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HomeMy WebLinkAbout09. 16-408City of Oshkosh Finance Department 215 Church Ave., PO Box 1 130 Oshkosh, W1 OIHKOIH 920) 236-5006 54903-192130 0 36 -5039 FAX ON THE WATER MEMORANDUM TO: Honorable Mayor and Members of the Common Council FROM: Trena Larson, Finance Director DATE: August 4, 2016 Initial Resolution authorizing not to exceed $7, 320, 000 general obligation bonds of the City of Oshkosh. Resolution directing the advertisement and sale of approximately $12,485, 000 Water System Revenue Refunding Bonds, Series 2016G, approximately $7,320,000 aggregate principal amount of General Obligation Refunding Bonds, Series 201611, and approximately $16,220, 000 aggregate principal amount of Storm Water Utility Revenue Refunding Bonds, Series 20161 of the City of Oshkosh, Winnebago County, Wisconsin. BACKGROUND In order to borrow money through the bonding process, the City is required to issue initial resolutions stating its intent, along with another resolution that authorize staff to proceed with the preparation and documentation needed to sell the bonds and receive proceeds. The sale of the bonds and notes will occur at least 30 days after the initial resolution is authorized. ANALYSIS In early June tax - exempt municipal bond yields dropped significantly. Due to timing and process constraints the City was not able to incorporate additional refinancing into the debt issues sold that month. However, In light of the favorable rates the City did receive Council Member Herman had asked if the City had any additional outstanding debt that could be refinanced for savings separately. Ehlers has reviewed all existing City debt and is recommending that we consider refinancing the following issues at this time: 4.00% 3.80% 3.60% 3.40% 3.20% 3.00% 2.80% 2.60% • Weekly Rates August, 2015 - August, 2016 Source: The Bond Buyer Sep 15 Oct 15 Nov 15 Dec 15 Jan 16 Feb 16 Mar 16 Apr 16 May 16 Jun 16 Jul 16 Aug 16 1 Year BBI Average (3.41 %) BBI (Current: 2.85 %) 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. E H L E R S LEADERS IN PUBLIC FINANCE =I;, _: July 19, 2016 Pre -Sale Report for City of Oshkosh, Wisconsin $12,485,000 Water System Revenue Refunding Bonds, Series 2016G • t Prepared by: Todd Taves, CIPMA Senior Municipal Advisor /Principal And Jon Cameron, CIPMA Municipal Advisor II1111 .1111 1 ""'N) .'i f 71 1 11, (.t (A I�I Executive Summary of Proposed Debt Proposed Issue: $12,485,000 Water System Revenue Refunding Bonds, Series 2016G Purposes: The proposed issue includes financing for the purpose of refunding the City's Series 2006E Water Refunding Revenue Bonds and Series 2010F Taxable Water Revenue Bonds (Build America Bonds — Direct Payment). Interest rates on the Series 2006E Bonds proposed to be refunded range from 4.000% to 4.500 %. The refunding is expected to reduce interest expense by approximately $873,000 over the next 10 years. The Net Present Value Benefit of the refunding is estimated to be $722,954, equal to 9.3% of the refunded principal. This refunding is considered to be a Current Refunding as the obligations being refunded are either callable (pre - payable) now, or will be within 90 days of the date of issue of the new Bonds. Interest rates on the Series 2010F Bonds proposed to be refunded range from 2.550% to 5.150 %. The refunding is expected to reduce interest expense by approximately $220,000 over the next 14 years. The Net Present Value Benefit of the refunding is estimated to be $158,133, equal to 3.6% of the refunded principal. This refunding is considered to be a Current Refunding as the obligations being refunded are either callable (pre - payable) now, or will be within 90 days of the date of issue of the new Bonds. 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 14 year term. Principal on the Bonds will be due on January 1 in the years 2017 through 2030. Interest is payable every six months beginning January 1, 2017. The Bonds maturing on and after January 1, 2025 will be subject to prepayment at the discretion of the City on January 1, 2024 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 water system revenue bond issues were 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 in the event that the bond rating of the insurer is higher than that of the City. Presale Report July 19, 2016 City of Oshkosh, Wisconsin Page 1 Basis for Recommendation: Based on our knowledge of your situation, your objectives communicated to us, our advisory relationship as well as characteristics of various municipal financing options, we are recommending the issuance of Bonds based on: • 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 goal of restricting its General Obligation borrowing to 70% of its constitutional limit. • The existing revenue pledge securing the obligations to be refunded. Method of Sale /Placement: In order to obtain the lowest interest cost to the City, we will competitively bid the purchase of the Bonds from local and national underwriters/banks. We have included an allowance for discount bidding equal to 1.25% of the principal amount 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 lower your borrowing amount. Premium Bids: Under current market conditions, most 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." For this issue of Bonds, any premium amount received will be used to reduce the issue size. This adjustment may slightly change the true interest cost of the original bid, either up or down. 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: Extraordinary Redemption Provision. The City's Series 201OF Taxable Water Revenue Bonds (Build America Bonds — Direct Payment) are subject to redemption prior to maturity, in whole or in part, at the option of the City, on any day, at a redemption price equal to 100% of the principal amount redeemed plus accrued interest to the date of redemption, in the event that either (a) Section 54AA or 6431 of the Internal Revenue Service Code of 1986, as amended, is repealed, amended or modified in a manner which results in a reduction or elimination of the City's 35% cash subsidy payment from the United States Treasury or (b) the United States Treasury fails to make a cash subsidy payment to which the City is entitled and such failure is not caused by any action or inaction by the City. The City's Build America Bond cash subsidy payments beginning with the January 1, 2013 interest payment on the 201OF Bonds have been reduced by percentages ranging from 6.8% to 8.7% pursuant to the requirements of the Budget Control Act of 2011, as amended. Presale Report July 19, 2016 City of Oshkosh, Wisconsin Page 2 Other Considerations: (cost.) The reduction was not due to any action or inaction by the City. The City will be relying on this extraordinary redemption provision to redeem the 2010F Bonds which are not otherwise callable until January 1, 2020. 