Loading...
HomeMy WebLinkAboutSupplemental Attachments - 5/22/2018 Speer Financial, Inc. INDEPENDENT MUNICIPAL ADVISORS ESTABLISHED 1954 KEVIN DANIEL DAVID RAPHALIATA MAGGIE ANTHONY LARRY MARK McCANNA FORBES PHILLIPS McKENZIE BURGER MICELI BURGER JERETINA Chairman President Executive V11 Senior VP Senior VP Senior Vt' Vice President Vice President May 22, 2018 The Honorable Quentin M. Hart, Mayor and Members of the City Council City of Waterloo 715 Mulberry Street Waterloo, IA 50703 Dear Mayor Hart and Council Members: Bids were received today for the $10,505,000 General Obligation Bonds, Series 2018A. There were three bids received, which are listed at the bottom of this letter. Upon examination, it is our opinion that the bid of Robert W. Baird & Co., Inc., Milwaukee, Wisconsin, is the best bid received, and it is further our opinion that the bid is favorable to the City and should be accepted. We therefore recommend that the Tax-Exempt Bonds be awarded to that bidder at a price of$10,545,153.70, being at a true interest rate of 2.9295%. A portion of the Tax-Exempt Bonds will be used to currently refund the outstanding portion of the General Obligation Bonds,Taxable Series 2010A(Taxable Build America Bonds). By the City choosing to currently refund the Series 2010A Bonds, the City will realize a gross savings of$86,823.52, with a net present value saving of$73,067.86 or 2.082% of the principal amount of the Refunded Bonds. True Account Managers Interest Rate Robert W. Baird & Co., Inc., Milwaukee, Wisconsin................................. 2.9295% Hutchinson, Shockey, Erley& Co., Chicago, Illinois...................................... 2.9528% FTN Financial Capital Markets,New York,New York .................................. 2.9834% Respectfully submitted, SPEER FINANCIAL, INC. Maggie Burger, Sr. Vice President MB/mr Enclosures SUITE 4100.ONE NORTH LASALLE STREET•CHICAGO,ILLINOIS 60602•(312)346-3700•FAX(312)346-8833 SUITE 608.531 COMMERCIAL STREET•WATERLOO,IOWA 50701 •(319)291-2077•FAX(319)291-8628 U.S.PUBLIC FINANCE INVESTORS CREDIT OPINION Waterloo (City of) IA 9 May 2018 Update to credit analysis Rate-rr Researchhis ® Summary The City of Waterloo(Aa2),Iowa is part of the Cedar Falls-Waterloo metropolitan area and is an employment hub for the region.The city's tax base is moderately sized and exhibits steady growth,though full value per capita and resident incomes are slightly below the national Contacts medians.The city's financial position is strong with stable operations and healthy reserves. Francis A Mama +1.212.5533£326 The city's debt and pension burden is above average,as are associated fixed costs. 7,=�a Gst rrank_marn°` oodys.com Credit strengths Daniel Simpson +1312.746.9965 Ana{7st » Diverse tax base that is a regional economic center in eastern Iowa :pan<i-rpson,,amcodys c urn Thomas Jacobs +1.2'€2.553.4131 » Sound financial management has resulted in stable operating history and maintenance of e17;or"'Ve res;t.ie„t healthy reserves l l,or,i<as.jacobs:zn,ocd✓s coo Credit challenges CLIENT SERVICES » Above average debt and pension burden Americas 1-212-553-1663 Asia Pacific 852-3551-3477 » Full value per capita and resident incomes are below average compared to like rated peers Japan 81-3-5408-4144 Rating outlook EMEA 44-24-7772-5454 We typically do not assign outlooks to local governments with this amount of debt. Factors that could lead to an upgrade » Moderation of the city's debt and pension burden » Expansion of the tax base and improvement in resident wealth and incomes » Significant and sustained improvement in reserves Factors that could lead to a downgrade » Growth in the city's debt and pension burden » Material declines in financial reserves » Deterioration of the tax base or weakening of resident wealth and incomes .•. INVESTORS Key indicators Exhibit 1 Waterloo(City of)IA 2013 2014 2015 2016 2017 Economy/Tax Base Total Full Vsue($000) $3,668,184 $3,706,644 $3,806,814 $3,834,111 $3,891,239 Population 68,327 68,392 68,432 68,357 68,406 Full Value Per Capita $53,686 $54,197 $55,629 $56,090 $56,884 Median Family Income(%of US Median) 80.0% 80.4% 79.3% 81.4% 81.4% F nances Operating Revenue($000) $60,536 $61,967 $62,739 $64,467 $65,853 Fund Balance($000) $17,753 $18,224 $18,193 $17,679 $18,009 Cash Balance($000) $20,141 $22,710 $20,512 $24,084 $23,894 Fund Polanceasa%of FLe-venues 29.31/6 29.4% 29.0% 27.4% 27.3% Cash Balance as a%of Fbvenues 33.30/6 36.6% 32.7% 37.4% 36.3% Debt/Pensions Net Direct Debt($000) $67,963 $70,787 $69,128 $77,051 $84,322 3-Year Average of Moody'sANPL($000) $120,435 $132,351 $126,045 $131,232 $141,835 Net Direct Debt/Operating Revenues(x) 1.1x 1.1x 1.1x 1.2x 1.3x Net Direct Debt/Full Value(%) 1.91% 1.9% 1.8% 2.0% 2.21% Moody's-adjusted Net Penson Liability(3-yr average)to Fe-venues(x) 2.Ox 2.1x 2.Ox 2.Ox 2.2x Moody's-adjusted Net Penson Liability(3-yr average)to Full Value(%) 3.3% 3.6% 3.3% 3.4% 3.6% The table above reflects fiscal year end data through fiscal 2017. Source.