CITY OF WEST DES MOINES, IOWA

Transcription

1 OFFICIAL STATEMENT DATED JULY 15, 2011 New Issue Rating: Standard & Poor s AAA Assuming compliance with certain covenants, in the opinion of Ahlers & Cooney, P.C., Bond Counsel, under present law and assuming continued compliance with the requirements of the Internal Revenue Code of 1986, as amended (the Code ) the interest on the Bonds will be excluded from gross income for federal income tax purposes. Interest on the Bonds is not an item of tax preference for purpose of the federal alternative minimum tax imposed on individuals and corporations under the Code. However, with respect to corporations (as defined for federal income tax purposes), such interest is included in adjusted current earnings for the purpose of determining the alternative minimum tax imposed on certain corporations. The Bonds will NOT be designated as qualified tax-exempt obligations. See TAX EXEMPTION AND RELATED CONSIDERATIONS herein for a more detailed discussion. CITY OF WEST DES MOINES, IOWA $6,900,000 General Obligation Bonds, Series 2011A Dated: August 10, 2011 Principal Due: June 1 as shown inside front cover The $6,900,000 General Obligation Bonds, Series 2011A (the Bonds ) are being issued pursuant to Division III of Chapter 384 of the Code of Iowa and a resolution to be adopted by the City Council of the City of West Des Moines, Iowa (the "City"). The Bonds are being issued to pay costs of street improvements, including the SW Connector, Grand Avenue and Westridge improvements; street and sidewalk rehabilitation; street lighting and markings, and traffic controls devices; improvements to and equipping parks already owned by the City; equipping the street department, including acquiring a heavy truck hoist; and acquiring emergency services communication equipment and systems. The Bonds will be issued as fully registered Bonds without coupons and, when issued, will be registered in the name of Cede & Co., as nominee of The Depository Trust Company ("DTC"). DTC will act as securities depository for the Bonds. Individual purchases may be made in book-entry-form only, in the principal amount of $5,000 and integral multiples thereof. Purchasers will not receive certificates representing their interest in the Bonds purchased. The City s designated Paying Agent, Bankers Trust Company, Des Moines, Iowa, will pay principal of the Bonds, payable annually on each June 1, beginning June 1, 2012 and interest on the Bonds, payable initially on June 1, 2012 and thereafter on each December 1 and June 1 to DTC, which will in turn remit such principal and interest to its participants for subsequent disbursements to the beneficial owners of the Bonds as described herein. Interest and principal shall be paid to the registered holder of a bond as shown on the records of ownership maintained by the registrar as of the 15 th day preceding the payment date (the Record Date ). FOR MATURITIES, INTEREST RATES AND PRICES OR YIELDS, SEE INSIDE THE FRONT COVER The Bonds are offered for delivery, when, as and if issued and subject to the legal opinions of Ahlers & Cooney, P.C., Bond Counsel, of Des Moines, Iowa, to be furnished upon delivery of the Bonds. The Bonds will be available for delivery through DTC in New York, New York, on or about August 10, 2011.

2 CITY OF WEST DES MOINES, IOWA $6,900,000 General Obligation Bond, Series 2011A CUSIP Base CUSIP Base Year (June 1) Amount Interest Rate Yield Year (June 1) Amount Interest Rate Yield 2012 $1,215, % 0.350% J $415, % 2.500% K , % 0.550% J , % 2.750%* K , % 0.800% J , % 2.950%* K , % 1.120% K , % 3.150% K , % 1.440% K , % 3.300% L , % 1.820% K , % 3.450%* L , % 2.170% K , % 3.580% L 43 * Priced to the call date of June 1, INTEREST: June 1, 2012 and semiannually thereafter. REDEMPTION: Bonds due after June 1, 2019 will be subject to call on said date or on any date thereafter upon terms of par plus accrued interest to date of call. Notice of such call shall be given by mailing a notice thereof by mail at least thirty (30) days prior to the date fixed for redemption to the registered owners of the Bonds to be redeemed at the address shown on the registration books. PURCHASER: MORGAN STANLEY & CO., LLC Copyright 2011, American Bankers Association. CUSIP data herein is provided by Standard & Poor s CUSIP Service Bureau, a division of the McGraw-Hill Companies, Inc.

