amounts, maturities, interest rates, yields and cusip …. add.pdf · new issue investment rating:...

NEW ISSUE Investment Rating: Standard & Poor’s ... AA+/Stable

ADDENDUM DATED SEPTEMBER 25, 2012

OFFICIAL STATEMENT DATED AUGUST 30, 2012

$19,200,000

CITY OF AURORA Kane, DuPage, Kendall and Will Counties, Illinois, Illinois

General Obligation Library Bonds, Series 2012A

AMOUNTS, MATURITIES, INTEREST RATES, YIELDS AND CUSIP NUMBERS Principal Due Interest CUSIP Principal Due Interest CUSIP Amount Dec. 30 Rate Yield Number Amount Dec. 30 Rate Yield Number $145,000 .... 2013 3.000% 0.500% 051645 ZX0 $660,000 ..... 2023* 3.000% 2.600% 051645 A90 270,000 .... 2014 3.000% 0.700% 051645 ZY8 675,000 ..... 2024* 3.000% 2.700% 051645 B24 270,000 .... 2015 3.000% 0.800% 051645 ZZ5 690,000 ..... 2025* 3.000% 2.800% 051645 B32 270,000 .... 2016 3.000% 0.900% 051645 A25 *** ..... *** *** *** *** 270,000 .... 2017 3.000% 1.150% 051645 A33 745,000 ..... 2028 3.000% 3.100% 051645 B65 280,000 .... 2018 3.000% 1.450% 051645 A41 760,000 ..... 2029 3.125% 3.150% 051645 B73 275,000 .... 2019 3.000% 1.750% 051645 A58 780,000 ..... 2030 3.125% 3.200% 051645 B81 290,000 .... 2020 3.000% 2.000% 051645 A66 805,000 ..... 2031 3.250% 3.250% 051645 B99 540,000 .... 2021 3.000% 2.250% 051645 A74 825,000 ..... 2032 3.250% 3.300% 051645 C23 550,000 .... 2022* 3.000% 2.400% 051645 A82

$1,435,000 .... 3.000%; Term Bonds due December 30, 2027; Yield 3.000%; CUSIP Number 051645 B57 $1,725,000 .... 3.375%; Term Bonds due December 30, 2034; Yield 3.400%; CUSIP Number 051645 C49 $2,780,000 .... 3.500%; Term Bonds due December 30, 2037; Yield 3.500%; CUSIP Number 051645 C72

$4,160,000 .... 4.000%; Term Bonds due December 30, 2041*; Yield 3.550%; CUSIP Number 051645 D30

For further details see “MANDATORY REDEMPTION” herein. *These maturities have been priced to call. The Official Statement of the City dated August 30, 2012 (the "Official Statement") with respect to the 2012A Bonds is

incorporated by reference herein and made a part hereof. The "Final Official Statement" of the City with respect to the 2012A Bonds as that term is defined in Rule 15c2-12 of the Securities and Exchange Commission shall be comprised of the following:

1. Official Statement dated August 30, 2012; and 2. This Addendum dated September 25, 2012.

No dealer, broker, salesman or other person has been authorized by the City to give any information or to make any representations with respect to the 2012A Bonds other than as contained in the Final Official Statement and, if given or made, such other information or representations must not be relied upon as having been authorized by the City. Certain information contained in the Final Official Statement may be obtained from sources other than records of the City and, while believed to be reliable, is not guaranteed as to completeness. NEITHER THE DELIVERY OF THE OFFICIAL STATEMENT OR THE FINAL OFFICIAL STATEMENT NOR ANY SALE MADE THEREUNDER SHALL CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE CITY SINCE THE DATE THEREOF.

The City has authorized preparation of the Final Official Statement containing pertinent information relative to the 2012A Bonds and the City. Copies of that Final Official Statement can be obtained from the 2012A Underwriter, as defined herein. Additional information may also be obtained from the City or from the independent public finance consultants to the City:

Established 1954

Speer Financial, Inc. INDEPENDENT PUBLIC FINANCE CONSULTANTS ONE NORTH LASALLE STREET SUITE 4100 CHICAGO, ILLINOIS 60602 Telephone: (312) 346-3700; Facsimile: (312) 346-8833

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ADDITIONAL INFORMATION

References herein to laws, rules, regulations, ordinances, resolutions, agreements, reports and other documents do not purport to be comprehensive or definitive. All references to such documents are qualified in their entirety by reference to the particular document, the full text of which may contain qualifications of and exceptions to statements made herein. Where full texts have not been included as appendices to the Official Statement or the Final Official Statement, they will be furnished on request.

DEBT INFORMATION After issuance of the Debt and the refunding, the City’s general obligation debt will be $176,055,000. A large portion of the debt service for the City's general obligation debt is expected to be abated from sources other than general ad valorem taxes. The City also has outstanding $30,750,000 of Series 2006 Waterworks and Sewerage Revenue Bonds, $2,995,000 of Series 2000 Golf Course Revenue Bonds, $6,745,000 of debt certificates (excluding the Refunded 2002 Certificates), and $11,022,291 of IEPA loans.

General Obligation Debt Summary - By Issue(1) (Principal Only)

Outstanding Issue Principal Series 2003-B(3) ................................................. $ 980,000 Series 2004(2)(3) ................................................ 440,000 Series 2004B(2)(3) ............................................... 590,000 Series 2006(3)(4) ................................................ 27,780,000 Series 2007(3) ................................................... 11,475,000 Series 2008(3)(4) ................................................ 77,640,000 Series 2009A(3) .................................................. 13,825,000 Series 2009B(3) .................................................. 4,995,000 Series 2011(3)(4) ................................................ 9,060,000 Series 2012A(4) .................................................. 19,200,000 Series 2012B(3) .................................................. 6,905,000 Series 2012C(3) .................................................. 3,165,000 Sub-Total ...................................................... $176,055,000 Less: Self-Supporting Debt(3) .................................... (95,095,000) Total Property Tax Supported Debt(4) ........................... $ 80,960,000 Notes: (1) Source: the City. (2) Excludes the Refunded Bonds. (3) Expected to be abated, in whole or in part, by the

application of real estate transfer taxes, home-rule sales taxes, gaming taxes, stormwater management fees, water and sewer service fees, developer contributions, and other sources.

(4) A portion, $12,135,000, of Series 2006 is supported by property tax. A portion, $46,885,000, of Series 2008 is property tax supported. A portion, $2,740,000 of Series 2011 is property tax supported and all of Series 2012A is property tax supported.

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City General Obligation Bonded Debt(1) (Principal Only)

(Page 1 of 2)

Calendar Series Series Series Series Series Series Series Series Series Year 2003-B(2) 2004(2) 2004B(2) 2006(2) 2007(2) 2008B(2) 2009A(2) 2009B(2) 2011

2012 ....... $980,000 $ 440,000 $ 590,000 $ 855,000 $ 3,285,000 $ 2,780,000 $ 910,000 $ 330,000 $ 105,000 2013 ....... 0 460,000 610,000 900,000 2,680,000 2,860,000 920,000 335,000 1,225,000 2014 ....... 0 475,000 625,000 935,000 2,665,000 1,650,000 940,000 345,000 1,330,000 2015 ....... 0 495,000 645,000 965,000 2,705,000 1,695,000 960,000 350,000 1,360,000 2016 ....... 0 510,000 670,000 1,015,000 140,000 1,765,000 985,000 360,000 1,405,000 2017 ....... 0 535,000 695,000 1,060,000 0 1,835,000 1,010,000 370,000 1,445,000 2018 ....... 0 555,000 0 1,105,000 0 1,910,000 1,040,000 380,000 1,335,000 2019 ....... 0 580,000 0 1,150,000 0 1,985,000 1,075,000 395,000 330,000 2020 ....... 0 605,000 0 1,205,000 0 2,065,000 1,110,000 405,000 330,000 2021 ....... 0 630,000 0 1,255,000 0 2,160,000 1,150,000 420,000 95,000 2022 ....... 0 660,000 0 1,315,000 0 2,255,000 1,195,000 420,000 100,000 2023 ....... 0 690,000 0 1,380,000 0 2,355,000 1,240,000 440,000 0 2024 ....... 0 720,000 0 1,445,000 0 2,460,000 1,290,000 445,000 0 2025 ....... 0 0 0 1,520,000 0 2,575,000 0 0 0 2026 ....... 0 0 0 1,585,000 0 2,695,000 0 0 0 2027 ....... 0 0 0 810,000 0 2,825,000 0 0 0 2028 ....... 0 0 0 850,000 0 2,960,000 0 0 0 2029 ....... 0 0 0 885,000 0 3,100,000 0 0 0 2030 ....... 0 0 0 930,000 0 3,245,000 0 0 0 2031 ....... 0 0 0 970,000 0 3,400,000 0 0 0 2032 ....... 0 0 0 1,025,000 0 3,570,000 0 0 0 2033 ....... 0 0 0 1,070,000 0 3,750,000 0 0 0 2034 ....... 0 0 0 1,125,000 0 3,935,000 0 0 0 2035 ....... 0 0 0 1,185,000 0 4,130,000 0 0 0 2036 ....... 0 0 0 1,240,000 0 4,340,000 0 0 0 2037 ....... 0 0 0 0 0 4,555,000 0 0 0 2038 ....... 0 0 0 0 0 4,785,000 0 0 0 2039 ....... 0 0 0 0 0 0 0 0 0 2040 ....... 0 0 0 0 0 0 0 0 0 2041 ....... 0 0 0 0 0 0 0 0 0 Total .... $980,000 $7,355,000 $3,835,000 $27,780,000 $11,475,000 $77,640,000 $13,825,000 $4,995,000 $9,060,000

Notes: (1) Source: the City. (2) Expected to be abated from revenue from the Casino Gaming Taxes, the City home rule sales tax, water and sewer revenues, real estate transfer tax, developer

fees, drainage fees and other sources.

(Continued on following page)

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(Page 2 of 2)

Less: Less: Series 2004 Series 2004B Total Cumulative Calendar Series Series Proposed to Series Proposed to Outstanding Principal Retired Year 2012A 2012B(2) be Refunded 2012C(2) be Refunded Bonds Amount Percent

2012 ....... $ 0 $ 0 $ 0 $ 0 $ 0 $ 10,275,000 $ 10,275,000 5.84% 2013 ....... 145,000 480,000 (460,000) 600,000 (610,000) 10,145,000 20,420,000 11.60% 2014 ....... 270,000 525,000 (475,000) 625,000 (625,000) 9,285,000 29,705,000 16.87% 2015 ....... 270,000 535,000 (495,000) 635,000 (645,000) 9,475,000 39,180,000 22.25% 2016 ....... 270,000 540,000 (510,000) 645,000 (670,000) 7,125,000 46,305,000 26.30% 2017 ....... 270,000 555,000 (535,000) 660,000 (695,000) 7,205,000 53,510,000 30.39% 2018 ....... 280,000 570,000 (555,000) 0 0 6,620,000 60,130,000 34.15% 2019 ....... 275,000 580,000 (580,000) 0 0 5,790,000 65,920,000 37.44% 2020 ....... 290,000 595,000 (605,000) 0 0 6,000,000 71,920,000 40.85% 2021 ....... 540,000 605,000 (630,000) 0 0 6,225,000 78,145,000 44.39% 2022 ....... 550,000 625,000 (660,000) 0 0 6,460,000 84,605,000 48.06% 2023 ....... 660,000 640,000 (690,000) 0 0 6,715,000 91,320,000 51.87% 2024 ....... 675,000 655,000 (720,000) 0 0 6,970,000 98,290,000 55.83% 2025 ....... 690,000 0 0 0 0 4,785,000 103,075,000 58.55% 2026 ....... 710,000 0 0 0 0 4,990,000 108,065,000 61.38% 2027 ....... 725,000 0 0 0 0 4,360,000 112,425,000 63.86% 2028 ....... 745,000 0 0 0 0 4,555,000 116,980,000 66.45% 2029 ....... 760,000 0 0 0 0 4,745,000 121,725,000 69.14% 2030 ....... 780,000 0 0 0 0 4,955,000 126,680,000 71.95% 2031 ....... 805,000 0 0 0 0 5,175,000 131,855,000 74.89% 2032 ....... 825,000 0 0 0 0 5,420,000 137,275,000 77.97% 2033 ....... 850,000 0 0 0 0 5,670,000 142,945,000 81.19% 2034 ....... 875,000 0 0 0 0 5,935,000 148,880,000 84.56% 2035 ....... 900,000 0 0 0 0 6,215,000 155,095,000 88.09% 2036 ....... 925,000 0 0 0 0 6,505,000 161,600,000 91.79% 2037 ....... 955,000 0 0 0 0 5,510,000 167,110,000 94.92% 2038 ....... 990,000 0 0 0 0 5,775,000 172,885,000 98.20% 2039 ....... 1,020,000 0 0 0 0 1,020,000 173,905,000 98.78% 2040 ....... 1,055,000 0 0 0 0 1,055,000 174,960,000 99.38% 2041 ....... 1,095,000 0 0 0 0 1,095,000 176,055,000 100.00% Total .... $19,200,000 $6,905,000 $(6,915,000) $3,165,000 $(3,245,000) $176,055,000

Notes: (1) Source: the City. (2) Expected to be abated from revenue from the Casino Gaming Taxes, the City home rule sales tax, water and sewer revenues, real estate transfer tax,

developer fees, drainage fees and other sources.

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City Debt Certificates(1) (Principal Only)

Refunded Total Cumulative Principal Calendar Series Series Series Debt Debt Retired Year 2002 2006 2012D Certificates Certificates Amount Percent

2012 ........ $ 350,000 $ 580,000 $ 0 $ 0 $ 930,000 $ 930,000 13.79% 2013 ........ 450,000 520,000 460,000 (450,000) 980,000 1,910,000 28.32% 2014 ........ 450,000 560,000 470,000 (450,000) 1,030,000 2,940,000 43.59% 2015 ........ 450,000 555,000 455,000 (450,000) 1,010,000 3,950,000 58.56% 2016 ........ 500,000 570,000 500,000 (500,000) 1,070,000 5,020,000 74.43% 2017 ........ 250,000 305,000 235,000 (250,000) 540,000 5,560,000 82.43% 2018 ........ 300,000 105,000 280,000 (300,000) 385,000 5,945,000 88.14% 2019 ........ 325,000 105,000 300,000 (325,000) 405,000 6,350,000 94.14% 2020 ........ 425,000 0 395,000 (425,000) 395,000 6,745,000 100.00% Total ..... $3,500,000 $3,300,000 $3,095,000 $(3,150,000) $6,745,000

Note: (1) Source: the City.

Statement of Bonded Indebtedness(1)

Ratio To Per Capita Amount Equalized Estimated (2010 Census Applicable Assessed Actual 197,899) City EAV of Taxable Property, 2011 .............. $ 3,598,534,505 100.00% 33.33% $18,183.69 Estimated Actual Value, 2011 .................... $10,795,603,515 300.00% 100.00% $54,551.08

Direct Bonded Debt(2) ........................... $ 176,055,000 4.89% 1.63% $ 889.62 Paid From Non-Property Tax Sources .............. (95,095,000) (2.64%) (0.88%) (480.52) Net Direct Debt(2) ............................ $ 80,960,000 2.25% 0.75% $ 409.10

Overlapping Bonded Debt: Schools ......................................... $ 279,186,894 7.76% 2.59% $ 1,410.75 Other ........................................... 109,152,663 3.03% 1.01% 551.56 Total Overlapping Bonded Debt(3) .............. $ 388,339,557 10.79% 3.60% $ 1,962.31 Total Direct and Overlapping Bonded Debt(2) ... $ 469,299,557 13.04% 4.35% $ 2,371.41

Notes: (1) Source: Kane and DuPage Counties Clerks. (2) Includes the Bonds and excludes the bonds proposed to be refunded. Does not include

water and sewer revenue bonds and the debt certificates. (3) As of June 27, 2012.

MANDATORY REDEMPTION

Certain maturities of the 2012A Bonds are term Bond (“Term Bonds”) and are subject to mandatory redemption prior to maturity on December 30 of the years 2027, 2034, 2037 and 2041 of the years and in the amounts as follows:

For the Bonds maturing on December 30, 2027:

Year Amount ($) 2026 .................. 710,000 2027 ................... 725,000 (stated maturity)


Year Amount ($) 2033 .................. 850,000 2034 ................... 875,000 (stated maturity)


Year Amount ($) 2035 ................... 900,000 2036 ................... 925,000 2037 ................... 955,000 (stated maturity)

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Year Amount ($) 2038 ................... 990,000 2039 ................... 1,020,000 2040 ................... 1,055,000 2041 ................... 1,095,000 (stated maturity)

If the City redeems or purchases Term Bonds of any maturity and cancels the same from Bond Moneys as hereinafter described, then an amount equal to the principal amount of Term Bonds so redeemed or purchased shall be deducted from the mandatory redemption requirement as provided for Term Bonds of such maturity, first, in the current year of such requirement, until the requirement for the current year has been fully met, and then in any order of payment on the Term Bonds as due at maturity or subject to mandatory redemption in any year as the City shall at such time determine.

The City covenants that it will redeem Term Bonds pursuant to the mandatory redemption requirement for such Term Bonds. Proper provision for mandatory redemption having been made, the City covenants that the Term Bonds so selected for redemption shall be payable as at maturity.

INVESTMENT RATING

The 2012A Bonds have been rated "AA+/Stable" by Standard & Poor’s Ratings Services. The City has supplied certain information and material concerning the 2012A Bonds and the City to the rating service shown on the cover page as part of its application for an investment rating on the 2012A Bonds. Generally, such rating service bases its rating on such information and material, and also on such investigations, studies and assumptions that it may undertake independently. There is no assurance that such rating will continue for any given period of time or that it may not be lowered or withdrawn entirely by such rating service if, in its judgment, circumstances so warrant. Any such downward change in or withdrawal of such rating may have an adverse effect on the secondary market price of the 2012A Bonds. An explanation of the significance of investment ratings may be obtained from the rating agency: Standard & Poor’s Ratings Services, 55 Water Street, New York, New York 10041, telephone 212-238-2000.

UNDERWRITING

The 2012A Bonds were offered for sale by the City at a public, competitive sale on September 25, 2012. The best bid submitted at the sale was submitted by Robert W. Baird & Co. Inc., Milwaukee, Wisconsin, and Associates (the "2012A Underwriter"). The City awarded the contract for sale of the 2012A Bonds to the 2012A Underwriter at a price of $19,121,280.00. The 2012A Underwriter has represented to the City that the 2012A Bonds have been subsequently re-offered to the public initially at the yields set forth in this Addendum.

AUTHORIZATION

The Official Statement dated August 30, 2012, and this Addendum dated September 25, 2012, for the $19,200,000 General Obligation Library Bonds, Series 2012A have been prepared under the authority of the City and have been authorized for distribution by the City. /s/ THOMAS J. WEISNER /s/ BRIAN W. CAPUTO Mayor Chief Financial Officer/City Treasurer CITY OF AURORA CITY OF AURORA Kane, DuPage, Kendall and Will Counties, Illinois Kane, DuPage, Kendall and Will Counties, Illinois

New Issue Investment Rating Date of Sale: Tuesday, September 11, 2012 Standard & Poor’s ... The 2012A Bonds: Between 9:00 and 9 15 A.M., C.S.T. (Rating Requested) The 2012B Bonds: Between 9:30 and 9:45 A.M., C.S.T. The 2012C Bonds: Between 10:00 and 10:15 A.M., C.S.T. The 2012D Certificates: Between 10:30 and 10:45 A.M., C.S.T. (Open Speer Auction Internet Sales)

Official Statement

Subject to compliance by the City with certain covenants, in the opinion of Chapman and Cutler LLP, Bond Counsel, under present law, interest on the Debt is excludable from gross income of the owners thereof for federal income tax purposes, and is not included as an item of tax preference in computing the federal alternative minimum tax for individuals and corporations, but such interest is taken into account in computing an adjustment used in determining the federal alternative minimum tax for certain corporations. Interest on the Debt is not exempt from present State of Illinois income taxes. See “TAX EXEMPTION” herein for a more complete discussion.

CITY OF AURORA Kane, DuPage, Kendall and Will Counties, Illinois

$22,400,000 General Obligation Library Bonds, Series 2012A $7,020,000* General Obligation Refunding Bonds, Series 2012B $3,315,000* General Obligation Refunding Bonds, Series 2012C

$3,285,000* Refunding Debt Certificates, Series 2012D (Special Service Area Number 34 Project)

Dated Date of Delivery Book-Entry Due Serially as Detailed Herein

The $22,400,000 General Obligation Library Bonds, Series 2012A (the “2012A Bonds”), the $7,020,000* General Obligation Refunding Bonds, Series 2012B (the “2012B Bonds”) and the $3,315,000* General Obligation Refunding Bonds, Series 2012C (the “2012C Bonds”) (collectively, the “Bonds”) and the $3,285,000* Refunding Debt Certificates, Series 2012D (Special Service Area Number 34 Project) (the “2012D Certificates” and together with the Bonds, the “Debt”) are being issued by the City of Aurora, Kane, DuPage, Kendall and Will Counties, Illinois (the “City”). Interest on the Debt is payable semiannually on June 30 and December 30 of each year, commencing June 30, 2013. Interest is calculated based on a 360-day year of twelve 30-day months. The Debt will be issued using a book-entry system. The Depository Trust Company (“DTC”), New York, New York, will act as securities depository for the Debt. The ownership of one fully registered Bond or Certificate for each maturity will be registered in the name of Cede & Co., as nominee for DTC and no physical delivery of Bonds or Certificates will be made to purchasers. The Debt will mature on December 30 as detailed herein.

OPTIONAL REDEMPTION

The 2012A Bonds due December 30, 2013-2021, inclusive, are non-callable. The 2012A Bonds due December 30, 2022-2041, inclusive, are callable in whole or in part on any date on or after December 30, 2021, at a price of par and accrued interest. If less than all the 2012A Bonds are called, they shall be redeemed in such principal amounts and from such maturities as determined by the City and within any maturity by lot. See “OPTIONAL REDEMPTION” herein.

The 2012B Bonds due December 30, 2013-2021, inclusive, are non-callable. The 2012B Bonds due December 30, 2022-2024, inclusive, are callable in whole or in part on any date on or after December 30, 2021, at a price of par and accrued interest. If less than all the 2012B Bonds are called, they shall be redeemed in such principal amounts and from such maturities as determined by the City and within any maturity by lot. See “OPTIONAL REDEMPTION” herein.

The 2012C Bonds are not subject to optional redemption prior to maturity.

The 2012D Certificates are not subject to optional redemption prior to maturity.

PURPOSE, LEGALITY AND SECURITY

The 2012A Bond proceeds will be used to finance construction of a new central library, other improvements to existing library facilities and to pay the costs of issuing the 2012A Bonds. See “THE PROJECT – The 2012A Bonds” herein.

The 2012B Bond proceeds will be used to currently refund a portion of the City’s outstanding General Obligation Bonds, Series 2004 and to pay the costs of issuing the 2012B Bonds. See “PLAN OF FINANCING – The 2012B Bonds” herein.

The 2012C Bond proceeds will be used to currently refund a portion of the City’s outstanding General Obligation Corporate Purpose Refunding Bonds, Series 2004B and to pay the costs of issuing the 2012C Bonds. See “PLAN OF FINANCING – The 2012C Bonds” herein.

The 2012D Certificate proceeds will be used to currently refund a portion of the City’s outstanding Debt Certificates, Series 2002 (Special Service Area Number 34 Project) and to pay the costs of issuing the 2012D Certificates. See “PLAN OF FINANCING – The 2012D Certificates” herein.

In the opinion of Chapman and Cutler LLP, Chicago, Illinois, Bond Counsel, the 2012A Bonds, 2012B Bonds and 2012C Bonds will constitute valid and legally binding obligations of the City payable both as to principal and interest from ad valorem taxes levied against all taxable property therein without limitation as to rate or amount, except that the rights of the owners of the Bonds and the enforceability of the Bonds may be limited by bankruptcy, insolvency, moratorium, reorganization and other similar laws affecting creditors’ rights and by equitable principles, whether considered at law or in equity, including the exercise of judicial discretion.

In the opinion of Chapman and Cutler LLP, Chicago, Illinois, Bond Counsel, the 2012D Certificates are a direct obligation of the City, payable from the corporate funds of the City and such other sources of payment as are pledged or otherwise lawfully available. For the purpose of providing the funds necessary to pay the interest and principal due, the City irrevocably agrees to budget and appropriate funds of the City annually and in a timely manner so as to provide for the making of all payments then due. See “DESCRIPTION OF THE 2012D CERTIFICATES” herein.

The City does not intend to designate the Debt as “qualified tax-exempt obligations” pursuant to the small issuer exception provided by Section 265(b)(3) of the Internal Revenue Code of 1986, as amended.

This Official Statement is dated August 30, 2012, and has been prepared under the authority of the City. An electronic copy of this Official Statement is available from the www.speerfinancial.com web site under “Debt Auction Center/Competitive Official Statement Sales Calendar”. Additional copies may be obtained from Mr. Brian Caputo, Chief Financial Officer/City Treasurer, City of Aurora, 44 East Downer Place, Aurora, Illinois 60507-3302, or from the Independent Public Finance Consultants to the City:

Established 1954

Speer Financial, Inc. INDEPENDENT PUBLIC FINANCE CONSULTANTS

ONE NORTH LASALLE STREET, SUITE 4100 • CHICAGO, ILLINOIS 60602 Telephone: (312) 346-3700; Facsimile: (312) 346-8833

*Subject to change. www.speerfinancial.com

City of Aurora, Kane, DuPage, Kendall and Will Counties, Illinois General Obligation Library Bonds, Series 2012A General Obligation Refunding Bonds, Series 2012B General Obligation Refunding Bonds, Series 2012C Refunding Debt Certificates (Special Service Area Number 34 Project), Series 2012D

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For purposes of compliance with Rule 15c2-12 of the Securities and Exchange Commission, this document, as

the same may be supplemented or corrected by the City from time to time (collectively, the “Official Statement”), may be treated as an Official Statement with respect to the Debt described herein that is deemed near final as of the date hereof (or the date of any such supplement or correction) by the City.

The Official Statement, when further supplemented by an addendum or addenda specifying the maturity dates,

principal amounts and interest rates of the Debt, together with any other information required by law or deemed appropriate by the City, shall constitute a “Final Official Statement” of the City with respect to the Debt, as that term is defined in Rule 15c2-12. Any such addendum shall, on and after the date thereof, be fully incorporated herein and made a part hereof by reference.

No dealer, broker, salesman or other person has been authorized by the City to give any information or to

make any representations with respect to the Debt other than as contained in the Official Statement or the Final Official Statement and, if given or made, such other information or representations must not be relied upon as having been authorized by the City. Certain information contained in the Official Statement and the Final Official Statement may have been obtained from sources other than records of the City and, while believed to be reliable, is not guaranteed as to completeness. THE INFORMATION AND EXPRESSIONS OF OPINION IN THE OFFICIAL STATEMENT AND THE FINAL OFFICIAL STATEMENT ARE SUBJECT TO CHANGE, AND NEITHER THE DELIVERY OF THE OFFICIAL STATEMENT OR THE FINAL OFFICIAL STATEMENT NOR ANY SALE MADE UNDER EITHER SUCH DOCUMENT SHALL CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE CITY SINCE THE RESPECTIVE DATES THEREOF.

References herein to laws, rules, regulations, ordinances, resolutions, agreements, reports and other

documents do not purport to be comprehensive or definitive. All references to such documents are qualified in their entirety by reference to the particular document, the full text of which may contain qualifications of and exceptions to statements made herein. Where full texts have not been included as appendices to the Official Statement or the Final Official Statement, they will be furnished on request. This Official Statement does not constitute an offer to sell, or solicitation of an offer to buy, any securities to any person in any jurisdiction where such offer or solicitation of such offer would be unlawful.

The tax advice contained in this Official Statement is not intended or written by the City, its Bond Counsel, or

any other tax practitioner to be used, and it cannot be used, by any taxpayer for the purpose of avoiding penalties that may be imposed on the taxpayer. The tax advice contained in this Official Statement was written to support the promotion or marketing of the Debt. Each taxpayer should seek advice based on the taxpayer’s particular circumstances from an independent tax advisor.


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DEBT ISSUE SUMMARY This Debt Issue Summary is expressly qualified by the entire Official Statement, including the Official Notices of Sale and the Official Bid Forms, which are provided for the convenience of potential investors and which should be reviewed in their entirety by potential investors. The following descriptions apply equally to the 2012A Bonds, the 2012B Bonds, the 2012C Bonds and the 2012D Certificates. Other terms specific to each series are provided separately herein. Issuer: City of Aurora, Kane, DuPage, Kendall and Will Counties, Illinois. Dated Date: Date of delivery. Interest Due: Each June 30 and December 30, commencing June 30, 2013. Authorization: The City is a home rule unit under the Illinois Constitution and as such has no debt

limitation and is not required to seek referendum approval to issue the Debt. Credit Rating: A credit rating for the Debt has been requested from Standard & Poor’s, a

Division of the McGraw-Hill Companies Tax Exemption: Chapman and Cutler LLP, Chicago, Illinois, will provide an opinion as to the tax

exemption of the Debt as discussed under “TAX EXEMPTION” in this Official Statement. Interest on the Debt is not exempt from present State of Illinois income taxes.

Bank Qualification: The Debt is not “qualified tax-exempt obligations” under Section 265(b)(3) of the

Internal Revenue Code of 1986, as amended. Debt Registrar/Paying Agent: Amalgamated Bank of Chicago, Chicago, Illinois. Verification Agent: Dunbar Breitweiser & Co., LLP, Bloomington, Illinois. Book-Entry Form: The Debt will be registered in the name of Cede & Co. as nominee for The

Depository Trust Company (“DTC”), New York, New York. DTC will act as securities depository of the Debt. See APPENDIX B herein.

Denomination: $5,000 or integral multiples thereof. Financial Advisor: Speer Financial, Inc., Chicago, Illinois.


4

THE 2012A BONDS Issue: $22,400,000 General Obligation Library Bonds, Series 2012A. Principal Due: Serially each December 30, commencing December 30, 2013 through 2041, as

detailed below. Optional Redemption: The 2012A Bonds maturing on or after December 30, 2022, are callable at the

option of the City on any date on or after December 30, 2021, at a price of par plus accrued interest. See “OPTIONAL REDEMPTION” herein.

Security: The 2012A Bonds are valid and legally binding obligations of the City payable

both as to principal and interest from ad valorem taxes levied against all taxable property therein without limitation as to rate or amount.

Purpose: The 2012A Bond proceeds will be used to finance construction of a new central

library, other improvements to existing library facilities and to pay the costs of issuing the 2012A Bonds. See “THE PROJECT – The 2012A Bonds” herein.

Delivery: The 2012A Bonds are expected to be delivered on or about October 1, 2012.

AMOUNTS, MATURITIES, INTEREST RATES, PRICES OR YIELDS AND CUSIP NUMBERS Principal Due Interest Yield or CUSIP Principal Due Interest Yield or CUSIP Amount Dec. 30 Rate Price Number Amount Dec. 30 Rate Price Number $ 50,000 .... 2013 ______% ______% __________ $ 835,000 .... 2028 ______% ______% __________ 270,000 .... 2014 ______% ______% __________ 865,000 .... 2029 ______% ______% __________ 275,000 .... 2015 ______% ______% __________ 900,000 .... 2030 ______% ______% __________ 280,000 .... 2016 ______% ______% __________ 935,000 .... 2031 ______% ______% __________ 285,000 .... 2017 ______% ______% __________ 975,000 .... 2032 ______% ______% __________ 300,000 .... 2018 ______% ______% __________ 1,015,000 .... 2033 ______% ______% __________ 305,000 .... 2019 ______% ______% __________ 1,055,000 .... 2034 ______% ______% __________ 320,000 .... 2020 ______% ______% __________ 1,095,000 .... 2035 ______% ______% __________ 575,000 .... 2021 ______% ______% __________ 1,140,000 .... 2036 ______% ______% __________ 590,000 .... 2022 ______% ______% __________ 1,185,000 .... 2037 ______% ______% __________ 710,000 .... 2023 ______% ______% __________ 1,245,000 .... 2038 ______% ______% __________ 735,000 .... 2024 ______% ______% __________ 1,310,000 .... 2039 ______% ______% __________ 755,000 .... 2025 ______% ______% __________ 1,375,000 .... 2040 ______% ______% __________ 780,000 .... 2026 ______% ______% __________ 1,440,000 .... 2041 ______% ______% __________ 800,000 .... 2027 ______% ______% __________

Any consecutive maturities may be aggregated into no more than five term bonds at the option of the bidder, in which case the mandatory redemption provisions shall be on the same schedule as above.


5

THE 2012B BONDS Issue: $7,020,000* General Obligation Refunding Bonds, Series 2012B. Principal Due: Serially each December 30, commencing December 30, 2013 through 2024, as

detailed below. Optional Redemption: The 2012B Bonds maturing on or after December 30, 2022, are callable at the

option of the City on any date on or after December 30, 2021, at a price of par plus accrued interest. See “OPTIONAL REDEMPTION” herein.

Security: The 2012B Bonds are valid and legally binding obligations of the City payable


Purpose: The 2012B Bond proceeds will be used to currently refund a portion of the City’s

outstanding General Obligation Bonds, Series 2004 and to pay the costs of issuing the 2012B Bonds. See “PLAN OF FINANCING – The 2012B Bonds” herein.

Delivery: The 2012B Bonds are expected to be delivered on or about October 2, 2012.

AMOUNTS*, MATURITIES, INTEREST RATES, PRICES OR YIELDS AND CUSIP NUMBERS Principal Due Interest Yield or CUSIP Principal Due Interest Yield or CUSIP Amount* Dec. 30 Rate Price Number Amount* Dec. 30 Rate Price Number $505,000 .... 2013 ______% ______% __________ $585,000 .... 2019 ______% ______% __________ 545,000 .... 2014 ______% ______% __________ 600,000 .... 2020 ______% ______% __________ 550,000 .... 2015 ______% ______% __________ 610,000 .... 2021 ______% ______% __________ 550,000 .... 2016 ______% ______% __________ 630,000 .... 2022 ______% ______% __________ 565,000 .... 2017 ______% ______% __________ 645,000 .... 2023 ______% ______% __________ 570,000 .... 2018 ______% ______% __________ 665,000 .... 2024 ______% ______% __________

Any consecutive maturities may be aggregated into no more than five term bonds at the option of the bidder, in which case the mandatory redemption provisions shall be on the same schedule as above.

*Subject to change.


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THE 2012C BONDS Issue: $3,315,000* General Obligation Refunding Bonds, Series 2012C. Principal Due: Serially each December 30, commencing December 30, 2013 through 2017, as

detailed below. Optional Redemption: The 2012C Bonds are not subject to optional redemption prior to maturity. Security: The 2012C Bonds are valid and legally binding obligations of the City payable


Purpose: The 2012C Bond proceeds will be used to currently refund a portion of the City’s

outstanding General Obligation Corporate Purpose Refunding Bonds, Series 2004B and to pay the costs of issuing the 2012C Bonds. See “PLAN OF FINANCING – The 2012C Bonds” herein.

