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Official Statement Prepared by: R. V. NORENE & Associates - A Crowe Chizek Company NEW ISSUE Investment Rating: Date of Sale: Tuesday, October 15, 2002 Moody's Investors Service, Inc. . . . A3 11:00 A.M., C.D.T. PRELIMINARY (Outstanding Bonds, Review Requested) OFFICIAL STATEMENT $2,200,000 CITY OF GENOA DeKalb County, Illinois GENERAL OBLIGATION BONDS, SERIES 2002 ($1,950,000 Series 2002A and $250,000 Series 2002B) (Bank Qualified) BOND DETAILS Fully Registered Bonds issued under the Global Book Entry System (the Depository Trust Company will act as securities depository - - see page 11) . . . Initially Dated November 1, 2002 (bonds issued thereafter upon each exchange or transfer will be dated so that no gain or loss of interest will result from such transfer or exchange) . . . Due Serially December 1, 2003-2012 . . . Denomination multiples of $5,000 . . . The record date shall be the 15th day of the calendar month next preceding an interest payment date . . . Principal payable at American National Bank and Trust Company of Chicago, Chicago, Illinois which is Bond Registrar and Paying Agent. Interest due June 1, 2003 and semiannually thereafter payable by check or draft mailed by the Bond Registrar to the registered owners . . . Bonds due December 1, 2003-2009, inclusive, are not callable in advance of maturity. Bonds due December 1, 2010-2012 are callable in whole or in part and, if in part, in such order of maturity as determined by the City and within a maturity by lot beginning December 1, 2009 and any date thereafter at par plus accrued interest to the date of redemption. Notice of such redemption shall be given once not less than 30 days prior to the date of redemption by mail to the registered holders thereof. MATURITIES - December 1 Series 2002 Series 2002 Coupon Reoffering Coupon Reoffering Year A B Total Rate Yield Year A B Total Rate Yield MUNICIPAL / PUBLIC FINANCE CONSULTANTS 2003 .. $ 210,000 $ 40,000 $ 250,000 % % 2008 .. $ 270,000 $ 30,000 $ 300,000 % % MUNICIPAL / PUBLIC FINANCE CONSULTANTS 2004 .. 205,000 45,000 250,000 % % 2009 .. 265,000 35,000 300,000 % % 2005 .. 205,000 45,000 250,000 % % 2010 .. 100,000 - 0 - 100,000 % % 2006 .. 250,000 25,000 275,000 % % 2011 .. 100,000 - 0 - 100,000 % % 2007 .. 245,000 30,000 275,000 % % 2012 .. 100,000 - 0 - 100,000 % % $1,950,000 $250,000 $2,200,000 PURPOSE, SECURITY AND LEGALITY The proceeds of the Series 2002A Bonds will be used: (1) to call and redeem at par plus accrued interest on December 1, 2002 the $1,200,000 Series 1993 Bonds due December 1, 2003-2009; and (2) for water and sewer system improvements including improvements to the water and sewer system which are necessary to meet the City's growth needs. Additional information regarding the improvement s can be found in "This Issue" on page 6. Proceeds of the Series 2002B Bonds will be used to call and redeem $160,000 of 6% installment debt and provide $90,000 for capital improvements. These Bonds, in the opinion of bond counsel, Katten Muchin Zavis Rosenman, Chicago, Illinois, will constitute valid and legally binding general obligations of the City of Genoa, Illinois, payable both as to principal and interest from ad valorem taxes levied against all taxable property therein, without limitation as to rate or amount. The Series 2002A Bonds have been authorized as "Alternate Bonds" under provisions of Section 15 of the Local Government Debt Reform Act (30 Illinois Compiled Statutes 350) and, pursuant thereto, the City has additionally pledged the revenues derived from the Waterworks and Sewerage System of the City. The Series 2002B Bonds have also been authorized as "Alternate Bonds" and pursuant thereto, the City has pledged its Utility Taxes. The City covenants to collect and apply such additional revenues to the payment of the Series 2002A and 2002B Bonds and the provision of not less than an additional .25 times the annual debt service on the Bonds. The City covenants that, prior to the abatement of any taxes on the Series 2002A or 2000B Bonds, it will have the necessary offsetting cash on hand. The City will furnish the written approving opinion of said bond attorneys evidencing legality of each Series of the Bonds. See the Official Notice of Sale on page 16 for a summary of bond counsel's opinion as it relates to tax exemption. Interest on the Bonds is not exempt from Illinois income taxes. For additional disclosure regarding: (1) the Tax Reform Act of 1986; and (2) the City's decision to designate this issue as a "Qualified Tax-Exempt Obligation", see page 2. STATEMENT OF INDEBTEDNESS (Including This Issue) As Per Cent of Per Capita Amount Applicable Assessed Estimated (2000 Census as of Oct. 15, 2002 Value True Value Pop. = 4,169) Assessed Valuation of Taxable Real Property, 2001 . . $ 52,514,765 100.00% 33.33% $ 12,596.49 Estimated True Value of Taxable Real Property, 2001 . 157,544,295 300.00% 100.00% 37,789.47 Direct General Obligation Bonded Debt(1): Payable From Property Taxes . . . . . . . . . . . . . . . . . . . . $ - 0 - 0.00% 0.00% $ - 0 - Self-Supporting Debt(2) . . . . . . . . . . . . . . . . . . . . . . . . . _2,350,000 4.47% 1.49% 563.68 Total Direct Bonded Debt . . . . . . . . . . . . . . . . . . . . . . . $ 2,350,000 4.47% 1.49% $ 563.68 Overlapping Bonded Debt Payable from Property Taxes(3): Schools . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 7,796,161 14.85% 4.95% $ 1,870.03 Other than Schools . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 567,582 1.08% 0.36% _ 136.14 Total Overlapping Bonded Debt . . . . . . . . . . . . . . . . . . $ 8,363,743 15.93% 5.31% $ 2,006.17 Total Direct and Overlapping Bonded Debt . . . . . . . . . . . . $ 10,713,743 20.40% 6.80% $ 2,569.85 Total Direct and Overlapping Exclud. Self-Supporting $ 8,363,743 15.93% 5.31% $ 2,006.17 Notes: 1. As a non-home rule unit under the 1970 Illinois Constitution, the City has a debt limit of 8.625% of its taxable valuation or $4,529,398. At October 15, 2002, none of the City's debt limit is encumbered. 2. The City has chosen in the past to fund certain projects with general obligation bonds and abate the taxes thereon from other revenues. For additional detail on the City's self-supporting general obligation debt, see table on page 7. 3. See "Detailed Overlapping Bonded Indebtedness Payable From Property Taxes at October 15, 2002" on page 7. AUTHORIZATION This Preliminary Official Statement has been prepared under the authority of the City Council of the City of Genoa, DeKalb County, Illinois by R.V. Norene & Associates, Municipal/Public Finance Consultants, and is authorized for distribution to prospective underwriters and purchasers of these Bonds. The information herein has been compiled from sources believed to be reliable, but is not guaranteed. As far as any statements herein involve matters of opinion, whether or not so stated, they are intended as opinion and not representations of fact. This Preliminary Official Statement is dated October 3, 2002. Lake & Waukegan Office Center, Suite 215 • 1701 Lake Avenue • Glenview, IL 60025 847-998-9848 • FAX 847-998-5503 • www.rvnorene-assoc.com TAX EXEMPTION In 1986, the United States Congress enacted legislation (the "Tax Reform Act of 1986") adopting the Internal Revenue Code of 1986 (the "Code"). The Code sets forth certain requirements that must be satisfied on a continuing basis in order to preserve the exemption from Federal income taxes of interest on the Bonds. Among these requirements (all of which the City in the Bond Ordinance covenants to comply with) are the following: A. Limitations on Private Use . The Code includes limitations on the amount of Bond proceeds that may be used in the trade or business of, or used to make or finance loans to, persons other than governmental units. B. Investment Restrictions . Except during certain "temporary periods", proceeds of the Bonds and investment earnings thereon (other than amounts held in a reasonably required reserve or replacement fund, if any, or as part of a "minor portion") may not be invested in taxable investments having a yield that is "materially higher" (1/8 of one percent) than the yield on the Bonds. C. Rebate of Arbitrage Profit . Unless the City qualifies for one of several exceptions, earnings from the investment of the "gross proceeds" of the Bonds in excess of the earnings that would have been realized if such investments had been made at a yield equal to the yield on the Bonds are required to be paid to the United States of America at periodic intervals. For this purpose, the term "gross proceeds" includes the original proceeds of the Bonds, amounts received as a result of investing such proceeds and amounts to be used to pay debt service on the Bonds. In the event that the City fails to comply with the requirements of the Code, interest on the Bonds may become subject to Federal income taxation retroactively to the date of issue. In such event, the Bond Ordinance does not contain any specific provision for acceleration of the Bonds nor provide that any additional interest or penalties will be paid to the owners of the Bonds. Under certain limited circumstances and upon payment of a statutory penalty, the loss of tax exemption for failure to make timely payment of the rebate owed to the United States of America may be waived by the Internal Revenue Service ("IRS"). Such waiver is entirely at the discretion of the IRS. Bonds Purchased at a Premium or at a Discount The difference (if any) between the initial price at which a substantial amount of each maturity of the Bonds is sold to the public (the “Offering Price”) and the principal amount payable at maturity of such Bonds is given special treatment for Federal income tax purposes. If the Offering Price is higher than the maturity value of a Bond, the difference between the two is known as “bond premium”; if the Offering Price is lower than the maturity value of a Bond, the difference between the two is known as “original issue discount”. Bond premium and original issue discount are amortized over the term of a Bond on the basis of the owner’s yield from the date of purchase to the date of maturity, compounded at the end of each accrual period of one year or less with straight line interpolation between compounding dates, as provided more specifically in the Income Tax Regulations. The amount of bond premium accruing during each period is subtracted from the owner’s tax basis in the Bond. The amount of original issue discount accruing during each period is treated as interest that is excludable from the gross income of the owner of such Bond for Federal income tax purposes, to the same extent and with the same limitations as current interest, and is added to the owner’s tax basis in the Bond. A Bond’s adjusted tax basis is used to determine whether, and to what extent, the owner realizes taxable gain or loss upon the disposition of the Bond (whether by reason of sale, acceleration, redemption prior to maturity or payment at maturity of the Bond). Owners who purchase Bonds at a price other than the Offering Price, after the termination of the initial public offering or at a market discount should consult their tax