt of $150,000. The City of Beech Grove currently has the ability to issue General Obligation Bonds of $2,564,312. Debt and Lease Obligation Information: The following is a statement of the presently outstanding principal amounts of the debt and lease obligations of the City of Beech Grove and of overlapping political subdivisions and related information: Pension Obligations: Beech Grove Debt and Lease Obligations: Previous Issues (a) $ 150,000 This Issue (b) $1,995,000 Total $2,145,000 Highest Underlying Indebtedness (c) $146,884,709 Total Beech Grove and Underlying Indebtedness $149,029,709 Population: (d) Per Capita Debt for the Project $ Per Capita Total City and Overlapping Indebtedness $10, Total Debt for Project as a percentage of Assessed Valuation ($407,146,828).49% Total Beech Grove and Underlying Indebtedness as a percentage Of Assessed Valuation ($407,146,828) 36.60% (a) Beech Grove General Obligation Bonds (b) Beech Grove General Obligation Bonds (c) Highest underlying debt consists of the remaining balance of all debt or lease obligations of the following entities: (1) Franklin Township Community School Corporation $59,681,942, (2) MSD Perry Township $19,040,762, (3) Beech Grove City Schools $61,127,240, (4) Beech Grove Public Library $3,010,434, (5) Park District Debt $234,466, (6) Flood Control District $118,487, (7) Metropolitan Thoroughfare District $439,920, (8) Public Safety Comm and Comp Facilities District $420,360, (9) Marion County Health and Hospital $2,533,678, (10) Indpls. Marion County Building Authority $177,875 and (11) Indianapolis Public Transportation Corp. $99,546 (d) Source: 2010, U.S. Bureau of Census. Currently 93 employees of the City have pensions funded under the Public Employees Retirement Fund ( PERF ) of the State of Indiana. PERF was created on July 1, 1945 to provide secure, long-term pension benefits for the Indiana employees with careers in public service. Provided below is a statement of pension obligations as reported by PERF computed on the basis of amortized cost. Employees covered under the 1925 Police Officer s Pension Plan and the 1937 Firefighter s Pension, shown below, are not covered under PERF. The employer contribution for the twelve months ended June 30, 2011 was 130,972. 5

30 Pension Obligation 2011 Employer Annual Percent of Pension Cost Contributed City of Beech Grove ($109,428) 67% 1925 Police Officer s Pension Plan Certain City employees have pensions funded under the 1925 Police Officer s Pension Plan of the State of Indiana. As of January 1, 2012, the City had 0 active and 18 retires and beneficiaries covered by the Plan. The employer contribution was $527, for the twelve months ended December 31, Beginning with property taxes payable in 2009, the State has assumed 100% of the cost of the Pre-1977 Local Police Pension payments, eliminating all property tax levies associated with these costs Firefighter s Pension Plan Certain City employees have pensions funded under the 1937 Firefighter s Pension Plan of the State of Indiana. As of January 1, 2012, the City had 0 active and 10 retires and beneficiaries covered by the Plan. The employer contribution was $331, for the twelve months ended December 31, Beginning with property taxes payable in 2009, the State has assumed 100% of the cost of the Pre-1977 Local Police Pension payments, eliminating all property tax levies associated with these costs. Economic and Demographic Information: Beech Grove General Information Information under this caption, unless specifically attributed to other sources, has been obtained from the City of Beech Grove. Beech Grove is served by diversified transportation facilities. Immediate access is to Interstates 65, 70, 74 and 465. The nearby Indianapolis International Airport provides air transportation for local business and city residents. The Indianapolis International Airport is also easily accessible for commercial flight service. Amtrak provides rail service in the area. IndyGO and Greyhound provide bus transportation. The area of Beech Grove is provided with banking and financial services by five (5) commercial and savings banks located in the City. Two (2) daily newspapers serve the area of the City. The City is within the service area of all network and numerous cable television stations and approximately (33) AM-FM radio stations. The Beech Grove City Schools District serves city residents. Schools in the district include: Beech Grove Senior High School, Beech Grove Middle School, South Grove Intermediate School, Hornet Park Elementary School and Central Elementary School. Holy Name Elementary School and Montessori Children s House are two private elementary/middle schools that are located in the City. The district reports an enrollment of 2,628 for the 2010/2011 school year. Area colleges and universities include Butler University, Indiana University-Purdue University, Ivy Tech Community College- Central Indiana, Marion College, Indiana Wesleyan University and the University of Indianapolis. All are located in Indianapolis and Greenwood. Other regional colleges and universities include: Purdue University in West Lafayette, Indiana University in Bloomington, Ball State University in Muncie, Franklin College in Franklin and Earlham College in Richmond. The City is served by Community Hospital South in Greenwood, Indiana, St. Francis Hospital and Health Centers in Indianapolis, Indiana and Indiana University Hospital in Indianapolis, Indiana. 6

