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Home My WebLink Aboutattachment May 10, 2022 Pre-Sale Report for City of Oshkosh, Wisconsin $21,625,000 General Obligation Corporate Purpose Bonds, Series 2022A Prepared by: Ehlers N21W23350 Ridgeview Parkway West, Suite 100 Waukesha, WI 53188 Advisors: Todd Taves, Senior Municipal Advisor Jon Cameron, Senior Municipal Advisor Harry Allen, Financial Specialist BUILDING COMMUNITIES. IT’S WHAT WE DO. Presale Report City of Oshkosh, Wisconsin May 10, 2022 Page 1 Proposed Issue: $21,625,000 General Obligation Corporate Purpose Bonds, Series 2022A (the “Bonds”) Purposes: The proposed Bonds will finance street projects, a portion of the new Parks Dept. Building, and other park improvements (the “Projects”). Debt service associated with the Projects will be paid from ad valorem property taxes. Authority: The Bonds are being issued pursuant to Wisconsin Statute 67.04 and will be general obligations of the City for which its full faith, credit and taxing powers are pledged. The Bonds count against the City’s General Obligation Debt Capacity Limit of 5% of total City Equalized Valuation. Following issuance of the Bonds, and the Series 2022B General Obligation Promissory Notes (the “Notes”) to be issued concurrently, the City’s total General Obligation debt principal outstanding will be approximately $146.9 million, which is 61% of its limit. Remaining General Obligation Borrowing Capacity will be approximately $94.1 million. At the end of 2022, General Obligation debt capacity usage will be approximately 54.8% of the City’s limit. Term/Call Feature: The Bonds are being issued for a term of 20 years. Principal on the Bonds will be due on June 1 in the years 2023 through 2042. Interest is payable every six months beginning June 1, 2023. The Bonds will be subject to prepayment at the discretion of the City on June 1, 2032 or any date thereafter. Bank Qualification: Because the City is issuing, or expects to issue, more than $10,000,000 in tax-exempt obligations during the calendar year, the City will be not able to designate the Bonds as “bank qualified” obligations. Rating: The City’s most recent bond issues were rated by Moody’s Investors Service. The current ratings on those bonds are “Aa3”. The City will request a new rating for the Bonds. If the winning bidder on the Bonds elects to purchase bond insurance, the rating for the issue may be higher than the City's bond rating if the bond rating of the insurer is higher than that of the City. EXECUTIVE SUMMARY OF PROPOSED DEBT Presale Report City of Oshkosh, Wisconsin May 10, 2022 Page 2 Basis for Recommendation: Issuance of General Obligation Bonds is a suitable debt instrument to achieve the City’s objectives for this financing. It will permit the City to amortize the payments over a term consistent with the useful life of the financed projects. The City has the financial capacity to repay the Bonds within the maximum twenty-year amortization period that is permitted and has adequate General Obligation debt capacity to undertake the financing. The City could choose to finance the projects with a State Trust Fund Loan as an alternative. The current State Trust Fund Loan interest rate for a loan of the same term is 4.25%. Based on estimated rates, the Bonds are expected to provide a lower All-Inclusive Cost (AIC). (The exhibits to this Pre-Sale Report reflect an AIC of 3.68%). None of the Projects will generate user fees or other revenues that could be used to secure a revenue bond. The City is an active capital markets participant with staff having the requisite experience to meet the City’s obligations related to issuance of municipal securities to include secondary market disclosure and other post-issuance requirements. Method of Sale/Placement: General Obligation Bonds issued to finance capital projects must be offered for public sale. The City’s existing general obligation debt is rated Aa3 by Moody’s Investors Service. Based on that rating, the City’s credit characteristics, and history of receiving multiple bids in the competitive markets a competitive public offering is also expected to produce the lowest total cost of financing. We will include an allowance for discount bidding in the terms of the issue. The discount is treated as an interest item and provides the underwriter with all or a portion of their compensation in the transaction. If the Bonds are purchased at a price greater than the minimum bid amount (maximum discount), the unused allowance may be used to reduce your borrowing amount. Premium Pricing: In some cases, investors in municipal bonds prefer “premium” pricing structures. A premium is achieved when the coupon for any maturity (the interest rate paid by the issuer) exceeds the yield to the investor, resulting in a price paid that is greater than the face value of the bonds. The sum of the amounts paid in excess of face value is considered “reoffering premium.” The underwriter of the bonds will retain a portion of this reoffering premium as their compensation (or “discount”) but will pay the remainder of the premium to the City. For this issue of Bonds, any premium amount received that is in excess of the underwriting discount and any capitalized interest amounts must be placed in the debt service fund and used to pay a portion of the interest payments due on the Bonds. The amount of premium allowed can be restricted in the bid specifications. Restrictions on premium may result in fewer bids but may also eliminate large adjustments on the day of sale and unintended results with respect to debt service payment impacts. Ehlers will identify appropriate premium restrictions for the Bonds intended to achieve the City’s objectives for this financing. Presale Report City of Oshkosh, Wisconsin May 10, 2022 Page 3 Other Considerations: Term Bond Option. The Bonds will be offered with the option of the successful bidder utilizing a term bond structure. By offering underwriters the option to “term up” some of the maturities at the time of the sale, it gives them more flexibility in finding a market for your Bonds. This makes your issue more marketable, which can result in lower borrowing costs. If the successful bidder utilizes a term bond structure, we recommend the City retain a paying agent to handle responsibility for processing mandatory redemption/call notices associated with term bonds. Review of Existing Debt: We have reviewed all outstanding indebtedness for the City and find that there are no refunding opportunities at this time. We will continue to monitor the market and the call dates for the City’s outstanding debt and will alert you to any future refunding opportunities. Continuing Disclosure: Because the City has more than $10,000,000 in outstanding debt (including this issue) and this issue is over $1,000,000, the City will be agreeing to provide certain updated Annual Financial Information and its Audited Financial Statement annually, as well as providing notices of the occurrence of certain reportable events to the Municipal Securities Rulemaking Board (the “MSRB”), as required by rules of the Securities and Exchange Commission (SEC). The City is already obligated to provide such reports for its existing bonds and has contracted with Ehlers to prepare and file the reports. Arbitrage Monitoring: The City must ensure compliance with certain sections of the Internal Revenue Code and Treasury Regulations (“Arbitrage Rules”) throughout the life of the issue to maintain the tax- exempt status of the Bonds. These Arbitrage Rules apply to amounts held in construction, escrow, reserve, debt service account(s), etc., along with related investment income on each fund/account. IRS audits will verify compliance with rebate, yield restriction and records retention requirements within the Arbitrage Rules. The City’s specific arbitrage responsibilities will be detailed in the Tax Exemption Certificate and Agreement (the “Tax Compliance Document”) prepared by your Bond Attorney and provided at closing. The Bonds may qualify for one or more exception(s) to the Arbitrage Rules by meeting 1) small issuer exception, 2) spend down requirements, 3) bona fide debt service fund limits, 4) reasonable reserve requirements, 5) expenditure within an available period limitation, 6) investments yield restrictions, 7) de minimis rules, or; 8) borrower limited requirements. We recommend that the City review its specific responsibilities related to the Bonds with an arbitrage expert in order to utilize one or more of the exceptions listed above. We also recommend that you establish written procedures regarding compliance with IRS rules and/or contract with Ehlers to assist you. Presale Report City of Oshkosh, Wisconsin May 10, 2022 Page 4 Investment of Bond Proceeds: Ehlers can assist the City in developing a strategy to invest your Bond proceeds until the funds are needed to pay project costs. Other Service Providers: This debt issuance will require the engagement of other public finance service providers. This section identifies those other service providers, so Ehlers can coordinate their engagement on your behalf. Where you have previously used a particular firm to provide a service, we have assumed that you will continue that relationship. For services you have not previously required, we have identified a service provider. Fees charged by these service providers will be paid from proceeds of the obligation, unless you notify us that you wish to pay them from other sources. Our pre-sale bond sizing includes a good faith estimate of these fees, but the final fees may vary. If you have any questions pertaining to the identified service providers or their role, or if you would like to use a different service provider for any of the listed services please contact us. Bond Counsel: Chapman and Cutler LLP Paying Agent: U.S. Bank Trust Company, National Association (only if Term Bonds) Rating Agency: Moody's Investors Service, Inc. Presale Report City of Oshkosh, Wisconsin May 10, 2022 Page 5 Pre-Sale Review by City Council: May 10, 2022 Conference with Rating Agency: May 23, 2022 Due Diligence Call to review Official Statement: May 23, 2022 Distribute Official Statement: Week of June 6, 2022 City Council Meeting to Award Sale of the Bonds: June 14, 2022 Estimated Closing Date: July 7, 2022 Attachments Estimated Sources and Uses of Funds Estimated Bond and Note Structure Estimated Debt Service Schedule by Purpose Current and Projected Debt Limit and Debt Burden Calculations Bond Buyer Index – 10-year EHLERS’ CONTACTS Todd Taves, Senior Municipal Advisor (262) 796-6173 Jon Cameron, Senior Municipal Advisor (262) 796-6179 Harry Allen, Financial Specialist (262) 796-6182 Sue Porter, Senior Public Finance Analyst/Marketing Coordinator (262) 796-6167 Kathy Myers, Senior Financial Analyst (262) 796-6177 PROPOSED DEBT ISSUANCE SCHEDULE EHLERS’ CONTACTS Presale Estimate Presale Estimate Sale 6-14-2022 Sale 6-14-2022 Est. Dated 7-7-2022 Est. Dated 7-7-2022 G.O. Corporate Purpose Bonds G.O. Promissory Notes Series 2022A Series 2022B Tax-Exempt Tax-Exempt Capital Projects1 21,260,800$ 8,990,600$ Estimated Issuance Expenses Ehlers (Municipal Advisor) 40,100$ 25,200$ Chapman & Cutler (Bond Counsel) 29,000$ 21,000$ Maximum Discount (Bid Item)2 270,313$ 91,400$ Moody's Investors Service (Rating Fee) 23,196$ 9,804$ U.S. Bank (Paying Agent) 1,000$ 1,000$ TOTAL TO BE FINANCED 21,624,409$ 9,139,004$ Estimated Interest Earnings3 (2,480)$ (1,049)$ Rounding 3,072$ 2,045$ NET BOND OR NOTE SIZE 21,625,000$ 9,140,000$ NOTES: 1Capital projects amounts taken from City of Oshkosh 2022 Budget and 2023 CIP. 2Maximum allowable discount of 1.25% for the Series 2022A Bonds, and 1.0% for the Series 2022B Notes. 