advisors with respect to the tax consequences of their ownership of the Bonds. In addition, owners of Bonds should consult their tax advisors with respect to the state and local consequences of owning the Bonds; under the applicable provisions of state or local income tax law, bond premium and original issue discount may give rise to taxable income at different times and in different amounts than they do for Federal income tax purposes. QUALIFIED TAX-EXEMPT OBLIGATIONS--DESIGNATION OF THIS ISSUE Section 265 of the Code provides that certain issues designated as "qualified tax-exempt obligations" and purchased by financial institutions (either from the City or in a secondary market transaction) may be disregarded in computing the proportional disallowance of interest expense provided in such Section. In the Bond Ordinance, the City has designated the Series 2002A and Series 2002B Bonds as "qualified tax-exempt obligations". In addition, as required by Section 265 of the Code, the City has represented that the reasonably anticipated amount of "tax-exempt obligations" that will be issued by the City and all subordinate entities of the City during 2002 will not exceed $10,000,000 and has covenanted that it will not designate and issue more than $10,000,000 aggregate principal amount of "tax-exempt obligations" during 2002. For purposes of the foregoing sentence, the term "tax-exempt obligations" includes "qualified 501(c)(3) bonds" (as defined in Section 145(a) of the Code) but does not include other "private activity bonds" (as defined in Section 141(a) of the Code). Katten Muchin Zavis Rosenman's legal opinion will also state: "Pursuant to the Bond Ordinance, the City has designated the Bonds as 'qualified tax-exempt obligations' as described in Section 265(b)(3)(B) of the Code." 2 CITY OF GENOA DeKalb County, Illinois ELECTED OFFICIALS Todd A. Walker Mayor ALDERMEN Glennis Carroll William Lee Laurie B. Curley Craig Pulley Claude Doty JoAnn Watson Earl Jursich Pam Wesner Wendy Shaneen City Clerk APPOINTED OFFICIALS David C. Jepson William P. Brady Budget Officer City Attorney GENERAL INFORMATION The City of Genoa is located in the northeastern part of DeKalb County 60 miles west of downtown Chicago and 20 miles southeast of Rockford, the State’s second largest city. The State’s second largest public university, Northern Illinois University, is located in the City of DeKalb, which is twelve miles south of Genoa. The county seat of DeKalb County, the City of Sycamore, is approximately seven miles south of Genoa. Genoa’s Main Street runs on the line of the historic Galena-Chicago trail. One of Genoa’s first buildings was the old stagecoach building known as the Pacific House, which still stands on Main Street. The City was settled in 1835 by Thomas Madison, a Revolutionary War soldier from Ashtabuhla County, Ohio. He named Genoa after a town of the same name in New York State. Genoa was incorporated as a village in 1876 and as a city on September 9, 1911. During its early history, Genoa flourished primarily as a service center for the surrounding agricultural community. The population of Genoa was 1,690 at the 1950 Census, increasing to 2,318 in 1960 and to 3,003 in 1970. Population was stable in the 1970’s and 1980’s, increasing to 3,083 at the 1990 Census. The population increased to 4,169 at the 2000 Census (up 35.2%), as the City participated in the growth affecting DeKalb County (the County’s population increased 14.2% between 1990 and 2000). The City’s location and proximity to an expanding Chicago Metropolitan area will likely fuel future growth of the City. According to projections by the U.S. Census Bureau and the DeKalb County Economic Development Corporation, the population of Genoa will increase to 5,003 by 2010 and to 6,004 by 2020. The City of Genoa has access to an excellent transporation network. I-88, the East-West Tollway which connects Chicago and the Quad Cities, is 15 miles south of the City. I-90, the Northwest Tollway which connects Chicago to Rockford, has two interchanges north of the City within 12 miles of Genoa. State routes 72 and 23 intersect within the City limits. O’Hare International Airport is approximately an hour’s driving time to the east and general aviation services are available at DeKalb Taylor Municipal Airport (12 miles south) and Rockford Airport (20 miles northwest of the City). Two railroad lines provide freight service to the City. ECONOMIC INFORMATION The City of Genoa is an established residential community, with 78.0% of the City’s tax base classified residential and 21.7% commercial/industrial. The City’s population increased 35.2% in the 1990’s, from 3,083 at the 1990 Census to 4,169 at the 2000 Census. This growth is evident in the following table of building permit information. In the last 11 years, 436 new residential units were constructed, including 386 single-family and 50 multi-family. The average value of new single family homes (excludes the value of land and builders’ profit) has increased each year since 1992, to $150,714 in 2002. BUILDING PERMIT ACTIVITY New Residential Single Family(2) Multiple Family Calendar No. Average No. Average Total Years Units Value Value Units Value Value Value 1992(1) ............ 10 $ 980,000 $ 98,000 6 $ 400,000 $ 66,667 $1,380,000 1993(1) ............ 4 400,000 100,000 0 - 0 - - 0 - 400,000 1994(2) ............ 24 2,640,000 110,000 6 440,000 73,333 3,080,000 1995(2) ............ 72 8,300,000 115,278 6 460,000 76,667 8,760,000 1996(2) ............ 58 6,860,000 118,276 28 1,950,000 69,643 8,810,000 1997(2) ............ 47 5,835,000 124,149 0 - 0 - - 0 - 5,835,000 1998(2) ............ 33 4,220,000 127,879 4 325,000 81,250 4,545,000 1999(2) ............ 38 5,110,000 134,474 0 - 0 - - 0 - 5,110,000 2000(2) ............ 48 6,680,000 139,167 0 - 0 - - 0 - 6,680,000 2001(2) ............ 38 5,490,000 144,474 0 - 0 - - 0 - 5,490,000 2002(3)(4) .......... 14 2,110,000 150,714 0 - 0 - - 0 - 2,110,000 3 Notes: 1. DeKalb Economic Development Corporation. 2. City of Genoa. 3. Through June 30, 2002. 4. In June 2002, the City of Genoa annexed the proposed River Bend subdivision which will include a total of 496 units: 269 single family, 103 senior housing, 54 townhouses, and 70 apartment units (build-out expected over a 10-year period). This development petitioned for annexation to obtain the City’s excellent complement of services. Although primarily residential in nature, the City also has an established industrial and commercial base. Among the City’s largest employers are AG Communication Systems Corporation, a manufacturer of telecommunications equipment which employs approximately 700; Greenlee Textron, a manufacturer of electrical contractor tools which employs 175; Sycamore Precision Machine, Inc., which is involved in metal fabrication and powder coating and has 73 employees; and Polar Tech, which makes insulated shipping containers and employs 46. Other large employers in the City include the unit school district, a long-term care facility, the City, the Park District, and two banks. Following is a list of the City’s largest employers, based on information from the DeKalb County Economic Development Corporation. TEN LARGEST EMPLOYERS(Note 1) No. of Rank Employer Business/Service Employees 1.......... AG Communication Systems Corp.......... Telecommunications Equipment ............... 700 2.......... Genoa-Kingston C.U.S.D. No. 424 ......... Unit School District (K-12) .................... 215(2) 3.......... Greenlee Textron ..................... Electrical Contractor Tools ................... 175 4.......... Genesis Enterprises, Inc. ................ Long-Term Care Facility ..................... 100 5.......... Sycamore Precision Machine, Inc. ......... Metal Fabrication; Powder Coating ............. 73 6.......... City of Genoa ........................ Municipal Government ...................... 47(3) 7.......... Polar Tech .......................... Insulated Shipping Containers................. 46 8.......... Genoa Park District .................... Parks and Recreation ....................... 40(3) 9.......... Citizens First National Bank of Genoa....... Bank ................................... 20 10.......... Resource Bank ....................... Bank ................................... 15 Notes: 1. From a DeKalb County Economic Development Corporation canvass of employers in June 2002 and subsequent telephone updates. 2. Includes certified and classified employees. 3. Includes part-time employees. Residents of Genoa also benefit from growing employment opportunities in surrounding areas, including the City of Rockford, the Fox Valley communities along the I-90 corridor, and the nearby cities of DeKalb and Sycamore (the mean travel time to work for Genoa residents was 27.0 minutes at the 2000 Census). The largest employer in DeKalb County is Northern Illinois University, the State’s second largest public university with an enrollment of over 24,000. The largest employers in the County, many of which are in the DeKalb/Sycamore area approximately 10 miles south of Genoa, are listed below. LARGEST EMPLOYERS IN DEKALB COUNTY(Note) No. of Rank Employer/Location Business/Service Employees 1.......... Northern Illinois University (DeKalb) ........ Four-Year Public University................... 4,139 2.......... AG Communication Systems Corp. (Genoa) .. Telecommunication Equipment ................ 700 3.......... Kishwaukee Hospital (DeKalb) ............ Hospital ................................. 630 4.......... Ideal Industries (Sycamore/DeKalb) ........ Electrical Tools and Supplies ................. 547 5.......... DeKalb Community Unit School District No. 428 (DeKalb) ........................... Unit School District ......................... 510 6.......... DeKalb County (Sycamore) .............. County Government ........................ 475 7.......... Alloyd Co., Inc. (DeKalb) ................ Plastic Packaging and Machinery .............. 400 8.......... Monsanto Global Seed Group (DeKalb) ..... Seed, Livestock Research and Production ........ 400 9.......... MWC-EMD (Sycamore) ................. Wire Harnesses ........................... 272 10.......... 3M (DeKalb) ......................... Midwest Distribution Center .................. 250 11.......... AGCO Caterpillar Agriculture Products (DeKalb) Tractor Manufacturing and Assembly............ 250 12.......... CTS Frequency Control (Sandwich) ........ Frequency Control Devices ................... 250 13.......... Nestle Co. (DeKalb)................... Distribution Facility ......................... 230 14.......... West Irving Die Casting (Sandwich) ....... Aluminum Die Casting ...................... 213 15.......... Auto Meter (Sycamore) ................ Tachometers, Speedometers, Auto Gauges ....... 