-Waterloo,IA's audited financial statements,Moody's Investors Service,U.S.Census Bureau Profile The City of Waterloo is located in northeastern Iowa,approximately 50 miles northwest of Cedar Rapids.The city provides municipal services to a population of approximately 68,000 residents. Detailed credit considerations Economy and tax base:employment hub in eastern Iowa Waterloo's tax base and economy will likely remain stable due to its role as a regional commercial and industrial hub.Waterloo is located in eastern Iowa's Black Hawk County(Aa2),approximately 50 miles northwest of the City of Cedar Rapids(Aal stable).The city's tax base grew 1.5%in the most recent assessment year to$3.9 billion.Over the last five years,annual tax base growth averaged a modest 0.5%.While tax base growth is relatively modest,there is a considerable amount commercial and industrial development taking place within the city that should facilitate faster near-term growth. The city's economy is dominated by manufacturing,with additional employment opportunities in the government,health care,and higher education sectors.The city's largest employer is Deere and Company(A2 stable),which employs approximately 5,600 people representing 17%of the city's workforce.While Deere has layed off employees over the last five years,operations have stabilized and the company has continued to invest in its local operations.The city's labor market continues to lag the nation as a whole with total employment remaining around 7%below its prerecession peak.The unemployment rate as of December 2017 was 4.3%,above the state rate of 2.8%and national rate of 3.9%. Financial operations and reserves:sound financial profile driven by prudent management and ample reserves The city's financial position is currently healthy and operations remain stable.In fiscal 2017 the city drew down reserves for the first time in seven years.Available general fund balance ended the year at$15.0 million representing 29.9%of annual revenues.Across the city's major operating funds(which include the general,debt service,and trust and agency funds),available fund balance ended fiscal This publication does not announce a credit ioting action.For any credit ratings referenced in this publication,please see the ratings tab on the issuedendty page on www,moodys.corn for the most updated credit rating action information and rating history_ 2 9 May 2018 Waterloo(City of)!A Update to credit analysis ••• INVESTORS 2017 at$18.0 million,or 27.3%of operating revenues. For fiscal 2018,the city budgeted for a modest draw on operating reserves of $500,000.The city regularly outperforms budgeted expectations due to conservative revenue and expenditure assumptions.The city's financial position is a credit strength and will likely remain so. The city is exposed to some enterprise risk due to its operation of the Cedar Valley SportsPlex.The 125,000 square foot facility was financed through a combination of private donations and grants from the Black Hawk County Gaming Association.The city acquired the property and signed a lease purchase agreement to operate the facility for$100 per year from the Waterloo Development Corporation in 2014.The annual budget for the SportsPlex is approximately$1.1 million or less than 2%of total operating revenues and has generated operating surpluses each year.Sportsplex memberships increased 72%in 2015 and 11%in 2016. LIQUIDITY Liquidity across the city's operating funds is sound.At the close of fiscal 2017,available cash totaled $23.9 million,equal to a healthy 36.3%of operating revenue. Debt and pensions:above average debt and pension burden The city's above average debt burden will likely moderate given future plans to finance capital projects on a pay-as-you-go basis. Following the upcoming debt issuance,the city's debt burden will total$94.9 million which