Delivery: The 2012C Bonds are expected to be delivered on or about October 2, 2012.

AMOUNTS*, MATURITIES, INTEREST RATES, PRICES OR YIELDS AND CUSIP NUMBERS Principal Due Interest Yield or CUSIP Principal Due Interest Yield or CUSIP Amount* Dec. 30 Rate Price Number Amount* Dec. 30 Rate Price Number $645,000 .... 2013 ______% ______% __________ $675,000 ..... 2016 ______% ______% __________ 655,000 .... 2014 ______% ______% __________ 680,000 ..... 2017 ______% ______% __________ 660,000 .... 2015 ______% ______% __________

Any consecutive maturities may be aggregated into no more than two term bonds at the option of the bidder, in which case the mandatory redemption provisions shall be on the same schedule as above.

*Subject to change.


7

THE 2012D CERTIFICATES Issue: $3,285,000* Refunding Debt Certificates, Series 2012D (Special Service Area

Number 34 Project). Principal Due: Serially each December 30, commencing December 30, 2013 through 2020, as

detailed below. Optional Redemption: The 2012D Certificates are not subject to optional redemption prior to

maturity. Security: The 2012D Certificates are a direct obligation of the City, payable from the

corporate funds of the City and such other sources of payment as are pledged or otherwise lawfully available. For the purpose of providing the funds necessary to pay the interest and principal due, the City irrevocably agrees to budget and appropriate funds of the City annually and in a timely manner so as to provide for the making of all payments then due. See “DESCRIPTION OF THE 2012D CERTIFICATES” herein.

Purpose: The 2012D Certificate proceeds will be used to currently refund a portion of the

City’s outstanding Debt Certificates, Series 2002 and to pay the costs of issuing the 2012D Certificates. See “PLAN OF FINANCING – The 2012D Certificates” herein.

Delivery: The 2012D Bonds are expected to be delivered on or about October 1, 2012.

AMOUNTS*, MATURITIES, INTEREST RATES, PRICES OR YIELDS AND CUSIP NUMBERS Principal Due Interest Yield or CUSIP Principal Due Interest Yield or CUSIP Amount* Dec. 30 Rate Price Number Amount* Dec. 30 Rate Price Number $505,000 .... 2013 ______% ______% __________ $255,000 ..... 2017 ______% ______% __________ 500,000 .... 2014 ______% ______% __________ 300,000 ..... 2018 ______% ______% __________ 485,000 .... 2015 ______% ______% __________ 315,000 ..... 2019 ______% ______% __________ 520,000 .... 2016 ______% ______% __________ 405,000 ..... 2020 ______% ______% __________

Any consecutive maturities may be aggregated into no more than four term certificates at the option of the bidder, in which case the mandatory redemption provisions shall be on the same schedule as above.

*Subject to change.


8

CITY OF AURORA Kane, DuPage, Kendall and Will Counties, Illinois City Council Thomas J. Weisner Mayor Aldermen

Lynda D. Elmore Stephanie A. Kifowit Robert J. O’Connor Scheketa Hart-Burns Richard A. Lawrence John S. Peters

Juany Garza Allan Lewandowski Michael B. Saville Richard C. Irvin Richard B. Mervine Abby D. Schuler

_____________________________________

Cheryl M. Vonhoff Brian W. Caputo City Clerk Chief Financial Officer/City Treasurer

Alayne M. Weingartz Corporation Counsel

THE CITY

The City, currently Illinois’ second largest municipality in terms of population, counting its recent growth, became a city in 1857 when the two incorporated Villages of East Aurora and West Aurora (as related to the Fox River) so voted. In 1892, when the City’s population was some 12,000, Aurora became known as the “City of Lights” because it was the world’s first city to use electric streetlights.

Originally located solely in the southeastern portion of Kane County, the City expanded into DuPage County in 1973, when it annexed a 4,139-acre (6¼ square miles) development district, which now contains the Westfield Fox Valley Mall. In 1996, the City expanded into Kendall and Will Counties with the annexation of 570 acres. The City currently covers 46 square miles and is approximately 36 miles west of downtown Chicago. The population in 1980, according to the U.S. Census Bureau, was 81,293. The 1990 U.S. Census Bureau report for the City’s population was 99,581, which is an increase of 22.50% over 1980. The 2000 Census recorded the population as 142,990. In 2006, a special census resulted in an official population of 164,681 and the 2010 Census recorded a population of 197,899.


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The City operates under a mayor-council form of government. The Mayor is elected on an at-large basis and serves a term of four years. The City Council consists of twelve aldermen, two of whom are elected on an at-large basis and ten of whom are elected from individual wards, all of whom serve overlapping four-year terms. Other officers are appointed.

Basic services provided by the City include police protection, fire protection, emergency medical service, maintenance of highways and streets, refuse and recycling collection, water supply, and library services. Sanitary sewerage treatment is provided by the Fox Metro Water Reclamation District, a separate unit of government. A variety of recreation programs are provided by the Fox Valley Park District, also a separate unit of government.

Pursuant to authority granted by Article VII of the 1970 Constitution of the State of Illinois, any municipality

which, according to the most recent official U.S. Census, has a population of more than 25,000 is a home rule unit. The City is a home rule unit based upon the 2010 Census and may exercise any power and perform any function pertaining to its government and affairs. Transportation

The East-West Tollway (Interstate 88) links Aurora east to Chicago, and west to DeKalb, Dixon, Rock Falls, Sterling and the Quad Cities area on the Illinois-Iowa border. State Highways 25 and 31 run north-south along the Fox River to Batavia, Geneva, St. Charles, and Elgin. Aurora is approximately bordered by Gordon Road on the west, Route 59 on the east, 111th Street on the south and Route 56 on the north. In addition to these roadways, rail transportation, both passenger and freight, is available from Amtrak, the Burlington Northern Railroad, and two freight lines. Metra, the regional commuter transportation authority, provides commuter rail service to Chicago. Commuting time to Chicago via Metra is approximately one hour. Intra and inter-city bus services are also available. The City-owned airport is located in Sugar Grove Township, just eight miles west of downtown Aurora. The airport is capable of handling jet aircraft and caters to corporate and other private aircraft traffic. Education

Illinois’ first public school system was established more than 140 years ago in Aurora. School District Numbers 101, 129, 131, 200, 204, 302 and 308 have a combined enrollment of over 55,000 students. These Districts provide the City with 37 elementary, ten junior high and five high schools. Indian Prairie School District 204 is the largest of the districts, with an Early Childhood Center, 21 elementary schools, seven middle schools, three high schools and an alternative high school. It serves the far east side of Aurora and much of neighboring Naperville. Students have alternatives to public education in nine parochial elementary schools and four Christian/Catholic high schools. Additionally, the Illinois Mathematics and Science Academy is located in the City, drawing talented Illinois students in mathematics and science and has an enrollment of approximately 640. Advanced education is available through Community College District Numbers 502 and 516, and Aurora University, which have a combined enrollment of approximately 45,000 students.


10

Community Life

The City maintains 22 park sites totaling nearly 525 acres, which includes two 18-hole golf courses and a zoo. The Fox Valley Park District has 155 park sites totaling approximately 2,400 acres. The District operates the Blackberry Historical Farm-Village, a golf course, a nature center, and numerous recreational programs. In addition, the District operates three fitness/athletic centers and two aquatic centers. Also available locally are a symphony orchestra and an historical society.

Hospitals located in the City are part of a healthcare network that provide linkages in the Fox Valley region providing physician referral and community education services. Rush-Copley Medical Center is a state-of-the-art 98-acre hospital campus on Route 34 located in the southeast area of the City. The $80 million campus includes a $67 million ranch-style hospital and a $13 million physician office building. The complex has 210 beds and a medical staff of about 500 people. Rush-Copley Healthplex, a state-of-the-art fitness center, opened in 1997. Provena-Mercy Center for Health Care Services located in the northwest area of the City offers a complete continuum of care in both medical treatment and behavioral health services. The Mercy complex has 356 beds and a medical staff of nearly 400 people.

The City is a regional center for museums, the sciences and the performing arts, including the nationally

renowned Paramount Arts Centre and Sci-Tech Interactive Center. The City experienced a large boost in its economic base in 1975 with the opening of the Fox Valley Shopping

Center (now named Westfield Fox Valley Mall and Chicago Premium Outlets). The Center completed a $12 million renovation in 1998. Anchor retail department stores in the center include Macy's; Carson Pirie Scott; Sears, Roebuck & Co.; and J.C. Penney. Carson's completed a multi-million dollar renovation of their store, formerly occupied by Lord & Taylor. Macy’s completed a multi-million renovation to their store in 1995. Near the Westfield Fox Valley Mall is the regional service center for Metropolitan Life Insurance Company. In 2004, the City’s tax base received another significant boost with the opening of Chicago Premium Outlets at the northeast corner of Interstate 88 and Farnsworth Avenue. Chicago Premium Outlets is an upscale, fashion-oriented center with more than 100 stores.

SOCIOECONOMIC INFORMATION The following statistics pertain principally to the City, Kane, DuPage, Kendall and Will Counties and the State of Illinois (the “State”). Population

The City’s population has grown at a rate faster than that of both Kane County and the State of Illinois. Kane County is essentially rural with a number of growing cities, and major developments in DuPage County provide jobs and sales tax revenue (Westfield Fox Valley Mall) for the City in addition to drawing residents of DuPage County toward the Aurora area. A table of population statistics follows. In 1996, the City expanded into rural Kendall and Will Counties.

Population(1)

Percent Increase 1980 1990 2000 2010 2000-2010 Aurora.................... 81,293 99,581 142,990 197,899 38.40% Kane County ............... 278,405 319,471 404,119 515,269 27.50% State of Illinois ......... 11,426,518 11,430,602 12,419,293 12,830,632 3.31% Note: (1) Source: U.S. Bureau of the Census.


11

The City’s total population is 197,899 and the City’s population by county for selected prior years was as

follows:

City of Aurora Population(1)

1980 1990 2000 2006 2010 Kane County Portion ............................. 79,610 84,770 100,290 105,813 130,976 DuPage County Portion ........................... 1,683 14,811 38,905 45,799 49,433 Will and Kendall Counties Portion ............... NA NA 3,795 13,069 17,490 Total City .................................... 81,293 99,581 142,990 164,681 197,899 Note: (1) Source: U.S. Bureau of the Census.

Employment Numerous employers are located within the City and in surrounding communities, including the “Research and Development Corridor” immediately north of the City, and throughout the Chicago metropolitan area. The following tables show large employers in or adjacent to the City and in the surrounding area. The following employment data shows a consistently diverse and strong growth trend for employment in Kane, DuPage and Will Counties. This data is NOT comparable to similar U.S. Census statistics, which would include government employment, and establishments not covered by the Illinois Unemployment Insurance Program, and could classify employment categories differently.

Kane County Private, Non-Agricultural Employment Covered by the Illinois Unemployment Insurance Act(1)

(Data as of March for each Year) 2007 2008 2009 2010 2011 Farm and Forestry .................................... 754 735 655 627 563 Mining and Quarrying ................................. 123 110 130 97 107 Construction ........................................ 12,136 10,790 8,240 6,797 6,969 Manufacturing ....................................... 34,227 33,825 29,883 27,699 29,454 Transportation, Communications, Utilities ............ 7,588 8,157 7,709 7,209 6,799 Wholesale Trade...................................... 11,105 11,246 10,913 11,261 11,646 Retail Trade ........................................ 21,399 21,856 20,918 20,202 19,988 Finance, Insurance, Real Estate ...................... 9,898 9,614 9,257 8,850 8,449 Services(2) ......................................... 80,377 79,685 75,299 72,923 72,524 Total ............................................. 177,607 176,018 163,004 155,665 156,499 Notes: (1) Source: Illinois Department of Employment Security.

(2) Includes unclassified establishments.


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DuPage County Private, Non-Agricultural Employment Covered by the Illinois Unemployment Insurance Act(1)

(Data as of March for each Year) 2007 2008 2009 2010 2011 Farm, Forestry, Fisheries ............................ 353 338 310 280 243 Mining and Quarrying ................................. 157 112 90 84 77 Construction ........................................ 29,278 26,903 23,042 19,192 19,063 Manufacturing ....................................... 60,122 59,719 53,193 49,208 50,700 Transportation, Communications, Utilities ............ 40,010 41,205 37,913 34,566 34,315 Wholesale Trade...................................... 50,083 50,669 47,984 44,552 45,609 Retail Trade ........................................ 69,136 68,274 61,886 59,906 60,903 Finance, Insurance, Real Estate ...................... 46,031 43,489 39,579 37,239 37,365 Services(2) ......................................... 243,456 247,072 237,881 239,883 251,853 Total ............................................. 538,626 537,781 501,878 484,907 500,128 Notes: (1) Source: Illinois Department of Employment Security. (2) Includes unclassified establishments.

Will County Private, Non-Agricultural Employment Covered by the Illinois Unemployment Insurance Act(1)

(Data as of March for each Year) 2007 2008 2009 2010 2011 Farm and Forestry .................................... 302 269 261 243 233 Mining and Construction .............................. 14,593 14,401 10,997 9,743 9,500 Manufacturing ....................................... 14,295 20,391 19,307 18,185 19,544 Transportation, Communications, Utilities ............ 12,182 13,528 13,320 13,461 14,366 Wholesale Trade...................................... 11,222 12,121 12,026 12,605 12,854 Retail Trade ........................................ 25,606 27,175 25,863 26,059 26,716 Finance, Insurance, Real Estate ...................... 6,644 6,828 6,754 7,875 7,638 Services(2) ......................................... 69,821 66,058 65,779 67,323 70,479 Total ............................................. 154,665 160,771 154,307 155,494 161,330 Percent Change..................................... 6.50%(3) 3.95% (4.02%) 0.77% 3.75% Notes: (1) Source: Illinois Department of Employment Security. (2) Includes unclassified establishments. (3) Percent increase based on 145,222 employment in 2006.

Following are lists of large employers located in the City and in the surrounding area.

Major City Employers(1) Approximate Name Product/Service Employment Caterpillar, Inc. .................................... Construction Machinery ........................................ 2,500 Rush-Copley Medical Center ........................... Hospital and Medical Center ................................... 2,000 School District Number 129 ........................... School System ................................................. 1,500(2) School District Number 131 ........................... School System ................................................. 1,320(2) Provena Mercy Medical Center ......................... Medical and Psychiatric Hospital .............................. 1,300 City of Aurora....................................... Government .................................................... 1,280 Dreyer Medical Clinic ................................ Medical Services .............................................. 1,200 School District Number 204 ........................... School System ................................................. 1,200(2) Hollywood Casino..................................... Riverboat Casino .............................................. 1,009 MetLife, Inc......................................... Insurance and Financial Services .............................. 720

Notes: (1) Source: 2012 Illinois Manufacturers Directory, 2012 Illinois Services Directory and a selective telephone survey.

(2) Administrative office and majority of school sites located in the City. Limited number of school sites located in adjacent areas.


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Major Area Employers(1)

Approximate Location Name Business or Product Employment Naperville ......... Alcatel-Lucent ................................... Telecommunications Research and Development .......... 3,400 Wheaton ............ DuPage County Government Center .................. Government Administration ............................ 3,400 Naperville ......... Edward Hospital .................................. General Hospital ..................................... 3,000 Downers Grove ...... Advocate Good Samaritan Hospital ................. Hospital and Health Care Services .................... 2,700 Naperville ......... Nicor Gas ........................................ Gas Utility Divisional and Corporate Headquarters .... 2,265 Downers Grove ...... GCA Services Group, Inc. ......................... School Maintenance and Cleaning Contractors .......... 2,000 Batavia ............ Fermi Research Alliance .......................... High Energy Physics Research Laboratory .............. 1,900 Downers Grove ...... Sara Lee Corp. ................................... Packaged Baked Goods Corporate Headquarters .......... 1,700 Geneva ............. Delnor Hospital .................................. General Hospital ..................................... 1,650 Naperville ......... BP, Global Fuels Technology Division ............. Chemical and Petrochemical Research .................. 1,600 Naperville ......... OfficeMax, Inc. .................................. Wholesale Office Equipment Corporate Headquarters .... 1,500 Sugar Grove ........ Waubonsee Community College District Number 516 ... Education ............................................ 1,460 Naperville ......... Tellabs .......................................... Communications Corporate Headquarters ................ 1,250 Naperville ......... Nalco Company .................................... Water Treatment Company Headquarters ................. 1,200 Wheaton ............ Wheaton College .................................. Private College ...................................... 885 Downers Grove ...... DeVry, Inc. ...................................... Business Education Services .......................... 850 Batavia ............ Suncast Corp. .................................... Plastic Garden Hose Reels and Garden Sheds ........... 800 Naperville ......... North Central College ............................ Liberal Arts College ................................. 700 Geneva ............. Peacock Engineering Co. .......................... Packaging of Shelf-Stable and Refrigerated Food Products ........................................... 600 Downers Grove ...... R.R. Donnelley & Sons Co. ........................ Business Consulting .................................. 600 Downers Grove ...... Coventry Health Care/First Health, Inc. .......... Health Benefits Services Provider .................... 530 Downers Grove ...... FTD, Inc. ........................................ Direct Flower and Gift Marketing ..................... 510 Downers Grove ...... Ambitech Engineering Corp. ....................... Engineering, Procurement and Construction Management . 500 West Chicago ....... General Mills, Inc. .............................. Dry Food Products .................................... 500 Naperville ......... Castrol Industrial North America, Inc. ........... Corporate Headquarters and Lubricating Oils .......... 500 Naperville ......... Tiger Direct, Inc. ............................... Mail Order Computer Supplies ......................... 500 Naperville ......... ConAgra Foods, Inc. .............................. Food Processing and Packaging ........................ 500

Note: (1) Source: 2012 Illinois Manufacturers Directory, 2012 Illinois Services Directory and telephone survey.

The following tables show employment by industry and by occupation for the City, DuPage County, Kane County and the State as reported by the 2006-2010 American Community Survey 5-Year estimates from the U.S. Bureau of the Census.

Employment By Industry(1) The City DuPage County Kane County State of Illinois Classification Number Percent Number Percent Number Percent Number Percent Agriculture, Forestry, Fishing and Hunting, and Mining ................................... 181 0.2% 1,073 0.2% 1,305 0.5% 65,279 1.1% Construction .................................. 5,383 5.8% 25,942 5.5% 18,036 7.4% 361,528 6.0% Manufacturing ................................. 16,398 17.7% 58,574 12.5% 42,683 17.5% 789,606 13.0% Wholesale Trade................................ 4,142 4.5% 23,449 5.0% 10,823 4.4% 207,774 3.4% Retail Trade .................................. 11,239 12.1% 50,203 10.7% 28,315 11.6% 657,040 10.8% Transportation and Warehousing, and Utilities .. 5,262 5.7% 25,172 5.4% 12,635 5.2% 356,345 5.9% Information ................................... 1,749 1.9% 12,881 2.7% 6,133 2.5% 140,821 2.3% Finance, Insurance, Real Estate, and Rental and Leasing .................................. 7,912 8.5% 46,481 9.9% 17,934 7.4% 475,856 7.8% Professional, Scientific, Management, Administrative, and Waste Management Services . 12,184 13.1% 64,219 13.7% 29,386 12.1% 657,479 10.8% Educational, Health and Social Services ........ 15,564 16.8% 92,736 19.7% 43,293 17.8% 1,312,067 21.6% Arts, Entertainment, Recreation, Accommodation and Food Services ............................. 7,411 8.0% 36,162 7.7% 17,861 7.3% 518,641 8.6% Other Services (Except Public Administration) .. 3,644 3.9% 22,231 4.7% 10,104 4.1% 288,895 4.8% Public Administration .......................... 1,764 1.9% 10,982 2.3% 5,338 2.2% 231,517 3.8% Total ....................................... 92,833 100.0% 470,105 100.0% 243,846 100.0% 6,062,848 100.0% Note: (1) Source: U. S. Bureau of the Census, 2006-2010 American Community Survey 5 year estimates.


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Employment By Occupation(1)

The City DuPage County Kane County State of Illinois Classification Number Percent Number Percent Number Percent Number Percent Management, Professional, and Related Occupations ................................. 30,568 32.9% 205,759 43.8% 83,469 34.2% 2,159,236 35.6% Service Occupations .......................... 13,686 14.7% 56,316 12.0% 33,970 13.9% 989,889 16.3% Sales and Office Occupations ................. 23,874 25.7% 131,886 28.1% 65,169 26.7% 1,566,966 25.8% Natural Resources, Construction and Maintenance Occupations ..................... 6,431 6.9% 30,216 6.4% 21,116 8.7% 490,469 8.1% Production, Transportation, and Material Moving Occupations .......................... 18,274 19.7% 45,928 9.8% 40,122 16.5% 856,288 14.1% Total ...................................... 92,833 100.0% 470,105 100.0% 243,846 100.0% 6,062,848 100.0% Note: (1) Source: U. S. Bureau of the Census, 2006-2010 American Community Survey 5 year estimates.

Unemployment

The following table shows the trend in annual average unemployment rates for the City, DuPage and Kane Counties and the State. Annual Average Unemployment Rates(1)

Calendar The DuPage Kane State of Year City County County Illinois

2002 ............... 7.0% 5.5% 6.5% 6.5% 2003 .............. 7.3% 5.5% 6.7% 6.7% 2004 ............... 6.5% 5.0% 6.1% 6.2% 2005 ............... 6.2% 4.7% 5.8% 5.8% 2006 ............... 4.5% 3.4% 4.3% 4.6% 2007 ............... 5.1% 3.8% 4.8% 5.1% 2008 ............... 6.5% 5.0% 6.2% 6.4% 2009 ............... 10.8% 8.4% 10.3% 10.0% 2010 ............... 10.1% 8.5% 10.5% 10.5% 2011 ............... 9.5% 8.0% 9.9% 9.8% 2012(2) ............ 8.9% 7.6% 8.7% 9.3%

Notes: (1) Source: Illinois Department of Employment Security. (2) Preliminary rates for the month of July 2012.

Building Permits

Building Permits(1) (Excludes the Value of Land)

Calendar No. of Year Permits Value

2003 .......... 5,657 $452,373,788 2004 .......... 5,549 399,277,210 2005 .......... 4,788 349,972,698 2006 .......... 5,927 426,349,462 2007 .......... 5,879 282,181,142 2008 .......... 4,986 362,969,837 2009 .......... 4,698 322,872,033 2010 .......... 4,655 130,576,466 2011 .......... 4,437 95,684,453



15

Housing

The 2006-2010 American Community Survey 5-Year estimates from the U.S. Bureau of the Census reported that the median value of the City’s owner-occupied homes was $205,600, which compares with, $316,900 for DuPage County, $245,000 for Kane County and $202,500 for the State. The 2006-2010 American Community Survey market value of specified owner-occupied units for the City, DuPage County, Kane County and the State were as follows:

Specified Owner-Occupied Units(1)

The City DuPage County Kane County State of Illinois

Value Number Percent Number Percent Number Percent Number Percent Under $50,000 ............. 647 1.5% 2,338 0.9% 2,069 1.6% 216,017 6.5% $50,000 to $99,999 ......... 1,961 4.4% 3,679 1.4% 3,760 2.9% 450,834 13.7% $100,000 to $149,999 ....... 6,037 13.6% 12,868 5.0% 11,281 8.6% 455,940 13.8% $150,000 to $199,999 ....... 12,582 28.4% 26,658 10.4% 26,717 20.4% 505,936 15.3% $200,000 to $299,999 ....... 13,821 31.2% 71,513 28.0% 40,334 30.7% 723,366 21.9% $300,000 to $499,999 ....... 8,047 18.1% 94,338 36.9% 35,539 27.1% 643,537 19.5% $500,000 to $999,999 ....... 1,157 2.6% 36,405 14.3% 10,169 7.8% 250,844 7.6% $1,000,000 or more ......... 110 0.2% 7,555 3.0% 1,320 1.0% 54,217 1.6% Total ................... 44,362 100.0% 255,354 100.0% 131,189 100.0% 3,300,691 100.0% Note: (1) Source: U. S. Bureau of the Census, 2006-2010 American Community Survey 5 year estimates.

Mortgage Status(1)

The City DuPage County Kane County State of Illinois Classification Number Percent Number Percent Number Percent Number Percent Housing Units With a Mortgage ............... 37,888 85.4% 192,540 75.4% 104,689 79.8% 2,296,372 69.6% Housing Units Without a Mortgage ............... 6,474 14.6% 62,814 24.6% 26,500 20.2% 1,004,319 30.4% Total ................... 44,362 100.0% 255,354 100.0% 131,189 100.0% 3,300,691 100.0% Note: (1) Source: U.S. Bureau of the Census, 2006-2010 American Community Survey 5-year estimates.

Development Activity in the City of Aurora The following are highlights from the five key areas of work that the City’s economic development department targeted in 2011.

Business Recruitment

Textbook company Follett Corporation leased 550,000 square feet of warehouse space at 2805 Duke Parkway

in the Butterfield East Business Park. The facility will employ about 160 workers.

Consumer electronics retailer, hhgregg, leased a 247,000 square-foot distribution center in the Prairie Point West Industrial Park. The development will create 40 new jobs.

Medical instrumentation manufacturer, Trigon International, has relocated to Aurora’s Meridian Business Campus and purchased a 100,000 square-foot facility.

Central DuPage Hospital broke ground for its 27,000 square-foot urgent care facility on Bilter Road between Farnsworth Avenue and Church Road. The $17 million facility will create approximately 300 jobs.


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Engineered Custom Lubricants moved its operations from Michigan to Aurora’s Meridian Business Campus.

The manufacturer and marketer of custom formulated, high technology synthetic lubricating greases and coatings will create approximately 13 new positions in addition to the 20 current positions.

Discount and brand name clothing store, T. J. Maxx opened in the Northgate Shopping Center. The 20,000

square-foot store employs about 70 full and part-time workers.

Windy City Distribution, Inc., purchased a 173,000 square-foot distribution facility in the Liberty Business Park. Approximately 40 people will be employed by the company that is part of the Two Brother Brewery, which purchased the former Walter Payton Roundhouse Complex in downtown Aurora.

The Two Brothers Brewery based in Warrenville, Illinois, purchased the former Walter Payton’s Roundhouse and has re-opened it with a renovated restaurant and banquet facilities.

Medallion Media Group, formerly based in St. Charles, Illinois, relocated to 8,700 square feet of space at 100 S. River Street in downtown Aurora. The company specializes in book, music, and film production. The company will employ approximately 15 people.

Hearing aid manufacturer Phonak opened its 100,000 square-foot office and distribution facility at 444 N. Commerce Street. The investment of $1.2 million will employ about 110 workers.

Business Expansion and Retention

Caterpillar Logistics Services, Inc., a wholly-owned subsidiary of Caterpillar Inc., has leased more than 251,000 square feet of space for Mazda North America at 900 Bilter Road in the Liberty Trust Business Park on the City’s north side. The state-of-the-art facility will create 65 full-time jobs and serve as Mazda’s main distribution center for domestically sourced parts for the region.

Aurora-based Optimum Nutrition, makers of nutritional products, began expansion of its headquarters in the Meridian Business Campus.

Community and Regional Improvements

Rush-Copley Medical Center completed its $7.5 million renovation and expansion of its Cancer Care Center on the hospital campus on U.S. Route 34. The 7,186 square-foot expansion includes new waiting and consultation rooms. The expansion allows for 25 new jobs.

Waubonsee Community College opened its 132,000 square-foot Aurora campus at the southeast corner of

Galena Boulevard and River Street in downtown Aurora. The $50 million facility features 52 classrooms, a library, and a number of state-of-the-art features.


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Workforce Development

Teachers, counselors, and student attended the fifth annual ‘Did You Know?’ Manufacturing Career Awareness Event that took place in November 2011, at Waubonsee Community College’s Academic and Professional Center in Sugar Grove, Illinois. The event was open to area high school students who were looking to pursue a technical career. The event attracted 100 students rotating to different sessions. The sessions included: building a positive work/school culture, manufacturing companies with interactive displays, where to go for job training and further education, and how to have a successful career.

Marketing and Public Relations

The City’s economic development commission continued its successful “CEO Testimonial” web series on its website at www.investinaurora.org. In the series, chief executive officers from various Aurora firms have been interviewed about their companies and why they chose Aurora to locate their business.

Aurora Area Commercial Development Totals(1)

2009 2010 2011 Job Creation ................................ 937 644 1,145 Total Investment ............................ $124,800,000 $55,342,000 $217,995,001 Note: (1) Development statistics are estimated.

Income According to the 2006-2010 American Community Survey 5-Year estimates from the U.S. Bureau of the Census, the City had a median family income of $67,792. This compares to $92,423 for DuPage County, $77,998 for Kane County and $68,236 for the State. The following table represents the distribution of family incomes for the City, DuPage County, Kane County and the State at the time of the 2006-2010 American Community Survey.

Median Family Income(1)

The City DuPage County Kane County State of Illinois

Value Number Percent Number Percent Number Percent Number Percent Under $10,000 ............. 1,831 4.0% 4,009 1.7% 3,651 2.9% 131,278 4.2% $10,000 to $14,999 ......... 1,015 2.2% 3,139 1.3% 2,198 1.7% 87,888 2.8% $15,000 to $24,999 ......... 2,914 6.4% 9,167 3.9% 6,837 5.4% 228,903 7.2% $25,000 to $34,999 ......... 4,016 8.8% 13,538 5.7% 8,767 6.9% 264,029 8.4% $35,000 to $49,999 ......... 6,475 14.2% 21,663 9.1% 15,852 12.4% 401,825 12.7% $50,000 to $74,999 ......... 8,475 18.6% 40,581 17.1% 23,629 18.5% 622,596 19.7% $75,000 to $99,999 ......... 7,316 16.1% 37,179 15.6% 20,604 16.2% 492,434 15.6% $100,000 to $149,999 ....... 7,714 16.9% 54,677 23.0% 25,505 20.0% 538,135 17.0% $150,000 to $199,999 ....... 3,453 7.6% 25,768 10.8% 11,217 8.8% 199,365 6.3% $200,000 or more........... 2,320 5.1% 28,108 11.8% 9,188 7.2% 195,094 6.2% Total ................... 45,529 100.0% 237,829 100.0% 127,448 100.0% 3,161,547 100.0% Note: (1) Source: U. S. Bureau of the Census, 2006-2010 American Community Survey 5 year estimates.


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According to the 2006-2010 American Community Survey 5-Year estimates from the U.S. Bureau of the Census, the City had a median household income of $60,689. This compares to $76,581 for DuPage County, $67,767 for Kane County, and $55,735 for the State. The following table represents the distribution of household incomes for the City, DuPage County, Kane County and the State at the time of the 2006-2010 American Community Survey.

Median Household Income(1)

The City DuPage County Kane County State of Illinois Value Number Percent Number Percent Number Percent Number Percent Under $10,000 ............. 3,043 4.9% 10,628 3.2% 6,033 3.6% 327,492 6.9% $10,000 to $14,999 ......... 1,985 3.2% 8,202 2.4% 5,217 3.1% 230,008 4.8% $15,000 to $24,999 ......... 5,041 8.1% 20,947 6.2% 13,056 7.7% 483,034 10.1% $25,000 to $34,999 ......... 5,768 9.2% 24,289 7.2% 13,877 8.2% 463,776 9.7% $35,000 to $49,999 ......... 9,612 15.4% 37,757 11.3% 22,500 13.3% 644,024 13.5% $50,000 to $74,999 ......... 12,157 19.5% 62,303 18.6% 31,753 18.8% 896,686 18.8% $75,000 to $99,999 ......... 9,242 14.8% 49,305 14.7% 25,301 15.0% 630,368 13.2% $100,000 to $149,999 ....... 9,260 14.8% 63,606 19.0% 29,111 17.2% 642,112 13.5% $150,000 to $199,999 ....... 3,765 6.0% 28,458 8.5% 12,025 7.1% 229,128 4.8% $200,000 or more........... 2,531 4.1% 29,958 8.9% 10,107 6.0% 223,323 4.7% Total ................... 62,404 100.0% 335,453 100.0% 168,980 100.0% 4,769,951 100.0% Note: (1) Source: U. S. Bureau of the Census, 2006-2010 American Community Survey 5 year estimates.

Per Capita Personal Income for the Ten Highest Income Counties in the State(1)

Rank 2006-2010 1..................... Lake County ................. $38,120 2..................... DuPage County ............... 37,849 3..................... McHenry County .............. 31,838 4..................... Monroe County ............... 31,091 5..................... Kendall County .............. 30,565 6..................... Will County ................. 29,811 7..................... Kane County ................. 29,480 8..................... Woodford County ............. 29,475 9..................... Cook County ................. 29,335 10..................... Sangamon County ............. 28,394

Note: (1) Source: U.S. Bureau of the Census, 2006-2010 American Community 5-Year Estimates.

The following shows a ranking of median family income for the Chicago metropolitan area from the 2006-2010 American Community Survey.

Ranking of Median Family Income(1)

Ill. Family Ill. County Income Rank DuPage County ............. $92,423 1 Lake County ............... 91,693 2 Kendall County ............ 87,309 3 McHenry County ............ 86,698 4 Will County ............... 85,488 5 Kane County ............... 77,998 7 Cook County ............... 65,039 20

Note: (1) Source: U.S. Bureau of the Census, 2006-2010 American Community 5-Year Estimates.


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Retail Activity

Following is a summary of the City’s sales tax receipts as collected and disbursed by the State of Illinois.

1.00% Retailers’ Occupation, Service Occupation and Use Tax(1)

Calendar Year State Sales Tax Annual Percent Ending December 31 Distributions(2) Change + (-)

2002 .................................. $17,688,784 0.76%(3) 2003 .................................. 18,078,519 2.20% 2004 .................................. 20,112,094 11.25% 2005 .................................. 21,014,769 4.49% 2006 .................................. 22,683,925 7.94% 2007 .................................. 22,027,898 (2.89%) 2008 .................................. 21,667,726 (1.64%) 2009 .................................. 19,778,567 (8.72%) 2010 .................................. 21,111,296 6.74% 2011 .................................. 22,585,797 6.98% Growth from 2002 to 2011 ............................................................... 27.68%

Notes: (1) Source: the City. (2) Tax distributions are based on records of the Illinois Department of Revenue

relating to the 1% municipal portion of the Retailers’ Occupation, Service Occupation and Use Tax, collected on behalf of the City. The municipal 1% includes tax receipts from the sale of food and drugs which are not taxed by the State.

(3) The 2002 percentage is based on a 2001 sales tax of $17,556,232.

The City receives a 1% sales tax as part of a tax collected throughout the State. The tax proceeds are distributed based upon the point where sales originated. The City also receives a 1.25% home rule sales tax. The City uses the proceeds of the home rule sales tax to support both government operations and capital projects.