210 Note: From a DeKalb County Economic Development Corporation canvass of employers in June 2002. The City of Genoa benefits particularly from two strengths of DeKalb County: Northern Illinois University and a strong agricultural economy. Northern Illinois University - Founded as a teachers college in 1895, Northern received university status in 1957. Its enrollment of roughly 6,000 grew quickly thereafter to a level of approximately 22,000 (22,817 in 1970, 20,249 in 1980, and 23,783 in 2001). NIU’s fall 2002 enrollment will exceed 24,000. In addition to its well-established programs in education, business, professional studies, liberal arts and sciences, and visual and performing arts, Northern established a law school in 1978 and an engineering program in 1985. The DeKalb campus includes 58 major buildings on 756 acres. The university has established satellite campuses in Hoffman Estates, Rockford, Naperville, and Oregon, Illinois. The insurance replacement value of the University’s buildings is $828.6 Million. The University confers 21 types of degrees with 51 undergraduate majors, 70 graduate majors, and one professional degree (juris doctor). Forty-one academic departments are housed within seven different colleges: Business, Education, Engineering and Engineering Technology, Law, Liberal Arts and Sciences, Health and Human Services, and Visual and Performing Arts. Other academic units include the Center for Biochemical and Biophysical Studies, the Center for Burma Studies, the Center for Governmental Studies, the Center for Plant Molecular Biology, the Center for Southeast Asian Studies, the University Outreach Services, the Graduate School, International and Special Programs, the Social Science Research Institute, and the University Libraries. NIU’s research library contains nearly 2 4 million volumes and subscriptions to over 15,000 periodicals. The University reports that it employs 4,139 faculty and staff. Agriculture - DeKalb County’s topography, soils and climate have made it possible for local farmers to grow a variety of crops and livestock. According to the 1997 Census of Agriculture, the market value of agricultural products sold in DeKalb County was approximately $183.4 Million; of this amount, 61.7% was attributable to cash crops and 38.3% to livestock/poultry. According to the United States Department of Agriculture (USDA), the term “prime farmland” describes the land which is best suited for agricultural production (based upon physical criteria). According to the USDA, 98% of the existing cropland in the County is considered prime farmland. The high quality of the agricultural land in the County has contributed to the wealth of the agricultural community in the County. The table below summarizes DeKalb County agricultural statistics from the past five Agricultural Censuses. DEKALB COUNTY AGRICULTURAL STATISTICS Agricultural Censuses 1978 1982 1987 1992 1997 Number of Farms .............. 1,216 1,150 1,063 942 828 Land Area (Acres) in Farms (%) ... 390,685(94%) 395,767(95%) 384,277(93%) 377,512(91%) 368,076(88%) Average Size Farm ............ 321 acres 344 acres 362 acres 401 acres 445 acres Value: Land & Buildings Per Farm . $931,234 $845,837 $612,973 $912,437 $1,439,884 Land & Buildings Per Acre . $ 2,738 $ 2,535 $ 1,700 $ 2,204 $ 3,369 The very high value of agricultural assets in DeKalb County is apparent in the following table, which compares the value of land and buildings in DeKalb County to that of surrounding Midwestern states and the United States. Of note, Illinois’ $773,141 average farm value was the highest of the surrounding states, which was 36.5% greater than that of Iowa, the second ranking state and DeKalb County’s $1,439,884 was 86.2% greater than that reported for the State of Illinois. VALUE OF LAND & BUILDINGS - 1997 CENSUS OF AGRICULTURE Average per Farm Average per Acre DeKalb County DeKalb County Amount as Percent of Amount as Percent of DeKalb County ............... $1,439,884 100.0% $3,369 100.0% State of Illinois ................ 773,141 186.2% 2,126 158.5% State of Iowa ................. 566,587 254.1% 1,697 198.5% State of Indiana ............... 532,663 270.3% 2,064 163.2% State of Missouri .............. 430,533 334.4% 1,069 315.1% State of Ohio ................. 414,773 347.1% 2,039 165.2% State of Michigan .............. 358,166 402.0% 1,671 201.6% State of Wisconsin ............. 282,135 510.3% 1,244 270.8% United States................. $449,748 320.1% $ 933 361.1% Other Economic Information At the 2000 Census, the City of Genoa’s median household income was $48,125, which was higher than the State’s $46,590. The City’s median family income was $53,523, compared to $55,545 for State. The unemployment rate at the 2000 Census was 3.5% for the City and 3.9% for the State of Illinois. The percent of families below the poverty level at the 2000 Census was 2.1% for the City, which was significantly less than the 7.8% reported for the State as a whole. The table below compares the 2000 Census home values of the City of Genoa, DeKalb County, the nine-county Chicago Primary Metropolitan Statistical Area (“PMSA”), the balance of the State, and the State itself. The City of Genoa’s median home value was reported at $120,700. Although considered part of the Chicago PMSA, DeKalb County does not share the high housing costs of certain parts of the metropolitan area because of its location at the western edge of the PMSA. When the very high housing values applicable to the Chicago PMSA are separated from the balance of the State, Genoa’s home values, with 82.7% valued above $100,000, compare favorably to the “Downstate Counties” where only 31.4% were valued above $100,000. 2000 CENSUS--MEDIAN HOME VALUE (Owner Occupied Condominium and Non-Condominium Units) State of Illinois 93 Counties 9 County City of DeKalb Outside Chicago State Genoa County Chicago PMSA PMSA* Total Median Home Value ............ $120,700 $135,900 $ N.A. $ 166,200 $ 130,800 Number Single Family Homes ..... 966 16,148 956,823 1,513,515 2,470,338 Percent of Homes Valued: Under $50,000 .............. - 0 - .5% 21.9% 1.3% 9.3% $50,000-$99,999 ............. 17.3% 17.2% 46.7% 13.5% 26.4% $100,000-$149,999 ........... 68.1% 45.5% 19.5% 26.2% 23.6% Above $150,000 ............. 14.6% 36.8% 11.9% 59.0% 40.7% Total ................... 100.0% 100.0% 100.0% 100.0% 100.0% *Includes Cook, DuPage, Lake, Kane, McHenry, Will, Kendall, DeKalb and Grundy Counties. 5 MUNICIPAL AND OTHER GOVERNMENTAL SERVICES The City of Genoa was incorporated as a city in 1911 and operates under a Mayor/Aldermanic form of government. The Mayor functions as Chief Executive Officer overseeing the daily operations of the municipality. Eight aldermen are elected to overlapping four-year terms. The City provides the following services: police services, street and alley maintenance, water supply and sewer treatment, refuse pick-up and disposal, building inspection and zoning, public improvements and community development, and general administrative services. This City’s Comprehensive Plan, which was adopted on December 3, 1996, is currently being updated. The City has 20 full-time and 27 part-time employees. General administrative staff are housed at City Hall, located in the downtown area, which was remodeled in 1992. The Police Department, also located in the City Hall building, has 10 full-time sworn personnel, including the chief, two sergeants, and seven patrol officers. The City’s Enhanced 911 system, which is part of DeKalb County’s system, became operational in 1991. Fire protection and emergency medical services are provided by a separate fire protection district. The Public Works Department is housed in a separate public works facility. None of the City’s employees are in collective bargaining units. The City of Genoa owns and operates a water supply and distribution system and a sewage collection and treatment system. The City’s current water system consists of 3 wells, 2.4 miles of water mains, and 2 water storage facilities with total storage capacity of 0.55 million gallons (MG). The water system has 1,620 customers and a service area of 2.3 square miles, including the City and certain surrounding subdivisions. The water plant’s capacity is 0.8 MGD, which exceeds the current demand of 0.4 MGD. The City’s sewage collection system consists of 17.1 miles of lines. The City’s wastewater treatment plant, constructed in 1975, has a treatment capacity of 0.78 MG versus a current demand of 0.48 MG. This Issue Proceeds of the Series 2002A Bonds will be used: (1) to call and redeem at par plus accrued interest on December 1, 2002 the $1,200,000 Series 1993 Bonds due December 1, 2003-2009; and (2) to make certain water and sewer system improvements, including water main and sanitary sewer improvements, water meter replacement, and improvements to the wastewater treatment plant. Proceeds of the Series 2002B Bonds will be used to call and redeem $160,000 of 6% installment notes and provide $90,000 for capital projects, including sidewalk and downtown streetscape improvements. The Series 2002A and Series 2002B Bonds have been authorized as “Alternate Bonds.” The City has pledged the revenues of its Waterworks and Sewerage System as the alternate revenue source for the Series 2002A Bonds and its utility tax revenues as the alternate revenue source for the Series 2002B Bonds. The City covenants to collect and apply such additional revenues to the payment of the Series 2002A and 2002B Bonds and the provision of not less than an additional .25 times the annual debt service on the Bonds. The City covenants that, prior to the abatement of any taxes on the Series 2002A or Series 2002B Bonds, it will have the necessary offsetting cash on hand. The City reports no material litigation which would affect its ability to issue or pay the Series 2002A or 2002B Bonds. Pension Fund Obligations The City is required by State law to annually provide funds sufficient to accumulate the actuarial requirements of its pension fund obligations. All full-time employees are covered by the Illinois Municipal Retirement Fund (IMRF). As of December 31, 2002, the actuarial value of assets exceeded the actuarial accrued liability in the City’s IMRF account by $305,156 (123.39% funded). The IMRF annually determines the contribution rate necessary to provide full funding of the unfunded prior service costs, including interest, over the remaining amortization period. Schools and Other Governmental Services The City is served by Genoa-Kingston Community Unit School District No. 424, a unit school district which currently operates two elementary schools, one middle school, and one high school. Of the District’s schools, all but one elementary school is located in the City of Genoa. District 424, which serves a 67 square mile area, was created in 1947 when the school districts associated with the City of Genoa and the Village of Kingston (3 miles west of Genoa) combined to form the current district. The District has a total enrollment of 1,700 students and employs 215 certified and classified staff. On April 4, 2001, voters approved the sale of $14.6 million in general obligation bonds to construct a new high school building. These bonds were subsequently sold and, together with a $7.6 million grant from the State of Illinois, are being used to construct a 170,000 square foot high school building. When the new high school opens in fall 2003, the District will operate three elementary schools with grade centers pre-K to 1, grades 2-3, and grades 4-5, respectively; the current high school will be the middle school (grades 6-8); and the new high school will have grades 9-12. Kishwaukee Community College, located approximately 18 miles southwest of Genoa, is a fully accredited, comprehensive two-year undergraduate institution which was founded in 1968. With a current enrollment in excess of 5,000 students, it offers Associate of Arts or Science degrees for students planning to transfer to four-year institutions, as well as certificate programs, adult education, and continuing education programs. The Genoa Township Park District owns and operates park and recreational facilities in and around the City. The Park District serves an area of 40 square miles and owns 66 acres of land. The District maintains 3 parks including one site which has the District’s administrative building and outdoor swimming pool facility. The District conducts a year-round program of recreation, sports and activities for residents of all ages. Additional open space is provided by the DeKalb County Forest Preserve District, which operates two nearby nature preserves, the Russell Preserves and the Knute Oleson Forest Preserve. 