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Home My WebLink About8542RESOLUTION NO. 8542 A RESOLUTION AWARDING THE SALE OF THE CITY OF PUEBLO, COLORADO, GENERAL OBLIGATION REFUNDING BONDS, SERIES 1998; PRESCRIBING THE INTEREST RATES FOR SUCH BONDS; AND PRESCRIBING CERTAIN DETAILS CONCERNING SUCH BONDS. WHEREAS, the City Council (the "City Council ") of the City of Pueblo, Colorado (the "City ") has determined, and hereby determines, that it is in the best interests of the health, safety and welfare of the people of the City that the City's General Obligation Refunding Bonds, Series 1998 (the "Bonds ") be sold and issued for the purpose of refunding the City's outstanding General Obligation Refunding Bonds, Series 1987A and paying the costs of issuing the Bonds; and WHEREAS, the City Council has previously determined that the Bonds are to be sold based upon competitive bids to be received and publicly opened by the City; and WHEREAS, after advertising the sale of the Bonds, the City Council hereby finds that the highest responsible bidder is Piper Jaffray Inc. (the "Original Purchaser "), whose bid is in all cases to the best advantage of the City, and the City hereby determines to sell the Bonds to the Original Purchaser; and WHEREAS, the City has previously adopted Ordinance No. 6348 (the "Ordinance ") authorizing the issuance of the Bonds and providing certain terms of the Bonds (other than the interest rates and purchase price thereof);and WHEREAS, pursuant to the Ordinance, this Resolution awards the sale of the Bonds to the Original Purchaser and supplements the Ordinance. BE IT RESOLVED BY THE CITY COUNCIL OF PUEBLO: SECTION 1 . Acceptance of Bid; Sale of Bonds. (a) As a result of the public sale held pursuant to the City's Resolution No. 8534 and that resolution's accompanying Notice of Bond Sale, the City Council hereby sells the Bonds to the responsible bidder submitting the bid which results in the lowest true interest cost for the Bonds, and in furtherance thereof the Council hereby accepts and approves the offer to purchase the Bonds as bid by Piper Jaffray Inc., the Original Purchaser. The Bonds, when executed as provided by law, shall be delivered to the Original Purchaser, upon receipt of $7,071,130.55, plus accrued interest from the date of the Bonds to the date of delivery thereof. (b) The proceeds of the Bonds shall be used exclusively for payment of the cost of refunding the City's General Obligation Refunding Bonds, Series 1987A and for paying the costs of issuing the Bonds. (c) Neither the Original Purchaser nor any subsequent registered owner or registered owners of any of the Bonds shall be responsible for the application or disposal of the funds derived from the sale thereof by the City or any of its officers. The issuance of the Bonds by the City shall constitute a warranty by and on behalf of the City, for the benefit of each and every registered owner of the Bonds, that the Bonds have been issued for valuable consideration in full conformity with law. SECTION 2 . Interest Rates for the Bonds. The Bonds shall mature on May 1 and November 1, commencing May 1, 1999, in the principal amounts and years, and shall bear interest from their date at the rates per annum on each May 1 and November 1, commencing on May 1, 1999, as shown in the following table: Maturity Date Principal Amount Interest Rate May 1, 1999 $ 360,000 3.50% November 1, 1999 390,000 3.50 May 1, 2000 395,000 3.50 November I, 2000 405,000 3.50 May 1, 2001 410,000 3.50 November 1, 2001 420,000 3.50 May 1, 2002 430,000 3.60 November I, 2002 440,000 3.60 May 1, 2003 445,000 3.65 November 1, 2003 455,000 3.65 May 1, 2004 465,000 3.70 November I, 2004 475,000 3.70 May 1, 2005 485,000 3.70 November I, 2005 495,000 3.70 May 1, 2006 510,000 3.75 November 1, 2006 520,000 3.75 The interest rates on the Bonds do not exceed the limitations set forth in the Ordinance. SECTION 3 . Approval of Official Statement and Miscellaneous Documents. All action heretofore taken by any of the City's officials and the efforts of the City directed toward the issuance and sale of the Bonds, including use of a Preliminary Official Statement, are hereby ratified, approved and confirmed. The City Council hereby ratifies and approves the final Official Statement in substantially the form presented to the City Council at this meeting, and the President of the City Council is hereby authorized and directed to execute the final Official Statement, with such changes as he. and the City Attorney shall deem necessary or appropriate. The President or the Vice President of the City Council and the City Clerk or her designee are hereby authorized to execute and deliver, and such officials and all other officers of the City are hereby authorized and directed to execute, all other documents- and certificates necessary or desirable to effectuate the issuance of the Bonds and the transactions contemplated thereby. SECTION 4 . Other Action. The officers and agents of the City are hereby authorized and directed to take all action necessary or appropriate to effectuate the provisions of this Resolution. SECTION S . Repeals. All resolutions, motions, orders, bylaws, rules or regulations, or parts thereof, in conflict with this resolution are hereby repealed only to the extent of such inconsistency. SECTION 6 . Severability. If any section, paragraph, clause or provision of this resolution shall for any reason be held to be invalid or unenforceable, the invalidity or unenforceability of such section, paragraph, clause or provision shall not affect any of the remaining parts or provisions of this resolution. SECTION 7 . Effective Date. This resolution shall take effect immediately upon its introduction and passage. INTRODUCED October 13, 1998 BY: Corinne Koehler Councilperson. APPROVED: '. President 00he C until ATTEST: Mw WW� w�_ NEW ISSUE RATING: Standard & Poor's "AAA" BOOK ENTRY ONLY INSURANCE: Financial Security Assurance Inc. BANK QUALIFIED (See "MISCELLANEOUS- Ratings ") In the opinion of Kutak Rock, Bond Counsel, under existing laws, regulations, rulings and judicial decisions and assuming the accuracy of certain representations and continuing compliance with certain covenants, interest on the Bonds is excluded from gross income for federal income tax purposes, is not a specific preference item for purposes of the federal alternative minimum tax, and is exempt from income taxation by the State of Colorado. The City has designated the Bonds as "qualified tax- exempt obligations" under Section 265(b) (3) of the Code. See the caption "TAX MATTERS. " $7,100,000 CITY OF PUEBLO, COLORADO GENERAL OBLIGATION REFUNDING BONDS SERIES 1998 Dated: October 15,1998 Due: As shown below The Bonds are issued in fully registered form in denominations of $5,000 or integral multiples thereof. Interest on the Bonds, at the rates set forth below, is payable semi - annually on May I and November 1 each year, commencing on May 1, 1999. The Depository Trust Company, New York, New York, will act as securities depository for the Bonds, and the Bonds will be registered in the name of Cede & Co., as nominee of DTC. Purchasers of the Bonds will not receive certificates evidencing their ownership interests in the Bonds. So long as DTC or its nominee is the registered owner of the Bonds, payments of principal, premium if any, and interest on the Bonds will be made by the Paying Agent, initially The Bank of Cherry Creek, N.A., Denver, Colorado, directly to DTC, which will remit such payments to Participants for subsequent distribution to the Beneficial Owners. The scheduled payment of principal of and interest on the Bonds when due will be guaranteed under an insurance policy to be issued concurrently with the delivery of the Bonds by FINANCIAL SECURITY ASSURANCE INC. [FSA LOGO] MATURITY SCHEDULE Principal Interest Price or Principal Interest Price or Maturity Date Amount Rate Yield Maturity Date Amount Rate Yield May 1, 1999 $360,000 3.500% May 1, 2003 $445,000 3.650% November 1, 1999 390,000 3.500 November 1, 2003 455,000 3.650 May 1, 2000 395,000 3.500 May 1, 2004 465,000 3.700 November 1, 2000 405,000 3.500 November 1, 2004 475,000 3.700 May 1, 2001 410,000 3.500 May 1, 2005 485,000 3.700 November 1, 2001 420,000 3.500 November 1, 2005 495,000 3.700 May 1, 2002 430,000 3.600 May 1, 2006 510,000 3.750 November 1, 2002 440,000 3.600 November 1, 2006 520,000 3.750 The Bonds are not subject to redemption prior to their stated maturities. Proceeds from the sale of the Bonds will be used to refund the City's General Obligation Refunding Bonds, Series 1987A and to pay the costs of issuance of the Bonds. This cover page contains certain information for quick reference only. It is not a summary of this issue. Investors must read this entire Official Statement to obtain information essential to the making of an informed investment decision The Bonds are being offered pursuant to a public sale, subject to the approval of legality and certain other matters by Kutak Rock, Denver, Colorado, as Bond Counsel, and subject to certain other conditions. Certain legal matters will be passed upon for the City by Thomas E. Jagger, Esq. James Capital Advisors Inc., Denver, Colorado, is acting as financial advisor to the City with respect to this financing. It is expected that the Bonds will be available for delivery through the facilities of DTC, on or about October 29, 1998. PIPER JAFFRAY INC. This Official Statement is dated October 13, 1998. 02- 13172.06 CITY OF PUEBLO, COLORADO City Council Cathy A. Garcia, President Richard Golenda, Vice President Albert Gurule Corinne Koehler Robert Schilling Dr. Bill Sova John Verna City Officials Lewis A. Quigley, City Manager Billy G. Martin, Director of Finance Thomas E. Jagger, Esq., City Attorney Financial Advisor James Capital Advisors Inc. Denver, Colorado Bond Registrar and Paying Agent The Bank of Cherry Creek, N.A. Denver, Colorado Bond and Special Counsel Kutak Rock Denver, Colorado 02- 13172.06 No dealer, salesman, or other person has been authorized to give any information or to make any representation, other than the information contained in this Official Statement, in connection with the offering of the Bonds, and, if given or made, such information or representation must not be relied upon as having been authorized by the City. The information in this Official Statement is subject to change without notice, and neither the delivery of this Official Statement nor any sale hereunder will, tender any circumstances, create any implication that there has been no change in the affairs of the City since the date hereof. This Official Statement does not constitute an offer or solicitation in any jurisdiction in which such offer or solicitation is not authorized, or in which any person making such offer or solicitation is not qualified to do so, or to any person to whom it is unlawful to make such offer or solicitation. The information set forth herein has been obtained from the City and other sources which are believed to be reliable, but it is not guaranteed as to accuracy or completeness. TABLE OF CONTENTS Page INTRODUCTION ........................................................................................................ ............................... 1 THEBONDS ................................................................................................................ ............................... 4 Description ...................................................................................................... ............................... 4 Application of Bond Proceeds ......................................................................... ............................... 4 Securityfor the Bonds ...................... :............................................................................................. 4 Book - Entry-Only System ................................................................................ ............................... 6 Debt Service Requirements ............................................................................. ............................... 8 BONDINSURANCE ................................................................................................... ............................... 9 BondInsurance Policy ..................................................................................... ............................... 9 Financial Security Assurance Inc .................................................................... ............................... 9 REVENUES AVAILABLE FOR DEBT SERVICE .................................................. ............................... 10 Ad Valorem Property Taxes .......................................................................... ............................... 10 Ad Valorem Property Tax Data ..................................................................... ............................... 11 OverlappingMill Levies ............................................................................... ............................... 14 THECITY .................................................................................................................. ............................... 16 Description .................................................................................................... ............................... 16 CityPowers ................................................................................................... ............................... 16 GoverningBody ............................................................................................ ............................... 16 Administration and Management .................................................................. ............................... 17 CityEmployees and Employee Benefits ....................................................... ............................... 17 Services Available to City Residents ............................................................ ............................... 18 Capital Improvements Program ..................................................................... ............................... 18 CITY FINANCIAL OPERATIONS .......................................................................... ............................... 19 AccountingPolicies ....................................................................................... ............................... 19 Major Sources of General Fund Revenues .................................................... ............................... 19 Historical General Fund Operations .............................................................. ............................... 20 Director of Finance's Summary of Material Trends ..................................... ............................... 21 BudgetProcess .............................................................................................. ............................... 22 Retirement and Pension Matters .................................................................... ............................... 23 InsuranceCoverage ....................................................................................... ............................... 23 Deposit and Investment of City Funds .......................................................... ............................... 24 Constitutional Amendment Limiting Taxes and Spending ........................... ............................... 24 FiscalYear 2000 ............................................................................................ ............................... 24 02- 13172.06 ii DEBTSTRUCTURE ................................................................................................. ............................... 25 RequiredElections ........................................................................................ ............................... 