$12,770,000 CITY OF CALUMET CITY Cook County, Illinois General Obligation Corporate Purpose Bonds, Series 2009A

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1 New Issue Book-Entry Only FINAL OFFICIAL STATEMENT Moody s Investors Service... Aa2 Standard & Poor s... AAA (Assured Guaranty Corp. Insured) (Moody s Underlying Rating... A3) (Standard & Poor s Underlying Rating). A) Subject to compliance by the City with certain covenants, in the opinion of Bond Counsel, under present law, interest on the Bonds is not includible in gross income of the owners thereof for federal income tax purposes and is not included as an item of tax preference in computing the federal alternative minimum tax for individuals and corporations, but such interest is taken into account in computing an adjustment used in determining the federal alternative minimum tax for certain corporations. Interest on the Bonds is not exempt from present Illinois income taxes. The Bonds are to be qualified tax-exempt obligations. See TAX EXEMPTION herein. $12,770,000 CITY OF CALUMET CITY Cook County, Illinois General Obligation Corporate Purpose Bonds, Series 2009A Dated: Date of Delivery Due: May 15, as shown below The $12,770,000 City of Calumet City, Cook County, Illinois (the City ), General Obligation Corporate Purpose Bonds, Series 2009A (the Bonds ), are being issued using a book-entry system. Interest is payable semiannually on May 15 and November 15, commencing November 15, The City Treasurer, Calumet City, Illinois, will act as Paying Agent and Bond Registrar for the Bonds (the Paying Agent and Bond Registrar ). The Depository Trust Company ( DTC ), New York, New York, will act as securities depository for the Bonds. The ownership of one fully registered Bond for each maturity will be registered in the name of Cede & Co., as nominee for DTC, and no physical delivery of Bonds will be made to purchasers. Individual purchases will be made in book-entry form only in denominations of $5,000 principal amount or any integral multiple thereof. The scheduled payment of principal of and interest on the Bonds when due will be guaranteed under a financial guaranty insurance policy to be issued concurrently with the delivery of the Bonds by Assured Guaranty Corp. ( Assured Guaranty ). MATURITIES Due May 15 Principal Interest Price or Principal Interest Price or Amount Maturity Rate Yield Amount Maturity Rate Yield $ 280, % 1.550% $ 715, % 4.390% **** **** **** **** 740, % 4.480% 1,300, % 3.570% 765, % 4.600% 1,045, % 3.720% 785, % 4.690% 850, % 3.920% 1,580, % 4.770% 705, % 4.070% 1,885, % 4.850% **** **** **** **** 1,840, % 4.930% 280, % 4.300% Bonds maturing on or after May 15, 2019, are subject to optional redemption prior to maturity, in whole or in part, on any date on or after November 15, 2018 (see THE BONDS Redemption herein). Proceeds of the Bonds will be used to provide funds to: (i) refund the City s outstanding General Obligation Corporate Purpose Bonds, Series 1999B maturing May 15, ; (ii) refund all outstanding maturities of the City s General Obligation Refunding Bonds, Series 2002A-2; (iii) refund all outstanding maturities of the City s General Obligation Covenant Bonds, Series 2007A; (iv) provide funds for capital projects; and (v) pay for certain costs of issuance associated with the Bonds. In the opinion of Bond Counsel, the Bonds are valid and legally binding general obligations of the City and will be secured by the full faith and credit of the City payable, as to both principal and interest, from ad valorem taxes to be levied on all taxable property within the City without limitation as to rate or amount. The Bonds will be designated as qualified tax-exempt obligations under Section 265(b)(3) of the Internal Revenue Code of 1986, as amended. The Bonds are offered when, as, and if issued, and accepted by the Underwriter, subject to prior sale, withdrawal or modification of the offer without notice, and to the approval of legality by Louis F. Cainkar, Ltd, Burbank, Illinois, Bond Counsel. Certain legal matters will be passed on for the City by Odelson & Sterk, Ltd., Evergreen Park, Illinois. Certain legal matters will be passed on for the Underwriter by Wildman, Harrold, Allen & Dixon LLP, Chicago, Illinois. It is anticipated that the Bonds will be available for delivery to DTC on or about May 12, MESIROW FINANCIAL, INC. Dated May 6, 2009

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3 REGARDING USE OF THIS OFFICIAL STATEMENT The Underwriter has provided the following sentence for inclusion in the Official Statement. The Underwriter has reviewed the information in this Official Statement in accordance with, and as part of, their respective responsibilities to investors under the federal securities laws as applied to the facts and circumstances of this transaction, but the Underwriter does not guarantee the accuracy or completeness of such information. This Official Statement is being used in connection with the sale of the Bonds and may not be reproduced or used, in whole or in part, for any other purpose. Certain information contained in this Official Statement has been obtained by the City from DTC and other sources that are deemed to be reliable; however, no representation or warranty is made as to the accuracy or completeness of such information by the City or the Underwriter. Assured Guaranty makes no representation regarding the Bonds or the advisability of investing in the Bonds. In addition, Assured Guaranty has not independently verified, makes no representation regarding, and does not accept any responsibility for the accuracy or completeness of this Official Statement or any information or disclosure contained herein, or omitted herefrom, other than with respect to the accuracy of the information regarding Assured Guaranty supplied by Assured Guaranty and presented under the heading Appendix C BOND INSURANCE AND SPECIMEN FINANCIAL GUARANTY INSURANCE POLICY. The delivery of this Official Statement at any time does not imply that information herein is correct as of any time subsequent to its date. This Official Statement should be considered in its entirety and no one factor considered more or less important than any other by reason of its position in this Official Statement. Where statutes, reports or other documents are referred to herein, reference should be made to such statutes, reports or other documents in their entirety for more complete information regarding the rights and obligations of parties thereto, facts and opinions contained therein and the subject matter thereof. Any statements made in this Official Statement, including the Appendices, involving matters of opinion or 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 such estimates will be realized. This Official Statement contains certain forward-looking statements and information that are based on the beliefs of the City as well as assumptions made by and currently available to the City. Such statements are subject to certain risks, uncertainties and assumptions. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, estimated or expected. No dealer, broker, sales representative or any other person has been authorized by the City to give any information or to make any representation other than those contained in this Official Statement in connection with the offering it describes and, if given or made, such other information or representation must not be relied upon as having been authorized by the City. This Official Statement does not constitute an offer to sell or the solicitation of an offer to buy any securities other than those described on the cover page and inside cover page hereof, nor shall there be any offer to sell, solicitation of an offer to buy or sale of, the Bonds in any jurisdiction in which it is unlawful to make such offer, solicitation or sale. The information and opinions expressed herein are subject to change without notice and neither the delivery of this Official Statement nor any sale made hereunder shall under any circumstances create any implication that there has been no change in the affairs of the City since the date of this Official Statement. Neither this Official Statement nor any statement that may have been made verbally or in writing is to be construed as a contract with the registered or beneficial owners of the Bonds. In making an investment decision, investors must rely on their own examination of the City and the terms of this offering, including the merits and the risks involved. These securities have not been recommended by any federal or state securities commission or regulatory authority. Furthermore, the foregoing authorities have not confirmed the accuracy or determined the adequacy of this document. Any representation to the contrary is a criminal offense. CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS THAT MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE BONDS. SPECIFICALLY, THE UNDERWRITER MAY OVERALLOT IN CONNECTION WITH THE OFFERING, AND MAY BID FOR, AND PURCHASE, THE BONDS IN THE OPEN MARKET. THE PRICES AND OTHER TERMS RESPECTING THE OFFERING AND SALE OF THE BONDS MAY BE CHANGED FROM TIME TO TIME BY THE UNDERWRITER AFTER THE BONDS ARE RELEASED FOR SALE, AND THE BONDS MAY BE OFFERED AND SOLD AT PRICES OTHER THAN THE INITIAL OFFERING PRICES, INCLUDING SALES TO DEALERS WHO MAY SELL THE BONDS INTO INVESTMENT ACCOUNTS. This Official Statement has been prepared under the authority of the Mayor and City Council of the City of Calumet City, Cook County, Illinois. Additional copies may be obtained from the Underwriter. i

4 BOND ISSUE SUMMARY This Bond Issue Summary is expressly qualified by the entire Official Statement, which should be reviewed in its entirety by potential investors. Issuer: City of Calumet City, Cook County, Illinois. Issue: $12,770,000 General Obligation Corporate Purpose Bonds, Series 2009A. Dated Date: Date of delivery. Interest Due: Each May 15 and November 15, commencing November 15, Principal Due: Purpose and Security: Redemption: Rating / Insurance: Paying Agent and Bond Registrar: Escrow Agent: Tax Exemption: Bank Qualification: Underwriter: Due May 15, in the years shown on the cover page hereof. Proceeds of the Bonds will be used to provide funds to: (i) refund the City s outstanding General Obligation Corporate Purpose Bonds, Series 1999B maturing May 15, ; (ii) refund all outstanding maturities of the City s General Obligation Refunding Bonds, Series 2002A-2; (iii) refund all outstanding maturities of the City s General Obligation Covenant Bonds, Series 2007A; (iv) provide funds for capital projects; and (v) pay for certain costs of issuance associated with the Bonds. In the opinion of Bond Counsel, the Bonds are valid and legally binding general obligations of the City and will be secured by the full faith and credit of the City payable, as to both principal and interest, from ad valorem taxes to be levied on all taxable property within the City without limitation as to rate or amount. Bonds maturing on or after May 15, 2019, are subject to optional redemption prior to maturity, in whole or in part, on any date on or after November 15, 2018 (see THE BONDS Redemption herein). Moody s Investors Service and Standard & Poor s are expected to assign ratings of Aa2 and AAA, respectively, to the Bonds with the understanding that a policy guaranteeing the payment of the principal of and interest on the Bonds will be issued concurrently with the delivery of the Bonds by Assured Guaranty Corp. Additionally, the Bonds carry underlying ratings of A3 and A from Moody s Investors Service and Standard & Poor s, respectively. The City Treasurer, Calumet City, Illinois. Amalgamated Bank of Chicago, Chicago, Illinoi. Louis F. Cainkar, Ltd, Burbank, Illinois, will provide an opinion as to the tax-exempt status of the interest on the Bonds for federal income tax purposes, as discussed under TAX EXEMPTION herein. Interest on the Bonds is not exempt from present State of Illinois income taxes. A form of Bond Counsel opinion is included herein as APPENDIX D. The Bonds are to be designated as qualified tax-exempt obligations under Section 265(b)(3) of the Internal Revenue Code of 1986, as amended. Mesirow Financial, Inc., Chicago, Illinois. ii

5 CITY OF CALUMET CITY Cook County, Illinois 204 Pulaski Road Calumet City, Illinois (708) CITY COUNCIL Michelle Markiewicz Qualkinbush, Mayor Antoine Collins Roger Munda Edward Gonzalez Nick Manousopoulos Brian Wilson Thaddeus M. Jones Magdalena Wosczynski Gerald A. Tarka, Treasurer Odelson & Sterk, Ltd. Local Counsel Evergreen Park, Illinois Louis F. Cainkar, Ltd. Bond Counsel Burbank, Illinois Mesirow Financial, Inc. Underwriter Chicago, Illinois iii

6 TABLE OF CONTENTS Page INTRODUCTION... 1 THE BONDS... 1 General Description... 1 Purpose, Authority and Security... 1 Plan of Finance... 2 Redemption... 3 Registration, Transfer and Exchange... 3 BOOK-ENTRY ONLY SYSTEM... 4 TAX EXEMPTION... 6 QUALIFIED TAX-EXEMPT OBLIGATIONS... 8 CONTINUING DISCLOSURE... 8 THE UNDERTAKING... 8 BOND RATINGS UNDERWRITING CERTAIN LEGAL MATTERS LITIGATION CERTIFICATION APPENDIX A THE CITY... A - 1 General Information... A - 1 Accessibility... A - 1 Government... A - 1 Municipal and Community Services... A - 1 SOCIOECONOMIC CHARACTERISTICS... A - 2 Population... A - 2 Median Family Income... A - 2 Median Value of Specified Owner-Occupied Homes... A - 2 Building Permits... A - 3 Commerce and Employment... A - 3 Major Area Employers... A - 3 Average Annual Unemployment Rates... A - 4 Economics... A - 4 Retail Sales... A - 4 Sales Tax Receipts... A - 4 Commercial Activity and Economic Development... A - 5 Current Economic Development Programs... A - 5 REAL PROPERTY TAX ASSESSMENT, TAX LEVY AND COLLECTION PROCEDURES... A - 6 Real Property Assessment... A - 6 Equalization... A - 8 Exemptions... A - 8 Tax Levy... A - 10 Property Tax Extension Limitation Law... A - 10 Extensions... A - 10 Collections... A - 10 Truth in Taxation Law... A - 12 CITY TAX AND ASSESSMENT INFORMATION... A - 12 Equalized Assessed Valuation... A - 12 Tax Extensions and Collections... A - 12 Tax Rates Per $100 of Equalized Assessed Valuation... A - 13 Large Taxpayers... A - 13 DEBT INFORMATION... A - 14 Statement of Direct General Obligation Bonded Debt... A - 14 Debt Statement... A - 14 Direct General Obligation Bonded Debt Retirement Schedule Principal Only... A - 15 Detailed Overlapping Bonded Indebtedness... A - 15 PENSION PLANS... A - 16 FINANCIAL INFORMATION... A - 16 Summary of Financial Results... A - 16 APPENDIX B City of Calumet City Financial Statements Fiscal Year Ended April 30, B - 1 APPENDIX C Bond Insurance and Specimen Financial Guaranty Insurance Policy... C - 1 APPENDIX D Form of Bond Counsel Opinion... D - 1 iv