6 Library services are provided by the Genoa Public Library District. The Genoa Library was founded in 1922 by a local women’s organization, which operated it for 38 years with volunteer librarians. In 1962 it became a tax-supported city library and is now a public library district (separate taxing district). The Library has a collection of more than 25,000 books and other items, and offers computer access and special programs for residents. The District is part of the Northern Illinois Library System, which enables local library users to utilize the collections and facilities of 147 public, special, school, and academic libraries. The Genoa-Kingston Fire Protection District, manned by 30 paid-on-call firefighters, provides fire protection and emergency medical services to a 65 mile area including the City of Genoa. The fire district operates two fire stations and one emergency medical facility. Emergency medical services are provided on a contractual basis by four full-time and 15 paid-on-call emergency medical personnel. Regional hospital facilities are located in Sycamore, DeKalb, Belvidere, and Rockford. FINANCIAL INFORMATION RETIREMENT SCHEDULE OF OUTSTANDING CITY GENERAL OBLIGATION BONDS (Note 1) Principal Maturities as of November 1, 2002 Self-Supporting Cumu- Series Series Series lative December 1 1993(2) 2002A(3) 2002B(4) Total Percent 2002 ........ $150,000 $ - 0 - $ - 0 - $ 150,000 6.4% 2003 ........ - 0 - 210,000 40,000 250,000 17.0% 2004 ........ 205,000 45,000 250,000 27.7% 2005 ........ 205,000 45,000 250,000 38.3% 2006 ........ 250,000 25,000 275,000 50.0% 2007 ........ 245,000 30,000 275,000 61.7% 2008 ........ 270,000 30,000 300,000 74.5% 2009 ........ 265,000 35,000 300,000 87.2% 2010 ........ 100,000 - 0 - 100,000 91.5% 2011 ........ 100,000 100,000 95.7% 2012 ........ 100,000 100,000 100.0% $150,000 $1,950,000 $250,000 $2,350,000 Notes: 1. The City has no revenue bonds or installment debt outstanding. 2. The Series 1993 bonds are being paid from water and sewer revenues and utility taxes. The callable maturities (due 2003-2009) will be redeemed from proceeds of these Series 2002A Bonds. 3. The proceeds of the Series 2002A Bonds will be used to call and redeem on December 1, 2002 the $1,200,000 Series 1993 due December 1, 2003-2009 and to provide approximately $750,000 for water and sewer improvements. The Series 2002A Bonds are alternate bonds payable from revenues of the City’s Waterworks and Sewerage System. 4. The proceeds of the Series 2002B Bonds will be used to call and redeem $160,000 of 6% installment debt and provide approximately $90,000 for capital improvements. The Series 2002B Bonds are alternate bonds payable from pledged utility tax revenues. DETAILED OVERLAPPING BONDED INDEBTEDNESS PAYABLE FROM PROPERTY TAXES AT OCTOBER 15, 2002 City's Applicable Percent of Share (Note 1) City's 2001 of Gross Debt to be Paid Real Property Gross From Real Property Taxes in Taxing Body Bonded Debt Percent Amount SCHOOL DISTRICTS: Unit School District: Genoa-Kingston Comm. Unit S.D. No. 424 .. 100.0% $17,175,000 40.867% $ 7,018,904 Community College: Kishwaukee Comm. College No. 523 ...... 100.0% 20,700,000 3.755% 777,257 Total School Districts ........................................................................ $ 7,796,161 OTHER THAN SCHOOL DISTRICTS: DeKalb County, Incl. Forest Preserve District 100.0% $10,475,000(2) 3.999% $ 418,895 Genoa Township Park District ........... 98.7% 230,000(3) 64.646% 148,687 Total Other Than Schools .................................................................... $ 567,582 Notes: 1. City's share based upon 2001 Real Property valuations. 2. Includes $10,475,000 outstanding in the name of the DeKalb County Public Building Commission, which bonds are payable from lease payments made by the County to the Commission. Excludes $1,290,000 alternate bonds issued by the County which are payable from pledged non-property tax sources. The Forest Preserve District has no debt outstanding. 3. Excludes $1,010,000 alternate bonds which are payable from pledged non-property tax sources. EQUALIZED ASSESSED VALUATION FOR TAXING PURPOSES Real Property as of January 1 of Levy Year Tax Net For Taxing Purposes Levy Less Percent Increase Year Gross Exemptions(1) Amount Over Prior Year 1997 ............... $ N.A. $ N.A. $40,719,027 +10.3% 1998 ............... N.A. N.A. 43,526,423 +6.9% 1999* .............. N.A. N.A. 45,253,927 +4.0% 2000 ............... 53,789,193 4,620,395 49,168,258 +8.6% 2001 ............... 57,309,361 4,794,596 52,514,765(2) +6.8% * Quadrennial Reassessment Year. 7 Notes: 1. Includes 2001 exemptions for the Senior Citizens' Homestead ($402,000), Senior Citizens Tax Freeze ($667,752), General Homestead ($3,481,459), Homestead Improvement ($200,220), Veterans and Veteran’s Lodge Freeze ($41,587), and Small Parcels ($1,578). The Senior Citizens' Homestead Exemption, effective for tax years 1984 and following, is a reduction of $2,000 ($1,500 in levy years 1972-1983) in the equalized assessed valuation of real property owned and occupied by a person 65 years of age or older. The Senior Citizen Tax Freeze Homestead Exemption, first effective in levy year 1994, provides that persons 65 or older with a household income of less than $40,000 (up from $35,000 in levy year 1998 and prior) may receive an exemption in the amount of the difference between the current equalized assessed value of their principal residence and the lowest previous assessment in a qualifying year, even if the senior was not eligible for some intervening year. The General Homestead Exemption is available to owner-occupied residential property; the amount of the exemption is the increase in the current year's equalized assessed valuation above the 1977 tax year equalized assessed valuation, with a maximum of $1,500 in 1978, $3,000 between 1979 and 1982 and $3,500 thereafter. The Homestead Improvement Exemption allows homeowners to make up to $30,000 in improvements without increasing the assessed valuation of their property for at least four years. Under the Small Parcels Exemption, properties with assessed values of $150 or less are exempt from property taxes. 2. The City of Genoa is in Genoa Township (98.7% of the City’s 2001 equalized assessed valuation) and Kingston Township (1.3%). TEN LARGEST TAXPAYERS(Note 1) Equalized Assessed Percent of Rank Taxpayer Business/Properties Valuation(2) City(3) 1 ... AG Communications Systems Corp. ........ Telecommunications Equipment ...... $1,408,041 2.7% 2 ... Individual Taxpayer .................... Apartments ..................... 904,488 1.7% 3 ... Farmers State Bank and Trust Co., Tr. 145 ... Apartments ..................... 738,319 1.4% 4 ... American Mobile Home Communities ....... Industrial ....................... 552,982 1.1% 5 ... Individual Taxpayer .................... Apartments ..................... 500,548 1.0% 6 ... Greenlee Textron Tool Company ........... Electrical Contractor Tools .......... 390,805 0.7% 7 ... Resource Bank........................ Bank.......................... 387,295 0.7% 8 ... Individual Taxpayer .................... Downtown Retail Buildings .......... 360,484 0.7% 9 ... Individual Taxpayer .................... Industrial/Commercial ............. 308,983 0.6% 10 ... Individual Taxpayer .................... Office Complex .................. 292,161 0.6% Total Ten Largest Taxpayers ........................................... $5,844,106 11.1% Notes: 1. Source: DeKalb County Supervisor of Assessments Office. 2. Valuations as of January 1, 2001 for 2002 taxing purposes. 3. Total City 2001 Equalized Assessed Valuation of $52,514,765. 1996 AND 2001 TAX BASE DISTRIBUTION BY PROPERTY CLASSIFICATION City of Genoa Taxable Valuation Percent of Total Percentage Property Classification: 1996 2001 Increase 1996 2001 Residential ............ $27,916,857 $40,953,866 +46.7% 75.6% 78.0% Commercial............ 6,165,908 8,647,093 +40.2% 16.7% 16.5% Industrial .............. 2,676,227 2,732,108 +2.1% 7.2% 5.2% Farm................. 136,812 130,314 -4.7% .4% .2% Railroad .............. 30,798 51,384 +66.8% .1% .1% Total .............. $36,926,602 $52,514,765 +42.2% 100.0% 100.0% TAX RATES PER $100 EQUALIZED ASSESSED VALUATION (Levy Years) 2001 Rate Unused City of Genoa: 1997 1998 1999 2000 Rate(1) Limit(2) Margin Corporate ......................... $0.24070 $0.24590 $0.25000 $0.25000 $0.25000 $0.2500 0.0% Bonds and Interest .................. 0.00000 0.00000 0.00000 0.00000 0.00000 None N.A. IMRF/Social Security ................. 0.23340 0.22290 0.12160 0.11200 0.17672 None N.A. Police Protection.................... 0.02460 0.06440 0.07500 0.07500 0.07500 0.0750 0.0% Audit ............................. 0.00000 0.00000 0.00000 0.01330 0.01238 0.0500 75.2% Tort/Liability ....................... 0.14000 0.14480 0.24310 0.22890 0.14282 None N.A. School Crossing Guards .............. 0.00000 0.01150 0.01660 0.01510 0.01429 0.0200 28.6% Workers Compensation............... 0.00000 0.00000 0.00000 0.00000 0.02381 None N.A. Forestry Program ................... 0.04920 0.04600 0.04980 0.05000 0.05000 0.0500 0.0% Total City of Genoa ............... $0.68790 $0.73550 $0.75610 $0.74430 $0.74502 DeKalb County, Inc. Forest Preserve District ..................... $0.86300 $0.86170 $0.87690 $0.88050 $0.89493 Genoa-Kingston C.U.S.D. No. 424 .......... 4.68820 4.73540 4.90940 4.79780 4.88826 Kishwaukee Comm. College Dist. No. 523 .... 0.56420 0.56980 0.56110 0.52720 0.53405 Genoa Township Park District ............. 0.35150 0.42090 0.57630 0.54620 0.53832 Genoa-Kingston Fire Protection District ...... 0.33210 0.33080 0.44280 0.43760 0.43295 Genoa Public Library District .............. 0.23320 0.23440 0.27820 0.26920 0.26464 Township and All Other .................. 0.45840 0.45070 0.45550 0.43220 0.40812 Total(3)......................... $8.17850 $8.33920 $8.85630 $8.63500 $8.70629 City as a Percent of Total ............... 