31 POPULATION The historical population of the City of Beech Grove and Marion County is shown below, according to the U.S. Bureau of Census: City of Beech Grove Marion County Percentage Percentage Year Population Change Population Change , % % , % 860, % , % 797, % , % 765, % , % 793, % , ,567 The Majority of employees residing in the City of Beech Grove commute to Indianapolis for employment opportunities Name Product/Service Employees Indiana University Health Healthcare 24,210 St. Vincent Health Healthcare 11,356 Eli Lilly and Co. Pharmaceuticals 11,071 Republic Airways Holdings, Inc. Regional Airlines 10,500 Community Health Network Healthcare 8,652 Kar Auction Services Wholesale used vehicle auctions 8,414 Marsh Supermarkets, Inc. Retail grocery, food service 7,485 ITT Educational Services, Inc. Secondary Education 6,300 Well Point, Inc. Insurance 4,500 HH Gregg Inc. Retail 4,459 Source: Indiana Economic Development Corporation The following is a table of recent comparative unemployment figures: Year Marion County (a) State (a) Marion County Labor Force % 5.40% 459, % 5.00% 462, % 4.60% 463, % 5.80% 465, % 10.40% 459, % 10.10% 460, % 9.00% 463,504 (a) The figures are not seasonally adjusted. Unemployment figures for the County and State were obtained from the Bureau of Labor Statistics. 7

32 The following table of building permits for Beech Grove was compiled from the records of permits issued and estimated costs for the improvements on file with Beech Grove. Total Year Number Est. Dollar Value $5,294,121 $3,426, $2,548, $1,200, $4,243,541 The following tables show selected agriculture information in the County Number of Farms Land in Farms (acres) 17,233 23,692 Avg. Size of Farms (acres) Avg. Size of Indiana Farms Value of Land & Bldgs. Per Farm $384,823 $485,528 Value of Mach & Equip per Farm 52,273 $66,003 Total Cropland (acres) 14,233 19,531 Harvested Cropland (acres) 13,224 17,203 Market Value of Agricultural Products Sold Market Value of Farm Products 22,509,000 33,435,000 Avg. per Farm 85, ,348 Avg. per Farm (Indiana) 135,733 79,328 Source: U.S. Bureau of the Census: 2002 and 2007 Census of Agriculture-Indiana County Data Income of Households City of Beech Marion County Indiana Grove Less than $14, % 10.24% 7.53% $15,000 to 34, % 21.41% 18.39% $35,000 to 74, % 34.54% 37.95% $75,000 to 149, % 26.48% 29.45% $150,000 or more 2.95% 7.33% 6.69% % % % Source: U.S. Bureau of the Census, Census Beech Grove Financial Information The City maintains its system of Accounting on a regulatory basis prescribed by the State Board of Accounts in accordance with State Statute (IC ), which is a comprehensive basis of accounting other than accounting principles generally accepted in the United State of America. Receipts are recorded when received and disbursements are recorded when paid. Financial reports are prepared and filed with the State Board of Accounts annually. These reports have been timely filed. The most recent audit by the State Board of Accounts was dated May 24, 2011 and filed July 15, The report covered the period from January 1, 2010 through December 31, 2010 and is now on file with the Board of Accounts and the City. For 2010, the State Board of Accounts has certified to officials of Beech Grove that its financial statements present fairly, in all material respects, the financial position and results of operations of the City. 8