7 $12,770,000 CITY OF CALUMET CITY Cook County, Illinois General Obligation Corporate Purpose Bonds, Series 2009A INTRODUCTION The purpose of this Official Statement, including the cover page and the Appendices, is to set forth certain information in conjunction with the sale by City of Calumet City, Cook County, Illinois (the City ), of $12,770,000 aggregate principal amount of its General Obligation Corporate Purpose Bonds, Series 2009A (the Bonds ). Factors that may affect an investment decision concerning the Bonds are described throughout this Official Statement. Persons considering a purchase of any of the Bonds should read the Official Statement in its entirety. General Description THE BONDS The Bonds, when issued, will be issued only as fully registered Bonds without coupons and, when issued, will be registered in the name of Cede & Co., as nominee of The Depository Trust Company ( DTC ), New York, New York. DTC will act as securities depository for the Bonds. Individual purchases will be made in book-entry form only. The Bonds are issuable in denominations of any integral multiple of $5,000 in principal amount. Purchasers will not receive physical delivery of Bonds. (See BOOK-ENTRY ONLY SYSTEM herein.) Principal and interest are payable by the City Treasurer, Calumet City, Illinois, the Paying Agent, to DTC, which will remit such principal and interest to DTC s Participants for payment to the Beneficial Owners of the Bonds, as described herein. Interest on the Bonds will be payable semiannually on each May 15 and November 15, commencing November 15, Interest on the Bonds shall be payable on each interest payment date to the registered owners of record appearing on the registration books maintained by the Bond Registrar (including its successors) on behalf of the City for such purpose, at the principal corporate trust office of the Bond Registrar as of the close of business on the first (1st) day (whether or not a business day) of the calendar month next preceding the applicable interest payment date. Interest on the Bonds shall be paid by check or draft mailed by the Paying Agent to such registered owners at their addresses appearing on the registration books. Principal will be payable on May 15, in the years and amounts as detailed on the cover page hereof. Purpose, Authority and Security Proceeds of the Bonds will be used to provide funds to: (i) refund the City s outstanding General Obligation Corporate Purpose Bonds, Series 1999B maturing May 15, ; (ii) refund all outstanding maturities of the City s General Obligation Refunding Bonds, Series 2002A-2; (iii) refund all outstanding maturities of the City s General Obligation Covenant Bonds, Series 2007A; (iv) provide funds for capital projects; and (v) pay for certain costs of issuance associated with the Bonds. The City is a home rule unit of government under the provisions of Section 6(a) of Article VII of the 1970 Illinois Constitution. The Bonds are authorized pursuant to the City s home rule powers and through an Ordinance adopted by the City Council on April 23, 2009 (the Bond Ordinance ). 1

8 The Bonds will be valid and legally binding general obligations of the City and will be secured by the full faith and credit of the City payable, as to both principal and interest, from ad valorem taxes to be levied on all taxable property within the City without limitation as to rate or amount. The Refunding Proceeds of the bonds will be used to refund the Refunded Bonds, further described as follows: Maturity Remaining Outstanding Amount Amount Refunded Redemption Date Redemption Price Series 1999B... 5/15/2012 $ 900,000 $ % 5/15/2013 1,290, % 5/15/ , % 5/15/ , % 5/15/2016 1,270, % 5/15/2017 1,175, % 5/15/2018 1,205,000 1,205,000 6/11/ % 5/15/ , ,000 6/11/ % 5/15/ , ,000 6/11/ % 5/15/ , ,000 6/11/ % $ 9,930,000 $ 3,640,000 Series 2002A /15/2009 $ 2,615,000 $ 2,615,000 5/15/2009 * 100% Series 2007A... 6/29/2009 $ 765,000 $ 765,000 5/12/ % 6/29/ , ,000 5/12/ % 6/29/ , ,000 5/12/ % 6/29/ , ,000 5/12/ % $ 3,267,000 $ 3,267,000 * Final maturity date. Certain proceeds received from the sale of the Bonds will be deposited in an Escrow Account (the Escrow Account ) to be held by Amalgamated Bank of Chicago, Chicago, Illinois (the Escrow Agent ) under the terms of an Escrow Agreement, dated as of the date of delivery of the Bonds (the Escrow Agreement ), between the City and the Escrow Agent. The moneys so deposited in the Escrow Account will be applied by the Escrow Agent to purchase direct non-callable obligations of, or obligations guaranteed by the full faith and credit of, the United States of America (the Investment Securities ) and to provide an initial cash deposit. The Investment Securities together with interest earnings thereon and the beginning cash deposit will be sufficient to pay when due the principal of and interest on the Refunded Series 1999B Bonds up to and including the redemption or maturity dates thereof. The Series 2002A-2 Bonds and Series 2007A Bonds will be cash defeased and paid off on May 12, Plan of Finance In connection with the issuance of the Bonds, the City anticipates proceeds of the Bonds are expected to be applied as follows: Sources of Funds: Par Value of Bonds... $ 12,770, Total Sources of Funds... $ 12,770, Uses of Funds: Original Issue Discount... $ 153, Deposit to Project Construction Fund... 2,463, Deposit to Current Refunding Fund... 6,421, Payoff of Series 2007 Debt Service... 3,338, Costs of Issuance (Including Underwriter s Discount, Insurance Premium and Contingencies) , Total Uses of Funds... $ 12,770,

9 Redemption Bonds maturing on and after May 15, 2019 are subject to optional redemption prior to maturity at the option of the City in whole or in part on any date on and after November 15, 2018, and if in part, in integral multiples of $5,000 in any order of maturity in the principal amounts and from such maturities as determined by the City (but in inverse order if there is no determination), less than all Bonds of a maturity to be selected by the Bond Registrar, on the applicable redemption dates, at a price of par plus accrued interest, to the redemption date. Redemption Procedure and Notice of Redemption. The City shall, at least 45 days prior to a redemption date (unless a shorter time period shall be satisfactory to the Bond Registrar), notify the Bond Registrar of the designated Bonds, such redemption date and of the maturities and principal amounts of Bonds to be redeemed. For purposes of any redemption of less than all of the Bonds of a single maturity, the particular Bonds or portions of Bonds to be redeemed shall be selected by lot not more than 60 days prior to the redemption date by the Bond Registrar for the Bonds of such maturity or maturities by such method of lottery as the Bond Registrar shall deem fair and appropriate; provided, that such lottery shall provide for the selection for redemption of Bonds or portions thereof so that any $5,000 portion of principal amount of a Bond shall be as likely to be called for redemption as any other such $5,000 portion. Unless waived by the registered owner of Bonds to be redeemed, official notice of any such redemption shall be given by the Bond Registrar on behalf of the City by mailing the redemption notice by first class mail not less than 30 days and not more than 60 days prior to the date fixed for redemption to each registered owner of the Bond or Bonds to be redeemed at the address shown on the Bond Register or at such other address as is furnished in writing by such registered owner to the Bond Registrar. Official notice of redemption having been given, the Bonds or portions of Bonds so to be redeemed shall, on the redemption date, become due and payable at the redemption price therein specified, and from and after such date (unless the City shall default in the payment of the redemption price), such Bonds or portions of Bonds shall cease to bear interest. Neither the failure to mail such redemption notice, nor any defect in any notice so mailed, to any particular registered owner of a Bond, shall affect the sufficiency of such notice with respect to other registered owners to whom proper notice shall have been given. Notice having been properly given, failure of a registered owner of a Bond to receive such notice shall not be deemed to invalidate, limit or delay the effect of the notice or redemption action described in the notice. Such notice may be waived in writing by a registered owner of a Bond entitled to receive such notice either before or after the event, and such waiver shall be the equivalent of such notice. Waivers of notice by registered owners shall be filed with the Bond Registrar, but such filing shall not be a condition precedent to the validity of any action taken in reliance upon such waiver. Upon surrender of such Bonds for redemption in accordance with said notice, such Bonds shall be paid by the Bond Registrar at the redemption price. The procedure for the payment of interest due as part of the redemption price shall be as herein provided for payment of interest otherwise due. Upon surrender for any partial redemption of any Bond, there shall be prepared for the registered owner a new Bond or Bonds of like tenor, of authorized denominations, of the same maturity, and bearing the same rate of interest in the amount of the unpaid principal amount. Such additional notice and information as may be agreed upon with the Depository shall also be given so long as the Bonds are held by the Depository. Registration, Transfer & Exchange The Bonds will be issued in registered book-entry form. Transfers of ownership interests in the Bonds will be accomplished by book entries made by the securities depository for the Bonds. The Depository Trust Company ( DTC ), New York, New York, will act as the securities depository for the Bonds. For more detailed and complete information, see BOOK-ENTRY ONLY SYSTEM herein. 3

10 BOOK-ENTRY ONLY SYSTEM DTC will act as securities depository for the Bonds. The Bonds will be issued as fully registered bonds registered in the name of Cede & Co. (DTC s partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully registered Bond certificate will be issued for the Bonds in the aggregate principal amount of such issue and will be deposited with DTC. DTC, the world s largest depository, is a limited-purpose trust company organized under the New York Banking Law, a banking organization within the meaning of the New York Banking Law, a member of the Federal Reserve System, a clearing corporation within the meaning of the New York Uniform Commercial Code, and a clearing agency registered pursuant to the provisions of Section 17A of the Securities Exchange Act of DTC holds and provides asset servicing for over 2.2 million issues of U.S. and non-u.s. equity issues, corporate and municipal debt issues, and money market instruments from over 100 countries that DTC s participants ( Direct Participants ) deposit with DTC. DTC also facilitates the posttrade 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 bond certificates. Direct Participants include both U.S. and non-u.s. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation ( DTCC ). DTCC, in turn, is owned by a number of its Direct Participants of DTC and Members of the National Securities Clearing Corporation, Fixed Income Clearing Corporation, and Emerging Markets Clearing Corporation, (NSCG, FICC, and EMCC, also subsidiaries of DTCC), as well as by the New York Stock Exchange, Inc., the American Stock Exchange L.L.C., and the National Association of Securities Dealers, Inc. Access to the DTC system is also available to others such as both U.S. and non-u.s. securities brokers and dealers, banks, trust companies and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly ( Indirect Participants ). DTC has Standard & Poor s highest rating: AAA. The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at and Purchase of the 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, but 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 4

11 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 Bond 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 an issue are being redeemed, DTC s practice is to determine by lot the amount of the interest of each Direct Participant in such issue to be redeemed. Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to the Bonds unless authorized by a Direct Participant in accordance with DTC s 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). Redemption proceeds, distributions, and dividend 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 the payable date in accordance with their respective holdings shown on DTC s records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in street name, and will be the responsibility of such Participant and not of DTC, the Paying Agent, or the City, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of redemption proceeds, distributions, and dividend payments to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC), is the responsibility of the City or Bond Registrar/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 securities depository with respect to the Bonds at any time by giving reasonable notice to the City or the Bond Registrar/Paying Agent. Under such circumstances, in the event that a successor securities 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 transfers through DTC (or a successor securities depository). In that event, Bond certificates will be printed and delivered to DTC. The information in this section concerning DTC and DTC s book-entry system has been obtained from sources that the City believes to be reliable, but the City takes no responsibility for the accuracy thereof. Use of Certain Terms in Other Sections of this Official Statement In reading this Official Statement it should be understood that, while the Bonds are in the Book-Entry Only System, references in other sections of this Official Statement to registered owners should be read to include the person for which the Participant acquires an interest in the Bonds; however, all rights of ownership must be exercised through DTC and the book-entry system. 5