is 2.4%of full value and 1.4x operating revenues.The city's three-year average Moody's adjusted net pension liability(ANPL) is also above average at 3.6%of full value and 2.2x operating revenues.Fixed costs,consisting of debt service and pension funding,consume a sizeable 29%of annual operating revenues.The city's above average fixed costs are driven by rapid amortization of debt and are somewhat mitigated by unlimited property tax levies that can be utilized for debt service and pension contributions. DEBT STRUCTURE All of the city's debt is fixed rate and long-term.Amortization is rapid with 88%of principal scheduled to mature within ten years. DEBT-RELATED DERIVATIVES The city is not a party to any derivative agreements. PENSIONS AND OPEB Waterloo participates in two defined benefit multiple-employer cost-sharing plans,the Iowa Public Employees' Retirement System (IPERS)and Municipal Fire and Police Retirement System of Iowa (MFPRSI).On an annual basis,each plan establishes local government retirement contributions as a share of annual payroll based on actuarial requirements.The city has routinely made its full statutory contributions; however,unfunded liabilities are will likely grow over the near term primarily because investment returns have fallen short of plan assumptions. In aggregate,all participating governments contributed well above the"tread water" indicator in fiscal 2015.The tread water indicator is the annual employer contribution required to prevent unfunded liabilities from growing if plan assumptions hold.Despite making contributions above tread water, plan level ANPLs for IPERS and MFPRSI grew 36%from fiscal 2015 to 2016. Due to a 12 month balance sheet reporting lag,significant growth in plan unfunded liabilities in 2016 will not be reflected in local government balance sheets until fiscal 2017 for most Iowa municipalities.IPERS and MFPRSI contributions were 96%and 153%of tread water in fiscal 2016. In March 2017, IPERS reduced its assumed investment return to 7.0%from 7.5%.The change will increase reported unfunded pension liabilities and necessitate higher government contributions to keep pace with reported plan funding needs.The next opportunity for the plans to enact an increase in contribution rates would impact government budgets beginning July 1,2018. The city sponsors a single-employer health care plan that provides self-insured medical,prescription drug,dental and vision benefits to all active and retired employees and their eligible dependents.Management develops the health insurance plan contributions based on expected claims.The OPEB benefit is funded on a pay-as-you-go basis. Retirees are responsible for the portion of premium rates not covered by the city. For fiscal 2016,the city contributed $1.4 million or 2%of operating revenues to the plan.As of July 1,2015,the most recent actuarial valuation date,the unfunded actuarial accrued liability(UAAL)was$20.6 million. Management and governance:very strong institutional framework,prudent management At approximately 60%of annual operating revenue, property taxes account for a majority of the city's income.The city taxes at its general fund levy limit of$8.10 per$1,000 of taxable valuation but maintains approximately$1.3 million in additional revenue :3 9?Way 2!1?3 Wite,too(City of)lk Update to credit anatYsis ... INVESTORS raising flexibility within the employee benefits levy.The city implemented a 2%franchise fee on electric and gas utilities on July 1, 2013 and increased the fee to 3%on July 1,2014.The increased fee generates$2.5 million annually.The city could raise the fee up to 5%if necessary.Voters also recently renewed the city's 1%local option sales tax(LOST)that generates approximately$10 million annually and is designated for street construction and improvements,which reduces the city's need to borrow for capital improvements going forward.The city's management team has a history of positive budget to actual variances for both operating revenues and expenditures. The city has a formal policy to maintain general fund cash reserves equivalent to at least 5%of revenues.Officials also report an informal target of achieving an unassigned general fund balance of 25%of revenues,compared to the 27%of revenue it closed with in fiscal 2017 Iowa cities have an Institutional Framework score of Aaa,which is high.Institutional Framework scores measure a sector's legal ability to increase revenues and decrease expenditures.Even with property tax caps on general and emergency levies,cities have strong revenue-raising flexibility due to various additional levies, including an unlimited levy for employee benefits.Unpredictable revenue fluctuations tend to be minor.Across the sector,fixed and mandated costs are generally moderate. However,Iowa has public sector unions,which can limit the ability to cut expenditures. Expenditures mostly consist of personnel costs,which are highly predictable. 