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. In the event that 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, other than the obligations proposed to be refunded by the Bonds, there are no other 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: Because the Bonds are tax- exempt obligations, the City must ensure compliance with certain Internal Revenue Service (IRS) rules throughout the life of the issue. These rules apply to all gross proceeds of the issue, including initial bond proceeds and investment earnings in construction, escrow, debt service, and any reserve funds. How issuers spend bond proceeds and how they track interest earnings on funds (arbitrage /yield restriction compliance) are common subjects of IRS inquiries. Your specific responsibilities will be detailed in the Tax Exemption Certificate and Agreement prepared by your Bond Attorney and provided at closing. We recommend that you regularly monitor compliance with these rules and /or retain the services of a qualified firm to assist you. We also recommend that you establish written procedures regarding compliance with IRS rules. Risk Factors: Utility Revenue: The City expects to pay the Bond debt service with revenues derived from the operation of its Water System. 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 Presale Report July 19, 2016 City of Oshkosh, Wisconsin Page 3 Risk Factors: (cost.) would result in either a lack of access to capital markets in the future, or access at a substantially higher cost. Current Refunding: The Bonds are being issued for the purpose of current refunding prior City debt obligations. Those prior debt obligations are "callable" now and can therefore be paid off within 90 days or less. The new Bonds will not be pre - payable until January 1, 2024. This refunding is being undertaken based in part on an assumption that the City does not expect to have future revenues to pay off this debt and that market conditions warrant the refinancing at this time. 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, so their 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 Attorney: Chapman and Cutler LLP Paying Agent: Issuer, unless term bonds offered, then US Bank Rating Agency: Moody's Investors Service This presale report summarizes our understanding of the City's objectives for the structure and terms of this financing as of this date. As additional facts become known or capital markets conditions change, we may need to modify the structure and /or terms of this financing to achieve results consistent with the City's objectives. Presale Report July 19, 2016 City of Oshkosh, Wisconsin Page 4 Proposed Debt Issuance Schedule Pre -Sale Review by City Council: August 10, 2016 Conference with Rating Agency: Week of August 29, 2016 Distribute Official Statement: September 2, 2016 City Council Meeting to Award Sale of the Bonds: September 13, 2016 Estimated Closing Date: October 6, 2016 Redemption Date for Series 201OF Bond: October 18, 2016 Redemption Date for Series 2006E Bond: January 1, 2017 Attachments Sources and Uses of Funds Proposed Debt Service Schedule Refunding Savings Analysis Bond Buyer Index Ehlers Contacts Municipal Advisors: Todd Taves (262) 796 -6173 Jon Cameron (262) 796 -6179 Disclosure Coordinator: Sue Porter (262) 796 -6167 Financial Analyst: Mary Zywiec (262) 796 -6171 The Official Statement for this financing will be mailed to the City Council at their home address or e- mailed for review prior to the sale date. Presale Report July 19, 2016 City of Oshkosh, Wisconsin Page 5 Page 6 ON THE WATER City of Oshkosh, W1 EHLERS Est. Sale 9-13-2016 Est. Sale 9-13-2016 Est. Sale 9-27-2016 Presale Estimate Est. Dated 10-6-2016 Est. Dated 10-6-2016 Est. Dated 10-19-2016 Water System G.O. Refunding ] I Storm Wo ter Rev Rev Rfdg Bon Bonds I Rfdg Bon Series 2016G Series 2016H Series 20161 Refunding Deposit to Current Refunding Fund 12,342,941 7,212,336 16,394,004 Prior Issue Debt Service Funds 0 (230,102) Subtotal 12,342,941 7,212,336 16,163,901 Debt Service Reserve Deposit to Debt Service Reserve Fund 998,403 4,858,938 Prior Issue Debt Service Reserve Funds (1,067,538) (5,067,198) Subtotal (69,135) 0 (208,260) Bond Premium Estimated Issuance Expenses & Underwriting Discount Ehlers (Municipal Advisor) 29,990 17,211 32,230 Chapman & Cutler (Bond Counsel) 15,000 10,000 15,000 Maximum Discount (Bid Ite M)4 156,063 73,200 202,750 Moody's Investors Service (Rating Fee) 8,495 4,975 11,040 U.S. Bank (Paying Agent) 800 800 800 TOTAL TO BE FINANCED 12,484,154 7,318,522 16,217,461 Estimated Interest Earnings (2,900) (32S) (725) Rounding 3,746 1,803 3,264 NET BOND OR NOTE SIZE 1 12,485,0007 1 7,320,000 1 16,22� , Proposed issue current refunds the Series 2006E Water System Revenue Bonds and the Series 201OF Taxable Water System Revenue Bonds (BAB-DP). 2 Proposed issue current refunds the Series 2010A Taxable General Obligation Bonds (BAB-DP). 3 Proposed issue current refunds the Series 2010E Taxable General Obligation Bonds (BAB-DP). 4 Includes 1.2S% for the revenue bond issues and 1.0% for the G.O. issue. Prepared by Ehlers 7/18/2016 Leaders in Public Finance File: Oshkosh Base Case-2016-7-14—FOR RFDG SALES/Refunding Sizings Schedule of Water Utility Revenue Debt Outstanding Plus Proposed 2016 Refunding Issue EVER As of August 1, 2016 .- ® ® ® ® ®J = Maturities Subject to Optional Redemption NOTES: 'Estimated rates are the reoffering yields for the Series 2016F Water System Revenue Bonds sold June 28, 2016 plus 0.30 %. 2Net revenue calculation based the City's preliminary 2015 financial statements. Prepared by Ehlers Leaders in Public Finance Total Utility Debt Existing Water Revenue Debt Water System Revenue Bonds, Existing+ G.O. P &I Issue Net Revs' Year Debt Service Coverage 1,266,406 (Less Bonds to be Refunded) + Series 20166 Future Issues 2016 Amount 1 $12,485,000 06- Oct -16 01- Jan -24 $3,640,000 0.980- 2.700% 2017 -2030 8,241,702 1.12 Dated Callable Callable Amt Rate /Term Year Principal Interest Total Prin (1 /1) Est. Rate' Interest Total 6,429,768 Net Revs' 1.2X Req'd 2016 4,424,579 1,556,582 5,981,161 850,879 5,981,161 8,241,702 1.38 2017 3,863,086 1,125,647 4,988,733 1,115,000 0.980% 140,142 1,255,142 6,243,875 8,241,702 1.32 2018 3,973,204 1,027,998 5,001,202 1,090,000 1.060% 181,100 1,271,100 6,272,302 8,241,702 1.31 2019 3,274,516 928,226 4,202,742 1,125,000 1.170% 168,741 1,293,741 5,496,483 8,241,702 1.50 2020 2,407,244 850,261 3,257,505 1,145,000 1.270% 154,889 1,299,889 4,557,394 8,241,702 1.81 2021 2,482,440 780,299 3,262,739 1,170,000 1.380% 139,546 1,309,546 4,572,285 8,241,702 1.80 2022 2,109,223 710,271 2,819,494 1,195,000 1.540% 122,271 1,317,271 4,136,765 8,241,702 1.99 2023 2,113,901 644,516 2,758,417 990,000 1.640% 104,952 1,094,952 3,853,369 8,241,702 2.14 2024 2,013,809 581,714 2,595,522 1,015,000 1.750% 87,952 1,102,952 3,698,474 8,241,702 2.23 2025 1,878,950 525,271 2,404,221 ®1,045,0001 1.880% 69,248 1,114,248 3,518,469 8,241,702 2.34 2026 1,924,331 470,080 2,394,4111' 1,075,0001' 2.000% 48,675 1,123,675 3,518,086 8,241,702 2.34 2027 1,989,958 410,634 2,400,591' 355,0001 2.300% 33,843 388,843 2,789,434 8,241,702 2.95 2028 2,055,836 348,480 2,404,316 370,0001 2.400% 25,320 395,320 2,799,636 8,241,702 2.94 2029 1,635,000 289,666 1,924,6661' 390,0001 2.550% 15,908 405,908 2,330,573 8,241,702 3.54 2030 1,690,000 236,003 1,926,003 405,0001 2.700% 5,468 410,468 2,336,471 8,241,702 3.53 2031 1,740,000 181,434 1,921,434 0 1,921,434 8,241,702 4.29 2032 1,450,000 130,900 1,580,900 0 1,580,900 8,241,702 5.21 2033 1,145,000 90,247 1,235,247 0 1,235,247 8,241,702 6.67 2034 990,000 56,369 1,046,369 0 1,046,369 8,241,702 7.88 2035 870,000 26,794 896,794 0 896,794 8,241,702 9.19 2036 430,000 6,450 436,450 0 436,450 8,241,702 18.88 44,461,077 10,977,8401 55,438,9181 12,485,000 1,298,053 1 13,783,053 1 69,221,970 ® ® ® ® ®J = Maturities Subject to Optional Redemption NOTES: 'Estimated rates are the reoffering yields for the Series 2016F Water System Revenue Bonds sold June 28, 2016 plus 0.30 %. 