12 TAX EXEMPTION Federal tax law contains a number of requirements and restrictions which apply to the Bonds, including investment restrictions, periodic payments of arbitrage profits to the United States, requirements regarding the proper use of bond proceeds and the facilities financed therewith, and certain other matters. The City has covenanted to comply with all requirements that must be satisfied in order for interest on the Bonds to be excludable from gross income for federal income tax purposes. Failure to comply with certain of such covenants could cause interest on the Bonds to become includable in gross income for federal income tax purposes retroactively to the date of issuance of the Bonds. Subject to the City s compliance with the above-referenced covenants, under present law, in the opinion of Bond Counsel, interest on the Bonds is excludable from the gross income of the owners thereof for federal income tax purposes, and is not included as an item of tax preference in computing the federal alternative minimum tax for individuals and corporations. Interest on the Bonds is taken into account, however, in computing an adjustment used in determining the federal alternative minimum tax for certain corporations. The Internal Revenue Code of 1986, as amended (the Code ), includes provisions for an alternative minimum tax ( AMT ) for corporations in addition to the corporate regular tax in certain cases. The AMT, if any, depends upon the corporation s alternative minimum taxable income ( AMTI ), which is the corporation s taxable income with certain adjustments. One of the adjustment items used in computing the AMTI of a corporation (with certain exceptions) is an amount equal to 75% of the excess of such corporation s adjusted current earnings over an amount equal to its AMTI (before such adjustment item and the alternative tax net operating loss deduction). Adjusted current earnings would include all tax-exempt interest, including interest on the Bonds. In rendering its opinion, Bond Counsel will rely upon certifications of the City with respect to certain material facts within the City s knowledge. Bond Counsel s opinion represents its legal judgment based upon its review of the law and the facts that it deems relevant to render such opinion and is not a guarantee of a result. Ownership of the Bonds may result in collateral federal income tax consequences to certain taxpayers, including, without limitation, corporations subject to the branch profits tax, financial institutions, certain insurance companies, certain S 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 tax-exempt obligations. Prospective purchasers of the Bonds should consult their tax advisors as to applicability of any such collateral consequences. The issue price (the Issue Price ) for the Bonds is the price at which a substantial amount of the Bonds is first sold to the public. The Issue Price of the Bonds may be different from the price set forth, or the price corresponding to the yield set forth, on the cover page hereof. If the Issue Price of the Bonds is less than the principal amount payable at maturity, the difference between the Issue Price, if any, of the Bonds (the OID Bonds ) and the principal amount payable at maturity is original issue discount. For an investor who purchases an OID Bond in the initial public offering at the Issue Price and who holds such OID Bond to its stated maturity, subject to the condition that the City complies with the covenants discussed above, (a) the full amount of original issue discount with respect to such OID Bond constitutes interest which is excludable from the gross income of the owner thereof for federal income tax purposes; (b) such owner will not realize taxable capital gain or market discount upon payment of such OID Bond at its stated maturity; (c) such original issue discount is not included as an item of tax preference in computing the alternative minimum tax for individuals and corporations under the Code, but is taken into account in computing an adjustment used in determining the alternative minimum tax for certain corporations under the Code, as described above; and (d) the accretion of original issue discount in each year may result in an alternative minimum tax liability for corporations or certain other collateral federal income tax consequences in each year even though a corresponding cash payment may not be received until a later year. Based upon the stated position of the Illinois 6

13 Department of Revenue under Illinois income tax law, accreted original issue discount on such OID Bonds is subject to taxation as it accretes, even though there may not be a corresponding cash payment until a later year. Owners of OID Bonds should consult their own tax advisors with respect to the state and local tax consequences of original issue discount on such OID Bonds. Owners of Bonds who dispose of Bonds prior to the stated maturity (whether by sale, redemption or otherwise), purchase Bonds in the initial public offering, but at a price different from the Issue Price or purchase Bonds subsequent to the initial public offering should consult their own tax advisors. If a Bond is purchased at any time for a price that is less than the Bond s stated redemption price at maturity (the Revised Issue Price ), the purchaser will be treated as having purchased a Bond with market discount subject to the market discount rules of the Code (unless a statutory de minimis rule applies). Accrued market discount is treated as taxable ordinary income and is recognized when a Bond is disposed of (to the extent such accrued discount does not exceed gain realized) or, at the purchaser s election, as it accrues. Such treatment would apply to any purchaser who purchases an OID Bond for a price that is less than its Revised Issue Price. The applicability of the market discount rules may adversely affect the liquidity or secondary market price of such Bond. Purchasers should consult their own tax advisors regarding the potential implications of market discount with respect to the Bonds. An investor may purchase a Bond at a price in excess of its stated principal amount. Such excess is characterized for federal income tax purposes as bond premium and must be amortized by an investor on a constant yield basis over the remaining term of the Bond in a manner that takes into account potential call dates and call prices. An investor cannot deduct amortized bond premium relating to a tax-exempt bond. The amortized bond premium is treated as a reduction in the tax-exempt interest received. As bond premium is amortized, it reduces the investor s basis in the Bond. Investors who purchase a Bond at a premium should consult their own tax advisors regarding the amortization of bond premium and its effect on the Bond s basis for purposes of computing gain or loss in connection with the sale, exchange, redemption or early retirement of the Bond. There are or may be pending in the Congress of the United States legislative proposals, including some that carry retroactive effective dates, that, if enacted, could alter or amend the federal 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 the enactment. Prospective purchasers of the Bonds should consult their own tax advisors regarding any pending or proposed federal tax legislation. Bond Counsel expresses no opinion regarding any pending or proposed federal tax legislation. The Internal Revenue Service (the Service ) has an ongoing program of auditing tax-exempt obligations to determine whether, in the view of the Service, interest on such tax-exempt obligations is includible in the gross income of the owners thereof for federal income tax purposes. It cannot be predicted whether or not the Service will commence an audit of the Bonds. If an audit is commenced, under current procedures the Service will treat the City as the taxpayer and the Bondholders may have no right to participate in such procedure. The commencement of an audit could adversely affect the market value and liquidity of the Bonds until the audit is concluded, regardless of the ultimate outcome. Payments of interest on, and proceeds of the sale, redemption or maturity of, tax-exempt obligations, including the Bonds, are in certain cases required to be reported to the Service. Additionally, backup withholding may apply to any such payments to any Bond owner who fails to provide an accurate Form W-9 Request for Taxpayer Identification Number and Certification, or a substantially identical form, or to any Bond owner who is notified by the Service of a failure to report any interest or dividends required to be shown on federal income tax returns. The reporting and backup withholding requirements do not affect the excludability of such interest from gross income for federal tax purposes. 7

14 Interest on the Bonds is not exempt from income taxes imposed by the State of Illinois. Ownership of the Bonds may result in other state and local tax consequences to certain taxpayers. Bond Counsel expresses no opinion regarding any such collateral consequences arising with respect to the Bonds. Prospective purchasers of the Bonds should consult their tax advisors regarding the applicability of any such state and local taxes. QUALIFIED TAX-EXEMPT OBLIGATIONS Subject to the City s compliance with certain covenants, in the opinion of Bond Counsel, the Bonds are to be designated qualified tax-exempt obligations under the small issuer exception provided under Section 265(b)(3) of the Code, which affords banks and certain other financial institutions more favorable treatment of their deduction for interest expense than would otherwise be allowed under Section 265(b)(2) of the Code. CONTINUING DISCLOSURE The City will enter into a Continuing Disclosure Certificate and Agreement (the Undertaking ) for the benefit of the registered owners and beneficial owners of the Bonds to send certain information annually and to provide notice of certain events to certain information repositories pursuant to the requirements of Section (b)(5) of Rule 15c2-12 (the Rule ) adopted by the Securities and Exchange Commission (the SEC ) under the Securities Exchange Act of The information to be provided on an annual basis, the events which will be noticed on an occurrence basis and a summary of other terms of the Undertaking, including termination, amendment and remedies, are set forth below under THE UNDERTAKING. A failure by the City to comply with the Undertaking will not constitute a default under the Bond Ordinance, and beneficial owners of the Bonds are limited to the remedies described in the Undertaking. See THE UNDERTAKING -- Consequences of Failure of the City to Provide Information. A failure by the City to comply with the Undertaking 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. Bond Counsel expresses no opinion as to whether the Undertaking complies with the requirements of Section (b)(5) of the Rule. THE UNDERTAKING The following is a brief summary of certain provisions of the Undertaking of the City and does not purport to be complete. The statements made under this caption are subject to the detailed provisions of the Undertaking, a copy of which is available upon request from the City. Annual Financial Information Disclosure The City covenants that it will disseminate its Annual Financial Information and its Audited Financial Statements, if any (as described below) to each Nationally Recognized Municipal Securities Information Repository ( NRMSIR ) then recognized by the SEC for purposes of the Rule (or in lieu of NRMSIRs, any SEC recognized Central Post Office or similar facility) and to any public or private repository designated by the State of Illinois as the state information depository (the SID ) and recognized as such by the SEC for purposes of the Rule. Presently, Illinois has no SID. The City is required to deliver Annual Financial Information and Audited Financial Statements so that such entities receive the information by the dates specified in the Undertaking. Annual Financial Information means financial information and operating data (exclusive of Audited Financial Statements), including (i) information of the type contained in 8

15 Appendix A to this Official Statement under the subheadings Equalized Assessed Valuation, Tax Extensions and Collections and Tax Rates Per $100 of Equalized Assessed Valuation under the heading CITY TAX AND ASSESSMENT INFORMATION ; and (ii) information relating to the direct debt of the City contained in Appendix A to this Official Statement under the heading DEBT INFORMATION Statement of Direct General Obligation Bonded Debt. Audited Financial Statements means the general purpose financial statements of the City prepared in accordance with generally accepted auditing standards and Government Auditing Standards, issued by the Comptroller General of the United States. On and after July 1, 2009, the sole NRMSIR is to be the Municipal Securities Rulemaking Board acting through the Electronic Municipal Market Access ( EMMA ) system. See Prior Continuing Disclosure Undertakings The City entered into continuing disclosure undertaking agreements similar to the Undertaking in connection with outstanding Series 1999, 1999B, 2000, 2002A-2, 2004A, 2004B, 2005, 2006, 2007 and 2008A General Obligation Bonds (the Prior Undertakings ). Pursuant to the Prior Undertakings, the City agreed to disseminate, among other things, its Annual Financial Information (including financial information and operating data of the City, as more fully described herein) to NRMSIRs recognized by the Securities and Exchange Commission and to any public or private repositories designated by the State as SIDs within 210 days of the last day of the City s fiscal year. Additionally, pursuant to the Prior Undertakings, the City covenanted to disseminate its audited financial statements to the NRMSIRs and SIDs at the same time as the Annual Financial Information. In 2007 and 2008, the City filed Annual Financial Information (incorporated by reference in the Official Statements for the 2007 and 2008 bond issues), but has not filed any annual audited financial statements with the NRMSIRs (or SIDs) since filing its annual financial report for the fiscal year ending April 30, The City s failure to comply under the Prior Undertakings does not constitute a default under the respective bond ordinances for such bonds. The City will bring its required filings current by filing and incorporating by reference the Final Official Statement for its General Obligation Corporate Purpose Bonds, Series 2009A with the NRMSIRs and SIDs as it includes substantially all of the information that is currently available and referenced by the Prior Undertakings. In addition, the City also filed its audited financial statements for the fiscal year ended April 30, 2007, and will file the 2008 report as soon as it is available. Material Events Disclosure The City covenants that it will disseminate to each NRMSIR or to the Municipal Securities Rulemaking Board (the MSRB ) and to the SID, if any, in a timely manner the disclosure of the occurrence of an Event (as described below) with respect to the Bonds that is material, as materiality is interpreted under the Securities Exchange Act of 1934, as amended. The Events, certain of which may not be applicable to the Bonds are: 1) Principal and interest payment delinquencies; 2) Non-payment related defaults; 3) Unscheduled draws on debt service reserves reflecting financial difficulties; 4) Unscheduled draws on credit enhancements reflecting financial difficulties; 5) Substitution of credit or liquidity providers, or their failure to perform; 6) Adverse tax opinions or events affecting the tax-exempt status of the security; 7) Modifications to the rights of security holders; 8) Bond calls; 9) Defeasances; 10) Release, substitution or sale of property securing repayment of the securities; and 11) Rating changes. 9

16 Consequences of Failure of the City to Provide Information The City shall give notice in a timely manner to each NRMSIR or to the MSRB and to the SID, if any, of any failure to provide disclosure of Annual Financial Information and Audited Financial Statements when the same are due under the Undertaking. In the event of a failure of the City to comply with any provision of the Undertaking, the registered owner and beneficial owner of any Bond may seek mandamus or specific performance by court order, to cause the City to comply with its obligations under the Undertaking. A default under the Undertaking shall not be deemed a default under either Bond Ordinance, and the sole remedy under the Undertaking in the event of any failure of the City to comply with the Undertaking shall be an action to compel performance. Any filing under the Undertaking may be made solely by transmitting such filing to the Texas Municipal Advisory Counsel (the MAC ) as provided at unless the United States Securities and Exchange Commission has withdrawn the interpretive advice in its letter to the MAC dated September 7, Amendment; Waiver Notwithstanding any other provision of the Undertaking, the City by ordinance or resolution authorizing such amendment or waiver, may amend the Undertaking, and any provision of the Undertaking may be waived, if: (a) The amendment or the waiver 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 Undertaking, as amended, or the provision, as waived, would have complied with the requirements of the Rule at the time of the primary offering, after taking into account any amendments or interpretations of the Rule, as well as any change in circumstances; and (c) The amendment or waiver does not materially impair the interests of the registered owners or beneficial owners of the Bonds, as determined by a party unaffiliated with the City (such as Bond Counsel) at the time of the amendment. Termination of Undertaking The Undertaking shall be terminated if the City shall no longer have any legal liability for any obligation on or relating to repayment of the Bonds under the Bond Ordinance. The City shall give notice to each NRMSIR or to the MSRB and to the SID, if any, in a timely manner if this paragraph is applicable. Additional Information Nothing in the Undertaking shall be deemed to prevent the City from disseminating any other information, using the means of dissemination set forth in the Undertaking or any other means of communication, or including any other information in any Annual Financial Information or Audited Financial Statements or notice of occurrence of a material Event, in addition to that which is required by the Undertaking. If the City chooses to include any information from any document or notice of occurrence of a material Event in addition to that which is specifically required by the Undertaking, the City shall have no obligation under the Undertaking to update such information or include it in any future disclosure or notice of occurrence of a material Event. 10