25 Limitation on Indebtedness ........................................................................... ............................... 25 GeneralObligation Debt ............................................................................... ............................... 25 RevenueObligations ..................................................................................... ............................... 26 Other Financial Obligations .......................................................................... ............................... 26 Estimated Overlapping General Obligation Debt .......................................... ............................... 26 General Obligation Debt Ratios .................................................................... ............................... 27 LEGALMATTERS ................................................................................................... ............................... 28 Pending and Threatened Litigation Involving the City ................................. ............................... 28 No Litigation Certificate ............................................................................... ............................... 28 TAXMATTERS ........................................................................................................ ............................... 29 MISCELLANEOUS................................................................................................... ............................... 30 Ratings.......................................................................................................... ............................... 30 FinancialAdvisor .......................................................................................... ............................... 30 Registrationof Bonds .................................................................................... ............................... 30 Interest of Certain Persons Named in this Official Statement ....................... ............................... 30 Original Purchaser of the Bonds ................................................................... ............................... 30 IndependentAuditors .................................................................................... ............................... 31 AdditionalInformation .................................................................................. ............................... 31 Official Statement Certification .................................................................... ............................... 31 APPENDIX A— Audited general purpose financial statements of the City as of and for the year ended December 31, 1997 .................................. ............................... A -1 APPENDIX B— Continuing Disclosure Undertaking .............................................. ............................... B -1 APPENDIX C— Municipal Bond Insurance Policy ................................................. ............................... C -1 APPENDIX D— Economic and Demographic Information ........................................ ............................D -1 THE BONDS HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION BY REASON OF CERTAIN EXEMPTIONS CONTAINED IN THE SECURITIES ACT OF 1933, AS AMENDED. IN MAKING AN INVESTMENT DECISION INVESTORS MUST RELY ON THEIR OWN EXAMINATION OF THE CITY, THE BONDS AND THE TERMS OF THE OFFERING, INCLUDING THE MERITS AND 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 AND ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. 02- 13172.06 iii INDEX OF TABLES TABLE Page I Debt Service Requirements ................................................................................ ..............................8 II History of the City's Mill Levy ......................................................................... .............................12 III History of City's Assessed Valuation ................................................................ .............................12 IV History of Assessed and "Actual" Values by Property Classification .............. .............................13 V Historical Property Tax Collections .................................................................. .............................13 VI Largest Taxpayers Within the City .................................................................... .............................14 VIISample Mill Levy............. .................................................................................. .............................15 VIII History of General Fund Revenues, Expenditures, and Changes in Fund Balances ......................21 IX General Fund Budget Summary and Comparison ............................................. .............................23 X General Obligations of the City ......................................................................... .............................25 XI Revenue Obligations of the City ....................................................................... .............................26 XII Certificates of Participation ............................................................................... .............................26 XIII Estimated Overlapping General Obligation Debt .............................................. .............................27 XIV Historical City Debt Ratios ............................................................................... .............................27 02- 13172.06 iv REGIONAL MAP 02- 13172.06 INTRODUCTION This Official Statement is furnished to prospective purchasers of $7,100,000 General Obligation Refunding Bonds, Series 1998, dated October 15, 1998 (the "Bonds "), issued by the City of Pueblo, Colorado (the "City "). The offering of the Bonds is made only by way of this Official Statement, which supersedes any other information or materials used in connection with the offer or sale of the Bonds. This Official Statement speaks only as of its date, and the information contained herein is subject to change. The information set forth in this Official Statement has been obtained from the City and from other sources believed to be reliable but is not guaranteed as to accuracy or completeness. This Official Statement contains, in part, estimates and matters of opinion which are not intended as statements of fact, and no representation or warranty is made as to the correctness of such estimates and opinions, or that they will be realized. The following introductory material is only a brief description of, and is qualified by, the more complete information contained throughout this Official Statement. A full review should be•made of the entire Official Statement and the documents summarized or described herein. Issuer ........................... The City of Pueblo, Colorado, encompassing approximately 44 square miles, is located in the south central portion of Colorado, approximately 110 miles south of Denver and 45 miles south of Colorado Springs. The City has an estimated population of 103,400. See "THE CITY" and the preceding "REGIONAL MAP." Sources of Payment .... The Bonds are general obligations of the City secured by the City's covenant to levy an ad valorem tax on all of the taxable property in the City without limitation of rate and in amounts sufficient to pay the Bonds and the interest thereon as the same respectively become due. See "THE BONDS - Security for the Bonds" and "REVENUES AVAILABLE FOR DEBT SERVICE." Bond Insurance........... Financial Security Assurance Inc. (the "Insurer "), has committed to issue, effective as of the date of issuance of the Bonds, a policy of insurance guaranteeing the payment, when due, of the principal of and interest on the Bonds. The insurance extends over the life of the issue and cannot be canceled by the Insurer. Payment under the policy is subject to the conditions described in "BOND INSURANCE." Purpose ........................ The Bonds are being issued to refund the City's General Obligation Refunding Bonds, Series 1987A (the "Refunded Bonds ") and to pay the costs of issuance. See "THE BONDS - Application of Bond Proceeds." Payment Provisions .... The Bonds mature and bear interest at the rates (computed on the basis of a 360 - day year of twelve 30 day months) as set forth on the cover page hereof. Interest on the Bonds is payable semiannually on May 1 and November 1 each year, commencing on May 1, 1999. Payments for the principal of and interest on the Bonds will be made as described in "THE BONDS - Book - Entry-Only System." Book- Entry- Only Registration ....... The Bonds will be issued in fully registered form and will be registered initially in the name of "Cede & Co." as nominee for The Depository Trust Company, New York, New York ( "DTC "), a securities depository. Beneficial ownership interests in the Bonds may be acquired in principal denominations of $5,000 or 02- 13172.06 integral multiples thereof through Participants in the DTC system. Such beneficial ownership interests will be recorded in the records of the Participants. The Beneficial Owners will not receive certificates evidencing their interests in the Bonds so long as DTC or a successor securities depository acts as the securities depository with respect to the Bonds. So long as DTC or its nominee is the Owner of the Bonds, payments of principal, premium, if any, and interest on the Bonds, as well as notices and other communications made by or on behalf of the City pursuant to the Bond Ordinance, will be made to DTC or its nominee only. Disbursement of such payments, notices, and other communications by DTC to Participants, and by Participants to the Beneficial Owners, is the responsibility of DTC and the Participants pursuant to rules and procedures established by such entities. See "THE BONDS - Book - Entry-Only System" for a discussion of the operating procedures of the DTC system with respect to payments, registration, transfers, notices, and other matters. Prior Redemption ....... The Bonds are not subject to redemption prior to their stated maturities. Registration and Denominations ............ The Bonds are issued in fully registered form in denominations of $5,000 or integral multiples thereof. Tax Status ....................In the opinion of Kutak Rock, Bond Counsel, under existing laws, regulations, rulings and judicial decisions and assuming continuing compliance with certain covenants, interest on the Bonds is excluded from gross income for federal income tax purposes, is not a specific preference item for purposes of the federal alternative minimum tax, and is exempt from taxation by the State of Colorado. The City has designated the Bonds as "qualified tax - exempt obligations" under Section 265(b)(3) of the Code. See the caption "TAX MATTERS." Continuing Disclosure Undertaking ................ Pursuant to the requirements of Securities and Exchange Commission Rule 15c2- 12 (17 CFR Part 240, § 240.15c2 -12), the City has agreed for the benefit of the holders of the Bonds to provide certain financial information, other operating data and notices of material events after the Bonds are issued (the "Continuing Disclosure Undertaking "). A form of the City's Continuing Disclosure Undertaking is attached hereto as Appendix A. Authority for Issuance ....................... The Bonds are issued in full conformity with the City Charter, the constitution and laws of the State of Colorado, and pursuant to an authorizing ordinance (the "Bond Ordinance ") adopted by the City Council of the City (the "Council "). Delivery Information ................. The Bonds are offered when, as, and if issued by the City subject to prior sale and the approving legal opinion of Bond Counsel. It is expected that the Bonds will be available for delivery on or about October 29, 1998, against payment therefor. 02- 13172.06 2 Exchange and Transfer ....................... While the Bonds remain in book - entry-only form, transfer of ownership by Beneficial Owners may be made as described under the caption "THE BONDS — Book - Entry-Only System." In the event that DTC ceases to act as securities depository for the Bonds, the Bond Ordinance provides for the transfer of Bonds by the Bond Registrar pursuant to specified terms and provisions. Financial Statements ................... Appended hereto are the audited general purpose financial statements of the City as of and for the year ended December 31, 1997, being the most recent audited financial statements available for the City. Debt Ratios .................. The following are selected City debt ratios upon issuance and delivery of the Bonds. City 1998 Certified Assessed Valuation ............................... City 1998 Statutory "Actual" Value z) ...... ............................... City General Obligation Debt Outstanding Upon Issuance ofthe Bonds .......................................... ............................... Population .................................................. ............................... City Debt as a Ratio of: 1998 Assessed Valuation ....................... ............................... 1998 Statutory "Actual" Valuation ....... ............................... City Debt Per Capita .................................. ............................... Estimated Overlapping General Obligation Debt ) ................... Sum of City and Overlapping Debt ............ ............................... City and Overlapping Debt as a Ratio of: 1998 Assessed Valuation ....................... ............................... 1998 Statutory "Actual" Valuation ....... ............................... City and Overlapping Debt Per Capita ....... ............................... .......................... $461,740,250 .......................... $3,210,706,306 ......................... $21,085,000 ......................... 103,400 ........................... 4.6% ........................... 0.7% ........................... $204 ........................... $48,140 ........................... $21,133,140 ........................ 4.6 ........................ 0.7 ........................ $204 ( ' ) For definitions of and descriptions of the methodology used in computing assessed valuation, statutory "actual" value, estimated population, general obligation debt outstanding, and estimated overlapping general obligation debt, see "THE BONDS - Security for the Bonds ", "REVENUES AVAILABLE FOR DEBT SERVICE ", and "DEBT STRUCTURE ". (2) Preliminary certified value as of August 25, 1998. Such value is subject to change prior to the final certification date of December 10. Sources: Pueblo County Assessor's Office, the City, and individual overlapping entities ALL OF THE SUMMARIES OF THE STATUTES, RESOLUTIONS, OPINIONS, CONTRACTS, AND AGREEMENTS DESCRIBED IN THIS OFFICIAL STATEMENT ARE SUBJECT TO THE ACTUAL PROVISIONS OF SUCH DOCUMENTS. The summaries do not purport to be complete statements of such provisions and reference is made to such documents, copies of which are either publicly available or available upon request and the payment of a reasonable copying, mailing, and handling charge from: City of Pueblo, Colorado, P.O. Box 1427, Pueblo, Colorado 81022, telephone: (719) 584 -0800; or James Capital Advisors Inc., 8101 E. Belleview, Suite A60 -502, Denver, Co, 80237, telephone: (303) 699 -4464. 