2Net revenue calculation based the City's preliminary 2015 financial statements. Prepared by Ehlers Leaders in Public Finance Total Utility Debt Debt Service Coverage Rev P &I G.O. P &I Total Net Revs' Year 5,981,161 1,266,406 7,247,567 8,241,702 1.14 2016 6,243,875 1,092,154 7,336,029 8,241,702 1.12 2017 6,272,302 1,016,672 7,288,973 8,241,702 1.13 2018 5,496,483 933,284 6,429,768 8,241,702 1.28 2019 4,557,394 850,879 5,408,273 8,241,702 1.52 2020 4,572,285 818,794 5,391,078 8,241,702 1.53 2021 4,136,765 662,121 4,798,887 8,241,702 1.72 2022 3,853,369 507,898 4,361,267 8,241,702 1.89 2023 3,698,474 398,993 4,097,468 8,241,702 2.01 2024 3,518,469 257,307 3,775,776 8,241,702 2.18 2025 3,518,086 260,119 3,778,205 8,241,702 2.18 2026 2,789,434 161,802 2,951,236 8,241,702 2.79 2027 2,799,636 161,916 2,961,552 8,241,702 2.78 2028 2,330,573 47,569 2,378,142 8,241,702 3.47 2029 2,336,471 51,478 2,387,949 8,241,702 3.45 2030 1,921,434 50,269 1,971,703 8,241,702 4.18 2031 1,580,900 53,900 1,634,800 8,241,702 5.04 2032 1,235,247 52,400 1,287,647 8,241,702 6.40 2033 1,046,369 55,825 1,102,194 8,241,702 7.48 2034 896,794 0 896,794 8,241,702 9.19 2035 436,450 0 436,450 8,241,702 18.88 2036 62,104,776 8,487,3931 70,592,1701 1 Presale Estimate 7/18/2016 File: Oshkosh Base Case-2016-7-14-FOR RFDG SALES /Water Rev Debt Rfdg !y cs� CE) a Issue Water Revenue Bonds Series 2006E Amount $12,705,000 15- Dec -06 01- Jan -17 $4,740,000 Refunding Bonds Series 2016G Dated Call Date Call Amt Rate /Term 4.000- 4.500% Rate /Term 0.980- 2.000% 2017 -2026 2016 -2026 Year Prin (1/1) Rate Interest Total 2016 660,000 4.000% 347,063 1,007,063 2017 1 685,000' 4.000% 320,163 1,005,163 2018 1 720,000' 4.000°% 292,063 1,012,063 2019 1 775,000' 4.250% 261,194 1,036,194 2020 1 810,000' 4.250°% 227,513 1,037,513 2021 1 845,000' 4.250% 192,344 1,037,344 2022 1 890,0001 4.375°% 154,919 1,044,919 2023 1 700,000' 4.500% 119,700 819,700 2024 ' 735,000 4.500% 87,413 822,413 2025 1 770,000' 4.500% 53,550 823,550 2026 1 805,000' 4.500% 18,113 823,113 (1,007,063) Total 8,395,000 2,074,031 10,469,031 Total 7,990,000 599,073 8,589,073 Presale Estimate Plus Rounding ESTIMATED FUTURE VALUE SAVINGS NET OF COSTSZ NOTES: Estimated rates are the reoffering yields for the Series 2016F Water System Revenue Bonds sold June 28, 2016 plus 0.30 %. `Estimated present value savings of $722,954 or 9.347% of refunded principal. Maturities Subject to Optional Redemption 872,896 397 873,293 Prepared by Ehlers 7/18/2016 ca3 Leaders in Public Finance File: Oshkosh Base Case _2016- 7- 14_FOR RFDG SALES /Water 2006E Savings C Water System Revenue Issue Refunding Bonds Series 2016G Amount $7,990,000 6- Oct -16 1- Jan -24 $1,445,000 Dated Call Date Call Amt Rate /Term 0.980- 2.000% 2017 -2026 Year Prin (1/1) Est. Rate Interest Total 2016 2017 835,000 0.980% 80,898 915,898 2018 820,000 1.060°% 102,929 922,929 2019 855,000 1.170% 93,581 948,581 2020 870,000 1.270°% 83,055 953,055 2021 880,000 1.380% 71,458 951,458 2022 900,000 1.540°% 58,456 958,456 2023 685,000 1.640% 45,909 730,909 2024 L 700,000 1.750% 34,167 734,167 2025 ' ®715,000' 1.880% 21,321 736,321 2026 1 730,000' 2.000% 7,300 737,300 (1,007,063) Total 8,395,000 2,074,031 10,469,031 Total 7,990,000 599,073 8,589,073 Presale Estimate Plus Rounding ESTIMATED FUTURE VALUE SAVINGS NET OF COSTSZ NOTES: Estimated rates are the reoffering yields for the Series 2016F Water System Revenue Bonds sold June 28, 2016 plus 0.30 %. `Estimated present value savings of $722,954 or 9.347% of refunded principal. Maturities Subject to Optional Redemption 872,896 397 873,293 Prepared by Ehlers 7/18/2016 ca3 Leaders in Public Finance File: Oshkosh Base Case _2016- 7- 14_FOR RFDG SALES /Water 2006E Savings C Series 201OF Taxable Water Revenue Bonds - � EFERS O -fHKQ. H Estimated s E I Existing Debt Service To Be Refunded Estimated Debt Service After Refunding Taxable Water Revenue Bonds Series 201OF Issue Issue (Build America Bonds - Direct Payment) Amount $4,495,000 6- Oct -16 1- Jan -24 $2,195,000 $5,740,000 14- Oct -10 01- Jan -20 $4,385,000 Dated Call Date Dated Call Date Call Amt Rate /Term 2.150- 5.150% 2017 -2030 Year Prin (1 /1) 2016 -2030 Year Prin (1 /1) Rate Interest BAB Credit2 Total 2016 230,000 2.150% 190,918 (66,821) 354,096 2017 235,0001 2.550% 185,449 (64,907) 355,542 2018 1 245,000' 2.950% 178,839 (62,594) 361,245 2019 1 250,000' 1600% 170,725 (59,754) 360,971 2020 1 260,000' 3.800% 161,285 (56,450) 364,835 2021 1 275,0001 1800% 151,120 (52,892) 373,228 2022 ' 285,000 4.000% 140,195 (49,068) 376,127 2023 1 295,000' 4A50% 128,374 (44,931) 378,443 2024 1 310,000' 4350% 115,510 (40,429) 385,082 2025 1 325,0001 4.500% 101,455 (35,509) 390,946 2026 1 345,0001 4.650% 86,121 (30,142) 400,979 2027 1 360,0001 4.850% 69,370 (24,280) 405,091 2028 1 380,0001 4.950% 51,235 (17,932) 413,303 2029 1 400,0001 5.050% 31,730 (11,106) 420,625 2030 420,000, 5.150% 10,815 (3,785) 427,030 Estimated Debt Service After Refunding Total 4,615,000 1,773,140 5,767,541 Total 4,495,000 Presale Estimate NOTES: 1The Extraordinary Redemption Provision conditions have been satisfied for this issue. 2For purposes of the savings estimate the full 35% BAB credit is included. 'Estimated rates are the reoffering yields for the Series 2016F Water System Revenue Bonds sold June 28, 2016 plus 0.30% "Estimated present value savings of $158,133 or 3.606% of refunded principal. 