17 Dissemination Agent / Contact The City may, from time to time, appoint or engage a Dissemination Agent to assist it in carrying out its obligations under the Undertaking, and may discharge any such Agent, with or without appointing a successor Dissemination Agent. The initial Dissemination Agent / Contact for the Undertaking shall be: The City Treasurer, City of Calumet City, Illinois. BOND RATINGS Moody s Investors Service and Standard & Poor s are expected to assign municipal bond ratings of Aa2 and AAA, respectively, to the Bonds with the understanding that a policy guaranteeing the payment of the principal of and interest on the Bonds will be issued concurrently with the delivery of the Bonds by Assured Guaranty Corp. For a more complete description of the bond insurance policy, see Appendix C herein. Additionally, the Bonds carry underlying ratings of A3 and A from Moody s Investors Service and Standard & Poor s, respectively. A rating reflects only the view of the rating agency giving such rating. An explanation of the significance of such ratings may be obtained only from the rating agency(ies). Certain information and materials concerning the Bonds, the City and overlapping entities were furnished to the rating agencies by the City and others. There is no assurance that any such rating(s) will be maintained for any given period of time or that any such rating(s) may not be raised, lowered or withdrawn entirely by the rating agency(ies) if, in its judgment, circumstances so warrant. Any change in or withdrawal of any such rating(s) may have an effect on the price at which the Bonds may be sold. Such ratings reflects only the views of the rating agencies, and any desired explanation of the significance of such ratings should be obtained from the respective rating agencies: Moody s Investors Service, 99 Church Street, New York, NY and Standard & Poor s, 55 Water Street, New York, NY UNDERWRITING Mesirow Financial, Inc. (the Underwriter ) has agreed, subject to certain conditions, to purchase the Bonds from the City at a purchase price of $12,425, The purchase price reflects an underwriter s discount of 1.50% of the par amount of the Bonds. The initial public offering prices for the Bonds are set forth on the cover of this Official Statement. The purchase contract provides that the Underwriter will purchase all of the Bonds if any are purchased. The obligations of the City to deliver the Bonds and of the Underwriter to accept delivery of the Bonds are subject to various conditions contained in the purchase contract. The Underwriter may offer and sell Bonds to certain dealers at prices lower than the public offering prices stated on the cover of this Official Statement. CERTAIN LEGAL MATTERS Certain legal matters incident to the authorization, issuance and sale of the Bonds are subject to the approving legal opinion of Louis F. Cainkar, Ltd., Burbank, Illinois, as Bond Counsel (the Bond Counsel ) who has been retained by, and acts as, Bond Counsel to the City. Bond Counsel has reviewed the statements in this Official Statement appearing under the headings THE BONDS and TAX EXEMPTION, and is of the opinion that the statements contained under such headings are accurate statements or summaries of the matters set forth therein insofar as such statements purport to summarize the terms of the Bonds or the Bond Ordinance or the tax-exempt status of the interest on the Bonds. Except for the foregoing, however, Bond Counsel has not independently verified the accuracy or completeness of statements and information contained in this Official Statement and does not assume any responsibility for the accuracy or completeness of such statements and information. 11

18 LITIGATION There is no litigation now pending or threatened affecting the validity of or security for the Bonds or the proceedings of the City taken with respect to the issuance or sale of the Bonds. CERTIFICATION At the time of original delivery of and payment for the Bonds, the City, acting through the Mayor, shall deliver a certificate to the effect that this Official Statement and the other data concerning the City contained herein have been examined and that, to the best of her knowledge and belief, the Official Statement both as of the date of sale and as of the date of delivery of the Bonds, does not contain any untrue statement of a material fact and does not omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. CITY OF CALUMET CITY Cook County, Illinois /s/ MICHELLE MARKIEWICZ QUALKINBUSH Mayor Dated: May 6,

19 APPENDIX A CITY OF CALUMET CITY Cook County, Illinois

20 [INTENTIONALLY LEFT BLANK]

21 THE CITY General Information The City of Calumet City (the City ) was incorporated in 1893 and is a home rule unit of government. The City encompasses an area of approximately 7.4 square miles in southern Cook County, Illinois, and is located approximately 25 miles southeast of downtown Chicago. The City is bordered by the Village of Burnham and the City of Chicago to the north; the Village of Lansing to the south; the Villages of South Holland and Dolton to the west; and the City of Hammond, Indiana to the east. According to the 2000 U.S. Census, the City s population is 39,071. Accessibility The City is easily accessible, via Interstates 80 and 94, U.S. Route 6 and State Route 83. Commuter rail service is provided by Metra, a division of the Regional Transportation Authority, which maintains stations in the City of Harvey and the Village of Homewood, both within 4 miles of the City. The South Shore Line s Hegewisch Station, located just 2 miles away, also serves City residents. Commuter bus service is provided by PACE. O Hare International Airport is approximately 40 miles northwest of the City and Midway Airport is approximately 25 miles northwest. Additionally, the nearby 290-acre Lansing Municipal Airport is classified as a reliever airport for Midway and O Hare Airports by the Chicago Area Transportation System. Government As a home rule unit of government, the City may exercise any powers and perform any functions pertaining to its government and the management of its affairs including, but not limited to, the power to tax and to incur debt without referendum and without limitation as to amount, except that debt payable from ad valorem taxes must mature within 40 years. The City is governed by an elected Mayor and City Council consisting of seven Aldermen. The City also has both an elected Clerk and Treasurer. All elected officials serve concurrent four-year terms. Elections were recently held on April 7, The positions of City Attorney, Finance Director and the various department heads are appointed by the Mayor with the approval of the City Council. Municipal and Community Services The City provides a full range of municipal services, including general municipal government, police and fire protection, paramedic services, sanitation, street and alley maintenance, building inspection and zoning, community and economic development, youth and family services, health center, human relations, civil defense (or Emergency Service Disaster Agency, known as E.S.D.A.), and animal control. The City employs approximately 425 persons (includes full-time and part-time). Of the 137 full-time Police Department staff, 93 are sworn officers. Fire Department staff include approximately 53 full-time firefighters, 50 of whom are also paramedics. Recreation facilities are provided by the Calumet Memorial Park District, a separate municipal governing unit. Several park facilities located throughout the City offer a variety of recreational services. The city s public education needs are met by five Elementary School Districts (Numbers 149, 150, 155, 156, and 157), and two High School Districts (Numbers 205 and 215). The City is also located within South Suburban Community College District No. 510 (approximate enrollment 3,600). Library services are provided by the Calumet City Library (the Library ), which offers approximately 126,000 books, 7,900 audio materials, and over 4,200 video materials. The Library s taxes are levied by the City on behalf of the Library. A-1

22 Residents have access to excellent health care through numerous clinics and health service facilities, including Ingalls Family Care Center with emergency care provided around the clock. Additionally, St. Margaret Mercy Healthcare s North Campus hospital is located just one block from the City limits. SOCIOECONOMIC CHARACTERISTICS The following tables show the population, income and housing trends for the City and surrounding areas, compared to Cook County and the State of Illinois. Population(1) % Change Calumet City... 37,840 39, % Village of Lansing... 28,086 28, % Village of South Holland... 22,105 22, % Cook County... 5,105,067 5,376, % State of Illinois... 11,430,602 12,419, % (1) Source: U.S. Census Bureau. Median Family Income(1) % Change Calumet City... $35,427 $ 45, % Village of Lansing... 42,230 56, % Village of South Holland... 49,200 67, % Cook County... 39,296 53, % State of Illinois... 38,664 55, % (1) Source: U.S. Census Bureau. Median Value of Specified Owner-Occupied Homes(1) % Change Calumet City... $ 64,300 $ 90, % Village of Lansing... 77, , % Village of South Holland... 90, , % Cook County , , % State of Illinois... 80, , % (1) Source: U.S. Census Bureau. A-2

23 Building Permits The following table shows the value of building permits for the City in recent years. According to 2007 U.S. Census estimates, the median value of houses or condos in the City was $163,090. Value of Building Permits(1) Single Family No. of All Other Year Units Value Value Total Value $ 2,640,000 $ 13,862,031 $ 16,502, ,735,000 3,920,502 15,655, (2) 1,891,000 11,558,306 13,449, (3) 2,957,200 19,416,865 22,374, ,740,000 16,920,058 18,660, (4) 2,953,000 17,356,716 20,309, (5) 1,190,000 19,427,858 20,617,858 (1) Source: City of Calumet City. (2) Includes 12 single-family homes totaling $1,165,000 in value, and 12 townhomes totaling $726,000 in value. (3) Includes 20 single-family homes totaling $2,231,200 in value, and 12 townhomes totaling $726,000 in value. (4) Includes 10 single-family homes totaling $1,273,000 in value, and 20 townhomes totaling $1,680,000 in value. (5) Includes 3 single-family homes totaling $350,000 in value, and 10 townhomes totaling $840,000 in value. Commerce and Employment The area in and around the City is home to an extensive economic base that includes both commercial and industrial enterprises. Businesses include small and midsize retail business and manufacturing options as well as large businesses with national reputations. The City actively promotes business growth and development and has three tax increment financing districts with developmental incentives. The following list of major employers located within the City and surrounding areas shows the diversity of job opportunities available for area residents. There are also many employment opportunities in nearby Chicago. Major Area Employers(1) Number of Employer Product/Service Location Employees Carl Buddig & Co... Processed meat and sausage...south Holland Silver Line Building Products Corp.... Vinyl windows and patio doors...lansing NB Coatings... Plastic automotive coatings...lansing Saint-Gobain Containers... Glass containers...dolton Sherwin-Williams... Color pigment and dispersions...south Holland Landauer, Inc.... Radon and radiation monitors...glenwood Land O Frost, Inc... Meat and food packing and processing...lansing Orc Protel, Inc... Telemarketing...Lansing Rupari Food Services, Inc.... Meat processing...south Holland Americall Group, Inc.... Telemarketing services...lansing Hasse Construction Co., Inc.... Industrial general contractors...calumet City CSX Transportation, Inc... Railroad transportation...calumet City (1) Source: 2009 Illinois Services and 2009 Illinois Manufacturers Directories. A-3

24 The following table shows historical unemployment rates for the City compared to those for Cook County and the State of Illinois. Economics Average Annual Unemployment Rates(1) City of Cook State of Year Calumet City County Illinois % 6.0% 5.4% % 7.4% 6.5% % 7.4% 6.7% % 6.7% 6.2% % 6.4% 5.8% % 4.7% 4.6% % 5.1% 5.1% % 6.6% 6.5% (1) Source: Illinois Department of Employment Security. The Illinois Department of Revenue compiles a Standard Industrial Classification Code Report which provides detailed information regarding the types of business collecting the various taxes connected to the retailing of tangible personal property. Retail sales for the City are reported below. Retail Sales(1) Calendar Estimated Year Retail Sales $ 696,598, ,111, ,461, ,613, ,761, ,616, ,792, ,338,348 (1) Source: Illinois Department of Revenue. Sales Tax Receipts shown below represent the City s historical 1% local government share and the City s 1% home rule share of the State of Illinois Sales Tax Receipts as collected and disbursed by the State. Sales Tax Receipts(1) Calendar Municipal Home Rule Year Tax Tax Total $ 6,965,983 $ 2,690,084 $ 9,656, ,321,112 3,672,410 9,993, ,914,610 4,638,669 10,553, ,696,134 4,432,495 10,128, ,507,618 4,214,427 9,722, ,756,160 4,258,422 10,014, ,537,925 4,137,024 9,674, ,023,383 3,747,061 8,770,444 (1) Source: Illinois Department of Revenue. A-4