8.4% 8.8% 8.5% 8.6% 8.6% Notes: 1. The City is subject to the provisions of the Property Tax Extension Limitation Act (the "Tax Limitation Act"). The Tax Limitation Act limits the annual growth in the amount of taxes to be extended by individual taxing bodies in DeKalb County, including the City of Genoa, beginning in 2001 (taxes levied in 2000) to the "Extension Limitation" (similar tax cap legislation applicable to non-home rule taxing districts in the Cook County “collar counties” was effective October 1, 1991). The Extension Limitation under the Act is (i) the lesser of 5% or the percentage increase in the Consumer Price Index during the calendar year preceding the levy year or (ii) the rate of increase approved by the voters at a referendum election held pursuant to the Tax Limitation Act. The maximum allowable extension for levy year 2001, as calculated by the County Clerk’s Office, was $394,008, an increase of 7.7% over the levy year 2000 extension for “capped” funds (the addition of $2,079,385 in equalized assessed valuation from “new construction” in the City caused the extension limitation to be in excess of the 3.4% allowed under the law in levy year 2001). The City’s actual extension for capped funds in 2001 was $391,245. Property taxes extended for bonded indebtedness issued prior to the effective date of the Tax Limitation Act (including bonds issued to refund those bonds) together with alternate bonds and limited tax bonds issued subsequent to the effective date of the Act are not included in the extension limitation. 2. As a non-home rule unit under the 1970 Illinois Constitution, the City has statutory tax rate limitations. 3. Rates applicable to the largest tax code which represented 98.7% of the City’s 2001 tax base. 8 TAX EXTENSIONS AND COLLECTIONS(Note 1) (City Purposes Only) Levy Collection Taxes Taxes Collected(3) Year Year Extended Amount(2) Percent 1996 ........................... 1997 $274,129 $274,129 100.00% 1997 ........................... 1998 279,973 279,973 100.00% 1998 ........................... 1999 319,813 319,813 100.00% 1999 ........................... 2000 339,460 339,325 99.96% 2000 ........................... 2001 365,564 365,564 100.00% 2001 ........................... 2002 391,245 - - - - - In Process - - - - - Notes: 1. Summarized from County Treasurer reports. Extensions are after deductions of court-ordered abatements and addition of omitted tax. Excludes road and bridge tax. 2. Taxes paid under protest are included in current collections but are not included as back taxes collected when released to the City after the applicable court action. 3. In DeKalb County, taxes are payable in two equal installments; in 2002, taxes were due on June 3 and September 3. GENERAL FUND Summary Statement of Revenues, Expenditures and Changes in Fund Balance (Fiscal Years Ending April 30) Audited (Note 1) 2002 2003 1998 1999 2000 2001 Budget 2) Actual Budget(2) Revenues(3): Property Taxes .............. $ 56,150 $ 223,239 $ 257,569 $ 231,597 $ 253,700 $ 254,329 $ 304,500 Sales Tax .................. 284,604 294,534 301,081 347,287 320,000 294,713 312,500 Income Tax................. 179,373 248,499 289,941 299,272 315,000 292,814 305,000 Licenses and Permits ......... 71,927 67,894 94,739 73,003 63,975 70,667 61,550 Franchise Fees .............. 12,083 34,090 44,610 56,389 50,750 41,259 21,500 Fines and Fees .............. 23,254 26,541 36,650 34,036 32,893 37,000 37,500 Interest .................... 41,349 52,635 56,066 77,771 75,300 46,206 60,300 Utility Taxes(3) .............. 89,367 85,897 99,796 110,372 105,000 96,375 172,500 Water Service Charges ........ 55,000 52,500 60,000 65,000 65,000 35,000 37,500 All Other Revenue ............ 108,052 116,645 126,516 116,201 127,682 126,313 148,100 Total Revenues ........... $ 921,169 $1,202,474 $1,366,968 $1,410,928 $1,409,300 $1,294,676 $1,460,950 Expenditures: General Government .......... $ 255,735 $ 271,176 $ 291,468 $ 273,171 $ 306,640 $ 307,328 $ 334,865 Highways and Street .......... 138,481 213,175 208,511 241,322 274,500 251,660 276,975 Public Safety................ 524,324 636,625 665,526 664,335 826,995 784,833 845,685 Total Expenditures ........ $ 918,540 $1,120,976 $1,165,505 $1,178,828 $1,408,135 $1,343,821 $1,457,525 Revenues Over (Under) Expenditures: $ 2,629 $ 81,498 $ 201,463 $ 232,100 $ 1,165 $ (49,145) $ 3,425 (4) Adjustment to Fund Balance ....... $ - 0 - $ 34,946 $ 12,544 $ - 0 - $ - 0 - Fund Balance at April 30 .......... $ 429,868 $ 546,312 $ 760,319 $ 992,419 $ 943,274 Balance Sheet 1998 1999 2000 2001 2002 Assets: Cash and Investments ......... $ 592,426 $ 853,088 $1,097,627 $1,434,163 $1,548,645 Property Taxes Rec. (Net) ...... 97,030 257,111 232,152 253,413 303,739 Due From Other Governments ... 50,593 56,644 86,091 68,214 101,910 Due From Other Funds ........ 3,290 90,041 74,014 48,512 7,072 All Other Assets ............. 14,643 20,244 46,507 17,451 27,016 Total Assets ............. $ 757,982 $1,277,128 $1,536,391 $1,821,753 $1,988,382 Liabilities and Fund Equity: Accounts Payable/Accrued Exp.... $ 30,302 $ 34,448 $ 33,160 $ 43,603 $ 48,685 Due to Other Funds........... 144,897 368,431 451,928 470,000 587,330 Due to Other Governments ..... 1,127 271 - 0 - - 0 - 1,426 Deferred Revenue ............ 101,590 267,671 238,592 257,818 334,284 Compensated Absences ....... 50,198 59,995 52,392 57,913 73,383 Total Liabilities ........... $ 328,114 $ 730,816 $ 776,072 $ 829,334 $1,045,108 Fund Equity: Fund Balance - Reserved..... $ - 0 - $ 48,804 $ 90,885 $ 90,275 $ 85,900 Fund Balance - Unreserved ... 429,868 497,508 669,434 857,374 902,144 Total Fund Equity ....... $ 429,868 $ 546,312 $ 760,319 $ 992,419 $ 943,274 Total Liabilities & Fund Equity $ 757,982 $1,277,128 $1,536,391 $1,821,753 $1,988,382 Notes: 1. For basis of accounting, see Note 1 to the table “Combined Statement-All Funds” below. The General Fund is the City’s primary operating fund. It accounts for all financial resources of the City except those required to be accounted for in another fund. 2. The City has adopted certain sections of the Illinois Compiled Statutes which provide for an annual budget in lieu of the passage of an annual appropriation ordinance. Department heads prepare their operating budgets, and in meetings with the Mayor and Budget Officer they are reviewed and finalized after which the preliminary budget is prepared and formally sent to the City Council for their review and adoption. The budget is adopted on a basis consistent with generally accepted accounting principles. 3. Utility taxes are deposited in either the General Fund or the Utility Tax Special Revenue Fund. Total utility taxes received over the past five fiscal years were: 1998 = $298,061; 1999 = $286,324; 2000 = $332,654; 2001 = $367,907; and 2002 = $321,253. The Utility tax rate is 5%, which is the maximum statutory rate. Of note, over the past five years the Utility Tax Special Revenue Fund has expended $466,194 for capital improvements (primarily street and sidewalks) and those funds could have been transferred to the General Fund, if needed. 4. As of the date of this Official Statement, the City projects that revenues and expenditures will be as budgeted. 9 COMBINED STATEMENT -- ALL FUNDS Fund Balances 1998-2001 and Summary 2002 Revenues, Excess Revenues and Fund Balance (Fiscal Years Ended April 30) Fiscal Year Ended April 30, 2002(Audited) Revenues Incl. Transfers Revenues Audited (Note 1) Property Over (Under) Fund 1998 1999 2000 2001 Tax Total Expenditure Balance Governmental Fund Types: General Fund ................. $ 429,868 $ 546,312 $ 760,319 $ 992,419 $ 254,329 $1,294,676 $ (49,145) $ 943,274 Special Revenue Funds: Liability Insurance ............ $ 30,220 $ 48,778 $ 70,940 $ 150,232 $ 112,934 $ 114,302 $ (11,339) $ 138,893 Utility Tax .................. 109,386 202,788 181,235 235,837 - 0 - 226,446 (16,631) 219,206 Garbage Disposal ............ 24,225 22,314 15,777 4,253 - 0 - 202,402 (1,776) 2,477 Road and Bridge ............. 19,527 38,029 40,010 49,815 20,897 21,226 (9,410) 40,405 Motor Fuel Tax .............. 158,452 114,349 213,683 232,571 - 0 - 122,967 117,687 350,258 CDAP Loan Fund (2) .......... 442,654 459,888 475,379 492,624 - 0 - 15,182 15,182 507,806 Police Dare................. 1,595 1,359 1,435 882 - 0 - - 0 - (882) - 0 - IMRF (3) ................... 13,329 - 0 - - 0 - - 0 - - 0 - - 0 - - 0 - - 0 - Forestry (3)................. 3,427 - 0 - - 0 - - 0 - - 0 - - 0 - - 0 - - 0 - School Closing Guards (3) ...... 10,416 - 0 - - 0 - - 0 - - 0 - - 0 - - 0 - - 0 - Police Protection (3) .......... 7,229 - 0 - - 0 - - 0 - - 0 - - 0 - - 0 - - 0 - Total Special Revenue....... $ 821,005 $ 887,505 $ 998,459 $1,166,214 $ 133,831 $ 702,525 $ 92,831 $1,259,045 Debt Service.................. 20,061 54,941 33,174 21,516 - 0 - 105,145 (2,640) 18,876 Capital Projects ............... 1,260 - 0 - - 0 - - 0 - - 0 - - 0 - - 0 - - 0 - Total Governmental ......... $1,272,194 $1,488,758 $1,791,952 $2,180,149 $ 388,160 $2,102,346 $ 41,046 $2,221,195 Proprietary and Fiduciary Fund Types: Enterprise Fund(4): Waterworks and Sewerage ..... $6,930,222 $7,008,651 $6,315,890 $6,386,665 $ - 0 - $ 742,963 $132,065 $6,518,730 Fiduciary Fund Working Cash ............... 45,642 45,642 45,642 45,642 - 0 - - 0 - - 0 - 45,642 Total Proprietary & Fiduciary .. $6,975,864 $7,054,293 $6,361,532 $6,432,307 $ - 0 - $ 742,963 $132,065 $6,564,372 Total All Funds (Memo Only) ........ $8,248,058 $8,503,051 $8,153,484 $8,612,456 $ 388,160 $2,845,309 $173,111 $8,785,567 Cash and Investments at April 30: 1998 1999 2000 2001 2002 General Fund ................. $ 592,426 $ 853,088 $ 1,097,627 $1,434,163 $ 1,548,645 Special Revenue Funds ......... 504,692 179,810 261,409 400,010 536,621 Debt Service Funds ............ 20,061 - 0 - - 0 - 1,516 3,876 Capital Projects Funds .......... 49,213 - 0 - - 0 - - 0 - - 0 - Enterprise Funds .............. 1,073,322 1,169,131 1,280,825 1,265,973 1,134,161 Working Cash................. 45,642 24,349 - 0 - 642 45,642 Escrow Deposit - Agency ........ 280,417 13,336 7,887 11,667 16,088 Total .................... $2,565,773 $2,239,714 $2,647,748 $3,113,971 $3,285,033 Notes: 1. These condensed financial statements for the years ending April 30, 1998-2002 have been prepared from the full Comprehensive Annual Financial Reports (“CAFR”) of the City of Genoa and do not purport to be complete audits. The full financial statements, together with the report of the City’s independent accountants, are available upon request. The accounting policies of the City are in accordance with generally accepted accounting principles as established by the Governmental Accounting Standards Board (GASB). The accounts of the City are organized on the basis of funds or account groups, each of which is considered a separate accounting entity. The modified accrual basis of accounting is followed by the governmental funds (General Fund, Special Revenue Funds, Debt Service Funds, and Capital Projects Fund) and fiduciary fund. Governmental funds use a current financial resources measurement focus and report current assets and liabilities payable from current assets with the difference reported as fund balance. The accrual basis of accounting with the flow of economic resources measurement focus is used by the Proprietary Funds and non-expendable Trust Funds. The City’s CAFR for the year ended April 30, 2002 included an unqualified “Independent Auditor’s Report”. Similar opinions were included in the City’s CAFR’s for the years ending April 30, 1998-2001, except for a qualification that the City did not report fixed assets. The “Report of Independent Auditors” included in the April 30, 2002 CAFR states, in part: “In our opinion, the general purpose financial statements referred to above present fairly, in all material respects, the financial position of the City of Genoa, Illinois, as of April 30, 2002, and the results of its operations and the cash flows of its proprietary fund types and similar trust funds for the year then ended in conformity with accounting principles generally accepted in the United States of America.” 