THE PROJECT The 2012A Bonds

The 2012A Bond proceeds will be used to finance construction of a new central library, other improvements to existing library facilities and to pay the costs of issuing the 2012A Bonds

PLAN OF FINANCING The 2012B Bonds

The 2012B Bond proceeds will be used to currently refund a portion of the City’s outstanding General Obligation Bonds, Series 2004, as listed below (the “Refunded 2004 Bonds”, and together with the Refunded 2004B Bonds and the Refunded 2002 Certificates, the “Refunded Debt”) and to pay the costs of issuing the 2012B Bonds. The 2012B Bond proceeds will be deposited with the paying agent for the City’s outstanding General Obligation Bonds, Series 2004.

The Refunded 2004 Bonds

Outstanding General Obligation Bonds, Series 2004

Refunded Outstanding Amount Redemption Redemption Maturities Amount Refunded Price(s) Date(s) 12/30/2012 .............. $ 440,000 $ 0 N/A N/A 12/30/2013 .............. 460,000 460,000 100.00% 12/30/2012 12/30/2014 .............. 475,000 475,000 100.00% 12/30/2012 12/30/2015 .............. 495,000 495,000 100.00% 12/30/2012 12/30/2016 .............. 510,000 510,000 100.00% 12/30/2012 12/30/2017 .............. 535,000 535,000 100.00% 12/30/2012 12/30/2018 .............. 555,000 555,000 100.00% 12/30/2012 12/30/2019 .............. 580,000 580,000 100.00% 12/30/2012 12/30/2020 .............. 605,000 605,000 100.00% 12/30/2012 12/30/2021 .............. 630,000 630,000 100.00% 12/30/2012 12/30/2022 .............. 660,000 660,000 100.00% 12/30/2012 12/30/2023 .............. 690,000 690,000 100.00% 12/30/2012 12/30/2024 .............. 720,000 720,000 100.00% 12/30/2012 Total................. $7,355,000 $6,915,000


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The 2012C Bonds

The 2012C Bond proceeds will be used to currently refund a portion of the City’s outstanding General Obligation Corporate Purpose Refunding Bonds, Series 2004B, as listed below, (the “Refunded 2004B Bonds”, and together with the Refunded 2004 Bonds and the Refunded 2002 Certificates, the “Refunded Debt”) and to pay the costs of issuing the 2012C Bonds. The 2012C Bond proceeds will be deposited with the paying agent for the City’s outstanding General Obligation Corporate Purpose Refunding Bonds, Series 2004B.

The Refunded 2004B Bonds

Outstanding General Obligation Corporate Purpose Refunding Bonds, Series 2004B

Refunded Outstanding Amount Redemption Redemption Maturities Amount Refunded Price(s) Date(s) 12/30/2012 .............. $ 590,000 $ 0 N/A N/A 12/30/2013 .............. 610,000 610,000 100.00% 12/30/2012 12/30/2014 .............. 625,000 625,000 100.00% 12/30/2012 12/30/2015 .............. 645,000 645,000 100.00% 12/30/2012 12/30/2016 .............. 670,000 670,000 100.00% 12/30/2012 12/30/2017 .............. 695,000 695,000 100.00% 12/30/2012 Total................. $3,835,000 $3,245,000

The 2012D Certificates

The 2012D Certificate proceeds will be used to currently refund a portion of the City’s outstanding Debt Certificates, Series 2002 (Special Service Area Number 34 Project), as listed below (the “Refunded 2002 Certificates”, and together with the Refunded Bonds 2004 Bonds and the Refunded 2004B Bonds, the “Refunded Debt”) and to pay the costs of issuing the 2012D Certificates. The 2012D Certificate proceeds will be deposited with the paying agent for the City’s outstanding Debt Certificates, Series 2002 (Special Service Area Number 34 Project).

The Refunded 2002 Certificates

Outstanding Debt Certificates, Series 2002

Refunded Outstanding Amount Redemption Redemption Maturities Amount Refunded Price(s) Date(s) 12/30/2012 .............. $ 350,000 $ 0 N/A N/A 12/30/2013 .............. 450,000 450,000 100.00% 11/15/2012 12/30/2014 .............. 450,000 450,000 100.00% 11/15/2012 12/30/2015 .............. 450,000 450,000 100.00% 11/15/2012 12/30/2016 .............. 500,000 500,000 100.00% 11/15/2012 12/30/2017 .............. 250,000 250,000 100.00% 11/15/2012 12/30/2018 .............. 300,000 300,000 100.00% 11/15/2012 12/30/2019 .............. 325,000 325,000 100.00% 11/15/2012 12/30/2020 .............. 425,000 425,000 100.00% 11/15/2012 Total................. $3,500,000 $3,150,000

The mathematical calculations of the adequacy of the deposit made to provide for the payment of certain

interest, principal and call premiums on the Refunded Debt will be verified by Dunbar, Breitweiser & Company, LLP, Independent Certified Public Accountant, Bloomington, Illinois, at the time of delivery of the Debt. All moneys and Government Securities deposited for the payment of Refunded Debt, including interest thereon, are required to be applied solely and irrevocably to the payment of the Refunded Debt.


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DESCRIPTION OF THE 2012D CERTIFICATES The City is authorized to issue its 2012D Certificates under and pursuant to its powers as a home rule unit of government under Section 6 of Article VII of the 1970 Constitution of the State of Illinois (the “Act”). The City represents, warrants and agrees that the obligation to make payments on the 2012D Certificates shall be a direct obligation of the City, payable from the corporate funds of the City and such other sources of payment as are pledged or otherwise lawfully available. For the purpose of providing the funds necessary to pay the interest and principal, the City irrevocably agrees to budget and appropriate funds of the City annually and in a timely manner so as to provide for the making of all payments then due. THERE IS NO PROVISION FOR THE LEVY OF A SEPARATE TAX IN ADDITION TO OTHER CITY TAXES OR OF A SPECIAL TAX UNLIMITED AS TO RATE OR AMOUNT TO PAY DEBT SERVICE PAYMENTS ON THE 2012D CERTIFICATES WHEN DUE.

OPTIONAL REDEMPTION

The 2012A Bonds due December 30, 2013-2021, inclusive, are non-callable. The 2012A Bonds due December 30, 2022-2041, inclusive, are callable in whole or in part on any date on or after December 30, 2021, at a price of par and accrued interest. If less than all the 2012A Bonds are called, they shall be redeemed in such principal amounts and from such maturities as determined by the City and within any maturity by lot.

The 2012B Bonds due December 30, 2013-2021, inclusive, are non-callable. The 2012A Bonds due

December 30, 2022-2024, inclusive, are callable in whole or in part on any date on or after December 30, 2021, at a price of par and accrued interest. If less than all the 2012B Bonds are called, they shall be redeemed in such principal amounts and from such maturities as determined by the City and within any maturity by lot.

The Debt Registrar will give notice of redemption, identifying the Debt (or portions thereof) to be redeemed,

by mailing a copy of the redemption notice by first class mail not less than thirty (30) days nor more than sixty (60) days prior to the date fixed for redemption to the registered owner of each Bond or Certificate (or portion thereof) to be redeemed at the address shown on the registration books maintained by the Debt Registrar. Unless moneys sufficient to pay the redemption price of the Debt to be redeemed are received by the Debt Registrar prior to the giving of such notice of redemption, such notice may, at the option of the City, state that said redemption will be conditional upon the receipt of such moneys by the Debt Registrar on or prior to the date fixed for redemption. If such moneys are not received, such notice will be of no force and effect, the City will not redeem such Debt, and the Debt Registrar will give notice, in the same manner in which the notice of redemption has been given, that such moneys were not so received and that such Debt will not be redeemed. Otherwise, prior to any redemption date, the City will deposit with the Debt Registrar an amount of money sufficient to pay the redemption price of all the Debt or portions of Debt which are to be redeemed on the date.

Subject to the provisions for a conditional redemption described above, notice of redemption having been given as described above and in the related Ordinance, the Debt or portions of Debt so to be redeemed will, on the redemption date, become due and payable at the redemption price therein specified, and from and after such date (unless the City shall default in the payment of the redemption price) such Debt or portions of Debt shall cease to bear interest. Upon surrender of such Debt for redemption in accordance with said notice, such Debt will be paid by the Debt Registrar at the redemption price. The 2012C Bonds and the 2012D Certificates are not subject to optional redemption prior to maturity.


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DEBT INFORMATION After issuance of the Debt and the refunding, the City’s general obligation debt will be $179,520,000*. A large portion of the debt service for the City's general obligation debt is expected to be abated from sources other than general ad valorem taxes. The City also has outstanding $30,750,000 of Series 2006 Waterworks and Sewerage Revenue Bonds, $2,995,000 of Series 2000 Golf Course Revenue Bonds, $6,935,000 of debt certificates (excluding the Refunded 2002 Certificates), and $11,022,291 of IEPA loans.

General Obligation Debt Summary - By Issue(1) (Principal Only)

Outstanding Issue Principal Series 2003-B(3) ................................................... $ 980,000 Series 2004(2)(3) .................................................. 440,000 Series 2004B(2)(3) ................................................. 590,000 Series 2006(3)(4) .................................................. 27,780,000 Series 2007(3) ..................................................... 11,475,000 Series 2008(3)(4) .................................................. 77,640,000 Series 2009A(3) .................................................... 13,825,000 Series 2009B(3) .................................................... 4,995,000 Series 2011(3)(4) .................................................. 9,060,000 Series 2012A(4) .................................................... 22,400,000 Series 2012B(3)(5) ................................................. 7,020,000 Series 2012C(3)(5) ................................................. 3,315,000 Sub-Total ........................................................ $179,520,000 Less: Self-Supporting Debt(3) ...................................... (95,360,000) Total Property Tax Supported Debt(4) ............................. $ 84,160,000 Notes: (1) Source: the City. (2) Excludes bonds proposed to be refunded. (3) Expected to be abated, in whole or in part, by the

application of real estate transfer taxes, home-rule sales taxes, gaming taxes, stormwater management fees, water and sewer service fees, developer contributions, and other sources.

(4) A portion, $12,135,000, of Series 2006 is supported by property tax. A portion, $46,885,000, of Series 2008 is property tax supported. A portion, $2,740,000 of Series 2011 is property tax supported and all of Series 2012A is property tax supported.

(5) Subject to change.

*Subject to change.


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Calendar Series Series Series Series Series Series Series Series Series Year 2003-B(2) 2004(2) 2004B(2) 2006(2) 2007(2) 2008B(2) 2009A(2) 2009B(2) 2011

2012 ....... $980,000 $ 440,000 $ 590,000 $ 855,000 $ 3,285,000 $ 2,780,000 $ 910,000 $ 330,000 $ 105,000 2013 ....... 0 460,000 610,000 900,000 2,680,000 2,860,000 920,000 335,000 1,225,000 2014 ....... 0 475,000 625,000 935,000 2,665,000 1,650,000 940,000 345,000 1,330,000 2015 ....... 0 495,000 645,000 965,000 2,705,000 1,695,000 960,000 350,000 1,360,000 2016 ....... 0 510,000 670,000 1,015,000 140,000 1,765,000 985,000 360,000 1,405,000 2017 ....... 0 535,000 695,000 1,060,000 0 1,835,000 1,010,000 370,000 1,445,000 2018 ....... 0 555,000 0 1,105,000 0 1,910,000 1,040,000 380,000 1,335,000 2019 ....... 0 580,000 0 1,150,000 0 1,985,000 1,075,000 395,000 330,000 2020 ....... 0 605,000 0 1,205,000 0 2,065,000 1,110,000 405,000 330,000 2021 ....... 0 630,000 0 1,255,000 0 2,160,000 1,150,000 420,000 95,000 2022 ....... 0 660,000 0 1,315,000 0 2,255,000 1,195,000 420,000 100,000 2023 ....... 0 690,000 0 1,380,000 0 2,355,000 1,240,000 440,000 0 2024 ....... 0 720,000 0 1,445,000 0 2,460,000 1,290,000 445,000 0 2025 ....... 0 0 0 1,520,000 0 2,575,000 0 0 0 2026 ....... 0 0 0 1,585,000 0 2,695,000 0 0 0 2027 ....... 0 0 0 810,000 0 2,825,000 0 0 0 2028 ....... 0 0 0 850,000 0 2,960,000 0 0 0 2029 ....... 0 0 0 885,000 0 3,100,000 0 0 0 2030 ....... 0 0 0 930,000 0 3,245,000 0 0 0 2031 ....... 0 0 0 970,000 0 3,400,000 0 0 0 2032 ....... 0 0 0 1,025,000 0 3,570,000 0 0 0 2033 ....... 0 0 0 1,070,000 0 3,750,000 0 0 0 2034 ....... 0 0 0 1,125,000 0 3,935,000 0 0 0 2035 ....... 0 0 0 1,185,000 0 4,130,000 0 0 0 2036 ....... 0 0 0 1,240,000 0 4,340,000 0 0 0 2037 ....... 0 0 0 0 0 4,555,000 0 0 0 2038 ....... 0 0 0 0 0 4,785,000 0 0 0 2039 ....... 0 0 0 0 0 0 0 0 0 2040 ....... 0 0 0 0 0 0 0 0 0 2041 ....... 0 0 0 0 0 0 0 0 0 Total .... $980,000 $7,355,000 $3,835,000 $27,780,000 $11,475,000 $77,640,000 $13,825,000 $4,995,000 $9,060,000

Notes: (1) Source: the City. (2) Expected to be abated from revenue from the Casino Gaming Taxes, the City home rule sales tax, water and sewer revenues, real estate transfer tax, developer

fees, drainage fees and other sources.

(Continued on following page)


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Less: Less: Series 2004 Series 2004B Total Cumulative Calendar Series Series Proposed to Series Proposed to Outstanding Principal Retired(3) Year 2012A 2012B(2)(3) be Refunded 2012C(2)(3) be Refunded Bonds(3) Amount Percent

2012 ....... $ 0 $ 0 $ 0 $ 0 $ 0 $ 10,275,000 $ 10,275,000 5.72% 2013 ....... 50,000 505,000 (460,000) 645,000 (610,000) 10,120,000 20,395,000 11.36% 2014 ....... 270,000 545,000 (475,000) 655,000 (625,000) 9,335,000 29,730,000 16.56% 2015 ....... 275,000 550,000 (495,000) 660,000 (645,000) 9,520,000 39,250,000 21.86% 2016 ....... 280,000 550,000 (510,000) 675,000 (670,000) 7,175,000 46,425,000 25.86% 2017 ....... 285,000 565,000 (535,000) 680,000 (695,000) 7,250,000 53,675,000 29.90% 2018 ....... 300,000 570,000 (555,000) 0 0 6,640,000 60,315,000 33.60% 2019 ....... 305,000 585,000 (580,000) 0 0 5,825,000 66,140,000 36.84% 2020 ....... 320,000 600,000 (605,000) 0 0 6,035,000 72,175,000 40.20% 2021 ....... 575,000 610,000 (630,000) 0 0 6,265,000 78,440,000 43.69% 2022 ....... 590,000 630,000 (660,000) 0 0 6,505,000 84,945,000 47.32% 2023 ....... 710,000 645,000 (690,000) 0 0 6,770,000 91,715,000 51.09% 2024 ....... 735,000 665,000 (720,000) 0 0 7,040,000 98,755,000 55.01% 2025 ....... 755,000 0 0 0 0 4,850,000 103,605,000 57.71% 2026 ....... 780,000 0 0 0 0 5,060,000 108,665,000 60.53% 2027 ....... 800,000 0 0 0 0 4,435,000 113,100,000 63.00% 2028 ....... 835,000 0 0 0 0 4,645,000 117,745,000 65.59% 2029 ....... 865,000 0 0 0 0 4,850,000 122,595,000 68.29% 2030 ....... 900,000 0 0 0 0 5,075,000 127,670,000 71.12% 2031 ....... 935,000 0 0 0 0 5,305,000 132,975,000 74.07% 2032 ....... 975,000 0 0 0 0 5,570,000 138,545,000 77.18% 2033 ....... 1,015,000 0 0 0 0 5,835,000 144,380,000 80.43% 2034 ....... 1,055,000 0 0 0 0 6,115,000 150,495,000 83.83% 2035 ....... 1,095,000 0 0 0 0 6,410,000 156,905,000 87.40% 2036 ....... 1,140,000 0 0 0 0 6,720,000 163,625,000 91.15% 2037 ....... 1,185,000 0 0 0 0 5,740,000 169,365,000 94.34% 2038 ....... 1,245,000 0 0 0 0 6,030,000 175,395,000 97.70% 2039 ....... 1,310,000 0 0 0 0 1,310,000 176,705,000 98.43% 2040 ....... 1,375,000 0 0 0 0 1,375,000 178,080,000 99.20% 2041 ....... 1,440,000 0 0 0 0 1,440,000 179,520,000 100.00% Total..... $22,400,000 $7,020,000 $(6,915,000) $3,315,000 $(3,245,000) $179,520,000

Notes: (1) Source: the City. (2) Expected to be abated from revenue from the Casino Gaming Taxes, the City home rule sales tax, water and sewer revenues, real estate transfer tax,

developer fees, drainage fees and other sources. (3) Subject to change.


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City Debt Certificates(1) (Principal Only)

Refunded Total Cumulative Principal Calendar Series Series Series Debt Debt Retired(2) Year 2002 2006 2012D(2) Certificates Certificates(2) Amount Percent

2012 ........ $ 350,000 $ 580,000 $ 0 $ 0 $ 930,000 $ 930,000 13.41% 2013 ........ 450,000 520,000 505,000 (450,000) 1,025,000 1,955,000 28.19% 2014 ........ 450,000 560,000 500,000 (450,000) 1,060,000 3,015,000 43.48% 2015 ........ 450,000 555,000 485,000 (450,000) 1,040,000 4,055,000 58.47% 2016 ........ 500,000 570,000 520,000 (500,000) 1,090,000 5,145,000 74.19% 2017 ........ 250,000 305,000 255,000 (250,000) 560,000 5,705,000 82.26% 2018 ........ 300,000 105,000 300,000 (300,000) 405,000 6,110,000 88.10% 2019 ........ 325,000 105,000 315,000 (325,000) 420,000 6,530,000 94.16% 2020 ........ 425,000 0 405,000 (425,000) 405,000 6,935,000 100.00% Total ..... $3,500,000 $3,300,000 $3,285,000 $(3,150,000) $6,935,000

Notes: (1) Source: the City. (2) Subject to change.

Detailed Overlapping Bonded Debt(1) (As of June 27, 2012)

Outstanding Applicable to City Debt Percent(2) Amount

Schools: School District Number 101 ........................... $ 99,400,000 9.41% $9,353,540 School District Number 129 ........................... 107,935,000 52.43% 56,590,321 School District Number 131 ........................... 98,162,519 84.94% 83,379,244 School District Number 200 ........................... 194,780,000 0.05% 97,390 School District Number 204 ........................... 315,300,000 33.04% 104,175,120 School District Number 302 ........................... 111,952,771 3.82% 4,276,596 School District Number 308 ........................... 403,961,021 1.12% 4,524,363 Community College Number 502 ......................... 260,980,000 3.75% 9,786,750 Community College Number 516 ......................... 39,191,775 17.87% 7,003,570 Total Schools ............................................................................ $279,186,894 Others: DuPage County ........................................ $256,370,000 4.26% $ 10,921,362 Kane County .......................................... 88,155,000 12.03% 10,605,047 DuPage County Forest Preserve District ............... 235,078,071 4.26% 10,014,326 Kane County Forest Preserve District ................. 233,685,866 12.03% 28,112,410 Batavia Library District ............................. 4,305,000 2.24% 96,432 Batavia Park District ................................ 5,575,000 6.60% 367,950 Fox Valley Park District ............................. 67,654,265 71.81% 48,582,528 Naperville Park District ............................. 20,480,000 2.21% 452,608 Total Others ............................................................................. $109,152,663 Total Schools and Others Overlapping Bonded Debt ......................................... $388,339,557 Notes: (1) Source: DuPage and Kane Counties. Kendall and Will Counties have been excluded since

they consist of approximately 10% of the City's 2011 EAV. (2) Percentages are based on 2011 EAV, the most recent available.


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Statement of Bonded Indebtedness(1)

Ratio To Per Capita Amount Equalized Estimated (2010 Census Applicable Assessed Actual 197,899) City EAV of Taxable Property, 2011 .............. $ 3,598,534,505 100.00% 33.33% $18,183.69 Estimated Actual Value, 2011 .................... $10,795,603,515 300.00% 100.00% $54,551.08 Direct Bonded Debt(2) ........................... $ 179,520,000 4.99% 1.66% $ 907.13 Paid From Non-Property Tax Sources .............. (95,360,000) (2.65%) (0.88%) (481.86) Net Direct Debt(2) ............................ $ 84,160,000 2.34% 0.78% $ 425.27 Overlapping Bonded Debt: Schools ......................................... $ 279,186,894 7.76% 2.59% $ 1,410.75 Other ........................................... 109,152,663 3.03% 1.01% 551.56 Total Overlapping Bonded Debt(3) .............. $ 388,339,557 10.79% 3.60% $ 1,962.31 Total Direct and Overlapping Bonded Debt(2) ... $ 472,499,557 13.13% 4.38% $ 2,387.58 Notes: (1) Source: Kane and DuPage Counties Clerks.

(2) Includes the Bonds and excludes the bonds proposed to be refunded. Does not include water and sewer revenue bonds and the debt certificates. Subject to change.

(3) As of June 27, 2012.

PROPERTY ASSESSMENT AND TAX INFORMATION The City's 2011 total EAV is comprised of 75.89% residential, 16.20% commercial, 7.84% industrial, 0.04% farm, and 0.04% railroad property valuations. City Equalized Assessed Valuation(1)

Levy Years Property Class: 2007 2008 2009 2010 2011 Residential ........... $3,119,661,075 $3,250,613,934 $3,215,060,697 $3,017,867,140 $2,730,761,797 Farm .................. 1,170,473 1,244,196 1,367,617 1,397,339 1,514,150 Commercial ............ 610,906,155 664,325,891 652,132,768 616,823,178 582,824,054 Industrial ............ 281,084,086 303,808,658 317,484,799 301,946,177 282,100,080 Railroad .............. 749,480 853,846 1,022,515 1,107,906 1,334,424 Total ............... $4,013,571,269 $4,220,846,525 $4,187,068,396 $3,939,141,740 $3,598,534,505 Total by County: ...... Kane County ........... $1,907,177,864 $2,001,714,381 $1,959,260,286 $1,809,362,652 $1,625,951,658 DuPage County ......... 1,679,678,537 1,790,478,973 1,808,716,577 1,728,074,480 1,606,824,629 Kendall County ........ 123,477,670 131,450,428 130,434,946 120,944,577 112,030,593 Will County ........... 303,237,198 297,202,743 288,656,587 280,760,031 253,727,625 Total ............... $4,013,571,269 $4,220,846,525 $4,187,068,396 $3,939,141,740 $3,598,534,505 Percent Change +(-) ... 5.84%(2) 5.16% (0.80%) (5.92%) (8.65%) Notes: (1) Source: Kane, DuPage, Kendall and Will Counties Clerks.

(2) Percentage change based on 2006 EAV of $3,791,995,386.


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Kane County Representative Tax Rates(1) (Per $100 EAV)

Levy Years 2007 2008 2009 2010 2011

City Rates: General ................................... $1.2594 $1.1925 $1.1949 $1.1333 $1.1560 Bonds and Interest ........................ 0.1088 0.1007 0.0957 0.0965 0.1123 I.M.R.F. .................................. 0.0000 0.0000 0.0000 0.0000 0.0756 Police Pension ............................ 0.1571 0.1692 0.1608 0.2309 0.2230 Firefighters Pension ...................... 0.1389 0.1530 0.1453 0.1912 0.1975 Library ................................... 0.2553 0.2546 0.2448 0.2542 0.2503 Prior Period Adjustment ................... 0.0055 0.0454 0.0635 0.0046 0.0000 Total City Rates(2) ..................... $1.9250 $1.9153 $1.9050 $1.9107 $2.0147 Kane County ............................... 0.3452 0.3322 0.3336 0.3398 0.3990 Kane County Forest Preserve District ...... 0.1747 0.1974 0.1932 0.1997 0.2609 Aurora Township ........................... 0.1501 0.1449 0.1450 0.1486 0.1882 Aurora Township Road Funds ................ 0.0715 0.0690 0.0691 0.0703 0.0860 Fox Valley Park District .................. 0.3746 0.4037 0.4014 0.4122 0.5286 Unit School District Number 129 ........... 3.5635 4.1252 4.1225 4.1835 5.1603 Community College District Number 516 ..... 0.3984 0.3950 0.3995 0.4043 0.4710 Total Tax Rates(3) ...................... $7.0030 $7.5827 $7.5693 $7.6691 $9.1087 Notes: (1) Source: Kane County Clerk and the City. (2) The City is a home-rule municipality and based on the 1970 Illinois Constitution has no statutory tax rate

limits. (3) Representative tax rates for other government units are from Aurora Township tax code 5, which represents 35%

of the City’s 2011 EAV in Kane County.

DuPage County Representative Tax Rates(1) (Per $100 EAV)

Levy Years 2007 2008 2009 2010 2011

City Rates: General ................................... $1.2425 $1.2070 $1.1488 $1.0725 $1.1676 Bond and Interest ......................... 0.1010 0.0954 0.0965 0.1026 0.1123 I.M.R.F. .................................. 0.0000 0.0000 0.0000 0.0696 0.0764 Police Pension ............................ 0.1669 0.1624 0.2250 0.2604 0.2253 Firefighters Pension ...................... 0.1507 0.1468 0.1862 0.2139 0.1995 Library ................................... 0.2546 0.2473 0.2543 0.2548 0.2503 Total City Rates(2) ..................... $1.9157 $1.8589 $1.9108 $1.9738 $2.0314 .......................................... DuPage County ............................. 0.1651 0.1557 0.1554 0.1659 0.1773 DuPage County Forest Preserve District .... 0.1187 0.1206 0.1217 0.1321 0.1414 Naperville Township ....................... 0.0423 0.0420 0.0419 0.0454 0.0483 Naperville Township Road Funds ............ 0.0379 0.0376 0.0370 0.0401 0.0411 Fox Valley Park District .................. 0.4057 0.3990 0.4219 0.4793 0.5340 Unit School District Number 204 ........... 4.4930 4.4858 4.4987 4.8927 5.2200 Community College District Number 502 ..... 0.1888 0.1858 0.2127 0.2349 0.2495 Total Tax Rates(3) ...................... $7.3672 $7.2854 $7.4001 $7.9642 $8.4430 Notes: (1) Source: DuPage County Clerk and the City.

(2) The City is a home-rule municipality and based on the 1970 Illinois Constitution has no statutory tax rate limits.

(3) Representative tax rates for other government units are from Naperville Township tax code 7045, which represents 66% of the City's 2011 EAV in DuPage County.


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Will County Representative Tax Rates(1)

(Per $100 EAV)

Levy Years 2007 2008 2009 2010 2011

The City: Total City Rates(2) ..................... $1.9159 $1.8392 $1.9097 $1.9674 $ 1.9052 Will County ............................... 0.4826 0.4751 0.4833 0.5077 0.5351 Will County Building Commission ........... 0.0117 0.0191 0.0191 0.0197 0.0200 Will County Forest Preserve District ...... 0.1424 0.1445 0.1519 0.1567 0.1693 Wheatland Township ........................ 0.0303 0.0314 0.0319 0.0331 0.0328 Wheatland Township Road & Bridge .......... 0.0412 0.0427 0.0433 0.0474 0.0503 City of Aurora SSA 34-X ................... 0.3200 0.3172 0.3216 0.3529 0.4066 Fox Valley Park District .................. 0.4132 0.3915 0.4201 0.4671 0.4897 School District Number 308-U .............. 5.0600 5.0600 5.0600 5.8245 6.6317 Community College District Number 516 ..... 0.4158 0.3842 0.4052 0.4131 0.4309 Total Tax Rates ......................... $8.8331 $8.7049 $8.8461 $9.7896 $10.6716

Notes: (1) Source: Will County Clerk’s Office and the City. (2) The City is a home-rule municipality and, based on the 1970 Illinois Constitution, has no statutory tax rate limits. (3) Representative tax rates for other government units are from Wheatland Township tax code 0751, which represents the

largest portion of the City's 2011 EAV in Will County.

City Tax Extensions and Collections(1) (Includes Township Road and Bridge Levy, Excludes Library)

Levy Coll. Taxes Current Collections Total Collections Year Year Extended(2) Amount(3) Percent Amount(4) Percent 2004 ........ 2005 ......... $49,168,579 $49,499,767 100.67% $49,774,378 101.23% 2005 ........ 2006(5) ...... 58,402,714 57,680,483 98.76% 58,037,291 99.37% 2006 ........ 2007 ......... 62,607,912 62,173,915 99.31% 62,501,611 99.83% 2007 ........ 2008 ......... 67,328,337 67,176,454 99.77% 67,179,966 99.78% 2008 ........ 2009 ......... 69,106,548 68,721,377 99.44% 69,183,939 100.11 2009 ........ 2010 ......... 70,028,262 69,894,824 99.81% 69,917,907 99.84% 2010 ........ 2011 ......... 68,267,554 68,101,873 99.76% 68,102,983 99.76% 2011 ........ 2012 ......... 64,174,532 ------ In Collection ------ ------ In Collection ------ Notes: (1) Source: the City’s audited financial statements.

(2) Taxes Extended have been adjusted for abatements and Township Road and Bridge. (3) Current collections in both Kane and DuPage Counties include taxes paid under protest. (4) Total collections include back taxes, penalties, etc. (5) After the effect of a prior-year adjustment.

Principal City Taxpayers(1)

County Taxpayer Name Business/Service 2011 EAV(2) Kane ............ Simon/Chelsea Chicago Development, LLC .............. Shopping Center ................................... $ 38,928,626 DuPage .......... Westfield Shoppingtown .............................. Shopping Center ................................... 34,830,640 DuPage/Kane ..... Liberty Illinois LP ................................. Real Estate ....................................... 31,564,378 Kane ............ Toyota Motor Sales, U.S.A., Inc. .................... Automotive ........................................ 23,106,942 Kane ............ Aurora Industrial Holding Company LLC ............... Real Estate ....................................... 19,539,015 DuPage .......... AIMCO ............................................... Apartments ........................................ 14,260,790 DuPage .......... Amli Residential Property ........................... Residential Property .............................. 12,322,520 DuPage .......... Reliant Energy Aurora LP ............................ Industrial Property ............................... 9,540,310 DuPage .......... Cabot Microelectronics .............................. Electronics ....................................... 8,847,790 Kane ............ Wal-Mart Real Estate Business Trust ................. Retail ............................................ 8,033,196 Total ......... .................................................... .................................................. $200,974,207 Ten Largest Taxpayers as a Percent of the City's 2011 EAV ($3,598,534,505) ............................................ 5.58% Notes: (1) Source: DuPage and Kane Counties. Kendall and Will Counties have been excluded since they consist of

approximately 10% of the City's 2011 EAV. (2) Every effort has been made to seek out and report the largest taxpayers. However, many of the taxpayers listed

contain multiple parcels, and it is possible that some parcels and their valuations have been overlooked. The 2011 EAV is the most current available.


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REAL PROPERTY ASSESSMENT, TAX LEVY AND COLLECTION PROCEDURES Tax Levy and Collection Procedures

Local assessment officers determine the assessed valuation of taxable real property and railroad property not

held or used for railroad operations. The Illinois Department of Revenue (the “Department”) assesses certain other types of taxable property, including railroad property held or used for railroad operations. Local assessment officers’ valuation determinations are subject to review at the county level and then, in general, to equalization by the Department. Such equalization is achieved by applying to each county’s assessments a multiplier determined by the Department. The purpose of equalization is to provide a common basis of assessments among counties by adjusting assessments toward the statutory standard of 33-1/3% of fair cash value. Farmland is assessed according to a statutory formula which takes into account factors such as productivity and crop mix. Taxes are extended against the assessed values after equalization.

Property tax levies of each taxing body are filed in the office of the county clerk of each county in which

territory of that taxing body is located. The county clerk computes the rates and amount of taxes applicable to taxable property subject to the tax levies of each taxing body and determines the dollar amount of taxes attributable to each respective parcel of taxable property. The county clerk then supplies to the appropriate collecting officials within the county the information needed to bill the taxes attributable to the various parcels therein. After the taxes have been collected, the collecting officials distribute to the various taxing bodies their respective shares of the taxes collected. Taxes levied in one calendar year are due and payable in two installments during the next calendar year. Taxes that are not paid when due, or that are not paid by mail and postmarked on or before the due date, are subject to a penalty of 1-1/2% per month until paid. Unpaid property taxes, together with penalties, interest and costs, constitute a lien against the property subject to the tax. Exemptions

An annual General Homestead Exemption (the “General Homestead Exemption”) provides that the Equalized Assessed Valuation (“EAV”) of certain property owned and used for residential purposes (“Residential Property”) may be reduced by the amount of any increase over the 1977 EAV, up to a maximum reduction of $3,500 for assessment years prior to assessment year 2004 in counties with less than 3,000,000 inhabitants, and a maximum reduction of $5,000 for assessment year 2004 through 2007 in all counties. Additionally, the maximum reduction is $5,500 for assessment year 2008 and the maximum reduction is $6,000 for assessment year 2009 and thereafter in all counties.

The Homestead Improvement Exemption applies to Residential Properties that have been improved or rebuilt in

the 2 years following a catastrophic event. The exemption is limited to $45,000 through December 31, 2003, and $75,000 per year beginning January 1, 2004 and thereafter, to the extent the assessed value is attributable solely to such improvements or rebuilding.

Additional exemptions exist for senior citizens. The Senior Citizens Homestead Exemption (“Senior Citizens

Homestead Exemption”) operates annually to reduce the EAV on a senior citizen’s home for assessment years prior to 2004 by $2,000 in counties with less than 3,000,000 inhabitants. For assessment years 2004 and 2005, the maximum reduction is $3,000 in all counties. For assessment years 2006 and 2007, the maximum reduction is $3,500 in all counties. In addition, for assessment year 2008 and thereafter, the maximum reduction is $4,000 for all counties. Furthermore, beginning with assessment year 2003, for taxes payable in 2004, property that is first occupied as a residence after January 1 of any assessment year by a person who is eligible for the Senior Citizens Homestead Exemption must be granted a pro rata exemption for the assessment year based on the number of days during the assessment year that the property is occupied as a residence by a person eligible for the exemption.