25 Commercial Activity and Economic Development The City has a tax base consisting of primarily single-family dwellings, multiple-family units and a major commercial and retail base. Two main corridors of industrial base companies exist on the northern City limits along the Grand Calumet River and State Street which has excellent rail access provided by Illinois Central Gulf, CSX, South Shore, Indiana Harbor Belt and Conrail. The most southern City limit is developed with a business park that is occupied by light industry, research, warehousing, office space, assembly, financial institutions and small trade companies. The River Oaks Simon Mall has 1.4 million square feet of retail space and has been recording a 98% occupancy rate with over 130 stores including anchors such as Sears, Macy s, Carson Pirie Scott, J.C. Penney, and Westwood College. In spring of 1995, the open air mall underwent a $65 million renovation project to enclose the mall and expand tenant space. Simon Mall and the City have been very aggressive in retaining and recruiting businesses. The mall is now entertaining proposals for out lots along the City s major retail/commercial Torrence Avenue Corridor. Adjacent to River Oaks Simon Mall is River Oaks West which includes financial institutions, professional buildings, a main branch post office, residential, retail, several new car dealers and restaurants. Main anchors include Target, Old Navy, Bed Bath and Beyond, Petco, Famous Footwear, Michael s, and Applebee s. The mall most recently became home to a $23 million, 134,000 square-foot Sam s Club which opened in Given its substantial amount of commercial and retail businesses, the City routinely experiences business turnover due to general economic and business trends. As such, it has a commitment to and excellent track record of returning closed store locations to business. For example, a former large Kmart store in River Oaks West was converted and expanded into Old Navy, Michaels, Bed Bath and Beyond, Famous Footwear and Petco to strengthen and diversify the retail base. A vacated Best Buy store location became Big Lots. A Frank s Nursery and Crafts location closed due to bankruptcy and was promptly converted to Chase Bank, Bargain Furniture, Wings it is and Jim s Original Maxwell Street locations. A former Bennigan s location is being remodeled and will re-open as Buffalo Wild Wings in September There are also ongoing negotiations to re-open former Wickes Furniture and Circuit City locations in the near future. These efforts reflect the City s ongoing commitment to maintaining a vibrant economic base. The City s main thoroughfares have very good daily traffic counts ranging from 25 thousand to well over 40 thousand which has led to a continuing growth away from the mall that includes national chains to specialty and mom-and-pop stores. Away from the River Oaks malls, another major commercial/retail corridor is Sibley Boulevard. In this corridor, a former Dominick s Grocery store will open in May of 2009 as a 70,000 square foot Pete s Fresh Market. With the out-lot development of the Pete s location, investment in that location will exceed $14 million. Additionally, a closed Good Year Tire has been redeveloped into a 5,000 square foot retail shopping plaza that is fully occupied. Further, a former Blockbuster Entertainment store was refurbished and expanded into a $5 and Up Store. Numerous other project sites throughout the community are under construction and pre-construction planning again reflecting the City s commitment to renewing and revitalizing itself. Current Economic Development Programs The City is characterized by a predominantly commercial/industrial tax base. The breakdown of the City s 2007 equalized assessed valuation by classification is as follows: commercial 39.43%; industrial (including railroad) 9.06%; and residential 51.51%. In order to stabilize and expand its industrial tax base and sources of revenue, the City has attempted to retain and attract industrial development and retain its commercial/retail tax base. Tools which have assisted its efforts are the use of its Enterprise Zone and partnering with State and County government programs to assist communities within their jurisdiction in economic development. Some of the programs include, low interest loans, utility assistance, job training dollars, new market tax credits, TIF districts, sales tax abatements and property tax abatements which are available depending on the nature of the development. A-5

26 The City takes the initiative to create a business friendly environment by streamlining City department processes and minimizing protocol and requirements for developers and contractors. Various forums are available through the Mayor s Office, Community and Economic Development Department and the Mayor s Business Advisory Council to address business concerns and offer information on business strategies and introduce programs that will strengthen the community business growth. An assertive approach to marketing the community and combining networking, the internet and materials together has proven effective as part of the overall effort to remain as one of the top south suburbs for retail and industry. The City continues to increase its capacity to achieve success due to the participation with networking groups sponsored by various levels of government and related organizations. In 2008, the City incorporated two additional programs: the Business Retention Grant and the Streetscape Banner Program. The Business Retention Grant assists businesses of ten years or longer that do not qualify for other programs. The Streetscape Banner Program gives business owners an affordable way to advertise their business or organization, while also creating a sense of community as the banners are changed during the year to include patriotic, summer and holiday themes. Another tool used by the City to attract development and redevelopment is tax increment financing. Tax Increment Financing ( TIF ) provides a means for municipalities, after the approval of a Redevelopment Plan and Project, to redevelop blighted, conservation or industrial park conservation areas by pledging the anticipated increase in tax revenues resulting from using new tax revenues generated by private redevelopment to pay for the public costs incurred to stimulate such private investment in new development and rehabilitation. Tax Increment Financing is authorized in Illinois by the Tax Increment Allocation Redevelopment Act, as amended. The City created its first TIF district in 1994 to redevelop 250 acres in the northeast corner of the City along State Street and Stateline Road. One company of several that moved to the TIF District in 1998 is Door Industries, which consolidated two facilities in nearby suburbs into a 44,000 square foot plant. In late 2006, the City created the Wentworth Wood Shopping Center TIF, its most recent. A local grocer has purchased the 120,000 square foot building in that TIF and plans are being completed for redevelopment of the center which will feature the grocery store as anchor tenant. On the whole, the City continues to review and assess strategies to encourage diverse economic development throughout its corporate limits. REAL PROPERTY ASSESSMENT, TAX LEVY AND COLLECTION PROCEDURES Real Property Assessment The County Assessor (the County Assessor ) is responsible for the assessment of all taxable real property within Cook County (the County ), including that in the City, except for certain railroad property and pollution control facilities which are assessed directly by the Illinois Department of Revenue (the Department of Revenue ). For triennial reassessment purposes, Cook County is divided into three districts: west and south suburbs, north and northwest suburbs, and the City of Chicago. The City is located in the south suburbs and was just reassessed for the current 2008 tax levy year. Real property in the County is separated into classes for assessment purposes. After the County Assessor establishes the fair market value of a parcel of property, that value is multiplied by the appropriate classification percentage to arrive at the assessed valuation (the Assessed Valuation ) for the parcel. The classification percentages range from 16% for certain residential, commercial and industrial property to 36% and 38%, respectively, for other industrial and commercial property. Property is classified for assessment into six basic categories each of which is assessed at various percentages of fair market value as follows: Class 1) unimproved real estate - 22%; Class 2) residential - 16%; Class 3) rental-residential - 26%, 24% in tax year 2006, 22% in tax year 2007, and 20% in tax year 2008 A-6

27 and subsequent years; Class 4) not-for-profit - 30%; Class 5a) commercial - 38%; Class 5b) industrial - 36%. There are also seven additional categories. Newly constructed industrial properties or substantially rehabilitated sections of existing industrial properties within the County may qualify for a Class 6b assessment level, which assessment level is 16% for the first 10 years and for any subsequent 10-year renewal periods. However, if the incentive is not renewed, the 6b assessment level is 23% in year 11 and 30% in year 12, thereafter reverting to Class 5b. Real estate which is to be used for industrial or commercial purposes where such real estate has undergone environmental testing and remediation may be eligible for a Class C assessment level. The Class C assessment level for industrial properties is 16% for the first 10 years, 23% in year 11 and 30% in year 12, thereafter reverting to Class 5b. Class C commercial properties are assessed at 16% for the first 10 years, 23% in year 11 and 30% in year 12, thereafter reverting to Class 5a. Commercial properties that are newly constructed or substantially rehabilitated and are within an area determined to be an area in need of commercial development may be classified as Class 7a or 7b property, and will then be assessed at a level of 16% for the first 10 years, 23% in year 11 and 30% in year 12, thereafter reverting to Class 5a. Certain commercial and industrial properties located in zones determined to be in need of substantial revitalization or in an enterprise community could be eligible for Class 8 assessments. The Class 8 assessment level for industrial properties is 16% for the first 10 years and for any subsequent 10-year renewal periods. If the incentive is not renewed, the Class 8 assessment level for industrial properties is 23% in year 11 and 30% in year 12, thereafter reverting to Class 5b. The Class 8 assessment level for commercial properties is 16% for the first 10 years, 23% in year 11 and 30% in year 12, thereafter reverting to Class 5a. Substantially rehabilitated or new construction multi-family residential properties within certain target areas, empowerment or enterprise zones, may be eligible for Class 9 categorization. The Class 9 assessment level is 16% for an initial 10-year period, renewable upon application for additional 10-year periods. When the Class 9 assessment level expires, the assessment level reverts to the applicable classification. Rentalresidential (Class 3) properties subject to a Section 8 contract that has been renewed under the Mark Up To Market option may qualify for a Class S assessment level. The Class S assessment level is 16% for the term of the Section 8 contract renewal under the Mark Up To Market option, and for any additional terms of renewal of the Section 8 contract under the Mark Up To Market option. When the Class S assessment level expires, the assessment level reverts to Class 3. Substantially rehabilitated properties which are designated as Class 3, Class 4, Class 5a, or Class 5b and which qualify as Landmark or Contributing buildings may qualify for a Class L assessment level. The Class L assessment level for Class 3, 4, or 5b properties is 16% for the first 10 years and for any subsequent 10-year renewal periods. If the incentive is not renewed, the Class L assessment level is 23% in year 11 and 30% in year 12, thereafter reverting to Class 3, 4, or 5b. Class L commercial properties are assessed at 16% for the first 10 years, 23% in year 11 and 30% in year 12, thereafter reverting to Class 5a. The Assessor has established procedures enabling taxpayers to contest their tentative Assessed Valuations. Once the Assessor certifies final Assessed Valuations, a taxpayer can seek review of its assessment through a process that has been modified as a result of amendments (the Amendments ) to the Property Tax Code (the Property Tax Code ). Prior to January 1, 1996, a taxpayer generally was required to seek a review of its assessment by filing a complaint with the Cook County Board of Appeals, from which there was generally no further appeal. However, in 1998, the Cook County Board of Appeals was replaced by a Board of Review consisting of three commissioners elected by the voters of the County. The Board of Review has powers similar to, but somewhat broader than, those previously vested in the Board of Appeals to review and adjust Assessed Valuations set by the Assessor. The Board of Appeals remained in existence until it was replaced by the Board of Review in December The Amendments also provide that beginning with assessments for the year 1996, owners of residential property having six or fewer units are able to appeal decisions of the Board of Appeals or the Board of Review to the Illinois Property Tax Appeal Board (the PTAB ), a state-wide administrative body. Owners of real estate other than residential property with six or fewer units are now able to appeal Assessed Valuations to the PTAB. The PTAB has the power to determine the Assessed Valuation of real property based on equity and the weight of the evidence. Taxpayers may appeal the decision of the PTAB to either the Circuit Court of Cook County or the Illinois Appellate Court under the Illinois Administrative Review Law. A-7

28 As an alternative to seeking review of Assessed Valuations by the PTAB, taxpayers who have first exhausted their remedies before the Board of Appeals or the Board of Review may file an objection in the Circuit Court of Cook County similar to the previous judicial review procedure but with a different standard of proof than that previously required. In addition, in cases where the Assessor agrees that an assessment error has been made after tax bills have been issued, the Assessor can correct the Assessed Value, and thus reduce the amount of taxes due, by issuing a Certificate of Error. Equalization After the County Assessor has established the Assessed Valuation for each parcel for a given year, and following any revisions by the Board of Tax Appeals, the Board of Review or the PTAB, the Department of Revenue is required by statute to review the Assessed Valuations. The Department of Revenue establishes an equalization factor (the Equalization Factor ), commonly called the multiplier, for each county to make all valuations uniform among the 102 counties in the State. Under State law, the aggregate of the assessments within each county is to be equalized at 33-1/3% of the estimated fair cash value of real property located within the county prior to any applicable exemptions. One multiplier is applied to all property in Cook County, regardless of its assessment category, except for some farmland property which is not subject to equalization. Once the Equalization Factor is established, the Assessed Valuation, as revised by the Board of Tax Appeals, the Board of Review or the PTAB, is multiplied by the Equalization Factor to determine the equalized assessed valuation (the Equalized Assessed Valuation ) of that parcel. The Equalized Assessed Valuation for each parcel is the final property valuation used for determination of tax liability. The aggregate Equalized Assessed Valuation for all parcels in any taxing body s jurisdiction, plus the valuation of property assessed directly by the State, constitutes the total real estate tax base for the taxing body and is the figure used to calculate tax rates (the Assessment Base ). The following table sets forth the Equalization Factor for Cook County for the last ten tax levy years. Exemptions Tax Equalization Year Factor(1) (1) Source: Cook County Clerk s Office. An annual General Homestead Exemption provides that the Equalized Assessed Valuation ( EAV ) of certain property owned and used for residential purposes ( Residential Property ) may be reduced by the amount of any increase over the 1977 EAV, up to a maximum reduction of $4,500 for taxable years prior to tax year 2004 and $5,000 for each taxable year thereafter (the General Homestead Exemption ). The Alternative General Homestead Exemption (the Alternative General Homestead Exemption ) caps property tax assessment increases for homeowners at 7% a year for a total of three years. Homes that do not increase by at least 7% a year are entitled to the General Homestead Exemption as discussed above. However, pursuant to an ordinance adopted by the County on July 13, 2004, the County has elected to allow the amount of the Alternative General Homestead Exemption to be increased to an amount not greater than $20,000 for taxable years 2003, 2004 and 2005 in the City of Chicago, for taxable years 2004, 2005 and 2006 A-8