3 TABLE OF CONTENTS INTRODUCTION... 1 Authority and Purpose; Optional Redemption; Interest... 1 Payment of and Security for the Bonds... 2 Book-Entry-Only System... 2 Future Financing; Litigation... 4 Debt Payment History; Legality... 4 Tax Exemption and Related Considerations... 5 Rating... 8 Financial Advisor... 8 Continuing Disclosure; Sale at Competitive Bidding... 8 Certification... 9 CITY PROPERTY VALUES Iowa Property Valuations /1/2010 Valuations (Taxes Payable July 1, 2011 to June 30, 2012) Gross Taxable Valuation by Class of Property Trend of Valuations Property Tax Assessments Larger Taxpayers Legislation CITY INDEBTEDNESS Debt Limit; Direct Debt Other Debt Indirect General Obligation Debt Debt Ratios Tax Rates Levies and Tax Collections Levy Limits; Funds on Hand (Cash and Investments as of April 30, 2011) THE CITY City Government; Employees and Pensions Other Post-Employement Benefits; Union Contracts Insurance GENERAL INFORMATION Location and Transportation Larger Employers Building Permits; U.S. Census Data Unemployment Rates Education; Retail Sales Effective Buying Income Financial Services; Financial Statements APPENDIX A - FORM OF LEGAL OPINION APPENDIX B - JUNE 30, 2010 COMPREHENSIVE ANNUAL FINANCIAL REPORT APPENDIX C - FORM OF CONTINUING DISCLOSURE CERTIFICATE

4 City of West Des Moines, Iowa City Council Steven K. Gaer Kevin Trevillyan Charles Schneider Russ Trimble Ted Ohmart James Sandager Mayor Council Member Council Member Council Member Council Member Council Member Administration Greg L. Sparks, City Manager Jody E. Smith, Deputy City Manager/City Clerk City Attorney Richard J. Scieszinski West Des Moines, Iowa Bond Counsel Ahlers & Cooney, P.C. Des Moines, Iowa Financial Advisor Public Financial Management, Inc. Des Moines, Iowa

5 OFFICIAL STATEMENT CITY OF WEST DES MOINES, IOWA $6,900,000 General Obligation Bonds, Series 2011A INTRODUCTION This Official Statement contains information relating to the City of West Des Moines, Iowa (the "City") and its issuance of $6,900,000 General Obligation Bonds, Series 2011A (the Bonds ). This Official Statement has been executed on behalf of the City and its Deputy City Manager and may be distributed in connection with the sale of the Bonds authorized therein. Inquiries may be made to Public Financial Management, Inc., 801 Grand Avenue, Suite 3300, Des Moines, Iowa, 50309, or by telephoning (515) Information can also be obtained from Mr. Jody E. Smith, Deputy City Manager/City Clerk, City of West Des Moines, 4200 Mills Civic Parkway, West Des Moines, Iowa 50265, or by telephoning (515) AUTHORITY AND PURPOSE The Bonds are being issued pursuant to Division III Chapter 384 of the Code of Iowa and a resolution to be adopted by the City Council of the City. The Bonds are being issued to pay costs of street improvements, including the SW Connector, Grand Avenue and Westridge improvements; street and sidewalk rehabilitation; street lighting and markings, and traffic controls devices; improvements to and equipping parks already owned by the City; equipping the street department, including acquiring a heavy truck hoist; and acquiring emergency services communication equipment and systems. The Sources and Uses of the Bonds are as follows: Sources of Funds Par Amount of the Bonds $6,900, Net Original Issue Premium 102, Total Funds $7,002, Uses of Funds Deposit to Construction Fund $6,918, Underwriter s Discount 47, Cost of Issuance 36, Total Uses $7,002, OPTIONAL REDEMPTION Bonds due after June 1, 2019 will be subject to call on said date or on any date thereafter upon terms of par plus accrued interest to date of call. Notice of such call shall be given by mailing a notice thereof by mail at least thirty (30) days prior to the date fixed for redemption to the registered owners of the Bonds to be redeemed at the address shown on the registration books. INTEREST Interest on the Bonds will be payable on June 1, 2012 and semiannually on the 1st day of December and June thereafter. Interest and principal shall be paid to the registered holder of a bond as shown on the records of ownership maintained by the Registrar as of the 15 th day preceding the payment date (the Record Date ). Interest will be computed on the basis of a 360-day year of twelve 30-day months and will be rounded pursuant to rules of the Municipal Securities Rulemaking Board. 1