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A Senior Citizens Assessment Freeze Homestead Exemption (“Senior Citizens Assessment Freeze Homestead

Exemption”) freezes property tax assessments for homeowners, who are 65 and older and receive a household income not in excess of the maximum income limitation. The maximum income limitation was $35,000 for years prior to 1999, $40,000 for assessment years 1999 through 2003, $45,000 for assessment years 2004 and 2005, $50,000 from assessment years 2006 and 2007 and for assessments year 2008 and after, the maximum income limitation is $55,000. In general, the Senior Citizens Assessment Freeze Homestead Exemption limits the annual real property tax bill of such property by granting to qualifying senior citizens an exemption as to a portion of the valuation of their property. In counties with a population of 3,000,000 or more, the exemption for all assessment years is equal to the EAV of the residence in the assessment year for which application is made less the base amount. Furthermore, for those counties with a population of less than 3,000,000, the Senior Citizens Assessment Freeze Homestead Exemption is as follows: through assessment year 2005 and for assessment year 2007 and later, the exempt amount is the difference between (i) the current EAV of their residence and (ii) the base amount, which is the EAV of a senior citizen’s residence for the year prior to the year in which he or she first qualifies and applies for the Exemption (plus the EAV of improvements since such year). For assessment year 2006, the amount of the Senior Citizens Assessment Freeze Homestead Exemption phases out as the amount of household income increases. The amount of the Senior Citizens Assessment Freeze Homestead Exemption is calculated by using the same formula as above, and then multiplying the resulting value by a ratio that varies according to household income.

Another exemption available to disabled veterans operates annually to exempt up to $70,000 of the Assessed

Valuation of property owned and used exclusively by such veterans or their spouses for residential purposes. Also, certain property is exempt from taxation on the basis of ownership and/or use, such as public parks, not-for-profit schools and public schools, churches, and not-for-profit hospitals and public hospitals. However, individuals claiming exemption under the Disabled Persons’ Homestead Exemption (“Disabled Persons’ Homestead Exemption”) or the Disabled Veterans Standard Homestead Exemption (“Disabled Veterans Standard Homestead Exemption”) cannot claim the aforementioned exemption.

Furthermore, beginning with assessment year 2007, the Disabled Persons’ Homestead Exemption provides an

annual homestead exemption in the amount of $2,000 for property that is owned and occupied by certain persons with a disability. However, individuals claiming exemption as a disabled veteran or claiming exemption under the Disabled Veterans Standard Homestead Exemption cannot claim the aforementioned exemption.

In addition, the Disabled Veterans Standard Homestead Exemption provides disabled veterans an annual

homestead exemption starting with assessment year 2007 and thereafter. Specifically, (i) those veterans with a service-connected disability of 75% are granted an exemption of $5,000 and (ii) those veterans with a service-connected disability of less than 75%, but at least 50% are granted an exemption of $2,500. Furthermore, the veteran’s surviving spouse is entitled to the benefit of the exemption, provided that the spouse has legal or beneficial title of the homestead, resides permanently on the homestead and does not remarry. Moreover, if the property is sold by the surviving spouse, then an exemption amount not to exceed the amount specified by the current property tax roll may be transferred to the spouse’s new residence, provided that it is the spouse’s primary residence and the spouse does not remarry. However, individuals claiming exemption as a disabled veteran or claiming exemption under the Disabled Persons’ Homestead Exemption cannot claim the aforementioned exemption.


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Beginning with assessment year 2007, the Returning Veterans’ Homestead Exemption (“Returning Veterans’

Homestead Exemption”) is available for property owned and occupied as the principal residence of a veteran in the assessment year the veteran returns from an armed conflict while on active duty in the United States armed forces. This provision grants a homestead exemption of $5,000, which is applicable in all counties. In order to apply for the Returning Veterans’ Homestead Exemption, the individual must pay real estate taxes on the property, own the property or have either a legal or an equitable interest in the property, “or a leasehold interest of land on which a single family residence is located, which is occupied as a principle residence of a veteran returning from an armed conflict involving the armed forces of the United States who has an ownership interest therein, legal, equitable or as a lessee, and on which the veteran is liable for the payment of property taxes.” Those individuals eligible for the Returning Veterans’ Homestead Exemption may claim the Returning Veterans’ Homestead Exemption, in addition to other homestead exemptions, unless otherwise noted. Truth in Taxation Law

Legislation known as the Truth in Taxation Law (the “Law”) limits the aggregate amount of certain taxes which

can be levied by, and extended for, a taxing district to 105% of the amount of taxes extended in the preceding year unless specified notice, hearing and certification requirements are met by the taxing body. The express purpose of the Law is to require published disclosure of, and hearing upon, an intention to adopt a levy in excess of the specified levels.

FINANCIAL INFORMATION Basis of Accounting

The City records and reports its financial transactions in accordance with generally accepted accounting principles. Consequently, the City prepares government-wide financial statements and fund financial statements each year. The government-wide financial statements are designed to provide a broad overview of the City’s finances and are prepared using the accrual basis of accounting. The fund financial statements provide information on the financial position and the financial operating results for the City’s various accounting entities (funds). Either the accrual or the modified accrual basis of accounting is used depending upon the type of fund concerned.

The financial statements of the City are audited annually by certified public accountants. The financial

statements that follow are summaries and do not purport to be the complete, audited financial statements, copies of which are available upon request. Investment Policy

On December 14, 1999, the City adopted a formal policy governing its investment activities. Although the City is a home-rule community, the City’s investment policy includes a provision that restricts its investments to those permitted by Illinois’ Public Funds Investment Act, which applies to non-home rule communities. In doing so, the City restricted itself to investment instruments with limited risk.

It is the policy of the City to apply the “prudent investor rule” which states: “Investments shall be made with

judgment and care under circumstances then prevailing, which persons of prudence, discretion and intelligence exercise in the management of their own affairs, not for speculation, but for investment, considering the probable safety of their capital as well as the probable income to be derived.”


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For funds other than the Police Pension Fund, Firefighters’ Pension Fund and Retiree Health Insurance Trust

Fund, the City concentrates its investments primarily in U.S. Treasury Bills, Certificates and Notes with maturities of 24 months or less to meet objectives of (1) preservation of capital; (2) liquidity; (3) maximizing rate of return; and (4) maintaining public trust.

Police Pension and Firefighters’ Pension Funds are invested under like statutory provisions, but include

maturity periods up to 30 years. Over 90% of the pension funds are managed by six separate nationally recognized money managers in accordance with oversight policies of the respective governing Pension Fund Board of Trustees.

Money in the Retiree Health Insurance Trust Fund is invested pursuant to a trust agreement and an investment policy that permit the purchase of both fixed-income and equity securities. The trust agreement and investment policy also require reasonable diversification of assets so as to reduce the potential for large losses. Currently, the fund has engaged one outside fixed-income securities manager and one outside equity securities manager to assist with investment activities. The fund is governed by a five-member board. No Consent or Updated Information Requested of the Auditor

The tables and excerpts (collectively, the “Excerpted Financial Information”) contained in this “FINANCIAL INFORMATION” section and in APPENDIX A are from the audited financial statements of the City, including the audited financial statements for the fiscal year ended December 31, 2011 (the “2011 Audit”). The 2011 Audit has been prepared by Sikich LLP, Independent Certified Public Accountants and Advisors, Naperville, Illinois, (the “Auditor”), and approved by formal action of the City Council. The City has not requested the Auditor to update information contained in the Excerpted Financial Information; nor has the City requested that the Auditor consent to the use of the Excerpted Financial Information in this Official Statement. Other than as expressly set forth in this Official Statement, the financial information contained in the Excerpted Financial Information has not been updated since the date of the 2011 Audit. The inclusion of the Excerpted Financial Information in this Official Statement in and of itself is not intended to demonstrate the fiscal condition of the City since the date of the 2011 Audit. Questions or inquiries relating to financial information of the City since the date of the 2011 Audit should be directed to the City. Summary Financial Information

The following tables are summaries and do not purport to be the complete audits, copies of which are available upon request. See APPENDIX A for excerpts of the City's 2011 fiscal year audit.


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Statement of Net Assets Governmental Activities(1)

Audited as of December 31 2007 2008 2009 2010 2011

ASSETS: Cash and Investments ....................... $132,831,950 $197,615,207 $147,481,074 $133,242,577 $145,373,765 Receivables, Net of Allowance: Property Taxes: General and Pension Levies ............... 67,796,113 67,678,790 71,424,540 68,635,680 63,850,924 Special Service Area Levies .............. 1,371,611 1,369,892 1,359,854 1,472,964 1,482,620 Other Taxes ............................... 15,402,987 14,493,977 15,986,157 19,285,335 18,770,481 Loans Receivable .......................... 2,944,327 3,060,404 3,137,926 2,971,808 2,825,291 Rental Fees ............................... 29,938 19,209 113,857 26,707 88,387 Development Participation ................. 7,602,384 3,015,000 2,015,000 1,045,000 0 Miscellaneous ............................. 9,962,073 11,697,136 12,447,814 16,247,520 14,152,344 Deferred Charges/Prepaid Expenses .......... 849,900 1,563,353 1,437,188 1,285,260 1,319,271 Due From Fiduciary Funds ................... 0 0 0 92,099 0 Due From Other Governments ................. 5,840,635 5,614,036 6,194,982 5,725,433 6,617,370 Due From Component Unit .................... 108 0 0 0 0 Due To/From Other Funds .................... 184,323 0 (127,476) (7,783) 0 Property Held For Resale ................... 0 0 0 574,163 452,616 Advance to Component Unit .................. 1,060,175 0 0 0 0 Restricted Assets: Restricted Cash and Investments ........... 3,848,213 1,018,460 1,083,435 1,025,935 1,074,260 Unamortized Loss of Refunding .............. 654,732 596,226 674,898 606,162 254,232 Capital Assets: Non-Depreciable ........................... 146,049,186 198,580,532 164,750,317 187,921,068 174,455,165 Depreciable (Net of Accumulated Depreciation) ............................ 268,474,344 286,085,150 377,649,617 385,585,180 389,084,262 Total Assets ............................ $664,902,999 $792,407,372 $805,629,183 $825,735,108 $819,800,988 LIABILITIES: Accounts Payable ........................... $ 8,163,949 $ 12,099,892 $16,206,955 $ 8,596,198 $ 7,357,863 Accrued Payroll ............................ 8,534,952 8,092,316 9,530,566 9,353,088 9,770,536 Retainage Payable .......................... 1,061,555 4,283,060 1,137,427 415,943 509,958 Accrued Interest Payable ................... 803,267 366,277 377,562 55,935 44,323 Deferred Property Taxes .................... 68,849,407 68,715,089 72,362,793 69,649,401 64,959,672 Other Deferred Revenue ..................... 12,773,287 13,746,661 16,345,221 19,468,967 24,256,564 Due To Fiduciary Funds ..................... 190,618 0 851,332 317,789 102,854 Due To Other Governments ................... 906,908 309,942 259,291 240,026 375,633 Deposits Payable ........................... 989,302 1,220,131 1,097,258 1,302,175 1,231,179 Noncurrent Liabilities: Due Within One Year ....................... 14,494,562 15,264,029 16,908,398 18,178,479 17,716,891 Due In More Than One Year ................. 162,082,649 259,107,405 276,676,724 274,329,391 267,084,717 Unamortized Bond Premium .................. 1,321,642 2,206,618 1,811,040 0 0 Total Liabilities ....................... $280,172,098 $385,411,420 $413,564,567 $401,907,392 $393,410,190 NET ASSETS: Investment In Capital Assets, Net of Related Debt .............................. $323,833,683 $360,690,801 $373,628,698 $403,827,533 $400,801,028 Restricted For: Working Cash .............................. 431,960 440,186 441,213 441,844 442,102 Redevelopment ............................. 11,284,984 14,468,971 12,413,210 17,956,030 22,453,977 Highways and Streets ...................... 8,495,166 6,481,385 6,387,830 6,703,361 8,949,374 Public Safety ............................. 16,448,252 20,673,332 18,627,653 17,079,971 19,140,246 Sanitation ................................ 0 180,230 208,778 311,273 0 Health and Welfare ........................ 0 0 0 0 4,959,129 Debt Service .............................. 18,902,583 11,879,494 770,788 2,135,047 1,530,550 Unrestricted ............................... 5,334,273 (7,818,447) (20,413,554) (24,627,343) (31,885,608) Total Net Assets ........................ $384,730,901 $406,995,952 $392,064,616 $423,827,716 $426,390,798 Note: (1) Source: the City.


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Statement of Activities Governmental Activities(1)

Audited Fiscal Year Ended December 31 2007 2008 2009 2010 2011

GOVERNMENTAL ACTIVITIES: Net Function (Expense) Revenue: General Government ........................ $ (17,464,867) $ (15,129,865) $ (19,389,876) $ (9,411,079) $ (14,019,525) Public Safety ............................. (93,081,907) (93,427,891) (100,681,753) (101,718,844) (101,049,465) Streets and Transportation ................ (26,472,416) (33,958,497) (16,756,827) (4,089,275) (17,005,264) Health and Welfare ........................ (6,015,398) (5,279,746) (5,469,475) 964,097 (757,966) Culture and Recreation .................... (7,893,070) (8,109,716) (8,215,166) (5,475,559) (4,571,614) Sanitation ................................ (383,180) (91,077) (177,500) 0 0 Economic Development ...................... (14,295,893) (13,329,304) (21,699,994) (11,858,643) (11,204,962) Interest .................................. (5,216,216) (6,863,786) (9,193,424) (9,010,597) (8,690,804) Total Governmental Activities ........... $(170,822,947) $(176,189,882) $(181,584,015) $(140,599,900) $(157,299,600) GENERAL REVENUES: Taxes: Property and Replacement .................. $ 73,435,415 $ 79,201,939 $ 82,845,255 $ 85,791,335 $ 82,425,418 Sales ..................................... 40,471,565 39,760,622 36,434,096 38,657,829 40,911,661 Utility ................................... 10,952,041 10,756,816 10,362,550 10,125,801 10,231,247 Income .................................... 14,357,727 15,589,361 13,385,104 12,960,748 14,334,299 Real Estate Transfer ...................... 3,432,176 1,805,490 1,260,381 1,352,542 1,396,683 Food and Beverage ......................... 3,526,036 3,616,354 3,419,497 3,554,765 3,728,894 Gaming .................................... 15,579,995 12,729,676 11,809,475 10,624,299 10,241,111 Hotel/Motel ............................... 409,067 417,698 373,696 393,253 436,624 Other ..................................... 1,026,959 830,184 855,881 913,533 905,063 Investment Income ........................... 6,003,812 4,114,618 1,375,305 294,340 405,583 Miscellaneous ............................... 763,900 1,593,393 1,008,521 1,160,863 1,003,328 Special Item – Disposal of Land ............. 0 0 0 0 (6,957,229) Contributions ............................... 7,976,237 29,302,023 0 0 0 Transfers ................................... 600,000 1,000,000 865,000 550,000 800,000 Total General Revenues .................. $ 178,534,930 $ 200,718,174 $ 163,994,761 $ 166,379,308 $159,862,682 Change in Net Assets ........................ $ 7,711,983 $ 24,528,292 $ (17,589,254) $ 25,779,408 $ 2,563,082 Net Assets, Beginning ....................... $ 377,018,918 $ 384,730,901 406,995,952 $ 392,064,616 $423,827,716 Prior Period Adjustment ................... 0 (2,263,241) 2,657,918 5,983,692 0 Net Assets, Ending .......................... $ 384,730,901 $ 406,995,952 $ 392,064,616 $ 423,827,716 $426,390,798 Note: (1) Source: the City.


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General Fund Balance Sheet(1)

Audited as of December 31 2007 2008 2009 2010 2011

ASSETS: Cash and Investments ......................... $ 13,890,911 $ 22,869,363 $ 20,318,906 $ 24,865,994 $ 18,380,550 Receivables: Property Taxes ............................. 63,815,436 63,718,790 67,464,540 64,675,680 59,874,349 Due From Other Governments ................. 646,098 235,029 328,748 442,526 246,113 Other Taxes ................................ 12,833,557 13,335,405 14,377,133 18,074,413 15,774,883 Other Receivables .......................... 8,721,199 8,569,396 9,138,577 9,010,458 9,123,302 Due From Other Funds ......................... 1,231,605 0 216,009 37,190 106,159 Total Assets ............................. $101,138,806 $108,727,983 $111,843,913 $117,106,261 $103,505,356

LIABILITIES AND EQUITY: Liabilities: Accounts Payable ........................... $ 3,717,450 $ 5,803,573 $ 4,567,383 $ 3,882,801 $ 3,467,510 Accrued Payroll ............................ 8,524,732 8,088,213 9,508,949 9,287,606 9,743,991 Due to Other Funds ......................... 190,618 2,885,000 0 9,656,892 0 Due to Fiduciary Funds ..................... 0 0 851,332 317,789 102,854 Due to Other Governments ................... 865,734 162,765 206,245 172,123 313,919 Deferred Property Tax Revenue .............. 63,518,400 63,386,235 67,043,295 64,283,670 59,517,612 Other Deferred Revenue ..................... 8,959,501 8,989,714 9,719,477 9,592,135 9,375,222 Fund Balance: Reserved ................................... 100,000 0 0 0 0 Unreserved ................................. 15,262,371 19,412,483 19,947,232 19,913,245 20,984,248 Total Liabilities and Fund Equity ........ $101,138,806 $108,727,983 $111,843,913 $117,106,261 $103,505,356


General Fund Revenues and Expenditures(1)

Audited Years Ending December 31 2007 2008 2009 2010 2011

REVENUES: Property Tax ................................... $ 58,463,594 $ 63,185,395 $ 65,150,394 $ 65,992,477 $ 64,387,553 Replacement Tax ................................ 4,399,662 4,339,489 3,567,756 3,908,752 3,394,432 Sales Tax ...................................... 32,163,927 33,235,235 32,545,538 34,591,849 27,595,814 State Income Tax ............................... 14,357,727 15,589,361 13,385,104 12,960,748 14,334,299 Utility Tax .................................... 10,952,041 10,756,816 10,362,550 10,125,801 10,231,247 Food and Beverage Tax .......................... 3,526,036 3,616,354 3,419,497 3,554,765 3,728,894 Other Taxes .................................... 409,067 417,698 373,696 393,253 436,624 Other Governmental Sources ..................... 956,386 1,271,476 1,189,488 1,309,478 1,326,045 Licenses, Permits, Fees and Fines .............. 6,595,454 8,237,026 6,496,137 8,330,828 7,901,634 Charges for Services ........................... 4,686,327 5,889,360 4,971,108 4,081,237 3,616,937 Interest Income ................................ 750,412 321,801 91,731 25,293 14,896 All Other ...................................... 313,876 305,036 259,052 216,615 295,875 Total Revenues ............................. $137,574,509 $147,165,047 $141,812,051 $145,491,096 $137,264,250

EXPENDITURES: General Government ............................. $ 16,349,574 $ 16,343,126 $ 15,621,175 $ 17,579,883 $ 16,777,012 Public Safety .................................. 87,676,817 91,406,304 93,151,648 102,573,670 97,430,776 Streets and Transportation ..................... 15,116,356 15,193,832 13,934,641 11,839,036 10,180,929 Sanitation ..................................... 303,980 252,275 186,020 0 0 Health and Welfare ............................. 0 0 0 6,166,732 5,982,685 Culture and Recreation ......................... 7,862,198 7,858,681 7,182,201 5,391,620 3,948,222 Other .......................................... 11,358,963 12,060,717 11,201,617 1,974,142 1,873,623 Total Expenditures ......................... $138,667,888 $143,114,935 $141,277,302 $145,525,083 $136,193,247

Excess of Revenues Over (Under) Expenditures ................................. $ (1,093,379) $ 4,050,112 $ 534,749 $ (33,987) $ 1,071,003

Other Financing Sources: Operating Transfers In ....................... $ 1,600,000 $ 0 0 $ 0 $ 0 Operating Transfers Out ...................... 0 0 0 0 0 Total Other Financing Sources .............. $ 1,600,000 $ 0 $ 0 $ 0 $ 0

Excess of Revenues and Other Sources Over (Under) Expenditures ............ $ 506,621 $ 4,050,112 $ 534,749 $ (33,987) $ 1,071,003 Prior Period Adjustment ........................ 0 0 0 0 0 Fund Balance - January 1 ....................... 14,855,750 15,362,371 19,412,483 19,947,232 19,913,245 Ending Fund Balance - December 31 .............. $ 15,362,371 $ 19,412,483 $ 19,947,232 $ 19,913,245 $ 20,984,248



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General Fund Estimated and Budget Financial Information(1)

Estimated Budget Twelve Months Twelve Months Ending Ending 12/31/12 12/31/12

REVENUES: Property Tax ....................................... $ 60,676,800 $ 60,376,800 Replacement Tax .................................... 2,821,000 2,821,000 Sales Tax .......................................... 32,940,000 32,640,000 State Income Tax ................................... 14,947,000 14,447,000 Utility Tax ........................................ 10,325,000 10,250,000 Food and Beverage Tax .............................. 3,600,000 3,600,000 Other Taxes ........................................ 4,616,000 4,616,000 Other Governmental Sources ......................... 591,826 591,826 Licenses, Permits, Fees and Fines .................. 4,827,000 4,827,000 Charges for Services ............................... 5,878,100 5,878,100 Interest Income .................................... 256,000 256,000 All Other .......................................... 204,201 204,201 Total Revenues ................................... $141,682,927 $140,507,927 EXPENDITURES: General Government ................................. $ 17,208,945 $ 17,208,945 Public Safety ..................................... 99,664,618 99,664,618 Streets and Transportation ......................... 11,653,696 11,653,696 Health and Welfare ................................. 6,398,414 6,398,414 Culture and Recreation ............................. 4,375,640 4,375,640 Economic Development ............................... 2,285,894 2,285,894 Total Expenditures ............................... $141,587,207 $141,587,207 Excess of Revenues Over (Under) Expenditures ....... $ 95,720 $ (1,079,280) Note: (1) Source: the City.

Fund Balance Policy On September 14, 1999, the City adopted a policy establishing a target fund balance for the General Fund. Under that policy, the General Fund balance target for a given fiscal year is the greater of a) $1,000,000 plus 25% of the prior fiscal year’s property tax levy, or b) 10% of expenditures and other financing uses of the General Fund as originally budgeted for the given fiscal year. A 3/5 vote of the City Council is required for expenditures and/or budgeting which would cause the balance to decrease below the target. Recognitions For its Comprehensive Annual Financial Reports for the fiscal years ended December 31, 1998 through 2010 financial statements, the City received from the Government Finance Officers Association (the “GFOA”) the Certificate of Achievement for Excellence in Financial Reporting. The Certificate of Achievement is a prestigious national award recognizing conformance with the highest standards for preparation of state and local government financial reports. In addition, the GFOA recognized the City with the Distinguished Budget Presentation Award for its 2000 through 2012 budgets. In order to receive this award, a governmental unit must publish a budget document that meets program criteria as a policy document, an operations guide, a financial plan, and a communications device. The Chief Financial Officer/City Treasurer is a past President of the Illinois Government Finance Officers Association.


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EMPLOYEE RETIREMENT BENEFITS OBLIGATIONS

For detailed information relating to the City’s pension plans, see the notes and the Required Supplementary Information to the City’s audited financial statements for the fiscal year ended December 31, 2011, which have been attached hereto as APPENDIX A.

The police and fire pensions are subject to audit. Currently, the pensions are not fully funded. The state law

provides for fully funding over an extended period. The City annually funds the actuarially required contribution. In the event that contributions and investment revenue are insufficient for the pension obligation, the City will be required to increase its contribution by increasing revenues or decreasing expenditures on other services.

The Illinois Municipal Retirement Fund (IMRF) is held by the State of Illinois, which sets the annual

contribution by the City. The full annual amount is funded each year.

REGISTRATION, TRANSFER AND EXCHANGE

See also APPENDIX B for information on registration, transfer and exchange of book-entry debt. The Debt will be initially issued as book-entry debt.

The City shall cause books (the “Debt Register”) for the registration and for the transfer of the Debt to be kept at the principal office maintained for the purpose by the Debt Registrar in Chicago, Illinois. The City will authorize to be prepared, and the Debt Registrar shall keep custody of, multiple bond or certificate blanks executed by the City for use in the transfer and exchange of Debt.

Any Debt may be transferred or exchanged, but only in the manner, subject to the limitations, and upon payment of the charges as set forth in the Debt Ordinance. Upon surrender for transfer or exchange of any Debt at the principal office maintained for the purpose by the Debt Registrar, duly endorsed by, or accompanied by a written instrument or instruments of transfer in form satisfactory to the Debt Registrar and duly executed by the registered owner or such owner’s attorney duly authorized in writing, the City shall execute and the Debt Registrar shall authenticate, date and deliver in the name of the registered owner, transferee or transferees (as the case may be) a new fully registered Bond or Certificate of the same maturity and interest rate of authorized denominations, for a like aggregate principal amount.

The execution by the City of any fully registered Bond or Certificate shall constitute full and due authorization of such Debt, and the Debt Registrar shall thereby be authorized to authenticate, date and deliver such Debt, provided, however, the principal amount of outstanding Debt of each maturity authenticated by the Debt Registrar shall not exceed the authorized principal amount of Debt for such maturity less Debt previously paid. The Debt Registrar shall not be required to transfer or exchange any Debt following the close of business on the fifteenth day of the calendar month in which an interest payment date occurs on such Debt (known as the record date), nor to transfer or exchange any Debt after notice calling such Debt for redemption has been mailed, nor during a period of fifteen days next preceding mailing of a notice of redemption of any Debt. The person in whose name any Debt shall be registered shall be deemed and regarded as the absolute owner thereof for all purposes, and payment of the principal of or interest on any Debt shall be made only to or upon the order of the registered owner thereof or such owner’s legal representative. All such payments shall be valid and effectual to satisfy and discharge the liability upon such Debt to the extent of the sum or sums so paid.

No service charge shall be made for any transfer or exchange of Debt, but the City or the Debt Registrar may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any transfer or exchange of Debt except in the case of the issuance of Debt for the unredeemed portion of debt surrendered for redemption.


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TAX EXEMPTION

Federal tax law contains a number of requirements and restrictions which apply to the Debt, including investment restrictions, periodic payments of arbitrage profits to the United States of America, requirements regarding the proper use of debt proceeds and the facilities financed therewith, and certain other matters. The City has covenanted to comply with all requirements that must be satisfied in order for the interest on the Debt to be excludible from gross income for federal income tax purposes. Failure to comply with certain of such covenants could cause the interest on the Debt to become includible in gross income for federal income tax purposes retroactively to the date of issuance of the Debt.

Subject to the City’s compliance with the above-referenced covenants, under present law, in the opinion of

Bond Counsel, interest on the Debt is excludible from the gross income of the owners thereof for federal income tax purposes, and is not included as an item of tax preference in computing the federal alternative minimum tax for individuals and corporations, but interest on the Debt is taken into account, however, in computing an adjustment used in determining the federal alternative minimum tax for certain corporations.

In rendering its opinion, Bond Counsel will rely upon certifications of the City with respect to certain material facts within the City’s knowledge. Bond Counsel’s opinion represents its legal judgment based upon its review of the law and the facts that it deems relevant to render such opinion, and is not a guarantee of result.

The Internal Revenue Code of 1986, as amended (the “Code”), includes provisions for an alternative minimum tax (“AMT”) for corporations in addition to the corporate regular tax in certain cases. The AMT for a corporation, if any, depends upon the corporation’s alternative minimum taxable income (“AMTI”), which is the corporation’s taxable income with certain adjustments. One of the adjustment items used in computing the AMTI of a corporation (with certain exceptions) is an amount equal to 75% of the excess of such corporation’s “adjusted current earnings” over an amount equal to its AMTI (before such adjustment item and the alternative tax net operating loss deduction). “Adjusted current earnings” would generally include certain tax-exempt interest, including the interest on the Debt.

Ownership of the Debt may result in collateral federal income tax consequences to certain taxpayers, including, without limitation, corporations subject to the branch profits tax, financial institutions, certain insurance companies, certain S corporations, individual recipients of Social Security or Railroad Retirement benefits and taxpayers who may be deemed to have incurred (or continued) indebtedness to purchase or carry tax-exempt obligations. Prospective purchasers of the Debt should consult their tax advisors as to applicability of any such collateral consequences.

The issue price (the “Issue Price”) for each maturity of the Debt is the price at which a substantial amount of such maturity of the Debt is first sold to the public. The Issue Price of a maturity of the Debt may be different from the price set forth, or the price corresponding to the yield set forth, on the cover page hereof.

If the Issue Price of a maturity of the Debt is less than the principal amount payable at maturity, the difference between the Issue Price of each such maturity, if any, of the Debt (the “OID Debt”) and the principal amount payable at maturity is original issue discount.


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For an investor who purchases an OID Debt in the initial public offering at the Issue Price for such maturity and who holds such OID Debt to its stated maturity, subject to the condition that the City complies with the covenants discussed above, (a) the full amount of original issue discount with respect to such OID Debt constitutes interest which is excludible from the gross income of the owner thereof for federal income tax purposes; (b) such owner will not realize taxable capital gain or market discount upon payment of such OID Debt at its stated maturity; (c) such original issue discount is not included as an item of tax preference in computing the alternative minimum tax for individuals and corporations under the Code, but is taken into account in computing an adjustment used in determining the alternative minimum tax for certain corporations under the Code, as described above; and (d) the accretion of original issue discount in each year may result in certain other collateral federal income tax consequences in each year even though a corresponding cash payment may not be received until a later year. Based upon the stated position of the Illinois Department of Revenue under Illinois income tax law, accreted original issue discount on such OID Debt is subject to taxation as it accretes, even though there may not be a corresponding cash payment until a later year. Owners of OID Debt should consult their own tax advisors with respect to the state and local tax consequences of original issue discount on such OID Debt.

Owners of Debt who dispose of Debt prior to the stated maturity (whether by sale, redemption or otherwise), purchase Debt in the initial public offering, but at a price different from the Issue Price or purchase Debt subsequent to the initial public offering should consult their own tax advisors.

If Debt is purchased at any time for a price that is less than the Debt’s stated redemption price at maturity or, in the case of an OID Debt, its Issue Price plus accreted original issue discount (the “Revised Issue Price”), the purchaser will be treated as having purchased Debt with market discount subject to the market discount rules of the Code (unless a statutory de minimis rule applies). Accrued market discount is treated as taxable ordinary income and is recognized when Debt is disposed of (to the extent such accrued discount does not exceed gain realized) or, at the purchaser’s election, as it accrues. Such treatment would apply to any purchaser who purchases an OID Debt for a price that is less than its Revised Issue Price. The applicability of the market discount rules may adversely affect the liquidity or secondary market price of such Debt. Purchasers should consult their own tax advisors regarding the potential implications of market discount with respect to the Debt.

An investor may purchase Debt at a price in excess of its stated principal amount. Such excess is characterized for federal income tax purposes as “bond premium” and must be amortized by an investor on a constant yield basis over the remaining term of the Debt in a manner that takes into account potential call dates and call prices. An investor cannot deduct amortized bond premium relating to a tax-exempt bond or certificate. The amortized bond premium is treated as a reduction in the tax-exempt interest received. As bond premium is amortized, it reduces the investor’s basis in the Debt. Investors who purchase Debt at a premium should consult their own tax advisors regarding the amortization of bond premium and its effect on the Debt’s basis for purposes of computing gain or loss in connection with the sale, exchange, redemption or early retirement of the Debt.

There are or may be pending in the Congress of the United States of America legislative proposals, including some that carry retroactive effective dates, that, if enacted, could alter or amend the federal tax matters referred to above or affect the market value of the Debt. It cannot be predicted whether or in what form any such proposal might be enacted or whether, if enacted, it would apply to obligations issued prior to enactment. Prospective purchasers of the Debt should consult their own tax advisors regarding any pending or proposed federal tax legislation. Bond Counsel expresses no opinion regarding any pending or proposed federal tax legislation.

The Internal Revenue Service (the “Service”) has an ongoing program of auditing tax-exempt obligations to determine whether, in the view of the Service, interest on such tax-exempt obligations is includible in the gross income of the owners thereof for federal income tax purposes. It cannot be predicted whether or not the Service will commence an audit of the Debt. If an audit is commenced, under current procedures the Service may treat the City as a taxpayer and the owners of the Debt may have no right to participate in such procedure. The commencement of an audit could adversely affect the market value and liquidity of the Debt until the audit is concluded, regardless of the ultimate outcome.


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Payments of interest on, and proceeds of the sale, redemption or maturity of, tax-exempt obligations, including the Debt, are in certain cases required to be reported to the Service. Additionally, backup withholding may apply to any such payments to any Debt owner who fails to provide an accurate Form W-9 Request for Taxpayer Identification Number and Certification, or a substantially identical form, or to any Debt owner who is notified by the Service of a failure to report any interest or dividends required to be shown on federal income tax returns. The reporting and backup withholding requirements do not affect the excludability of such interest from gross income for federal tax purposes.

Interest on the Debt is not exempt from present State of Illinois income taxes. Ownership of the Debt may result in other state and local tax consequences to certain taxpayers. Bond Counsel expresses no opinion regarding any such collateral consequences arising with respect to the Debt. Prospective purchasers of the Bonds or Certificates should consult their tax advisors regarding the applicability of any such state and local taxes.

CONTINUING DISCLOSURE

The City will enter into a Continuing Disclosure Undertaking (the “Undertaking”) for the benefit of the beneficial owners of the Debt to send certain information annually and to provide notice of certain events to the Municipal Securities Rulemaking Board (the “MSRB”) pursuant to the requirements of Section (b)(5) of Rule 15c2-12 (the “Rule”) adopted by the Securities and Exchange Commission (the “Commission”) under the Securities Exchange Act of 1934. No person, other than the City, has undertaken, or is otherwise expected, to provide continuing disclosure with respect to the Debt. The information to be provided on an annual basis, the events which will be noticed on an occurrence basis and a summary of other terms of the Undertaking, including termination, amendment and remedies, are set forth below under “THE UNDERTAKING.”

The City has represented that it has not failed to comply in all material respects with each and every undertaking previously entered into by it pursuant to the Rule. A failure by the City to comply with the Undertaking will not constitute a default under the related Ordinance and beneficial owners of the Debt are limited to the remedies described in the Undertaking. See “THE UNDERTAKING - Consequences of Failure of the City to Provide Information.” The City must report any failure to comply with the Undertaking in accordance with the Rule. Any broker, dealer or municipal securities dealer must consider such report before recommending the purchase or sale of the Debt in the secondary market. Consequently, such a failure may adversely affect the transferability and liquidity of the Debt and their market price.

Bond Counsel expresses no opinion as to whether the Undertaking complies with the requirements of Section (b)(5)

of the Rule.

THE UNDERTAKING

The following is a brief summary of certain provisions of the Undertaking of the City and does not purport to be complete. The statements made under this caption are subject to the detailed provisions of the Undertaking, a copy of which is available upon request from the City. Annual Financial Information Disclosure

The City covenants that it will disseminate its Annual Financial Information and its Audited Financial Statements, if any (as described below) to the MSRB in such manner and format and accompanied by identifying information as is prescribed by the MSRB or the Commission at the time of delivery of such information within 210 days after the last day of the City’s fiscal year (currently December 31). If Audited Financial Statements are not available when the Annual Financial Information is filed, the City will file unaudited financial statements. The City will submit Audited Financial Statements to the MSRB’s Electronic Municipal Market Access (“EMMA”) system within 30 days after availability to the City. MSRB Rule G-32 requires all EMMA filings to be in word-searchable PDF format. This requirement extends to all documents to be filed with EMMA, including financial statements and other externally prepared reports.