698,980 5,193,980 Prior Issue DS Funds (354,096) Plus Rounding ESTIMATED FUTURE VALUE SAVINGS NET OF COSTS4 Maturities Subject to Optional Redemption Total Estimated Savings 219,465: 3,349 222,814 Prepared by Ehlers 7/18/2016 c0 Leaders in Public Finance File: Oshkosh Base Case 2016 -7 -14 FOR RFDG SALES /Water 201OF Savings m - - co Water System Revenue Issue Refunding Bonds Series 2016G Amount $4,495,000 6- Oct -16 1- Jan -24 $2,195,000 Dated Call Date Call Amt Rate /Term 0.980- 2.700% 2017 -2030 Year Prin (1 /1) Est. Rate Interest Total 2016 2017 280,000 0.980% 59,244 339,244 2018 270,000 1.060% 78,171 348,171 2019 270,000 1A70% 75,161 345,161 2020 275,000 1.270% 71,835 346,835 2021 290,000 1380% 68,088 358,088 2022 295,000 1.540% 63,815 358,815 2023 305,000 1.640% 59,043 364,043 2024 315,000 1350% 53,785 368,785 2025 1 330,000' 1.880% 47,927 377,927 2026 1 345,0001 2.000% 41,375 386,375 2027 1 355,0001 2300% 33,843 388,843 2028 1 370,0001 2.400% 25,320 395,320 2029 1 390,0001 2.550% 15,908 405,908 2030 405,0001 2.700% 5,468 410,468 Total 4,615,000 1,773,140 5,767,541 Total 4,495,000 Presale Estimate NOTES: 1The Extraordinary Redemption Provision conditions have been satisfied for this issue. 2For purposes of the savings estimate the full 35% BAB credit is included. 'Estimated rates are the reoffering yields for the Series 2016F Water System Revenue Bonds sold June 28, 2016 plus 0.30% "Estimated present value savings of $158,133 or 3.606% of refunded principal. 698,980 5,193,980 Prior Issue DS Funds (354,096) Plus Rounding ESTIMATED FUTURE VALUE SAVINGS NET OF COSTS4 Maturities Subject to Optional Redemption Total Estimated Savings 219,465: 3,349 222,814 Prepared by Ehlers 7/18/2016 c0 Leaders in Public Finance File: Oshkosh Base Case 2016 -7 -14 FOR RFDG SALES /Water 201OF Savings m - - co 6.50% 6.00% 5.50% 5.00% 4.50% 4.00% 3.50% 3.00% 2.50% Weekly Rates July, 2006 - July, 2016 Jan 07 Jan 08 Jan 09 Jan 10 Jan 11 Jan 12 Jan 13 Jan 14 Jan 15 Jan 16 RBI Source: The Bond Buyer The Revenue Bond Index (RBI) shows the average yield on a group of revenue bonds that mature in 30 years and have an average rating equivalent to Moody's Al and S &P's A +. 10 EHLERS LEADERS IN PUBLIC FINANCE CD i =I;, _: July 19, 2016 Pre -Sale Report for City of Oshkosh, Wisconsin $7,320,000 General Obligation Refunding Bonds, Series 2016H k; • t 0 Prepared by: Todd Taves, CIPMA Senior Municipal Advisor /Principal And Jon Cameron, CIPMA Municipal Advisor II1111 .1111 1 ""'N) .'i f 71 1 11, (.t (A I�I Executive Summary of Proposed Debt Proposed Issue: $7,320,000 General Obligation Refunding Bonds, Series 2016H Purposes: The proposed issue includes financing for the purpose of refunding the City's Series 2010A Taxable General Obligation Corporate Purpose Bonds (Build America Bonds — Direct Payment). Interest rates on the obligations proposed to be refunded range from 3.125% to 5.20 %. The refunding is expected to reduce interest expense by approximately $360,000 over the next 14 years. The Net Present Value Benefit of the refunding is estimated to be $281,572, equal to 3.9% of the refunded principal. This refunding is considered to be a Current Refunding as the obligations being refunded are either callable (pre- payable) now, or will be within 90 days of the date of issue of the new Bonds. 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, the City's total General Obligation debt principal outstanding will be approximately $151.2 million, which is 80.7% of its limit. Remaining General Obligation Borrowing Capacity will be approximately $36 million. (Following payment of all scheduled 2016 principal on existing debt the City's total General Obligation debt principal outstanding at year end will be $140.5 million, which is 75.1 % of its limit.) Term /Call Feature: The Bonds are being issued for a 14 year term. Principal on the Bonds will be due on August 1 in the years 2017 through 2030. Interest is payable every six months beginning February 1, 2017. The Bonds maturing on and after August 1, 2025 will be subject to prepayment at the discretion of the City on August 1, 2024 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 General Obligation bond issues were 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 in the event that the bond rating of the insurer is higher than that of the City. Basis for Recommendation: Based on our knowledge of your situation, your objectives communicated to us, our advisory relationship as well as characteristics of various municipal financing options, we are recommending the issuance of Bonds based on: • The expectation this form of financing will provide the overall lowest cost of funds while also meeting the City's objectives for term, structure and optional redemption. Presale Report July 19, 2016 City of Oshkosh, Wisconsin Page 1 Basis for Recommendation: (cont.) The existing General Obligation pledge securing the obligations to be refunded. Method of Sale /Placement: In order to obtain the lowest interest cost to the City, we will competitively bid the purchase of the Bonds from local and national underwriters/banks. We have included an allowance for discount bidding equal to 1.00% of the principal amount 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 lower your borrowing amount. Premium Bids: Under current market conditions, most 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." For this issue of Bonds, any premium amount received will be used to reduce the issue size. These adjustments may slightly change the true interest cost of the original bid, either up or down. 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: Extraordinary Redemption Provision. The City's Series 2010A Taxable General Obligation Bonds (Build America Bonds — Direct Payment) are subject to redemption prior to maturity, in whole or in part, at the option of the City, on any day, at a redemption price equal to 100% of the principal amount redeemed plus accrued interest to the date of redemption, in the event that either (a) Section 54AA or 6431 of the Internal Revenue Service Code of 1986, as amended, is repealed, amended or modified in a manner which results in a reduction or elimination of the City's 35% cash subsidy payment from the United States Treasury or (b) the United States Treasury fails to make a cash subsidy payment to which the City is entitled and such failure is not caused by any action or inaction by the City. The City's Build America Bond cash subsidy payments beginning with the February 1, 2013 interest payment on the 2010A Bonds have been reduced by percentages ranging from 6.8% to 8.7% pursuant to the requirements of the Budget Control Act of 2011, as amended. The reduction was not due to any action or inaction by the City. The City will be relying on this extraordinary redemption provision to redeem the 2010A Bonds which are not otherwise callable until August 1, 2018. 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. In the event that Presale Report July 19, 2016 City of Oshkosh, Wisconsin Page 2 Other Considerations: (cost.) 