3Assumes temporary investment of available new money proceeds at 0.07% for 60 days. (January 2022 LGIP Rate). 2022 General Obligation Sizing Worksheet 4/27/2022 File: Oshkosh Debt Base Case_2022‐4‐20 ‐ NO REFUNDING ‐ 2022 & 2023 Projects/G.O. Sizing 2022 YearPrin (6/1) Est. Rate3Interest Total Prin (6/1) Est. Rate3Interest TotalYear20224,562,703,300 19,590,575(6,857,076)12,733,5002.7912,733,5002.79 202220234,685,520,562 17,758,761(5,713,541)12,045,2202.57210,000 2.550% 1,025,217 1,235,217 580,000 2.550% 388,484 968,484 14,248,9213.04 202320244,811,643,776 15,917,517(4,523,467)11,394,0502.37830,000 2.810% 717,194 1,547,194 980,000 2.810% 254,212 1,234,212 14,175,4552.95 202420254,941,161,931 14,401,256(3,981,941)10,419,3152.11855,000 2.930% 693,007 1,548,007 1,010,000 2.930% 225,646 1,235,646 13,202,9682.67 202520265,074,166,411 12,836,648(3,428,385)9,408,2631.85875,000 2.960% 667,531 1,542,531 850,000 2.960% 198,270 1,048,270 11,999,0642.36 202620275,210,751,059 11,366,966(2,859,656)8,507,3091.63905,000 3.050% 640,780 1,545,780 880,000 3.050% 172,270 1,052,270 11,105,3592.13 202720285,351,012,245 9,868,254(2,374,245)7,494,0091.40935,000 3.150% 612,252 1,547,252 905,000 3.150% 144,596 1,049,596 10,090,8571.89 202820295,495,048,933 7,513,598(1,197,192)6,316,4061.15960,000 3.220% 582,070 1,542,070 935,000 3.220% 115,289 1,050,289 8,908,7651.62 202920305,642,962,750 7,449,145(1,192,298)6,256,8471.11990,000 3.290% 550,329 1,540,329 965,000 3.290% 84,361 1,049,361 8,846,5361.57 203020315,794,858,061 5,923,329(934,248)4,989,0810.861,030,000 3.340% 516,842 1,546,842 1,000,000 3.340% 51,787 1,051,787 7,587,7101.31 203120325,950,842,036 4,430,423(570,429)3,859,9940.651,060,000 3.390% 481,674 1,541,674 1,035,000 3.390% 17,543 1,052,543 6,454,2111.08 203220336,111,024,734 4,439,350(562,925)3,876,4250.631,105,000 3.430% 444,756 1,549,7565,426,1810.89 203320346,275,519,174 3,339,944(464,200)2,875,7440.461,140,000 3.470% 406,027 1,546,0274,421,7700.70 203420356,444,441,418 1,914,438(250,350)1,664,0880.261,180,000 3.500% 365,598 1,545,5983,209,6850.50 203520366,617,910,653 1,508,678(146,450)1,362,2280.211,220,000 3.530% 323,415 1,543,4152,905,6430.44 203620376,796,049,272 1,127,7660 1,127,7660.171,265,000 3.570% 279,301 1,544,3012,672,0670.39 203720386,978,982,964 819,8130 819,8130.121,315,000 3.590% 233,117 1,548,1172,367,9290.34 203820397,166,840,802 631,7310 631,7310.091,360,000 3.610% 184,965 1,544,9652,176,6960.30 203920407,359,755,333 623,9940 623,9940.081,415,000 3.620% 134,805 1,549,8052,173,7990.30 204020417,557,862,669 383,8000 383,8000.051,460,000 3.650% 82,549 1,542,5491,926,3490.25 204120427,761,302,5900000.001,515,000 3.690% 27,952 1,542,9521,542,9520.20 2042TOTALS141,845,984(35,056,401)106,789,58221,625,0008,969,378 30,594,378 9,140,0001,652,455 10,792,455 148,176,415TOTALS Maturities Subject to Optional RedemptionNOTES:1Value shown for 2022 is 1-1-2021 actual TID OUT EV. Assumes an 2.69% increase each year thereafter which is 50% of the actual past five year average increase. 2Includes General Obligation debt, room-tax secured State Trust Fund Loan, and TID 31 SBA Loan.3Estimated rates are 4-19-2022 MMD AA scale plus 0.50%.Net Tax Rate for Debt$9,140,000Dated 7/7/2022Dated 7/7/2022$21,625,0002022 G.O. Bond and Note Structure WorksheetPresale EstimateExisting Debt Only Proposed 2022 IssuesProjected Equalized Value1Debt P&I2Total Abatement SourcesNet Tax Levy for DebtNet Tax Rate for DebtG.O. Corporate Purpose Bonds, Series 2022AG.O. Promissory Notes, Series 2022BNet Tax Levy for Debt4/27/2022File: Oshkosh Debt Base Case_2022‐4‐20 ‐ NO REFUNDING ‐ 2022 & 2023 Projects/G.O. Structure YEAR Prin (6/1) Est. Rate1Interest Total Prin (6/1) Est. Rate1Interest Total Prin (6/1) Est. Rate1Interest Total Prin (6/1) Est. Rate1Interest Total YEAR2023100,000 2.550% 655,326 755,326 100,000 2.550% 348,030 448,030 10,000 2.550% 21,861 31,861 210,000 2.550% 1,025,217 1,235,21720232024530,000 2.810% 459,005 989,005 280,000 2.810% 243,020 523,020 20,000 2.810% 15,170 35,170 830,000 2.810% 717,194 1,547,19420242025545,000 2.930% 443,574 988,574 290,000 2.930% 234,837 524,837 20,000 2.930% 14,596 34,596 855,000 2.930% 693,007 1,548,00720252026560,000 2.960% 427,302 987,302 295,000 2.960% 226,223 521,223 20,000 2.960% 14,007 34,007 875,000 2.960% 667,531 1,542,53120262027580,000 3.050% 410,169 990,169 305,000 3.050% 217,205 522,205 20,000 3.050% 13,406 33,406 905,000 3.050% 640,780 1,545,78020272028600,000 3.150% 391,874 991,874 315,000 3.150% 207,593 522,593 20,000 3.150% 12,786 32,786 935,000 3.150% 612,252 1,547,25220282029615,000 3.220% 372,522 987,522 325,000 3.220% 197,399 522,399 20,000 3.220% 12,149 32,149 960,000 3.220% 582,070 1,542,07020292030635,000 3.290% 352,175 987,175 335,000 3.290% 186,656 521,656 20,000 3.290% 11,498 31,498 990,000 3.290% 550,329 1,540,32920302031660,000 3.340% 330,707 990,707 350,000 3.340% 175,300 525,300 20,000 3.340% 10,835 30,835 1,030,000 3.340% 516,842 1,546,84220312032680,000 3.390% 308,159 988,159 360,000 3.390% 163,353 523,353 20,000 3.390% 10,162 30,162 1,060,000 3.390% 481,674 1,541,67420322033705,000 3.430% 284,542 989,542 375,000 3.430% 150,820 525,820 25,000 3.430% 9,394 34,394 1,105,000 3.430% 444,756 1,549,75620332034730,000 3.470% 259,786 989,786 385,000 3.470% 137,709 522,709 25,000 3.470% 8,532 33,532 1,140,000 3.470% 406,027 1,546,02720342035755,000 3.500% 233,908 988,908 400,000 3.500% 124,029 524,029 25,000 3.500% 7,661 32,661 1,180,000 3.500% 365,598 1,545,59820352036780,000 3.530% 206,929 986,929 415,000 3.530% 109,704 524,704 25,000 3.530% 6,782 31,782 1,220,000 3.530% 323,415 1,543,41520362037810,000 3.570% 178,703 988,703 430,000 3.570% 94,704 524,704 25,000 3.570% 5,894 30,894 1,265,000 3.570% 279,301 1,544,30120372038840,000 3.590% 149,167 989,167 445,000 3.590% 79,041 524,041 30,000 3.590% 4,910 34,910 1,315,000 3.590% 233,117 1,548,11720382039870,000 3.610% 118,385 988,385 460,000 3.610% 62,750 522,750 30,000 3.610% 3,830 33,830 1,360,000 3.610% 184,965 1,544,96520392040905,000 3.620% 86,301 991,301 480,000 3.620% 45,759 525,759 30,000 3.620% 2,745 32,745 1,415,000 3.620% 134,805 1,549,80520402041935,000 3.650% 52,857 987,857 495,000 3.650% 28,037 523,037 30,000 3.650% 1,655 31,655 1,460,000 3.650% 82,549 1,542,54920412042970,000 3.690% 17,897 987,897 515,000 3.690% 9,502 524,502 30,000 3.690% 554 30,554 1,515,000 3.690% 27,952 1,542,9522042TOTALS 13,805,0005,739,284 19,544,284 7,355,0003,041,669 10,396,669 465,000188,424 653,424 21,625,0008,969,378 30,594,378 TOTALSNOTES:1Estimated rates are 4-19-2022 MMD AA scale plus 0.50%.Presale EstimateStreet ImprovementsPark ImprovementsTotal Issue Estimated Debt ServiceProposed G.O. Corporate Purpose Bonds, Series 2022ADebt Service Breakdown by PurposeBuilding for the Housing of Machinery and Equipment 4/27/2022File: Oshkosh Debt Base Case_2022‐4‐20 ‐ NO REFUNDING ‐ 2022 & 2023 Projects/2022A Bond Allocation 20214,821,112,500 241,055,625 120,615,83650.04%120,615,83650.04%(9,140,000)111,475,8362.31%Moderate202120224,950,885,531 247,544,277 104,879,51142.37%21,625,000 9,140,000 135,644,51154.80%(7,095,000)128,549,5112.60%Moderate202220235,084,151,747 254,207,587 90,347,19135.54%21,415,000 8,560,000 120,322,19147.33%(5,470,000)114,852,1912.26%Moderate202320245,221,005,177 261,050,259 77,213,10929.58%20,585,000 7,580,000 105,378,10940.37%(4,120,000)101,258,1091.94%Moderate202420255,361,542,380 268,077,119 65,210,14924.33%19,730,000 6,570,000 91,510,14934.14%(3,035,000)88,475,1491.65%Strong202520265,505,862,514 275,293,126 54,445,00019.78%18,855,000 5,720,000 79,020,00028.70%(2,030,000)76,990,0001.40%Strong202620275,654,067,408 282,703,370 44,835,00015.86%17,950,000 4,840,000 67,625,00023.92%(1,360,000)66,265,0001.17%Strong202720285,806,261,630 290,313,081 36,200,00012.47%17,015,000 3,935,000 57,150,00019.69%(690,000)56,460,0000.97%Strong202820295,962,552,562 298,127,628 29,665,0009.95%16,055,000 3,000,000 48,720,00016.34%(595,000)48,125,0000.81%Strong202920306,123,050,480 306,152,524 23,015,0007.52%15,065,000 2,035,000 40,115,00013.10%(490,000)39,625,0000.65%Very Strong203020316,287,868,625 314,393,431 17,720,0005.64%14,035,000 1,035,000 32,790,00010.43%(380,000)32,410,0000.52%Very Strong203120326,457,123,288 322,856,164 13,780,0004.27%12,975,000 26,755,0008.29%(265,000)26,490,0000.41%Very Strong203220336,630,933,888 331,546,694 9,695,0002.92%11,870,000 21,565,0006.50%(135,000)21,430,0000.32%Very Strong203320346,809,423,062 340,471,153 6,585,0001.93%10,730,000 17,315,0005.09%0 17,315,0000.25%Very Strong203420356,992,716,746 349,635,837 4,825,0001.38%9,550,000 14,375,0004.11%0 14,375,0000.21%Very Strong203520367,180,944,265 359,047,213 3,425,0000.95%8,330,000 11,755,0003.27%0 11,755,0000.16%Very Strong203620377,374,238,427 368,711,921 2,370,0000.64%7,065,000 9,435,0002.56%0 9,435,0000.13%Very Strong203720387,572,735,614 378,636,781 1,595,0000.42%5,750,000 7,345,0001.94%0 7,345,0000.10%Very Strong203820397,776,575,880 388,828,794 990,0000.25%4,390,000 5,380,0001.38%0 5,380,0000.07%Very Strong203920407,985,903,047 399,295,152 380,0000.10%2,975,000 3,355,0000.84%0 3,355,0000.04%Very Strong204020418,200,864,810 410,043,2400.00%1,515,000 1,515,0000.37%1,515,0000.02%Very Strong204120428,421,612,839 421,080,6420.00% 0.00%00.00%Very Strong204220438,648,302,887 432,415,1440.00% 0.00%00.00%Very Strong204320448,881,094,898 444,054,7450.00% 0.00%00.00%Very Strong204420459,120,153,124 456,007,6560.00% 0.00%00.00%Very Strong204520469,365,646,237 468,282,3120.00% 0.00%00.00%Very Strong204620479,617,747,447 480,887,3720.00% 0.00%00.00%Very Strong204720489,876,634,631 493,831,7320.00% 0.00%00.00%Very Strong2048204910,142,490,449 507,124,5220.00% 0.00%00.00%Very Strong2049NOTES:1Value shown for 2021 is 1-1-2021 actual TID IN EV. Assumes a 2.69% increase each year thereafter which is 50% of the actual past five year average increase.2Direct debt burden metric excludes G.O. debt principal allocated to essential purpose utilities (sewer, sanitary sewer, and storm water) 1provided utility net revenues are sum sufficient to make all debt payments.PROP 2022B NOTESEXIST DEBT PRIN OUTS% OF LIMITExisting Debt OnlyCurrent and Projected Debt Limit & Debt Burden CalculationsWith Proposed 2022 Bonds & NotesYearTOTALDIRECT DEBT BURDEN2ASSESSMENTYearPROJECTED EV (TID IN)1DEBT LIMIT @ 5%EXIST DEBT PRIN OUTS% OF LIMITPLUS RDA DEBTLESS UTILITY ABATEDPROP 2022A BONDS4/27/2022File: Oshkosh Debt Base Case_2022‐4‐20 ‐ NO REFUNDING ‐ 2022 & 2023 Projects/Debt Limit 10 YEAR TREND IN MUNICIPAL BOND INDICES Source: The