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“Annual Financial Information” means:

1. The table under the heading of “Retailers’ Occupation, Service Occupation and Use Tax”

within this Official Statement; 2. All of the tables under the heading “PROPERTY ASSESSMENT AND TAX

INFORMATION” within this Official Statement; 3. All of the tables under the heading “DEBT INFORMATION” within this Official Statement;

and 4. All of the tables under the heading “FINANCIAL INFORMATION” within this Official

Statement.

“Audited Financial Statements” means financial statements of the City as audited annually by independent certified public accountants. Audited Financial Statements are expected to continue to be prepared according to Generally Accepted Accounting Principles as applicable to governmental units (i.e., as subject to the pronouncements of the Governmental Accounting Standards Board and subject to any express requirements of State law). Reportable Events Disclosure

The City covenants that it will disseminate in a timely manner (not in excess of ten business days after the occurrence of the Reportable Event) Reportable Events Disclosure to the MSRB in such manner and format and accompanied by identifying information as is prescribed by the MSRB or the Commission at the time of delivery of such information. MSRB Rule G-32 requires all EMMA filings to be in word-searchable PDF format. This requirement extends to all documents to be filed with EMMA, including financial statements and other externally prepared reports. The “Events” are:

1. Principal and interest payment delinquencies 2. Non-payment related defaults, if material 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, the issuance by the Internal Revenue Service of proposed or final determinations

of taxability, Notices of Proposed Issue (IRS Form 5701-TEB) or other material notices or determinations with respect to the tax status of the security, or other material events affecting the tax status of the security

7. Modifications to the rights of security holders, if material 8. Debt calls, if material, and tender offers 9. Defeasances 10. Release, substitution or sale of property securing repayment of the securities, if material 11. Rating changes 12. Bankruptcy, insolvency, receivership or similar event of the City* 13. The consummation of a merger, consolidation, or acquisition involving the City or the sale of all or

substantially all of the assets of the City, other than in the ordinary course of business, the entry into a definitive agreement to undertake such an action or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms, if material

14. Appointment of a successor or additional trustee or the change of name of a trustee, if material. This event is considered to occur when any of the following occur: the appointment of a receiver, fiscal agent or similar officer for the City in a proceeding under the U.S. Bankruptcy Code or in any other proceeding under state or federal law in which a court or governmental authority has assumed jurisdiction over substantially all of the assets or business of the City, or if such jurisdiction has been assumed by leaving the existing governing body and officials or officers in possession but subject to the supervision and orders of a court or governmental authority, or the entry of an order confirming a plan of reorganization, arrangement or liquidation by a court or governmental authority having supervision or jurisdiction over substantially all of the assets or business of the City.


42

Consequences of Failure of the City to Provide Information

The City shall give notice in a timely manner to the MSRB of any failure to provide disclosure of Annual Financial Information and Audited Financial Statements when the same are due under the Undertaking.

In the event of a failure of the City to comply with any provision of the Undertaking, the beneficial owner of any Debt may seek mandamus or specific performance by court order, to cause the City to comply with its obligations under the Undertaking. A default under the Undertaking shall not be deemed a default under the Debt Ordinance, and the sole remedy under the Undertaking in the event of any failure of the City to comply with the Undertaking shall be an action to compel performance. Amendment; Waiver

Notwithstanding any other provision of the Undertaking, the City by resolution or ordinance authorizing such amendment or waiver, may amend the Undertaking, and any provision of the Undertaking may be waived, if:

(a) (i) The amendment or the waiver is made in connection with a change in circumstances that arises from a change in legal requirements, including, without limitation, pursuant to a “no-action” letter issued by the Commission, a change in law, or a change in the identity, nature, or status of the City, or type of business conducted; or

(ii) The Undertaking, as amended, or the provision, as waived, would have complied with the requirements of the Rule at the time of the primary offering, after taking into account any amendments or interpretations of the Rule, as well as any change in circumstances; and (b) The amendment or waiver does not materially impair the interests of the beneficial owners of the Debt, as determined by parties unaffiliated with the City (such as Bond Counsel).

In the event that the Commission or the MSRB or other regulatory authority approves or requires Annual

Financial Information or notices of a Reportable Event to be filed with a central post office, governmental agency or similar entity other than the MSRB or in lieu of the MSRB, the City shall, if required, make such dissemination to such central post office, governmental agency or similar entity without the necessity of amending the Undertaking. Termination of Undertaking

The Undertaking shall be terminated if the City shall no longer have any legal liability for any obligation on or relating to repayment of the Debt under the Debt Ordinance. The City shall give notice to the MSRB in a timely manner if this paragraph is applicable.


43

Additional Information

Nothing in the Undertaking shall be deemed to prevent the City from disseminating any other information, using the means of dissemination set forth in the Undertaking or any other means of communication, or including any other information in any Annual Financial Information or Audited Financial Statements or notice of occurrence of a Reportable Event, in addition to that which is required by the Undertaking. If the City chooses to include any information from any document or notice of occurrence of a Reportable Event in addition to that which is specifically required by the Undertaking, the City shall have no obligation under the Undertaking to update such information or include it in any future disclosure or notice of occurrence of a Reportable Event. Dissemination of Information; Dissemination Agent

When filings are required to be made with the MSRB in accordance with the Undertaking, such filings are required to be made through its EMMA system for municipal securities disclosure or through any other electronic format or system prescribed by the MSRB for purposes of the Rule.

The City may, from time to time, appoint or engage a Dissemination Agent to assist it in carrying out its obligations under the Undertaking, and may discharge any such Agent, with or without appointing a successor Dissemination Agent.

LITIGATION

There is no litigation of any nature now pending or threatened restraining or enjoining the issuance, sale, execution or delivery of the Debt, or in any way contesting or affecting the validity of the Debt or any proceedings of the City taken with respect to the issuance or sale thereof.

CERTAIN LEGAL MATTERS

Certain legal matters incident to the authorization, issuance and sale of the Debt is subject to the approving legal opinions of Chapman and Cutler LLP, Chicago, Illinois, as Bond Counsel (the “Bond Counsel”), who has been retained by, and acts as, Bond Counsel to the City. Bond Counsel has not been retained or consulted on disclosure matters, and has not undertaken to review or verify the accuracy, completeness or sufficiency of this Official Statement or other offering material relating to the Debt, and assumes no responsibility for the statements or information contained in or incorporated by reference in this Official Statement, except that in its capacity as Bond Counsel, Chapman and Cutler LLP has, at the request of the City, reviewed only those portions of this Official Statement involving the description of the Debt, the security for the Debt (excluding forecasts, projections, estimates or any other financial or economic information in connection therewith), the description of the federal tax exemption of interest on the Debt and the “bank-qualified” status of the Debt, if any. This review was undertaken solely at the request and for the benefit of the City, and did not include any obligation to establish or confirm factual matters set forth herein.


44

OFFICIAL STATEMENT AUTHORIZATION

This Official Statement has been authorized for distribution to prospective purchasers of the Debt. All statements, information, and statistics herein are believed to be correct but are not guaranteed by the consultants or by the City, and all expressions of opinion, whether or not so stated, are intended only as such.

INVESTMENT RATING

The City has supplied certain information and material concerning the Debt and the City to the rating service shown on the cover page, including certain information and materials which may not have been included in this Official Statement, as part of its application for an investment rating on the Debt. A rating reflects only the views of the rating agency assigning such rating and an explanation of the significance of such rating may be obtained from such rating agency. Generally, such rating service bases its rating on such information and material, and also on such investigations, studies and assumptions that it may undertake independently. There is no assurance that such rating will continue for any given period of time or that it may not be lowered or withdrawn entirely by such rating service if, in its judgment, circumstances so warrant. Any such downward change in or withdrawal of such rating may have an adverse effect on the secondary market price of the Debt. An explanation of the significance of the investment rating may be obtained from the rating agency: Standard & Poor’s Ratings Service, a division of The McGraw-Hill Companies, Inc., 55 Water Street, New York, New York 10041, telephone 212-438-2000. The City will provide appropriate periodic credit information to the rating service to maintain a rating on the Debt.

UNDERWRITING

The 2012A Bonds were offered for sale by the City at a public, competitive sale on September 11, 2012. The

best bid submitted at the sale was submitted by ____________________ (the “2012A Underwriter”). The City awarded the contract for sale of the 2012A Bonds to the 2012A Underwriter at a price of $___________. The 2012A Underwriter has represented to the City that the 2012A Bonds have been subsequently re-offered to the public initially at the yields or prices set forth in the addendum to this Official Statement.

The 2012B Bonds were offered for sale by the City at a public, competitive sale on September 11, 2012. The best bid submitted at the sale was submitted by ____________________ (the “2012B Underwriter”). The City awarded the contract for sale of the 2012B Bonds to the 2012B Underwriter at a price of $___________. The 2012B Underwriter has represented to the City that the 2012B Bonds have been subsequently re-offered to the public initially at the yields or prices set forth in the addendum to this Official Statement.

The 2012C Bonds were offered for sale by the City at a public, competitive sale on September 11, 2012. The best bid submitted at the sale was submitted by ____________________ (the “2012C Underwriter”). The City awarded the contract for sale of the 2012C Bonds to the 2012C Underwriter at a price of $___________. The 2012C Underwriter has represented to the City that the 2012C Bonds have been subsequently re-offered to the public initially at the yields or prices set forth in the addendum to this Official Statement.

The 2012D Certificates were offered for sale by the City at a public, competitive sale on September 11, 2012. The best bid submitted at the sale was submitted by ____________________ (the “2012D Underwriter”). The City awarded the contract for sale of the 2012D Certificates to the 2012D Underwriter at a price of $___________. The 2012D Underwriter has represented to the City that the 2012D Certificates have been subsequently re-offered to the public initially at the yields or prices set forth in the addendum to this Official Statement.


45

FINANCIAL ADVISOR

The City has engaged Speer Financial, Inc. as financial advisor (the “Financial Advisor”) in connection with the issuance and sale of the Debt. The Financial Advisor is a Registered Municipal Advisor in accordance with the rules of the Municipal Securities Rulemaking Board (the “MSRB”). The Financial Advisor will not participate in the underwriting of the Debt. The financial information included in the Official Statement has been compiled by the Financial Advisor. Such information does not purport to be a review, audit or certified forecast of future events and may not conform with accounting principles applicable to compilations of financial information. The Financial Advisor is not a firm of certified public accountants and does not serve in that capacity or provide accounting services in connection with the Debt. The Financial Advisor is not obligated to undertake any independent verification of or to assume any responsibility for the accuracy, completeness or fairness of the information contained in this Official Statement, nor is the Financial Advisor obligated by the City’s continuing disclosure undertaking.

CERTIFICATION We have examined this Official Statement dated August 30, 2012, for the $22,400,000 General Obligation Library Bonds, Series 2012A, $7,020,000* General Obligation Refunding Bonds, Series 2012B, $3,315,000* General Obligation Refunding Bonds, Series 2012C and $3,285,000* Refunding Debt Certificates, Series 2012D (Special Service Area Number 34 Project), believe it to be true and correct and will provide to the purchasers of the Debt at the time of delivery certificates confirming to the purchasers that to the best of our knowledge and belief information in the Official Statement was at the time of acceptance of the bid for the Debt and, including any addenda thereto, was at the time of delivery of the Debt true and correct in all material respects and does not include any untrue statement of a 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/ THOMAS J. WEISNER /s/ BRIAN W. CAPUTO Mayor Chief Financial Officer/City Treasurer CITY OF AURORA CITY OF AURORA Kane, DuPage, Kendall and Will Counties, Illinois Kane, DuPage, Kendall and Will Counties, Illinois *Subject to change.

APPENDIX A

CITY OF AURORA KANE, DUPAGE, KENDALL AND WILL COUNTIES, ILLINOIS

EXCERPTS OF FISCAL YEAR 2011 AUDITED FINANCIAL STATEMENTS

Com

ponen

t

Un

it

Gover

nm

enta

l

Busi

nes

s-T

ype

A

uro

ra

Act

ivit

ies

Act

ivit

ies

Tota

lP

ubli

c L

ibra

ry

AS

SE

TS

Cas

h a

nd I

nves

tmen

ts145,3

73,7

65

$

19,0

23,5

23

$

164,3

97,2

88

$

9,7

81,6

52

$

Res

tric

ted C

ash

and I

nves

tmen

ts1

,074,2

60

2,8

46,6

61

3,9

20,9

21

211,8

31

Rec

eivab

les,

Net

of

All

ow

ance

W

her

e A

ppli

cable

Pro

per

ty T

axes

Gen

eral

and P

ensi

on L

evie

s63,8

50,9

24

-

63,8

50,9

24

9,2

69,6

80

Sp

ecia

l S

ervic

e A

reas

Lev

ies

1,4

82,6

20

-

1,4

82,6

20

-

Oth

er T

axes

18,7

70,4

81

-

18,7

70,4

81

-

Uti

lity

Cust

om

ers

-

5,3

58,0

04

5,3

58,0

04

-

Loan

s R

ecei

vab

le2,8

25,2

91

-

2,8

25,2

91

-

Ren

tal

Fee

s88,3

87

-

88,3

87

-

Inte

rest

884,0

23

130,4

53

1,0

14,4

76

46,7

33

Mis

cell

aneo

us

13,2

68,3

21

-

13,2

68,3

21

588

Inven

tory

-

215,1

79

215,1

79

-

Due

from

Oth

er G

over

nm

ents

6,6

17,3

70

6,7

52,8

54

13,3

70,2

24

202,9

45

Pro

per

ty H

eld

for

Res

ale

452,6

16

-

452,6

16

-

Def

erre

d C

har

ges

/Pre

pai

d C

ost

1,3

19,2

71

405,1

60

1,7

24,4

31

130,0

62

Un

amort

ized

Loss

on

Ref

undin

g254,2

32

-

254,2

32

-

Oth

er P

ost

emplo

ym

ent

Ben

efit

s A

sset

-

2,4

98,0

03

2,4

98,0

03

-

Cap

ital

Ass

ets

Nondep

reci

able

174,4

55,1

65

14,9

72,4

90

189,4

27,6

55

4,4

78,2

62

Dep

reci

able

(N

et o

f A

ccum

ula

ted D

epre

ciat

ion)

389,0

84,2

62

181,3

13,5

55

570,3

97,8

17

7,4

08,9

29

Tota

l A

sset

s819,8

00,9

88

233,5

15,8

82

1,0

53,3

16,8

70

31,5

30,6

82

LIA

BIL

ITIE

S

Acc

ounts

Pay

able

7,3

57,8

63

1,2

78,1

81

8,6

36,0

44

222,7

76

Acc

rued

Pay

roll

9,7

70,5

36

612,5

68

10,3

83,1

04

416,8

61

Ret

ainag

e P

ayab

le509,9

58

63,8

51

573,8

09

-

Acc

rued

Inte

rest

Pay

able

44,3

23

261,7

47

306,0

70

58,4

55

Unea

rned

Pro

per

ty T

axes

64,9

59,6

72

-

64,9

59,6

72

9,2

14,4

84

Oth

er U

nea

rned

Rev

enue

24,2

56,5

64

665,1

62

24,9

21,7

26

20,7

13

Due

to O

ther

Gover

nm

ents

375,6

33

-

375,6

33

-

Du

e to

Fid

uci

ary F

unds

102,8

54

-

102,8

54

-

Dep

osi

ts P

ayab

le1,2

31,1

79

629,2

33

1,8

60,4

12

-

Noncu

rren

t L

iabil

itie

s

Due

Wit

hin

One

Yea

r17,7

16,8

91

1,6

99,4

12

19,4

16,3

03

787,3

27

Due

in M

ore

than

One

Yea

r267,0

84,7

17

44,5

64,2

00

311,6

48,9

17

2,9

03,9

47

Tota

l L

iabil

itie

s393,4

10,1

90

49,7

74,3

54

443,1

84,5

44

13,6

24,5

63

NE

T A

SS

ET

S

Inves

ted i

n C

apit

al A

sset

s,

N

et o

f R

elat

ed D

ebt

400,8

01,0

28

159,1

99,8

65

560,0

00,8

93

8,8

39,7

28

Res

tric

ted f

or:

Deb

t S

ervic

e1,5

30,5

50

3,2

20,6

87

4,7

51,2

37

64,1

25

Work

ing C

ash

442,1

02

-

442,1

02

-

Publi

c S

afet

y19,1

40,2

46

-

19,1

40,2

46

-

Str

eets

and T

ransp

ort

atio

n8,9

49,3

74

-

8,9

49,3

74

-

Hea

lth a

nd W

elfa

re4,9

59,1

29

-

4,9

59,1

29

-

Eco

nom

ic D

evel

opm

ent

22,4

53,9

77

-

22,4

53,9

77

-

Unre

stri

cted

(31,8

85,6

08)

21,3

20,9

76

(10,5

64,6

32)

9,0

02,2

66

TO

TA

L N

ET

AS

SE

TS

426,3

90,7

98

$

183,7

41,5

28

$

610,1

32,3

26

$

17,9

06,1

19

$

Pri

mar

y G

over

nm

ent

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Y O

F A

UR

OR

A,

ILL

INO

IS

ST

AT

EM

EN

T O

F N

ET

AS

SE

TS

Dec

ember

31,

2011

See

acc

om

pan

yin

g n

ote

s to

fin

anci

al s

tate

men

ts.

__

____

____

____

____

____

____

____

____

T

HIS

PA

GE

IN

TE

NT

ION

AL

LY

LE

FT

BL

AN

K

__

____

____

____

____

____

____

____

___

A-1

Oper

atin

gC

apit

al

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arges

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nts

an

dG

ran

ts a

nd

FU

NC

TIO

NS

/PR

OG

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MS

Expen

ses

for

Ser

vic

esC

ontr

ibuti

ons

Contr

ibuti

ons

PR

IMA

RY

GO

VE

RN

ME

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Gover

nm

enta

l A

ctiv

itie

s

Gen

eral

Gover

nm

ent

20,5

10,5

61

$

4,1

51,4

53

$

9,5

83

$

2

,33

0,0

00

$

Publi

c S

afet

y108,5

55,3

89

5,4

20,7

08

472,0

35

1

,61

3,1

81

Str

eets

and T

ransp

ort

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n28,2

08,0

54

1,5

01,8

23

5,9

27,8

26

3,7

73

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1

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nd W

elfa

re12,7

12,6

38

8,1

84,1

03

3,6

11,2

83

15

9,2

86

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and R

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n5,7

90,3

23

55,6

49

1,1

63,0

60

-

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nom

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12,8

54,3

42

32,8

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1,6

16

,58

0

Inte

rest

8,9

40,5

72

-

249,7

68

-

Tota

l G

over

nm

enta

l A

ctiv

itie

s197,5

71,8

79

19,3

46,5

36

11,4

33,5

55

9

,49

2,1

88

Busi

nes

s-T

ype

Act

ivit

ies

Wat

er a

nd S

ewer

25,7

15,5

82

27,1

10,2

25

-

3,9

66

,98

3

Dow

nto

wn P

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g1,3

86,3

68

871,8

41

-

50

1,8

59

Com

mute

r P

arkin

g2,1

68,7

00

2,0

66,6

86

-

-

Golf

Oper

atio

ns

2,0

38,8

60

1,7

19,5

95

-

-

Tota

l B

usi

nes

s-T

ype

Act

ivit

ies

31,3

09,5

10

31,7

68,3

47

-

4,4

68

,84

2

TO

TA

L P

RIM

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Y G

OV

ER

NM

EN

T228,8

81,3

89

$

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14,8

83

$

11,4

33,5

55

$

1

3,9

61

,03

0$

CO

MP

ON

EN

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NIT

Auro

ra P

ubli

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ry10,3

38,7

38

$

176,1

03

$

237,2

87

$

3

,92

5$

Pro

gra

m R

even

ues

CIT

Y O

F A

UR

OR

A, IL

LIN

OIS

ST

AT

EM

EN

T O

F A

CT

IVIT

IES

For

the

Yea

r E

nded

Dec

ember

31, 2011

Com

pon

ent

Un

it

Auro

ra

Gover

nm

enta

lB

usi

nes

s-T

ype

Publi

c

Act

ivit

ies

Act

ivit

ies

Tota

lL

ibra

ry

(14,0

19,5

25)

$

-$

(14,0

19,5

25)

$

-$

(10

1,0

49

,46

5)

-

(101,0

49,4

65)

-

(17,0

05,2

64)

-

(17,0

05,2

64)

-

(75

7,9

66

)

-

(75

7,9

66

)

-

(4,5

71

,61

4)

-

(4,5

71

,61

4)

-

(11,2

04,9

62)

-

(11,2

04,9

62)

-

(8,6

90

,80

4)

-

(8,6

90

,80

4)

-

(15

7,2

99

,60

0)

-

(157,2

99,6

00)

-

-

5,3

61,6

26

5,3

61,6

26

-

-

(12

,66

8)

(12

,66

8)

-

-

(10

2,0

14

)

(10

2,0

14

)

-

-

(31

9,2

65

)

(31

9,2

65

)

-

-

4,9

27,6

79

4,9

27,6

79

-

(15

7,2

99

,60

0)

4,9

27,6

79

(152,3

71,9

21)

-

-

-

-

(9

,92

1,4

23

)

Gen

eral

Rev

enues

Tax

es

Pro

per

ty a

nd R

epla

cem

ent

82,4

25,4

18

-

82,4

25,4

18

10,5

58,7

75

Sal

es40,9

11,6

61

369,1

03

41,2

80,7

64

-

Uti

lity

10

,23

1,2

47

-

10,2

31,2

47

-

Inco

me

14,3

34,2

99

-

14,3

34,2

99

-

Rea

l E

stat

e T

ransf

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62,7

41

Contr

ibuti

ons

of

capit

al a

sset

s ar

e re

port

ed o

nly

in t

he

stat

emen

t of

acti

vit

ies

1,5

62,6

36

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e is

suan

ce o

f lo

ng-t

erm

deb

t is

rep

ort

ed a

s an

oth

er f

inan

cin

g s

ourc

e

in

gover

nm

enta

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nds

but

as a

n i

ncr

ease

of

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nci

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ou

tsta

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g i

n

th

e st

atem

ent

of

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ies

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pay

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ort

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uct

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n t

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atem

ent

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00

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ang

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n n

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on

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nly

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he

stat

emen

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o

f ac

tiv

itie

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29

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net

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er p

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ent

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nly

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emen

t of

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94

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7)

Rev

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t of

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that

are

not

avai

lable

in

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l

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nds

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not

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rted

as

reven

ue

in g

over

nm

enta

l fu

nd

s u

nti

l re

ceiv

ed(1

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6,6

30

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e ex

pen

ses

in t

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stat

emen

t of

acti

vit

ies

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requir

e th

e use

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cu

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cial

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rces

an

d, th

eref

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s

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pen

dit

ure

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nm

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l fu

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-

2

9,7

66

,92

2

Pay

men

ts t

o S

up

pli

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(11

,54

0,1

49

)

(1

,92

8,1

35

)

(13

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8,2

84

)

(2

2,5

07

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1)

Pay

men

ts t

o E

mp

loyee

s/R

etir

ees

(8,7

89

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6,8

99

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(4

20

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1)

Net

Cas

h f

rom

Op

erat

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ctiv

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s6

,86

6,2

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10

4,9

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6

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com

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h f

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F

inan

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74

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ITA

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ND

R

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AT

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FIN

AN

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Pro

per

ty,

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and

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men

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cqu

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or

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stru

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43

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fras

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(10

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93

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(10

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Inte

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gen

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94

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1)

(2

09

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(1

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4,0

71

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h f

rom

Cap

ital

an

d

R

elat

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on

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ves

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92

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56

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7,4

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(1

7,9

76

,47

4)

Inte

rest

on I

nves

tmen

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69

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5

24

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8

4

94

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h f

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ves

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g A

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10

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T I

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15,4

11,7

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6

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Bu

sin

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e A

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he

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95

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7)

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2

45

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Inte

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9

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27

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in

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Pay

able

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59,0

67

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58

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Ben

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6,8

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4,9

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39

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4

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the

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om

pan

yin

g n

ote

s to

fin

anci

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tate

men

ts.

A-8

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Y O

F A

UR

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A, IL

LIN

OIS

ST

AT

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EN

T O

F F

IDU

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NE

T A

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ET

S

Dec

ember

31, 2011

Pen

sion

and O

PE

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gen

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SE

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hort

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m I

nves

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14

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tmen

ts, at

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r V

alue

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ket

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al F

unds

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50

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no

is F

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ds

5,9

14

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4

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oti

able

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s of

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56,2

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72,0

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69

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rued

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rest

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87,2

24

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102,8

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116,5

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efit

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T A

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EL

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RU

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262,7

63,8

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om

pan

yin

g n

ote

s to

fin

anci

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Y O

F A

UR

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LIN

OIS

ST

AT

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emb

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1,

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23

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Inv

estm

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me

Net

Ap

pre

ciat

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epre

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F

air

Val

ue

of

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estm

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75

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Inte

rest

7,1

16

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estm

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me

5,7

40

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1

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ves

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ves

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com

e 4

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dit

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efit

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min

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tal

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s2

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8

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NC

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AS

E

8,1

75

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6

NE

T A

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emb

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62

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acc

om

pan

yin

g n

ote

s to

fin

anci

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tate

men

ts.

A-9

CIT

Y O

F A

UR

OR

A, IL

LIN

OIS

NO

TE

S T

O F

INA

NC

IAL

ST

AT

EM

EN

TS

Dec

ember

31, 2011

1.

SU

MM

AR

Y O

F S

IGN

IFIC

AN

T A

CC

OU

NT

ING

PO

LIC

IES

T

he

finan

cial

sta

tem

ents

of

the

Cit

y o

f A

uro

ra, Il

linois

(th

e C

ity)

hav

e bee

n p

repar

ed i

n

confo

rmit

y w

ith a

ccounti

ng p

rinci

ple

s gen

eral

ly a

ccep

ted i

n t

he

Unit

ed S

tate

s of

Am

eric

a,

as a

ppli

ed t

o g

over

nm

ent

unit

s (h

erei

naf

ter

refe

rred

to a

s gen

eral

ly a

ccep

ted a

ccounti

ng

pri

nci

ple

s (G

AA

P))

. T

he

Gover

nm

enta

l A

ccounti

ng S

tandar

ds

Boar

d (

GA

SB

) is

the

acce

pte

d s

tandar

d-s

etti

ng b

ody f

or

esta

bli

shin

g g

over

nm

enta

l ac

counti

ng a

nd f

inan

cial

repo

rting

prin

cipl

es.

The

mor

e si

gnifi

cant

of t

he C

ity’s

acc

ount

ing

polic

ies a

re d

escr

ibed

bel

ow

.

A

. R

epo

rtin

g E

nti

ty

The

Cit

y w

as i

nco

rpora

ted i

n 1

857 a

nd i

s a

munic

ipal

corp

ora

tion g

over

ned

by a

n

elec

ted b

oar

d u

nder

the

may

or/

counci

l fo

rm o

f gover

nm

ent.

It

is

a “h

om

e ru

le”

un

it

un

der

th

e Il

lin

ois

Co

nst

itu

tio

n.

As

requir

ed b

y G

AA

P, th

ese

finan

cial

sta

tem

ents

pre

sent

the

Cit

y (

the

pri

mar

y gover

nm

ent)

and i

ts c

om

ponen

t unit

s.

In e

val

uat

ing

how

to d

efin

e th

e re

port

ing e

nti

ty, m

anag

emen

t h

as c

onsi

der

ed a

ll p

ote

nti

al

com

ponen

t unit

s.

The

dec

isio

n t

o i

ncl

ude

a pote

nti

al c

om

ponen

t unit

in t

he

report

ing

enti

ty w

as b

ased

upon t

he

signif

ican

ce o

f it

s oper

atio

nal

or

finan

cial

rel

atio

nsh

ip w

ith

the

pri

mar

y g

over

nm

ent.

Dis

cret

ely P

rese

nte

d C

om

po

nen

t U

nit

The

com

ponen

t unit

colu

mn i

n t

he

bas

ic f

inan

cial

sta

tem

ents

incl

udes

the

finan

cial

data

of t

he C

ity’s

com

pone

nt u

nit.

It is

repo

rted

in a

sepa

rate

col

umn

to e

mph

asiz

e th

at i

t is

leg

ally

sep

arat

e fr

om

th

e C

ity.

The

Auro

ra P

ubli

c L

ibra

ry

The

Auro

ra P

ubli

c L

ibra

ry (

the

Lib

rary

) op

erat

es a

nd m

aint

ains

the

City

’s p

ublic

li

bra

ry f

acil

itie

s.

The

Libr

ary’

s Bo

ard i

s ap

poin

ted b

y t

he

May

or

wit

h t

he

conse

nt

of

the

Cit

y C

ounci

l.

The

Lib

rary

may

not

issu

e bonded

deb

t w

ithou

t City

Cou

ncil’

s ap

pro

val

, an

d i

ts a

nnual

budget

and p

roper

ty t

ax l

evy r

eques

t ar

e su

bje

ct t

o t

he

Cit

y

Cou

ncil’

s app

rova

l. S

epar

ate

audi

ted

finan

cial

stat

emen

ts a

s of D

ecem

ber

31, 2011

are

avai

labl

e fr

om th

e Li

brar

y’s a

dmin

istra

tive

offic

es lo

cate

d at

1 E

. Ben

ton

Stre

et,

Auro

ra, Il

linois

6050

5.

CIT

Y O

F A

UR

OR

A, IL

LIN

OIS

NO

TE

S T

O F

INA

NC

IAL

ST

AT

EM

EN

TS

(C

onti

nued

)

1.

SU

MM

AR

Y O

F S

IGN

IFIC

AN

T A

CC

OU

NT

ING

PO

LIC

IES

(C

onti

nued

)

B

. F

und A

ccounti

ng

Th

e C

ity u

ses

fun

ds

to r

epo

rt o

n i

ts f

inan

cial

posi

tion a

nd c

han

ges

in

its

fin

anci

al

posi

tion. F

und a

ccounti

ng i

s des

igned

to d

emonst

rate

leg

al c

om

pli

ance

and t

o a

id

finan

cial

man

agem

ent

by s

egre

gat

ing t

ransa

ctio

ns

rela

ted t

o c

erta

in g

over

nm

ent

fun

ctio

ns

or

acti

vit

ies.

A f

und i

s a

separ

ate

acco

unti

ng e

nti

ty w

ith a

sel

f-bal

anci

ng s

et o

f ac

counts

. T

he

min

imum

num

ber

of

funds

are

mai

nta

ined

consi

sten

t w

ith l

egal

and m

anag

eria

l

requir

emen

ts.

Funds

are

clas

sifi

ed i

nto

the

foll

ow

ing c

ateg

ori

es:

gover

nm

enta

l, p

ropri

etar

y a

nd

fiduci

ary.

Gover

nm

enta

l fu

nds

are

use

d t

o a

ccount

for

all

or

most

of

the

City

’s g

ener

al

acti

vit

ies,

incl

udin

g t

he

coll

ecti

on a

nd

dis

bu

rsem

ent

of

rest

rict

ed o

r co

mm

itte

d

monie

s (s

pec

ial

reven

ue

funds)

, th

e fu

nds

com

mit

ted,

rest

rict

ed o

r as

signed

for

the

acquis

itio

n o

r co

nst

ruct

ion o

f ca

pit

al a

sset

s (c

apit

al p

roje

cts

funds)

, th

e fu

nds

com

mit

ted, re

stri

cted

or

assi

gned

for

the

serv

icin

g o

f lo

ng-t

erm

deb

t (d

ebt

serv

ice

funds)

and t

he

man

agem

ent

of

funds

hel

d i

n t

rust

wher

e th

e in

tere

st e

arnin

gs

can b

e

use

d f

or

gover

nm

enta

l se

rvic

es (

per

man

ent

fund).

T

he

gen

eral

fund i

s use

d t

o

acco

unt

for

all

acti

vit

ies

of

the

gen

eral

gover

nm

ent

not

acco

unte

d f

or

in s

om

e oth

er

fund.

Pro

pri

etar

y fu

nds

are

use

d t

o a

ccount

for

acti

vit

ies

sim

ilar

to t

hose

found i

n t

he

pri

vat

e se

ctor,

wher

e th

e det

erm

inat

ion o

f net

inco

me

is n

eces

sary

or

use

ful

for

sound

finan

cial

adm

inis

trat

ion. G

oods

or

serv

ices

fro

m s

uch

act

ivit

ies

can b

e pro

vid

ed

eith

er t

o o

uts

ide

par

ties

(en

terp

rise

funds)

or

to o

ther

dep

artm

ents

or

agen

cies

pri

mar

ily w

ithin

the

gover

nm

ent

(inte

rnal

ser

vic

e fu

nds)

. P

urs

uan

t to

GA

SB

Sta

tem

ent

No. 20,

Acco

untin

g an

d Fi

nanc

ial R

epor

ting

for P

ropr

ieta

ry F

unds

and

O

ther

Gov

ernm

ent E

ntiti

es T

hat U

se P

ropr

ieta

ry F

und

Acco

untin

g, t

he

Cit

y h

as

chose

n t

o a

pply

all

GA

SB

pro

nounce

men

ts a

s w

ell

as t

hose

FA

SB

pro

nounce

men

ts

issu

ed o

n o

r bef

ore

Novem

ber

30, 1989 t

o a

ccount

for

its

ente

rpri

se f

unds.

Fid

uci

ary f

unds

are

use

d t

o a

ccount

for

asse

ts h

eld o

n b

ehal

f of

outs

ide

par

ties

,

incl

udin

g o

ther

gover

nm

ents

, or

on b

ehal

f of

oth

er f

unds

wit

hin

the

gover

nm

ent.

The

Cit

y u

tili

zes

pen

sion t

rust

funds

and a

gen

cy f

unds

whic

h a

re g

ener

ally

use

d t

o

acco

unt

for

asse

ts t

hat

the

Cit

y h

old

s in

a f

iduci

ary c

apac

ity o

r on b

ehal

f of

oth

ers

as

thei

r ag

ent.

A-10

CIT

Y O

F A

UR

OR

A, IL

LIN

OIS

NO

TE

S T

O F

INA

NC

IAL

ST

AT

EM

EN

TS

(C

onti

nued

)

1.

SU

MM

AR

Y O

F S

IGN

IFIC

AN

T A

CC

OU

NT

ING

PO

LIC

IES

(C

onti

nued

)

C.