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, other than the obligations proposed to be refunded by the Bonds, there are no other 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: Because the Bonds are tax- exempt obligations, the City must ensure compliance with certain Internal Revenue Service (IRS) rules throughout the life of the issue. These rules apply to all gross proceeds of the issue, including initial bond proceeds and investment earnings in construction, escrow, debt service, and any reserve funds. How issuers spend bond proceeds and how they track interest earnings on funds (arbitrage /yield restriction compliance) are common subjects of IRS inquiries. Your specific responsibilities will be detailed in the Tax Exemption Certificate and Agreement prepared by your Bond Attorney and provided at closing. We recommend that you regularly monitor compliance with these rules and /or retain the services of a qualified firm to assist you. We also recommend that you establish written procedures regarding compliance with IRS rules. Risk Factors: GO with Planned Abatement: The City expects to abate a portion of the City debt service with tax incremental revenues from TID No. 18. In the event this /these revenue(s) is /are not available, the City is obligated to levy property taxes in an amount sufficient to make all debt payments. Current Refunding: The Bonds are being issued for the purpose of current refunding prior City debt obligations. Those prior debt obligations are "callable" now and can therefore be paid off within 90 days or less. The new Bonds will not be pre - payable until August 1, 2024. This refunding is being undertaken based in part on an assumption that the City does not expect to have future revenues to pay off this debt and that market conditions warrant the refinancing at this time. 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 Presale Report July 19, 2016 City of Oshkosh, Wisconsin Page 3 Other Service Providers: that relationship. For services you have not previously required, we have (cost.) 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, so their 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 Attorney: Chapman and Cutler LLP Paying Agent: Issuer, unless term bonds offered, then US Bank Rating Agency: Moody's Investors Service This presale report summarizes our understanding of the City's objectives for the structure and terms of this financing as of this date. As additional facts become known or capital markets conditions change, we may need to modify the structure and /or terms of this financing to achieve results consistent with the City's objectives. Presale Report July 19, 2016 City of Oshkosh, Wisconsin Page 4 Proposed Debt Issuance Schedule Pre -Sale Review by City Council: August 10, 2016 Conference with Rating Agency: Week of August 29, 2016 Distribute Official Statement: September 2, 2016 City Council Meeting to Award Sale of the Bonds: September 13, 2016 Estimated Closing Date: October 6, 2016 Redemption Date for Series 2010A Bond October 18, 2016 Attachments Sources and Uses of Funds Refunding Savings Analysis Bond Buyer Index Ehlers Contacts Municipal Advisors: Todd Taves (262) 796 -6173 Jon Cameron (262) 796 -6179 Disclosure Coordinator: Sue Porter (262) 796 -6167 Financial Analyst: Mary Zywiec (262) 796 -6171 The Official Statement for this financing will be mailed to the City Council at their home address or e- mailed for review prior to the sale date. Presale Report July 19, 2016 City of Oshkosh, Wisconsin Page 5 Page 6 ON THE WATER City of Oshkosh, W1 EHLERS Est. Sale 9-13-2016 Est. Sale 9-13-2016 Est. Sale 9-27-2016 Presale Estimate Est. Dated 10-6-2016 Est. Dated 10-6-2016 Est. Dated 10-19-2016 Water System G.O. Refunding ] I Storm Wo ter Rev Rev Rfdg Bon Bonds I Rfdg Bon Series 2016G Series 2016H Series 20161 Refunding Deposit to Current Refunding Fund 12,342,941 7,212,336 16,394,004 Prior Issue Debt Service Funds 0 (230,102) Subtotal 12,342,941 7,212,336 16,163,901 Debt Service Reserve Deposit to Debt Service Reserve Fund 998,403 4,858,938 Prior Issue Debt Service Reserve Funds (1,067,538) (5,067,198) Subtotal (69,135) 0 (208,260) Bond Premium Estimated Issuance Expenses & Underwriting Discount Ehlers (Municipal Advisor) 29,990 17,211 32,230 Chapman & Cutler (Bond Counsel) 15,000 10,000 15,000 Maximum Discount (Bid Ite M)4 156,063 73,200 202,750 Moody's Investors Service (Rating Fee) 8,495 4,975 11,040 U.S. Bank (Paying Agent) 800 800 800 TOTAL TO BE FINANCED 12,484,154 7,318,522 16,217,461 Estimated Interest Earnings (2,900) (32S) (725) Rounding 3,746 1,803 3,264 NET BOND OR NOTE SIZE 1 12,485,0007 1 7,320,000 1 16,22� , Proposed issue current refunds the Series 2006E Water System Revenue Bonds and the Series 201OF Taxable Water System Revenue Bonds (BAB-DP). 2 Proposed issue current refunds the Series 2010A Taxable General Obligation Bonds (BAB-DP). 3 Proposed issue current refunds the Series 2010E Taxable General Obligation Bonds (BAB-DP). 4 Includes 1.2S% for the revenue bond issues and 1.0% for the G.O. issue. Prepared by Ehlers 7/18/2016 Leaders in Public Finance File: Oshkosh Base Case-2016-7-14—FOR RFDG SALES/Refunding Sizings Series 2010A Taxable General Obligation Bonds ( - HERS O -fHKQ. H Estimated Existing Debt Service To Be Refunded Estimated Debt Service After Refunding Taxable General Obligation Bonds Series 2010A Issue Issue (Build America Bonds - Direct Payment) Amount $7,320,000 6- Oct -16 1- Aug -24 $3,415,000 $9,140,000 02- Sep -10 01- Aug -18 $7,145,000 Dated Call Date Dated Call Date Call Amt Rate /Term 2.625- 5.200% 2017 -2030 Year Prin (8/1) 2016 -2030 Year Prin (1 /1) Rate Interest BAB Credit2 Total 2016 395,000 2.625% 326,408 (114,243) 607,165 2017 410,0001 3.125% 314,818 (110,186) 614,631 2018 1 430,000' 3.500% 302,005 (105,702) 626,303 2019 1 445,000' 1500% 286,955 (100,434) 631,521 2020 1 460,000' 3.750% 271,380 (94,983) 636,397 2021 1 465,0001 4.000% 254,130 (88,946) 630,185 2022 ' 475,000 4.200% 235,530 (82,436) 628,095 2023 1 485,000' 4350% 215,580 (75,453) 625,127 2024 1 505,000' 4.500% 194,483 (68,069) 631,414 2025 1 535,000' 4.650% 171,758 (60,115) 646,642 2026 1 565,0001 4.800% 146,880 (51,408) 660,472 2027 1 570,0001 4.900% 119,760 (41,916) 647,844 2028 1 585,0001 5.000% 91,830 (32,141) 644,690 2029 1 600,0001 5.100% 62,580 (21,903) 640,677 2030 615,000, 5.200% 31,980 (11,193) L 635,787 Estimated Debt Service After Refunding Total 7,540,000 3,026,076 9,506,949 Total 7,320,000 Presale Estimate NOTES: 1The Extraordinary Redemption Provision conditions have been satisfied for this issue. 2For purposes of the savings estimate the full 35% BAB credit is included. 'Estimated rates are June 13, 2016 City of Oshkosh Sewer Revenue Bond sale results (reoffering yields) plus 0.30% "Estimated present value savings of $281,572 or 3.943% of refunded principal. 