Bond Buyer The Bond Buyer “20 Bond Index” (BBI) shows average yields on a group of municipal bonds that mature in 20 years and have an average rating equivalent to Moody’s Aa2 and S&P’s AA. May 10, 2022 Pre-Sale Report for City of Oshkosh, Wisconsin $9,140,000 General Obligation Promissory Notes, Series 2022B Prepared by: Ehlers N21W23350 Ridgeview Parkway West, Suite 100 Waukesha, WI 53188 Advisors: Todd Taves, Senior Municipal Advisor Jon Cameron, Senior Municipal Advisor Harry Allen, Financial Specialist BUILDING COMMUNITIES. IT’S WHAT WE DO. Presale Report City of Oshkosh, Wisconsin May 10, 2022 Page 1 Proposed Issue: $9,140,000 General Obligation Promissory Notes, Series 2022B (the “Notes”) Purposes: The proposed Notes will finance a portion of the new Parks Dept. Building, other park improvements, acquisition of public safety and public works equipment, parking lot improvements and improvements to City buildings and facilities (the “Projects”). Debt service associated with the Projects will be paid from ad valorem property taxes. Authority: The Notes are being issued pursuant to Wisconsin Statute 67.12(12) and will be general obligations of the City for which its full faith, credit and taxing powers are pledged. The Notes count against the City’s General Obligation Debt Capacity Limit of 5% of total City Equalized Valuation. Following issuance of the Notes, and the Series 2022A General Obligation Corporate Purpose Bonds to be issued concurrently, the City’s total General Obligation debt principal outstanding will be approximately $146.9 million, which is 61% of its limit. Remaining General Obligation Borrowing Capacity will be approximately $94.1 million. At the end of 2022, General Obligation debt capacity usage will be approximately 54.8% of the City’s limit. Term/Call Feature: The Notes are being issued for a term of 10 years. Principal on the Notes will be due on June 1 in the years 2023 through 2032. Interest is payable every six months beginning June 1, 2023. The Notes will be subject to prepayment at the discretion of the City on June 1, 2029 or any date thereafter. Bank Qualification: Because the City is issuing, or expects to issue, more than $10,000,000 in tax-exempt obligations during the calendar year, the City will be not able to designate the Notes as “bank qualified” obligations. Rating: The City’s most recent bond issues were rated by Moody’s Investors Service. The current ratings on those bonds are “Aa3”. The City will request a new rating for the Notes. If the winning bidder on the Notes elects to purchase bond insurance, the rating for the issue may be higher than the City's bond rating if the bond rating of the insurer is higher than that of the City. EXECUTIVE SUMMARY OF PROPOSED DEBT Presale Report City of Oshkosh, Wisconsin May 10, 2022 Page 2 Basis for Recommendation: Issuance of General Obligation Notes is a suitable debt instrument to achieve the City’s objectives for this financing. It will permit the City to amortize the payments over a term consistent with the useful life of the financed projects. The City has the financial capacity to repay the Notes within the maximum ten-year amortization period that is permitted and has adequate General Obligation debt capacity to undertake the financing. The City could choose to finance the projects with a State Trust Fund Loan as an alternative. The current State Trust Fund Loan interest rate for a loan of the same term is 4.00%. Based on estimated rates, the Bonds are expected to provide a lower All-Inclusive Cost (AIC). (The exhibits to this Pre-Sale Report reflect an AIC of 3.53%). None of the Projects will generate user fees or other revenues that could be used to secure a revenue bond. The City is an active capital markets participant with staff having the requisite experience to meet the City’s obligations related to issuance of municipal securities to include secondary market disclosure and other post-issuance requirements. Method of Sale/Placement: A competitive public offering is recommended. The City’s existing general obligation debt is rated Aa3 by Moody’s Investors Service. Based on that rating, the City’s credit characteristics, and history of receiving multiple bids in the competitive markets a competitive public offering is expected to produce the lowest total cost of financing. We will include an allowance for discount bidding in the terms of the issue. The discount is treated as an interest item and provides the underwriter with all or a portion of their compensation in the transaction. If the Bonds are purchased at a price greater than the minimum bid amount (maximum discount), the unused allowance may be used to reduce your borrowing amount. Premium Pricing: In some cases, investors in municipal bonds prefer “premium” pricing structures. A premium is achieved when the coupon for any maturity (the interest rate paid by the issuer) exceeds the yield to the investor, resulting in a price paid that is greater than the face value of the bonds. The sum of the amounts paid more than face value is considered “reoffering premium.” The underwriter of the bonds will retain a portion of this reoffering premium as their compensation (or “discount”) but will pay the remainder of the premium to the City. For this issue of Notes, any premium amount received that is more than the underwriting discount and any capitalized interest amounts must be placed in the debt service fund and used to pay a portion of the interest payments due on the Notes. The amount of premium allowed can be restricted in the bid specifications. Restrictions on premium may result in fewer bids but may also eliminate large adjustments on the day of sale and unintended results with respect to debt service payment impacts. Ehlers will identify appropriate premium restrictions for the Notes intended to achieve the City’s objectives for this financing. Presale Report City of Oshkosh, Wisconsin May 10, 2022 Page 3 Other Considerations: Term Bond Option. The Notes will be offered with the option of the successful bidder utilizing a term bond structure. By offering underwriters the option to “term up” some of the maturities at the time of the sale, it gives them more flexibility in finding a market for your Notes. This makes your issue more marketable, which can result in lower borrowing costs. If the successful bidder utilizes a term bond structure, we recommend the City retain a paying agent to handle responsibility for processing mandatory redemption/call notices associated with term bonds. Review of Existing Debt: We have reviewed all outstanding indebtedness for the City and find that there are no refunding opportunities at this time. We will continue to monitor the market and the call dates for the City’s outstanding debt and will alert you to any future refunding opportunities. Continuing Disclosure: Because the City has more than $10,000,000 in outstanding debt (including this issue) and this issue is over $1,000,000, the City will be agreeing to provide certain updated Annual Financial Information and its Audited Financial Statement annually, as well as providing notices of the occurrence of certain reportable events to the Municipal Securities Rulemaking Board (the “MSRB”), as required by rules of the Securities and Exchange Commission (SEC). The City is already obligated to provide such reports for its existing bonds and has contracted with Ehlers to prepare and file the reports. Arbitrage Monitoring: The City must ensure compliance with certain sections of the Internal Revenue Code and Treasury Regulations (“Arbitrage Rules”) throughout the life of the issue to maintain the tax- exempt status of the Notes. These Arbitrage Rules apply to amounts held in construction, escrow, reserve, debt service account(s), etc., along with related investment income on each fund/account. IRS audits will verify compliance with rebate, yield restriction and records retention requirements within the Arbitrage Rules. The City’s specific arbitrage responsibilities will be detailed in the Tax Exemption Certificate and Agreement (the “Tax Compliance Document”) prepared by your Bond Attorney and provided at closing. The Notes may qualify for one or more exception(s) to the Arbitrage Rules by meeting 1) small issuer exception, 2) spend down requirements, 3) bona fide debt service fund limits, 4) reasonable reserve requirements, 5) expenditure within an available period limitation, 6) investments yield restrictions, 7) de minimis rules, or 8) borrower limited requirements. We recommend that the City review its specific responsibilities related to the Notes with an arbitrage expert to utilize one or more of the exceptions listed above. We also recommend that you establish written procedures regarding compliance with IRS rules and/or contract with Ehlers to assist you. Presale Report City of Oshkosh, Wisconsin May 10, 2022 Page 4 Investment of Note Proceeds: Ehlers can assist the City in developing a strategy to invest your Note proceeds until the funds are needed to pay project costs. Other Service Providers: This debt issuance will require the engagement of other public finance service providers. This section identifies those other service providers, so Ehlers can coordinate their engagement on your behalf. Where you have previously used a particular firm to provide a service, we have assumed that you will continue that relationship. For services you have not previously required, we have identified a service provider. Fees charged by these service providers will be paid from proceeds of the obligation, unless you notify us that you wish to pay them from other sources. Our pre-sale bond sizing includes a good faith estimate of these fees, but the final fees may vary. If you have any questions pertaining to the identified service providers or their role, or if you would like to use a different service provider for any of the listed services please contact us. Bond Counsel: Chapman and Cutler LLP Paying Agent: U.S. Bank Trust Company, National Association (only if Term Bonds) Rating Agency: Moody's Investors Service, Inc. Presale Report City of Oshkosh, Wisconsin May 10, 2022 Page 5 Pre-Sale Review by City Council: May 10, 2022 Conference with Rating Agency: May 23, 2022 Due Diligence Call to review Official Statement: May 23, 2022 Distribute Official Statement: Week of June 6, 2022 City Council Meeting to Award Sale of the Notes: June 14, 2022 Estimated Closing Date: July 7, 2022 Attachments Estimated Sources and Uses of Funds Estimated Bond and Note Structure Estimated Debt Service Schedule by Purpose Current and Projected Debt Limit and Debt Burden Calculations Bond Buyer Index – 10-year EHLERS’ CONTACTS Todd Taves, Senior Municipal Advisor (262) 796-6173 Jon Cameron, Senior Municipal Advisor (262) 796-6179 Harry Allen, Financial Specialist (262) 796-6182 Sue Porter, Senior Public Finance Analyst/Marketing Coordinator (262) 796-6167 Kathy Myers, Senior Financial Analyst (262) 796-6177 PROPOSED DEBT ISSUANCE SCHEDULE EHLERS’ CONTACTS Presale Estimate Presale Estimate Sale 6-14-2022 Sale 6-14-2022 Est. Dated 7-7-2022 Est. Dated 7-7-2022 G.O. Corporate Purpose Bonds G.O. Promissory Notes Series 2022A Series 2022B Tax-Exempt Tax-Exempt Capital Projects1 21,260,800$ 8,990,600$ Estimated Issuance Expenses Ehlers (Municipal Advisor) 40,100$ 25,200$ Chapman & Cutler (Bond Counsel) 29,000$ 21,000$ Maximum Discount (Bid Item)2 270,313$ 91,400$ Moody's Investors Service (Rating Fee) 23,196$ 9,804$ U.S. Bank (Paying Agent) 1,000$ 1,000$ TOTAL TO BE FINANCED 21,624,409$ 9,139,004$ Estimated Interest Earnings3 (2,480)$ (1,049)$ Rounding 3,072$ 2,045$ NET BOND OR NOTE SIZE 21,625,000$ 9,140,000$ NOTES: 1Capital projects amounts taken from City of Oshkosh 2022 Budget and 2023 CIP. 2Maximum allowable discount of 1.25% for the Series 2022A Bonds, and 1.0% for the Series 2022B Notes. 