Gover

nm

ent-

Wid

e an

d F

und F

inan

cial

Sta

tem

ents

T

he

gover

nm

ent-

wid

e fi

nan

cial

sta

tem

ents

(i.

e., th

e st

atem

ent

of

net

ass

ets

and t

he

stat

emen

t of

acti

vit

ies)

rep

ort

info

rmat

ion o

n a

ll o

f th

e nonfi

duci

ary

acti

vit

ies

of

the

Cit

y. T

he

effe

ct o

f m

ater

ial

inte

rfund a

ctiv

ity

has

bee

n e

lim

inat

ed f

rom

thes

e st

atem

ents

. G

over

nm

enta

l ac

tivit

ies,

whic

h n

orm

ally

are

support

ed b

y ta

xes

and

inte

rgover

nm

enta

l re

ven

ues

, ar

e re

port

ed s

epar

atel

y fr

om

busi

nes

s-ty

pe

acti

vit

ies,

w

hic

h r

ely

to a

sig

nif

ican

t ex

tent

on f

ees

and c

har

ges

for

support

.

The

stat

emen

t of

acti

vit

ies

dem

onst

rate

s th

e deg

ree

to w

hic

h t

he

dir

ect

expen

ses

of

a giv

en f

unct

ion, se

gm

ent

or

pro

gra

m a

re o

ffse

t by

pro

gra

m r

even

ues

. D

irec

t ex

pen

ses

are

those

that

are

cle

arly

iden

tifi

able

wit

h a

spec

ific

funct

ion o

r se

gm

ent.

P

rogra

m

reven

ues

incl

ude

(1)

char

ges

to c

ust

om

ers

or

appli

cants

who p

urc

has

e, u

se o

r dir

ectl

y ben

efit

fro

m g

oods,

ser

vic

es o

r pri

vil

eges

pro

vid

ed b

y a

giv

en f

unct

ion o

r se

gm

ent

and

(2)

gra

nts

and s

tandar

d r

even

ues

that

are

res

tric

ted t

o m

eeti

ng t

he

oper

atio

nal

or

capit

al

requir

emen

ts o

f a

par

ticu

lar

funct

ion o

r se

gm

ent.

T

axes

and o

ther

ite

ms

not

pro

per

ly

incl

uded

am

ong p

rogra

m r

even

ues

are

rep

ort

ed i

nst

ead a

s gen

eral

rev

enues

.

S

epar

ate

finan

cial

sta

tem

ents

are

pro

vid

ed f

or

gover

nm

enta

l fu

nds,

pro

pri

etar

y fu

nds

and f

iduci

ary

funds,

even

though t

he

latt

er a

re e

xcl

uded

fro

m t

he

gover

nm

ent-

wid

e fi

nan

cial

sta

tem

ents

. M

ajor

indiv

idual

gover

nm

enta

l fu

nds

and m

ajor

indiv

idual

en

terp

rise

funds

are

report

ed a

s se

par

ate

colu

mns

in t

he

fund f

inan

cial

sta

tem

ents

.

T

he

Cit

y re

port

s th

e fo

llow

ing m

ajor

gover

nm

enta

l fu

nds:

The

Gen

eral

Fund i

s th

e C

ity’

s prim

ary

oper

atin

g f

und. I

t ac

counts

for

all

finan

cial

res

ourc

es o

f th

e gen

eral

gover

nm

ent,

exce

pt

those

acc

ounte

d f

or

in

anoth

er f

und.

The

Cit

y re

port

s th

e fo

llow

ing m

ajor

pro

pri

etar

y fu

nds:

The

Wat

er a

nd S

ewer

Fund a

ccounts

for

the

acti

vit

ies

of

the

wat

er o

per

atio

ns

and

sew

er c

oll

ecti

on s

yste

m. T

he

Cit

y oper

ates

the

wat

er t

reat

men

t pla

nt,

sew

erag

e pum

pin

g s

tati

ons

and c

oll

ecti

on s

yste

ms

and t

he

wat

er d

istr

ibuti

on s

yste

m.

Addit

ional

ly, th

e C

ity

report

s th

e fo

llow

ing p

ropri

etar

y fu

nd t

ype:

Inte

rnal

Ser

vic

e F

unds

acco

unt

for

the

City

’s se

lf-in

sure

d p

roper

ty, ca

sual

ty,

work

ers’

com

pen

sati

on a

nd h

ealt

h i

nsu

rance

pro

gra

ms

and t

he

emplo

yee

ben

efit

s, i

ncl

udin

g v

acat

ion, si

ck l

eave

and s

ever

ance

pro

vid

ed t

o o

ther

dep

artm

ents

or

agen

cies

of

the

Cit

y on a

cost

rei

mburs

emen

t bas

is. T

hes

e ar

e re

port

ed a

s par

t of

the

gover

nm

enta

l ac

tivit

ies

on t

he

gover

nm

ent-

wid

e fi

nan

cial

sta

tem

ents

as th

ey p

rovi

de se

rvic

es to

the

City

’s g

over

nmen

tal f

unds

/act

iviti

es.

CIT

Y O

F A

UR

OR

A, IL

LIN

OIS

NO

TE

S T

O F

INA

NC

IAL

ST

AT

EM

EN

TS

(C

onti

nued

)

1.

SU

MM

AR

Y O

F S

IGN

IFIC

AN

T A

CC

OU

NT

ING

PO

LIC

IES

(C

onti

nued

)

C

. G

over

nm

ent-

Wid

e an

d F

und F

inan

cial

Sta

tem

ents

(C

onti

nued

)

The

Cit

y re

port

s pen

sion a

nd o

ther

post

emplo

ymen

t ben

efit

(O

PE

B)

trust

funds

as

fiduci

ary

funds

to a

ccount

for

the

Poli

ce P

ensi

on F

und, F

iref

ighte

rs’ P

ensi

on F

und a

nd

Ret

iree

Hea

lth I

nsu

rance

Tru

st F

und. F

urt

her

more

, th

e C

ity

report

s th

e fo

llow

ing

agen

cy f

unds

as f

iduci

ary

funds:

Sec

tion 1

25 M

edic

al F

und, S

ecti

on 1

25 D

epen

den

t

Car

e F

und a

nd t

he

CN

/EJE

Coal

itio

n F

und.

D

. M

easu

rem

ent

Focu

s, B

asis

of

Acc

ounti

ng a

nd F

inan

cial

Sta

tem

ent

Pre

senta

tion

The

gover

nm

ent-

wid

e fi

nan

cial

sta

tem

ents

are

rep

ort

ed u

sing t

he

econom

ic r

esourc

es

mea

sure

men

t fo

cus

and t

he

accr

ual

bas

is o

f ac

counti

ng, as

are

the

pro

pri

etar

y fu

nd a

nd

fiduci

ary

fund f

inan

cial

sta

tem

ents

(ex

cept

the

agen

cy f

unds

whic

h d

o n

ot

hav

e a

mea

sure

men

t fo

cus)

. R

even

ues

and a

ddit

ions

are

reco

rded

when

ear

ned

and e

xpen

ses

and d

educt

ions

are

reco

rded

when

a l

iabil

ity

is i

ncu

rred

. P

roper

ty t

axes

are

rec

ogniz

ed

as r

even

ues

in t

he

year

for

whic

h t

hey

are

lev

ied (

i.e.

, in

tended

to f

inan

ce).

G

rants

and

sim

ilar

ite

ms

are

reco

gniz

ed a

s re

ven

ue

as s

oon a

s al

l el

igib

ilit

y re

quir

emen

ts i

mpose

d

by

the

pro

vid

er h

ave

bee

n m

et. O

per

atin

g r

even

ues

/expen

ses

incl

ude

all

reven

ues

/expen

ses

dir

ectl

y re

late

d t

o p

rovid

ing e

nte

rpri

se f

und s

ervic

es. I

nci

den

tal

reven

ues

/ex

pen

ses

are

report

ed a

s nonoper

atin

g.

Gover

nm

enta

l fu

nd f

inan

cial

sta

tem

ents

are

rep

ort

ed u

sing t

he

curr

ent

finan

cial

reso

urc

es m

easu

rem

ent

focu

s an

d t

he

modif

ied a

ccru

al b

asis

of

acco

unti

ng. R

even

ues

are

reco

gniz

ed a

s so

on a

s th

ey a

re b

oth

“m

easu

rable

” an

d “

avai

lable

.” R

even

ues

are

consi

der

ed t

o b

e av

aila

ble

when

they

are

coll

ecti

ble

wit

hin

the

curr

ent

per

iod o

r so

on

enough t

her

eaft

er t

o p

ay l

iabil

itie

s of

the

curr

ent

per

iod. T

he

Cit

y co

nsi

der

s re

ven

ues

to b

e av

aila

ble

if

they

are

coll

ecte

d w

ithin

60 d

ays

of

the

end o

f th

e cu

rren

t fi

scal

per

iod, ex

cept

for

sale

s ta

xes

and t

elec

om

munic

atio

n t

axes

whic

h u

se a

90-d

ay p

erio

d

and i

nco

me

tax

es w

hic

h u

se a

120-d

ay p

erio

d (

due

to a

tem

pora

ry s

low

dow

n i

n

rem

itta

nce

fro

m t

he

stat

e). E

xpen

dit

ure

s gen

eral

ly a

re r

ecord

ed w

hen

a f

und l

iabil

ity

is

incu

rred

. H

ow

ever

, deb

t se

rvic

e ex

pen

dit

ure

s ar

e re

cord

ed o

nly

when

pay

men

t is

due,

unle

ss d

ue

the

firs

t day

of

the

foll

ow

ing f

isca

l ye

ar.

Pro

per

ty t

axes

, sa

les

taxes

and t

elec

om

munic

atio

n t

axes

ow

ed t

o t

he

stat

e at

yea

r en

d,

uti

lity

tax

es, fr

anch

ise

taxes

, li

cense

s, c

har

ges

for

serv

ices

, fo

od a

nd b

ever

age

tax

es a

nd

inte

rest

ass

oci

ated

wit

h t

he

curr

ent

fisc

al p

erio

d a

re a

ll c

onsi

der

ed t

o b

e su

scep

tible

to

accr

ual

and a

re r

ecogniz

ed a

s re

ven

ues

of

the

curr

ent

fisc

al p

erio

d. F

ines

and p

erm

it

reven

ue

are

consi

der

ed t

o b

e m

easu

rable

and a

vai

lable

only

when

cas

h i

s re

ceiv

ed b

y

the

Cit

y.

A-11

CIT

Y O

F A

UR

OR

A, IL

LIN

OIS

NO

TE

S T

O F

INA

NC

IAL

ST

AT

EM

EN

TS

(C

onti

nued

)

1.

SU

MM

AR

Y O

F S

IGN

IFIC

AN

T A

CC

OU

NT

ING

PO

LIC

IES

(C

onti

nued

)

D.

Mea

sure

men

t F

ocu

s, B

asis

of

Acc

ounti

ng a

nd F

inan

cial

Sta

tem

ent

Pre

senta

tion

(C

onti

nued

)

In

apply

ing t

he

susc

epti

ble

to a

ccru

al c

once

pt

to i

nte

rgover

nm

enta

l re

ven

ues

(i.

e.,

feder

al a

nd s

tate

gra

nts

), t

he

legal

and c

ontr

actu

al r

equir

emen

ts o

f th

e num

erous

indiv

idual

pro

gra

ms

are

use

d a

s guid

ance

. T

her

e ar

e, h

ow

ever

, es

senti

ally

tw

o t

ypes

of

thes

e re

ven

ues

. I

n o

ne,

monie

s m

ust

be

expen

ded

on t

he

spec

ific

purp

ose

or

pro

ject

bef

ore

any a

mounts

wil

l be

pai

d t

o t

he

Cit

y;

ther

efore

, re

ven

ues

are

re

cogniz

ed b

ased

upon t

he

expen

dit

ure

s re

cord

ed. I

n t

he

oth

er, m

onie

s ar

e vir

tual

ly

unre

stri

cted

as

to p

urp

ose

of

expen

dit

ure

and a

re g

ener

ally

rev

oca

ble

only

for

fail

ure

to

com

ply

wit

h p

resc

ribed

eli

gib

ilit

y r

equir

emen

ts, su

ch a

s eq

ual

em

plo

ym

ent

opport

unit

y. T

hes

e re

sourc

es a

re r

efle

cted

as

reven

ues

at

the

tim

e of

rece

ipt

or

earl

ier

if t

hey

mee

t th

e av

aila

bil

ity c

rite

rion.

The

Cit

y r

eport

s def

erre

d/u

nea

rned

rev

enue

on i

ts f

inan

cial

sta

tem

ents

.

Def

erre

d/u

nea

rned

rev

enues

ari

se w

hen

a p

ote

nti

al r

even

ue

does

not

mee

t both

the

mea

sura

ble

and a

vai

lable

or

earn

ed c

rite

ria

for

reco

gnit

ion i

n t

he

curr

ent

per

iod.

Def

erre

d/u

nea

rned

rev

enues

als

o a

rise

when

res

ourc

es a

re r

ecei

ved

by t

he

Cit

y b

efore

it

has

a l

egal

cla

im t

o t

hem

or

pri

or

to t

he

pro

vis

ion o

f se

rvic

es, as

when

gra

nt

monie

s ar

e re

ceiv

ed p

rior

to t

he

incu

rren

ce o

f qual

ifyin

g e

xpen

dit

ure

s.

In s

ubse

quen

t per

iods,

when

both

rev

enue

reco

gnit

ion c

rite

ria

are

met

, or

when

the

Cit

y h

as a

leg

al

clai

m t

o t

he

reso

urc

es, th

e li

abil

ity f

or

def

erre

d/u

nea

rned

rev

enue

is r

emoved

fro

m

the

finan

cial

sta

tem

ents

and r

even

ue

is r

ecogniz

ed.

E

. C

ash a

nd I

nves

tmen

ts

Cas

h a

nd C

ash E

quiv

alen

ts

Fo

r purp

ose

s of

the

stat

emen

t of

cash

flo

ws,

the

City

’s p

ropr

ieta

ry fu

nds

consi

der

th

eir

dem

and

dep

osi

ts a

nd

all

hig

hly

liq

uid

inves

tmen

ts w

ith a

n o

rigin

al m

aturi

ty o

f th

ree

month

s or

less

when

purc

has

ed t

o b

e ca

sh e

quiv

alen

ts.

Inv

estm

ents

C

ity i

nves

tmen

ts w

ith a

mat

uri

ty o

f one

yea

r or

less

when

purc

has

ed a

nd

nonneg

oti

able

cer

tifi

cate

s of

dep

osi

t ar

e st

ated

at

amort

ized

co

st.

Cit

y i

nv

estm

ents

w

ith a

mat

uri

ty g

reat

er t

han

one

yea

r w

hen

purc

has

ed a

re r

eport

ed a

t fa

ir v

alue.

A

ll

inves

tmen

ts i

n t

he

pen

sion a

nd o

ther

post

emplo

ym

ent

ben

efit

(O

PE

B)

trust

funds

are

stat

ed a

t fa

ir v

alue.

F

air

val

ue

is b

ased

on q

uote

d m

arket

pri

ces

at D

ecem

ber

31 f

or

deb

t se

curi

ties

, eq

uit

y s

ecuri

ties

and m

utu

al f

un

ds

and c

ontr

act

val

ues

for

insu

rance

co

ntr

acts

. I

llin

ois

Funds,

an i

nves

tmen

t pool

crea

ted b

y t

he

stat

e le

gis

latu

re u

nder

th

e co

ntr

ol

of

the

Sta

te T

reas

ure

r, i

s a

money

mar

ket

mutu

al f

und t

hat

mai

nta

ins

a $1

per

shar

e val

ue.

CIT

Y O

F A

UR

OR

A, IL

LIN

OIS

NO

TE

S T

O F

INA

NC

IAL

ST

AT

EM

EN

TS

(C

onti

nued

)

1.

SU

MM

AR

Y O

F S

IGN

IFIC

AN

T A

CC

OU

NT

ING

PO

LIC

IES

(C

onti

nued

)

F

. P

roper

ty T

axes

Pro

per

ty t

axes

are

rec

ogniz

ed a

s re

ceiv

able

in t

he

yea

r th

at t

hey

att

ach a

s an

enfo

rcea

ble

lie

n a

nd a

re l

evie

d. F

unds

uti

lizi

ng t

he

modif

ied a

ccru

al b

asis

of

acco

unti

ng t

reat

pro

per

ty t

axes

rec

eivab

le a

s def

erre

d r

even

ue

unti

l th

e m

easu

rable

and a

vai

lable

cri

teri

a hav

e bee

n m

et (

the

yea

r in

tended

to f

inan

ce a

nd c

oll

ecte

d

wit

hin

60 d

ays

afte

r yea

r en

d).

O

n t

he

accr

ual

bas

is, pro

per

ty t

axes

are

rec

ogniz

ed a

s

reven

ue

in t

he

yea

r in

tended

to f

inan

ce, re

gar

dle

ss o

f w

hen

coll

ecte

d. P

roper

ty t

axes

rece

ivab

le m

ore

than

one

yea

r old

hav

e bee

n f

ull

y o

ffse

t by a

n a

llow

ance

acc

ount.

G

. In

ven

tory

Inven

tory

is

val

ued

at

the

low

er o

f co

st o

r m

arket

on a

fir

st-i

n, fi

rst-

out

(FIF

O)

bas

is.

H

. R

estr

icte

d A

sset

s

Res

tric

ted a

sset

s in

gover

nm

enta

l ac

tivit

ies/

funds

incl

ude

cash

wit

h p

ayin

g a

gen

t in

the

deb

t se

rvic

e fu

nd.

Ente

rpri

se f

unds,

bas

ed o

n c

erta

in b

ond c

oven

ants

, ar

e re

quir

ed t

o e

stab

lish

and

mai

nta

in p

resc

ribed

am

ounts

of

reso

urc

es (

consi

stin

g o

f ca

sh a

nd t

empora

ry

inves

tmen

ts)

that

can

be

use

d o

nly

for

spec

ifie

d p

urp

ose

s in

dic

ated

in t

he

bond

ord

inan

ces.

I.

Def

erre

d C

har

ges

Def

erre

d c

har

ges

in t

he

pro

pri

etar

y f

unds

and t

he

gover

nm

enta

l ac

tivit

ies

in t

he

gover

nm

ent-

wid

e fi

nan

cial

sta

tem

ents

rep

rese

nts

bond d

isco

unts

, bond i

ssuan

ce c

ost

s

and a

ccounti

ng l

oss

es o

n a

dvan

ce r

efundin

gs

of

bonds

whic

h a

re b

eing a

mort

ized

over

the

life

of

the

bonds.

J.

P

repai

d I

tem

s/E

xpen

ses

Pay

men

ts m

ade

to v

endors

for

serv

ices

that

wil

l ben

efit

per

iods

bey

ond t

he

dat

e of

this

report

are

rec

ord

ed a

s pre

pai

d i

tem

s/ex

pen

ses.

A-12

CIT

Y O

F A

UR

OR

A, IL

LIN

OIS

NO

TE

S T

O F

INA

NC

IAL

ST

AT

EM

EN

TS

(C

onti

nued

)

1.

SU

MM

AR

Y O

F S

IGN

IFIC

AN

T A

CC

OU

NT

ING

PO

LIC

IES

(C

onti

nued

)

K

. C

apit

al A

sset

s

Cap

ital

ass

ets,

whic

h i

ncl

ude

pro

per

ty, pla

nt,

equip

men

t an

d i

nfr

astr

uct

ure

ass

ets

(e.g

.,

road

s, b

ridges

, si

dew

alks

and s

imil

ar i

tem

s), ar

e re

port

ed i

n t

he

appli

cable

gover

nm

enta

l or

busi

nes

s-ty

pe

acti

vit

ies

colu

mns

in t

he

gover

nm

ent-

wid

e fi

nan

cial

stat

emen

ts. C

apit

al a

sset

s ar

e def

ined

by

the

Cit

y as

ass

ets

wit

h a

n i

nit

ial,

indiv

idual

cost

in e

xce

ss o

f th

e fo

llow

ing a

nd a

n e

stim

ated

use

ful

life

in e

xce

ss o

f one

year

.

Ass

et C

lass

C

apit

aliz

atio

n

Thre

shold

Lan

d

$

-

Buil

din

g I

mpro

vem

ents

, L

and I

mpro

vem

ents

and I

nfr

astr

uct

ure

(A

ll S

yste

ms)

100,0

00

Inta

ngib

le A

sset

s

100,0

00

Veh

icle

s, M

achin

ery,

Furn

iture

and E

quip

men

t

50,0

00

Work

s of

Art

, H

isto

rica

l A

rtif

acts

50,0

00

Such

ass

ets

are

reco

rded

at

his

tori

cal

cost

or

esti

mat

ed h

isto

rica

l co

st i

f purc

has

ed o

r

const

ruct

ed. D

onat

ed c

apit

al a

sset

s ar

e re

cord

ed a

t es

tim

ated

fai

r m

arket

val

ue

at t

he

dat

e of

donat

ion.

The

cost

s of

norm

al m

ainte

nan

ce a

nd r

epai

rs, in

cludin

g s

tree

t over

lays

that

do n

ot

add

to t

he

val

ue

of

the

asse

t or

mat

eria

lly

exte

nd a

sset

liv

es a

re n

ot

capit

aliz

ed.

Maj

or

outl

ays

for

capit

al a

sset

s an

d i

mpro

vem

ents

are

cap

ital

ized

as

pro

ject

s ar

e

const

ruct

ed. I

nte

rest

incu

rred

duri

ng t

he

const

ruct

ion p

has

e of

capit

al a

sset

s of

busi

nes

s-ty

pe

acti

vit

ies

is i

ncl

uded

as

par

t of

the

capit

aliz

ed v

alue

of

the

asse

ts

const

ruct

ed. P

roper

ty, pla

nt

and e

quip

men

t is

dep

reci

ated

usi

ng t

he

stra

ight-

line

met

hod o

ver

the

foll

ow

ing e

stim

ated

use

ful

lives

:

A

sset

s

Yea

rs

Buil

din

gs,

Lan

d I

mpro

vem

ents

and I

nfr

astr

uct

ure

20-6

5

Veh

icle

s

8

Mac

hin

ery, F

urn

iture

and E

quip

men

t, S

oft

war

e

5-1

5

CIT

Y O

F A

UR

OR

A, IL

LIN

OIS

NO

TE

S T

O F

INA

NC

IAL

ST

AT

EM

EN

TS

(C

onti

nued

)

1.

SU

MM

AR

Y O

F S

IGN

IFIC

AN

T A

CC

OU

NT

ING

PO

LIC

IES

(C

onti

nued

)

L.

Vac

atio

n, S

ick P

ay a

nd O

ther

Em

plo

yee

Ben

efit

s

A

ccum

ula

ted u

npai

d v

acat

ion, si

ck p

ay a

nd o

ther

em

plo

yee

ben

efit

am

ounts

for

gover

nm

enta

l fu

nds

are

accr

ued

in t

hes

e fu

nds

as a

curr

ent

liab

ilit

y t

o t

he

exte

nt

that

em

plo

yee

s hav

e re

tire

d o

r te

rmin

ated

at

yea

r en

d b

ut

hav

e not

bee

n p

aid

. T

he

rem

ainin

g l

iabil

ity i

s re

port

ed i

n t

he

Em

plo

yee

Com

pen

sate

d B

enef

its

Fund (

an

inte

rnal

ser

vic

e fu

nd).

A

ccum

ula

ted u

npai

d v

acat

ion, si

ck p

ay a

nd o

ther

em

plo

yee

ben

efit

am

ounts

for

pro

pri

etar

y fu

nds

are

reco

rded

as

earn

ed b

y e

mplo

yee

s in

those

funds.

M.

Inte

rfund T

ransa

ctio

ns

Inte

rfund s

ervic

e tr

ansa

ctio

ns

are

acco

unte

d f

or

as r

even

ues

, ex

pen

dit

ure

s or

expen

ses.

T

ransa

ctio

ns

that

const

itute

rei

mburs

emen

ts t

o a

fund f

or

expen

dit

ure

s/ex

pen

ses

init

iall

y m

ade

from

it

that

are

pro

per

ly a

ppli

cable

to a

noth

er

fund, ar

e re

cord

ed a

s ex

pen

dit

ure

s/ex

pen

ses

in t

he

reim

burs

ing f

und a

nd a

s re

duct

ions

of

expen

dit

ure

s/ex

pen

ses

in t

he

fund t

hat

is

reim

burs

ed.

All

oth

er i

nte

rfund t

ransa

ctio

ns,

ex

cept

inte

rfund s

ervic

e tr

ansa

ctio

ns

and

reim

burs

emen

ts,

are

report

ed a

s tr

ansf

ers.

N

. In

terf

und R

ecei

vab

les/

Pay

able

s

A

ctiv

ity

bet

wee

n f

unds

that

are

rep

rese

nta

tive

of

lendin

g/b

orr

ow

ing a

rran

gem

ents

ou

tstan

ding

at t

he e

nd o

f the

fisc

al y

ear a

re re

ferre

d to

as e

ither

“du

e to

/from

oth

er

funds”

(i.e

., th

e cu

rrent

por

tion

of in

terfu

nd lo

ans)

or “

adva

nces

to/fr

om o

ther

fund

s”

(i.e

., t

he

noncu

rren

t port

ion o

f in

terf

und l

oan

s). A

ll o

ther

outs

tandin

g b

alan

ces

betw

een

fund

s are

repo

rted

as “

due

to/fr

om o

ther

fund

s.”

Advan

ces

bet

wee

n f

unds,

as

report

ed i

n t

he

fund f

inan

cial

sta

tem

ents

, ar

e off

set

by

a fu

nd b

alan

ce n

onsp

endab

le a

ccount

in a

ppli

cable

gover

nm

enta

l fu

nds

to i

ndic

ate

that

th

ey a

re n

ot

avai

lable

for

appro

pri

atio

n a

nd a

re n

ot

expen

dab

le a

vai

lable

fin

anci

al

reso

urc

es.

O

. L

ong-T

erm

Obli

gat

ions

In t

he

gover

nm

ent-

wid

e fi

nan

cial

sta

tem

ents

and p

ropri

etar

y fu

nds

in t

he

fund f

inan

cial

st

atem

ents

, lo

ng-t

erm

deb

t an

d o

ther

long-t

erm

obli

gat

ions

are

report

ed a

s li

abil

itie

s in

th

e ap

pli

cable

gover

nm

enta

l ac

tivit

ies,

busi

nes

s-ty

pe

acti

vit

ies

or

pro

pri

etar

y fu

nd

finan

cial

sta

tem

ents

. B

ond p

rem

ium

s an

d d

isco

unts

, as

wel

l as

iss

uan

ce c

ost

s an

d

gai

ns/

loss

es o

n r

efundin

gs,

are

def

erre

d a

nd a

mort

ized

over

the

life

of

the

bonds.

B

onds

pay

able

are

rep

ort

ed n

et o

f th

e ap

pli

cable

bond p

rem

ium

or

dis

count.

A-13

CIT

Y O

F A

UR

OR

A, IL

LIN

OIS

NO

TE

S T

O F

INA

NC

IAL

ST

AT

EM

EN

TS

(C

onti

nued

)

1.

SU

MM

AR

Y O

F S

IGN

IFIC

AN

T A

CC

OU

NT

ING

PO

LIC

IES

(C

onti

nued

)

O

. L

ong-T

erm

Obli

gat

ions

(Conti

nued

)

In t

he

fund f

inan

cial

sta

tem

ents

, gover

nm

enta

l fu

nds

reco

gniz

e bond p

rem

ium

s an

d

dis

counts

, as

wel

l as

bond i

ssuan

ce c

ost

s, d

uri

ng t

he

curr

ent

per

iod. T

he

face

am

ount

of

deb

t is

sued

is

report

ed a

s oth

er f

inan

cing s

ourc

es. P

rem

ium

s re

ceiv

ed o

n d

ebt

issu

ance

s ar

e re

port

ed a

s oth

er f

inan

cing s

ourc

es w

hil

e dis

counts

on d

ebt

issu

ance

s ar

e

report

ed a

s oth

er f

inan

cing u

ses.

Is

suan

ce c

ost

s, w

het

her

or

not

wit

hhel

d f

rom

the

actu

al d

ebt

pro

ceed

s re

ceiv

ed, ar

e re

port

ed a

s ex

pen

dit

ure

s.

P

. F

und B

alan

ce/N

et A

sset

s

In t

he

fund f

inan

cial

sta

tem

ents

, gover

nm

enta

l fu

nds

report

nonsp

endab

le f

und

bal

ance

for

amounts

that

are

eit

her

not

in s

pen

dab

le f

orm

or

legal

ly o

r co

ntr

actu

ally

requir

ed t

o b

e m

ainta

ined

inta

ct. R

estr

icti

ons

of

fund b

alan

ce a

re r

eport

ed f

or

amounts

const

rain

ed b

y l

egal

res

tric

tions

from

outs

ide

par

ties

for

use

fo

r a

spec

ific

purp

ose

, or

exte

rnal

ly i

mpose

d b

y o

uts

ide

enti

ties

or

from

enab

ling l

egis

lati

on

ado

pte

d b

y t

he

Cit

y.

Co

mm

itte

d f

un

d b

alan

ce i

s co

nst

rain

ed b

y f

orm

al a

ctio

ns

of

the

Cit

y C

ou

nci

l, w

hic

h i

s co

nsi

der

ed t

he

Cit

y’s

hig

hest

leve

l of d

ecis

ion

mak

ing

auth

ori

ty. F

orm

al a

ctio

ns

incl

ude

reso

luti

ons

and o

rdin

ance

s ap

pro

ved

by t

he

Counci

l.

Ass

igned

fund b

alan

ce r

epre

sents

am

ounts

con

stra

ined

by

the

City

’s in

tent

to

use

them

for

a sp

ecif

ic p

urp

ose

. T

he

auth

ori

ty t

o a

ssig

n f

und b

alan

ce h

as b

een

dele

gate

d to

the

City

’s C

hief

Fin

anci

al O

ffic

er/C

ity T

reas

urer

or t

hrou

gh th

e ap

pro

ved

budget

of

the

Cit

y. A

ny r

esid

ual

fund b

alan

ce i

n t

he

Gen

eral

Fund,

incl

udin

g f

und b

alan

ce t

arget

s an

d a

ny d

efic

it f

und b

alan

ce o

f an

y o

ther

gover

nm

enta

l fu

nd i

s re

port

ed a

s unas

sign

ed.

The

City

’s fl

ow o

f fun

ds a

ssum

ptio

n pr

escr

ibes

that

the

fund

s with

the

hig

hes

t le

vel

of

const

rain

t ar

e ex

pen

ded

fir

st. I

f re

stri

cted

or

unre

stri

cted

funds

are

avai

lable

for

spen

din

g, th

e re

stri

cted

funds

are

spen

t fi

rst.

A

ddit

ional

ly, if

dif

fere

nt

level

s of

unre

stri

cted

funds

are

avai

lable

for

spen

din

g t

he

Cit

y c

on

sid

ers

com

mit

ted

fu

nd

s to

be

expen

ded

fir

st f

oll

ow

ed b

y a

ssig

ned

funds

and t

hen

unas

signed

funds.

The

Cit

y h

as e

stab

lish

ed a

poli

cy r

equir

ing t

hat

the

Gen

eral

Fund b

alan

ce b

e

mai

nta

ined

at

the

gre

ater

of

eith

er (

a) 1

0%

of

expen

dit

ure

s an

d o

ther

fin

anci

ng

sourc

es a

s ori

gin

ally

budget

ed f

or

the

fisc

al y

ear

or

(b)

$1.0

mil

lion p

lus

25%

of

the

curr

ent

fisc

al y

ear’

s pro

per

ty t

ax l

evy. T

his

is

report

ed a

s par

t of

unas

signed

fund

bal

ance

.

In t

he

gover

nm

ent-

wid

e fi

nan

cial

sta

tem

ents

, re

stri

cted

net

ass

ets

are

legal

ly r

estr

icte

d

by

outs

ide

par

ties

for

a sp

ecif

ic p

urp

ose

. I

nves

ted i

n c

apit

al a

sset

s, n

et o

f re

late

d d

ebt

repre

sents

the

book v

alue

of

capit

al a

sset

s le

ss a

ny

long-t

erm

deb

t is

sued

to a

cquir

e or

const

ruct

the

capit

al a

sset

s.

CIT

Y O

F A

UR

OR

A, IL

LIN

OIS

NO

TE

S T

O F

INA

NC

IAL

ST

AT

EM

EN

TS

(C

onti

nued

)

1.

SU

MM

AR

Y O

F S

IGN

IFIC

AN

T A

CC

OU

NT

ING

PO

LIC

IES

(C

onti

nued

)

P

. F

und B

alan

ce/N

et A

sset

s (C

onti

nued

)

Res

tric

ted n

et a

sset

s an

d r

estr

icte

d f

und b

alan

ce r

esult

ing f

rom

enab

ling l

egis

lati

on

adopte

d b

y th

e C

ity,

consi

sts

of

$7,4

50,9

20 r

estr

icte

d b

y th

e ori

gin

al o

rdin

ance

s to

be

use

d f

or

publi

c sa

fety

and $

4,5

44,0

22 r

estr

icte

d b

y th

e ori

gin

al o

rdin

ance

s to

be

use

d

for

hea

lth a

nd w

elfa

re a

t D

ecem

ber

31, 2011.

2.

PR

OP

ER

TY

TA

XE

S

Th

e C

ity’s

pro

perty

tax

beco

mes

a li

en o

n re

al p

rope

rty o

n Ja

nuar

y 1

of th

e ye

ar it

is le

vied

. T

he

2011 l

evy w

as a

dopte

d D

ecem

ber

20, 2011 a

nd a

ttac

hed

as

an e

nfo

rcea

ble

lie

n a

s of

Januar

y 1, 2011. T

he

Cit

y d

oes

not

hav

e a

stat

uto

ry t

ax r

ate

lim

it. P

roper

ty t

axes

are

dep

osi

ted w

ith t

he

County

Tre

asure

rs w

ho r

emit

to

th

e C

ity i

ts r

esp

ecti

ve

shar

e of

the

coll

ecti

ons.

T

axes

lev

ied i

n o

ne

yea

r bec

om

e due

and p

ayab

le i

n t

wo i

nst

allm

ents

duri

ng

the

foll

ow

ing y

ear,

on o

r ab

out

June

1 a

nd

Sep

tem

ber

1.

Th

e 2

01

1 l

evy i

s in

ten

ded

to

finan

ce t

he

2012 f

isca

l yea

r an

d, th

eref

ore

, is

rep

ort

ed a

s def

erre

d/u

nea

rned

rev

enue

at

Dec

ember

31, 2011.

3.

CA

SH

AN

D I

NV

ES

TM

EN

TS

T

he

Cit

y m

ainta

ins

a ca

sh a

nd i

nves

tmen

t pool

that

is

avai

lable

for

use

by a

ll f

unds

exce

pt

the

pens

ion

trust

fund

s. E

ach

fund

’s p

ortio

n of

this

poo

l is d

ispl

ayed

on

the

finan

cial

st

atem

ents

as “

cash

and

inve

stm

ents

.” I

n ad

ditio

n, in

vest

men

ts a

re se

para

tely

hel

d by

se

vera

l of t

he C

ity’s

fund

s. T

he d

epos

its a

nd in

vest

men

ts o

f the

pen

sion

trus

t fun

ds a

re

hel

d s

epar

atel

y f

rom

those

of

oth

er f

unds.