6 PAYMENT OF AND SECURITY FOR THE BONDS The Bonds are general obligations of the City and the unlimited taxing powers of the City are irrevocably pledged for their payment. Upon issuance of the Bonds, the City will levy taxes for the years and in amounts sufficient to provide 100% of annual principal and interest due on all the Bonds. If, however, the amount credited to the debt service fund for payment of the Bonds is insufficient to pay principal and interest, whether from transfers or from original levies, the City must use funds in its treasury and is required to levy ad valorem taxes upon all taxable property in the City without limit as to rate or amount sufficient to pay the debt service deficiency Nothing in the resolution authorizing the Bonds prohibits or limits the ability of the City to use legally available moneys other than the proceeds of the general ad valorem property taxes levied as described in the preceding paragraph to pay all or any portion of the principal of or interest on the Bonds. If and to the extent such other legally available moneys are used to pay the principal of or interest on the Bonds, the City may, but shall not be required to, (a) reduce the amount of taxes levied for such purpose, as described in the preceding paragraph; or (b) use proceeds of taxes levied, as described in the preceding paragraph, to reimburse the fund or account from which such other legally available moneys are withdrawn for the amount withdrawn from such fund or account to pay the principal of or interest on the Bonds. The City s obligation to pay the principal of and interest on the Bonds is on a parity with the City s obligation to pay the principal of and interest on any other of its general obligation debt secured by a covenant to levy taxes within the City, including any such debt issued or incurred after the issuance of the Bonds. The resolution authorizing the Bonds does not restrict the City s ability to issue or incur additional general obligation debt, although issuance of additional general obligation debt is subject to the same constitutional and statutory limitations that apply to the issuance of the Bonds. For a further description of the City s outstanding general obligation debt upon issuance of the Bonds and the annual debt service on the Bonds, see DIRECT DEBT under CITY INDEBTEDNESS herein. For a description of certain constitutional and statutory limits on the issuance of general obligation debt, see DEBT LIMIT under CITY INDEBTEDNESS herein. BOOK-ENTRY-ONLY SYSTEM The information contained in the following paragraphs of this subsection Book-Entry-Only System has been extracted from a schedule prepared by Depository Trust Company ( DTC ) entitled SAMPLE OFFERING DOCUMENT LANGUAGE DESCRIBING BOOK-ENTRY-ONLY ISSUANCE. 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. The Depository Trust Company ( DTC ), New York, NY, will act as securities depository for the securities (the Securities ). The Securities will be issued as fully-registered securities registered in the name of Cede & Co. (DTC s partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully-registered Security certificate will be issued for each issue of the Securities, each in the aggregate principal amount of such issue, and will be deposited with DTC. If, however, the aggregate principal amount of any issue exceeds $500 million, one certificate will be issued with respect to each $500 million of principal amount, and an additional certificate will be issued with respect to any remaining principal amount of such issue. DTC, the world s largest securities depository, is a limited-purpose trust company organized under the New York Banking Law, a banking organization within the meaning of the New York Banking Law, a member of the Federal Reserve System, a clearing corporation within the meaning of the New York Uniform Commercial Code, and a clearing agency registered pursuant to the provisions of Section 17A of the Securities Exchange Act of DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non-u.s. equity issues, corporate and municipal debt issues, and money market instruments from over 100 countries that DTC s participants (the Direct Participants ) deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book-entry transfers and pledges between Direct Participants accounts. This eliminates the need for physical 2

7 movement of securities certificates. Direct Participants include both U.S. and non-u.s. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation ( DTCC ). DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non-u.s. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly (the Indirect Participants ). DTC has Standard & Poor s highest rating: AAA. The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at and Purchases of Securities under the DTC system must be made by or through Direct Participants, which will receive a credit for the Securities on DTC s records. The ownership interest of each actual purchaser of each Security (the Beneficial Owner ) is in turn to be recorded on the Direct and Indirect Participants records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Securities 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 Securities, except in the event that use of the book-entry system for the Securities is discontinued. To facilitate subsequent transfers, all Securities 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 Securities 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 Securities; DTC s records reflect only the identity of the Direct Participants to whose accounts such Securities 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 Securities may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the Securities, such as redemptions, tenders, defaults, and proposed amendments to the Security documents. For example, Beneficial Owners of Securities may wish to ascertain that the nominee holding the Securities for their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names and addresses to the registrar and request that copies of notices be provided directly to them. Redemption notices shall be sent to DTC. If less than all of the Securities 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 Securities unless authorized by a Direct Participant in accordance with DTC s MMI Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the City as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co. s consenting or voting rights to those Direct Participants to whose accounts Securities are credited on the record date identified in a listing attached to the Omnibus Proxy. Redemption proceeds, distributions, and dividend payments on the Securities 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 Agent, 3