3Assumes temporary investment of available new money proceeds at 0.07% for 60 days. (January 2022 LGIP Rate). 2022 General Obligation Sizing Worksheet 4/27/2022 File: Oshkosh Debt Base Case_2022‐4‐20 ‐ NO REFUNDING ‐ 2022 & 2023 Projects/G.O. Sizing 2022 YearPrin (6/1) Est. Rate3Interest Total Prin (6/1) Est. Rate3Interest TotalYear20224,562,703,300 19,590,575(6,857,076)12,733,5002.7912,733,5002.79 202220234,685,520,562 17,758,761(5,713,541)12,045,2202.57210,000 2.550% 1,025,217 1,235,217 580,000 2.550% 388,484 968,484 14,248,9213.04 202320244,811,643,776 15,917,517(4,523,467)11,394,0502.37830,000 2.810% 717,194 1,547,194 980,000 2.810% 254,212 1,234,212 14,175,4552.95 202420254,941,161,931 14,401,256(3,981,941)10,419,3152.11855,000 2.930% 693,007 1,548,007 1,010,000 2.930% 225,646 1,235,646 13,202,9682.67 202520265,074,166,411 12,836,648(3,428,385)9,408,2631.85875,000 2.960% 667,531 1,542,531 850,000 2.960% 198,270 1,048,270 11,999,0642.36 202620275,210,751,059 11,366,966(2,859,656)8,507,3091.63905,000 3.050% 640,780 1,545,780 880,000 3.050% 172,270 1,052,270 11,105,3592.13 202720285,351,012,245 9,868,254(2,374,245)7,494,0091.40935,000 3.150% 612,252 1,547,252 905,000 3.150% 144,596 1,049,596 10,090,8571.89 202820295,495,048,933 7,513,598(1,197,192)6,316,4061.15960,000 3.220% 582,070 1,542,070 935,000 3.220% 115,289 1,050,289 8,908,7651.62 202920305,642,962,750 7,449,145(1,192,298)6,256,8471.11990,000 3.290% 550,329 1,540,329 965,000 3.290% 84,361 1,049,361 8,846,5361.57 203020315,794,858,061 5,923,329(934,248)4,989,0810.861,030,000 3.340% 516,842 1,546,842 1,000,000 3.340% 51,787 1,051,787 7,587,7101.31 203120325,950,842,036 4,430,423(570,429)3,859,9940.651,060,000 3.390% 481,674 1,541,674 1,035,000 3.390% 17,543 1,052,543 6,454,2111.08 203220336,111,024,734 4,439,350(562,925)3,876,4250.631,105,000 3.430% 444,756 1,549,7565,426,1810.89 203320346,275,519,174 3,339,944(464,200)2,875,7440.461,140,000 3.470% 406,027 1,546,0274,421,7700.70 203420356,444,441,418 1,914,438(250,350)1,664,0880.261,180,000 3.500% 365,598 1,545,5983,209,6850.50 203520366,617,910,653 1,508,678(146,450)1,362,2280.211,220,000 3.530% 323,415 1,543,4152,905,6430.44 203620376,796,049,272 1,127,7660 1,127,7660.171,265,000 3.570% 279,301 1,544,3012,672,0670.39 203720386,978,982,964 819,8130 819,8130.121,315,000 3.590% 233,117 1,548,1172,367,9290.34 203820397,166,840,802 631,7310 631,7310.091,360,000 3.610% 184,965 1,544,9652,176,6960.30 203920407,359,755,333 623,9940 623,9940.081,415,000 3.620% 134,805 1,549,8052,173,7990.30 204020417,557,862,669 383,8000 383,8000.051,460,000 3.650% 82,549 1,542,5491,926,3490.25 204120427,761,302,5900000.001,515,000 3.690% 27,952 1,542,9521,542,9520.20 2042TOTALS141,845,984(35,056,401)106,789,58221,625,0008,969,378 30,594,378 9,140,0001,652,455 10,792,455 148,176,415TOTALS Maturities Subject to Optional RedemptionNOTES:1Value shown for 2022 is 1-1-2021 actual TID OUT EV. Assumes an 2.69% increase each year thereafter which is 50% of the actual past five year average increase. 2Includes General Obligation debt, room-tax secured State Trust Fund Loan, and TID 31 SBA Loan.3Estimated rates are 4-19-2022 MMD AA scale plus 0.50%.Net Tax Rate for Debt$9,140,000Dated 7/7/2022Dated 7/7/2022$21,625,0002022 G.O. Bond and Note Structure WorksheetPresale EstimateExisting Debt Only Proposed 2022 IssuesProjected Equalized Value1Debt P&I2Total Abatement SourcesNet Tax Levy for DebtNet Tax Rate for DebtG.O. Corporate Purpose Bonds, Series 2022AG.O. Promissory Notes, Series 2022BNet Tax Levy for Debt4/27/2022File: Oshkosh Debt Base Case_2022‐4‐20 ‐ NO REFUNDING ‐ 2022 & 2023 Projects/G.O. Structure YEAR Prin (6/1) Est. Rate1Interest Total Prin (6/1) Est. Rate1Interest Total Prin (6/1) Est. Rate1Interest Total YEAR2023420,000 2.550% 370,544 790,544 160,000 2.550% 17,940 177,940 580,000 2.550% 388,484 968,48420232024805,000 2.810% 246,479 1,051,479 175,000 2.810% 7,733 182,733 980,000 2.810% 254,212 1,234,21220242025830,000 2.930% 223,009 1,053,009 180,000 2.930% 2,637 182,637 1,010,000 2.930% 225,646 1,235,64620252026850,000 2.960% 198,270 1,048,270850,000 2.960% 198,270 1,048,27020262027880,000 3.050% 172,270 1,052,270880,000 3.050% 172,270 1,052,27020272028905,000 3.150% 144,596 1,049,596905,000 3.150% 144,596 1,049,59620282029935,000 3.220% 115,289 1,050,289935,000 3.220% 115,289 1,050,28920292030965,000 3.290% 84,361 1,049,361965,000 3.290% 84,361 1,049,361203020311,000,000 3.340% 51,787 1,051,7871,000,000 3.340% 51,787 1,051,787203120321,035,000 3.390% 17,543 1,052,5431,035,000 3.390% 17,543 1,052,543203220332033203420342035203520362036203720372038203820392039204020402041204120422042TOTALS 8,625,0001,624,145 10,249,145 515,00028,310 543,310 9,140,0001,652,455 10,792,455 TOTALSNOTES:1Estimated rates are 4-19-2022 MMD AA scale plus 0.50%.Proposed G.O. Promissory Notes, Series 2022BDebt Service Breakdown by PurposePresale EstimateGarbage TrucksGeneral ProjectsTotal Issue Estimated Debt Service4/27/2022File: Oshkosh Debt Base Case_2022‐4‐20 ‐ NO REFUNDING ‐ 2022 & 2023 Projects/2022B Note Allocation 20214,821,112,500 241,055,625 120,615,83650.04%120,615,83650.04%(9,140,000)111,475,8362.31%Moderate202120224,950,885,531 247,544,277 104,879,51142.37%21,625,000 9,140,000 135,644,51154.80%(7,095,000)128,549,5112.60%Moderate202220235,084,151,747 254,207,587 90,347,19135.54%21,415,000 8,560,000 120,322,19147.33%(5,470,000)114,852,1912.26%Moderate202320245,221,005,177 261,050,259 77,213,10929.58%20,585,000 7,580,000 105,378,10940.37%(4,120,000)101,258,1091.94%Moderate202420255,361,542,380 268,077,119 65,210,14924.33%19,730,000 6,570,000 91,510,14934.14%(3,035,000)88,475,1491.65%Strong202520265,505,862,514 275,293,126 54,445,00019.78%18,855,000 5,720,000 79,020,00028.70%(2,030,000)76,990,0001.40%Strong202620275,654,067,408 282,703,370 44,835,00015.86%17,950,000 4,840,000 67,625,00023.92%(1,360,000)66,265,0001.17%Strong202720285,806,261,630 290,313,081 36,200,00012.47%17,015,000 3,935,000 57,150,00019.69%(690,000)56,460,0000.97%Strong202820295,962,552,562 298,127,628 29,665,0009.95%16,055,000 3,000,000 48,720,00016.34%(595,000)48,125,0000.81%Strong202920306,123,050,480 306,152,524 23,015,0007.52%15,065,000 2,035,000 40,115,00013.10%(490,000)39,625,0000.65%Very Strong203020316,287,868,625 314,393,431 17,720,0005.64%14,035,000 1,035,000 32,790,00010.43%(380,000)32,410,0000.52%Very Strong203120326,457,123,288 322,856,164 13,780,0004.27%12,975,000 26,755,0008.29%(265,000)26,490,0000.41%Very Strong203220336,630,933,888 331,546,694 9,695,0002.92%11,870,000 21,565,0006.50%(135,000)21,430,0000.32%Very Strong203320346,809,423,062 340,471,153 6,585,0001.93%10,730,000 17,315,0005.09%0 17,315,0000.25%Very Strong203420356,992,716,746 349,635,837 4,825,0001.38%9,550,000 14,375,0004.11%0 14,375,0000.21%Very Strong203520367,180,944,265 359,047,213 3,425,0000.95%8,330,000 11,755,0003.27%0 11,755,0000.16%Very Strong203620377,374,238,427 368,711,921 2,370,0000.64%7,065,000 9,435,0002.56%0 9,435,0000.13%Very Strong203720387,572,735,614 378,636,781 1,595,0000.42%5,750,000 7,345,0001.94%0 7,345,0000.10%Very Strong203820397,776,575,880 388,828,794 990,0000.25%4,390,000 5,380,0001.38%0 5,380,0000.07%Very Strong203920407,985,903,047 399,295,152 380,0000.10%2,975,000 3,355,0000.84%0 3,355,0000.04%Very Strong204020418,200,864,810 410,043,2400.00%1,515,000 1,515,0000.37%1,515,0000.02%Very Strong204120428,421,612,839 421,080,6420.00% 0.00%00.00%Very Strong204220438,648,302,887 432,415,1440.00% 0.00%00.00%Very Strong204320448,881,094,898 444,054,7450.00% 0.00%00.00%Very Strong204420459,120,153,124 456,007,6560.00% 0.00%00.00%Very Strong204520469,365,646,237 468,282,3120.00% 0.00%00.00%Very Strong204620479,617,747,447 480,887,3720.00% 0.00%00.00%Very Strong204720489,876,634,631 493,831,7320.00% 0.00%00.00%Very Strong2048204910,142,490,449 507,124,5220.00% 0.00%00.00%Very Strong2049NOTES:1Value shown for 2021 is 1-1-2021 actual TID IN EV. Assumes a 2.69% increase each year thereafter which is 50% of the actual past five year average increase.2Direct debt burden metric excludes G.O. debt principal allocated to essential purpose utilities (sewer, sanitary sewer, and storm water) 1provided utility net revenues are sum sufficient to make all debt payments.PROP 2022B NOTESEXIST DEBT PRIN OUTS% OF LIMITExisting Debt OnlyCurrent and Projected Debt Limit & Debt Burden CalculationsWith Proposed 2022 Bonds & NotesYearTOTALDIRECT DEBT BURDEN2ASSESSMENTYearPROJECTED EV (TID IN)1DEBT LIMIT @ 5%EXIST DEBT PRIN OUTS% OF LIMITPLUS RDA DEBTLESS UTILITY ABATEDPROP 2022A BONDS4/27/2022File: Oshkosh Debt Base Case_2022‐4‐20 ‐ NO REFUNDING ‐ 2022 & 2023 Projects/Debt Limit 10 YEAR TREND IN MUNICIPAL BOND INDICES Source: The Bond Buyer The Bond Buyer “20 Bond Index” (BBI) shows average yields on a group of municipal bonds that mature in 20 years and have an average rating equivalent to Moody’s Aa2 and S&P’s AA. May 10, 2022 Pre-Sale Report for City of Oshkosh, Wisconsin $8,780,000 Storm Water Utility Revenue Bonds, Series 2022C Prepared by: Ehlers N21W23350 Ridgeview Parkway West, Suite 100 Waukesha, WI 53188 Advisors: Todd Taves, Senior Municipal Advisor Jon Cameron, Senior Municipal Advisor Harry Allen, Financial Specialist BUILDING COMMUNITIES. IT’S WHAT WE DO. Presale Report City of Oshkosh, Wisconsin May 10, 2022 Page 1 Proposed Issue: $8,780,000 Storm Water Utility Revenue Bonds, Series 2022C (the “Bonds”) Purposes: The proposed issue includes financing for construction of storm water utility system improvements (the “Projects”). Authority: The Bonds are being issued pursuant to Wisconsin Statute 66.0621. The Bonds are not general obligations of the City but are payable only from and secured by a pledge of income and revenue to be derived from the operation of the Storm Water Utility System. Term/Call Feature: The Bonds are being issued for a term of 20 years. Principal on the Bonds will be due on May 1 in the years 2023 through 2042. Interest is payable every six months beginning May 1, 2023. The Bonds will be subject to prepayment at the discretion of the City on May 1, 2032 or any date thereafter. Bank Qualification: Because the City is issuing, or expects to issue, more than $10,000,000 in tax-exempt obligations during the calendar year, the City will be not able to designate the Bonds as “bank qualified” obligations. Rating: The City’s outstanding Storm Water Utility bond issues are rated “A1” by Moody’s