4 9 Mai 201£3 WateOno(City afj IA.update to credit anatysis MOODY'S INVESTORS SERVICE U.S. PUBLIC FINANCE Y)2018 Moody's Corporation,Moody's Investors Service,Inc,,Moody's Anrtytics,Inc.and/or their licensors and affiliates(cofeinvery,"MOODVS°'L Art rights reserved. CREDIT RATINGS ISSUED BY MOODY'S INVESTORS SERVICE,INC AND ITS RATINGS AFFIt W!FS(`MIS")ARE MOODY'S CURRANT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF FNTI TIES,CREDIT COMMITMENTS,OR DEBT OR DE91-1 lKc SECURITIES,AND MOODY'S PUBLICATIONS MAY INCLUDE MOODY'S CURRENT OPINIONS OF THE RELATIVE FUT JRE CREDIT RISK OF ENTITIES,CREDIT COMMITMENTS,OR DEBT OR DEBT-LIKE SECURITIES MOODY'S DEFINES CREDIT RISK AS TH7 RISK'THATAN ENTITY MAY NOT e'i—ITS CONTRACTUAL,FINANCIAL OBLIGATIONS AS THEY COME!DUE AND ANY ESTIMATED FINANCIAL LOSS IN THE EVENT OF DEFAULT CREDIT RATINGS DO NOT ADDRESS ANY O1—HER RISK,INCL 11 DIN(,BUT NOT LINI I i D TO,LIQUIDITY RISK,MARKET VALUE RISK,OR PRICE VOLATILITY CREDIT RATINGS AND MOODYS OPINIONS INCLUDED IN MOODY'S PlIBLICIA11ONY ARE NO--STAT`-oPNTS 0,CURRENT OR HISTORICAL FACE,MOODY S PUBLICATIONS MAY ALSO INC!DUE.QUANTITATIVE MOpF1-BASED FS71MATES OF CREDIT RISK AND RELATED OPINIONS OR COMMENFARv PUBLISHED BY MOODY'S ANALYTICS,INC,CREDIT RATINGS AND MOODY'S PUBLICATIONS[)(,I NOFCONSTITUTf OR,PROVIDE INVESTMENT OR FINANCIAL ADVICE,AND CR-,IIT RATINGS AND MOODY'S PUBLICATIONS ARE NOT AND DO NOT PROVIDIP kt(_()MM1:NDAIITDNy TO PURL-ASE,SILL,OR f-KAJD FAR IICU;AR SECURITIES.NEITHER CREDIT RA:Ipl,'-,S NOR moVIDY's PUBLICATIONS COMMENT ON THE SUITABILITY OF AN;NVESIMENT FOR ANY PARTICULAR INVESTOR MOODY'S ISSUES ITS CREDIT RATINGS ANO PUBLISHES MOODY'S PUBLICATIONS' ITH THE FXPFCTAI ION ANUUNDENSIANDINC,THAT EACH INVLSI OR WILL,Will 1­1 DUE CARE,MAKE 11"S OWN STUDY AND EVALUAI ION Or-EACH S1,C1JRl I Y I HA-1 IS UNDER CONSIDERATION FOR PURCHASF,HOLDING,OR SALE MOODY CR-DIF RATINGS ANDI-TOODY'S PUBLICATIONS ARE NOT INTENDED FOR USE BY RETAIL INVESTORS AND IT WOULD RE RECKLESS AND INAPPROPRIATE FOR RE IAII INVI-cl-,ORS 10 USE MoODY'S CREDIT RAI INCS OR MOODY'S PUSLICA:1 IONS WHEN MAKING AN INVFS I MEN 1 Df_,11S10N,IF IN DOUBT YOU SHOULD CONTACT YOUR i-INANJAL OR OTHER PROFESSIONAL ADVISER ALL INFi_,RBLATRDN CONTAINED HEREIN IS PROTECTED BY LAW,INCLUDING BUT NOT LIMITED TO,COPYRIGHT LAW, AND NONE OF SUCH INFOYMATION MAY RE COPIED OR 01 HERWISE REPRODUCED,REPACKAGED,PURI-HER TRANSMITTED.TRANSFERRED,DISSEMINATED,IsYDISTRIFILTED OR RFS,1 D,OR STORED FOR SLJ9SF.QLFNT USE FOR ANY SUCH PURPOSE,IN WHOLE OR IN PART,IN ANY FORM OR MANNER OR BY ANY MEANS WHATSOEVER,BY ANY PERSON WITHOUT MOODY'S PRIOR WRITTEN CONSENT CREDIT RATINGS AND MOODY'S PUBLICATIONS ARE NOT INTENDED FOR USE BY ANY'PERSON AS A BENCHMARK AS THAT TERM 15 DEFINED FOR REGULATORY PURPOSES AND MUST NOT BE USFD IN ANY WAY FHAF D RFSTRI IN THEM BFING C ONSIDERTE,A BENCHMARK AU informationcoortained herein is obtained:YMOCDY'F Frorn sources believed by it to be accurate end reliable.Because of the possibitityort human or mechanical error as well as rs,her'aliors,however,allinForniano")contained he is provided A',IS"without warranty of any kind.MOODY'S adepts JtTneCecoily rusaSlircls so that tire inointration it uses Ina ignirri;,s riedu ratings oc sufficient Trialityano frorl rou(e,;M,;,O[)Y S considers To be reliable Including,when appropriate,independent third-party sources,However, MO(DDY'S is not an auditor and cannot in every instance independently verify or validate information received in the rating process or it,preparing the Moody's publications To til?exlent permitted by law,MOODY'S and ns directors,officers,employees,agents,representatives,licensors and suppliers discilikT,ualshuylo is,iy perscii or entity For any indec,,t, cial,consequential,or incidental lo,ses of damages whatsoever arising from or in cenner-Tion saith,the infornsaticvl c ont'lined her ejn or The res of n,narnIlity,to use any sudi:i�idolor,ever