02- 13172.06 THE BONDS Description The Bonds are general obligations issued by the City in the total principal amount of $7,100,000 and dated October 15, 1998. Provisions regarding payment of the Bonds, exchange and transfer, and certain other matters are set forth in the "INTRODUCTION ". For a complete statement of the details and conditions of the Bond issue, reference is made to the authorizing Bond Ordinance, copies of which are available from the Financial Advisor prior to delivery of the Bonds. Application of Bond Proceeds The Refunded Bonds. As stated in the Bond Ordinance, the Bonds are being issued by the City for the purpose of refinancing City bonded debt at a lower interest rate, and thus are permitted by Article X, Section 20 of the Colorado Constitution. Proceeds from the sale of the Bonds will be used to refund the City's General Obligation Refunding Bonds, Series 1987A, originally issued in the aggregate principal amount of $8,805,000 and now outstanding in the aggregate principal amount of $7,270,000 (the "Refunded Bonds "). The City expects to make the November 1, 1998 principal and interest payment on the Series 1987A Bonds with money collected prior to the issuance of the Bonds. Entering into and completing the refunding program herein authorized at this time will enable the Council to reduce the net effective interest rate of the obligation represented by the Refunded Bonds and effect other economies. Application of Bond Proceeds. The estimated application of the net proceeds of the Bonds and the contribution by the City is as follows: SOURCES Par Amount of Bonds .......................................... ............................... $7,100,000 City Contribution ................................................ ............................... 550,000 $ 7,650.000 USES Redemption of Refunded Bonds ............... Costs of issuance, including underwriting discount (1) bond insurance premium, professional fees and printing costs ...... Total................ ............................... ....... ............................... $7,555,285 ...... ............................... 94,715 ....... ............................... $ 7,650,000 See "MISCELLANEOUS— Underwriting." Security for the Bonds General Obligation Debt. In the opinion of Bond Counsel, the Bonds are general obligations of the City and all of the taxable property in the City is subject to the levy of an ad valorem tax without limitation of rate and in amounts sufficient to pay the Bonds and the interest thereon. The Bonds are secured by the City's obligation to certify a rate of levy sufficient, together with other legally available funds and revenues, to meet the debt service requirements on the Bonds. The ad valorem property taxes to be levied for the purpose of meeting the debt service requirements on the Bonds shall be in addition to any and all other taxes which may be levied for other purposes of the City. Additionally, the Bond Ordinance provides that in the event that the mill levy of the City fails to produce an amount sufficient to pay the principal of and interest on or in connection with the Bonds 02- 13172.06 4 becoming due in the next succeeding year, the deficit shall be made up in the next levy, and taxes shall continue to be levied until the Bonds and the interest thereon shall be paid in full. Amendments to Bond Ordinance. The Bond Ordinance may be amended or supplemented by ordinance adopted by the City Council in accordance with law, without receipt by the City of additional considerations and without the consent of the Registered Owners but with the written consent of the Bond Insurer, to make any amendment or supplement to the Ordinance which, in the opinion of nationally recognized bond counsel, is not to the material prejudice of the Registered Owner. The Ordinance may be amended or supplemented for any other reason by ordinance adopted by the City Council in accordance with law, without receipt by the City of any additional consideration but with the written consent of the Bond Insurer and the Registered Owners of seventy-five percent (75 %) in aggregate principal amount of the Bonds authorized by the Ordinance and outstanding at the time of the adoption of such amendatory or supplemental ordinance; provided, however, that no such ordinance shall have the effect of permitting: (a) an extension of the maturity of any Bond authorized by the Ordinance; or (b) a reduction in the principal amount of any Bond, or the rate of interest thereon; or (c) a reduction of the principal amount of Bonds required for consent to such amendatory or supplemental Ordinance; or (d) the establishment of priorities as between Bonds issued and outstanding under the provisions of this Ordinance; or (e) the modification of or otherwise affecting adversely the rights of the Registered Owners of less than all of the Bonds then outstanding. Bond Ordinance Irrepealable. The Bond Ordinance provides that after any of the Bonds are issued, such ordinance shall remain irrepealable, but amendable, until the Bonds and the interest accruing thereon shall have been fully paid, satisfied, and discharged. Future Clianges in Laws. Various Colorado laws and constitutional provisions apply to the imposition, collection, and expenditure of ad valorem property taxes and the operation of the City. There is no assurance that there will not be any change in the interpretation of, or additions to applicable laws, provisions, and regulations which would have a material effect, directly or indirectly, on the affairs of the City and the imposition, collection, and expenditure of ad valorem property taxes. Limitations on Remedies Available to Bondholders. There is no bond trustee or similar person to monitor or enforce the provisions of the Bond Ordinance and Bondholders should 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 Bondholders (consisting primarily of an action in the nature of mandamus requiring the City and certain other public officials to perform the terms of the Bond Ordinance) 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 property in question, but is not an obligation for which a property owner may be held personally liable in the event of a deficiency. In addition, the Bondholders 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 "REVENUES AVAILABLE FOR DEBT SERVICE -Ad Valorem Property Taxes" for a description of property tax collection and enforcement. The enforceability of the rights and remedies of the Bondholders, and the obligations incurred by the City in issuing the Bonds, are subject to the following: the federal bankruptcy code and applicable bankruptcy, insolvency, reorganization, moratorium, or similar laws relating to or affecting the enforcement of creditors' rights generally, now or hereafter in effect; usual equity principles which may limit the specific enforcement under state law of certain remedies; the exercise by the United States of America of the powers granted to it by the federal Constitution; and the reasonable and necessary exercise, in certain exceptional situations, of the police power inherent in the sovereignty of the State of Colorado and its governmental bodies in the interest of serving a significant and legitimate public 02- 13172.06 5 purpose. Bankruptcy proceedings, or the exercise of powers by the federal or state government, if initiated, could subject the owners of the Bonds to judicial discretion and interpretation of their rights in bankruptcy or otherwise, and consequently may entail risks of delay, limitation, or modification of their rights. No recourse shall be had for the payment of the principal of or premium, if any, or interest on any of the Bonds or for any claim based thereon or upon any obligation, covenants or agreement contained in the Bond Ordinance or the Paying Agency Agreement against any past, present or future officer, employee or agent of the City, or of any successor public corporation, as such, either directly or through the City or any successor public corporation, under any rule of law or equity, statute or constitution or by the enforcement of any assessment or penalty or otherwise, and all such liability of any such officers, employees or agents as such is hereby expressly waived and released as a condition of and consideration for the passage of the Bond Ordinance, the execution of the Paying Agency Agreement, and the issuance of the Bonds. Book- Entry-Only System The information in this section concerning DTC and DTC's book -entry -only system has been obtained from DTC, and the City and the Financial Advisor take no responsibility for the accuracy thereof DTC will act as securities depository for the Bonds. The Bonds will be issued as frilly registered securities registered in the name of Cede & Co. (DTC's partnership nominee). One fully registered certificate is to be issued for each of the Bonds, as set forth on the cover page hereof, each in the aggregate principal amount of such maturity and will be deposited with DTC. DTC 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 1934. DTC holds securities that its participants ( "Participants ") deposit with DTC. DTC also facilitates the settlement among Participants of securities transactions, such as transfers and pledges, in deposited securities through electronic computerized book -entry changes in Participants' accounts, thereby eliminating the need for physical movement of securities certificates. Direct Participants include securities brokers and dealers, banks, trust companies, clearing corporations and certain other organizations ( "Direct Participants "). DTC is owned by a number of its Direct Participants and by the New York Stock Exchange, Inc., the American Stock Exchange, Inc. and the National Association of Securities Dealers, Inc. Access to the DTC system is also available to others such as securities brokers and dealers, banks and trust companies that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly ( "Indirect Participants "). The rules applicable to DTC and its Participants are on file with the Securities and Exchange Commission. Purchases of the Bonds under the DTC system must be made by or through Direct Participants, which are to receive a credit for the Bonds on DTC's records. The ownership interest of each 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 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 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. 02- 13172.06 6 To facilitate subsequent transfers, all Bonds deposited by Participants with DTC are registered in the name of DTC's partnership nominee, Cede & Co. The deposit of Bonds with DTC and their registration in the name of Cede & Co. effect no change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of 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 Participants remain responsible for keeping accounts 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. Redemption notices shall be sent to Cede & Co. 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. will consent or vote with respect to Bonds. Under its usual procedures, DTC mails an omnibus proxy to the issuer as soon as possible after the record date. The omnibus proxy assigns Cede & Co.'s consenting or voting rights to those Direct Participants to whose accounts the Bonds are credited on the record date (identified in a listing attached to the omnibus proxy). Principal and interest payments on the Bonds are to be made to DTC. DTC's practice is to credit Direct Participants' accounts on payable date in accordance with their respective holdings shown on DTC's records unless DTC has reason to believe that it will not receive payment on the payable date. Payments by Participants to Beneficial Owners are governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in "street name," and will be the responsibility of such Participant and not of DTC, the Paying Agent or the City, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of principal and interest to DTC is the responsibility of the City or the Paying Agent, disbursement of such payments to Direct Participants shall be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners shall 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. Under such circumstances, in the event that a successor securities depository is not obtained, 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, certificates will be printed and delivered to Beneficial Owners. 02- 13172.06 7 Debt Service Requirements Set forth in the following table are the debt service requirements for the Bonds. See the cover page of this Official Statement for the actual interest rates for each maturity of the Bonds. TABLE I Debt Service Requirements Maturity Principal Interest Total May 1, 1999 $ 360,000 139,995.72 499,995.72 November 1, 1999 390,000 122,267.50 512,267.50 May 1, 2000 395,000 115,442.50 510,442.50 November 1, 2000 405,000 109,530.00 513,530.00 May 1, 2001 410,000 101,442.50 511,442.50 November 1, 2001 420,000 94,267.50 514,267.50 May 1, 2002 430,000 86,917.50 516,917.50 November 1, 2002 440,000 79,177.50 519,177.50 May 1, 2003 445,000 72,257.50 516,257.50 November 1, 2003 455,000 63,136.25 518,136.25 May 1, 2004 465,000 54,832.50 519,832.50 November 1, 2004 475,000 46,230.00 521,230.00 May 1, 2005 485,000 37,442.50 522,442.50 November 1, 2005 495,000 26,470.00 523,470.00 May 1, 2006 510,000 19,312.50 529,312.50 November 1, 2006 520,000 9,750.00 529,750.00 Total $ 7,100,000 1,178,471.97 8,278,471.97 Source: Financial Advisor 02- 13172.06 BOND INSURANCE The following information has been furnished by Financial Security Assurance Inc. (the "Bond Insurer ") for use in this Official Statement. Neither the City, the Underwriter nor the Paying Agent makes any representation or warranty regarding the accuracy or completeness of such information. Reference is hereby made to Appendix C for a specimen of the Bond Insurer's Municipal Bond Insurance Policy. Bond Insurance Policy Concurrently with the issuance of the Bonds, the Bond Insurer will issue its Municipal Bond Insurance Policy for the Bonds (the "Policy "). The Policy guarantees the scheduled payment of principal of and interest on the Bonds when due as set forth in the form of the Policy included as an exhibit to this Official Statement. THE POLICY IS NOT COVERED BY THE PROPERTY /CASUALTY INSURANCE SECURITY FUND SPECIFIED IN ARTICLE 76 OF THE NEW YORK INSURANCE LAW. Financial Security Assurance Inc. The Bond Insurer is a New York domiciled insurance company and a wholly -owned subsidiary of Financial Security Assurance Holdings Ltd. ( "Holdings "). Holdings is a New York Stock Exchange listed company whose major shareholders include Fund American Enterprises Holdings, Inc., The Tokio Marine and Fire Insurance Co., Ltd. and MediaOne Capital Corporation. The shareholders of Holdings are not liable for the obligations of the Bond Insurer. At June 30, 1998, the Bond Insurer's total policyholders' surplus and contingency reserves were approximately $831,493,000 and its total unearned premium reserve was approximately $537,866,000 in accordance with statutory accounting principles. At June 30, 1998, the Bond Insurer's total shareholders' equity was approximately $949,625,000 and its total net unearned premium reserve was approximately $457,615,000 in accordance with generally accepted accounting principles. The financial statements included as exhibits to the annual and quarterly reports filed by Holdings with the Securities and Exchange Commission are hereby incorporated herein by reference. Also incorporated herein by reference are any such financial statements so filed from the date of this Official Statement until the termination of the offering of the Bonds. Copies of such materials incorporated by reference will be provided upon request to Financial Security: 350 Park Avenue, New York, New York, 10022, Attention: Communications Department (telephone: (212) 826 - 0100). The Policy does not protect investors against changes in market value of the Bonds, which market value may be impaired as a result of changes in prevailing interest rates, changes in applicable ratings or other causes. The Bond Insurer makes no representation regarding the Bonds or the advisability of investing in the Bonds. The Bond Insurer makes no representation regarding the Official Statement, nor has it participated in the preparation thereof, except that the Bond Insurer has provided to the Issuer the information presented under this caption for inclusion in the Official Statement. 