Investor’s Service. The City will request a new rating for the Bonds. If the winning bidder on the Bonds elects to purchase bond insurance, the rating for the issue may be higher than the City's bond rating if the bond rating of the insurer is higher than that of the City. Basis for Recommendation: Issuance of Storm Water Utility Revenue Bonds is a suitable debt instrument to achieve the City’s objectives for this financing. The City expects to have net system revenues available for debt service that provide sufficient coverage for the estimated principal and interest payments of the proposed Bonds and existing parity debt (see also the Other Considerations section). The City’s past practice has been to issue revenue bonds to finance enterprise system EXECUTIVE SUMMARY OF PROPOSED DEBT Presale Report City of Oshkosh, Wisconsin May 10, 2022 Page 2 improvements to reduce its use of General Obligation debt capacity. The City’s current Capital Improvements Plan has also identified issuance of revenue bonds to finance the Projects. The City is an active capital markets participant with staff having the requisite experience to meet the City’s obligations related to issuance of municipal securities to include secondary market disclosure and any other post-issuance requirements. Method of Sale/Placement: A competitive public offering is recommended. The City’s existing Storm Water Utility Revenue Bonds are rated A1 by Moody’s Investors Service. Based on that rating, the City’s credit characteristics, the past availability of credit enhancement, and history of receiving multiple bids in the competitive markets a competitive public offering is expected to produce the lowest total cost of financing. We will include an allowance for discount bidding in the terms of the issue. The discount is treated as an interest item and provides the underwriter with all or a portion of their compensation in the transaction. If the Bonds are purchased at a price greater than the minimum bid amount (maximum discount), the unused allowance may be used to reduce your borrowing amount. Premium Pricing: In some cases, investors in municipal bonds prefer “premium” pricing structures. A premium is achieved when the coupon for any maturity (the interest rate paid by the issuer) exceeds the yield to the investor, resulting in a price paid that is greater than the face value of the bonds. The sum of the amounts paid more than face value is considered “reoffering premium.” The underwriter of the bonds will retain a portion of this reoffering premium as their compensation (or “discount”) but will pay the remainder of the premium to the City. For this issue of Bonds, any premium amount received may: be retained; used to reduce the issue size; or combination thereof. These adjustments may slightly change the true interest cost of the original bid, either up or down. We anticipate using any premium amounts received to reduce the issue size. The amount of premium allowed can be restricted in the bid specifications. Restrictions on premium may result in fewer bids but may also eliminate large adjustments on the day of sale and unintended results with respect to debt service payment impacts. Ehlers will identify appropriate premium restrictions for the Bonds intended to achieve the City’s objectives for this financing. Other Considerations: Additional Bonds Test. The City’s ability to proceed with issuance of the Bonds is contingent on verification that revenues generated from operation of the Storm Water System in 2021 were sufficient to meet the additional bonds test. The additional bonds test requires that net system revenues be at least 1.2 times the annual debt service payment for the Bonds and all existing parity debt. Term Bond Option. The Bonds will be offered with the option of the successful bidder utilizing a term bond structure. By offering underwriters the option to “term up” some of the maturities at the time of the sale, it gives them more flexibility in finding a market for your Presale Report City of Oshkosh, Wisconsin May 10, 2022 Page 3 Bonds. This makes your issue more marketable, which can result in lower borrowing costs. If the successful bidder utilizes a term bond structure, we recommend the City retain a paying agent to handle responsibility for processing mandatory redemption/call notices associated with term bonds. Review of Existing Debt: The City’s Series 2012D Storm Water Utility Revenue Bonds are callable May 1, 2022 and could potentially be refinanced for debt service savings as a part of the Bonds. Based on current market conditions, the refunding would not generate significant savings. However, we will continue to evaluate this savings opportunity as we get closer to the sale date and will make a recommendation to the City based on market conditions at the time. Other than the foregoing, there are no refunding opportunities currently. We will continue to monitor the market and the call dates for the City’s outstanding debt and will alert you to any future refunding opportunities. Continuing Disclosure: Because the City has more than $10,000,000 in outstanding debt (including this issue) and this issue is over $1,000,000, the City will be agreeing to provide certain updated Annual Financial Information and its Audited Financial Statement annually, as well as providing notices of the occurrence of certain reportable events to the Municipal Securities Rulemaking Board (the “MSRB”), as required by rules of the Securities and Exchange Commission (SEC). The City is already obligated to provide such reports for its existing bonds and has contracted with Ehlers to prepare and file the reports. Arbitrage Monitoring: The City must ensure compliance with certain sections of the Internal Revenue Code and Treasury Regulations (“Arbitrage Rules”) throughout the life of the issue to maintain the tax- exempt status of the Bonds. These Arbitrage Rules apply to amounts held in construction, escrow, reserve, debt service account(s), etc., along with related investment income on each fund/account. IRS audits will verify compliance with rebate, yield restriction and records retention requirements within the Arbitrage Rules. The City’s specific arbitrage responsibilities will be detailed in the Tax Exemption Certificate and Agreement (the “Tax Compliance Document”) prepared by your Bond Attorney and provided at closing. The Bonds may qualify for one or more exception(s) to the Arbitrage Rules by meeting 1) small issuer exception, 2) spend down requirements, 3) bona fide debt service fund limits, 4) reasonable reserve requirements, 5) expenditure within an available period limitation, 6) investments yield restrictions, 7) de minimis rules, or 8) borrower limited requirements. We recommend that the City review its specific responsibilities related to the Bonds with an arbitrage expert to utilize one or more of the exceptions listed above. We also recommend that you establish written procedures regarding compliance with IRS rules and/or contract with Ehlers to assist you. Presale Report City of Oshkosh, Wisconsin May 10, 2022 Page 4 Investment of Bond Proceeds: Ehlers can assist the City in developing a strategy to invest your Bond proceeds until the funds are needed to pay project costs. Risk Factors: Utility Revenue: In the event utility revenues are insufficient to pay debt service, the City Council is committing to consider appropriating funds from any other available sources in an amount sufficient to cover the shortfall. If it chooses to do so, the City may levy a tax to make up a shortfall. Any amount levied for this purpose is potentially exempted from levy limits. While the City is not required to appropriate the funds necessary to remedy any shortfall in revenues needed to pay debt service, failure to do so would result in either a lack of access to capital markets in the future, or access at a substantially higher cost. Other Service Providers: This debt issuance will require the engagement of other public finance service providers. This section identifies those other service providers, so Ehlers can coordinate their engagement on your behalf. Where you have previously used a particular firm to provide a service, we have assumed that you will continue that relationship. For services you have not previously required, we have identified a service provider. Fees charged by these service providers will be paid from proceeds of the obligation, unless you notify us that you wish to pay them from other sources. Our pre-sale bond sizing includes a good faith estimate of these fees, but the final fees may vary. If you have any questions pertaining to the identified service providers or their role, or if you would like to use a different service provider for any of the listed services please contact us. Bond Counsel: Chapman and Cutler LLP Paying Agent: U.S. Bank Trust Company, National Association (only if Term Bonds) Rating Agency: Moody's Investors Service, Inc. Presale Report City of Oshkosh, Wisconsin May 10, 2022 Page 5 Pre-Sale Review by City Council: May 10, 2022 Conference with Rating Agency: May 23, 2022 Due Diligence Call to review Official Statement: May 23, 2022 Distribute Official Statement: Week of June 6, 2022 City Council Meeting to Award Sale of the Bonds: June 14, 2022 Estimated Closing Date: July 7, 2022 Attachments Estimated Sources and Uses of Funds Estimated Debt Service Schedule EHLERS’ CONTACTS Todd Taves, Senior Municipal Advisor (262) 796-6173 Jon Cameron, Senior Municipal Advisor (262) 796-6179 Harry Allen, Financial Specialist (262) 796-6182 Sue Porter, Senior Public Finance Analyst/Marketing Coordinator (262) 796-6167 Kathy Myers, Senior Financial Analyst (262) 796-6177 PROPOSED DEBT ISSUANCE SCHEDULE EHLERS’ CONTACTS Presale Estimate Sale 6-14-2022 Est. Dated 7-7-2022 Storm Water Utility Revenue Bonds Series 2022C Tax-Exempt Capital Projects1 8,385,000$ Reserve Fund Adjustments New Reserve Fund Requirement 7,730,697$ Less Current Reserve Requirement (7,535,319)$ Net Deposit to Reserve Fund Required 195,378$ Estimated Issuance Expenses Ehlers (Municipal Advisor) 43,100$ Chapman & Cutler (Bond Counsel) 23,000$ Maximum Discount (Bid Item) @ 1.25% 109,750$ Moody's Investors Service (Rating Fee) 19,000$ U.S. Bank (Paying Agent) 1,000$ TOTAL TO BE FINANCED 8,776,228$ Estimated Interest Earnings2 (978)$ Rounding 4,750$ NET BOND SIZE 8,780,000$ NOTES: 1Capital projects amounts taken from City of Oshkosh 2022 Budget. 2Assumes temporary investment of available new money proceeds at 0.07% for 60 days. (January 2022 LGIP Rate). 