8 on payable date in accordance with their respective holdings shown on DTC s records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in street name, and will be the responsibility of such Participant and not of DTC, 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 Agent, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants. A Beneficial Owner shall give notice to elect to have its Securities purchased or tendered, through its Participant, to Remarketing Agent, and shall effect delivery of such Securities by causing the Direct Participant to transfer the Participant s interest in the Securities, on DTC s records, to Remarketing Agent. The requirement for physical delivery of Securities in connection with an optional tender or a mandatory purchase will be deemed satisfied when the ownership rights in the Securities are transferred by Direct Participants on DTC s records and followed by a book-entry credit of tendered Securities to Remarketing Agent s DTC account. DTC may discontinue providing its services as depository with respect to the Securities at any time by giving reasonable notice to the City or Agent. Under such circumstances, in the event that a successor depository is not obtained, Security certificates are required to be printed and delivered. The City may decide to discontinue use of the system of book-entry-only transfers through DTC (or a successor securities depository). In that event, Security 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. FUTURE FINANCING The City anticipates issuing approximately $11,630,000* General Obligation Refunding Capital Loan Notes on July 27, LITIGATION The City is not aware of any threatened or pending litigation affecting the validity of the Bonds or the City s ability to meet its financial obligations. DEBT PAYMENT HISTORY The City knows of no instance in which it has defaulted in the payment of principal or interest on its debt. LEGALITY The Bonds are subject to approval as to certain matters by Ahlers & Cooney, P.C. of Des Moines, Iowa as Bond Counsel. Bond Counsel has not participated in the preparation of this Official Statement and will not pass upon its accuracy, completeness or sufficiency. Bond Counsel has not examined, nor attempted to examine or verify, any of the financial or statistical statements or data contained in this Official Statement, and will express no opinion with respect thereto. The FORM OF LEGAL OPINION as set out in APPENDIX A to this Official Statement, will be delivered at closing. * Preliminary; subject to change. The legal opinion to be delivered concurrently with the delivery of the Bonds expresses the professional judgment of the attorneys rendering the opinion as to legal issues expressly addressed therein. By rendering a legal opinion, the opinion giver does not become an insurer or guarantor of the result indicated by that expression of professional judgment, or of the transaction on which the opinion is rendered, or of the future performance of parties to the 4

9 transaction. Nor does the rendering of an opinion guarantee the outcome of any legal dispute that may arise out of the transaction. There is no bond trustee or similar person to monitor or enforce the provisions of the resolution for the Bonds. The owners of the Bonds should, therefore, be prepared to enforce such provisions themselves if the need to do so arises. In the event of a default in the payment of principal of or interest on the Bonds, there is no provision for acceleration of maturity of the principal of the Bonds. Consequently, the remedies of the owners of the Bonds (consisting primarily of an action in the nature of mandamus requiring the City and certain other public officials to perform the terms of the resolution for the Bonds) may have to be enforced from year to year. The obligation to pay general ad valorem property taxes is secured by a statutory lien upon the taxed property, but is not an obligation for which a property owner may be held personally liable in the event of a deficiency. The owners of the Bonds cannot foreclose on property within the boundaries of the City or sell such property in order to pay the debt service on the Bonds. See LEVIES AND TAX COLLECTIONS herein, for a description of property tax collection and enforcement. In addition, the enforceability of the rights and remedies of owners of the Bonds may be subject to limitation as set forth in the Bond Counsel s opinion. The opinion will state, in part, that the obligation of the City with respect to the Bonds may be subject to bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors rights heretofore or hereafter enacted to the extent constitutionally applicable, to the exercise of judicial discretion in appropriate cases and to the exercise by the State and its governmental bodies of the police power inherent in the sovereignty of the State and to the exercise by the United States of America of the powers delegated to it by the Constitution of the United States of America. TAX EXEMPTION AND RELATED CONSIDERATIONS Federal tax law contains a number of requirements and restrictions that apply to the Bonds. These include investment restrictions, periodic payments of arbitrage profits to the United States, requirements regarding the proper use of bond proceeds and facilities financed with bond proceeds, and certain other matters. The City has covenanted to comply with all requirements that must be satisfied in order for the 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 will be excluded from gross income for federal income tax purposes interest on the Bonds is not an item of tax preference for purpose of the federal alternative minimum tax imposed on individuals and corporations under the Code. However, with respect to corporations (as defined for federal income tax purposes), such interest is included in adjusted current earnings for the purpose of determining the alternative minimum tax imposed on certain corporations. The interest on the Bonds is not exempt from present Iowa income taxes. 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. Prospective purchasers of the Bonds should be aware that 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. Bond Counsel will not express any opinion as to such collateral tax consequences. Prospective purchasers of the Bonds should consult their tax advisors as to collateral federal income tax consequences. 5