1,219,343 8,539,343 Prior Issue DS Funds (607,165)1 Plus Rounding ESTIMATED FUTURE VALUE SAVINGS NET OF COSTS4 Maturities Subject to Optional Redemption Total Estimated Savings 360,441 1,803 362,244 Prepared by Ehlers 7/18/2016 Leaders in Public Finance File: Oshkosh Base Case-2016-7-14-FOR RFDG SALES /GO 2010A Savings � General Obligation Issue Refunding Bonds Series 2016H Amount $7,320,000 6- Oct -16 1- Aug -24 $3,415,000 Dated Call Date Call Amt Rate /Term 1.020- 2.800% 2017 -2030 Year Prin (8/1) Est. Rate Interest Total 2016 2017 475,000 1.020% 112,951 587,951 2018 465,000 1.120% 132,993 597,993 2019 475,000 1220% 127,785 602,785 2020 490,000 1.350% 121,990 611,990 2021 490,000 1A80% 115,375 605,375 2022 495,000 1.600% 108,123 603,123 2023 500,000 1320% 100,203 600,203 2024 515,000 1.850% 91,603 606,603 2025 1 540,000' 1.970% 82,076 622,076 2026 1 565,0001 2.100% 71,438 636,438 2027 1 560,0001 2350% 59,573 619,573 2028 1 570,0001 2.500% 46,413 616,413 2029 1 585,0001 2.650% 32,163 617,163 2030 595,0001 2.800% 16,660 611,660 Total 7,540,000 3,026,076 9,506,949 Total 7,320,000 Presale Estimate NOTES: 1The Extraordinary Redemption Provision conditions have been satisfied for this issue. 2For purposes of the savings estimate the full 35% BAB credit is included. 'Estimated rates are June 13, 2016 City of Oshkosh Sewer Revenue Bond sale results (reoffering yields) plus 0.30% "Estimated present value savings of $281,572 or 3.943% of refunded principal. 1,219,343 8,539,343 Prior Issue DS Funds (607,165)1 Plus Rounding ESTIMATED FUTURE VALUE SAVINGS NET OF COSTS4 Maturities Subject to Optional Redemption Total Estimated Savings 360,441 1,803 362,244 Prepared by Ehlers 7/18/2016 Leaders in Public Finance File: Oshkosh Base Case-2016-7-14-FOR RFDG SALES /GO 2010A Savings � 6.50% 6.00% 5.50% 5.00% 4.50% 4.00% 3.50% 3.00% 2.50% Weekly Rates July, 2006 - July, 2016 Jan 07 Jan 08 Jan 09 Jan 10 Jan 11 Jan 12 Jan 13 Jan 14 Jan 15 Jan 16 10 Year BBI Average (4.22 %) BBI (Current: 2.80 %) 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. Source: The Bond Buyer 10 EHLERS v LEADERS IN PUBLIC FINANCE (a 0 00 =I;, _: July 19, 2016 Pre -Sale Report for City of Oshkosh, Wisconsin $16,220,000 Storm Water Utility Revenue Refunding Bonds, Series 20161 • t Prepared by: Todd Taves, CIPMA Senior Municipal Advisor /Principal And Jon Cameron, CIPMA Municipal Advisor II1111 .1111 1 ""'N) .'i f 71 1 11, (.t (A I�I Executive Summary of Proposed Debt Proposed Issue: $16,220,000 Storm Water Utility Revenue Refunding Bonds, Series 2016I Purposes: The proposed issue includes financing for the purpose of refunding the City's Series 2010E Taxable Storm Water Utility Revenue Bonds (Build America Bonds — Direct Payment). Interest rates on the Series 2010E Bonds proposed to be refunded range from 2.875% to 5.200 %. The refunding is expected to reduce interest expense by approximately $840,000 over the next 14 years. The Net Present Value Benefit of the refunding is estimated to be $426,279, equal to 2.7% of the refunded principal. The Net Present Value Benefit reflects an approximate $200,000 reduction in the size of the required Debt Service Reserve requirement which is not treated as savings. This refunding is considered to be a Current Refunding as the obligations being refunded are either callable (pre - payable) now, or will be within 90 days of the date of issue of the new Bonds. 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 System. Term /Call Feature: The Bonds are being issued for a 14 year term. Principal on the Bonds will be due on May 1 in the years 2017 through 2030. Interest is payable every six months beginning May 1, 2017. The Bonds maturing on and after May 1, 2025 will be subject to prepayment at the discretion of the City on May 1, 2024 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 storm water utility revenue bond issues were rated "Al" 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 in the event that the bond rating of the insurer is higher than that of the City. Basis for Recommendation: Based on our knowledge of your situation, your objectives communicated to us, our advisory relationship as well as characteristics of various municipal financing options, we are recommending the issuance of Bonds based on: • 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 goal of restricting its General Obligation borrowing to 85% of its constitutional limit. Presale Report July 19, 2016 City of Oshkosh, Wisconsin Page 1 Basis for Recommendation: (cont.) The existing revenue pledge securing the obligations to be refunded. Method of Sale /Placement: In order to obtain the lowest interest cost to the City, we will competitively bid the purchase of the Bonds from local and national underwriters/banks. We have included an allowance for discount bidding equal to 1.25% of the principal amount 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 lower your borrowing amount. Premium Bids: Under current market conditions, most 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." For this issue of Bonds, any premium amount received will be used to reduce the issue size. This adjustment may slightly change the true interest cost of the original bid, either up or down. 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: Extraordinary Redemption Provision. The City's Series 2010E Taxable Storm Water Utility Revenue Bonds (Build America Bonds — Direct Payment) are subject to redemption prior to maturity, in whole or in part, at the option of the City, on any day, at a redemption price equal to 100% of the principal amount redeemed plus accrued interest to the date of redemption, in the event that either (a) Section 54AA or 6431 of the Internal Revenue Service Code of 1986, as amended, is repealed, amended or modified in a manner which results in a reduction or elimination of the City's 35% cash subsidy payment from the United States Treasury or (b) the United States Treasury fails to make a cash subsidy payment to which the City is entitled and such failure is not caused by any action or inaction by the City. The City's Build America Bond cash subsidy payments beginning with the May 1, 2013 interest payment on the 2010F Bonds have been reduced by percentages ranging from 6.8% to 8.7% pursuant to the requirements of the Budget Control Act of 2011, as amended. The reduction was not due to any action or inaction by the City. The City will be relying on this extraordinary redemption provision to redeem the 2010E Bonds which are not otherwise callable until May 1, 2020. 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. In the event that Presale Report July 19, 2016 City of Oshkosh, Wisconsin Page 2 Other Considerations: (cost.) 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, other than the obligations proposed to be refunded by the Bonds, there are no other 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: Because the Bonds are tax- exempt obligations, the City must ensure compliance with certain Internal Revenue Service (IRS) rules throughout the life of the issue. These rules apply to all gross proceeds of the issue, including initial bond proceeds and investment earnings in construction, escrow, debt service, and any reserve funds. How issuers spend bond proceeds and how they track interest earnings on funds (arbitrage /yield restriction compliance) are common subjects of IRS inquiries. Your specific responsibilities will be detailed in the Tax Exemption Certificate and Agreement prepared by your Bond Attorney and provided at closing. We recommend that you regularly monitor compliance with these rules and /or retain the services of a qualified firm to assist you. We also recommend that you establish written procedures regarding compliance with IRS rules. Risk Factors: Utility Revenue: The City expects to pay the Bond debt service with revenues derived from the operation of its Storm Water Management system. 