if on:)OOY'`;or any ot its directors,officer=_,employees,agents,representatives,licensors or suppliers is advised in advisn-'s,of the prissi,,ility Pf such losses or darnsges, but not limited to:(a)any loss o"prose ritor prospective profits or(b)any loss or darriage insfiro,where the relevant hrmn(iai instrument is not the subject of a particular credit rating assigtied by MOODY'S To The extent peelnuted by law,MOODY',and s directors,officers,employees,agents,re;re Ircernfirs anci sufot,e,,htsctfin i liability for any direct or compensatory losses or damages ca .:_d to any"'erson or en,i,},in, ,ding hut:not limited Tons,any neg!fg-Tce,(but ex(h,fLng 1,said,willful mist cuwluct or any armIr ypp of Iia,htss that,for the avoidance of doubt by Less cannot de excluded)on The part o`,or any,,ontingericSvothinor beyond db_C-crinol of,MOODY'S or airy of its directors,clIfifiels,employees,agents, representatives,(icer isorsor suppliers,insing b-cirri or iri connectfocimitis the mforniat!on contained herein or this i.,sc o,or inability to use any such information, NO WARRANTY,EXP'r sS OF,IMN IFF),AS 7O THE ACCURACY,T IMP INFSS,COMET F!FNFSS,MFR{HAN FM'sil,TY OR 6 ITN[SS FOR ANY PARTICULAR PURPOSE OF ANY SUCH RATIN`'.OR 01 HER("'PINION OR lisrOPMA TON IS GIVEN 09 MADE BY MOCi IN ANY FORM OR MANNER WHArSOFVER, Moody's Investors SerVce,Inc,,o wholly-owned,redid ratin?agericy subsidiary of ploody's(criporallon f MCO"),hereby that inceit issuers of debt securities(including corpoial,,and inumcrinalt;crtris ehentureys,notes and commercial pani si)and prefer rl,(j stork rated by Mondy'.s Inver tc—Servo e,Inc have,prior to assigninenr of any rating, agreed in pay to Moody's Investors Sei,lce.,Inc.for appraisal and faring services i enclered by it fees ranging from$1,500 To spnroxmifateIy S2,500,000, MCC,and MIS also maintain policies and procedures to address,he,indcTsenderwe of MIS's ratior,and rating Processes.Information regarding certain aft,lations flrramay exist between ciffec tors of MCO and rated entiries,and between entioesshro hold ratings from MIS and have also pt bbdy reported to the SE-C an ownership interest in MCO otmore than 5%,is posted annuattvat www.moodys.com under the heading"Investor Relations—Corporate Governance—Director arid,Shareholder Atfieatron P,,Al(-y" A(',­ui0r,.,_,j ierrls dor Australia outy,Any fluck(ation into Au�tra&3 Of UNS(10CLIfirent is pursuant to nie Australian f inancral Sonocits License of MOOC)Vy affikat-,klcody's Investors Serl,r e Fry bliniled ABN 611 003'391)657ASt.i36,03 and/or Mocfcy's Ariailincs Australia Ply Ad ASH 94 105 136 972 AFSL 3S3569(ars applicrible) his Joculnew,is intended to or,-'rovided only to"Wholesalect,ents" vuhm the rnoasing of,section 761i"I of the Corprran,)ns Act 2001 By continuing no access this document fiorn, Within Aurfratia,you repkessli,z to NOODY'S that yo are,q-are acceso,,g the docurnent as a representative or,a"wholesalb,client"and That neither you nor fire entity you represent wilt diiec-dy or tin's docur-ent or Its Contents to"retail clientssvIthin t:e i-..caning of section 7fXi oftheCorporations Act 2001.M01ODY's'y d, laimil is an opinion is to the cred,11wo-thiness of a debt obligation of the issuer,Tinton the irquitj sec trines of thr,issIlrnr or any form of sec,,ray'chat,Is available to retail investors it,would be reckless wIdirdpliropriate,for retaii Investors to use CCIOYIS ratings or Publications alifixis iinak:ng an Investment dee siwi If nl doubt you should contact your financial of other profession ji adviser. Additional onerns for japan only Moody'-,,Japan K.K.("MIKK")is a wholly-owned credit rating agency subsidiary of Moody's Group Japan G K,,which is osho iy-owned by Moody's ,sclefseas Holdqlgs Inc.,c a sshotly-ossnre:.,subsidiary of Mw Moody s,l Japan K K,(`MSI­J"),,a,wholly-owned credit isiong agency subsidiwy o,If MICST I is nor a Nalionalty Recognized Slafirstv-at RahngOrr arrIiation("NRSRO") 71necfcrl,,rrecit ischilys assigned By PAST!are Non-NRSRO Credit Ratings Nor-NrISSRO Ond I 3w!r1gs are assigned by an entily trat is zi<x a Nk`,Rc_ja,id tile rated_:Ibligaliorl*11 ri-t quihiv w"crtain types of treatment under U"S" laws MJKX.ind MS,_j ar",_iefjst I Jung agelides ft,,gstere' with the Japan F:rranoal Siervic,°s As..1,Iy anfl,treir regi snatior,numbers are FSA onirnissioner(Ratings)No,2 and 3 iesnr,chvely. MIKK orMSF)(as afpplicabh, hereby did0se Thai roosir!ssucrs of debt securities(lricluding corporate and innurrupai bonds,debentures,notes and cornmerdat paper)and preferred sto,K rated byMIKI(or MY 1(as itipik,abbe)have,pi[f,f toacsignment of any rating,agreed to pay to MJK<or MSF!