10 Not Qualified Tax-Exempt Obligations: The City will NOT designate the Bonds as qualified tax-exempt obligations under Section 265(b)(3) of the Code; therefore the Bonds will NOT be bank qualified. Original Issue Premium: The initial public offering price of the Bonds due 2012 through 2021 and 2024 (the "Premium Bonds ") is greater than the amount of such Bonds at maturity. An amount equal to the difference between the initial public offering price of the Premium Bonds (assuming that a substantial amount of the Premium Bonds of that maturity are sold to the public at such price) and the amount payable at maturity constitutes a premium to the initial purchaser of such Premium Bonds. The basis for federal income tax purposes of the Premium Bonds in the hands of such initial purchaser must be reduced each year by the amortizable bond premium, although no federal income tax deduction is allowed as a result of such reduction in basis for amortizable bond premium. Such reduction in basis will increase the amount of any gain (or decrease the amount of any loss) to be recognized for federal income tax purposes upon a sale or other taxable disposition of the Premium Bonds. The amount of premium which is amortizable each year by an initial purchaser is determined by using such purchaser's yield to maturity. Purchasers of the Premium Bonds should consult with their own tax advisors with respect to the determination of amortizable bond premium on Premium Bonds for federal income tax purposes and with respect to the state and local tax consequences of owning and disposing of Premium Bonds. Original Issue Discount: The initial public offering price of the Bonds due in 2022, 2023 and 2025 (the Discount Bonds ) is less than the principal amount payable at maturity. As a result, the Discount Bonds will be considered to be issued with original issue discount. The difference between the initial public offering price of each maturity of the Discount Bonds, as set forth in this Official Statement (assuming it is the first price (the Issue Price ) at which a substantial amount of such maturity is sold), and the principal amount payable at maturity of the Discount Bonds will be treated as original issue discount. With respect to a taxpayer who purchases Discount Bonds in the initial public offering at the Issue Price and who holds such Discount Bonds to maturity, the full amount of original issue discount will constitute interest which is not includable in the gross income of the owner of such Discount Bonds for federal income tax purposes and such owner will not, under present federal income tax law, realize taxable capital gain upon payment of such Discount Bonds at maturity. The original issue discount on Discount Bonds is treated as accruing daily over the term of such Discount Bonds on the basis of a constant interest rate compounded at the end of each six-month period (or shorter period from the date of original issue) ending on June 1 and December 1 (with straight line interpolation between compounding dates). Section 1288 of the Code provides, with respect to tax-exempt obligations such as the Discount Bonds, that the amount of original issue discount accruing each accrual period will be added to the owner s tax basis for the Discount Bonds. Such adjusted tax basis will be used to determine taxable gain or loss upon disposition of the Discount Bonds (including sale, redemption or payment at maturity). In the event of the sale or other taxable disposition of the Discount Bonds prior to stated maturity, the amount realized by such owner in excess of the adjusted basis of such Discount Bonds will be includable in gross income. An owner of Discount Bonds who disposes of such Discount Bonds prior to maturity should consult such owner s tax advisor as to the amount of original issue discount accrued over the period held and the amount of taxable gain or loss upon the sale or other disposition of such Discount Bonds prior to maturity. The original issue discount that accrues in each year to an owner of Discount Bonds may result in certain collateral federal income tax consequences. Owners of any Discount Bonds should be aware that the accrual of original issue discount in each year may result in a tax liability from these collateral tax consequences even through the owners of such Discount Bonds will not receive a corresponding cash payment until a later year. Owners who purchase Discount Bonds in the initial public offering but at a price different than the Issue Price should consult their own tax advisors with respect to the tax consequences of the ownership of the Discount Bonds. 6

11 The Code contains certain provisions relating to the accrual of original issue discount in the case of subsequent purchasers of the Bonds such as the Discount Bonds. Owners who do not purchase Discount Bonds in the initial offering should consult their own tax advisors with respect to the tax consequences of the ownership of the Discount Bonds. Owners of Discount Bonds should consult their own tax advisors with respect to the state and local tax consequences of owning the Discount Bonds. It is possible that under the applicable provisions governing the determination of state or local income taxes, accrued original issue discount on the Discount Bonds may be deemed to be received in the year of accrual even though there will not be a corresponding cash payment until a later year. Related Tax Matters: 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 includable 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 may treat the City as a 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. 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 in this section or affect the market value of the Bonds. It cannot be predicted whether or in what form any such proposal might be enacted or whether, if enacted, it would apply to bonds issued prior to enactment. Prospective purchasers of the Bonds should consult their own tax advisors regarding any pending or proposed tax legislation. Bond Counsel expresses no opinion regarding any pending or proposed federal or state tax legislation. Opinions: Bond Counsel s opinion is not a guarantee of a result, or of the transaction on which the opinion is rendered, or of the future performance of parties to the transaction, but represents its legal judgment based upon its review of existing statutes, regulations, published rulings and court decisions and the representations and covenants of the City described in this section. No ruling has been sought from the Service with respect to the matters addressed in the opinion of Bond Counsel and Bond Counsel s opinion is not binding on the Service. Bond Counsel assumes no obligation to update its opinion after the issue date to reflect any further action, fact or circumstance, or change in law or interpretation, or otherwise. 7