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. Current Refunding: The Bonds are being issued for the purpose of current refunding prior City debt obligations. Those prior debt obligations are "callable" now and can therefore be paid off within 90 days or less. The new Bonds will not be pre - payable until May 1, 2024. This refunding is being undertaken based in part on an assumption that the City does not expect to have future revenues to pay off this debt and that market conditions warrant Presale Report July 19, 2016 City of Oshkosh, Wisconsin Page 3 Risk Factors: (cost.) the refinancing at this time. 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, so their 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 Attorney: Chapman and Cutler LLP Paying Agent: Issuer, unless term bonds offered, then US Bank Rating Agency: Moody's Investors Service This presale report summarizes our understanding of the City's objectives for the structure and terms of this financing as of this date. As additional facts become known or capital markets conditions change, we may need to modify the structure and /or terms of this financing to achieve results consistent with the City's objectives. Presale Report July 19, 2016 City of Oshkosh, Wisconsin Page 4 Proposed Debt Issuance Schedule Pre -Sale Review by City Council: August 10, 2016 Conference with Rating Agency: Week of August 29, 2016 Distribute Official Statement: September 16, 2016 City Council Meeting to Award Sale of the Bonds: September 27, 2016 Estimated Closing Date: October 19, 2016 Redemption Date for Bond November 1, 2016 Attachments Sources and Uses of Funds Proposed Debt Service Schedule Refunding Savings Analysis Bond Buyer Index Ehlers Contacts Municipal Advisors: Todd Taves (262) 796 -6173 Jon Cameron (262) 796 -6179 Disclosure Coordinator: Sue Porter (262) 796 -6167 Financial Analyst: Mary Zywiec (262) 796 -6171 The Official Statement for this financing will be mailed to the City Council at their home address or e- mailed for review prior to the sale date. Presale Report July 19, 2016 City of Oshkosh, Wisconsin Page 5 Page 6 ON THE WATER City of Oshkosh, W1 EHLERS Est. Sale 9-13-2016 Est. Sale 9-13-2016 Est. Sale 9-27-2016 Presale Estimate Est. Dated 10-6-2016 Est. Dated 10-6-2016 Est. Dated 10-19-2016 Water System G.O. Refunding ] I Storm Wo ter Rev Rev Rfdg Bon Bonds I Rfdg Bon Series 2016G Series 2016H Series 20161 Refunding Deposit to Current Refunding Fund 12,342,941 7,212,336 16,394,004 Prior Issue Debt Service Funds 0 (230,102) Subtotal 12,342,941 7,212,336 16,163,901 Debt Service Reserve Deposit to Debt Service Reserve Fund 998,403 4,858,938 Prior Issue Debt Service Reserve Funds (1,067,538) (5,067,198) Subtotal (69,135) 0 (208,260) Bond Premium Estimated Issuance Expenses & Underwriting Discount Ehlers (Municipal Advisor) 29,990 17,211 32,230 Chapman & Cutler (Bond Counsel) 15,000 10,000 15,000 Maximum Discount (Bid Ite M)4 156,063 73,200 202,750 Moody's Investors Service (Rating Fee) 8,495 4,975 11,040 U.S. Bank (Paying Agent) 800 800 800 TOTAL TO BE FINANCED 12,484,154 7,318,522 16,217,461 Estimated Interest Earnings (2,900) (32S) (725) Rounding 3,746 1,803 3,264 NET BOND OR NOTE SIZE 1 12,485,0007 1 7,320,000 1 16,22� , Proposed issue current refunds the Series 2006E Water System Revenue Bonds and the Series 201OF Taxable Water System Revenue Bonds (BAB-DP). 2 Proposed issue current refunds the Series 2010A Taxable General Obligation Bonds (BAB-DP). 3 Proposed issue current refunds the Series 2010E Taxable General Obligation Bonds (BAB-DP). 4 Includes 1.2S% for the revenue bond issues and 1.0% for the G.O. issue. Prepared by Ehlers 7/18/2016 Leaders in Public Finance File: Oshkosh Base Case-2016-7-14—FOR RFDG SALES/Refunding Sizings Schedule of Stormwater Utility Revenue Debt Outstanding Plus Proposed 2016 Refunding Issue EHLERS As of August 1, 2016 1 ® ® ® ®® ] = Maturities Subject to Optional Redemption Total Utility Debt Existing Stormwater Revenue Debt Existing + Issue Rev P &I Storm Water Utility Revenue Bonds Total Debt service Coverage Year (Less Bonds to be Refunded) 963,116 Futurelssues 7,228,608 1.27 Amount 4,757,303 $16,220,000 19- Oct -16 01- May -24 $7,950,000 1.150- 2.850% 2017 -2030 5,703,570 7,228,608 1.27 Dated Callable Callable Amt Rate /Term Year Principal Interest Total Prin (5/1) Est. Rate' Interest Total Total P &I Net Revs= 1.2X Req'd 2016 2,530,000 2,202,164 4,732,164 7,228,608 1.27 4,732,164 7,228,608 1.53 2017 1,985,000 1,509,087 3,494,087 935,000 1.150! 328,216 1,263,216 4,757,303 7,228,608 1.52 2018 2,085,000 1,411,463 3,496,463 965,000 1.230! 306,144 1,271,144 4,767,607 7,228,608 1.52 2019 2,150,000 1,346,225 3,496,225 990,000 1.340! 293,577 1,283,577 4,779,802 7,228,608 1.51 2020 2,225,000 1,275,288 3,500,288 1,015,000 1.440! 279,636 1,294,636 4,794,923 7,228,608 1.51 2021 2,305,000 1,199,138 3,504,138 1,040,000 1.550! 264,268 1,304,268 4,808,405 7,228,608 1.50 2022 2,380,000 1,119,138 3,499,138 1,070,000 1.700! 247,113 1,317,113 4,816,250 7,228,608 1.50 2023 2,460,000 1,036,581 3,496,581 1,110,000 1.800! 228,028 1,338,028 4,834,609 7,228,608 1.50 2024 2,540,000 953,847 3,493,847 1,145,000 1.900! 207,160 1,352,160 4,846,007 7,228,608 1.49 2025 2,630,000 869,581 3,499,581' ®1,175,000 1 2.030! 184,356 1,359,356 4,858,938 7,228,608 1.49 2026 2,405,000 787,875 3,192,875' 1,240,000' 2.150! 159,100 1,399,100 4,591,975 7,228,608 1.57 2027 2,490,000 708,503 3,198,5031 1,300,0001 2.400! 130,170 1,430,170 4,628,673 7,228,608 1.56 2028 2,565,000 625,900 3,190,9001 1,340,0001 2.550! 97,485 11 11 1,437,485 4,628,385 7,228,608 1.56 2029 2,655,000 539,741 3,194,741 1,405,000 2.700! 61,433 1,466,433 4,661,173 7,228,608 1.55 2030 2,745,000 449,022 3,194,0221 1,490,0001 2.850! 