02- 13172.06 9 REVENUES AVAILABLE FOR DEBT SERVICE Ad Valorem Property Taxes The Council has the power, subject to constitutional and statutory guidelines, to certify a levy for collection of ad valorem taxes against all taxable property within the City. Property taxes are uniformly levied against the assessed valuation of all taxable property within the City. The property subject to taxation, the assessment of such property, and the property tax procedure and collections are discussed below. Property Subject to Taxation. Both real and personal property located within the boundaries of the City, unless exempt, are subject to taxation by the City. Exempt property generally includes property of the United States of America; property of the State and its political subdivisions; public libraries; public school property; charitable property; religious property; cemeteries; irrigation ditches, canals, and flumes; household furnishings; personal effects; intangible personal property; inventories of merchandise and materials and supplies which are held for consumption by a business or are held primarily for sale; livestock; agricultural and livestock products; agricultural equipment which is used on the farm or ranch in the production of agricultural products; and non - profit cemeteries. Assessment of Property. All taxable property is listed, appraised and valued for assessment as of January 1 of each year. The "actual" value of taxable property is determined by the county assessor. The "actual" value of most taxable property is determined based on a "level of value," which is the "actual" value of such property as ascertained from manuals and associated data prepared and published by the State property tax administrator for a statutorily defined period preceding the assessment date. The statutorily defined period for the valuation of property for any odd numbered year is the period beginning two years and ending six months prior to January 1 of such year. The statutorily defined period for the valuation of property does not change during even numbered years. The classes of property the "actual" value of which is not determined by a level of value include oil and gas leaseholds and lands, producing mines and other lands producing nonmetallic minerals. The assessed value of taxable property is then determined by multiplying the "actual" value (determined as described in the immediately preceding paragraph) times an assessment ratio. The assessment ratio for all taxable property, other than residential property, with certain exceptions, is fixed at 29 %. The assessment ratio of residential property changes from year to year based on a constitutionally mandated requirement to keep the ratio of the assessed value of all other taxable property to residential property at the same level as it was in the property tax year commencing January 1, 1985. The assessment ratio of residential property was 14.34% for the 1991 and 1992 levy years, 12.86% for the 1993 and 1994 levy years and 10.36% for the 1995 and 1996 levy years and is 9.74% for the 1997 and 1998 levy years. Beginning in May of each year each county assessor hears taxpayers' objections to property valuations, and the county board of equalization hears assessment appeals. The assessor is required to complete the assessment roll of all taxable property no later than August 25 each year. The abstract of assessment prepared therefrom is reviewed by the State property tax administrator. Assessments are also subject to review at various stages by the State board of equalization, the State board of assessment appeals and the State courts. Therefore, the City's assessed valuation may be subject to modification as a result of the review of such entities. In the instance of the erroneous levy of taxes, an abatement or refund must be authorized by the board of county commissioners; and in no case will an abatement or refund of taxes be made unless a petition for abatement or refund is filed within two years after January 1 of the year following the year in which the taxes were levied. Refunded or abated taxes are prorated among all taxing jurisdictions which levied a tax against the property. 02- 13172.06 10 Taxation Procedure. The assessed valuation and statutory "actual" valuation of taxable property within the City is required to be certified by the county assessor to the City no later than August 25 each year. The Council then determines a rate of levy which, when levied upon such certified assessed valuation, and together with other legally available revenues, will raise the amount required annually by the City for its General Fund and Bond Redemption Fund to defray its expenditures during the ensuing fiscal year. In determining the rate of levy, the Council must take into consideration the limitations on certain increases in property tax revenues as described in "Constitutional Amendment Limiting Taxes and Spending" and "Budgetary Process and Information," below. The Council must certify the City's levy to the board of county commissioners no later than December 15. Upon receipt of the tax levy certification of the City and other taxing entities within the county, the board of county commissioners levies against the assessed valuation of all taxable property within the county the applicable property taxes. Such levies are certified by the board of county commissioners to the county assessor, who thereupon delivers the tax list and warrant to the county treasurer for the collection of taxes. Property Tax Collections. Taxes levied in one year are collected in the succeeding year. Taxes certified in 1997, for example, are being collected in 1998. Taxes are due on January 1 in the year of collection; however, they may be paid in either one installment (not later than the last day of April) or two equal installments (not later than the last day of February and June 15) without interest or penalty. Taxes which are not paid within the prescribed time bear interest at the rate of 1% per month until paid. Unpaid amounts and the accrued interest thereon become delinquent on June 16 of the collection year. The county treasurer collects current and delinquent property taxes, as well as any interest, penalties, and other requirements and remits the amounts collected on behalf of the City to the City on a monthly basis. All taxes levied on real and personal property, together with any interest and penalties prescribed by law, as well as other costs of collection, until paid, constitute a perpetual lien on and against the taxed property. Such lien is on a parity with the liens of other general taxes. It is the county treasurer's duty to enforce the collection of delinquent real property taxes by sale of the tax lien on such realty in December of the collection year and of delinquent personal property taxes by the distraint, seizure and sale of such property at any time after October 1 of the collection year. There can be no assurance, however, that the value of taxes, penalty interest and costs due on the property can be recovered by the county treasurer. Further, the treasurer may set a minimum total amount below which competitive bids will not be accepted, in which event property for which acceptable bids are not received will be set off to the county. Taxes on real and personal property may be determined to be uncollectible after a period of six years from the date of becoming delinquent and canceled by the board of county commissioners. Ad Valorem Property Tax Data The City's assessed valuation and mill levies from 1993 to date are set forth in the following tables. For the 1993 and 1994 levy years, the residential assessment ratio was 12.86 %, all other property was assessed at 29% of statutory "actual" value and the levels of value for the one and one -half year period immediately prior to July 1, 1990 were used to determine statutory "actual" value. For 1995 and 1996, the residential assessment ratio was reduced to 10.36 %, and was further reduced to 9.74% for the 1997 and 1998 assessment years. See "Ad Valorem Property Taxes — Assessment of Property" above for a description of the assessment ratios for taxable property used in each of such years. 02- 13112.06 11 TABLE II History of the City's Mill Levy Levy /Collection Year Mill Levy 1993/1994 17.100 1994/1995 17.100 1995/1996 17.100 1996/1997 17.100 1997/1998 15.633 Sources: State of Colorado, Colorado Department of Local Affairs, Division of Property Taxation, 1993 -1997 State of Colorado Property Tax Annual Reports; and the Pueblo County Assessor's Office TABLE III History of City's Assessed Valuation Levy /Collection Assessed Increase or Percent Year Valuation (Decrease) Change 1993/1994 $368,568,940 -- -- 1994/1995 371,121,120 $2,552,180 0.7% 1995/1996 365,332,640 (5,788,480) (1.6) 1996/1997 373,176,830 7,844,190 2.1 1997/1998 429,464,730 56,287,900 15.1 1998/1999 461,740,250 32,275,520 7.5 11 According to City officials, the decrease in assessed valuation was the result of the change in the residential assessment ratio. (2) Preliminary certified value as of August 25, 1998. Such value is subject to change prior to the final certification date of December 10. Sources: State of Colorado, Colorado Department of Local Affairs, Division of Property Taxation, 1993 -1997 State of Colorado Property Tax Annual Reports; and the Pueblo County Assessor's Office The following table sets forth the 1998 assessed and "actual" valuations of specific classes of property within the City. As shown below, residential properties have accounted for the largest percentage of the assessed valuation and will accordingly account for the largest percentage of ad valorem property taxes levied by the City. 02- 13172.06 12 TABLE IV 1998 Assessed and "Actual" Valuation of Classes of Property in the City ( ' ) Preliminary 1998 values as of the August 25, 1998 certification date. Such figures are subject to change prior to the December 10 certification date. (Z) The City's estimated 1998 statutory "actual" value is $3,210,706,306 based upon the breakdown of major classifications of property in the City as provided by the Pueblo County Assessor's Office. The estimate does not take into account variations within major classifications or permitted exceptions. Source: Pueblo County Assessor's Office 1993. The following table sets forth a history of the City's ad valorem property tax collections since TABLE V Historical Property Tax Collections Levy/ Percent Percent Taxes Assessed of Assessed "Actual" of "Actual" Class Valuation Valuation Valuation Valuation 100.6% Residential $237,362,980 51.4% $2,436,991,581 75.9% Commercial 170,122,820 36.8 586,630,414 18.3 State Assessed 28,900,710 6.3 99,657,621 3.1 Vacant 13,416,140 2.9 46,262,552 1.4 Industrial 11,471,450 2.5 39,556,724 1.2 Agricultural 191,360 0.0 659,862 0.0 Other Natural Resources 274,790 0.1 947,552 0.1 Total $461,740,250 100.0 $3,210,706,306 100.0 ( ' ) Preliminary 1998 values as of the August 25, 1998 certification date. Such figures are subject to change prior to the December 10 certification date. (Z) The City's estimated 1998 statutory "actual" value is $3,210,706,306 based upon the breakdown of major classifications of property in the City as provided by the Pueblo County Assessor's Office. The estimate does not take into account variations within major classifications or permitted exceptions. Source: Pueblo County Assessor's Office 1993. The following table sets forth a history of the City's ad valorem property tax collections since TABLE V Historical Property Tax Collections Levy/ Collection Taxes Total Tax Percent of Year Levied Collections Levy Collected 1992/1993 $6,362,876 $6,398,760 100.6% 1993/1994 6,239,504 6,169,032 98.9 1994/1995 6,282,710 6,257,982 99.6 1995/1996 6,185,621 6,125,218 99.0 1996/1997 6,321,906 6,294,361 99.6 1997/1998 6,720,567 6,150,593 91.5 (') Collections through July 31, 1998. Sources: City Comprehensive Annual Financial Report 1993 -1997, and the City Set forth in the following table are the ten largest taxpayers within the City for the 1997 levy year as provided by the Pueblo County Assessor's Office. 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. 02- 13172.06 13 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. TABLE VI Ten Largest Taxpayers of the City "' The total 1997 assessed valuation figure of the City used in computing the above percentages was $429,464,730. Source: Pueblo County Assessor's Office Overlapping Mill Levies Numerous entities located wholly or partially within the City are authorized to levy taxes on property located within the City. As a result, property owners within the City may be subject to various mill levies depending upon the location of their property. According to the assessor's office the lowest total mill levy imposed in 1997 (for payment in 1998) on a taxpayer owning property located in the City is 84.028 mills and the highest is 101.992 mills. The following table is representative of a sample total 1997 mill levy (for payment in 1998) attributable to taxpayers within the City and is not intended to portray the mills levied against all properties within the City. Additional taxing entities may overlap the City in the future. See also "DEBT AND OTHER FINANCIAL OBLIGATIONS — Estimated Overlapping General Obligation Debt." 02- 13172.06 14 Percent of Assessed Assessed Name Valuation Valuation US West $12,743,100 3.0% Westplains Energy 8,607,990 2.0 Public Service Company of Colorado 4,190,400 1.0 Pueblo Mall Limited Partnership 3,600,480 0.8 TCI Cable Vision of Colorado 2,373,980 0.6 Wal Mart Stores 2,333,350 0.5 Eagle Hardware 2,306,280 0.5 Parkview Health Systems 2,194,200 0.5 Pueblo Bank & Trust 2,128,620 0.5 Qual Med 2,037,210 0_5 Total $ 42,515,610 9.9% "' The total 1997 assessed valuation figure of the City used in computing the above percentages was $429,464,730. Source: Pueblo County Assessor's Office Overlapping Mill Levies Numerous entities located wholly or partially within the City are authorized to levy taxes on property located within the City. As a result, property owners within the City may be subject to various mill levies depending upon the location of their property. According to the assessor's office the lowest total mill levy imposed in 1997 (for payment in 1998) on a taxpayer owning property located in the City is 84.028 mills and the highest is 101.992 mills. The following table is representative of a sample total 1997 mill levy (for payment in 1998) attributable to taxpayers within the City and is not intended to portray the mills levied against all properties within the City. Additional taxing entities may overlap the City in the future. See also "DEBT AND OTHER FINANCIAL OBLIGATIONS — Estimated Overlapping General Obligation Debt." 02- 13172.06 14 TABLE VII Sample Total 1997 Mill Levy Taxing Entity Pueblo County Pueblo Regional Library District Pueblo School District No. 60 Southeastern Colorado Water Conservancy District Sample Overlapping Mill Levy (subtotal) City of Pueblo Sample Total Mill Levy 1997 Mill Levy 27.999 5.250 35.146 0.812 69.207 15.633 84.840 (') One mill equals 1/10 of one cent. Mill levies certified in 1997 are for the collection of ad valorem property taxes in 1998. Source: Pueblo County Assessor's Office [The Remainder of this Page Intentionally Left Blank] 02- 13172.06 15 THE CITY Description The City of Pueblo is located in Pueblo County in south central Colorado. The City encompasses approximately 44 square miles and has an estimated current population of 103,400. The City was incorporated in 1885 and is one of the original home rule cities under the Constitution of the State. City Powers Pursuant to the Charter, the City has all powers which are necessary, requisite, or proper for the government and administration of its local and municipal matters, as well as all municipal powers established by the constitution and laws of the State of Colorado. Among those powers, rights, and liabilities specifically granted by the Charter are the following: to have perpetual succession; to own, possess, and hold real and personal property; to succeed to all rights and liabilities of the City; to acquire all benefits, and to assume and pay all bonds, obligations, and indebtedness of the City; to sue and defend, plead, and be impleaded in all courts and places and in all matters and proceedings; purchase, receive, hold, and enjoy, or sell and dispose of real and personal property; to have and use a common seal; to receive bequests, gifts and donations of all kinds of property; and to construct, condemn and purchase, acquire, lease, and to maintain, conduct, and operate waterworks, light plants, telephone systems, power plants, transportation systems, heating plants, and any other public utilities or works or ways, for the use of the City. In carrying out the powers and duties imposed upon it by the Charter and the constitution and laws of the State of Colorado, the City has the power to acquire, within or without its corporate limits, lands, buildings, water, water rights and water storage rights, and other properties and any interest in land and air rights over land, and may take the same upon paying just compensation to the owner as provided by law. Governing Body The City operates under a council- manager form of government whereby all powers of the City are vested in an elected City Council. The Council consists of seven members: four of these members are elected by district and three are elected from the City at large. The members of the Council are elected for staggered four -year terms at the general municipal election held in November in odd numbered years. The members of the City Council elect the president of the City Council, who is the presiding officer and is recognized as head of the City government for ceremonial purposes. The president of the City Council votes as do other members of the City Council, has no veto power, and has no special administrative duties. Pursuant to statute, with certain exceptions, no nonjudicial elected official of any political subdivision of the State can serve more than two consecutive terms in office; however, such term limitation may be lengthened, shortened or eliminated pursuant to voter approval. The City Council is subject to such term limitations. The City Council meets regularly with special meetings held as needed. The president and members of the City Council, their principal occupation, their length of service on the Council, and terms of office are set forth in the following table. 