2. The CDAP Loan Fund, which was established in the fiscal year ended April 30, 1988, is used to account for economic development grant funds, which are to be loaned to new or expanding local business ventures which enhance economic development of the City. The fund was established at $300,000 from the proceeds of a $300,000 Community Development Block Grant and proceeds received from economic development loans made by the City are used to capitalize a revolving economic loan fund. As of April 30, 2002, the total amount of funds that have been loaned is $680,000 and the outstanding balance of the seven loans is $331,903. 3. Equity in these funds was transferred to the General Fund in the fiscal year ending April 30, 1999. 4. Fund balances shown for the Enterprise Funds are total fund equity including contributed capital and reserved and unreserved retained earnings and the column “Revenues Over (Under) Expenditures” represents the change in that amount from the prior year. The “Total Revenues” column represents operating revenues. FIXED ASSETS (April 30, 2002) Enterprise Fund Fixed Assets(2) General Waterworks and Fixed Assets(1) Sewerage Fund Land and Buildings .............. $ 573,239 Gross Value .............. $ 9,499,517 Machinery and Equipment ......... 218,734 Less Accum. Depreciation .... (3,240,011) Automotive .................... 428,600 Net Assets................ $ 6,259,506 Total General Fixed Assets .... $1,220,573 Notes: 1. Fixed assets used in governmental fund type operations (general fixed assets) are accounted for in the General Fixed Assets Account Group, rather than in governmental funds. Public domain general fixed assets consisting of certain improvements other than buildings, including roads, bridges, curbs and gutters, streets and sidewalks, drainage systems, and lighting systems, are not capitalized along with other general fixed assets. No depreciation has been provided on general fixed assets. General fixed assets are valued at historical cost or estimated historical cost if actual historical cost is not available. Donated fixed assets are valued at their estimated fair market value on the date donated. 2. Enterprise Fund fixed assets are valued at historical cost or estimated historical cost if actual historical cost is not available. Donated fixed assets are valued at their estimated fair market value on the date donated. Depreciation has been provided over the estimated useful lives using the straight-line method. 10 GLOBAL BOOK-ENTRY SYSTEM The Depository Trust Company ("DTC"), New York, New York, will act as securities depository for the Bonds. The Bonds will be issued as fully-registered bonds registered in the name of Cede & Co. (DTC's partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully-registered bond certificate will be issued for each maturity of the Bonds, in the aggregate principal amount of such maturity, and will be deposited with DTC. DTC, the world’s largest depository, is a limited-purpose trust company organized under the New York Banking Law, a “banking organization” within the meaning of the New York Banking Law, a member of the Federal Reserve System, a "clearing corporation" within the meaning of the New York Uniform Commercial Code and a "clearing agency" registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 2 million issues of U.S. and non–U.S. equity issues, corporate and municipal debt issues, and money market instruments from over 85 countries that DTC’s participants ("Direct Participants") deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book-entry transfers and pledges between Direct Participants' accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non–U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust and Clearing Corporation (“DTCC”). DTCC, in turn is owned by a number of its Direct Participants of DTC and Members of the National Securities Clearing Corporation, Government Securities Clearing Corporation, MBS Clearing Corporation, and Emerging Markets Clearing Corporation, (NSCG, GSCG, MBSCC, and EMCG, also subsidiaries of DTCC), as well as by the New York Stock Exchange, Inc., the American Stock Exchange, LLC, and the National Association of Securities Dealers, Inc. Access to the DTC system is also available to others such as both U.S. and non–U. S. securities brokers and dealers, banks and trust companies that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly ("Indirect Participants"). DTC has Standard & Poor’s highest rating: AAA. The Rules applicable to DTC and its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at www.dtcc.com. Purchases of Bonds under the DTC system must be made by or through Direct Participants, which will receive a credit for the Bonds on DTC's records. The ownership interest of each actual purchaser of each Bond ("Beneficial Owner") is in turn to be recorded on the Direct and Indirect Participants' records. Beneficial Owners will not receive written confirmation from DTC of their purchases. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Bonds are to be accomplished by entries made on the books of Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in Bonds, except in the event that use of the book-entry system for the Bonds is discontinued. To facilitate subsequent transfers, all Bonds deposited by Direct Participants with DTC are registered in the name of DTC's partnership nominee, Cede & Co. or such other name as may be requested by an authorized representative of DTC. The deposit of Bonds with DTC and their registration in the name of Cede & Co. or such other nominee, do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Bonds; DTC's records reflect only the identity of the Direct Participants to whose accounts such Bonds are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers. Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Beneficial Owners of Securities may wish to take certain steps to augment transmission to them of notices of significant events with respect to the Securities, such as redemptions, tenders, defaults, and proposed amendments to the security documents. For example, Beneficial Owners of Securities may wish to ascertain that the nominee holding the Securities for their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names and addresses to the registrar and request that copies of the notices be provided directly to them. Redemption notices shall be sent to DTC. If less than all of the Bonds within a maturity are being redeemed, DTC’s practice is to determine by lot the amount of the interest of each Direct Participant in such maturity to be redeemed. Neither DTC nor Cede & Co. (nor such other DTC nominee) will consent or vote with respect to the Bonds unless authorized by a Direct Participant in accordance with DTC’s Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the Issuer as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.’s consenting or voting rights to those Direct Participants to whose accounts the Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy). Redemption proceeds, distributions, and dividend payments on the Bonds will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC's practice is to credit Direct Participants' accounts upon DTC’s receipt of funds and corresponding detail information from Issuer or Agent on payable date in accordance with their respective holdings shown on DTC's records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in "street name," and will be the responsibility of such Participant and not of DTC, Agent, or Issuer, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of redemption proceeds, distributions, and dividend payments to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the Issuer or Agent, disbursement of such payments to Direct Participants shall be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners shall be the responsibility of Direct and Indirect Participants. DTC may discontinue providing its services as securities depository with respect to the Bonds at any time by giving reasonable notice to the Issuer or the Agent. Under such circumstances, in the event that a successor securities depository is not obtained, bond certificates are required to be printed and delivered. The Issuer may decide to discontinue use of the system of book-entry transfers through DTC (or a successor securities depository). In that event, bond certificates will be printed and delivered. The information in this section concerning DTC and DTC's book-entry system has been obtained from sources that the Issuer believes to be reliable, but the Issuer takes no responsibility for the accuracy thereof. 11 LIMITED CONTINUING DISCLOSURE Because at the time of the delivery of the Bonds, the City will be an “obligated person” (as such term is defined in Rule 15(c)2-12 (the “Rule)) with respect to less than $10,000,000 in aggregate amount of outstanding municipal securities, including the Bonds, the City is exempt from the provisions of the Rule requiring the delivery of annual financial information to the nationally recognized securities information repositories specified in the Rule. In the bond ordinance, the City has covenanted and agreed, for the benefit of the beneficial owners of the Bonds, to provide certain annual financial information relating to the City (the “annual financial information”) and, in a timely manner, to provide notices of the occurrence of certain enumerated events, if material. The annual financial information will be filed by the City with the Illinois state information depository, if any. As of the date of this Official Statement, the State of Illinois has not designated a state information depository. The annual financial information will consist of the annual audited financial statements of the City. Each annual audited financial statement will conform to generally accepted accounting principles applicable to governmental units and will be prepared in accordance with standards of the Governmental Accounting Standards Board, subject to qualifications expressed in the auditor’s opinion. The notices of material events will be filed by the City with the Municipal Securities Rulemaking Board and with the Illinois state information depository, if any. The City’s undertaking with respect to material events includes timely notice of the occurrence of any of the following events with respect to the Bonds, if material: 1. Principal and interest payment delinquencies; 2. Non-payment related defaults; 3. Unscheduled draws on debt service reserves reflecting financial difficulties; 4. Unscheduled