T

he

inves

tmen

ts a

re g

over

ned

by f

our

separ

ate

inves

tmen

t poli

cies

: one

poli

cy f

or

the

Cit

y a

nd t

he

Lib

rary

adopte

d b

y t

he

Cit

y C

ounci

l

and o

ne

poli

cy e

ach f

or

the

Poli

ce a

nd F

iref

ight

ers’

Pen

sion F

unds

and t

he

Ret

iree

Hea

lth

Insu

rance

Tru

st F

und a

ppro

ved

by t

hei

r re

spec

tive

boar

ds.

In

acc

ord

ance

wit

h t

he

Cit

y’s

inve

stm

ent

polic

y, th

e C

ity’s

mon

etar

y as

sets

may

be

plac

ed

in a

ll i

nst

rum

ents

per

mit

ted

by t

he

Illi

no

is P

ub

lic

Funds

Inves

tmen

t A

ct. T

his

act

per

mit

s

dep

osi

ts a

nd i

nves

tmen

ts i

n c

om

mer

cial

ban

ks,

sav

ings

and l

oan

inst

ituti

ons,

obli

gat

ions

of

the

U.S

. T

reas

ury

and U

.S.

agen

cies

, obli

gat

ions

of

stat

es a

nd t

hei

r poli

tica

l su

bdiv

isio

ns,

cred

it u

nio

n s

har

es, re

purc

has

e ag

reem

ents

, co

mm

erci

al p

aper

rat

ed w

ithin

the

thre

e

hig

hes

t cl

assi

fica

tions

by a

t le

ast

two s

tan

dar

d r

atin

g s

erv

ices

an

d I

llin

ois

Fu

nd

s.

T

he

Poli

ce a

nd F

iref

ight

ers’

Pen

sion F

unds

can i

nves

t in

the

sam

e se

curi

ties

as

the

Cit

y,

plu

s th

e fo

llow

ing:

mutu

al f

unds,

equit

y s

ecuri

ties

, in

ves

tmen

t gra

de

corp

ora

te d

ebt

secu

riti

es a

nd v

aria

ble

annuit

ies.

A-14

CIT

Y O

F A

UR

OR

A, IL

LIN

OIS

NO

TE

S T

O F

INA

NC

IAL

ST

AT

EM

EN

TS

(C

onti

nued

)

3.

CA

SH

AN

D I

NV

ES

TM

EN

TS

(C

on

tin

ued

)

It

is

the

poli

cy o

f th

e C

ity t

o i

nves

t it

s fu

nds

in a

man

ner

whic

h w

ill

pro

vid

e th

e hig

hes

t

inves

tmen

t re

turn

wit

h t

he

max

imum

sec

uri

ty w

hil

e m

eeti

ng d

aily

cas

h f

low

dem

ands

and

confo

rmin

g t

o a

ll s

tate

and l

oca

l st

atute

s gover

nin

g t

he

inves

tmen

t of

publi

c fu

nds,

usi

ng

the

“pru

dent

per

son”

stan

dard

for m

anag

ing

the

over

all p

ortfo

lio.

The

prim

ary

obje

ctiv

es

of

the

poli

cy a

re s

afet

y (

pre

serv

atio

n o

f ca

pit

al a

nd p

rote

ctio

n o

f in

ves

tmen

t pri

nci

pal

),

liq

uid

ity a

nd

yie

ld.

C

ity D

epo

sits

wit

h F

inan

cial

In

stit

uti

on

s

C

ust

odia

l cr

edit

ris

k f

or

dep

osi

ts w

ith f

inan

cial

inst

ituti

ons

is t

he

risk

that

in t

he

even

t of

a

ban

k’s

failu

re, t

he C

ity’s

dep

osits

may

not

be

retu

rned

to it

. Th

e C

ity’s

inve

stm

ent p

olic

y re

quir

es p

ledgin

g o

f co

llat

eral

wit

h a

fai

r val

ue

of

110%

of

all

ban

k b

alan

ces

in e

xce

ss o

f

feder

al d

eposi

tory

insu

rance

wit

h t

he

coll

ater

al h

eld b

y a

n a

gen

t of

the

City

in th

e C

ity’s

nam

e.

C

ity I

nv

estm

ents

Th

e fo

llow

ing

tabl

e pr

esen

ts th

e in

vest

men

ts a

nd m

atur

ities

of t

he C

ity’s

deb

t sec

uriti

es a

s of

Dec

ember

31, 2011:

In

ves

tmen

t M

atu

riti

es (

in Y

ears

)

Inves

tmen

t T

yp

e F

air

Val

ue

Les

s th

an 1

1

-5

6-1

0

Gre

ater

th

an 1

0

U.S

. T

reas

ury

Ob

ligat

ion

s $

4

,92

1,2

44

$

-

$

4,9

21

,24

4

$

- $

-

U.S

. G

over

nm

ent

Agen

cy N

ote

s

20

,08

7,9

53

5,3

04

,52

6

1

4,7

83

,42

7

-

-

Sta

te a

nd

Lo

cal

Obli

gat

ion

s

93

,87

7,7

08

35

,72

1,3

05

56

,88

6,3

15

-

1,2

70

,08

8

TO

TA

L

$ 1

18

,88

6,9

05

$

4

1,0

25

,83

1

$

76

,59

0,9

86

$

-

$

1,2

70

,08

8

In

acc

ord

ance

wit

h i

ts i

nves

tmen

t poli

cy, th

e C

ity l

imit

s it

s ex

po

sure

to

inte

rest

rat

e ri

sk b

y

stru

cturi

ng t

he

port

foli

o s

o t

hat

sec

uri

ties

mat

ure

to m

eet

cash

req

uir

emen

ts f

or

ongoin

g

oper

atio

ns,

ther

eby a

void

ing t

he

nee

d t

o s

ell

secu

riti

es o

n t

he

op

en m

arket

pri

or

to m

aturi

ty

and i

nves

ting o

per

atin

g f

unds

pri

mar

ily i

n s

hort

er-t

erm

sec

uri

ties

, m

oney

mar

ket

mutu

al

fun

ds

or

sim

ilar

in

ves

tmen

t p

oo

ls.

Un

less

mat

ched

to a

spec

ific

cas

h f

low

, th

e C

ity d

oes

no

t d

irec

tly i

nv

est

in s

ecu

riti

es m

atu

rin

g m

ore

than

thre

e yea

rs f

rom

the

dat

e of

purc

has

e.

T

he

Cit

y l

imit

s it

s ex

po

sure

to

cre

dit

ris

k,

the

risk

that

the

issu

er o

f a

deb

t se

curi

ty w

ill

not

pay

its

par

val

ue

upon m

aturi

ty, by p

rim

aril

y i

nves

ting i

n U

.S. T

reas

ury

obli

gat

ions,

U.S

.

Gover

nm

ent

agen

cy n

ote

s, a

nd s

tate

and l

oca

l obli

gat

ions

rate

d i

n t

he

hig

hes

t tw

o

cate

gori

es b

y n

atio

nal

rat

ing a

gen

cies

. T

he

U.S

. ag

ency

sec

uri

ties

are

rat

ed A

AA

. T

he

stat

e an

d l

oca

l obli

gat

ions

are

rate

d A

a3 t

o A

aa b

y M

oody

’s. C

erta

in U

.S. ag

ency

secu

riti

es a

re n

ot

rate

d.

CIT

Y O

F A

UR

OR

A, IL

LIN

OIS

NO

TE

S T

O F

INA

NC

IAL

ST

AT

EM

EN

TS

(C

onti

nued

)

3.

CA

SH

AN

D I

NV

ES

TM

EN

TS

(C

on

tin

ued

)

C

ity I

nv

estm

ents

(C

on

tin

ued

)

C

ust

od

ial

cred

it r

isk

fo

r in

ves

tmen

ts i

s th

e ri

sk t

hat

, in

the

even

t of

the

fail

ure

of

the

counte

rpar

ty t

o t

he

inves

tmen

t, t

he

Cit

y w

ill

not

be

able

to r

ecover

the

val

ue

of

its

inve

stm

ents

that

are

in p

osse

ssio

n of

an

outs

ide

party

. To

lim

it its

exp

osur

e, th

e C

ity’s

in

ves

tmen

t poli

cy r

equir

es a

ll s

ecuri

ty t

ransa

ctio

ns

that

are

ex

pose

d t

o c

ust

odia

l cr

edit

ris

k

to b

e pro

cess

ed o

n a

del

iver

y ver

sus

pay

men

t (D

VP

) bas

is w

ith t

he

under

lyin

g i

nves

tmen

ts

held

by

a th

ird p

arty

act

ing

as th

e C

ity’s

age

nt se

para

te fr

om w

here

the

inve

stm

ent w

as

purc

has

ed. I

llin

ois

Funds

and t

he

money

mar

ket

mu

tual

fu

nd

s ar

e n

ot

sub

ject

to

cu

sto

dia

l

cred

it r

isk

.

C

once

ntr

atio

n o

f cr

edit

ris

k -

The

inves

tmen

t port

foli

o o

f th

e C

ity s

hal

l not

exce

ed t

he

div

ersi

fica

tio

n s

tan

dar

ds

bel

ow

:

Div

ersi

fica

tion b

y I

nst

rum

ent

P

erce

nt

of

Port

foli

o

Com

mer

cial

Pap

er

10%

Illi

no

is F

un

ds

50%

No

finan

cial

inst

itutio

n sh

all h

old

mor

e th

an 2

0% o

f the

City

’s to

tal i

nves

tmen

t por

tfolio

. F

urt

her

more

, th

e am

ount

of

monie

s dep

osi

ted a

nd/o

r in

ves

ted i

n a

fin

anci

al i

nst

ituti

on s

hal

l

not

exce

ed 7

5%

of

the

capit

al s

tock

and s

urp

lus

of

such

inst

ituti

on.

Th

e C

ity’s

inve

stm

ent p

olic

y do

es n

ot sp

ecifi

cally

pro

hibi

t the

use

of o

r the

inve

stm

ent i

n der

ivat

ives

.

P

oli

ce a

nd F

iref

ight

ers’

Pen

sio

n F

un

ds

Dep

osi

ts w

ith

Fin

anci

al I

nst

itu

tio

ns

C

ust

odia

l cr

edit

ris

k f

or

dep

osi

ts w

ith f

inan

cial

inst

ituti

ons

is t

he

risk

that

in t

he

even

t of

a

ban

k’s

fai

lure

, th

e P

oli

ce a

nd F

iref

ight

ers’

Pen

sion

Fun

ds’ d

epos

its m

ay n

ot b

e re

turn

ed to

th

em. T

he

Poli

ce a

nd F

iref

ight

ers’

Pen

sion

Fun

ds’ i

nves

tmen

t pol

icie

s req

uire

all

ban

k

bal

ance

s to

be

cover

ed b

y f

eder

al d

eposi

tory

insu

rance

.

A-15

CIT

Y O

F A

UR

OR

A, IL

LIN

OIS

NO

TE

S T

O F

INA

NC

IAL

ST

AT

EM

EN

TS

(C

onti

nued

)

3.

CA

SH

AN

D I

NV

ES

TM

EN

TS

(C

on

tin

ued

)

P

oli

ce P

ensi

on F

und I

nves

tmen

ts

Th

e fo

llow

ing

tabl

e pr

esen

ts th

e in

vest

men

ts a

nd m

atur

ities

of t

he P

olic

e Pe

nsio

n Fu

nd’s

deb

t se

curi

ties

as

of

Dec

ember

31, 2011:

In

ves

tmen

t M

atu

riti

es (

in Y

ears

)

Inves

tmen

t T

yp

e F

air

Val

ue

Les

s th

an 1

1

-5

6-1

0

Gre

ater

th

an 1

0

U.S

. T

reas

ury

Ob

ligat

ion

s $

2

1,0

91

,00

9

$

13

8,9

64

$

1

0,3

42

,11

6

$

10

,11

9,7

61

$

4

90

,16

8

U.S

. A

gen

cy O

bli

gat

ion

s

9,4

20

,50

1

-

2

,59

7,3

87

46

9,1

08

6,3

54

,00

6

Co

rpo

rate

Bo

nd

s

23

,75

3,1

02

-

13

,04

3,1

03

8,8

83

,29

9

1

,82

6,7

00

Mu

nic

ipal

Bo

nd

s

1,0

48

,40

2

-

-

-

1

,04

8,4

02

Neg

oti

able

Cer

tifi

cate

s o

f

D

epo

sit

5

,00

0,0

00

-

5

,00

0,0

00

-

-

TO

TA

L

$

60

,31

3,0

14

$

1

38

,96

4

$

30

,98

2,6

06

$

1

9,4

72

,16

8

$

9,7

19

,27

6

In

acc

ord

ance

wit

h i

ts i

nves

tmen

t poli

cy, th

e P

oli

ce P

ensi

on F

und l

imit

s it

s ex

po

sure

to

inte

rest

rat

e ri

sk b

y s

truct

uri

ng t

he

port

foli

o t

o p

rovid

e li

quid

ity f

or

oper

atin

g f

unds

and

max

imiz

ing y

ield

s fo

r fu

nds

not

nee

ded

for

expec

ted c

urr

ent

cash

flo

ws.

T

he

inves

tmen

t

po

licy

do

es n

ot

lim

it t

he

max

imu

m m

atu

rity

len

gth

of

inv

estm

ents

in

th

e P

oli

ce P

ensi

on

Fu

nd

.

T

he

Poli

ce P

ensi

on F

und l

imit

s it

s ex

posu

re t

o c

redit

ris

k, th

e ri

sk t

hat

the

issu

er o

f a

deb

t

secu

rity

wil

l not

pay

its

par

val

ue

upon m

aturi

ty, by p

rim

aril

y i

nves

ting i

n o

bli

gat

ions

gu

aran

teed

by t

he

Unit

ed S

tate

s G

over

nm

ent,

sec

uri

ties

iss

ued

by a

gen

cies

of

the

Unit

ed

Sta

tes

Gover

nm

ent

that

are

ex

pli

citl

y o

r im

pli

citl

y g

uar

ante

ed b

y t

he

Un

ited

Sta

tes

Gover

nm

ent,

and i

nves

tmen

t gra

de

bonds

rate

d a

t or

above

BB

B-

by S

tandar

d &

Poo

r’s,

Baa

3 by

Moo

dy’s

and

BB

B1

by F

itch

by a

t lea

st tw

o of

the

thre

e ra

ting

agen

cies

. T

he

U.S

.

agen

cy o

blig

atio

ns a

re ra

ted

Aaa

by

Moo

dy’s

. Th

e co

rpor

ate

bond

s are

rat

ed B

aa3 t

o A

aa

by M

oody

’s.

How

ever

, cer

tain

U.S

. age

ncy

inve

stm

ents

, the

mon

ey m

arke

t mut

ual f

unds

an

d c

orp

ora

te b

onds

are

not

rate

d.

C

ust

odia

l cr

edit

ris

k f

or

inves

tmen

ts i

s th

e ri

sk t

hat

, in

the

even

t of

the

fail

ure

of

the

counte

rpar

ty t

o t

he

inv

estm

ent,

the

Poli

ce P

ensi

on F

und w

ill

not

be

able

to r

ecover

the

val

ue

of

its

inves

tmen

ts t

hat

are

in p

oss

essi

on o

f an

ou

tsid

e p

arty

. T

o l

imit

its

ex

po

sure

,

the

Polic

e Pe

nsio

n Fu

nd’s

inve

stm

ent p

olic

y re

quire

s all

secu

rity

trans

actio

ns th

at a

re

expose

d t

o c

ust

odia

l cr

edit

ris

k t

o b

e pro

cess

ed o

n a

del

iver

y ver

sus

pay

men

t (D

VP

) bas

is

with

the

unde

rlyin

g in

vest

men

ts h

eld

by a

third

par

ty a

ctin

g as

the

Polic

e Pe

nsio

n Fu

nd’s

ag

ent

separ

ate

from

wher

e th

e in

ves

tmen

t w

as p

urc

has

ed i

n t

he

Poli

ce P

ensi

on F

und

’s

nam

e. T

he

money

mar

ket

mutu

al f

un

ds

and

mu

tual

fu

nd

s ar

e n

ot

sub

ject

to

cu

sto

dia

l cr

edit

risk

.

CIT

Y O

F A

UR

OR

A, IL

LIN

OIS

NO

TE

S T

O F

INA

NC

IAL

ST

AT

EM

EN

TS

(C

onti

nued

)

3.

CA

SH

AN

D I

NV

ES

TM

EN

TS

(C

on

tin

ued

)

P

oli

ce P

ensi

on F

und

Inves

tmen

ts (

Conti

nued

)

C

once

ntr

atio

n o

f cr

edit

ris

k -

The

Poli

ce P

ensi

on F

und

’s in

ves

tmen

t p

oli

cy s

pec

ifie

s th

e

foll

ow

ing p

refe

rred

ass

et a

llo

cati

on

s b

y i

nv

estm

ent

typ

e:

Div

ersi

fica

tion b

y I

nst

rum

ent

P

erce

nt

of

Port

foli

o

Eq

uit

ies

40%

Mutu

al F

unds/

Var

iable

Annuit

ies

10%

Fix

ed I

nco

me

47%

Cas

h a

nd C

ash E

quiv

alen

ts

3%

S

ecuri

ties

in a

ny o

ne

com

pan

y s

hould

not

exce

ed 5

% o

f th

e to

tal

Poli

ce P

ensi

on F

und, an

d

no m

ore

than

10%

of

the

tota

l P

oli

ce P

ensi

on

Fund s

hould

be

inves

ted i

n a

ny o

ne

indust

ry.

Indiv

idual

tre

asury

sec

uri

ties

may

rep

rese

nt

100%

of

the

tota

l P

oli

ce P

ensi

on F

und, w

hil

e

the

tota

l al

loca

tio

n t

o t

reas

ury

bo

nd

s an

d n

ote

s m

ay r

epre

sent

up t

o 1

00%

of

the

Poli

ce

Pen

sio

n F

und’

s agg

rega

te b

ond

posi

tion.

Fi

refig

hter

s’ P

ensi

on F

und

Inv

estm

ents

Th

e fo

llow

ing

tabl

e pr

esen

ts th

e in

vest

men

ts a

nd m

atur

ities

of t

he F

irefig

hter

s’ P

ensi

on

Fu

nd

’s d

ebt s

ecur

ities

as o

f Dec

ember

31,

2011:

In

ves

tmen

t M

atu

riti

es (

in Y

ears

)

Inves

tmen

t T

yp

e F

air

Val

ue

Les

s th

an 1

1

-5

6-1

0

Gre

ater

th

an 1

0

U.S

. T

reas

ury

Ob

ligat

ion

s $

1

7,3

29

,55

2

$

1,0

82

,69

5

$

7,0

91

,40

4

$

8,3

88

,96

5

$

76

6,4

88

U.S

. A

gen

cy O

bli

gat

ion

s

9,9

56

,10

8

-

5

,76

7,1

78

36

7,7

01

3,8

21

,22

9

Co

rpo

rate

Bo

nd

s

18

,05

0,0

52

-

10

,12

0,1

12

6,5

82

,70

0

1

,34

7,2

40

Mu

nic

ipal

Bo

nd

s

73

7,2

46

-

-

-

73

7,2

46

Neg

oti

able

Cer

tifi

cate

s o

f

D

epo

sit

5

,00

0,0

00

-

5

,00

0,0

00

-

-

TO

TA

L

$

51

,07

2,9

58

$

1

,08

2,6

95

$

2

7,9

78

,69

4

$

15

,33

9,3

66

$

6

,67

2,2

03

In a

ccord

ance

wit

h i

ts i

nves

tmen

t poli

cy, th

e F

iref

ight

ers’

Pen

sio

n F

un

d l

imit

s it

s ex

po

sure

to i

nte

rest

rat

e ri

sk b

y s

truct

uri

ng t

he

port

foli

o t

o p

rovid

e li

quid

ity f

or

oper

atin

g f

unds

and

max

imiz

ing y

ield

s fo

r fu

nds

not

nee

ded

for

expec

ted c

urr

ent

cash

flo

ws.

T

he

inves

tmen

t

po

licy

do

es n

ot

lim

it t

he

max

imu

m m

atu

rity

len

gth

of

inv

estm

ents

in

th

e F

iref

ight

ers’

Pen

sio

n F

un

d.

A-16

CIT

Y O

F A

UR

OR

A, IL

LIN

OIS

NO

TE

S T

O F

INA

NC

IAL

ST

AT

EM

EN

TS

(C

onti

nued

)

3.

CA

SH

AN

D I

NV

ES

TM

EN

TS

(C

on

tin

ued

)

Fi

refig

hter

s’ P

ensi

on F

und I

nves

tmen

ts (

Conti

nued

)

T

he

Fir

efig

hter

s’ P

ensi

on

Fu

nd

lim

its

its

exp

osu

re t

o c

red

it r

isk, th

e ri

sk t

hat

the

issu

er o

f a

deb

t se

curi

ty w

ill

not

pay

its

par

val

ue

upon m

aturi

ty, by p

rim

aril

y i

nves

ting i

n o

bli

gat

ions

gu

aran

teed

by t

he

Unit

ed S

tate

s G

over

nm

ent,

sec

uri

ties

iss

ued

by a

gen

cies

of

the

Unit

ed

Sta

tes

Gover

nm

ent

that

are

ex

pli

citl

y o

r im

pli

citl

y g

uar

ante

ed b

y t

he

Un

ited

Sta

tes

Gover

nm

ent,

and i

nves

tmen

t gra

de

corp

ora

te b

onds

rate

d a

t or

above

BB

B-

by S

tandar

d

and

Poor

’s, B

aa3

by M

oody

’s a

nd B

BB

- by

Fit

ch b

y a

t le

ast

two o

f th

e th

ree

rati

ng

agen

cies

. T

he U

.S. a

genc

y ob

ligat

ion

are

rate

d A

aa b

y M

oody

’s.

The

corp

orat

e bo

nds a

re

rate

d B

aa3

to A

aa b

y M

oody

’s.

Cer

tain

cor

pora

te b

ond,

U.S

. age

ncy

oblig

atio

n an

d th

e m

oney

mar

ket

mutu

al f

und i

nves

tmen

ts a

re n

ot

rate

d.

C

ust

odia

l cr

edit

ris

k f

or

inves

tmen

ts i

s th

e ri

sk t

hat

, in

the

even

t of

the

fail

ure

of

the

counte

rpar

ty t

o t

he

inves

tmen

t, t

he

Fir

efig

hter

s’ P

ensi

on F

und w

ill

not

be

able

to r

ecover

the

val

ue

of

its

inves

tmen

ts t

hat

are

in p

oss

essi

on

of

an o

uts

ide

par

ty.

To

lim

it i

ts

exposu

re, th

e F

iref

ight

ers’

Pen

sion

Fun

d’s i

nves

tmen

t pol

icy

requ

ires a

ll se

curit

y tr

ansa

ctio

ns

that

are

ex

pose

d t

o c

ust

odia

l cr

edit

ris

k t

o b

e pro

cess

ed o

n a

del

iver

y ver

sus

pay

men

t (D

VP

) bas

is w

ith t

he

under

lyin

g i

nves

tmen

ts h

eld b

y a

thir

d p

arty

act

ing a

s th

e

Fir

efig

hter

s’ P

ensi

on F

und’

s age

nt se

para

te fr

om w

here

the

inve

stm

ent w

as p

urch

ased

in

the

Fir

efig

hter

s’ P

ensi

on F

und’

s nam

e. T

he

money

mar

ket

mutu

al f

unds

and m

utu

al f

unds

are

no

t su

bje

ct t

o c

ust

od

ial

cred

it r

isk

.

C

once

ntr

atio

n o

f cr

edit

ris

k -

The

Fir

efig

hter

s’ P

ensi

on

Fu

nd

’s in

vest

men

t pol

icy

spec

ifie

s

the

foll

ow

ing p

refe

rred

ass

et a

lloca

tions

by i

nves

tmen

t ty

pe:

Div

ersi

fica

tion b

y I

nst

rum

ent

P

erce

nt

of

Port

foli

o

Eq

uit

ies

40%

Mutu

al F

unds/

Var

iable

Annuit

ies

10%

Fix

ed I

nco

me

47%

Cas

h a

nd C

ash E

quiv

alen

ts

3%

S

ecuri

ties

in a

ny o

ne

com

pan

y s

hould

not

exce

ed 5

% o

f th

e to

tal

Fire

fight

ers’

Pen

sion

F

und, an

d n

o m

ore

than

10%

of

the

tota

l Fi

refig

hter

s’ P

ensi

on F

und s

hould

be

inves

ted i

n

any o

ne

indust

ry. I

ndiv

idual

tre

asury

sec

uri

ties

may

rep

rese

nt

100%

of

the

tota

l

Fire

fight

ers’

Pen

sion

Fu

nd

, w

hil

e th

e to

tal

allo

cati

on

to

tre

asu

ry b

on

ds

and

no

tes

may

repre

sent

up t

o 1

00%

of

the

Fire

fight

ers’

Pen

sion

Fun

d’s a

ggre

gate

bon

d po

sitio

n.

CIT

Y O

F A

UR

OR

A, IL

LIN

OIS

NO

TE

S T

O F

INA

NC

IAL

ST

AT

EM

EN

TS

(C

onti

nued

)

3.

CA

SH

AN

D I

NV

ES

TM

EN

TS

(C

on

tin

ued

)

R

etir

ee H

ealt

h I

nsu

rance

Tru

st F

und I

nves

tmen

ts

T

he

dep

osi

ts a

nd i

nves

tmen

ts o

f th

e R

etir

ee H

ealt

h I

nsu

rance

Tru

st F

und a

re h

eld

separ

atel

y f

rom

those

of

the

Cit

y.

P

erm

itte

d D

eposi

ts a

nd I

nves

tmen

ts -

The

Ret

iree

Hea

lth I

nsu

rance

Tru

st F

und S

tate

men

t

of

Inves

tmen

t P

oli

cies

and O

bje

ctiv

es a

uth

ori

zes

the

Ret

iree

Hea

lth I

nsu

rance

Tru

st F

und

to i

nves

t in

sto

cks

trad

ed o

n m

ajor

U.S

. an

d n

on

-U.S

. ex

chan

ges

, se

curi

ties

lis

ted o

n

NA

SD

AQ

, m

utu

al f

unds

and c

om

min

gle

d f

unds.

In

ves

tmen

t gra

de

fix

ed i

nco

me

inst

rum

ents

are

per

mit

ted s

ubje

ct t

o m

anag

er g

uid

elin

es. I

nves

tmen

ts i

n o

pti

ons,

futu

res,

com

modit

ies

and n

onm

arket

able

ill

iquid

inves

tmen

ts a

re p

rohib

ited

. S

pec

ific

guid

elin

es

for

per

mit

ted i

nves

tmen

ts f

or

each

man

ager

wil

l be

mai

nta

ined

.

Ret

iree

Hea

lth I

nsu

rance

Tru

st F

und D

eposi

ts w

ith F

inan

cial

Inst

ituti

ons

C

ust

odia

l cr

edit

ris

k f

or

dep

osi

ts w

ith f

inan

cial

inst

ituti

ons

is t

he

risk

that

in t

he

even

t of

a

bank

’s fa

ilure

, the

Ret

iree

Hea

lth I

nsu

rance

Tru

st F

und’

s dep

osits

may

not

be

retu

rned

to

them

. T

he

Ret

iree

Hea

lth I

nsu

rance

Tru

st F

und r

equir

es p

ledgin

g o

f co

llat

eral

wit

h a

fai

r

val

ue

of

110%

for

all

dep

osi

tory

acc

ounts

, ti

me

dep

osi

t ac

counts

, m

oney

mar

ket

mutu

al

funds

or

inves

tmen

ts i

n c

erti

fica

tes

of

dep

osi

ts o

f fi

nan

cial

inst

ituti

ons

in e

xce

ss o

f F

DIC

or

SA

IF i

nsu

rance

. T

he

coll

ater

al i

s re

quir

ed t

o b

e hel

d b

y a

n i

ndep

enden

t th

ird

par

ty

dep

osi

tory

or

the

Fed

eral

Res

erve

Ban

k i

n t

he

Ret

iree

Hea

lth I

nsu

rance

Tru

st F

und’

s nam

e.

T

he

foll

ow

ing t

able

pre

sents

the

inves

tmen

ts a

nd m

aturi

ties

of

the

Ret

iree

Hea

lth I

nsu

rance

Tru

st F

und’

s inves

tmen

t in

deb

t se

curi

ties

as

of

Dec

ember

31, 2011:

In

ves

tmen

t M

atu

riti

es (

in Y

ears

)

Inves

tmen

t T

yp

e F

air

Val

ue

Les

s th

an 1

1

-5

6-1

0

Gre

ater

th

an 1

0

U.S

. T

reas

ury

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ligat

ion

s $

1

,28

7,4

16

$

-

$

74

,52

3

$

79

6,1

34

$

4

16

,75

9

U.S

. A

gen

cy O

bli

gat

ion

s

2,9

49

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9

-

1

62

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8

1

20

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3

2

,66

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rpo

rate

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nd

s

4,9

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13

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1

1

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25

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nic

ipal

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nd

s

56

,17

5

-

-

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5

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75

Neg

oti

able

Cer

tifi

cate

s o

f

D

epo

sit

4

9,9

06

-

-

-

4

9,9

06

TO

TA

L

$

9,2

66

,96

1

$

- $

1

,89

8,7

90

$

2

,83

0,8

88

$

4

,53

7,2

83

T

he

Ret

iree

Hea

lth I

nsu

rance

Tru

st F

und l

imit

s it

s ex

posu

re t

o i

nte

rest

rat

e ri

sk b

y

stru

cturi

ng t

he

port

foli

o t

o p

rovid

e li

quid

ity f

or

oper

atin

g f

unds

and m

axim

izin

g y

ield

s fo

r

funds

not

nee

ded

for

expec

ted c

urr

ent

cash

flo

ws.

T

he

inves

tmen

t poli

cy d

oes

not

lim

it t

he

max

imum

mat

uri

ty l

ength

of

inves

tmen

ts i

n t

he

Ret

iree

Hea

lth I

nsu

rance

Tru

st F

und.

A-17

CIT

Y O

F A

UR

OR

A, IL

LIN

OIS

NO

TE

S T

O F

INA

NC

IAL

ST

AT

EM

EN

TS

(C

onti

nued

)

3.

CA

SH

AN

D I

NV

ES

TM

EN

TS

(C

on

tin

ued

)

Ret

iree

Hea

lth I

nsu

rance

Tru

st F

und D

epo

sits

wit

h F

inan

cial

In

stit

uti

on

s (C

on

tin

ued

)

T

he

Ret

iree

Hea

lth I

nsu

rance

Tru

st F

und l

imit

s it

s ex

posu

re t

o c

redit

ris

k, th

e ri

sk t

hat

the

issu

er o

f a

deb

t se

curi

ty w

ill

not

pay

its

par

val

ue

upon m

aturi

ty, by p

rim

aril

y i

nves

ting i

n

obli

gat

ions

guar

ante

ed b

y t

he

Unit

ed S

tate

s G

over

nm

ent

or

secu

riti

es i

ssued

by a

gen

cies

of

the

Unit

ed S

tate

s G

over

nm

ent

or

money

mar

ket

mutu

al f

unds

that

are

pri

mar

ily i

nves

ted i

n

U.S

. T

reas

ury

and a

gen

cy o

bli

gat

ions

that

are

ex

pli

citl

y o

r im

pli

citl

y g

uar

ante

ed b

y t

he

Unit

ed S

tate

s G

over

nm

ent.

H

ow

ever

, th

e in

ves

tmen

t poli

cy i

s si

lent

regar

din

g e

xposu

re t

o

cred

it r

isk.

The

U.S

. ag

ency

obli

gat

ion a

nd t

he

money

mar

ket

mutu

al f

unds

are

rate

d A

aa

by M

oody

’s.

The

corp

orat

e bo

nds a

re ra

ted

Baa

3 to

Aaa

by

Moo

dy’s

. C

erta

in c

orpo

rate

bond, neg

oti

able

cer

tifi

cate

s of

dep

osi

t an

d U

.S. ag

ency

obli

gat

ion i

nves

tmen

ts a

re n

ot

rate

d.

C

ust

odia

l cr

edit

ris

k f

or

inves

tmen

ts i

s th

e ri

sk t

hat

, in

the

even

t of

the

fail

ure

of

the

counte

rpar

ty t

o t

he

inves

tmen

t, t

he

Ret

iree

Hea

lth I

nsu

rance

Tru

st F

und w

ill

not

be

able

to

reco

ver

the

val

ue

of

its

inves

tmen

ts t

hat

are

in p

oss

essi

on o

f an

outs

ide

par

ty. T

o l

imit

its

exposu

re, th

e R

etir

ee H

ealt

h I

nsu

rance

Tru

st F

und r

equir

es a

ll s

ecuri

ty t

ransa

ctio

ns

that

are

expose

d t

o c

ust

odia

l cr

edit

ris

k t

o b

e pro

cess

ed o

n a

del

iver

y ver

sus

pay

men

t (D

VP

) bas

is

wit

h t

he

under

lyin

g i

nves

tmen

ts h

eld b

y a

thir

d p

arty

act

ing a

s th

e R

etir

ee H

ealt

h I

nsu

rance

Tru

st F

und’

s age

nt se

para

te fr

om w

here

the

inve

stm

ent w

as p

urch

ased

in th

e R

etir

ee

Hea

lth I

nsu

rance

Tru

st F

und’

s nam

e. T

he

money

mar

ket

mutu

al f

unds

are

not

subje

ct t

o

cust

odia

l cr

edit

ris

k.

4.

CA

PIT

AL

AS

SE

TS

C

apit

al a

sset

act

ivit

y fo

r th

e ye

ar e

nded

Dec

ember

31, 2011 w

as a

s fo

llow

s:

Beg

innin

g

Bal

ance

,

Res

tate

d

Incr

ease

s

Dec

reas

es

Endin

g

Bal

ance

GO

VE

RN

ME

NT

AL

AC

TIV

ITIE

S

C

apit

al A

sset

s not

Bei

ng D

epre

ciat

ed

L

and

$

46,0

53,1

13

$

406,5

36

$

7,2

72,1

87

$

39,1

87,4

62

L

and R

ight

of

Way

98,8

98,1

17

684,5

01

-

99,5

82,6

18

W

ork

s of

Art

977,2

67

-

-

977,2

67

C

onst

ruct

ion i

n P

rogre

ss

41,9

92,5

71

7,1

02,6

32

14,3

87,3

85

34,7

07,8

18

Tota

l C

apit

al A

sset

s not

Bei

ng D

epre

ciat

ed

187,9

21,0

68

8,1

93,6

69

21,6

59,5

72

174,4

55,1

65

C

apit

al A

sset

s B

eing D

epre

ciat

ed

B

uil

din

gs

and L

and I

mpro

vem

ents

179,8

48,3

36

1,2

59,5

90

520,0

94

180,5

87,8

32

M

achin

ery a

nd E

quip

men

t

9,3

98,8

45

230,4

84

-

9,6

29,3

29

V

ehic

les

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07,6

37

787,9

20

-

11,4

95,5

57

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nfr

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ure

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55,2

68

13,4

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99

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73

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94

Tota

l C

apit

al A

sset

s B

eing D

epre

ciat

ed

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10,0

86

15,7

19,0

93

779,7

67

557,0

49,4

12

CIT

Y O

F A

UR

OR

A, IL

LIN

OIS

NO

TE

S T

O F

INA

NC

IAL

ST

AT

EM

EN

TS

(C

onti

nued

)

4.