02- 13172.06 16 City Council Name Cathy A. Garcia, President Richard Golenda, Vice President Albert Gurule Corinne Koehler Robert Schilling Dr. Bill Sova John Verna The City Council effects its decisions through the passage of ordinances, resolutions, and motions. All legislative powers of the City are held by the City Council except as provided in the City Charter. Except as otherwise provided in the Charter, the adoption of ordinances requires an affirmative vote of four members of the Council for final passage. The City Charter reserves the right of the City's qualified electors to propose ordinances to the City Council by means of an initiatory petition procedure and to subject ordinances (except those passed as emergency ordinances and certain other ordinances) to reconsideration by the City Council or a referendum vote through the submission of a referendary petition. Administration and Management The City Council appoints all boards and commissions, unless otherwise required by law, and appoints the City Manager. The City manager is the executive head of the government of the City and is responsible for the enforcement of the City's laws and ordinances. The City Manager also administers the operation of all the departments and divisions of the City. The City Manager has the authority to appoint directors of all departments of the City, including the City Attorney. The staff functions through the City's various departments which are under the direction of the City Manager. The following is a list of the administrative and management personnel most directly involved in the issuance of the Bonds, their duties within the City government, and their background experience. City Manager. Lewis A. Quigley has served as City Manager since 1987, after having worked for the City since 1975 in various positions including Assistant City Manager, Interim Fire Chief and Parks and Recreation Director. Mr. Quigley has a bachelor of science degree from Indiana University and a master of science degree from the University of Missouri. Director of Finance. Billy G. Martin has served as the City's Director of Finance since 1976, after having served the City in various capacities since 1971, including Chief Accountant and Tax Auditor. Mr. Martin holds a bachelor of science degree in business administration from the University of Southern Colorado. City Employees and Employee Benefits The City currently employs 1,039 employees including 694 full -time employees, one part-time employee, and 344 seasonal employees. City employees belong to three unions including the Pueblo Association of Government Employees, International Association of Firefighters, and International Brotherhood of Police Officers. The City, through a wholly owned corporation, employs approximately 25 municipal transit workers who are represented by the Amalgamated Transit Workers Local 662. The 02- 13172.06 17 Years of Term Principal Occupation Service Expires Executive Director 3 1999 Bonfils Blood Center Retired business owner 1 2001 Business Owner 3 1999 Stockbroker 1 2001 Realtor 1 2001 Chiropractor 1 2001 Retired business owner 3 1999 The City Council effects its decisions through the passage of ordinances, resolutions, and motions. All legislative powers of the City are held by the City Council except as provided in the City Charter. Except as otherwise provided in the Charter, the adoption of ordinances requires an affirmative vote of four members of the Council for final passage. The City Charter reserves the right of the City's qualified electors to propose ordinances to the City Council by means of an initiatory petition procedure and to subject ordinances (except those passed as emergency ordinances and certain other ordinances) to reconsideration by the City Council or a referendum vote through the submission of a referendary petition. Administration and Management The City Council appoints all boards and commissions, unless otherwise required by law, and appoints the City Manager. The City manager is the executive head of the government of the City and is responsible for the enforcement of the City's laws and ordinances. The City Manager also administers the operation of all the departments and divisions of the City. The City Manager has the authority to appoint directors of all departments of the City, including the City Attorney. The staff functions through the City's various departments which are under the direction of the City Manager. The following is a list of the administrative and management personnel most directly involved in the issuance of the Bonds, their duties within the City government, and their background experience. City Manager. Lewis A. Quigley has served as City Manager since 1987, after having worked for the City since 1975 in various positions including Assistant City Manager, Interim Fire Chief and Parks and Recreation Director. Mr. Quigley has a bachelor of science degree from Indiana University and a master of science degree from the University of Missouri. Director of Finance. Billy G. Martin has served as the City's Director of Finance since 1976, after having served the City in various capacities since 1971, including Chief Accountant and Tax Auditor. Mr. Martin holds a bachelor of science degree in business administration from the University of Southern Colorado. City Employees and Employee Benefits The City currently employs 1,039 employees including 694 full -time employees, one part-time employee, and 344 seasonal employees. City employees belong to three unions including the Pueblo Association of Government Employees, International Association of Firefighters, and International Brotherhood of Police Officers. The City, through a wholly owned corporation, employs approximately 25 municipal transit workers who are represented by the Amalgamated Transit Workers Local 662. The 02- 13172.06 17 transit workers work under a signed one -year contract which expires at the end of 1998. City officials state employee relations are excellent. City employees are offered medical and dental insurance plans. Additional benefits include sick leave and vacation based on, among others, length of service with the City. Services Available to City Residents The City provides various services to its residents. Included among these are fire and police protection, streets and highways, public works and improvements, parks and recreation services, health and sanitation services, social services, planning and zoning and general administrative services. Water services are provided by the Board of Water Works of the City. Additional services are provided by various public and private entities. Electrical, natural gas, and telephone service, as well as medical facilities, are provided by private entities. The City owns and operates Pueblo Memorial Airport and a separately incorporated bus company providing services within the City. The airport facility currently is operated on a self sustaining basis with the exception of an annual City subsidy which was $1,442,500 for 1997. The bus company operations are also subsidized by the City and the federal government, with subsidies from the City's General Fund and the federal government being $926,601 and $666,182, respectively, for 1997. Capital Improvements Program As part of the budget message or as a separate report attached thereto, the City Manager is required to annually present a program of proposed capital projects for the ensuing fiscal year and for four fiscal years thereafter. The City Manager recommends to the City Council those projects to be undertaken during the ensuing fiscal year and the method of financing such projects. The City Council may levy annually a tax of not more than two mills to be assessed upon the valuation within the City at the same time as the regular annual taxes for City expenses, for the benefit of a fund known as the "Capital Improvement Fund." The City did not levy property taxes in 1997 for the Capital Improvement Fund. Pursuant to the proposals submitted by the City Manager, the City annually budgets and expends funds on capital improvements for street construction, replacement and addition of traffic control devices, improvements and acquisitions of recreational facilities, and other similar improvements. Capital improvements ordinarily are funded from the City's Capital Improvement Fund. Expenditures for such capital improvements were approximately $1.7 million in 1997. This includes moneys derived from a half cent sales tax increase which is currently scheduled to be in effect until December 31, 2001, the proceeds of which are being used for job- creating capital improvements within the City and at the Pueblo Memorial Airport and Industrial Park. The City expects to expend approximately $1.0 million for capital improvements in 1998. 02- 13172.06 18 CITY FINANCIAL OPERATIONS Accounting Policies The accounts of the City are organized on the basis of funds and account groups. Such funds are segregated for the purpose of accounting for the operation of specific activities or attaining certain objectives. For a description of the various funds and account groups, see "APPENDIX C." Financial operations are accounted for by the City's Finance Department which prepares monthly financial statements. State law and the Charter require that an audit be made of the City's financial statements at the end of the fiscal year. The audited financial statements must be filed with the Council within six months after the end of the fiscal year and with the state auditor 30 days thereafter. Failure to file an audit report may result in the withholding of the City's property tax revenues by the county treasurer pending compliance. Pueblo received the Certificate of Achievement for Excellence in Financial Reporting awarded by the Government Finance Officers Association for its 1996 Comprehensive Annual Financial Report. Such certificate is the highest form of recognition for excellence in state and local government financial reporting and is awarded to governmental entities whose comprehensive annual financial reports are judged to conform substantially to program standards. To receive the award, the report must be easily readable and understandable. It must include all funds and financial transactions during the fiscal year and it must go beyond the requirements of generally accepted accounting principles to provide the many users of government financial statements with a wide variety of information using standard formatting conventions. The City's 1997 Comprehensive Annual Financial Report will be submitted for consideration for the award. The City's fiscal year 1997 general purpose financial statements were audited by McPherson, Breyfogle, Lichlyter & Daveline, P.C., certified public accountants, Pueblo, Colorado. Such financial statements are the most current audited financial information available for the City. The general purpose financial statements from the City's 1997 Financial Statements and Independent Auditor's Report are appended hereto. Major Sources of General Fund Revenues The governmental fund utilized for the general administration and operation of the City is the General Fund. The major sources of revenue to such fund are sales and use taxes, intergovernmental revenues, and franchise and occupational taxes. Sales and Use Tax. Municipal sales and use tax revenue, the City's largest single source of revenue in the General Fund comprised $34,584,816 (70 %) of total General Fund revenue in 1997, and is expected to comprise $34,000,000 (73 %) of total General Fund revenue in 1998. The City imposes a sales tax at the rate of 3.5 %, with 0.5% being dedicated to economic development projects through December 31, 2001. The sales tax rate will revert to 3.0% at such time unless an extension is approved by a majority of the electorate voting thereon. Pursuant to the City's Sales Tax Ordinances, the City Council cannot adopt a mill levy exceeding 19.75 per thousand dollars assessed valuation for municipal purposes (excluding water bonds) without causing the City's Sales and Use Tax Ordinances to become null and void. Property Taxes. One of the largest General Fund revenue sources to the City is the ad valorem tax annually levied on and against all of the taxable property within the City Taxes levied in one year are 02- 13172.06 19 collected in the following year. See "REVENUES AVAILABLE FOR DEBT SERVICE —Ad Valorem Property Tax Data." The City's General Fund levy in 1997 produced $6,309,127 or 13% of the total revenue in the General Fund. Other Revenue Sources. The City also receives General Fund revenues from several additional sources including intergovernmental, franchise and room taxes, licenses and permits, charges for services, fines and forfeits, interest on investments. Historical General Fund Operations Set forth hereafter is a five -year comparative statement of revenues, expenditures, and changes in fund balances for the City's General Fund. The following information should be read together with the City's financial statements and accompanying notes appended hereto. Preceding years' financial statements may be obtained from the sources noted in "MISCELLANEOUS— Additional Information." [The Remainder of this Page Intentionally Left Blank] 02- 13172.06 20 TABLE VIII History of General Fund Revenues, Expenditures, and Changes in Fund Balances Excess of revenues Over expenditures 1993 1994 1995 1996 1997 Revenues: Taxes $34,251,562 $36,361,127 $38,487,529 $40,315,714 $44,483,162 State and federal grants -- -- -- 143,629 147,331 Licenses and permits 100,982 119,807 122,231 126,555 128,122 Other agencies 815,444 878,416 934,754 1,759,841 3,225,439 Charges for services 205,158 224,897 265,870 