33 The City Organization of Major Offices: City of Beech Grove is governed by a seven-member Common Council, with each member elected to a four year term. The Mayor serves as the chief executive of the City and serves a four-year term. The Clerk-Treasurer is also elected to a four-year term and is responsible for the financial records of the City. Additional City Departments include the following: Planning Department Public Works Fire Department Engineering Department Police Department Economic Development Department Parks and Recreation Department Redevelopment Commission Street Department Sources of Revenues and Expenditures: Principal sources of locally imposed and collected City revenues are (1) City ad valorem property taxes, (2) local income taxes, (3) the vehicle license excise taxes and investment earnings, (4) Park revenues, and (5) fees collected by the City for various services. Elected City Officials: The current elected City officials are as follows: Office Held Name of Incumbent Expiration Date of Present Term Council Members Mary Stewart 12/31/15 Ed Bell 12/31/15 Anthony Davidson 12/31/15 Dave Harrison 12/31/15 Kathy Coates 12/31/15 Dave Mobley 12/31/15 John Jennings 12/31/15 Clerk Treasurer Mayor Dan McMillian Dennis Buckley 12/31/15 12/31/15 Employee Relations: The City employs 110 full-time and 17 part-time employees, as of May 31, None of its employees are currently organized in unions. In the judgment of the City, labor relations are considered excellent. 9

34 APPENDIX B

35 , 2012 Page 2 FORM OF BOND COUNSEL OPINION Upon delivery of the Bonds in definitive form, Ice Miller LLP, Bond Counsel, proposes to render the following opinion with respect to the bonds substantially in the form set forth below., 2012 Re: City of Beech Grove, Indiana General Obligation Bonds of 2012 Total Issue: $1,995,000 Dated:, 2012 Ladies and Gentlemen: We have acted as bond counsel in connection with the issuance by City of Beech Grove, Indiana ("Issuer") of $1,995,000 of its General Obligation Bonds of 2012, dated, 2012 ("Bonds"). We have examined the law and the certified transcript of proceedings of the Issuer had relative to the authorization, issuance and sale of the Bonds and such other papers as we deem necessary to render this opinion. We have relied upon the certified transcript of proceedings and certificates of public officials of the Issuer, including the Issuer s tax covenants and representations ("Tax Representations"), and we have not undertaken to verify any facts by independent investigation. Based upon our examination, we are of the opinion, as of the date hereof, as follows: 1. The Bonds are the valid and binding general obligations of the Issuer. 2. The Bonds are payable from an ad valorem tax levied and collected on all taxable property of the Issuer; however, the Issuer's collection of the levy may be limited by operation of IC , which provides taxpayers with tax credits for property taxes attributable to different classes of property in an amount that exceeds certain percentages of the gross assessed value of that property. The Issuer is required by law to fully fund the payment of principal of and interest on the Bonds in an amount sufficient to pay the debt service, regardless of any reduction in property tax collections due to the application of such tax credits. 3. Under statutes, decisions, regulations and rulings existing on this date, interest on the Bonds is exempt from income taxation in the State of Indiana ("State"). This opinion relates only to the exemption of interest on the Bonds from State income taxes.

36 , 2012 Page 3 4. Under federal statutes, decisions, regulations and rulings existing on this date, the interest on the Bonds is excludable from gross income for purposes of federal income taxation pursuant to Section 103 of the Internal Revenue Code of 1986, as amended, is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations, but is taken into account in determining adjusted current earnings for the purpose of computing the federal alternative minimum tax imposed on certain corporations. This opinion is conditioned on continuing compliance by the Issuer with the Tax Representations. Failure to comply with the Tax Representations could cause interest on the Bonds to lose the exclusion from gross income for purposes of federal income taxation retroactively to the date of issuance of the Bonds. We have not been engaged nor have we undertaken to review the accuracy, completeness or sufficiency of the Official Statement or any other offering material relating to the Bonds and we express no opinion relating thereto. It is to be understood that the rights of the owners of the Bonds and the enforceability thereof may be subject to bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors rights heretofore or hereafter enacted and that their enforcement may be subject to the exercise of judicial discretion in accordance with general principles of equity. It is to be understood that the rights of the owners of the Bonds and the enforceability thereof may be subject to the valid exercise of the constitutional powers of the Issuer, the State and the United States of America. Very truly yours, I/

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