draws on credit enhancements reflecting financial difficulties; 5. Substitution of credit or liquidity providers, or their failure to perform; 6. Adverse tax opinions or events affecting the tax-exempt status of the Bonds; 7. Modifications to rights of Bondholders; 8. Bond calls; 9. Defeasances; 10. Release, substitution or sale of property securing repayment of the Bonds; and 11. Rating changes. The City has agreed to the foregoing undertakings in order to assist participating underwriters of the Bonds and brokers, dealers and municipal securities dealers in complying with Securities and Exchange Commission Rule 15c2- 12(b)(5) promulgated under the Securities Exchange Act of 1934. The City will provide the foregoing information for so long as Rule 15c2-12(b)(5) is applicable to the Bonds and the City remains an “obligated person” under the Rule with respect to the Bonds. No provision of the bond ordinance limits the remedies available to any beneficial owner of the Bonds with respect to the enforcement of the continuing disclosure covenants of the City described above. Failure to comply with the continuing disclosure covenants will not constitute an event of default under the bond ordinance. The City has not previously been required to deliver an undertaking pursuant to the Rule. The City may amend the continuing disclosure undertakings contained in the bond ordinance upon a change in circumstances provided that (a) the undertakings, as amended, would have complied with the requirements of Rule 15(c)2-12(b)(5) at the time of this offering, after taking into account any amendments or interpretations of the Rule, as well as any change in circumstances and (b) in the opinion of nationally recognized bond counsel selected by the City, the amendment does not materially impair the interests of the beneficial owners of the Bonds. The City is exempt from the provision of Rule 15(c)2-12 that requires the delivery of annual financial information to nationally recognized securities information repositories and, as noted above, the State of Illinois has not designated a State information repository. However, in accordance with Rule 15(c)2-12, the City will send the annual financial information to any person upon request. Annual financial information and notices of material events can be obtained from the City Clerk, City of Genoa, 113 North Genoa Street, Genoa, Illinois 60135, Tel: (815) 784-2327. PROPERTY TAX EXTENSION LIMITATION LAW The provisions of the Property Tax Extension Limitation Law (the “Limitation Law”) are applicable to non-home rule taxing districts in DeKalb County including the City. The Limitation Law limits the annual growth in property tax extensions for the City to the lesser of 5% or the percentage increase in the Consumer Price Index during the calendar year preceding the relevant levy year. Generally, extensions can be increased beyond this limitation due to new construction and referendum approval of tax or limitation rate increases. The effect of the Limitation Law is to limit or retard the growth in the amount of property taxes that can be extended for a taxing body. In addition, the City can now only issue its general obligation bonds secured by an unlimited as to rate or amount tax levy after first receiving referendum approval or unless such bonds are issued for certain refunding purposes or if such bonds are "alternate bonds" issued pursuant to the Local Government Debt Reform Act (these Series 2002 Bonds are "alternate bonds"). The limitations on the extensions of property taxes contained in the Limitation Law do not apply to the taxes levied to pay the principal of and interest on general obligation bonds issued prior to the effective date of the Limitation Law. DEFEASANCE Bonds shall be deemed to have been paid and the pledge of taxes, securities and funds pledged by the bond ordinance and the covenants, agreements and other obligations of the City to the owners of the Bonds shall be discharged and satisfied, if (1) in case any such bonds are to be redeemed prior to maturity, there shall have been taken all action necessary to call such bonds for redemption and notice of such redemption shall have been duly given or provision shall have been made for the giving of such notice, and (2) there shall have been deposited in trust with a bank, trust company or national banking association acting as fiduciary for such purpose either (i) moneys in an amount which shall be sufficient, or (ii) “Federal Obligations” as defined below, the principal of and the interest on which when due will provide moneys which, together with any moneys on deposit with such fiduciary at the same time for such purpose, shall 12 be sufficient, to pay when due the principal of, redemption premium, if any, and interest due and to become due on said bonds on and prior to the applicable redemption date or maturity date. The term “Federal Obligations” means (i) non-callable, direct obligations of the United States of America, (ii) non- callable and non-prepayable, direct obligations of any agency of the United States of America, which are unconditionally guaranteed by the United States of America as to full and timely payment of principal and interest, (iii) non-callable, non- prepayable coupons or interest installments from the securities described in clause (i) or clause (ii), which are stripped pursuant to programs of the Department of the Treasury of the United States of America, or (iv) coupons or interest installments stripped from bonds of the Resolution Funding Corporation. CERTAIN LEGAL MATTERS Certain legal matters incident to the authorization, issuance and sale of the Bonds are subject to the approving legal opinion of Katten Muchin Zavis Rosenman, Chicago, Illinois as bond counsel (“Bond Counsel”), who have been retained by and act as Bond Counsel to the City. Other than the statements under the captions “TAX EXEMPTION,” “QUALIFIED TAX-EXEMPT OBLIGATIONS,” “DEFEASANCE,” “LIMITED CONTINUING DISCLOSURE,” “BONDS PURCHASED AT A PREMIUM OR AT A DISCOUNT”, the statements in the second paragraph under the caption “PURPOSE, SECURITY, AND LEGALITY,” and the quoted text in the Notice of Sale on page 16, Bond Counsel has not been retained or consulted on disclosure matters and has not independently reviewed and assumes no responsibility for the statements or information contained in the Official Statement. Certain legal matters will be passed upon for the City by the City Attorney. OFFICIAL STATEMENT CERTIFICATION Based upon our examination of the attached Preliminary Official Statement dated October 3, 2002 for the $2,200,000 General Obligation Bonds, Series 2002, we believe it to be true and correct. We will provide to the purchaser of the Bonds, at the time of delivery of the Bonds, a certificate confirming that to the best of our knowledge and belief the information in the Official Statement, including any addenda thereto, was at the time of acceptance of the bid and at the delivery, true and correct in all material respects and does not include any untrue statement of material fact, nor does it omit the statement of any material fact required to be stated therein, or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. /s/ Todd A. Walker Mayor /s/ Wendy Shaneen David C. Jepson City Clerk Budget Officer City Hall 113 North Genoa Street Genoa, Illinois 60135 (815) 784-2327 October 3, 2002 13 (THIS PAGE IS INTENTIONALLY LEFT BLANK) 14 OFFICIAL BID FORM City of Genoa October 15, 2002 City Hall 113 North Genoa Street Genoa, Illinois 60135 Ladies and Gentlemen: For your $2,200,000 City of Genoa, DeKalb County, Illinois, General Obligation Bonds, Series 2002 (Bank Qualified) as described in the Official Notice of Sale, which is expressly made a part hereof by reference, we will pay you $_______________ (which amount is not less than $2,178,000), plus accrued interest from November 1, 2002 to the date of delivery. The Bonds are to bear interest at the following respective rates (each a multiple of 1/8 or 1/20 of 1%) for Bonds of each designated maturity. The rate specified for any year shall not be less than that for the immediately prior year. MATURITIES - December 1 $250,000 ....... 2003 _____% $300,000 ....... 2008 _____% 250,000 ....... 2004 _____% 300,000 ....... 2009 _____% 250,000 ....... 2005 _____% 100,000 ....... 2010 _____% 275,000 ....... 2006 _____% 100,000 ....... 2011 _____% 275,000 ....... 2007 _____% 100,000 ....... 2012 _____% As evidence of our good faith, we enclose herewith our Surety Bond or (cashier's) (certified) check in the sum of not less than $44,000 in accordance with your Official Notice of Sale. CUSIP numbers are to be applied for and printed on the Bonds at our expense, and we agree to accept the Bonds at delivery with the CUSIP numbers as printed regardless of errors or omissions. The Bonds are to be issued in global book-entry-only form and the securities depository is to be The Depository Trust Company. NOT A PART OF BID Respectfully submitted, Our calculation of interest cost from above is: Name ___________________________________ Account Manager Total Interest . . . . . . . . . . . . . . $__________________ By _____________________________________ Less Premium/Plus Discount . $__________________ Net Interest Cost . . . . . . . . . . . $__________________ Address ________________________________ Net Interest Rate . . . . . . . . . . . ________________ % ____________________________________________ City State Zip _______ Acknowledgment of applicability of our Surety Bond or return of our bid deposit check is Telephone ________________ Fax __________ acknowledged. (A list of the members of our account on whose behalf By _________________________ Date_____________ this bid is made is attached hereto.) ACCEPTANCE CLAUSE The foregoing bid was accepted and Bonds sold by ordinance of the City of Genoa, Illinois on October 15, 2002 and receipt is hereby acknowledged of the good faith deposit which is being held in accordance with the terms of the Official Notice of Sale. CITY OF GENOA DeKalb County, Illinois ____________________________________________ Mayor TABLE OF BOND YEARS–FROM NOVEMBER 1, 2002 (For Computation Purposes Only. Not Part of Bid.) Maturities - Dec. 1 Bond Years Year Amount Annual Cumulative 2003 . . . . . $ 250,000 270.8333 270.8333 2004 . . . . . 250,000 520.8334 791.6667 2005 . . . . . 250,000 770.8333 1,562.5000 2006 . . . . . 275,000 1,122.9167 2,685.4167 2007 . . . . . 275,000 1,397.9166 4,083.3333 2008 . . . . . 300,000 1,825.0000 5,908.3333 2009 . . . . . 300,000 2,125.0000 8,033.3333 2010 . . . . . 100,000 808.3334 8,841.6667 2011 . . . . . 100,000 908.3333 9,750.0000 2012 . . . . . 