(as applicable)for appraisal and isinng services rendered by it fees ranging frorn 1PY200,00C to alsIosoximately IPY350,00G'000, MJKK and MST]also maintain P-dh,res and pisicefAires to address Japanese regulatory iequirements, REPORT NUMBER 1124222 5 9 May 2018 Waterloo(City of)IA Update to credit siratysis MOODY'S INVESTORS SERVICE U.S.PUBLIC FINANCE CLIENT SERVICES Americas 1-212-553-1653 Asia Pacific 852-3551-3077 Japan 81-3-5408-4100 EMEA 44-20-7772-5454 MOODY'S INVESTORS SERVICE 6 9 May 1018 V,ltertoo of)IA dpda',e to rllditalalyiiS Speer Financial, Inc. INDEPENDENT MUNICIPAL ADVISORS • ESTABLISHED 1954 SUITE 608•531 COMMERCIAL STREET•WATERLOO,IOWA 50701 •(319)291-2077•FAX(319)291-8628 Investment Rating: Moody's Investors Service ... Aa2 CITY OF WATERLOO Black Hawk County,Iowa • $10,505,000 General Obligation Bonds, Series 2018A Date of Sale: May 22, 2018 Average Life: 6.118 Years (Based on TIC) True Bidders* Price Maturities Rates Interest** Robert W. Baird & Co., Inc. 100.382% 2019 - 2030 3.000% 2.9295% Milwaukee, Wisconsin $10,545,153.70 $1,887,939 In association with: C.L. King& Associates WMBE Country Club Bank Edward Jones Loop Capital Markets Dougherty& Company, LLC Wayne Hummer&Co. Fidelity Capital Markets Sierra Pacific Securities Crews& Associates, Inc. Alamo Capital WMBE Ross, Sinclaire&Associates, LLC First Empire Securities "J Capital IFS Securities SAMCO Capital Markets Midland Securities Davenport&Co. L.L.C. FMS Bonds, Inc. Vining-Sparks IBG, LP First Kentucky Securities Corp. Bernardi Securities, Inc. Isaak Bond Investments, Inc. Oppenheimer& Co. First Southern Securities SumRidge Partners Multi-Bank Securities Inc. R. Seelaus& Company, Inc. Wedbush Securities Inc. Hutchinson, Shockey, Erley & Co. 101.980% 2019 - 2028 3.250% 2.9528% Chicago, Illinois $10,713,000.00 2029 - 2030 3.500% $1,927,164 FTN Financial Capital Markets 100.188% 2019 - 2029 3.000% 2.9834% New York, New York $10,524,754.46 2030 3.125% $1,920,587 Raymond James& Associates, Inc. UBS Morgan Stanley Wiley Bros. Samuel A. Ramirez&Co., Inc. *Syndicate information is provided by the underwriter. The information contained in this report is the most current available. "The true interest rate reflects the time value of money where dollars spent in early years have a greater weight than dollars spent in later years. Speer Financial, Inc. INDEPENDENT MUNICIPAL ADVISORS Citi of Waterloo,Iowa $10,505,000 General Obligation Bonds, Series 2018A *** FINAL *** Debt Service Schedule Date Principal Coupon Interest Total P+I Fiscal Total 06/19/2018 12/01/2018 - 141,817.50 141,817.50 06/01/2019 1,090,000.00 3.000% 157,575.00 1,247,575.00 1,389,392.50 12/01/2019 - 141,225.00 141,225.00 06/01/2020 1,290,000.00 3.000% 141,225.00 1,431,225.00 1,572,450.00 12/01/2020 - 121,875.00 121,875.00 06/01/2021 885,000.00 3.000% 121,875.00 1,006,875.00 1,128,750.00 12/01/2021 - - 108,600.00 108,600.00 - 06/01/2022 710,000.00 3.000% 108,600.00 818,600.00 927,200.00 12/01/2022 - - 97,950.00 97,950.00 _ - - - - —. 06/01/2023 695,000.00 3.000% 97,950.00 792,950.00 890,900.00 12/01/2023 - - 87,525.00 87,525.00 - 06/01/2024 665,000.00 3.000% 87,525.00 752,525.00 840,050.00 12/01/2024 77,550.00 77,550.00 Call 06/01/2025 1,275,000.00 3.000% 77,550.00 1,352,550.00 1,430,100.00 12/01/2025 - - 58,425.00 58,425.00 - 06/01/2026 650,000.00 3.000% 58,425.00 708,425.00 766,850.00 12/01/2026 - - 48,675.00 48,675.00 _ 06/01/2027 850,000.00 3.000% 48,675.00 898,675.00 947,350.00 12/01/2027 - - 35,925.00 35,925.00 _ 06/01/2028 775,000.00 3.000% 35,925.00 810,925.00 846,850.00 12/01/2028 - - 24,300.00 24,300.00 - 06/01/2029 800,000.00 3.000% 24,300.00 824,300.00 848,600.00 12/01/2029 - - 12,300.00 12,300.00 - 06/01/2030 820,000.00 3.000% 12,300.00 832,300.00 844,600_.00 Total $10,505,000.00 - $1,928,092.50 $12,433,092.50 _ Yield Statistics Bond Year Dollars $64,269.75 Average Life 6.118 Years Average Coupon 3.0000000% Net Intere-st Cost True Interes Cost(1 ) (TIC) 2.9295488% Bond Yield for Arbitrage Purposes _ 3.0752800% All Inclusive Cost-(AIC)--- 3.0635343%° IRS Form 8038 Net Interest Cost 2.7053746% Weighted Average Maturity 6.092 Years 18A Wloo 10.505 GO TE 5.2 I Issue Summary 1 5/22/2018 1 1:33 PM Speer Financial, Inc. Registered