12 RATING Standard and Poor s ( S&P ) has rated the Bonds AAA. In addition, Moody s Investors Service ( Moody s ) currently maintains a rating of Aaa on the City s long-term general obligation debt. The City has not requested a rating on the Bonds from Moody s. Such ratings, if and, when received, reflect only the views of the rating agencies and any explanation of the significance of such ratings may only be obtained from the respective rating agency. There is no assurance that such ratings, if and when received, will continue for any period of time or that they will not be revised or withdrawn. FINANCIAL ADVISOR The City has retained Public Financial Management, Inc., Des Moines, Iowa (the Financial Advisor ) in connection with the preparation of the City's issuance of the Bonds. The Financial Advisor is not obligated to undertake, and has not undertaken to make, an independent verification or to assume responsibility for the accuracy, completeness or fairness of the information contained in the Official Statement. Public Financial Management, Inc. is an independent advisory firm and is not engaged in the business of underwriting, trading or distributing municipal securities or other public securities. CONTINUING DISCLOSURE In order to assist bidders in complying with paragraph (b)(5) of the Rule, the City will undertake, pursuant to the resolution for the Bonds and the Continuing Disclosure Certificate, to provide certain annual financial information and notices of certain events (the Disclosure Covenants ). The details of these undertakings are set forth in APPENDIX C of this Official Statement. The Continuing Disclosure Certificate will be delivered at closing, and any failure on the part of City to deliver the same shall relieve the Purchaser of its obligation to purchase the Bonds. The City inadvertently failed to comply with a previous continuing disclosure undertaking in accordance with the reporting requirements of paragraph (f)(3) of the Rule. While the required tables were provided in accordance to the Rule (within 210 days after the end of the fiscal year 2010), the audited financial statements for the year ending June 30, 2010 were not timely filed. On June 15, 2011, the City filed the outstanding audited financial statements for the year ending June 30, 2010 in accordance with the Rule and is now compliant. The City has taken steps to assure future compliance with its Disclosure Covenants. Breach of the Disclosure Covenants will not constitute a default or an Event of Default under the Bonds or the resolution for the Bonds. A broker or dealer is to consider a known breach of the Disclosure Covenants, however, before recommending the purchase or sale of the Bonds in the secondary market. Thus, a failure on the part of the City to observe the Disclosure Covenants may adversely affect the transferability and liquidity of the Bonds and their market price. SALE AT COMPETITIVE BIDDING After competitive bids were received on July 11, 2011, the Bonds were awarded to the syndicate of Morgan, Stanley & Co., LLC, Raymond James & Associates, Inc. and U.S. Bancorp Investments Inc. for an aggregate price of $6,954, Morgan Stanley, parent company of Morgan Stanley & Co. Incorporated, an underwriter of the Bonds, has entered into a retail brokerage joint venture with Citigroup Inc. As part of the joint venture, Morgan Stanley & Co., LLC will distribute municipal securities to retail investors through the financial advisor network of a new broker-dealer, Morgan Stanley Smith Barney LLC. This distribution arrangement became effective on June 1, As part of this arrangement, Morgan Stanley & Co., LLC will compensate Morgan Stanley Smith Barney LLC for its selling efforts with respect to the Bonds. 8

13 CERTIFICATION The City has authorized the distribution of this Official Statement for use in connection with the initial sale of the Bonds. I have reviewed the information contained within the Official Statement prepared on behalf of the City of West Des Moines, Iowa, by Public Financial Management, Inc., Des Moines, Iowa, and said Official Statement does not contain any material misstatements of fact nor omission of any material fact regarding the issuance of $6,900,000 General Obligation Bonds, Series 2011A. CITY OF WEST DES MOINES, IOWA /s/ Jody E. Smith, Deputy City Manager/City Clerk 9

14 CITY PROPERTY VALUES IOWA PROPERTY VALUATIONS In compliance with Section of the Code of Iowa, the State Director of Revenue annually directs the county auditors to apply prescribed statutory percentages to the assessments of certain categories of real property. The Polk, Dallas, Warren and Madison County Auditors adjusted the final Actual Values for The reduced values, determined after the application of rollback percentages, are the Taxable Values subject to tax levy. For assessment year 2010, the taxable value rollback rate was % of Actual Value for residential property; % of Actual Value for agricultural property; and 100% of Actual Value for commercial, industrial, railroad and utility property. The Legislature s intent has been to limit the growth of statewide Taxable Valuations for the specific classes of property to 4% annually. Political subdivisions whose Taxable Values are thus reduced or are unusually low in growth are allowed to appeal the valuations to the State Appeal Board, in order to continue to fund present services. 1/1/2010 VALUATIONS (Taxes payable July 1, 2011 to June 30, 2012) Taxable Value 100% Actual Value (With Rollback) Residential $3,600,129,250 $1,724,615,959 Commercial 1,972,317,012 1,972,317,012 Industrial 33,640,140 33,640,140 Railroad 1,821,837 1,821,837 Utilities w/o Gas & Electric 11,069,444 11,069,444 Gross valuation $5,618,977,683 $3,743,464,392 Less military exemption (3,966,280) (3,966,280) Net valuation $5,615,011,403 $3,739,498,112 TIF increment (used to compute debt service levies and constitutional debt limit) $413,950,068 $413,950,068 Taxed separately: Ag. Land $5,850,870 $4,038,012 Ag. Buildings $219,190 $151,272 Gas & Electric Utilities $68,963,596 $48,320, GROSS TAXABLE VALUATION BY CLASS OF PROPERTY 1) Taxable Valuation Percent Total Residential $1,724,615, % Commercial, Industrial and all Utilities 2,065,346, % Railroad 1,821, % Total Gross Taxable Valuation $3,791,784, % 1) Includes all Utilities but excludes Taxable TIF Increment, Ag. Land and Ag. Buildings. 10