100,000 1,008.3333 10,758.3333 $2,200,000 10,758.3333 Average Life: 4.8902 years 15 OFFICIAL NOTICE OF SALE $2,200,000 CITY OF GENOA DeKalb County, Illinois GENERAL OBLIGATION BONDS, SERIES 2002 ($1,950,000 Series 2002A and $250,000 Series 2002B) (Bank Qualified) The City of Genoa, DeKalb County, Illinois will receive sealed bids for its $2,200,000 General Obligation Bonds, Series 2002 (Bank Qualified) at the offices of R.V. Norene & Associates, 1701 Lake Avenue (Lake and Waukegan Office Center), Suite 215, Glenview, Illinois and, in the case of electronic proposals via PARITY, in the manner described below, until 11:00 A.M., C.D.T., Tuesday, October 15, 2002 at which time the bids will be publicly opened and read. To the extent any instructions or directions set forth in PARITY conflict with this Notice of Sale, the terms of the Notice of Sale shall control. For further information about PARITY, potential bidders may contact the financial advisor to the City or PARITY at 395 Hudson Street, 3rd Floor, New York, NY, telephone (212) 806-8304. Award will be made, or all bids rejected on the date of sale. These Bonds are general obligations of the City of Genoa, DeKalb County, Illinois, payable both as to principal and interest from ad valorem property taxes levied against all taxable property therein, without limitation as to rate or amount. The Bonds will be issued as book-entry-only securities through the facilities of The Depository Trust Company (DTC) as securities depository. Bonds will be issued in the denomination of $5,000 or in integral multiples thereof. The Bonds will be dated November 1, 2002. Interest will be payable June 1, 2003 and semi-annually thereafter. Bonds due December 1, 2003-2009, inclusive, are not callable in advance of maturity. Bonds due December 1, 2010-2012 are callable in whole or in part and, if in part, in such order of maturity as determined by the City and within a maturity by lot beginning December 1, 2009 and any date thereafter at par plus accrued interest to the date of redemption. Notice of such redemption shall be given once not less than 30 days nor more than 60 days prior to the date of redemption by mail to the registered holders thereof. The principal on the Bonds will be payable at the principal corporate trust office of American National Bank and Trust Company of Chicago, in the City of Chicago, Illinois, as Paying Agent and Bond Registrar. Interest on the Bonds will be paid to the registered owners of record thereof as of the close of business on the 15th day of the calendar month next preceding the applicable interest payment date, by checks or drafts mailed by the Bond Registrar to the registered owners at the addresses of such registered owners appearing on the registration books kept by the Bond Registrar. The City will be responsible for the fees and charges of American National Bank and Trust Company of Chicago as Paying Agent and Bond Registrar. The City or the Bond Registrar may make a charge sufficient to reimburse it for any tax, fee or other governmental charge required to be paid with respect to an exchange or transfer which sum shall be paid by the person requesting such exchange or transfer as a condition precedent to the exercise of the privilege of making such exchange or transfer. MATURITIES - December 1 Year Series A Series B Total Year Series A Series B Total 2003 ... $ 210,000 $ 40,000 $ 250,000 2008 ... $ 270,000 $ 30,000 $ 300,000 2004 ... 205,000 45,000 250,000 2009 ... 265,000 35,000 300,000 2005 ... 205,000 45,000 250,000 2010 ... 100,000 - 0 - 100,000 2006 ... 250,000 25,000 275,000 2011 ... 100,000 - 0 - 100,000 2007 ... 245,000 30,000 275,000 2012 ... 100,000 - 0 - 100,000 $1,950,000 $250,000 $2,200,000 These Bonds will be awarded to the best bidder determined upon the basis of the lowest total interest at the rate or rates designated in said bid from November 1, 2002 to the respective maturity dates after deducting therefrom the premium bid or adding the discount. Each bidder shall name a rate or rates of interest which the Bonds are to bear, and each rate must be a multiple of one-eighth or one-twentieth of one percent (1/8 or 1/20 of 1%). The rate specified for any year shall not be less than that for the immediately prior year. Not more than one interest rate will be specified for a single maturity. The interest rates named for the Bonds cannot exceed the greater of 9% or 125% of The Bond Buyer 20 Bond Index as published in the most recent edition of The Bond Buyer. Bids must be for all or none of the Bonds, must be for not less than $2,178,000 plus accrued interest to date of delivery and must be made upon the Official Bid Form and delivered in a sealed envelope marked "Bid for Series 2002 Bonds" at the time set out above provided that PARITY Bids may be submitted. The City will apply for an investment rating from Moody's Investors Service in conjunction with the sale of these Bonds and will pay for Moody's rating fee. If the purchaser of these Bonds elects to purchase bond insurance under any qualified bond insurance program, the purchaser of the Bonds will be responsible for any rating fees other than Moody's. The successful bidder will be required to provide information concerning the reoffering prices and yields of the Bonds as required by bond counsel in connection with the issuance of its approving opinion. The City reserves the right to reject any or all bids, to determine the best bid in its sole discretion and to waive any informality in any bid. Each bid shall be accompanied by a certified or cashier's check on a solvent bank or trust company or a Financial Surety Bond for $44,000 payable to the Treasurer of the City of Genoa, DeKalb County, Illinois, as evidence of good faith of the bidder (the "Deposit"). The Deposit of the successful bidder will be retained by the City pending delivery of the Bonds and all others will be returned promptly. Should the successful bidder fail to take up and pay for the Bonds when tendered in accordance with his bid and this Notice, his Deposit shall be retained as full and liquidated damages to the City caused by failure of the bidder to carry out his offer of purchase. Otherwise such Deposit will be returned at delivery or applied on the purchase price. If a Financial Surety Bond is used, it must be from an insurance company licensed to issue such a bond in the State of Illinois and such bond must be submitted to R.V. Norene & Associates prior to the opening of the bids. The Financial Surety Bond must identify each bidder whose Deposit is guaranteed by such Financial Surety Bond. If the Bonds are awarded to a bidder using a Financial Surety Bond, then that purchaser is required to submit its Deposit to the City in the form of a certified or cashier's check or wire transfer as instructed by R.V. Norene & Associates, or the City, not later than 3:30 P.M. on the next business day following the award. If such Deposit is not received by that time, the Financial Surety Bond may be drawn by the City to satisfy the Deposit requirement. No interest on the Deposit will accrue to the purchaser. The Bonds will be delivered to the successful purchaser against full payment in immediately available funds as soon as they can be prepared and executed, which is expected to be on Monday, November 4, 2002. Should delivery of these Bonds be delayed beyond 45 days from the date of sale for any reason except failure of performance by the successful bidder, then the bidder may cancel his agreement to purchase the Bonds and receive back his check and thereafter his interest in and liability for the Bonds will cease. The City will deliver the Bonds without expense to the purchaser in Chicago, Illinois and will pay for the preparation of the Bonds and the bond attorney's opinion. At the time of delivery the City will furnish to the purchaser the written opinion of Katten Muchin Zavis Rosenman, Chicago, Illinois, evidencing the legality of the Bonds. The City will furnish the transcript of proceedings on which said opinion is based and a certificate of no litigation then pending affecting the legality of the Bonds or the right of the City to issue them. The transcript will also include a 10b5 certification. Interest on the Bonds is not exempt from Illinois Income Taxes. Bond Counsel's opinion will also state: “We are of the opinion that under existing law, interest on the Bonds is not includable in the gross income of the owners thereof for Federal income tax purposes. If there is continuing compliance with the applicable requirements of the Internal Revenue Code of 1986 (the “Code”), we are of the opinion that interest on the Bonds will continue to be excluded from the gross income of the owners thereof for Federal income tax purposes. We are further of the opinion that the Bonds are not ‘private activity bonds’ within the meaning of Section 141(a) of the Code. Accordingly, interest on the Bonds is not an item of tax preference for purposes of computing individual or corporate alternative minimum taxable income. However, interest on the Bonds is includable in corporate earnings and profits and therefore must be taken into account when computing corporate alternative minimum taxable income for purposes of the corporate alternative minimum tax. The Code contains certain requirements that must be satisfied from and after the date hereof in order to preserve the exclusion from gross income for Federal income tax purposes of interest on the Bonds. These requirements relate to the use and investment of the proceeds of the Bonds, the payment of certain amounts to the United States, the security and source of payment of the Bonds and the use of the property financed with the proceeds of the Bonds. The City has covenanted in the Bond Ordinance to comply with these requirements.” The opinion will also state: "Pursuant to the Bond Ordinance the City has designated the Bonds as 'qualified tax-exempt obligations' as described in Section 265(b)(3)(B) of the Code." Interest on the Bonds is not exempt from Illinois Income Tax. By submission of its bid, the successful bidder will be deemed to have certified that it has obtained and reviewed this Official Statement which the City deems final as of its date, except for the information to be included in the Final Official Statement set forth below. The City will provide the successful bidder within seven business days after the acceptance of his bid with a reasonable number of Final Official Statements. The Final Official Statement shall include a revised cover page (bearing a date at its bottom that will be considered the date of delivery to the Purchaser) setting out, among other things, interest rates, the rating, the underwriter and additional disclosure relating to municipal bond insurance (if applicable). The revised cover page, when attached to the Preliminary Official Statement, shall collectively be the City's Final Official Statement. In order to assist bidders in complying with S.E.C. Rule 15c2-12(b)(5), the City will undertake to provide annual reports and notices of certain events. A description of this undertaking is set forth in the Official Statement on page 12. The City has authorized the preparation of an Official Statement containing pertinent information relative to the City and its finances. For copies of that Statement or for any additional information, any prospective purchaser is referred to the undersigned at the City Hall,113 N. Genoa St., Genoa, IL 60135-1024 (815) 784-2327 or the Municipal/Public Finance Consultants to the City, R.V. Norene & Associates, Lake and Waukegan Office Center, Suite 215, 1701 Lake Avenue, Glenview, Illinois 60025 (847) 998-9848 (Fax: 5503). /s/ Wendy Shaneen October 3, 2002 16 City Clerk
"THE COUNTY OF DEKALB_ ILLINOIS"