29 in the North Suburbs, and for taxable years 2005, 2006 and 2007 in the South and West Suburbs. Specifically, the amount of the Alternative General Homestead Exemption is the EAV of the Residential Property for the current tax year minus the Adjusted Homestead Value. Assessors calculate the Adjusted Homestead Value by determining the lesser of (i) the homestead property s Base Homestead Value increased by 7% for each tax year after the base year (2002) through and including the current tax year or (ii) the EAV of the homestead property for the current tax year minus $4,500 in tax year 2003 or $5,000 in all counties in tax year 2004 and thereafter. The Base Homestead Value equals the EAV of the homestead property for the base year prior to exemptions, minus $4,500 in tax year 2003 or $5,000 in all counties in tax year 2004 and thereafter. Furthermore, for the first tax year that the Alternative General Homestead Exemption no longer applies, there shall be an additional General Homestead Exemption of $5,000 awarded to Residential Property owners (i) who have not been granted a Senior Citizens Assessment Freeze Exemption for the taxable year, (ii) whose Residential Property has increased by more than 20% over the previous assessed valuation and (iii) who have a household income of $30,000 or less. The General Assembly has yet to renew the Alternative General Homestead Exemption. The Homestead Improvement Exemption applies to Residential Properties that have been improved or rebuilt in the two years following a catastrophic event. The exemption is limited to $45,000 through December 31, 2003, and $75,000 per year beginning January 1, 2004 and thereafter, to the extent the assessed value is attributable solely to such improvements or rebuilding. Additional exemptions exist for senior citizens. The Senior Citizens Homestead Exemption operates annually to reduce the EAV on a senior citizen s home by $2,500 for taxable years prior to 2004 and $3,000 for taxable years 2004 and For taxable years 2006 and thereafter, the maximum reduction is $3,500 in all counties. Furthermore, beginning with assessment year 2003, for taxes payable in 2004, property that is first occupied as a residence after January 1 of any assessment year by a person who is eligible for the Senior Citizens Homestead Exemption must be granted a pro-rata exemption for the assessment year based on the number of days during the assessment year that the property is occupied as a residence by a person eligible for the exemption. A Senior Citizens Assessment Freeze Homestead Exemption freezes property tax assessments for homeowners who are 65 and older and have annual incomes of $35,000 or less prior to taxable year 1999, $40,000 or less in taxable years 1999 through 2003, $45,000 or less in taxable years 2004 and 2005, and $50,000 or less in taxable year 2006 and thereafter. In general, the Exemption limits the annual real property tax bill of such property by granting to qualifying senior citizens an exemption for a portion of the valuation of their property. Through taxable year 2005, the exempt amount is the difference between (i) the current EAV of their residence and (ii) the EAV of a senior citizen s residence for the year prior to the year in which he or she first qualifies and applies for the Exemption (plus the EAV of improvements since such year). For taxable year 2006 and thereafter, the amount of the exemption phases out as the amount of household income increases. The amount of the exemption is calculated by using the same formula as above, and then multiplying that answer by a ratio that varies according to household income. The Homeowner Exemption for Long-term Properties ( H.E.L.P. ) provides relief to certain longtime homeowners facing a dramatic rise in property taxes attributable to gentrification in established neighborhoods. H.E.L.P. exempts from property tax an amount equal to the current EAV for an eligible property which exceeds the sum of: (i) the EAV for the year prior to reassessment, plus (ii) the prior-year EAV multiplied by a factor equal to 150% of the average assessment increase for the most current reassessment of the assessment district. In order to qualify for the exemption, a homeowner must own and occupy Class 2 property for ten years or more as their principal residence, or five years or more if the owner received governmental assistance in acquiring the property. Another exemption available to disabled veterans operates annually to exempt up to $70,000 of the Assessed Valuation of property owned and used exclusively by such veterans or their spouses for residential purposes. Lastly, certain property is exempt from taxation on the basis of ownership and/or use, such as public parks, not-for-profit schools and public schools, churches, and not-for-profit hospitals and public hospitals. A-9

30 Tax Levy As part of the annual budgetary process of governmental units (the Units ) such as the City with power to levy taxes in the County, proceedings are adopted by the designated body for each Unit each year in which they determine to levy real estate taxes. The administration and collection of real estate taxes is statutorily assigned to the County Clerk and the County Treasurer. After the Units file their annual tax levies, the County Clerk computes the annual tax rate for each Unit. The Cook County Clerk uses the prior year s Equalized Assessed Valuation (EAV) to compute the taxing district s maximum allowable levy. The maximum that can be raised for a Unit is the maximum tax rate for that Unit multiplied by the prior year EAV for all property currently in the unit. The prior year EAV includes the prior year EAV plus the EAV of any new property, the current year value of any annexed property, and any recovered tax increment value, minus any disconnected property for the current year under the Property Tax Extension Limitation Law (the Limitation Law ). The tax rate for a Unit is computed by dividing the lesser of the maximum allowable levy or the actual levy by the current year EAV. However, the City is a home rule unit of government and, as such, has no statutory tax rate limitations for any purpose. Property Tax Extension Limitation Law The Limitation Law is applied after the prior year EAV limitation. The Limitation Law limits the annual growth in the amount of property taxes to be extended for certain Illinois non-home rule units. The effect of the Limitation Law is to limit the amount of property taxes that can be extended for a taxing body. In addition, general obligation bonds, notes and installment contracts payable from ad valorem taxes unlimited as to rate and amount cannot be issued by the affected taxing bodies unless they are approved by referendum, are alternate bonds or are for certain refunding purposes. The use of prior year EAV to limit the allowable tax levy may reduce tax rates for funds that are at or near their maximum rates in taxing districts with rising EAVs. These reduced rates and all other rates for those funds subject to the Limitation Law are added together, which results in the aggregate preliminary rate. The aggregate preliminary rate is then compared to the limiting rate. If the limiting rate is more than the aggregate preliminary rate, there is no further reduction in rates due to the Limitation Law. If the limiting rate is less than the aggregate preliminary rate, the aggregate preliminary rate is further reduced to the limiting rate. In all cases, taxes are extended using current year EAV under Section of the Property Tax Code. In general, the annual growth permitted under the Limitation Law is the lesser of 5% or the percentage increase in the Consumer Price Index during the calendar year preceding the levy year. Taxes can also be increased due to new construction, referendum approval of tax rate increases, mergers and consolidations. As a home-rule unit of government, the provisions of the Limitation Law do not currently apply to the City. Extensions The County Clerk then computes the total tax rate applicable to each parcel of real property by aggregating the tax rates of all of the Units having jurisdiction over the particular parcel. The County Clerk extends the tax by entering the tax (determined by multiplying the total tax rate by the Equalized Assessed Valuation of that parcel for the current tax year) in the books prepared for the County Collector (the Warrant Books ) along with the tax rates, the Assessed Valuation and the Equalized Assessed Valuation. The Warrant Books are the County Collector s authority for the collection of taxes and are used by the County Collector as the basis for issuing tax bills to all property owners. Collections Property taxes are collected by the County Collector, who is also the County Treasurer, who remits to each Unit its share of the collections. Taxes levied in one year become payable during the following year in two installments, the first due on March 1 and the second on the later of August 1 or 30 days after the mailing A-10

31 of the tax bills. A payment due is deemed to be paid on time if the payment is postmarked on the due date. The first installment is equal to one-half of the prior years tax bill. However, if a certificate of error is approved by a court or certified on or before November 30 of the preceding year and before the estimated tax bills are prepared, then the first installment is instead equal to one-half of the corrected prior year s tax bill. The second installment is for the balance of the current year s tax bill, and is based on the then current tax year levy, assessed value and Equalization Factor, and reflects any changes from the prior year in those factors. The following table sets forth the second installment penalty date for the last ten tax levy years in Cook County; the first installment penalty date has been on or about March 1 for all such years. Second Installment Tax Levy Year Penalty Date 2007 November 3, December 3, September 1, November 2, November 15, October 1, November 1, November 2, October 2, November 1, 1999 It is possible that the changes to the assessment appeals process described above will cause delays similar to those experienced in past years in preparation and mailing of second installment in future years. The County may provide for tax bills to be payable in four installments instead of two. However, the County has not required payment of tax bills in four installments. During the periods of peak collections, tax receipts are forwarded to each Unit on a weekly basis. Upon receipt of taxes from the County Collector, the City promptly credits the taxes received to the funds for which they were levied. At the end of each collection year, the County Collector presents the Warrant Books to the Circuit Court and applies for a judgment for all unpaid taxes. The court orders resulting from the application for judgment provides for an annual tax sale (the Annual Tax Sale ) of unpaid taxes shown on that year s Warrant Books. A public sale is held, at which time successful tax buyers pay the unpaid taxes plus penalties. Unpaid taxes accrue penalties at the rate of 1.5% per month from their due date until the date of sale. Taxpayers can redeem their property by paying the amount paid at the sale, plus a maximum of 12% for each six month period after the sale. If no redemption is made within the applicable redemption period (ranging from six months to two and one-half years depending on the type and occupancy of the property) and the tax buyer files a petition in the Circuit Court, notifying the necessary parties in accordance with the applicable law, the tax buyer receives a deed to the property. In addition, there are miscellaneous statutory provisions for foreclosure of tax liens. If there is no sale of the tax lien on a parcel of property at the Annual Tax Sale, the taxes are forfeited and the property becomes eligible to be purchased at any time thereafter at an amount equal to all delinquent taxes and interest accrued to the date of purchase. Redemption periods and procedures are the same as applicable to the Annual Tax Sale. The scavenger sale (the Scavenger Sale ), like the Annual Tax Sale, is a sale of unpaid taxes. The Scavenger Sale is scheduled to be held every two years on all property on which two or more years taxes are delinquent. The sale price of the unpaid taxes is the amount bid at such sale, which may be less than the amount of delinquent taxes. Redemption periods vary from six months to two and one-half years depending upon the type and occupancy of the property. A-11

32 Truth in Taxation Law Legislation known as the Truth in Taxation Law (the Law ) limits the aggregate amount of certain taxes which can be levied by, and extended for, a taxing district to 105% of the amount of taxes extended in the preceding year unless specified notice, hearing and certification requirements are met by the taxing body. The express purpose of the Law is to require published disclosure of, and hearing upon, an intention to adopt a levy in excess of the specified levels. The provisions of the Law do not impose any limitation on the rate or the amount of the levy extended to pay principal and interest on the Bonds. CITY TAX AND ASSESSMENT INFORMATION years. The following shows the trend of Equalized Assessed Valuation (EAV) for the City for the past five Equalized Assessed Valuation(1) (5) Residential... $233,737,419 $239,247,427 $276,756,338 $288,157,721 $304,303,498 Commercial ,499, ,993, ,212, ,792, ,891,964 Industrial... 42,826,775 44,571,365 48,604,129 50,787,755 52,848,149 Other , , , , ,873 Total... $483,614,325 $498,281,261 $578,070,157 $583,287,124 $590,703,484 Percent Change (1.60%)(2) (3) 3.03% 16.01%(4) 0.90% 1.27% (1) Source: Cook County Clerk s office. (2) Based on the 2002 EAV of $491,466,076. (3) Decrease in EAV due to a decrease in the County multiplier. (4) Reassessment year. (5) Breakdown by classification is not yet available. The following table sets forth historical tax extensions and collections in the City. Tax Extensions and Collections(1) Levy Percent Year Extension(2) Collection(3) Collected 2001 $ 11,092,116 $ 10,877, % ,743,120 11,611, % ,110,515 12,952, % ,545,518 13,459, % ,962,312 14,821, % ,191,319 16,052, % ,843,636 17,060, % (1) Source: Cook County Treasurer s office. (2) Extensions have not been adjusted for abatements. (3) Includes back taxes, interest, and taxes paid under protest. A-12