15 TREND OF VALUATIONS Assessment Year Payable Fiscal Year 100% Actual Valuation Taxable Valuation (With Rollback) Taxable TIF Increment $5,269,296,213 $3,074,742,017 $517,187, ,693,347,823 3,354,478, ,944, ,885,335,010 3,552,031, ,575, ,998,691,853 3,720,483, ,625, ,103,995,127 3,787,818, ,950,068 The 100% Actual Valuations, before rollback, and after the reduction of military exemption, include Ag. Land, Ag Buildings, TIF Increment and Gas & Electric Utilities. The Taxable Valuations, with the rollback and after the reduction of military exemption include Gas & Electric Utilities and exclude Ag. Land, Ag. Buildings and Taxable TIF Increment. Iowa cities certify operating levies against Taxable Valuation excluding Taxable TIF Increment and debt service levies are certified against Taxable Valuation including the Taxable TIF Increment. PROPERTY TAX ASSESSMENTS In compliance with Section of the Code of Iowa, as amended, the State Director of Revenue annually directs all county auditors to apply prescribed percentages to the assessments of certain categories of real property. The final values, called Actual Valuation, are then adjusted by the County Auditor. Assessed or Taxable Valuations subject to tax levy is then determined by the application of State determined rollback percentages, principally to residential and commercial property. Beginning in 1978, the State required a reduction in Actual Valuation to reduce the impact of inflation on its residents. The resulting value is defined as the Assessed or Taxable Valuation. The rollback percentages for properties are as follows: Fiscal Year Agricultural Residential Railroads Commercial % % % % % % % % % % % % % % % % % % % % Property is assessed on a calendar year basis. The assessments finalized as of January 1 of each year are applied to the following fiscal year. For example, the assessments finalized on January 1, 2010 are used to calculate tax liability for the tax year starting July 1, 2011 through June 30,

16 LARGER TAXPAYERS Set forth in the following table are the persons or entities which represent larger taxpayers within the boundaries of the City, as provided by the Polk, Dallas, Warren and Madison County Auditor s Offices. No independent investigation has been made of and no representation is made herein as to the financial condition of any of the taxpayers listed below or that such taxpayers will continue to maintain their status as major taxpayers in the City. The City s mill levy is uniformly applicable to all of the properties included in the table, and thus taxes expected to be received by the City from such taxpayers will be in proportion to the assessed valuations of the properties. The total tax bill for each of the properties is dependent upon the mill levies of the other taxing entities which overlap the properties. 1/1/2010 Taxpayer Type of Property Taxable Valuation Wells Fargo Home Mortgage Inc. Commercial $188,454,660 GGP Jordan Creek LLC Commercial 175,142,440 Valley West DM Commercial 67,710,000 Mid-America Investment Company Commercial 55,130,500 Aviva Real Property Holdings, LLC Commercial 54,939,070 Mid-American Energy Co. Utility 47,970,768 IFBF Property Management Commercial 45,599,700 CCOP I LLC Commercial 40,041, Westlakes Parkway LC Commercial 32,702,680 West Glen Commercial 32,423,170 LEGISLATION From time to time, legislative proposals are pending in Congress and the Iowa General Assembly that would, if enacted, alter or amend one or more of the property tax matters described herein. It cannot be predicted whether or in what forms any of such proposals, either pending or that may be introduced, may be enacted, and there can be no assurance that such proposals will not apply to valuation, assessment or levy procedures for taxes levied by the City or have an adverse impact on the future tax collections of the City. Purchasers of the Bonds should consult their tax advisors regarding any pending or proposed federal or state tax legislation. The opinions expressed by Bond Counsel are based upon existing legislation as of the date of issuance and delivery of the Bonds and Bond Counsel has expressed no opinion as of any date subsequent thereto or with respect to any pending federal or state tax legislation. Iowa Code section 76.2 provides that when an Iowa political subdivision issues general obligation debt: "The governing authority of these political subdivisions before issuing bonds shall, by resolution, provide for the assessment of an annual levy upon all the taxable property in the political subdivision sufficient to pay the interest and principal of the bonds within a period named not exceeding the applicable period of time specified in section A certified copy of this resolution shall be filed with the county auditor or the auditors of the counties in which the political subdivision is located; and the filing shall make it a duty of the auditors to enter annually this levy for collection from the taxable property within the boundaries of the political subdivision until funds are realized to pay the bonds in full." Iowa Code section 76.1 provides that the annual levy shall be sufficient to pay the interest and approximately such portion of the principal of the bonds as will retire them in a period not exceeding twenty years from the date of issue, except for certain bonds issued for disaster purposes and bonds issued to refund or refinance bonds issued for such disaster purposes which may mature and be retired in a period not exceeding thirty years from date of issue. 12