2022 Revenue Bond Sizing Worksheet 4/27/2022 File: Oshkosh Debt Base Case_2022‐4‐20 ‐ NO REFUNDING ‐ 2022 & 2023 Projects/Rev Sizing 2022 Schedule of Storm Water Utility Revenue Debt Outstanding Plus Proposed 2022 IssuesAs of January 1, 2022AmountDatedPaying AgentCallableCallable AmtRate/TermEst. TIC 2.992%2023‐2042Year Principal Interest Total Prin (5/1)Est. Rate1Interest Total Total P&INet Revs21.2X Req'd Rev P&I G.O. P&I TotalNet Revs@Year20224,775,000 2,752,789 7,527,789 7,527,7899,537,247 1.277,527,789 820,269 8,348,0579,537,247 1.14202220235,040,000 2,493,519 7,533,519 200,0003.050%446,695 646,695 8,180,2149,537,2471.178,180,214 547,369 8,727,5839,537,247 1.09202320245,235,000 2,294,359 7,529,359 315,0003.310%330,265 645,265 8,174,6259,537,2471.178,174,625 438,194 8,612,8189,537,247 1.11202420255,435,000 2,100,319 7,535,319 325,0003.430%319,478 644,478 8,179,7979,537,2471.178,179,797 421,869 8,601,6669,537,247 1.11202520265,400,000 1,914,213 7,314,213 340,0003.460%308,023 648,023 7,962,2359,537,2471.207,962,235 410,694 8,372,9299,537,247 1.14202620275,630,000 1,722,447 7,352,447 350,0003.550%295,928 645,928 7,998,3759,537,2471.197,998,375 394,513 8,392,8879,537,247 1.14202720285,820,000 1,523,869 7,343,869 365,0003.650%283,054 648,054 7,991,9239,537,2471.197,991,923 378,475 8,370,3989,537,247 1.14202820296,065,000 1,318,353 7,383,353 375,0003.720%269,418 644,418 8,027,7719,537,2471.198,027,771 12,581 8,040,3529,537,247 1.19202920306,315,000 1,110,747 7,425,747 390,0003.790%255,053 645,053 8,070,7999,537,2471.188,070,799 17,259 8,088,0599,537,247 1.18203020315,025,000 924,050 5,949,050 405,0003.840%239,886 644,886 6,593,9369,537,247 1.456,593,936 16,856 6,610,7929,537,247 1.44203120325,195,000 753,484 5,948,484 420,0003.890%223,941 643,941 6,592,4259,537,247 1.456,592,425 16,425 6,608,8509,537,247 1.44203220334,910,000 586,978 5,496,978 440,0003.930%207,126 647,126 6,144,1049,537,247 1.556,144,104 20,900 6,165,0049,537,247 1.55203320343,965,000 443,800 4,408,800 455,0003.970%189,448 644,448 5,053,2489,537,247 1.895,053,248 20,300 5,073,5489,537,247 1.88203420353,505,000 328,641 3,833,641 475,0004.000%170,917 645,917 4,479,5579,537,247 2.134,479,557 0 4,479,5579,537,247 2.13203520362,860,000 233,694 3,093,694 495,0004.030%151,442 646,442 3,740,1369,537,247 2.553,740,136 0 3,740,1369,537,247 2.55203620372,600,000 153,113 2,753,113 515,0004.070%130,988 645,988 3,399,1009,537,247 2.813,399,100 0 3,399,1009,537,247 2.81203720381,970,000 86,569 2,056,569 535,0004.090%109,567 644,567 2,701,1369,537,247 3.532,701,136 0 2,701,1369,537,247 3.53203820391,295,000 42,306 1,337,306 560,0004.110%87,118 647,118 1,984,4249,537,247 4.811,984,424 0 1,984,4249,537,247 4.8120392040745,000 17,859 762,859 580,0004.120%63,662 643,662 1,406,5219,537,247 6.781,406,521 0 1,406,5219,537,247 6.7820402041450,000 4,781 454,781 605,0004.150%39,160 644,160 1,098,9429,537,247 8.681,098,942 0 1,098,9429,537,247 8.68204120420 0 0 635,0004.190%13,303 648,303 648,3039,537,247 14.71648,303 0 648,3039,537,247 14.712042TOTALS 82,235,000 20,805,889 103,040,889 8,780,000 4,134,472 12,914,472 115,955,360 115,955,360 3,515,703 119,471,064NOTES: = Maturities Subject to Optional Redemption1Estimated rates are 4-19-2022 MMD AA scale plus 1.00%.2Net revenue calculation based the City's 2020 audited financial statements.Debt Service CoverageDebt Service Coverage07‐Jul‐22TBDExisting + Future Issues$8,780,000Presale Estimate$5,295,00001‐May‐32Total Utility DebtStorm Water Utility Revenue Bonds, Series 2022CExisting Stormwater Revenue Debt Issue4/27/2022File: Oshkosh Debt Base Case_2022‐4‐20 ‐ NO REFUNDING ‐ 2022 & 2023 Projects/Storm Rev Debt May 10, 2022 Pre-Sale Report for City of Oshkosh, Wisconsin $8,615,000 Water System Revenue Bonds, Series 2022D Prepared by: Ehlers N21W23350 Ridgeview Parkway West, Suite 100 Waukesha, WI 53188 Advisors: Todd Taves, Senior Municipal Advisor Jon Cameron, Senior Municipal Advisor Harry Allen, Financial Specialist BUILDING COMMUNITIES. IT’S WHAT WE DO. Presale Report City of Oshkosh, Wisconsin May 10, 2022 Page 1 Proposed Issue: $8,615,000 Water System Revenue Bonds, Series 2022D (the “Bonds”) Purposes: The proposed issue includes financing for construction of water system improvements (the “Projects”). Authority: The Bonds are being issued pursuant to Wisconsin Statute 66.0621. The Bonds are not general obligations of the City but are payable only from and secured by a pledge of income and revenue to be derived from the operation of the Water System. Term/Call Feature: The Bonds are being issued for a term of 20 years. Principal on the Bonds will be due on January 1 in the years 2023 through 2042. Interest is payable every six months beginning January 1, 2023. The Bonds will be subject to prepayment at the discretion of the City on January 1, 2032 or any date thereafter. Bank Qualification: Because the City is issuing, or expects to issue, more than $10,000,000 in tax-exempt obligations during the calendar year, the City will be not able to designate the Bonds as “bank qualified” obligations. Rating: The City’s outstanding Water System Revenue Bonds are rated “Aa3” by Moody’s Investors Service. The City will request a new rating for the Bonds. If the winning bidder on the Bonds elects to purchase bond insurance, the rating for the issue may be higher than the City's bond rating if the bond rating of the insurer is higher than that of the City. Basis for Recommendation: Issuance of Water System Revenue Bonds is a suitable debt instrument to achieve the City’s objectives for this financing. The City expects to have net system revenues available for debt service that provide sufficient coverage for the estimated principal and interest payments of the proposed Bonds and existing parity debt. The City’s past practice has been to issue revenue bonds to finance enterprise system improvements to reduce its use of General EXECUTIVE SUMMARY OF PROPOSED DEBT Presale Report City of Oshkosh, Wisconsin May 10, 2022 Page 2 Obligation debt capacity. The City’s current Capital Improvements Plan has also identified issuance of revenue bonds to finance the Projects. The City is an active capital markets participant with staff having the requisite experience to meet the City’s obligations related to issuance of municipal securities to include secondary market disclosure and any other post-issuance requirements. Method of Sale/Placement: A competitive public offering is recommended. The City’s existing Water System Revenue Bonds are rated Aa3 by Moody’s Investors Service. Based on that rating, the City’s credit characteristics, and history of receiving multiple bids in the competitive markets a competitive public offering is expected to produce the lowest total cost of financing. We will include an allowance for discount bidding in the terms of the issue. The discount is treated as an interest item and provides the underwriter with all or a portion of their compensation in the transaction. If the Bonds are purchased at a price greater than the minimum bid amount (maximum discount), the unused allowance may be used to reduce your borrowing amount. Premium Pricing: In some cases, investors in municipal bonds prefer “premium” pricing structures. A premium is achieved when the coupon for any maturity (the interest rate paid by the issuer) exceeds the yield to the investor, resulting in a price paid that is greater than the face value of the bonds. The sum of the amounts paid more than face value is considered “reoffering premium.” The underwriter of the bonds will retain a portion of this reoffering premium as their compensation (or “discount”) but will pay the remainder of the premium to the City. For this issue of Bonds, any premium amount received may: be retained; used to reduce the issue size; or combination thereof. These adjustments may slightly change the true interest cost of the original bid, either up or down. We anticipate using any premium amounts received to reduce the issue size. The amount of premium allowed can be restricted in the bid specifications. Restrictions on premium may result in fewer bids but may also eliminate large adjustments on the day of sale and unintended results with respect to debt service payment impacts. Ehlers will identify appropriate premium restrictions for the Bonds intended to achieve the City’s objectives for this financing. Other Considerations: Term Bond Option. The Bonds will be offered with the option of the successful bidder utilizing a term bond structure. By offering underwriters the option to “term up” some of the maturities at the time of the sale, it gives them more flexibility in finding a market for your Bonds. This makes your issue more marketable, which can result in lower borrowing costs. If the successful bidder utilizes a term bond structure, we recommend the City retain a paying agent to handle responsibility for processing mandatory redemption/call notices associated with term bonds. Presale Report City of Oshkosh, Wisconsin May 10, 2022 Page 3 Review of Existing Debt: The City’s Series 2012F Water Revenue Bonds became callable on January 1, 2022 and could potentially be refinanced for debt service savings as a part of the Bonds. Based on current market conditions, the refunding would not generate significant savings. However, we will continue to evaluate this savings opportunity as we get closer to the sale date and will make a recommendation to the City based on market conditions at the time. Other than the foregoing, there are no refunding opportunities currently. We will continue to monitor the market and the call dates for the City’s outstanding debt and will alert you to any future refunding opportunities. Continuing Disclosure: Because the City has more than $10,000,000 in outstanding debt (including this issue) and this issue is over $1,000,000, the City will be agreeing to provide certain updated Annual Financial Information and its Audited Financial Statement annually, as well as providing notices of the occurrence of certain reportable events to the Municipal Securities Rulemaking Board (the “MSRB”), as required by rules of the Securities and Exchange Commission (SEC). The City is already obligated to provide such reports for its existing bonds and has contracted with Ehlers to prepare and file the reports. Arbitrage Monitoring: The City must ensure compliance with certain sections of the Internal Revenue Code and Treasury Regulations (“Arbitrage Rules”) throughout the life of the issue to maintain the tax- exempt status of the Bonds. These Arbitrage Rules apply to amounts held in construction, escrow, reserve, debt service account(s), etc., along with related investment income on each fund/account. IRS audits will verify compliance with rebate, yield restriction and records retention requirements within the Arbitrage Rules. The City’s specific arbitrage responsibilities will be detailed in the Tax Exemption Certificate and Agreement (the “Tax Compliance Document”) prepared by your Bond Attorney and provided at closing. The Bonds may qualify for one or more exception(s) to the Arbitrage Rules by meeting 1) small issuer exception, 2) spend down requirements, 3) bona fide debt service fund limits, 4) reasonable reserve requirements, 5) expenditure within an available period limitation, 6) investments yield restrictions, 7) de minimis rules, or 8) borrower limited requirements. We recommend that the City review its specific responsibilities related to the Bonds with an arbitrage expert to utilize one or more of the exceptions listed above. We also recommend that you establish written procedures regarding compliance with IRS rules and/or contract with Ehlers to assist