21,233 1,511,233 4,705,254 7,228,608 1.54 2031 2,845,000 353,163 3,198,163 ® ® ® ® ®® 0 3,198,163 7,228,608 2.26 2032 2,945,000 251,447 3,196,447 0 3,196,447 7,228,608 2.26 2033 2,595,000 150,391 2,745,391 0 2,745,391 7,228,608 2.63 2034 1,585,000 73,438 1,658,438 0 1,658,438 7,228,608 4.36 2035 1,050,000 27,475 1,077,475 0 1,077,475 7,228,608 6.71 2036 330,000 4,950 334,950 0 334,950 7,228,608 21.58 TOTALS 1 47,500,000 16,894,413 1 64,394,413 1 16,220,000 2,807,916 1 19,027,916 1 83,422,330 1 ® ® ® ®® ] = Maturities Subject to Optional Redemption Total Utility Debt Debt Service Coverage Rev P &I G.O. P &I Total Net Revs= Year 4,732,164 963,116 5,695,280 7,228,608 1.27 2016 4,757,303 946,267 5,703,570 7,228,608 1.27 2017 4,767,607 933,936 5,701,543 7,228,608 1.27 2018 4,779,802 903,820 5,683,622 7,228,608 1.27 2019 4,794,923 891,735 5,686,658 7,228,608 1.27 2020 4,808,405 854,012 5,662,417 7,228,608 1.28 2021 4,816,250 851,173 5,667,423 7,228,608 1.28 2022 4,834,609 579,107 5,413,716 7,228,608 1.34 2023 4,846,007 472,293 5,318,300 7,228,608 1.36 2024 4,858,938 455,947 5,314,885 7,228,608 1.36 2025 4,591,975 441,914 5,033,889 7,228,608 1.44 2026 4,628,673 427,874 5,056,547 7,228,608 1.43 2027 4,628,385 413,514 5,041,899 7,228,608 1.43 2028 4,661,173 12,581 4,673,754 7,228,608 1.55 2029 4,705,254 17,259 4,722,514 7,228,608 1.53 2030 3,198,163 16,856 3,215,019 7,228,608 2.25 2031 3,196,447 16,425 3,212,872 7,228,608 2.25 2032 2,745,391 20,900 2,766,291 7,228,608 2.61 2033 1,658,438 20,300 1,678,738 7,228,608 4.31 2034 1,077,475 1,077,475 7,228,608 6.71 2035 334,950 334,950 7,228,608 21.58 2036 83,422,330 1 9,239,031 1 92,661,360 NOTES: 'Estimated rates are the reoffering yields for the Series 2016E Storm Water Utility Revenue Bonds sold June 28, 2016 plus 0.40 %. 2Net revenue calculation based the City's preliminary 2015 financial statements with operating revenues adjusted and certifed by the City's auditor to reflect 2016 rate increase. Prepared by Ehlers Leaders in Public Finance Presale Estimate 7/18/2016 File: Oshkosh Base Case-2016-7-14-FOR RFDG SALES /Storm Rev Debt Rfdg cs� CE) a Series 2010E Taxable Storm Water Utility Revenue Bond - F E RS O -fHKQ. H Estimated s E I Existing Debt Service To Be Refunded Estimated Debt Service After Refunding Taxable Storm Water Utility Revenue Bonds Series 2010E (Build Issue America Bonds - Direct Payment) Amount $20,800,000 05- Oct -10 01- May -20 $16,040,000 $16,220,000 19- Oct -16 1- May -24 $7,950,000 Dated Call Date Call Amt Rate /Term 2.625- 5.200% 2017 -2030 2016 -2030 Year Prin (5/1) Rate Interest BAB Credit2 Total 2016 845,000 2.625% 719,098 (251,684) 1,312,414 2017 8770001 2.875% 695,501 (243,425) 1,322,076 2018 1 895,000' 3.250% 668,451 (233,958) 1,329,493 2019 1 930,000' 1625% 637,051 (222,968) 1,344,083 2020 1 965,000' 3.900% 601,378 (210,482) 1,355,895 2021 1 1,000,0001 1900% 563,060 (197,071) 1,365,989 2022 ' 1,040,000 4.100% 522,240 (182,784) 1,379,456 2023 1 1,085,000' 4300% 477,593 (167,157) 1,395,435 2024 1 1,135,000' 4.500% 428,728 (150,055) 1,413,673 2025 1 1,175,0001 4300% 375,578 (131,452) 1,419,125 2026 1 1,250,0001 4.800% 317,965 (111,288) 1,456,677 2027 1 1,325,0001 4.900% 255,503 (89,426) 1,491,077 2028 1 1,375,0001 5.000% 188,665 (66,033) 1,497,632 2029 1 1,450,0001 5.100% 117,315 (41,060) 1,526,255 2030 1,545,000, 5.200% 40,170 (14,060) 1,571,111 Estimated Debt Service After Refunding Total 16,885,000 6,608,294 21,180,391 Total 16,220,000 Presale Estimate NOTES: 1The Extraordinary Redemption Provision conditions have been satisfied for this issue. 2For purposes of the savings estimate the full 35% BAB credit is included. 'Estimated rates are June 28, 2016 City of Oshkosh Storm Water Revenue Bond sale results (reoffering yields) plus 0.40% "Estimated present value savings of $426,279 or 2.658% of refunded principal. 2,807,916 19,027,916 Prior Issue DS Funds (1,312,414) Plus Rounding ESTIMATED FUTURE VALUE SAVINGS NET OF COSTS4 Maturities Subject to Optional Redemption Total Estimated Savings 840,061 3,264 843,325 Prepared by Ehlers 7/18/2016 c0 Leaders in Public Finance File: Oshkosh Base Case 2016 -7 -14 FOR RFDG SALES /Storm 2010E Savings m Oo Storm Water Utility Revenue Issue Refunding Bonds Series 20161 Amount $16,220,000 19- Oct -16 1- May -24 $7,950,000 Dated Call Date Call Amt Rate /Term 1.150- 2.850% 2017 -2030 Year Prin(5 /1) Est. Rate 3 Interest Total 2016 2017 935,000 1.150% 328,216 1,263,216 2018 965,000 1.230% 306,144 1,271,144 2019 990,000 1340% 293,577 1,283,577 2020 1,015,000 1.440% 279,636 1,294,636 2021 1,040,000 1.550% 264,268 1,304,268 2022 1,070,000 1.700% 247,113 1,317,113 2023 1,110,000 1.800% 228,028 1,338,028 2024 1,145,000 1.900% 207,160 1,352,160 2025 1 1,1770001 2.030% 184,356 1,359,356 2026 1 1,240,0001 2.150% 159,100 1,399,100 2027 1 1,300,0001 1400% 130,170 1,430,170 2028 1 1,340,0001 2.550% 97,485 1,437,485 2029 i 1,405,0001 2.700% 61,433 1,466,433 2030 1,490,0001 2.850% 21,233 1,511,233 Total 16,885,000 6,608,294 21,180,391 Total 16,220,000 Presale Estimate NOTES: 1The Extraordinary Redemption Provision conditions have been satisfied for this issue. 2For purposes of the savings estimate the full 35% BAB credit is included. 'Estimated rates are June 28, 2016 City of Oshkosh Storm Water Revenue Bond sale results (reoffering yields) plus 0.40% "Estimated present value savings of $426,279 or 2.658% of refunded principal. 2,807,916 19,027,916 Prior Issue DS Funds (1,312,414) Plus Rounding ESTIMATED FUTURE VALUE SAVINGS NET OF COSTS4 Maturities Subject to Optional Redemption Total Estimated Savings 840,061 3,264 843,325 Prepared by Ehlers 7/18/2016 c0 Leaders in Public Finance File: Oshkosh Base Case 2016 -7 -14 FOR RFDG SALES /Storm 2010E Savings m Oo 6.50% 6.00% 5.50% 5.00% 4.50% 4.00% 3.50% 3.00% 2.50% 10 YEAR TREND IN MUNICIPAL BOND INDICES Weekly Rates July, 2006 - July, 2016 Jan 07 Jan 08 Jan 09 Jan 10 Jan 11 Jan 12 Jan 13 Jan 14 Jan 15 Jan 16 RBI Source: The Bond Buyer The Revenue Bond Index (RBI) shows the average yield on a group of revenue bonds that mature in 30 years and have an average rating equivalent to Moody's Al and S &P's A +. 10 EHLERS LEADERS IN PUBLIC FINANCE C� CD (O AUGUST 10, 2016 16-408 RESOLUTION (CARRIED 6-0LOST _______ LAID OVER _______ WITHDRAWN _______) PURPOSE: INITIAL RESOLUTION AUTHORIZING NOT TO EXCEED $7,320,000 GENERAL OBLIGATION BONDS OF THE CITY OF OSHKOSH INITIATED BY: CITY ADMINISTRATION B I R by the City Council of the City of Oshkosh, Winnebago County, ETESOLVED Wisconsin, that there shall be issued general obligation bonds of said City in an aggregate principal amount not exceeding $7,320,000 for the public purpose of refunding certain outstanding obligations of said City, including the interest thereon. For the purpose of paying the various installments of principal of and interest on said bonds as they severally mature, prior to the issuance and delivery of said bonds there shall be levied on all taxable property in said City a direct annual irrepealable tax sufficient for that purpose. BFRby the City Council of the City of Oshkosh, Winnebago County, E IT URTHER ESOLVED Wisconsin, that the City Manager, the City Clerk, the Director of Finance/City Treasurer and all other officers of the City are hereby authorized to execute all documents and certificates and to take all such actions as may be necessary in connection with the authorization, issuance, sale and delivery of said bonds and the performance of the obligations of the City hereunder and to carry out and comply with the terms of this resolution, and documents shall be in substantially the same form as indicated in this Resolution, any changes in the final execution copies of such documents to be deemed approved by the respective signatures of the City officers named above.