17 DEBT LIMIT CITY INDEBTEDNESS Article XI, Section 3 of the State of Iowa Constitution limits the amount of debt outstanding at any time of any county, municipality or other political subdivision to no more than 5% of the actual value of all taxable property within the corporate limits, as taken from the last state and county tax list. The debt limit for the City, based on its 2010 valuation currently applicable to the fiscal year is as follows: 2010 Actual Valuation of Property $6,107,961,407 Less: Military Exemption (3,966,280) Subtotal $6,103,995,127 Legal Debt Limit of 5% 0.05 Legal Debt Limit $305,199,756 Less: G. O. Debt Subject to Debt Limit (105,600,000) Less: Developer Rebate Agreements (850,000) 1) Less: Other Miscellaneous Debt (2,055,300) 2) Net Debt Limit $196,694,456 1) 2) As reported by the City pursuant to development agreements for urban renewal projects under the authority of Iowa Code Chapter 403. Other Miscellaneous Debt includes capital lease obligations and installment contracts. DIRECT DEBT General Obligation Debt Paid by Property Taxes (Includes the Bonds) Date of Issue Original Amount Purpose Final Maturity Principal Outstanding As of 7/11/11 9/03D $12,000,000 Corporate Purpose 6/19 $10,625,000 6/04A 6,000,000 Capital Improvements 6/21 5,190,000 4/05A 3,055,000 Refunding /15 1,300,000 6/06A 6,000,000 Capital Improvements 6/20 3,355,000 10/09A 7,510,000 Refunding 2001C Bonds 6/15 5,480,000 12/09B 6,500,000 Corporate Purpose 6/15 925,000 3/10A 6,050,000 Refunding 2002C Bonds 6/20 6,050,000 4/10B 975,000 Refunding 2001D Bonds 6/14 745,000 6/10C 7,000,000 Corporate Purpose 6/20 6,775,000 8/11A 6,900,000 Corporate Purpose 6/25 6,900,000 Subtotal $47,345,000 13

18 General Obligation Debt Abated by Tax Increment Revenues Date of Issue Original Amount Purpose Final Maturity Principal Outstanding As of 7/11/11 11/03F $19,250,000 Mills Parkway (Wells Fargo) 6/23 $12,670,000 1) 12/07A 2,550,000 Jordan Creek 6/19 1,830,000 3/08A 9,860,000 Refunding 6/14 5,190,000 6/08B 7,000,000 Mills Parkway (AVIVA) 6/22 7,000,000 3/10A 25,400,000 Refunding 2003A Bonds 6/19 25,400,000 4/10B 1,530,000 Refunding C Bonds 6/14 1,165,000 8/10D 5,000,000 Mills Parkway (Microsoft) 6/29 5,000,000 Subtotal $58,255,000 1) On July 27, 2011 the City anticipates advance refunding the maturities of the 2003F Bonds. Total General Obligation Debt Subject to Debt Limit: $105,600,000 Annual Fiscal Year Debt Service Payments General Obligation Debt Paid by Property Taxes (Includes the Bonds) Current Outstanding The Bonds Total Outstanding Principal and Principal and Principal and Fiscal Year Principal Interest Principal Interest Principal Interest FY $5,625,000 $7,145,741 $1,215,000 $1,358,949 $6,840,000 $8,504,690 FY ,395,000 6,751, , ,781 5,770,000 7,280,110 FY ,685,000 5,865, , ,281 5,065,000 6,391,766 FY ,105,000 5,130, , ,681 4,490,000 5,654,179 FY ,185,000 5,054, , ,981 5,035,000 6,035,459 FY ,255,000 4,954, , ,981 4,660,000 5,473,869 FY ,365,000 4,889, , ,869 4,465,000 5,094,144 FY ,465,000 3,803, , ,369 3,880,000 4,320,832 FY ,115,000 3,307, , ,919 3,540,000 3,822,119 FY ,250,000 1,312, , ,169 1,690,000 1,829,669 FY , , , ,969 FY , , , ,750 FY , , , ,475 FY , , , ,500 Total $40,445,000 $6,900,000 $47,345,000 14