328,206 352,710 Fines and forfeits 560,099 568,266 661,491 799,083 790,116 Interest income 127,032 113,564 150,270 288,567 328,166 Other 211,763 288,322 83,798 371,045 301,915 Total 36,272,040 38,554,399 40,705,943 44,132,640 49,756,961 Expenditures: 29( 9,949 1 � 6( 4,263 2) 202,793 24( 6,348) 967,774 General government 3,787,287 3,950,781 4,193,406 4,455,194 4,989,733 Public safety 15,363,067 16,438,142 15,681,429 18,320,764 21,193,667 Parks and recreation 2,095,696 2,127,277 2,230,794 2,497,423 2,683,631 Transportation 2,288,916 2,388,450 2,326,711 2,333,615 2,451,463 Public works 2,976,653 3,236,648 2,916,767 3,022,100 3,211,131 Insurance and contingencies 347,587 473,891 2,094,175 1,865,115 2,004,043 Intergovernmental 1,565,497 1,545,528 1,771,595 1,884,452 1,942,538 Total 28.424.703 30,160.717 31,214,877 34,378,663 38,476,206 Excess of revenues Over expenditures 7,847,337 8,393,682 9,491,066 9,753,977 11,280,755 Other financing sources (uses): Proceeds from capital lease -- -- -- -- 642,005 Transfers from other funds 2,954,257 2,716,406 2,911,659 2,925,916 3,103,900 Transfers to other funds (10.071,539) (10,210,785) (10,740,365 (11,998,899 (13,505,992) Total (7,117,282 (7,494,379 (7,828,706) (9,072,983) (9,760,087 Excess of revenue and other financing sources over expenditures and other financing (uses) 730,055 899,303 1,662,360 680,994 1,520,668 Fund Balance, January 1 2,791,067 3,371,173 7,762,466 9,627,619 10,062,265 Residual equity transfer 29( 9,949 1 � 6( 4,263 2) 202,793 24( 6,348) 967,774 Fund balance, December 31 $ 3,221,173 $ 4,206,213 $ 9,627,619 $ 10,062,265 $ 12,550,707 The General Fund balances differ because of a prior period adjustment made to reflect the City's implementation of a Governmental Accounting Standards Board Statement relating to compensated absences. (2) The General Fund balances differ as a result of a prior period adjustment made to reflect the City's implementation of a Governmental Accounting Standards Board Statement relating to the collection of taxpayer assessed tax revenues. Source: City of Pueblo Comprehensive Annual Financial Reports, 1993 -1997 Director of Finance's Summary of Material Trends In the last four years and including the first seven months of 1998 the most notable increase in City revenues were the general sales and use tax. The City's economy has been strong with the increase in new businesses that range from a service industry to retail outlets. Not only was the sales tax 02- 13172.06 21 increasing, but also added to the surge in the economy was the increase in assessed valuation which leads to higher property tax collections. Fund balances have also grown over the last few years due to controlling expenditures as well as legal growth in revenue under the TABOR amendment. The largest increase in debt service funds was the result of the issuance of the 1997 HARP (Historic Arkansas River Project) bonds for $12,850,000, in connection with which the citizens also approved a revenue and spending change of $1,100,000 for debt service payments out of the City's revenues in excess of the TABOR limits. Also, there will be a ballot issue in November 1998, for the citizens to consider, which entails potential voter - approved revenue and spending changes for all excess revenue for the next five years, for the purpose of capital expenditures. ;Budget Process The City is required by law to adopt an annual budget setting forth all proposed expenditures for each department, office, and agency of the City, including the Municipal Court and City Council. The budget must show estimates of all anticipated revenue of the City from all sources including bond issues, if any, for the ensuing fiscal year, including an estimate of revenue needed from ad valorem taxes to meet estimated expenditures of the City. The budget must give comparative figures showing the actual expenditures and revenues for corresponding items and sources for the preceding two fiscal years in full and for the current fiscal year. Statements of the bonded and other indebtedness of the City must be given, showing the debt service requirements, the amount of authorized but unissued debt, and the condition of any capital expenditure funds and special funds. The budget must provide a statement of the estimated surplus or deficit balance for the current fiscal year. Each year, not later than the first regular meeting of the Council in October, the City Manager must propose a budget for the ensuing budget year. Notice must be given that a public hearing on the proposed budget will be held before its final adoption and that the proposed budget will be open for inspection by the public. Prior to adoption, any elector of the City may register his or her objections to the proposed budget in writing. The City must adopt its budget, as well as an appropriation ordinance and a tax levy ordinance prior to the first day of December. Following adoption of the budget, the City Council certifies to the county assessor the amount to be levied on taxable property within the City for collection by the county treasurer. In general, the City cannot expend money for any of the purposes set out in the appropriation ordinance in excess of the amount appropriated. However, in the case of an emergency or some contingency which was not reasonably foreseeable, the City Council may authorize the expenditure of funds in excess of the budget by a resolution adopted by a majority vote of the City Council membership. If the City receives revenues which were unanticipated at the time of adoption of the budget, or if there is a cash surplus sufficient to meet a need, the City Council may authorize a supplemental appropriation by resolution. General Fund Budget Summary and Comparison. Set forth hereafter is a summary and comparison of the City's 1998 and 1997 budgets, as adopted, as compared to year to date actual unaudited figures for the seven month period ended July 31, 1998. The City has budgeted for the majority of its General Fund revenues to be derived from sales and use tax. 02- 13172.06 22 TABLE IX General Fund Budget Summary 1998 Year to Date ( ' ) Unaudited year to date figures through July 31, 1998. Source: City of Pueblo 1998 Budget and City Finance Department Retirement and Pension Matters See Note 14 to the City's financial statements appended hereto for a discussion of the City's pension plans. Insurance Coverage The Council acts to protect the City against loss and liability by maintaining certain insurance coverages. The City is insured as a member of CIRSA, a property and liability insurance pool established for Colorado municipalities on January 1, 1982. CIRSA provides liability coverage, including errors and omissions; property coverage; and specific catastrophe coverage, which is renewable annually on January 1 st. See Note 7 to the City's financial statements appended hereto for a discussion of CIRSA. The City Manager believes the City's present insurance coverage to be adequate. However, there can be no assurance that the City will continue to maintain this level of coverage. 02- 13172.06 23 (unaudited' 1998 Budget 1997 Budget REVENUES: Taxes $30,138,504 $44,503,567 $39,540,906 Licenses and Permits 70,539 125,200 114,000 Intergovernmental 553,754 947,413 818,413 Charges for Services 190,774 226,300 211,800 Fines and Forfeitures 514,913 781,500 655,000 Other 412,880 230,900 185,000 Other Financing Sources 1,775,052 3,475,564 4,230,118 Other Financing Uses (8,250,501) (13,883,365) (11,641,831) Prior Year Carryover -- 716,000 471,788 Total Funds Available $ 25,405,915 $ 37,123,079 $ 34,585,194 EXPENDITURES: General Government $ 3,183,901 $ 5,310,269 $ 4,835,836 Fire Protection 4,175,649 7,117,848 6,600,000 Police Protection 6,818,488 11,745,000 10,902,401 Park and Recreation 1,691,456 2,820,000 2,686,962 Transportation 1,322,661 2,550,836 2,426,724 Highways and Streets 1,485,955 2,871,187 2,705,345 Sanitation 195,897 187,022 198,854 Public Building Maintenance 268,108 441,359 416,765 Intergovernmental 1,977,715 2,079,558 1,854,307 Insurance and Contingent 1,136,458 2,000,000 1,958,000 Total Expenditures $ 22,256,288 $ 37,123,079 $ 34,585,194 ( ' ) Unaudited year to date figures through July 31, 1998. Source: City of Pueblo 1998 Budget and City Finance Department Retirement and Pension Matters See Note 14 to the City's financial statements appended hereto for a discussion of the City's pension plans. Insurance Coverage The Council acts to protect the City against loss and liability by maintaining certain insurance coverages. The City is insured as a member of CIRSA, a property and liability insurance pool established for Colorado municipalities on January 1, 1982. CIRSA provides liability coverage, including errors and omissions; property coverage; and specific catastrophe coverage, which is renewable annually on January 1 st. See Note 7 to the City's financial statements appended hereto for a discussion of CIRSA. The City Manager believes the City's present insurance coverage to be adequate. However, there can be no assurance that the City will continue to maintain this level of coverage. 02- 13172.06 23 Deposit and Investment of City Funds State statutes set forth requirements for the deposit of City funds in eligible depositaries and for the collateral ization of such deposited funds. See also Note 3 to the City's financial statements appended hereto. The City also may invest available funds in accordance with applicable state statutes. The investment of the proceeds of this issue also is subject to the provisions of the Federal Tax Code. See "TAX MATTERS." Constitutional Amendment Limiting Taxes and Spending General. At the general election on November 3, 1992, the voters of the State approved the addition of Article X, Section 20 to the State constitution (the "Amendment "), which limits the ability of the State and local governments such as the City to increase revenues, debt and spending and restricts property, income and other taxes. Generally, the Amendment limits the percentage increases in spending and property tax revenues to the prior year's amounts, adjusted for inflation, local growth and voter approved changes. The Amendment authorizes "voter- approved revenue changes" which allow local governments such as the City to exceed the otherwise mandated limitations on revenues and spending. (See below.) See "Debt Structure - Required Elections" for a description of the Amendment's limitations on the City's borrowing power. Many of the provisions of the Amendment are ambiguous and will require judicial interpretation. Pending such judicial interpretation, the application of the Amendment could adversely affect the financial condition and operations of the City and other Colorado local governments to an extent that cannot be predicted. Enterprises. Enterprises are excluded from the provisions of the Amendment. As defined in the Amendment, enterprise means a government -owned business authorized to issue its own revenue bonds and receiving under 10% of annual revenue in grants from all Colorado state and local governments combined. Voter Approved Revenue Changes. Voter - approved revenue changes are dollar amounts that are exceptions to, and not part of, the City's base for purposes of calculating fiscal year spending under the Amendment. With such changes, the City may retain and spend revenues which otherwise would have to be refunded as exceeding the limitations mandated by the Amendment. Since the Amendment was adopted, the City has presented five potential revenue changes to the voters, and all of those changes were approved. Three were for single year exceptions, where the money was used for designated purposes; one was for the limited term of a V2¢ sales tax extension, where the money is used for economic development; and one was for the limited term of, and to pay off, a bond issue. None of these voter - approved revenue changes has been challenged legally. Fiscal Year 2000 Computer programmers and other designers of equipment that use microprocessors have consistently abbreviated dates by eliminating the first two digits of the year, creating an assumption within such computers that these two digits would always be 19. As the year 2000 approaches, such systems will be unable to accurately process certain date -based information. This phenomenon and the business and operational problems that it poses for businesses and governments are collectively referred to as the Year 2000 Issue. According to City officials, the City has formulated remediation plans and expects to institute the plans in third quarter 1999. City officials believe the Year 2000 Issue is unlikely to have a material effect on the City's future financial results. 02- 13172.06 24 DEBTSTRUCTURE Required Elections Article X, Section 20 of the Colorado Constitution requires that, except for refinancing bonded debt at a lower interest rate, the City must have voter approval in advance for the creation of any multiple - fiscal year direct or indirect City debt or other financial obligation whatsoever without adequate present cash reserves pledged irrevocably and held for payments in all future fiscal years. Enterprises, as defined in Article X, Section 20, are excluded from the application of said Section and the voter approval requirements established therein. For a discussion of Article X, Section 20 see "CITY FINANCIAL OPERATIONS- Constitutional Amendment Limiting Taxes and Spending." Limitation on Indebtedness Pursuant to the Charter, the aggregate amount of indebtedness of the City may not exceed 10% of the assessed valuation of taxable property within the City as of the last preceding assessment for City purposes. Bonds issued for the acquisition, extension or improvement of water or the municipal water works system, local improvement district bonds, revenue bonds and refunding bonds are not included within such computation. Based upon the City's preliminary 1998 certified assessed valuation as of the August 25 certification date of $461,740,250, the current debt limitation is approximately $46,174,025, with the amount of outstanding debt applicable to the debt limitation being $21,945,890. General Obligation Debt "Debt" or "indebtedness" as used in this section means, generally, obligations backed by the City's full faith and credit and secured by the unlimited power of the City to levy ad valorem property taxes for the payment of bonds and the interest thereon. Any general obligation indebtedness of the City is subject to the election requirements described above in "Required Elections." The following table sets forth the City's outstanding general obligation debt as of the date of this Official Statement. TABLE X General Obligations of the City of Pueblo Principal Amount Obligation Outstanding Limited Tax General Obligation Bonds, Series 1996 (2) $12,075,000 General Obligation Street and Bridge Refunding Bonds, Series 1992 (3) 1,910,000 General Obligation Refunding Bonds, Series 1998 (when issued and outstanding) 7,100,000 Total $ 21,085,000 ( ' ) The City is also legally obligated as the issuer of General Obligation Water Refunding Bonds, Series 1991, of which $9,630,000 remains outstanding, but the Board of Water Works of Pueblo, Colorado (the "Board "), a body separately organized and existing under the City's Charter, has the responsibility to make, and has always made, the payments on these bonds. Payments on the bonds total a maximum of approximately $3,700,000 annually, and are insured by MBIA. (2) Payments on these bonds total a maximum of approximately $1,081,000 annually, and are insured by MBIA. (3) Payments on these bonds total a maximum of approximately $293,000 annually, and are insured by MBIA. 02- 13172.06 25 Revenue Obligations The City Council has the power to issue revenue bonds, subject to the election requirements described above in "Required Elections," payable from the revenues derived from the operation of facilities to be acquired, constructed or improved with the proceeds of the bonds, or