33 Tax Rates Per $100 of Equalized Assessed Valuation(1) Corporate... $ $ $ $ Bonds and Interest Pensions (Police, Fire, IMRF) Social Security Purchase Agreement Total City Tax Rate... $ $ $ $ County of Cook Forest Preserve District of Cook County Consolidated Elections Thornton Twp.(inc. Road & Bridge and Gen. Asst.) Suburban Cook County T.B. Sanitarium South Cook Co. Mosq. Abatement District Metropolitan Water Reclamation District Calumet Memorial Park District City of Calumet City Library Fund Thornton Township High School No Community College District No Cook County School District No Total Representative Tax Rate (2)... $ $ $ $ (1) Source: Cook County Assessor s Office. (2) Based on the largest tax code in the City, representing nearly 27% of City s 2007 EAV, most recent data available. Large Taxpayers(1) 2007 Equalized Assessed Taxpayer Description Valuation(2) Simon Property Group...River Oaks Mall... $ 47,001,659 Sears...Department Store... 21,613,637 Schottenstein Management Co....River Oaks Shopping Center - West... 11,041,959 KRCV Corp...Shopping Center... 8,606,150 Home Depot Store...Home Improvement Center... 6,932,390 J. C. Penney Co....Department Store... 6,540,970 Target...Discount Department Store... 6,256,574 Great Lakes and Gateway Warehouse...Warehouse Storage Facilities... 5,943,066 Waste Management of Illinois...Industrial Property... 5,410,085 Ingalls Health Venture...Family Care Center... 4,571,549 Total Ten Largest Taxpayers... $ 123,918,039 Ten Largest as Percent of City s Total 2007 EAV ($590,703,484) % (1) Derived from a listing of parcels with tax bills in excess of $30,000, which was obtained from the Cook County Clerk's Office. Therefore, since many of the values listed are made up of numerous parcel valuations, it is possible that some smaller parcels and their valuations may have been overlooked. (2) Most recent data available. A-13

34 DEBT INFORMATION The City is a home rule unit under the 1970 Illinois Constitution and, as such, has no general obligation debt limit, is not required to seek referendum approval for the issuance of the Bonds and has no statutory tax rate limitations for any purpose. Statement of Direct General Obligation Bonded Debt(1) (As of May 6, 2009) Outstanding General Obligation Bonds: The Bonds...$ 12,770,000 Series ,000,000 Series ,000,000 Series ,000,000 Series ,470,000 Series 2004B... 1,415,000 Series 2004A... 1,200,000 Series 2002 (Notes) ,142 Series ,000 Series 1999B... 6,290,000 Series 1999A... 1,305,000 Total Direct General Obligation Bonded Debt...$ 63,228,142 (1) Excludes refunded Bonds. Debt Statement (As of May 6, 2009 Includes the Bonds) Direct General Obligation Bonded Indebtedness... $ 63,228,142(1) Overlapping Bonded Indebtedness... 80,537,397 Total General Obligation and Overlapping Bonded Indebtedness... $ 143,765,539 Equalized Assessed Valuation (2007)... $ 590,703,484 Estimated Full Valuation... $ 1,772,110, Census Population... 39,071 Net Direct Debt Per Capita... $ 1, Net Direct and Overlapping Debt Per Capita... $ 3, Ratio of: Net Direct Debt to EAV % Net Direct Debt to Estimated Full Valuation % Net Direct and Overlapping Debt to EAV % Net Direct and Overlapping Debt to Estimated Full Valuation % (1) Excludes refunded bonds. A-14

35 Direct General Obligation Bonded Debt Retirement Schedule Principal Only(1) (As of May 6, Includes the Bonds) Outstanding G.O. Bonds The Cumulative Percent Due Principal(1) Bonds Total Amount Retired 2009 $ 958,142 $ 0 $ 958,142 $ 958, % ,590, ,000 3,870,000 4,828, % ,620, ,620,000 8,448, % ,215, ,215,000 11,663, % ,200, ,200,000 14,863, % ,195, ,195,000 18,058, % ,195, ,195,000 21,253, % ,185, ,185,000 24,438, % ,190, ,190,000 27,628, % ,970,000 1,300,000 3,270,000 30,898, % ,020,000 1,045,000 3,065,000 33,963, % ,180, ,000 3,030,000 36,993, % ,270, ,000 2,975,000 39,968, % ,860, ,860,000 42,828, % ,495, ,000 2,775,000 45,603, % ,030, ,000 2,745,000 48,348, % ,020, ,000 2,760,000 51,108, % ,000, ,000 2,765,000 53,873, % ,985, ,000 2,770,000 56,643, % ,280,000 1,580,000 2,860,000 59,503, % ,885,000 1,885,000 61,388, % ,920,000 1,920,000 63,228, % Total $50,458,142 $12,770,000 $63,463,142 (1) Excludes the refunded bonds. Detailed Overlapping Bonded Indebtedness(1) (As of March 17, 2009) Debt Applicable(2) Overlapping Entity Outstanding Percent Amount Cook County...$ 2,895,520, % $ 10,739,166 Cook County Forest Preserve District ,105, % 426,912 Metropolitan Water Reclamation District... 1,388,115,000(3) 0.379% 5,257,099 Calumet Memorial Park District... 2,300, % 1,978,950 School District # ,428, % 5,456,306 School District # ,280, % 566,419 School District # ,865, % 20,905,244 School District # ,565, % 4,565,000 School District # ,850, % 9,843,744 Thornton Township High School District ,031, % 9,249,647 Thornton Fractional Twp High School Dist ,060, % 8,590,289 Community College District ,669, % 2,958,621 Total Overlapping Bonded Indebtedness... $ 80,537,397 (1) Source: Cook County Clerk s Office. (2) Percentages are based on 2007 EAVs, the most recent data available. Amounts are based on actual percentages; percentages shown have been rounded to the nearest one-thousandth. (3) Includes IEPA Revolving Loan Bonds. A-15

36 PENSION PLANS Eligible City employees participate in one of three defined benefit pension plans (the Pension Plans ). For a description of the Pension Plans and of the Pension Plans assets and liabilities, see APPENDIX B Annual Financial Report of the City for the Year Ended April 30, 2007 Notes to Financial Statements. Summary of Financial Results FINANCIAL INFORMATION The financial statements of the City are audited annually by independent certified public accountants. A summary of these financial statements has been included in this Official Statement based upon the opinion of those firms as experts in accounting and auditing. This summary does not purport to be complete and reference may be made to the audited financial statements which are available upon request from the City. A-16

37 Statement of Revenues, Expenditures and Changes in Fund Balances(1) General Fund (Audited Fiscal Years Ending April 30) UNAUDITED 2008(2) Revenues: Property Taxes... $ 3,209,431 $ 4,041,003 $ 4,147,209 $ 4,867,082 $ 5,302,464 Sales Taxes / Local Use Tax... 6,315,774 6,059,640 5,998,539 6,270,301 5,921,922 Home Rule Sales Tax... 4,733,457 4,412,554 4,631,095 3,601,275 4,050,538 State Inc. & Replacement Tax... 2,453,626 2,939,002 3,300,234 4,262,227 3,917,791 Other Taxes... 4,656,906 5,121,606 5,664,310 5,065,847 5,158,770 Licenses and Permits , ,562 1,046,285 1,521,354 1,146,660 Fines , , , , ,764 Charges for Services... 1,826,443 1,989,003 2,074,286 2,010,388 2,144,792 Intergovernmental ,632 61, , , ,456 Interest... 18,662 22,642 39, , ,783 All Other , , , ,485 1,427,386 Transfers In... 1,129,141 1,009,888 3,665,460 2,910,232 2,100,000 Total Revenues... $26,559,689 $27,574,108 $31,784,468 $32,206,792 $32,375,326 Expenditures: Legislative Department... $ 291,061 $ 283,950 $ 343,475 $ 380,620 $ 404,650 Executive Department , , , , ,206 City Clerk , , , , ,130 Finance Department , , , , ,699 Legal Department... 1,074,443 1,588,031 2,189,523 1,421,564 1,888,602 Purchasing & Personnel Dept , , , , ,861 Street and Alleys Department... 3,663,754 3,858,642 3,558,255 3,520,811 3,728,164 Police Department... 7,248,663 7,290,741 7,448,128 7,897,029 8,987,081 Insurance Department... 2,545,455 1,986,055 1,992,048 2,534,247 1,756,203 Dept. of Inspectional Services , , , , ,862 Fire Department... 3,255,118 3,307,847 3,594,529 3,887,160 4,148,012 Emergency Service and Disaster , , , , ,882 Youth & Fam. Service Bureau ,949 76, Health Departments , , , , ,611 Community & Economic Dev , , ,613 71,773 63,924 Police and Fire Commission... 48,928 52,417 47, , ,190 Zoning Board Appeals... 10,626 13,917 8,067 11,364 7,546 Police Pension Board Cultural Center... 62,268 83,187 25, Special Corporate... 5,993,826 6,315,152 6,537,240 7,073,988 7,470,684 Capital Improvements , , , , ,947 All Other ,230 19,054 21,789 0 Transfers Out ,792 1,119, , ,835 1,036,338 Total Expenditures... $27,504,853 $28,830,073 $29,528,613 $30,524,799 $32,550,717 Revenues and Transfers in Over (Under) Expenditures and Transfers Out... $ (945,164) $(1,355,965) $ 2,255,855 $ 1,681,993 $ (175,391) Prior Period Adjustment (171,211) 0 0 Fund Bal., Beginning of Year... 4,131,855 3,186,691 1,830,726 3,915,370 5,597,363 Fund Balance, End of Year... $ 3,186,691 $ 1,830,726 $ 3,915,370 $ 5,597,363 $ 5,421,972 (1) Source: City of Calumet City Financial Reports. (2) Source: City of Calumet City Unaudited Financial Reports. A-17

38 Balance Sheet(1) General Fund (Audited as of April 30) Assets: Cash and Investments... $ 3,078,738 $ 1,677,094 $ 3,755,766 $ 5,918,859 Property Taxes Receivable... 2,353,554 2,592,808 2,900,028 3,260,433 Governmental Receivable... 3,866,143 4,190,187 4,036,073 4,429,694 Accounts Receivable , , , ,960 Due From Other Funds... 1,376,974 1,388,991 1,549,298 1,147,155 Due From Component Unit... 4,817 4,817 4,817 - All Other , ,694 53, ,185 Total Assets... $10,961,985 $10,413,832 $12,468,537 $15,053,286 Liabilities and Fund Balance: Liabilities: Accounts Payable... $ 1,493,050 $ 2,332,913 $ 2,100,409 $ 1,846,710 Accrued Expenditures ,152 49,110 52,139 25,204 Other Payables... 1,066,757 1,298,793 1,495,222 2,567,432 Interfund Payables... 1,458, , , ,705 Deferred Revenue... 3,564,819 3,963,662 4,160,156 4,747,872 Total Liabilities... $ 7,775,294 $ 8,583,106 $ 8,553,167 $ 9,187,218 Fund Balance: Reserved... $ 0 $ 0 $ 0 $ 1,147,155 Unreserved... 3,186,691 1,830,726 3,915,370 4,450,208 Total Fund Balance... $ 3,186,691 $ 1,830,726 $ 3,915,370 $ 5,597,363 Total Liabilities and Fund Balance $10,961,985 $10,413,832 $12,468,537 $15,053,286 (1) Source: City of Calumet City Audited Financial Reports. A-18

39 APPENDIX B CITY OF CALUMET CITY, ILLINOIS Annual Financial Report Fiscal Year Ended April 30, 2007

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143 APPENDIX C BOND INSURANCE AND SPECIMEN FINANCIAL GUARANTY INSURANCE POLICY

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145 BOND INSURANCE AND SPECIMEN FINANCIAL GUARANTY INSURANCE POLICY The following information is not complete and reference is made to the specimen of the financial guaranty insurance policy (the Policy ) attached hereto of Assured Guaranty Corp. ( Assured Guaranty or the Insurer ). The Insurance Policy Assured Guaranty has made a commitment to issue the Policy relating to the Bonds, effective as of the date of issuance of such Bonds. Under the terms of the Policy, Assured Guaranty will unconditionally and irrevocably guarantee to pay that portion of principal of and interest on the Bonds that becomes Due for Payment but shall be unpaid by reason of Nonpayment (the Insured Payments ). Insured Payments shall not include any additional amounts owing by the Issuer solely as a result of the failure by the Trustee or the Paying Agent to pay such amount when due and payable, including without limitation any such additional amounts as may be attributable to penalties or to interest accruing at a default rate, to amounts payable in respect of indemnification, or to any other additional amounts payable by the Trustee or the Paying Agent by reason of such failure. The Policy is non-cancelable for any reason, including without limitation the nonpayment of premium. Due for Payment means, when referring to the principal of the Bonds, the stated maturity date thereof, or the date on which such Bonds shall have been duly called for mandatory sinking fund redemption, and does not refer to any earlier date on which payment is due by reason of a call for redemption (other than by mandatory sinking fund redemption), acceleration or other advancement of maturity (unless Assured Guaranty in its sole discretion elects to make any principal payment, in whole or in part, on such earlier date) and, when referring to interest on such Bonds, means the stated dates for payment of interest. Nonpayment means the failure of the Issuer to have provided sufficient funds to the Trustee or the Paying Agent for payment in full of all principal and interest Due for Payment on the Bonds. It is further understood that the term Nonpayment in respect of a Bond also includes any amount previously distributed to the Holder (as such term is defined in the Policy) of such Bond in respect of any Insured Payment by or on behalf of the Issuer, which amount has been recovered from such Holder pursuant to the United States Bankruptcy Code in accordance with a final, nonappealable order of a court having competent jurisdiction that such payment constitutes an avoidable preference with respect to such Holder. Nonpayment does not include nonpayment of principal or interest caused by the failure of the Trustee or the Paying Agent to pay such amount when due and payable. Assured Guaranty will pay each portion of an Insured Payment that is Due for Payment and unpaid by reason of Nonpayment, on the later to occur of (i) the date such principal or interest becomes Due for Payment, or (ii) the business day next following the day on which Assured Guaranty shall have received a completed notice of Nonpayment therefor in accordance with the terms of the Policy. Assured Guaranty shall be fully subrogated to the rights of the Holders of the Bonds to receive payments in respect of the Insured Payments to the extent of any payment by Assured Guaranty under the Policy. The Policy is not covered by any insurance or guaranty fund established under New York, California, Connecticut or Florida insurance law. The Insurer Assured Guaranty Corp. ( Assured Guaranty ) is a Maryland-domiciled insurance company regulated by the Maryland Insurance Administration and licensed to conduct financial guaranty insurance business in all fifty states of the United States, the District of Columbia and Puerto Rico. Assured Guaranty commenced operations in Assured Guaranty is a wholly owned, indirect subsidiary of Assured Guaranty Ltd. ( AGL ), a Bermuda-based holding company whose shares are publicly traded and are listed on the New C-1