you. Investment of Bond Proceeds: Ehlers can assist the City in developing a strategy to invest your Bond proceeds until the funds are needed to pay project costs. Presale Report City of Oshkosh, Wisconsin May 10, 2022 Page 4 Risk Factors: Utility Revenue: In the event utility revenues are insufficient to pay debt service, the City Council is committing to consider appropriating funds from any other available sources in an amount sufficient to cover the shortfall. If it chooses to do so, the City may levy a tax to make up a shortfall. Any amount levied for this purpose is exempted from levy limits. While the City is not required to appropriate the funds necessary to remedy any shortfall in revenues needed to pay debt service, failure to do so would result in either a lack of access to capital markets in the future, or access at a substantially higher cost. Other Service Providers: This debt issuance will require the engagement of other public finance service providers. This section identifies those other service providers, so Ehlers can coordinate their engagement on your behalf. Where you have previously used a particular firm to provide a service, we have assumed that you will continue that relationship. For services you have not previously required, we have identified a service provider. Fees charged by these service providers will be paid from proceeds of the obligation, unless you notify us that you wish to pay them from other sources. Our pre-sale bond sizing includes a good faith estimate of these fees, but the final fees may vary. If you have any questions pertaining to the identified service providers or their role, or if you would like to use a different service provider for any of the listed services please contact us. Bond Counsel: Chapman and Cutler LLP Paying Agent: U.S. Bank Trust Company, National Association (only if Term Bonds) Rating Agency: Moody's Investors Service, Inc. Presale Report City of Oshkosh, Wisconsin May 10, 2022 Page 5 Pre-Sale Review by City Council: May 10, 2022 Conference with Rating Agency: May 23, 2022 Due Diligence Call to review Official Statement: May 23, 2022 Distribute Official Statement: Week of June 20, 2022 City Council Meeting to Award Sale of the Bonds: June 28, 2022 Estimated Closing Date: July 21, 2022 Attachments Estimated Sources and Uses of Funds Estimated Debt Service Schedule EHLERS’ CONTACTS Todd Taves, Senior Municipal Advisor (262) 796-6173 Jon Cameron, Senior Municipal Advisor (262) 796-6179 Harry Allen, Financial Specialist (262) 796-6182 Sue Porter, Senior Public Finance Analyst/Marketing Coordinator (262) 796-6167 Kathy Myers, Senior Financial Analyst (262) 796-6177 PROPOSED DEBT ISSUANCE SCHEDULE EHLERS’ CONTACTS Presale Estimate Sale 6-28-2022 Est. Dated 7-21-2022 Water System Revenue Bonds Series 2022D Tax-Exempt Capital Projects1 7,850,000$ Reserve Fund Adjustments New Reserve Fund Requirement 4,355,610$ Less Current Reserve Requirement (3,785,657)$ Net Deposit to Reserve Fund Required 569,953$ Estimated Issuance Expenses Ehlers (Municipal Advisor) 43,000$ Chapman & Cutler (Bond Counsel) 22,000$ Maximum Discount (Bid Item) @ 1.25% 107,688$ Moody's Investors Service (Rating Fee) 19,000$ U.S. Bank (Paying Agent) 1,000$ TOTAL TO BE FINANCED 8,612,640$ Estimated Interest Earnings2 (916)$ Rounding 3,276$ NET BOND SIZE 8,615,000$ NOTES: 1Capital projects amounts taken from City of Oshkosh 2022 Budget. 2Assumes temporary investment of available new money proceeds at 0.07% for 60 days. (January 2022 LGIP Rate). 2022 Revenue Bond Sizing Worksheet 4/27/2022 File: Oshkosh Debt Base Case_2022‐4‐20 ‐ NO REFUNDING ‐ 2022 & 2023 Projects/Rev Sizing 2022 Schedule of Water Utility Revenue Debt Outstanding Plus Proposed 2022 IssueAs of January 1, 2022AmountDatedPaying AgentCallableCallable AmtRate/TermEst. TIC 2.700%2023‐2042Year Principal Interest Total Prin (1/1) Rate Interest TotalNet Revs21.2X Req'd Rev P&I G.O. P&I TotalNet Revs2Year20224,269,223 1,593,992 5,863,215 0 5,863,2159,412,071 1.615,863,215 650,794 6,514,0099,412,071 1.44202220234,348,901 1,490,986 5,839,887 325,0002.750%286,308 611,308 6,451,1959,412,071 1.466,451,195 497,825 6,949,0209,412,071 1.35202320244,333,809 1,352,767 5,686,575 315,0003.010%294,203 609,203 6,295,7789,412,071 1.496,295,778 389,700 6,685,4789,412,071 1.41202420254,288,950 1,219,640 5,508,590 325,0003.130%284,376 609,376 6,117,9659,412,071 1.546,117,965 249,425 6,367,3909,412,071 1.48202520264,409,331 1,091,145 5,500,476 335,0003.160%273,997 608,997 6,109,4739,412,071 1.546,109,473 252,994 6,362,4679,412,071 1.48202620273,829,958 963,502 4,793,460 345,0003.250%263,097 608,097 5,401,5579,412,071 1.745,401,557 150,434 5,551,9929,412,071 1.70202720283,800,836 841,536 4,642,372 355,0003.350%251,545 606,545 5,248,9179,412,071 1.795,248,917 151,544 5,400,4619,412,071 1.74202820293,455,000 723,659 4,178,659 370,0003.420%239,272 609,272 4,787,9319,412,071 1.974,787,931 47,569 4,835,5009,412,071 1.95202920303,550,000 608,866 4,158,866 380,0003.490%226,314 606,314 4,765,1799,412,071 1.984,765,179 51,478 4,816,6579,412,071 1.95203020313,240,000 501,372 3,741,372 395,0003.540%212,691 607,691 4,349,0639,412,071 2.164,349,063 50,269 4,399,3329,412,071 2.14203120323,030,000 406,538 3,436,538 410,0003.590%198,340 608,340 4,044,8789,412,071 2.334,044,878 53,900 4,098,7789,412,071 2.30203220332,450,000 325,300 2,775,300 425,0003.630%183,267 608,267 3,383,5679,412,071 2.783,383,567 52,400 3,435,9679,412,071 2.74203320342,330,000 253,900 2,583,900 440,0003.670%167,479 607,479 3,191,3799,412,071 2.953,191,379 55,825 3,247,2049,412,071 2.90203420352,245,000 187,031 2,432,031 460,0003.700%150,895 610,895 3,042,9269,412,071 3.093,042,926 0 3,042,9269,412,071 3.09203520361,845,000 129,881 1,974,881 475,0003.730%133,526 608,526 2,583,4089,412,071 3.642,583,408 0 2,583,4089,412,071 3.64203620371,455,000 85,506 1,540,506 495,0003.770%115,337 610,337 2,150,8439,412,071 4.382,150,843 0 2,150,8439,412,071 4.3820372038955,000 55,231 1,010,231 510,0003.790%96,342 606,342 1,616,5739,412,071 5.821,616,573 0 1,616,5739,412,071 5.8220382039980,000 32,669 1,012,669 530,0003.810%76,581 606,581 1,619,2499,412,071 5.811,619,249 0 1,619,2499,412,071 5.8120392040685,000 14,066 699,066 555,0003.820%55,884 610,884 1,309,9499,412,071 7.191,309,949 0 1,309,9499,412,071 7.1920402041350,000 3,500 353,500 575,0003.850%34,214 609,214 962,7149,412,071 9.78962,714 0 962,7149,412,071 9.78204120420 0 0 595,0003.890%11,573 606,573 606,5739,412,071 15.52606,573 0 606,5739,412,071 15.52204255,851,008 11,881,087 67,732,095 8,615,000 3,555,237 12,170,237 79,902,332 79,902,332 2,654,156 82,556,488NOTES:1Estimated rates are 4-19-2022 MMD AA scale plus 0.70%.2Net revenue calculation based the City's 2020 audited financial statements. = Maturities Subject to Optional RedemptionPresale Estimate$5,060,00001‐Jan‐32TBD$8,615,000Debt Service CoverageIssue Existing Water Revenue Debt Water System Revenue Bonds, Series 2022DExisting + Future IssuesDebt Service CoverageTotal Utility Debt21‐Jul‐224/27/2022File: Oshkosh Debt Base Case_2022‐4‐20 ‐ NO REFUNDING ‐ 2022 & 2023 Projects/Water Rev Debt May 10, 2022 Pre-Sale Report for City of Oshkosh, Wisconsin $14,820,000 Sewer System Revenue Bonds, Series 2022E Prepared by: Ehlers N21W23350 Ridgeview Parkway West, Suite 100 Waukesha, WI 53188 Advisors: Todd Taves, Senior Municipal Advisor Jon Cameron, Senior Municipal Advisor Harry Allen, Financial Specialist BUILDING COMMUNITIES. IT’S WHAT WE DO. Presale Report City of Oshkosh, Wisconsin May 10, 2022 Page 1 Proposed Issue: $14,820,000 Sewer System Revenue Bonds, Series 2022E (the “Bonds”) Purposes: The proposed issue includes financing for construction of sanitary sewer system improvements (the “Projects”). Authority: The Bonds are being issued pursuant to Wisconsin Statute 66.0621. The Bonds are not general obligations of the City but are payable only from and secured by a pledge of income and revenue to be derived from the operation of the Sewer System. Term/Call Feature: The Bonds are being issued for a term of 20 years. Principal on the Bonds will be due on May 1 in the years 2023 through 2042. Interest is payable every six months beginning May 1, 2023. The Bonds will be subject to prepayment at the discretion of the City on May 1, 2032 or any date thereafter. Bank Qualification: Because the City is issuing, or expects to issue, more than $10,000,000 in tax-exempt obligations during the calendar year, the City will be not able to designate the Bonds as “bank qualified” obligations. Rating: The City’s outstanding Sewer System Revenue Bonds are rated “Aa3” by Moody’s Investors Service. If the winning bidder on the Bonds elects to purchase bond insurance, the rating for the issue may be higher than the City's bond rating if the bond rating of the insurer is higher than that of the City. Basis for Recommendation: Issuance of Sewer System Revenue Bonds is a suitable debt instrument to achieve the City’s objectives for this financing. The City expects to have net system revenues available for debt service that provide sufficient coverage for the estimated principal and interest payments of the proposed Bonds and existing parity debt. The City’s past practice has been to issue revenue bonds to finance enterprise system improvements to reduce its use of General EXECUTIVE SUMMARY OF PROPOSED DEBT Presale Report City of Oshkosh, Wisconsin May 10, 2022 Page 2 Obligation debt capacity. The City’s current Capital Improvements Plan has also identified issuance of revenue bonds to finance the Projects. The City is an active capital markets participant with staff having the requisite experience to meet the City’s obligations related to issuance of municipal securities to include secondary market disclosure and any other post-issuance requirements. Method of Sale/Placement: A competitive public offering is recommended. The City’s existing Sewer System Revenue Bonds are rated Aa3 by Moody’s Investors Service. Based on that rating, the City’s credit characteristics, and history of receiving multiple bids in the competitive markets a competitive public offering is expected to produce the lowest total cost of financing. We will include an allowance for discount bidding in the terms of the issue. The discount is treated as an interest item and provides the underwriter with all or a portion of their compensation in the transaction. If the Bonds are purchased at a price greater than the minimum bid amount (maximum discount), the unused allowance may be used to reduce your borrowing amount. Premium Pricing: In some cases, investors in municipal bonds prefer “premium” pricing structures. A premium is achieved when the coupon for any maturity (the interest rate paid by the issuer) exceeds the yield to the investor, resulting in a price paid that is greater than the face value of the bonds. The sum of the amounts paid more than face value is considered “reoffering premium.” The underwriter of the bonds will retain a portion of this reoffering premium as their compensation (or “discount”) but will pay the remainder of the premium to the City. For this issue of Bonds, any premium