payable in whole or part from available proceeds of sales and use taxes. The following table sets forth the City's outstanding revenue obligations as of the date of this Official Statement. TABLE XI Revenue Obligations of the City of Pueblo Principal Amount Obligation Outstanding Sewer Revenue Refunding Bonds, Series 1996 $10,005,000 Capital Improvement Residual Revenue Bonds, Series 1988 1,965,000 Total $11,970,000 Other Financial Obligations Leases and Long Term Contracts. The City Council has the authority to enter into installment or lease option contracts, subject to annual appropriation, for the purchase of property or capital equipment without prior electoral approval as described above in "Required Elections ". The term of any such contract may not extend over a period greater than the estimated useful life of the property or equipment. As of December 31, 1997, the City had long -term contracts and leases outstanding in the amount of $860,890. The City has also entered into several lease purchase and sublease agreements with the Pueblo Municipal Building Corporation to provide for the issuance of certificates of participation for various public projects. The following table sets forth the City's outstanding certificates of participation as of the date of this Official Statement. TABLE XII Certificates of Participation of the City of Pueblo Principal Amount Obligation Outstanding Certificates of Participation, Series 1992 $2,430,000 Golf Course Refunding Certificates of Participation, Series 1995 3,920,000 Certificates of Participation, Series 1995 1,135,000 Total $ 7,485,000 Estimated Overlapping General Obligation Debt Certain public entities whose boundaries may be entirely within, coterminous with, or only partially within the City are also authorized to incur general obligation debt, and to the extent that properties within the City are also within such overlapping public entities such properties will be liable for an allocable portion of such debt. For purposes of this Official Statement, the percentage of each 02- 13172.06 26 entity's outstanding debt chargeable to City property owners is calculated by comparing the assessed valuation of the portion overlapping the City to the total assessed valuation of the overlapping entity. To the extent the City's assessed valuation changes disproportionately with the assessed valuation of overlapping entities, the percentage of general obligation debt for which City property owners are responsible will also change. The following table sets forth the estimated overlapping general obligation debt chargeable to properties within the City as of the date of this Official Statement. TABLE XIII Estimated Overlapping General Obligation Debt Estimated Net Debt Chargeable Outstanding General to Properties in the City Overlapping Public Entity Obligation Debt Percent Amount Pueblo School District No. 70 $24,070,000 0.2% $48,140 Sources: Pueblo County Assessor's Office; and information obtained from individual entities General Obligation Debt Ratios Set forth in the following table are selected general obligation debt ratios for the City for the years ended December 31, 1993 -1997. TABLE XIV Historical City Debt Ratios Sources: City General Purpose Financial Statements, 1993 -1997; Pueblo County Assessor's Office; Regional Economics Information System Bureau of Economic Analysis; and the City 02- 13172.06 27 Calendar Year Ended December 31 1993 1994 1995 1996 1997 Debt Outstanding $12,395,000 $11,790,000 $11,110,000 $23,230,000 $22,065,000 Population 100,912 101,373 101,921 102,165 102,723 Assessed Value $368,568,940 $371,121,120 $365,332,640 $373,176,830 $429,464,730 Ratio of Debt to Assessed Value 3.4% 3.2% 3.0% 6.2% 5.1% General Obligation Debt Per Capita $123 $116 $109 $227 $215 Personal Income Per Capita (Pueblo County) $16,414 $17,320 $18,674 $19,235 Unavail Ratio of General Obligation Debt Per Capita to Personal Income Per Capita 0.7% 0.7% 0.6% 1.2% Unavail Sources: City General Purpose Financial Statements, 1993 -1997; Pueblo County Assessor's Office; Regional Economics Information System Bureau of Economic Analysis; and the City 02- 13172.06 27 LEGAL MATTERS Pending and Threatened Litigation Involving the City Sovereign Immunity. The Governmental Immunity Act of 1972, Title 24, Article 10, Part 1, Colorado Revised Statutes (the "Act "), provides that, with certain specified exceptions, sovereign immunity acts as a bar to any action against a public entity, such as the City, for injuries which lie in tort or could lie in tort. The Act provides that sovereign immunity does not apply to injuries occurring as a result of certain specified actions or conditions. In such instances, the public entity may be liable for injuries arising from an act or omission of the public entity, or an act or omission of its public employees, which are not willful and wanton, and which occur during the performance of their duties and within the scope of their employment. The maximum amounts that may be recovered under the Act, whether from one or more public entities and public employees, are as follows: (a) for any injury to one person in any single occurrence, the sum of $150,000; (b) for an injury to two or more persons in any single occurrence, the sum of $600,000; except in such instance, no person may recover in excess of $150,000. Suits against both the City and a public employee do not increase such maximum amounts which may be recovered. For injuries occurring prior to July 1, 1986, sovereign immunity limits are deemed to be waived to the extent that the City's insurance covers such injury. With regard to injuries occurring on and after such date, the City may, by resolution, increase any maximum amount that may be recovered from the City for the type of injury described in the resolution. The City has not adopted such a resolution to date. The City may not be held liable either directly or by indemnification for punitive or exemplary damages. In the event that the City is required to levy an ad valorem property tax to discharge a settlement or judgment, such tax may not exceed a total of ten mills per annum for all outstanding settlements or judgments. The City may be subject to civil liability and may not be able to claim sovereign immunity for actions founded upon various federal laws. Examples of such civil liability include, but are not limited to, suits filed pursuant to 42 U.S.C. § 1983 alleging the deprivation of federal constitutional or statutory rights of an individual. In addition, the City may be enjoined from engaging in anti - competitive practices which violate the antitrust laws. However, effective July 1, 1986, the Act provides that it applies to any action brought against a public entity or a public employee in any Colorado state court having jurisdiction over any claim brought pursuant to any federal law, if such action lies in tort or could lie in tort. Pending and Threatened Litigation. The City Attorney states that as of the date hereof, to the best of his knowledge, belief, and information, no litigation of any nature is now pending or threatened, which, if determined adversely to the City, would not otherwise be covered by insurance or would be expected to have a material adverse effect upon the City's ability to comply with its obligations under the Bond Ordinance. No Litigation Certificate The purchase of the Bonds is conditioned on, among other things, receipt from the City Attorney and /or certain City officials of certification at closing that there is no litigation then pending, or to their knowledge threatened, affecting the validity of or security for the Bonds. 02- 13172.06 28 TAX MATTERS In the opinion of Kutak Rock, Bond Counsel, under existing laws, regulations, rulings and judicial decisions, interest on the Bonds is excluded from gross income for federal income tax purposes and is not a specific preference item for purposes of the federal alternative minimum tax. The opinion described in the preceding sentence assumes the accuracy of certain representations and compliance by the City with covenants designed to satisfy the requirements of the Code that must be met subsequent to the issuance of the Bonds. Failure to comply with such requirements could cause interest on the Bonds to be included in gross income for federal income tax purposes retroactive to the date of issuance of the Bonds. The City has covenanted to comply with such requirements. Bond Counsel has expressed no opinion regarding other federal tax consequences arising with respect to the Bonds. Such interest is also exempt from taxation by the State of Colorado, except inheritance, estate, and transfer taxes. Notwithstanding Bond Counsel's opinion that interest on the Bonds is not a specific preference item for purposes of the federal alternative minimum tax, such interest will be included in adjusted current earnings of certain corporations, and such corporations are required to include in the calculation of alternative minimum taxable income 75% of the excess of such corporation's adjusted current earnings over its alternative minimum taxable income (determined without regard to such adjustment and prior to reduction for certain net operating losses). The accrual or receipt of interest on the Bonds may otherwise affect the federal income tax liability of the owners of the Bonds. The extent of these other tax consequences will depend upon such owner's particular tax status and other items of income or deduction. Bond Counsel has expressed no opinion regarding any such consequences. Purchasers of the Bonds, particularly purchasers that are corporations (including S corporations and foreign corporations operating branches in the United States), property or casualty insurance companies, banks, thrifts or other financial institutions, certain recipients of social security or railroad retirement benefits, taxpayers otherwise entitled to claim the earned income credit, or taxpayers who may be deemed to have incurred or continued indebtedness to purchase or carry tax - exempt obligations, should consult their tax advisors as to the tax consequences of purchasing or owning the Bonds. Bond Counsel is of the opinion that because the City has properly designated the Bonds as "qualified tax - exempt obligations" within the meaning of Section 265(b)(3) of the Code, in the case of certain banks, thrift institutions or other financial institutions owning the Bonds, a deduction is allowed for 80% of that portion of such institutions' interest expense allocable to interest on the Bonds. Changes in Federal Tax Law. From time to time, there are legislative proposals in the Congress 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 enactment. Purchasers of the Bonds should consult their tax advisors regarding any pending or proposed 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 legislation. 02- 13172.06 29 MISCELLANEOUS Ratings Standard & Poor's Ratings Services, a division of The McGraw -Hill Companies, Inc. ( "S &P ") and Fitch ICBA, Inc. ( "Fitch "), have assigned the ratings to the Bonds shown on the cover page hereof, with the understanding that, upon delivery of the Bonds, the Bond Insurance Policy will be issued by the Insurer. Such ratings reflect only the view of such organizations and any desired explanations of the significance of such ratings should be obtained from the rating agency furnishing the same at the following addresses: Standard & Poor's, 25 Broadway, New York, New York 10004, and Fitch, One State Street Plaza, New York, New York 10004. Generally, a rating agency bases its rating on the information and materials furnished to it and on investigations, studies, and assumptions of its own. There is no assurance such ratings will continue for any given period of time or that such ratings will not be revised downward or withdrawn entirely by the rating agency in the judgment of such rating agency circumstances so warrant. Any such downward revision or withdrawal of sucks rating may have an adverse effect on the market price of the Bonds. Financial Advisor James Capital Advisors Inc. ( "James Capital ") served as financial advisor to the City with respect to the sale of the Bonds. As the City's financial advisor, James Capital has assisted in the preparation of this Official Statement and in other matters relating to the planning, structuring, rating and issuance of the Bonds. In its role of financial advisor to the City, James Capital has not undertaken either to make an independent verification of or to assume responsibility for the accuracy or completeness of the information contained in the Official Statement and the Appendices hereto. Registration of Bonds Registration or qualification of the offer and sale of the Bonds (as distinguished from registration of the ownership of the Bonds) is not required under the federal Securities Act of 1933, as amended, the Colorado Securities Act, as amended, or the Colorado Municipal Bond Supervision Act, as amended, pursuant to exemptions from registration provided in such acts. THE CITY ASSUMES NO RESPONSIBILITY FOR QUALIFICATION OR REGISTRATION OF THE BONDS FOR SALE UNDER THE SECURITIES LAWS OF ANY JURISDICTION IN WHICH THE BONDS MAY BE SOLD, ASSIGNED, PLEDGED, HYPOTHECATED, OR OTHERWISE TRANSFERRED. Interest of Certain Persons Named in this Official Statement The legal fees to be paid to Kutak Rock are contingent upon the sale and delivery of the Bonds. Original Purchaser of the Bonds The Bonds are being sold by the City at a price of $7,071,130.55 (representing the par amount of the Bonds, less an underwriter's discount of $28,869.45) plus accrued interest on the Bonds, to Piper Jaffray Inc., ( the "Original Purchaser ") pursuant to a public sale. See "THE BONDS — Application of Bond Proceeds." Expenses associated with the issuance of the Bond are being paid by the City from proceeds of the issue. 