146 York Stock Exchange under the symbol AGO. AGL, through its operating subsidiaries, provides credit enhancement products to the U.S. and global public finance, structured finance and mortgage markets. Neither AGL nor any of its shareholders is obligated to pay any debts of Assured Guaranty or any claims under any insurance policy issued by Assured Guaranty. Assured Guaranty is subject to insurance laws and regulations in Maryland and in New York (and in other jurisdictions in which it is licensed) that, among other things, (i) limit Assured Guaranty s business to financial guaranty insurance and related lines, (ii) prescribe minimum solvency requirements, including capital and surplus requirements, (iii) limit classes and concentrations of investments, (iv) regulate the amount of both the aggregate and individual risks that may be insured, (v) limit the payment of dividends by Assured Guaranty, (vi) require the maintenance of contingency reserves, and (vii) govern changes in control and transactions among affiliates. Certain state laws to which Assured Guaranty is subject also require the approval of policy rates and forms. Assured Guaranty s financial strength is rated AAA (stable) by Standard & Poor s, a division of The McGraw-Hill Companies, Inc. ( S&P ), Aa2 (stable) by Moody s Investors Service, Inc. ( Moody s ), and AA (evolving) by Fitch, Inc. ( Fitch ) and. Each rating of Assured Guaranty should be evaluated independently. An explanation of the significance of the above ratings may be obtained from the applicable rating agency. The above ratings are not recommendations to buy, sell or hold any security, and such ratings are subject to revision or withdrawal at any time by the rating agencies. Any downward revision or withdrawal of any of the above ratings may have an adverse effect on the market price of any security guaranteed by Assured Guaranty. Assured Guaranty does not guaranty the market price of the securities it guarantees, nor does it guaranty that the ratings on such securities will not be revised or withdrawn. Recent Developments Ratings In a press release dated May 4, 2009, Fitch announced that it had downgraded the insurer financial strength rating of Assured Guaranty to AA from AAA and placed such rating on Rating Watch Evolving. Reference is made to the press release, a copy of which is available at for the complete text of Fitch s comments. There can be no assurance that Fitch or the other rating agencies will not take further ratings action with respect to Assured Guaranty or as to what impact, if any, Fitch s action will have on Assured Guaranty s insurance financial strength ratings from S&P or Moody s. For more information regarding Assured Guaranty s financial strength ratings, see AGL s Annual Report on Form 10-K for the fiscal year ended December 31, 2008, which was filed by AGL with the Securities and Exchange Commission ( SEC ) on February 26, Agreement to Purchase FSA On November 14, 2008, AGL announced that it had entered into a definitive agreement to purchase Financial Security Assurance Holdings Ltd. ( FSA ), the parent of financial guaranty insurance company Financial Security Assurance, Inc. For more information regarding the proposed acquisition by AGL of FSA, see the Annual Report on Form 10-K filed by AGL with the SEC on February 26, Capitalization of Assured Guaranty Corp. As of December 31, 2008, Assured Guaranty had total admitted assets of $1,803,146,295 (unaudited), total liabilities of $1,425,012,944 (unaudited), total surplus of $378,133,351 (unaudited) and total statutory capital (surplus plus contingency reserves) of $1,090,288,113 (unaudited) determined in accordance with statutory accounting practices prescribed or permitted by insurance regulatory authorities. As of December 31, 2007, Assured Guaranty had total admitted assets of $1,361,538,502 (audited), total liabilities of $961,967,238 (audited), total surplus of $399,571,264 (audited) and total statutory capital (surplus plus contingency reserves) of $982,045,695 (audited) determined in accordance with statutory accounting practices prescribed or permitted by insurance regulatory authorities. The Maryland Insurance Administration C-2

147 recognizes only statutory accounting practices for determining and reporting the financial condition and results of operations of an insurance company, for determining its solvency under the Maryland Insurance Code, and for determining whether its financial condition warrants the payment of a dividend to its stockholders. No consideration is given by the Maryland Insurance Administration to financial statements prepared in accordance with accounting principles generally accepted in the United States in making such determinations. Incorporation of Certain Documents by Reference The portions of the following documents relating to Assured Guaranty are hereby incorporated by reference into this Official Statement and shall be deemed to be a part hereof: The Annual Report on Form 10-K of AGL for the fiscal year ended December 31, 2008 (which was filed by AGL with the SEC on February 26, 2009); The Current Reports on Form 8-K filed by AGL with the SEC, as they relate to Assured Guaranty. All consolidated financial statements of Assured Guaranty and all other information relating to Assured Guaranty included in documents filed by AGL with the SEC pursuant to Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934, as amended, subsequent to the date of this Official Statement and prior to the termination of the offering of the Bonds shall be deemed to be incorporated by reference into this Official Statement and to be a part hereof from the respective dates of filing such consolidated financial statements. Any statement contained in a document incorporated herein by reference or contained herein under the heading APPENDIX C - BOND INSURANCE AND SPECIMEN FINANCIAL GUARANTY INSURANCE POLICY The Insurer shall be modified or superseded for purposes of this Official Statement to the extent that a statement contained herein or in any subsequently filed document which is incorporated by reference herein also modifies or supersedes such statement. Any statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Official Statement. Copies of the consolidated financial statements of Assured Guaranty incorporated by reference herein and of the statutory financial statements filed by Assured Guaranty with the Maryland Insurance Administration are available upon request by contacting Assured Guaranty at 1325 Avenue of the Americas, New York, New York or by calling Assured Guaranty at (212) In addition, the information regarding Assured Guaranty that is incorporated by reference in this Official Statement that has been filed by AGL with the SEC is available to the public over the Internet at the SEC s web site at and at AGL s web site at from the SEC s Public Reference Room at 450 Fifth Street, N.W., Room 1024, Washington, D.C , and at the office of the New York Stock Exchange at 20 Broad Street, New York, New York Assured Guaranty makes no representation regarding the Bonds or the advisability of investing in the Bonds. In addition, Assured Guaranty has not independently verified, makes no representation regarding, and does not accept any responsibility for the accuracy or completeness of this Official Statement or any information or disclosure contained herein, or omitted herefrom, other than with respect to the accuracy of the information regarding Assured Guaranty supplied by Assured Guaranty and presented under the heading APPENDIX C - BOND INSURANCE AND SPECIMEN FINANCIAL GUARANTY INSURANCE POLICY. C-3

148 Financial Guaranty Insurance Policy Issuer: Policy No.: Obligations: Premium: Effective Date: Assured Guaranty Corp., a Maryland corporation ( Assured Guaranty ), in consideration of the payment of the Premium and on the terms and subject to the conditions of this Policy (which includes each endorsement hereto), hereby unconditionally and irrevocably agrees to pay to the trustee (the Trustee ) or the paying agent (the Paying Agent ) for the Obligations (as set forth in the documentation providing for the issuance of and securing the Obligations) for the benefit of the Holders, that portion of the Insured Payments which shall become Due for Payment but shall be unpaid by reason of Nonpayment. Assured Guaranty will make such Insured Payments to the Trustee or the Paying Agent on the later to occur of (i) the date applicable principal or interest becomes Due for Payment, or (ii) the Business Day next following the day on which Assured Guaranty shall have Received a completed Notice of Nonpayment. If a Notice of Nonpayment by Assured Guaranty is incomplete or does not in any instance conform to the terms and conditions of this Policy, it shall be deemed not Received, and Assured Guaranty shall promptly give notice to the Trustee or the Paying Agent. Upon receipt of such notice, the Trustee or the Paying Agent may submit an amended Notice of Nonpayment. The Trustee or the Paying Agent will disburse the Insured Payments to the Holders only upon receipt by the Trustee or the Paying Agent, in form reasonably satisfactory to it of (i) evidence of the Holder's right to receive such payments, and (ii) evidence, including without limitation any appropriate instruments of assignment, that all of the Holder's rights to payment of such principal or interest Due for Payment shall thereupon vest in Assured Guaranty. Upon and to the extent of such disbursement, Assured Guaranty shall become the Holder of the Obligations, any appurtenant coupon thereto and right to receipt of payment of principal thereof or interest thereon, and shall be fully subrogated to all of the Holder's right, title and interest thereunder, including without limitation the right to receive payments in respect of the Obligations. Payment by Assured Guaranty to the Trustee or the Paying Agent for the benefit of the Holders shall discharge the obligation of Assured Guaranty under this Policy to the extent of such payment. This Policy is non-cancelable by Assured Guaranty for any reason. The Premium on this Policy is not refundable for any reason. This Policy does not insure against loss of any prepayment premium or other acceleration payment which at any time may become due in respect of any Obligation, other than at the sole option of Assured Guaranty, nor against any risk other than Nonpayment. Except to the extent expressly modified by any endorsement hereto, the following terms shall have the meanings specified for all purposes of this Policy. Avoided Payment means any amount previously distributed to a Holder in respect of any Insured Payment by or on behalf of the Issuer, which amount has been recovered from such Holder pursuant to the United States Bankruptcy Code in accordance with a final, nonappealable order of a court having competent jurisdiction that such payment constitutes an avoidable preference with respect to such Holder. Business Day means any day other than (i) a Saturday or Sunday, (ii) any day on which the offices of the Trustee, the Paying Agent or Assured Guaranty are closed, or (iii) any day on which banking institutions are authorized or required by law, executive order or governmental decree to be closed in the City of New York or in the State of Maryland. Due for Payment means (i) when referring to the principal of an Obligation, the stated maturity date thereof, or the date on which such Obligation shall have been duly called for mandatory sinking fund redemption, and does not refer to any earlier date on which payment is due by reason of a call for redemption (other than by mandatory sinking fund redemption), acceleration or other advancement of maturity (unless Assured Guaranty in its sole discretion elects to make any principal payment, in whole or in part, on such earlier date) and (ii) when referring to interest on an Obligation, the stated date for payment of such interest. Holder means, in respect of any Obligation, the person or entity who, at the time of Nonpayment, is entitled under the terms of such Obligation to payment of principal or interest thereunder, except that Holder shall not include the Issuer or any person or entity whose direct or indirect obligation constitutes the underlying security for the Obligations. Insured Payments means that portion of the principal of and interest on the Obligations that shall become Due for Payment but shall be unpaid by reason of Nonpayment. Insured Payments shall not include any additional amounts owing by the Issuer solely as a result of the failure by the Trustee or the Paying Agent to pay such amount when due and payable, including without limitation any such additional amounts as may be attributable to penalties or to interest accruing at a default rate, to amounts payable in respect of indemnification, or to any other additional amounts payable by the Trustee or the Paying Agent by reason of such failure. Nonpayment means, in respect of an Obligation, the failure of the Issuer to have provided sufficient funds to the Trustee or the Paying Agent for payment in full of all principal and interest Due for Payment on such Obligation. It is further understood that the term "Nonpayment" in respect of an Obligation includes any Avoided Payment. Receipt or Received means actual receipt or notice of or, if notice is given by overnight or other delivery service, or by certified or registered United States mail, by a delivery receipt signed by a person authorized to accept delivery on behalf of the person to whom the notice was given. Notices to Assured Guaranty may be mailed by registered mail or personally delivered or telecopied to it at 1325 Avenue of the Americas, New York, New York 10019, Telephone Number: (212) , Facsimile Number: (212) , Attention: Risk Management Department Public Finance Surveillance, with a copy to the General Counsel, or to such other address as shall be specified by Assured Guaranty to the Trustee or the Paying Agent in writing. A Notice of Nonpayment will be deemed to be Received by Assured Guaranty on a given Business Day if it is Received prior to 12:00 noon (New York City time) on such Business Day; otherwise it will be deemed Received on the next Business Day. Term means the period from and including the Effective Date until the earlier of (i) the maturity date for the Obligations, or (ii) the date on which the Issuer has made all payments required to be made on the Obligations. Page 1 of 2 Form NY-FG (05/07)