Municipal Advisor Page 1 Speer Financial, Inc. INDEPENDENT MUNICIPAL ADVISORS ESTABLISHED 1954 KEVIN DANIEL DAVID RAPHALIATA MAGGIE ANTHONY LARRY MARK MCCANNA FORBES PHILLIPS McKENZIE BURGER MICELI BURGER JERETINA Chairman President hxeennve VP Senior VP Senior VJ' Senior 67' Vice President Vice President May 22, 2018 The Honorable Quentin M. Hart, Mayor and Members of the City Council City of Waterloo 715 Mulberry Street Waterloo, IA 50703 Dear Mayor Hart and Council Members: Bids were received today for the $1,070,000 Taxable General Obligation Bonds,Series 2018B. There were five bids received, which are listed at the bottom of this letter. Upon examination, it is our opinion that the bid of UMB Bank, n.a., Kansas City,Missouri, is the best bid received, and it is further our opinion that the bid is favorable to the City and should be accepted. We therefore recommend that the Taxable Bonds be awarded to that bidder at a price of$1,065,074.35,being at a true interest rate of 3.4115%. True Account Managers Interest Rate UMBBank, n.a.,Kansas City, Missouri....................................................... 3.4115% Piper Jaffray & Co., Minneapolis, Minnesota.................................................. 3.5111% Bernardi Securities, Inc., Chicago, Illinois....................................................... 3.6769% Robert W. Baird & Co., Inc., Milwaukee, Wisconsin...................................... 3.7721% BOK Financial Securities, Inc., Milwaukee, Wisconsin.................................. 3.8504% Respectfully submitted, SPEER FINANCIAL, INC. U Maggie Burger, Sr. Vice President MB/mr Enclosures SUITE 4100•ONE NORTH LASALLE STREET•CHICAGO,ILLINOIS 60602•(312)346-3700•FAX(312)346-8833 SUITE 608.531 COMMERCIAL STREET•WATERLOO,IOWA 50701 •(319)291-2077•FAX(319)291-8628 Speer Financial, Inc. INDEPENDENT MUNICIPAL ADVISORS • ESTABLISHED 1954 SUITE 608•531 COMMERCIAL STREET•WATERLOO,IOWA 50701 •(319)291-2077•FAX(319)291-8628 Investment Rating: Moody's Investors Service ... Aa2 CITY OF WATERLOO Black Hawk County, Iowa is $1,070,000 Taxable General Obligation Bonds, Series 2018B Date of Sale: May 22, 2018 Average Life: 5.707 Years (Based on TIC) True Bidders* Price Maturities Rates Interest** UMB Bank, n.a. 99.539% 2019 - 2021 3.000% 3.4115% Kansas City, Missouri $1,065,074.35 2022 3.050% $208,044 2023 3.150% 2024 3.250% 2025 3.350% 2026 3.400% 2027 3.450% 2028 3.500% Piper Jaffray & Co. 99.408% 2019 - 2023 3.150% 3.5111% Minneapolis, Minnesota $1,063,666.55 2024 3.250% $213,935 2025 3.350% 2026 3.500% 2027 3.550% 2028 3.600% Bernardi Securities, Inc. 99.221% 2019 3.000% 3.6769% Chicago, Illinois $1,061,664.70 2020 3.050% $223,887 2021 3.150% 2022 3.250% 2023 3.300% 2024 3.400% 2025 3.500% 2026 3.600% 2027 3.700% 2028 3.800% Speer Financial, Inc. ►�/ INDEPENDENT MUNICIPAL ADVISORS Page 2 True Bidders* Price Maturities Rates Interest** Robert W. Baird & Co., Inc. 100.338% 2019 - 2021 3.000% 3.7721% Milwaukee, Wisconsin $1,073,617.00 2022 3.150% $231,581 2023 - 2028 4.000% BOK Financial Securities, Inc. 99.228% 2019 - 2024 3.625% 3.8504% Milwaukee, Wisconsin $1,061,740.90 2025 3.650% $234,016 2026 3.700% Stifel Nicolaus 2027 3.750% SunTrust Robinson Humphrey 2028 3.800% *Syndicate information is provided by the underwriter. The information contained in this report is the most current available. **The true interest rate reflects the time value of money where dollars spent in early years have a greater weight than dollars spent in later years. Speer Financial, Inc. INDEPENDENT MUNICIPAL ADVISORS City of Waterloo, Iowa $1,070,000 Taxable General Obligation Bonds, Series 2018B *** FINAL *** Debt Service Schedule Date Principal Coupon Interest Total P+l Fiscal Total 06/19/2018 - 12/01/2018 - - 15,561.00 15,561.00 - 06/01/2019 95,000.00 3.000% 17,290.00 112,290.00 127,851.00 12/01/2019 - - 15,865.00 15,865.00 06/01/2020 95,000.00 3.000% 15,865.00 110,865.00 126,730.00 12/01/2020 - - 14,440.00 14,440.00 06/01/2021 100,000.00 3.000% 14,440.00 114,440.00 128,880.00 12/01/2021 - - 12,940.00 12,940.00 - 06/01/2022 100,000.00 3.050% 12,940.00 112,940.00 125,880.00 12/01/2022 - 11,415.00 11,415.00 - 06/01/2023 105,000.00 3.150% 11,415.00 116,415.00 127,830.00 12/01/2023 - - 9,761.25 9,761.25 - Call 06/01/2024 105,000.00 3.250% 9,761.25 114,761.25 124,522.50 12/01/2024 - - 8,055.00 8,055.00 - 06/01/2025 110,000.00 3.350% 8,055.00 118,055.00 126,110.00 12/01/2025 - - 6,212.50 6,212.50 - 06/01/2026 115,000.00 3.400% 6,212.50 121,212.50 127,425A0 12/01/2026 - - 4,257.50 4,257.50 - 06/01/2027 120,000.00 3.450% 4,257.50 124,257.50 128,515.00 12/01/2027 - - 2,187.50 2,187.50 - 06/01/2028 125,000.00 3.500% 2,187.50 127,187.50 129,375.00 Total $1,070,000.00 - $203118.50 $1273118.50 - Yield Statistics Bond Year Dollars $6,106.50 Average Life - - 5.707 Years Average Coupon 3.3262671 Net Interest Cost(NIC) 3.4069295% True Interest Cost(TIC) - 3.4115064% Bond Yield for Arbitrage Purposes- 3.3028365% All Inclusive Cost(AIC) 3.7576688% IRS Form 8038 Net Interest Cost 3.3100799% Weighted Average Maturity 5.703 Years 188 Woo 1.070m GO TAX 5. 1 SINGLE PURPOSE 5/22/2018 1 1:26 PM Speer Financial, Inc. Registered Municipal Advisor Pagel �keseq)fRliem 4aww"4- / 'Speer Financial, Inc. *� INDEPENDENT MUNICIPAL ADVISORS City of Waterloo, Iowa $9,165,000 General Obligation Bonds, Taxable Series 2010A (Taxable Build American Bonds - Direct Payment) *** Final for Current Refunding *** Debt Service Schedule Less --- Date Principal Coupon Interest Subsidy Total P+I 06/01/2018 - 06/01/2019 510,000.00 4.400% 169,520.00 (55,416.08) 624,103.92 06/01/2020 500,000.00 4.6000/6 147,080.00 (48,080.44) 598,999.56 06/01/2021 460,000.00 4.800% 124,080.00 (40,561.74) 543,518.26 06/01/2022 480,000.00 5.000% —_102,000.00 (33,343.80) _ 548,656.20 06/01/2023 500,000.00 5.0000/6 78,000.00 (25,498.20) 552,501.80 06/01/2024 515,000.00 5.000°/© 53,000.00 (17,325.70) 550,674.30 06/01/2025 545,000.00 5.000% 27,250.00 (8,908.02) 563,341.98 Total $3,510,000.00 - $700,930.00 (229,133.98) $3,981,796.02 Yield Statistics Bond Year Dollars _ -- $14,215.00 Average Life — — 4.050 Years Average Coupon — -- — — - --- -o -- _ —_ 4.9309180% Net Interest Cost(NIC) — _ 4.9309180% True Interest Cost(TIC) 4.9257319% Bond Yield for Arbitrage Purposes 3.3166369% All Inclusive Cost(AIC) 3.3166369% IRS Form 8038 Net Interest Cost 4.9309180% Weighted Average Maturity 4.050 Years 10A Wloo GO BAB TAX for C I SINGLE PURPOSE 1 5/22/2018 2:47 PM Speer Financial, Inc. Registered Municipal Advisor Pagel Speer Financial, Inc. INDEPENDENT MUNICIPAL ADVISORS City of Waterloo,Iowa _ $3,485,000 General Obligation Bonds, Series 2018A *** FINAL -Refunding Portion - 2010A *** Debt Service Schedule Date Principal Coupon Interest Total P+l 06/01/2019 525,000.00 3.000% 99,322.50 624,322.50 06/01/2020 510,000.00 3.000% 88,800.00 598,800.00 06/01/2021 470,000.00 3.000% 73,500.00 543,500.00 06/01/2022 490,000.00 3.000% 59,400.00 06/01/2023 495,000.00 0 549,400.00 _ 3.000/a 44,700.00 539,700.00 06/01/2024 515,000.00 3.000% 29,850.00 544,850.00 06/01/2025 480,000.00 3.000% 14,400.00 494,400.00 Total $3,485,000.00 - $409,972.50 $3,894,972.50 Yield Statistics Bond Year Dollars — $13,665.75 Average Life ---- — — 3.921 Years Average Coupon 3.0000000% Net Interest Cost(NIC) _ _ 2.6885171% True Interest Cost(TIC) _ _ _ __ 2.6657863% Bond Yield for Arbitrage Purposes_ _ _ 3.0752800% All Inclusive Cost(AIC) 2.7146535% IRS Form 8038 Net Interest Cost _ 2.3130892% Weighted Average Maturity 3.932 Years 18A Woo 10.505 GO TE 5.2 1 Cur Rev 10A BAB 1 5/22/2018 1 2:41 PM '.. Speer Financial, Inc. Registered Municipal Advisor Page 3 Speer Financial, Inc. INDEPENDENT MUNICIPAL ADVISORS City of Waterloo,Iowa $3,485,000 General Obligation Bonds, Series 2018A *** FINAL -Refunding Portion -2010A *** Debt Service Comparison Date Total P+I Net New D/S Old Net D/S Savings 06/01/2019 624,322.50 624,322.50 624,103.92 (218.58) 06/01/2020 598,800.00 598,800.00 598,999.56 199.56 06/01/2021 543,500.00 543,500.00 543,518.26 18.26 06/01/2022 549,400.00 549,400.00 548,656.20 (743.80) 06/01/2023 539,700.00 539,700.00 552,501.80 12,801.80 06/01/2024 544,850.00 544,850.00 550,674.30 5,824.30 06/01/2025 494,400.00 494,400.00 563,341.98 68,941.98 Total $3,894,972.50 $39894,972.50 $3,981,796.02 586,823.52 PV Analysis Summary(Net to Net) Gross PV Debt Service Savings_ 286,026.55 Effects of changes in Credit Enhancement Expenses (212,958.69) Net PV Cashflow Savings 2.715%(Ik[C) 73,067.86 Net Present Value Benefit $73,067.86 Net PV Benefit/ $3,510,000 Refunded Principal — 1082% Net PV Benefit/ $3,485,000 Refunding Principal _ — — 2.097% Refunding Bond Information Refunding Dated Date _ _ 6/19/2018 Refunding Delivery Date _ 6/19/2018 j 18A Wloo 10.505 GO TE 5.2 1 Cur Rev 10A BAB 5/22/2018 2:41 PM Speer Financial, Inc. Registered Municipal Advisor Page 2