amount received may: be retained; used to reduce the issue size; or combination thereof. These adjustments may slightly change the true interest cost of the original bid, either up or down. We anticipate using any premium amounts received to reduce the issue size. The amount of premium allowed can be restricted in the bid specifications. Restrictions on premium may result in fewer bids but may also eliminate large adjustments on the day of sale and unintended results with respect to debt service payment impacts. Ehlers will identify appropriate premium restrictions for the Bonds intended to achieve the City’s objectives for this financing. Other Considerations: Term Bond Option. The Bonds will be offered with the option of the successful bidder utilizing a term bond structure. By offering underwriters the option to “term up” some of the maturities at the time of the sale, it gives them more flexibility in finding a market for your Bonds. This makes your issue more marketable, which can result in lower borrowing costs. If the successful bidder utilizes a term bond structure, we recommend the City retain a paying agent to handle responsibility for processing mandatory redemption/call notices associated with term bonds. Presale Report City of Oshkosh, Wisconsin May 10, 2022 Page 3 Review of Existing Debt: The City’s Series 2012E Sewer Revenue Bonds are callable May 1, 2022 and could potentially be refinanced for debt service savings as a part of the Bonds. Based on current market conditions, the refunding would not generate significant savings. However, we will continue to evaluate this savings opportunity as we get closer to the sale date and will make a recommendation to the City based on market conditions at the time. Other than the foregoing, there are no refunding opportunities currently. We will continue to monitor the market and the call dates for the City’s outstanding debt and will alert you to any future refunding opportunities. Continuing Disclosure: Because the City has more than $10,000,000 in outstanding debt (including this issue) and this issue is over $1,000,000, the City will be agreeing to provide certain updated Annual Financial Information and its Audited Financial Statement annually, as well as providing notices of the occurrence of certain reportable events to the Municipal Securities Rulemaking Board (the “MSRB”), as required by rules of the Securities and Exchange Commission (SEC). The City is already obligated to provide such reports for its existing bonds and has contracted with Ehlers to prepare and file the reports. Arbitrage Monitoring: The City must ensure compliance with certain sections of the Internal Revenue Code and Treasury Regulations (“Arbitrage Rules”) throughout the life of the issue to maintain the tax- exempt status of the Bonds. These Arbitrage Rules apply to amounts held in construction, escrow, reserve, debt service account(s), etc., along with related investment income on each fund/account. IRS audits will verify compliance with rebate, yield restriction and records retention requirements within the Arbitrage Rules. The City’s specific arbitrage responsibilities will be detailed in the Tax Exemption Certificate and Agreement (the “Tax Compliance Document”) prepared by your Bond Attorney and provided at closing. The Bonds may qualify for one or more exception(s) to the Arbitrage Rules by meeting 1) small issuer exception, 2) spend down requirements, 3) bona fide debt service fund limits, 4) reasonable reserve requirements, 5) expenditure within an available period limitation, 6) investments yield restrictions, 7) de minimis rules, or 8) borrower limited requirements. We recommend that the City review its specific responsibilities related to the Bonds with an arbitrage expert to utilize one or more of the exceptions listed above. We also recommend that you establish written procedures regarding compliance with IRS rules and/or contract with Ehlers to assist you. Investment of Bond Proceeds: Ehlers can assist the City in developing a strategy to invest your Bond proceeds until the funds are needed to pay project costs. Presale Report City of Oshkosh, Wisconsin May 10, 2022 Page 4 Risk Factors: Utility Revenue: In the event utility revenues are insufficient to pay debt service, the City Council is committing to consider appropriating funds from any other available sources in an amount sufficient to cover the shortfall. If it chooses to do so, the City may levy a tax to make up a shortfall. Any amount levied for this purpose is exempted from levy limits. While the City is not required to appropriate the funds necessary to remedy any shortfall in revenues needed to pay debt service, failure to do so would result in either a lack of access to capital markets in the future, or access at a substantially higher cost. Other Service Providers: This debt issuance will require the engagement of other public finance service providers. This section identifies those other service providers, so Ehlers can coordinate their engagement on your behalf. Where you have previously used a particular firm to provide a service, we have assumed that you will continue that relationship. For services you have not previously required, we have identified a service provider. Fees charged by these service providers will be paid from proceeds of the obligation, unless you notify us that you wish to pay them from other sources. Our pre-sale bond sizing includes a good faith estimate of these fees, but the final fees may vary. If you have any questions pertaining to the identified service providers or their role, or if you would like to use a different service provider for any of the listed services please contact us. Bond Counsel: Chapman and Cutler LLP Paying Agent: U.S. Bank Trust Company, National Association (only if Term Bonds) Rating Agency: Moody's Investors Service, Inc. Presale Report City of Oshkosh, Wisconsin May 10, 2022 Page 5 Pre-Sale Review by City Council: May 10, 2022 Conference with Rating Agency: May 23, 2022 Due Diligence Call to review Official Statement: May 23, 2022 Distribute Official Statement: Week of June 20, 2022 City Council Meeting to Award Sale of the Bonds: June 28, 2022 Estimated Closing Date: July 21, 2022 Attachments Estimated Sources and Uses of Funds Estimated Debt Service Schedule Todd Taves, Senior Municipal Advisor (262) 796-6173 Jon Cameron, Senior Municipal Advisor (262) 796-6179 Harry Allen, Financial Specialist (262) 796-6182 Sue Porter, Senior Public Finance Analyst/Marketing Coordinator (262) 796-6167 Kathy Myers, Senior Financial Analyst (262) 796-6177 PROPOSED DEBT ISSUANCE SCHEDULE EHLERS’ CONTACTS Presale Estimate Sale 6-28-2022 Est. Dated 7-21-2022 Sewer System Revenue Bonds Series 2022E Tax-Exempt Capital Projects1 13,575,000$ Reserve Fund Adjustments New Reserve Fund Requirement 6,881,490$ Less Current Reserve Requirement (5,937,815)$ Net Deposit to Reserve Fund Required 943,675$ Estimated Issuance Expenses Ehlers (Municipal Advisor) 52,500$ Chapman & Cutler (Bond Counsel) 31,000$ Maximum Discount (Bid Item) @ 1.25% 185,250$ Moody's Investors Service (Rating Fee) 29,000$ U.S. Bank (Paying Agent) 1,000$ TOTAL TO BE FINANCED 14,817,425$ Estimated Interest Earnings2 (1,584)$ Rounding 4,159$ NET BOND SIZE 14,820,000$ NOTES: 1Capital projects amounts taken from City of Oshkosh 2022 Budget. 2Assumes temporary investment of available new money proceeds at 0.07% for 60 days. (January 2022 LGIP Rate). 2022 Revenue Bond Sizing Worksheet 4/27/2022 File: Oshkosh Debt Base Case_2022‐4‐20 ‐ NO REFUNDING ‐ 2022 & 2023 Projects/Rev Sizing 2022 Schedule of Sewer Utility Revenue Debt Outstanding Plus Proposed 2022 IssueAs of January 1, 2022AmountDatedPaying AgentCallableCallable AmtRate/TermEst. TIC 2.690%2023‐2042YearPrincipal Interest Total Prin (5/1)Est. Rate1Interest Total Total P&INet Revs21.1X Req'd Rev P&I G.O. P&I TotalNet Revs2Year20224,639,508 2,429,354 7,068,8627,068,8629,252,811 1.317,068,862 847,338 7,916,1999,252,811 1.17202220234,796,502 2,184,833 6,981,335 385,0002.750%673,368 1,058,368 8,039,7039,252,811 1.158,039,703 789,969 8,829,6729,252,811 1.05202320244,893,799 2,039,610 6,933,409 545,0003.010%512,337 1,057,337 7,990,7469,252,811 1.167,990,746 684,044 8,674,7909,252,811 1.07202420254,749,764 1,877,422 6,627,185 565,0003.130%495,292 1,060,292 7,687,4789,252,811 1.207,687,478 535,613 8,223,0909,252,811 1.13202520264,822,501 1,716,025 6,538,526 585,0003.160%477,207 1,062,207 7,600,7339,252,811 1.227,600,733 431,925 8,032,6589,252,811 1.15202620274,865,442 1,546,220 6,411,662 600,0003.250%458,214 1,058,214 7,469,8769,252,811 1.247,469,876 182,706 7,652,5829,252,811 1.21202720284,943,591 1,369,039 6,312,630 620,0003.350%438,079 1,058,079 7,370,7099,252,811 1.267,370,709 178,006 7,548,7159,252,811 1.23202820295,136,954 1,190,789 6,327,743 645,0003.420%416,665 1,061,665 7,389,4079,252,811 1.257,389,407 53,219 7,442,6269,252,811 1.24202920305,165,536 1,013,050 6,178,586 665,0003.490%394,031 1,059,031 7,237,6179,252,811 1.287,237,617 52,066 7,289,6839,252,811 1.27203020314,974,344 853,673 5,828,017 690,0003.540%370,214 1,060,214 6,888,2319,252,811 1.346,888,231 55,788 6,944,0189,252,811 1.33203120324,763,383 717,078 5,480,461 715,0003.590%345,166 1,060,166 6,540,6279,252,811 1.416,540,627 54,350 6,594,9779,252,811 1.40203220334,532,660 588,411 5,121,070 740,0003.630%318,901 1,058,901 6,179,9719,252,811 1.506,179,971 62,700 6,242,6719,252,811 1.48203320344,392,179 466,654 4,858,833 770,0003.670%291,341 1,061,341 5,920,1749,252,811 1.565,920,174 60,900 5,981,0749,252,811 1.55203420353,785,000 357,738 4,142,738 795,0003.700%262,504 1,057,504 5,200,2419,252,811 1.785,200,2410 5,200,2419,252,811 1.78203520363,465,000 262,888 3,727,888 825,0003.730%232,410 1,057,410 4,785,2979,252,811 1.934,785,2970 4,785,2979,252,811 1.93203620372,980,000 181,144 3,161,144 860,0003.770%200,813 1,060,813 4,221,9569,252,811 2.194,221,9560 4,221,9569,252,811 2.19203720382,030,000 121,825 2,151,825 890,0003.790%167,736 1,057,736 3,209,5619,252,811 2.883,209,5610 3,209,5619,252,811 2.88203820392,080,000 76,438 2,156,438 925,0003.810%133,249 1,058,249 3,214,6879,252,811 2.883,214,6870 3,214,6879,252,811 2.88203920401,735,000 35,300 1,770,300 960,0003.820%97,292 1,057,292 2,827,5929,252,811 3.272,827,5920 2,827,5929,252,811 3.2720402041870,000 8,700 878,700 1,000,0003.850%59,706 1,059,706 1,938,4069,252,811 4.771,938,4060 1,938,4069,252,811 4.7720412042000 1,040,0003.890%20,228 1,060,228 1,060,2289,252,811 8.731,060,2280 1,060,2289,252,811 8.73204279,621,163 19,036,189 98,657,352 14,820,0006,364,750 21,184,750 119,842,102119,842,102 3,988,622 123,830,724NOTES:1Estimated rates are 4-19-2022 MMD AA scale plus 0.70%.2Net revenue calculation based the City's 2020 audited financial statements. = Maturities Subject to Optional Redemption01‐Jan‐32Debt Service CoverageTBD21‐Jul‐22$14,820,000Presale Estimate$8,805,000Total Utility DebtIssueExisting Sewer Revenue DebtSewer System Revenue Bonds,Series 2022EExisting + Future IssuesDebt Service Coverage4/27/2022File: Oshkosh Debt Base Case_2022‐4‐20 ‐ NO REFUNDING ‐ 2022 & 2023 Projects/Sewer Rev Debt