02- 13172.06 30 Independent Auditors The general purpose financial statements of the City as of and for the year ended December 31, 1997, included in this Official Statement, have been audited by independent auditors, McPherson, Breyfogle, Lichlyter & Daveline, P.C., Certified Public Accountants, Pueblo, Colorado, as set forth in their report appearing therein. Additional Information Copies of statutes, ordinances, opinions, contracts, agreements, financial and statistical data, and other related reports and documents described in this Official Statement are either publicly available or available upon request and the payment of a reasonable copying, mailing, and handling charge from the individuals listed in the "INTRODUCTION ". Official Statement Certification The preparation of this Official Statement and its distribution have been authorized by the City Council. This Official Statement is hereby duly approved by the Council as of the date on the cover page hereof. This Official Statement is not to be construed as an agreement or contract between the City and the purchasers or holders of any Bond. CITY OF PUEBLO, COLORADO By: /s/ President, City Council 02- 13172.06 31 APPENDIX A Audited general purpose financial statements of the City as of and for the year ended December 31, 1997 02- 13172.06 A -1 APPENDIX B Undertaking to Provide Ongoing Disclosure The following is a brief summary of certain provisions of the City's secondary market disclosure undertaking, contained in the Bond Ordinance, and is qualified in its entirety by the provisions of the undertaking. Copies of the Bond Ordinance may be obtained from the sources listed in "INTRODUCTION- Additional Information." The City has covenanted in the Bond Ordinance that beginning with the fiscal year ended December 31, 1996, it will provide to each Nationally Recognized Municipal Securities Information Repository ( "NRMSIR ") recognized by the Securities and Exchange Commission ( "SEC ") and to the state information depository, if any (the "SID," and collectively with the NRMSIRs, the "Depositories "), annual financial information and operating data of the type contained in this Official Statement, including audited financial statements prepared in accordance with generally accepted accounting principles and financial information and operating data set forth in this Official Statement under the captions: "CITY FINANCIAL OPERATIONS- Historical General Fund Operations "; - "Budget Process" and "REVENUES AVAILABLE FOR DEBT SERVICE." Such information may be provided by cross - reference to documents previously provided to the Depositories or the SEC; provided, however, that if the document so referenced is a final official statement, it must be available from the Municipal Securities Rulemaking Board (the "MSRB "). The information covered by this undertaking will be provided annually to the Depositories within 188 days of the close of the Issuer's fiscal year. The currently recognized NRMSIRs are: JJ Kenny Information Systems, The Repository, 765 Broadway — W floor, New York, New York 10006 -2503; Thompson NRMSIR, Secondary Market Disclosure, 395 Hudson Street — 3` Floor, New York, New York 10014 -3669; Bloomberg Municipal Repositories, Municipal Department, P.O. Box 840, Princeton, NJ 08542 -0840; and DPC Data Inc., One Executive Drive, Fort Lee, New Jersey 07024. As of the date of this Official Statement, no SID exists within the State. In addition, the City has covenanted to provide to the MSRB and to the SID, notice of the occurrence of any of the following events with respect to the Bonds (if such event is material): (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 Bonds; (7) modifications to rights of Bond Owners; (8) Bond calls; (9) defeasances; (10) release, substitution, or sale of property securing repayment of the Bonds; or (11) rating changes. The City also will provide notice in a timely manner to each NRMSIR or the MSRB and to the SID if the City has failed to comply with its disclosure undertakings. The City has never failed to comply in all material respects with any previous undertakings entered into in compliance with the Rule. The continuing disclosure undertakings described above have been made for the benefit of the registered owners of the Bonds, including beneficial owners of the Bonds. Unless otherwise required by law, no Bondholder shall be entitled to damages for the Issuer's non - compliance with its undertakings; however, Bondholders may enforce specific performance of the undertakings by any available judicial proceeding. Under no circumstances will the failure of the City to perform the undertakings hereunder constitute an Event of Default with respect to the Bonds as described in the Bond Ordinance. The undertaking will be in effect from the date of delivery of the Bonds until the earlier of (i) the date all principal and interest on the Bonds has been legally defeased pursuant to the terms of the Bond Ordinance; (ii) the date that the Issuer shall no longer constitute an "obligated person" within the meaning 02- 13172.06 B -1 of the Rule; or (iii) the date on which those portions of the rule which require this written undertaking are held to be invalid by a court of competent jurisdiction in a non - appealable action, have been repealed retroactively or otherwise do not apply to the Bonds. The undertaking may be amended from time to time without the consent of the holders of the bonds in compliance with the rule and any interpretive guidance related to the rule. The City shall cause notice of such amendment to be provided to each Depository. 02- 13172.06 B -2 APPENDIX C [Municipal Bond Insurance Policy] 02- 13172.06 C -1 L-W MW411 ECONOMIC AND DEMOGRAPHIC INFORMATION The following information is provided to give prospective investors general information concerning selected economic and demographic conditions existing in the area within which the City is located. The statistics presented below have been obtained from the referenced sources and represent the most current information available from such sources; however, certain of the information is released only after a significant amount of time has passed since the most recent date of the reported data and therefore, such information may not be indicative of economic and demographic conditions as they currently exist or conditions which may be experienced in the near future. Further, the reported data has not been adjusted to reflect economic trends, notably inflation. Finally, other economic and demographic information not presented herein may be available concerning the area in which the City is located and prospective investors may want to review such information prior to making their investment decision. The following information is not to be relied upon as a representation or guarantee of the City or its officers, employees, or advisors. Population and Median Age. The following table sets forth population statistics for the City, Pueblo County and Colorado. Population Source: U.S. Department of Commerce, Bureau of the Census 1950 -1990; 1997 estimates from Colorado Division of Local Government According to the United States Census Bureau, Pueblo's median age in 1980 was 29.9 years as compared with 34.5 years in 1990. The State's median age for the same period increased from 28.6 in 1980 to 32.5 years in 1990, with the median age of the United States being 30 and 33 years in 1980 and 1990, respectively. Income. The following tables set forth historical median household effective buying income, the percentage of households by classification of effective buying income ( "EBI ") levels, and per capita personal income. Pueblo's per capita income level over the five year period shown has consistently been lower than the State levels. 02- 13172.06 D -1 Percent Percent Percent Year City of Pueblo Change Pueblo County Change Colorado Change 1950 63,685 -- 90,188 -- 1,325,089 -- 1960 91,181 43.2% 118,707 31.6% 1,753,947 32.4% 1970 97,774 7.2 118,238 (0.4) 2,207,259 25.9 1980 101,686 4.0 125,972 6.5 2,889,964 30.9 1990 98,640 (3.0) 123,051 (2.3) 3,294,394 14.0 1997 101,623 3.0 132,436 7.6 3,892,644 18.2 Source: U.S. Department of Commerce, Bureau of the Census 1950 -1990; 1997 estimates from Colorado Division of Local Government According to the United States Census Bureau, Pueblo's median age in 1980 was 29.9 years as compared with 34.5 years in 1990. The State's median age for the same period increased from 28.6 in 1980 to 32.5 years in 1990, with the median age of the United States being 30 and 33 years in 1980 and 1990, respectively. Income. The following tables set forth historical median household effective buying income, the percentage of households by classification of effective buying income ( "EBI ") levels, and per capita personal income. Pueblo's per capita income level over the five year period shown has consistently been lower than the State levels. 02- 13172.06 D -1 Median Household Effective Buying Income 1993 1994 1995 1996 1997 City of Pueblo $23,816 $25,447 $22,051 $23,045 $23,568 Pueblo County 24,900 26,684 23,098 24,137 24,594 Colorado 34,797 36,770 31,797 32,947 33,890 United States 35,056 37,070 32,238 33,482 34,618 (') The 1995 EBI figures were based on money income rather than personal income which the prior years figures had been based on, and are therefore not directly comparable to historical numbers. 26.7 Source: "Survey of Buying Power," Sales & Marketing Management, 1994 -1998 15.3 Colorado Percent of Households by Effective Buying Income Groups -1997 Source: "Survey of Buying Power," Sales & Marketing Management, 1998 Per Capita Personal Income Less than $20,000- $35,000- $50,000- 20,969 21,991 23,138 24,517 25,740 $20,000 $34,999 $49,999 and Over City of Pueblo 42.6% 26.7% 15.4% 15.3% Pueblo County 40.5 26.7 15.4 15.3 Colorado 27.7 24.0 18.5 29.8 United States 28.0 22.5 18.2 31.3 Source: "Survey of Buying Power," Sales & Marketing Management, 1998 Per Capita Personal Income Fall School Enrollment School District 1994 1995 1996 1997 1998 Pueblo County School District No. 70 4,749 5,160 5,524 6,087 6,255 Pueblo County School District No. 60 18,001 17,817 18,100 17,970 17,807 Sources: Colorado Department of Education 1994 -1997; and Pueblo County School Districts No. 60 and 70 for 1998 02- 13172.06 D -2 1992 1993 1994 1995 1996 Pueblo County $15,658 $16,414 $17,320 $18,674 $19,235 Colorado 20,969 21,991 23,138 24,517 25,740 United States 20,261 20,915 22,186 - 23,359 24,436 Source: Bureau of Economic Analysis; U.S. Department of Commerce School Enrollment. The following table presents a five year history of school enrollment for Pueblo County School District No. 60 and Pueblo County School District No. 70, the school districts serving the City. Fall School Enrollment School District 1994 1995 1996 1997 1998 Pueblo County School District No. 70 4,749 5,160 5,524 6,087 6,255 Pueblo County School District No. 60 18,001 17,817 18,100 17,970 17,807 Sources: Colorado Department of Education 1994 -1997; and Pueblo County School Districts No. 60 and 70 for 1998 02- 13172.06 D -2 Housing Stock. According to the 1990 Census, Pueblo had a total of 50,383 households in 1990 compared to a total of 49,095 households in 1980, for a ten -year increase of 2.6 %. In 1990, the average household size in Pueblo was 2.56 persons. Building Permit Activity. Set forth in the following table is historical building permit activity for new structures in the City of Pueblo, Colorado. Building Permit Activity in the City of Pueblo Foreclosure Activity. As set forth in the following table, there has been a significant decrease in the number of foreclosures filed in Pueblo over the past five years. History of Foreclosures in Pueblo County Number of Residential Commercial Year Units Valuation Units Valuation 1993 147 $17,948,365 36 $ 8,308,018 1994 184 19,261, 971 34 19,490, 848 1995 225 23,762,345 43 23,130,840 1996 307 36,578,874 51 37,213,626 1997 221 23,804,721 72 43,258,869 City of Pueblo 1997 Comprehensive Annual Financial Report Source: Foreclosure Activity. As set forth in the following table, there has been a significant decrease in the number of foreclosures filed in Pueblo over the past five years. History of Foreclosures in Pueblo County ( ' ) As of September 4, 1998. Source: Pueblo County Public Trustee Retail Sales. The retail trade sector employs a large portion of the City's work force and is important to the area's economy. The following table sets forth retail sales figures as reported by the State for Pueblo and Colorado. 02- 13172.06 D -3 Number of Year Foreclosures Filed Percent Change 1993 142 -- 1994 119 (16.2)% 1995 107 (10.1) 1996 133 24.3 1997 175 31.6 1990 172 -- ( ' ) As of September 4, 1998. Source: Pueblo County Public Trustee Retail Sales. The retail trade sector employs a large portion of the City's work force and is important to the area's economy. The following table sets forth retail sales figures as reported by the State for Pueblo and Colorado. 02- 13172.06 D -3 Retail Sales ►) Collections through June 30, 1998. Source: State of Colorado, Department of Revenue, Sales Tax Statistics, 1993 -1998 Employment. The following tables set forth employment statistics by industry and the most recent historical labor force estimates for Pueblo. Total Business Establishments and Employment - City and County of Pueblo 1996 Annual Averages Percent 12 -Month Change City as % Year City of Pueblo Change Pueblo County of County 1993 $1,456,700,855 -- $1,561,650,788 93.3% 1994 1,678,037,089 15.2% 1,803,600,158 93.0 1995 1,842,222,530 9.8 1,978,712,090 93.1 1996 1,897,071,122 3.0 2,054,254,244 92.3 1997 2,045,685,910 7.8 2,206,307,682 92.7 1998 1,016,753,290 -- 1,107,765,233 91.8 ►) Collections through June 30, 1998. Source: State of Colorado, Department of Revenue, Sales Tax Statistics, 1993 -1998 Employment. The following tables set forth employment statistics by industry and the most recent historical labor force estimates for Pueblo. Total Business Establishments and Employment - City and County of Pueblo 02- 13172.06 D -4 1996 Annual Averages 1997 Annual Averages 12 -Month Change Average Average Average Industry Units Employment Units Employment Units Employment Agriculture, Forestry & Fisheries 52 437 62 460 10 23 Mining 5 19 4 12 (1) (7) Construction 325 2,902 366 3,274 41 372 Manufacturing 107 4,987 110 5,075 3 88 Transportation, Communication & Public Utilities 131 1,934 133 1,905 2 (29) Wholesale Trade 138 1,338 142 1,411 4 73 Retail Trade 806 12,296 833 12,771 27 475 Finance, Insurance & Real Estate 243 2,031 271 2,428 28 397 Services 1,025 14,184 1,053 15,161 28 977 Non -c lass ifiable -- -- -- -- -- -- Government 70 9,777 71 9,958 1 181 Total 2,903 49,908 3,046 52,456 143 2,550 ( ' ) Information provided herein reflects only those employers who are subject to state unemployment insurance law. (2) Information suppressed in accordance with U.S. Department of Labor guidelines. Source: State of Colorado, Division of Employment and Training, Colorado Employment and Wages Covered by Unemployment Insurance 02- 13172.06 D -4 Unemployment rates have been decreasing since 1993 in Pueblo as well as throughout the State. Labor Force Estimates Pueblo County Colorado (') Estimates through May, 1998. Source: State of Colorado, Division of Employment and Training, Labor Market Information, Colorado Labor Force Review The following table sets forth selected major employers in the Pueblo area. No independent investigation has been made of and there can be no representation as to the stability or financial condition of the entities listed below, or the likelihood that they will maintain their status as major employers in the Pueblo area. Selected Major Employers in the Pueblo Area - 1997 Firm Estimated Number of Product or Service Employees Pueblo School District No. 60 Matrixx Marketing, Inc. Parkview Episcopal Medical Center St. Mary Corwin Regional Medical Center CF & I Steel, L.P. Colorado Institute of Mental Health Trane Company Pueblo County Pueblo School District No. 70 City of Pueblo Public education Labor Percent Labor Percent Year Force Unemployed Force Unemployed 1993 52,877 8.3% 1,900,187 5.3% 1994 54,837 5.8 2,001,491 4.2 1995 56,948 6.0 2,087,518 4.2 1996 57,153 6.0 2,098,971 4.2 1997 59,614 4.7 2,158,169 3.3 1998 62,743 6.3 2,202,980 4.0 (') Estimates through May, 1998. Source: State of Colorado, Division of Employment and Training, Labor Market Information, Colorado Labor Force Review The following table sets forth selected major employers in the Pueblo area. No independent investigation has been made of and there can be no representation as to the stability or financial condition of the entities listed below, or the likelihood that they will maintain their status as major employers in the Pueblo area. Selected Major Employers in the Pueblo Area - 1997 Firm Estimated Number of Product or Service Employees Pueblo School District No. 60 Matrixx Marketing, Inc. Parkview Episcopal Medical Center St. Mary Corwin Regional Medical Center CF & I Steel, L.P. Colorado Institute of Mental Health Trane Company Pueblo County Pueblo School District No. 70 City of Pueblo Public education 2,191 Telemarketing 1,900 Medical and health care 1,474 Medical and health care 1,350 Steel, wire, pipe and rails 1,273 Public mental health care 1,250 Manufacturing 900 County government 875 Public education 769 City government 692 Source: Pueblo Chamber of Commerce, 1997 Community Profile 02- 13172.06 D-5 * * * * * * * * * * * * * * ** *B S tats * * * * * * * * * * * * * * * * * * * * * ** Box Number: 1 on Page: l; Filename: None; Content Type: Text; Text Angle: 1; Width: 0.55; Height: 10.1966666666667. THIS PRELIMINARY OFFICIAL STATEMENT AND THE INFORMATION CONTAINED HEREIN ARE SUBJECT TO COMPLETION OR AMENDMENT. These securities may not be sold, nor may offers to buy be accepted, prior to the time the Official Statement is delivered in final form. Under no circumstances shall this Preliminary Official Statement constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of these securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of such jurisdiction. 02- 13172.06