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PIT

AL

AS

SE

TS

(C

on

tin

ued

)

Beg

innin

g

Bal

ance

,

Res

tate

d

Incr

ease

s

Dec

reas

es

Endin

g

Bal

ance

GO

VE

RN

ME

NT

AL

AC

TIV

ITIE

S (

Conti

nued

)

L

ess

Acc

um

ula

ted D

epre

ciat

ion f

or

B

uil

din

gs

and L

and I

mpro

vem

ents

$

35,2

09,1

34

$

4,2

65,2

89

$

14,4

21

$

39,4

60,0

02

M

achin

ery a

nd E

quip

men

t

6,3

55,9

94

418,0

11

-

6,7

74,0

05

V

ehic

les

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38,6

58

434,8

91

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9,5

73,5

49

I

nfr

astr

uct

ure

105,8

21,1

20

6,5

96,0

33

259,5

59

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57,5

94

Tota

l A

ccum

ula

ted D

epre

ciat

ion

156,5

24,9

06

11,7

14,2

24

273,9

80

167,9

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50

Tota

l C

apit

al A

sset

s B

eing D

epre

ciat

ed, N

et

385,5

85,1

80

4,0

04,8

69

505,7

87

389,0

84,2

62

GO

VE

RN

ME

NT

AL

AC

TIV

ITIE

S

C

AP

ITA

L A

SS

ET

S, N

ET

$ 5

73,5

06,2

48

$

12,1

98,5

38

$

22,1

65,3

59

$ 5

63,5

39,4

27

Beg

innin

g

Bal

ance

Incr

ease

s

Dec

reas

es

Endin

g

Bal

ance

BU

SIN

ES

S-T

YP

E A

CT

IVIT

IES

C

apit

al A

sset

s not

Bei

ng D

epre

ciat

ed

L

and

$

12,1

96,6

67

$

156,5

46

$

- $

12,3

53,2

13

C

onst

ruct

ion i

n P

rogre

ss

1,4

06,3

21

1,8

49,1

91

636,2

35

2,6

19,2

77

Tota

l C

apit

al A

sset

s not

Bei

ng D

epre

ciat

ed

13,6

02,9

88

2,0

05,7

37

636,2

35

14,9

72,4

90

C

apit

al A

sset

s B

eing D

epre

ciat

ed

L

and I

mpro

vem

ents

8,0

88,4

92

352,7

23

-

8,4

41,2

15

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uil

din

g

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50,5

67

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00

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67

I

nfr

astr

uct

ure

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51

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34

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94

158,9

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91

M

achin

ery a

nd E

quip

men

t

4,5

20,8

51

-

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4,5

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51

V

ehic

les

2,0

47,2

38

101,5

05

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48,7

43

Tota

l C

apit

al A

sset

s B

eing D

epre

ciat

ed

259,7

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99

4,2

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62

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94

263,9

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L

ess

Acc

um

ula

ted D

epre

ciat

ion f

or

L

and I

mpro

vem

ents

4,2

15,6

24

337,0

11

-

4,5

52,6

35

B

uil

din

g

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40

1,7

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51

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27,4

53,3

91

I

nfr

astr

uct

ure

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54,5

90

2,4

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66

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45,5

62,1

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M

achin

ery a

nd E

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men

t

3,0

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96

218,4

88

-

3,2

42,6

84

V

ehic

les

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19

Tota

l A

ccum

ula

ted D

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ciat

ion

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83,2

41

4,8

48,3

44

12,4

73

82,6

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12

Tota

l C

apit

al A

sset

s B

eing D

epre

ciat

ed, N

et

181,9

37,1

58

(6

21,6

82)

1,9

21

181,3

13,5

55

BU

SIN

ES

S-T

YP

E A

CT

IVIT

IES

C

AP

ITA

L A

SS

ET

S, N

ET

$ 1

95,5

40,1

46

$

1,3

84,0

55

$

638,1

56

$ 1

96,2

86,0

45

A-18

CIT

Y O

F A

UR

OR

A, IL

LIN

OIS

NO

TE

S T

O F

INA

NC

IAL

ST

AT

EM

EN

TS

(C

onti

nued

)

4.

CA

PIT

AL

AS

SE

TS

(C

on

tin

ued

)

D

epre

ciat

ion e

xpen

se w

as c

har

ged

to f

unct

ions

of

the

pri

mar

y gover

nm

ent

as f

oll

ow

s:

G

OV

ER

NM

EN

TA

L A

CT

IVIT

IES

G

ener

al G

over

nm

ent

$

2,1

60,5

09

P

ubli

c S

afet

y

2,6

16,8

17

S

tree

ts a

nd T

ransp

ort

atio

n

6,4

14,2

67

C

ult

ure

and R

ecre

atio

n

446,5

74

E

conom

ic D

evel

opm

ent

76,0

57

TO

TA

L D

EP

RE

CIA

TIO

N E

XP

EN

SE

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ER

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EN

TA

L A

CT

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IES

$

11,7

14,2

24

5.

LO

NG

-TE

RM

DE

BT

T

he

foll

ow

ing i

s a

sum

mar

y of

chan

ges

in b

onds,

contr

acts

pay

able

and o

ther

long-t

erm

liab

ilit

ies

du

rin

g 2

01

1 (

in t

housa

nds

of

doll

ars)

:

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uar

y 1

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dit

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s

Red

uct

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s

Dec

emb

er 3

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rren

t

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rtio

n

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VE

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ME

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AL

AC

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S

G

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al O

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gat

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nd

s*

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16

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6

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18

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T

ax I

ncr

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ds/

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s

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f gen

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bee

n a

ccum

ula

ted i

n t

he

Deb

t S

ervic

e F

und a

s of

Dec

ember

31, 2011 f

or

pay

out

on J

anuar

y 1

, 2012 h

ave

bee

n

refl

ecte

d a

s bonds

pay

able

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he

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t S

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und.

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hes

e li

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itie

s ar

e pri

mar

ily r

etir

ed b

y t

he

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for

com

pen

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d a

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s

thro

ugh c

ontr

ibuti

ons

to t

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Inte

rnal

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vic

e F

und

).

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Y O

F A

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LIN

OIS

NO

TE

S T

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NC

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ember

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nd 2

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nder

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term

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Cit

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rs o

f ser

vice

. A

s of D

ecem

ber

31, 2011, 21

reti

rees

wer

e par

tici

pat

ing i

n t

he

earl

y r

etir

emen

t in

cen

tiv

e w

ith

an

est

imat

ed l

iab

ilit

y o

f $310,8

15. T

his

lia

bil

ity w

as c

alcu

late

d a

ssum

ing a

hea

lth c

are

cost

tre

nd r

ate

of

7%

. A

ll

ben

efit

s ar

e ex

pec

ted t

o b

e p

aid

in

20

12

an

d 2

01

3.

N

et P

ensi

on

Ob

ligat

ion

In f

isca

l yea

r 1997, th

e C

ity i

mple

men

ted G

AS

B S

tate

men

t N

o. 27,

Empl

oyer

’s A

ccou

ntin

g fo

r Pen

sion

Cos

ts. T

his

pro

nounce

men

t re

quir

ed t

he

Cit

y t

o c

alcu

late

and r

ecord

a n

et

pen

sion o

bli

gat

ion (

NP

O)

at D

ecem

ber

31, 1996. T

he

NP

O i

s, i

n g

ener

al, th

e cu

mula

tive

dif

fere

nce

bet

wee

n t

he

actu

aria

l re

quir

ed c

ontr

ibuti

ons

and t

he

actu

al c

ontr

ibuti

ons

since

1

98

6.

Net

Oth

er P

ost

emp

loym

ent

Ben

efit

Ob

ligat

ion

In f

isca

l yea

r 2004, th

e C

ity i

mple

men

ted G

AS

B S

tate

men

t N

o. 45,

Acco

untin

g an

d Fi

nanc

ial R

epor

ting

by E

mpl

oyer

s for

Pos

tem

ploy

men

t Ben

efits

Oth

er th

an P

ensi

ons.

Th

is

pro

nounce

men

t re

quir

ed t

he

Cit

y t

o c

alcu

late

and r

ecord

a n

et o

ther

post

emplo

ym

ent

ben

efit

obli

gat

ion (

NO

PE

BO

) at

Dec

ember

31, 2004

. T

he

NO

PE

BO

is,

in g

ener

al, th

e cu

mula

tive

dif

fere

nce

bet

wee

n t

he

actu

aria

l re

quir

ed c

on

trib

uti

on a

nd t

he

actu

al

contr

ibuti

ons

since

Jan

uar

y 1, 2004.

D

ebt

Ser

vic

e to

Mat

uri

ty

T

he

annual

req

uir

emen

ts t

o a

mort

ize

all

deb

t o

uts

tan

din

g (

exce

pt

com

pen

sate

d a

bse

nce

s,

insu

rance

cla

ims,

the

NP

O a

nd t

he

NO

PE

BO

) as

of

Dec

ember

31, 2011, ar

e as

foll

ow

s (i

n

thousa

nds

of

doll

ars)

:

G

ener

al O

bli

gat

ion B

ond

s

TIF

Bo

nd

s/N

ote

s In

stal

lmen

t C

ontr

acts

/ D

ebt

Cer

tifi

cate

s D

ecem

ber

31

, P

rinci

pal

In

tere

st

Pri

nci

pal

In

tere

st

Pri

nci

pal

In

tere

st

2

01

2

$

11

,21

5

$

6,8

80

$

1

,69

5

$

1,2

47

$

9

30

$

3

03

2

01

3

9

,71

0

6

,46

3

2

,60

5

1

,14

2

9

70

26

5

20

14

8,6

80

6,0

99

89

0

9

83

1,0

10

22

2

20

15

8,8

85

5,7

56

96

0

9

23

1,0

05

17

7

20

16

6,5

50

5,3

96

1,0

15

85

9

1

,07

0

1

33

2

01

7-2

02

1

2

8,8

40

23

,32

4

6

,30

0

3

,17

2

1

,81

5

2

09

2

02

2-2

02

6

2

6,6

85

17

,14

0

4

,88

5

9

88

-

- 2

02

7-2

03

1

1

9,9

75

11

,66

1

6

10

41

-

- 2

03

2-2

03

6

2

5,3

70

6,2

20

-

-

-

- 2

03

7-2

04

0

9

,34

0

7

06

-

-

-

-

TO

TA

L

$

15

5,2

50

$

8

9,6

45

$

1

8,9

60

$

9

,35

5

$

6,8

00

$

1

,30

9

A-21

CIT

Y O

F A

UR

OR

A, IL

LIN

OIS

NO

TE

S T

O F

INA

NC

IAL

ST

AT

EM

EN

TS

(C

onti

nued

)

5.

LO

NG

-TE

RM

DE

BT

(C

onti

nued

)

D

ebt

Ser

vic

e to

Mat

uri

ty (

Conti

nued

)

Illi

no

is E

PA

Lo

ans

No

tes

Pay

able

Rev

enue

and A

lter

nat

e

Rev

enue

So

urc

e B

ond

s

Dec

emb

er 3

1,

Pri

nci

pal

In

tere

st

Pri

nci

pal

In

tere

st

Pri

nci

pal

In

tere

st

20

12

$

8

29

$

2

17

$

2

,12

2

$

27

9

$

91

0

$

1,5

70

20

13

84

7

1

99

4,6

62

25

0

9

85

1,5

28

20

14

86

5

1

80

64

8

3

2

1

,03

5

1

,48

2

20

15

88

5

1

61

92

9

1

,09

5

1

,43

3

20

16

90

4

1

41

98

8

1

,15

0

1

,38

1

20

17

-20

21

4,7

48

38

9

5

18

20

6,2

65

6,0

17

20

22

-20

26

1,5

94

13

-

-

5,7

55

4,6

89

20

27

-20

31

76

2

-

-

-

7

,33

0

3

,26

2

20

32

-20

36

-

-

-

-

9,4

70

1,3

93

20

37

-20

40

-

-

-

-

-

-

TO

TA

L

$

11

,43

4

$

1,3

00

$

8

,14

0

$

59

8

$

33

,99

5

$

22

,75

5

T

he

bonds

of

sever

al i

ssues

are

subje

ct t

o r

edem

pti

on a

nd p

aym

ent

pri

or

to t

hei

r m

aturi

ty,

at t

he

opti

on o

f th

e C

ity.

C

urr

ent

Ref

undin

g

O

n N

ovem

ber

29, 2011, th

e C

ity i

ssued

$9,0

60,0

00 C

orp

ora

te P

urp

ose

Ref

undin

g S

eria

l

Bonds,

Ser

ies

2011 t

o r

efund, th

rough a

curr

ent

refu

ndin

g, $1,8

65,0

00 o

f th

e C

orp

ora

te

Purp

ose

Ser

ial

Bonds,

Ser

ies

2001A

(L

ibra

ry o

bli

gat

ion),

$990,0

00 o

f th

e C

orp

ora

te

Purp

ose

Ser

ial

Bonds,

Ser

ies

2003A

(L

ibra

ry o

bli

gat

ion)

and $

6,6

40,0

00 o

f th

e C

orp

ora

te

Purp

ose

Ser

ial

Bonds,

Ser

ies

20

03

B (

Cit

y o

bli

gat

ion

). A

s a

resu

lt o

f th

e re

fundin

g, th

e

Cit

y a

chie

ved

cas

h f

low

sav

ings

of

$1,2

82,8

92 a

nd a

n e

conom

ic g

ain o

f $1,1

92,4

77.

$2,7

40,0

00 o

f th

e C

orp

ora

te P

urp

ose

Ref

undin

g S

eria

l B

onds,

Ser

ies

2011, w

hil

e an

oblig

atio

n of

the

City

, will

be

repa

id w

ith th

e Li

brar

y’s t

ax le

vy.

6.

RE

VE

NU

E B

ON

DS

T

he

reven

ue

bond o

rdin

ance

s re

quir

e th

at a

ll r

even

ues

der

ived

fro

m t

he

oper

atio

n o

f th

e

Wat

er a

nd S

ewer

Fund b

e se

gre

gat

ed i

n s

epar

ate

acco

unts

, in

the

pri

ori

ty i

ndic

ated

by t

he

ord

er o

f th

e fo

llow

ing:

Acc

ount

Am

ount

Nat

ure

of

Au

tho

rize

d E

xp

end

itu

res

Op

erat

ion

an

d

Su

ffic

ien

t am

ou

nt

to

Ex

pen

ses

of

op

erat

ing,

Mai

nte

nan

ce

pay

rea

son

able

ex

pen

ses

mai

nta

inin

g a

nd

rep

airi

ng

fo

r one

mon

th’s

ope

ratio

ns

the

syst

em

CIT

Y O

F A

UR

OR

A, IL

LIN

OIS

NO

TE

S T

O F

INA

NC

IAL

ST

AT

EM

EN

TS

(C

onti

nued

)

6.

RE

VE

NU

E B

ON

DS

(C

onti

nued

)

Acc

ount

Am

ount

Nat

ure

of

Au

tho

rize

d E

xp

end

itu

res

Bond a

nd

Am

ou

nt

suff

icie

nt

to

Pay

ing p

rin

cip

al a

nd

Inte

rest

p

ay t

he

curr

ent

bo

nd

in

tere

st o

n b

on

ds

an

d i

nte

rest

mat

uri

ties

Bo

nd

Res

erve

$3

0,0

00

per

mo

nth

un

til

Pay

ing p

rin

cip

al a

nd

ac

cou

nt

aggre

gat

es a

n

inte

rest

on

bo

nd

s w

hen

am

ou

nt

equ

al t

o b

on

d a

nd

th

ere

are

insu

ffic

ien

t

in

tere

st r

equ

irem

ents

fo

r fu

nd

s in

th

e b

on

d a

nd

an

y s

ucc

eed

ing f

isca

l yea

r in

tere

st a

cco

un

t

Dep

reci

atio

n,

$8

,00

0 p

er m

on

th u

nti

l C

ost

of

extr

aord

inar

y

Imp

rovem

ent

the

acco

un

t ag

gre

gat

es

mai

nte

nan

ce,

nec

essa

ry

and

Ex

ten

sio

n

a m

inim

um

of

$5

00

,00

0

rep

lace

men

t an

d i

mp

rovem

ent

or

exte

nsi

on

of

the

syst

em

Su

rplu

s R

even

ue

Th

e am

ou

nt

rem

ain

ing

Mak

ing u

p d

efic

ien

cies

in

th

e

af

ter

pay

men

t in

to t

he

afo

rem

enti

on

ed a

cco

un

ts,

pay

ing

ab

ove

fou

r ac

cou

nts

o

f ju

nio

r li

en b

on

ds

and

fo

r an

y

oth

er l

awfu

l co

rpo

rate

pu

rpo

se

T

he

Cit

y h

as c

om

pli

ed w

ith a

ll s

ignif

ican

t li

mit

atio

ns,

res

tric

tions

and b

ond c

oven

ants

duri

ng t

he

yea

r en

ded

Dec

ember

31, 2011. T

he

rest

rict

ed a

sset

s an

d r

estr

icte

d n

et a

sset

s

for

purp

ose

s oth

er t

han

bond p

roce

eds

and t

he

expen

ses

of

oper

atin

g, m

ainta

inin

g a

nd

rep

airi

ng t

he

syst

em,

is a

s fo

llo

ws:

RE

ST

RIC

TE

D B

ON

D O

RD

INA

NC

E A

CC

OU

NT

S

B

ond a

nd I

nte

rest

Acc

ount

$

3

08

B

ond R

eser

ve

Acc

ount

2

,21

2,3

30

D

epre

ciat

ion, Im

pro

vem

ent

and E

xte

nsi

on A

ccount

5

00

,00

0

TO

TA

L

$

2,7

12

,63

8

7.

DE

FE

RR

ED

CO

MP

EN

SA

TIO

N P

LA

N

T

he

Cit

y o

ffer

s it

s em

plo

yee

s a

def

erre

d c

om

pen

sati

on p

lan c

reat

ed i

n a

ccord

ance

wit

h

Inte

rnal

Rev

enue

Code

Sec

tion 4

57. T

he

pla

n, av

aila

ble

to a

ll e

mplo

yee

s, p

erm

its

them

to

def

er a

port

ion o

f th

eir

sala

ry u

nti

l fu

ture

yea

rs. T

he

def

erre

d c

om

pen

sati

on i

s not

avai

lable

to e

mplo

yee

s unti

l te

rmin

atio

n, re

tire

men

t, d

eath

or

unfo

rese

eable

em

ergen

cy.

At

Dec

ember

31, 2011, th

e pla

n a

sset

s hav

e bee

n p

lace

d i

n t

rust

for

the

ben

efit

of

emplo

yee

s.

Acc

ordi

ngly

, the

pla

n as

sets

are

not

repo

rted

in th

e C

ity’s

fina

ncia

l sta

tem

ents

.

A-22

CIT

Y O

F A

UR

OR

A, IL

LIN

OIS

NO

TE

S T

O F

INA

NC

IAL

ST

AT

EM

EN

TS

(C

onti

nued

)

8.

IND

US

TR

IAL

AN

D M

OR

TG

AG

E R

EV

EN

UE

BO

ND

S

O

n M

arch

23, 1976, th

e C

ity p

asse

d a

n o

rdin

ance

enab

ling t

he

Cit

y t

o p

rovid

e fi

nan

cing

for

econom

ic d

evel

opm

ent

pro

ject

s, p

oll

uti

on c

ontr

ol

pro

ject

s an

d h

osp

ital

fac

ilit

ies

by t

he

issu

ance

of

indust

rial

or

mort

gag

e re

ven

ue

bonds.

T

he

bonds

are

secu

red s

ole

ly b

y t

he

pro

per

ty f

inan

ced a

nd a

re p

ayab

le s

ole

ly f

rom

the

pay

men

ts r

ecei

ved

on t

he

under

lyin

g

mort

gag

e lo

ans

on t

he

pro

per

ty. T

he

Cit

y i

s not

obli

gat

ed i

n a

ny m

anner

for

the

repay

men

t

of

the

bonds.

A

ccord

ingly

, th

e bonds

outs

tandin

g a

re n

ot

report

ed a

s a

liab

ilit

y i

n t

hes

e

finan

cial

sta

tem

ents

. A

s of

Dec

ember

31, 2011, th

ere

wer

e 32 s

erie

s of

bonds

outs

tandin

g.

The

aggre

gat

e pri

nci

pal

am

ount

pay

able

for

the

seri

es w

hic

h c

ould

be

det

erm

ined

was

$322,5

21,0

54.

The

aggre

gat

e pri

nci

pal

am

ount

pay

able

for

the

oth

er s

erie

s of

bonds

could

not

be

det

erm

ined

; how

ever

, th

e ori

gin

al i

ssue

amounts

of

the

bonds

tota

led $

398,3

67,6

00.

9.

DE

FIN

ED

BE

NE

FIT

PE

NS

ION

PL

AN

S

T

he

Cit

y c

ontr

ibute

s to

thre

e def

ined

ben

efit

pen

sion p

lan

s, t

he

Illi

nois

Munic

ipal

Ret

irem

ent

Fund (

IMR

F),

an a

gen

t m

ult

iple

-em

plo

yer

publi

c em

plo

yee

ret

irem

ent

syst

em;

the

Po

lice

Pen

sio

n P

lan

, w

hic

h i

s a

sin

gle

-em

ploy

er p

ensi

on p

lan;

and

the

Fire

fight

ers’

P

ensi

on P

lan, w

hic

h i

s al

so a

sin

gle

-em

plo

yer

pen

sion p

lan. T

he

ben

efit

s, b

enef

it l

evel

s,

emplo

yee

contr

ibuti

ons

and e

mplo

yer

contr

ibuti

ons

for

all

thre

e pla

ns

are

gover

ned

by

Illi

nois

Com

pil

ed S

tatu

tes

(IL

CS

) an

d c

an o

nly

be

amen

ded

by t

he

Illi

nois

Gen

eral

Ass

embl

y. T

he P

olic

e an

d Fi

refig

hter

s’ P

ensi

on P

lans

both

iss

ue

separ

ate

report

s on t

he

pen

sion p

lans

that

incl

ude

requir

ed s

upple

men

tary

info

rmat

ion a

nd t

rend i

nfo

rmat

ion.

Thes

e st

atem

ents

can

be

obta

ined

fro

m t

he

Tre

asure

r of

the

pen

sion p

lans

at 4

4 E

. D

ow

ner

Pla

ce, A

uro

ra, Il

linois

60507

-2067. I

MR

F a

lso i

ssues

a p

ubli

cly a

vai

lable

rep

ort

that

incl

udes

fin

anci

al s

tate

men

ts a

nd s

upple

men

tary

info

rmat

ion f

or

the

pla

n a

s a

whole

, but

not

for

indiv

idual

em

plo

yer

s.

That

rep

ort

can

be

obta

ined

fro

m I

MR

F, 2211 Y

ork

Road

,

Su

ite

50

0,

Oak

Bro

ok

, Il

lin

ois

60

52

3.

A

. P

lan D

escr

ipti

ons

Illi

no

is M

un

icip

al R

etir

emen

t F

un

d

All

empl

oyee

s (ot

her t

han

thos

e co

vere

d by

the

Polic

e or

Fire

fight

ers’

Pen

sion

Pla

ns)

hir

ed i

n p

osi

tions

that

mee

t or

exce

ed t

he

pre

scri

bed

annual

hourl

y s

tandar

d m

ust

be

enro

lled

in I

MR

F a

s par

tici

pat

ing m

ember

s.

IMR

F p

rovid

es t

wo t

iers

of

pen

sion

ben

efit

s.

Em

plo

yee

s hir

ed p

rior

to J

anuar

y 1, 2011 a

re e

ligib

le f

or

Tie

r 1 b

enef

its.

For

Tie

r 1 e

mplo

yee

s, p

ensi

on b

enef

its

ves

t af

ter

eight

yea

rs o

f se

rvic

e.

Par

tici

pat

ing

mem

ber

s w

ho r

etir

e at

age

55 (

reduce

d b

enef

its)

or

afte

r ag

e 60 (

full

ben

efit

s) w

ith

eight

yea

rs o

f cr

edit

ed s

ervic

e ar

e en

titl

ed t

o a

n a

nnual

ret

irem

ent

ben

efit

, pay

able

month

ly f

or

life

, in

an a

mount

equal

to 1

2/3

% o

f th

eir

final

rat

e of

earn

ings,

for

each

yea

r of

cred

ited

ser

vic

e up t

o 1

5 y

ears

, an

d 2

% f

or

each

yea

r th

erea

fter

.

CIT

Y O

F A

UR

OR

A, IL

LIN

OIS

NO

TE

S T

O F

INA

NC

IAL

ST

AT

EM

EN

TS

(C

onti

nued

)

9.

DE

FIN

ED

BE

NE

FIT

PE

NS

ION

PL

AN

S (

Conti

nued

)

A

. P

lan D

escr

ipti

ons

(Conti

nued

)

Illi

no

is M

un

icip

al R

etir

emen

t F

un

d (

Co

nti

nu

ed)

Em

plo

yee

s hir

ed o

n o

r af

ter

Januar

y 1

, 2011 a

re e

ligib

le f

or

Tie

r 2

ben

efit

s.

For

Tie

r

2 e

mplo

yee

s, p

ensi

on b

enef

its

ves

t af

ter

ten y

ears

of

serv

ice.

P

arti

cipat

ing m

ember

s

who r

etir

e at

age

62 (

reduce

d b

enef

its)

or

afte

r ag

e 67 (

full

ben

efit

s) w

ith t

en y

ears

of

cred

ited

ser

vic

e ar

e en

titl

ed t

o a

n a

nnual

ret

irem

ent

ben

efit

, pay

able

month

ly f

or

life

,

in a

n a

mount

equal

to 1

2/3

% o

f th

eir

final

rat

e of

earn

ings,

for

each

yea

r of

cred

ited

serv

ice

up t

o 1

5 y

ears

, an

d 2

% f

or

each

yea

r th

erea

fter

.

IMR

F a

lso p

rovid

es d

eath

and d

isab

ilit

y b

enef

its.

T

hes

e ben

efit

pro

vis

ions

and a

ll

oth

er r

equir

emen

ts a

re e

stab

lish

ed b

y s

tate

sta

tute

. P

arti

cipat

ing m

ember

s ar

e

requir

ed t

o c

ontr

ibute

4.5

% o

f th

eir

annual

sal

ary

to I

MR

F. T

he

Cit

y i

s re

quir

ed t

o

contr

ibute

the

rem

ainin

g a

mounts

nec

essa

ry t

o f

un

d I

MR

F a

s sp

ecif

ied

by s

tatu

te.

The

emplo

yer

contr

ibuti

on f

or

2011 w

as 1

2.2

2%

of

cover

ed p

ayro

ll. T

he

requir

ed

emplo

yer

contr

ibuti

on f

or

2011 w

as 1

3.1

8%

of

cover

ed p

ayro

ll.

Poli

ce P

ensi

on P

lan

Poli

ce s

worn

per

sonnel

are

cover

ed b

y t

he

Po

lice

Pen

sio

n P

lan

. A

lth

ou

gh

th

is i

s a

single

-em

plo

yer

pen

sion p

lan, th

e def

ined

ben

efit

s an

d e

mplo

yee

and e

mplo

yer

contr

ibuti

on l

evel

s ar

e gover

ned

by I

llin

ois

Com

pil

ed S

tatu

tes

(40 I

LC

S 5

/3-1

) an

d

may

be

amen

ded

only

by t

he

Illi

nois

leg

isla

ture

. T

he

Cit

y a

ccounts

for

the

pla

n a

s a

pen

sio

n t

rust

fu

nd

.

The

Poli

ce P

ensi

on P

lan p

rovid

es r

etir

emen

t ben

efit

s th

rough t

wo t

iers

of

ben

efit

s as

wel

l as

dea

th a

nd d

isab

ilit

y b

enef

its.

T

ier

1 e

mplo

yee

s (t

hose

hir

ed p

rior

to

Januar

y 1

, 2011)

atta

inin

g t

he

age

of

50 o

r old

er w

ith 2

0 o

r m

ore

yea

rs o

f cr

edit

able

serv

ice

are

enti

tled

to r

ecei

ve

an a

nnual

ret

irem

ent

ben

efit

equal

to o

ne-

hal

f of

the

sala

ry a

ttac

hed

to t

he

rank h

eld o

n t

he

last

day

of

serv

ice,

or

for

one

yea

r pri

or

to t

he

last

day

, w

hic

hev

er i

s gre

ater

. T

he

annual

ben

efit

shal

l be

incr

ease

d b

y 2

.50

% o

f

such

sal

ary f

or

each

addit

ional

yea

r of

serv

ice

over

20 y

ears

up t

o 3

0 y

ears

to a

max

imum

of

75.0

0%

of

such

sal

ary.

E

mplo

yee

s w

ith a

t le

ast

eight

yea

rs b

ut

less

than

20 y

ears

of

cred

ited

ser

vic

e m

ay r

etir

e at

or

afte

r ag

e 60 a

nd r

ecei

ve

a re

duce

d

ben

efit

. T

he

month

ly b

enef

it o

f a

poli

ce o

ffic

er w

ho r

etir

ed w

ith 2

0 o

r m

ore

yea

rs o

f

serv

ice

afte

r Ja

nuar

y 1, 1977 s

hal

l be

incr

ease

d a

nnual

ly, fo

llow

ing t

he

firs

t

anniv

ersa

ry d

ate

of

reti

rem

ent

and b

e pai

d u

pon r

each

ing t

he

age

of

at l

east

55 y

ears

,

by 3

.00%

of

the

ori

gin

al p

ensi

on a

nd 3

.00%

com

pounded

annual

ly t

her

eaft

er.

A-23

CIT

Y O

F A

UR

OR

A, IL

LIN

OIS

NO

TE

S T

O F

INA

NC

IAL

ST

AT

EM

EN

TS

(C

onti

nued

)

9.

DE

FIN

ED

BE

NE

FIT

PE

NS

ION

PL

AN

S (

Conti

nued

)

A

. P

lan D

escr

ipti

ons

(Conti

nued

)

Poli

ce P

ensi

on P

lan

(C

onti

nued

)

Tie

r 2 e

mplo

yee

s (t

hose

hir

ed o

n o

r af

ter

Januar

y 1

, 2011)

atta

inin

g t

he

age

of

55 o

r

old

er w

ith t

en o

r m

ore

yea

rs o

f cr

edit

able

ser

vic

e ar

e en

titl

ed t

o r

ecei

ve

an a

nnual

reti

rem

ent

ben

efit

equal

to t

he

aver

age

month

ly s

alar

y obta

ined

by d

ivid

ing t

he

tota

l

sala

ry o

f th

e poli

ce o

ffic

er d

uri

ng t

he

96 c

on

secu

tiv

e m

on

ths

of

serv

ice

wit

hin

th

e

last

120 m

onth

s of

serv

ice

in w

hic

h t

he

tota

l sa

lary

was

the

hig

hes

t by t

he

num

ber

of

mon

ths o

f ser

vice

in th

at p

erio

d. P

olic

e of

ficer

s’ sa

lary

for p

ensi

on p

urpo

ses i

s ca

pped

at

$106,8

00, plu

s th

e le

sser

of

½ o

f th

e an

nual

chan

ge

in t

he

Con

sum

er P

rice

Index

or

3.0

0%

com

pounded

. T

he

annual

ben

efit

shal

l be

incr

ease

d b

y 2

.50%

of

such

sal

ary f

or

each

addit

ional

yea

r of

serv

ice

over

20 y

ears

up t

o 3

0 y

ears

to a

max

imum

of

75.0

0%

of

such

sal

ary.

E

mplo

yee

s w

ith a

t le

ast

ten y

ears

may

ret

ire

at

or

afte

r ag

e 50 a

nd r

ecei

ve

a re

duce

d b

enef

it (

i.e.

, ½

% f

or

each

month

under

55).

The

month

ly b

enef

it o

f a

Tie

r 2 p

oli

ce o

ffic

er s

hal

l be

incr

ease

d a

nnual

ly a

t ag

e 60

on t

he

Januar

y 1

st a

fter

the

poli

ce o

ffic

er r

etir

es, or

the

firs

t an

niv

ersa

ry o

f th

e

pen

sion s

tart

ing d

ate,

whic

hev

er i

s la

ter.

N

onco

mpoundin

g i

ncr

ease

s occ

ur

annual

ly,

each

Jan

uar

y t

her

eaft

er. T

he

incr

ease

is

the

less

er o

f 3.0

0%

or

½ o

f th

e ch

ange

in t

he

Consu

mer

Pri

ce I

ndex

for

the

pro

ceed

ing c

alen

dar

yea

r.

Em

plo

yee

s ar

e re

quir

ed b

y I

LC

S t

o c

ontr

ibute

9.9

1%

of

thei

r bas

e sa

lary

to t

he

Poli

ce P

ensi

on P

lan. I

f an

em

plo

yee

lea

ves

cover

ed e

mplo

ym

ent

wit

h l

ess

than

20

yea

rs o

f se

rvic

e, a

ccum

ula

ted e

mplo

yee

contr

ibuti

ons

may

be

refu

nded

wit

hout

accu

mula

ted i

nte

rest

. T

he

Cit

y i

s re

quir

ed t

o c

ontr

ibute

the

rem

ainin

g a

mounts

nec

essa

ry t

o f

inan

ce t

he

pla

n a

nd t

he

adm

inis

trat

ive

cost

s as

act

uar

iall

y d

eter

min

ed

by a

n e

nro

lled

act

uar

y. E

ffec

tive

Januar

y 1, 2011, th

e C

ity h

as u

nti

l th

e yea

r 2040 t

o

fund 9

0%

of

the

pas

t se

rvic

e co

st f

or

the

Poli

ce P

ensi

on P

lan. F

or

the

yea

r en

ded

Dec

ember

31, 2011, th

e C

ity’

s con

tribu

tion

was

39.9

8%

of

cover

ed p

ayro

ll.

Fire

fight

ers’

Pen

sion

Pla

n

Fi

re sw

orn

pers

onne

l are

cov

ered

by

the

Fire

fight

ers’

Pen

sion

Pla

n. A

lthou

gh th

is is

a

single

-em

plo

yer

pen

sion p

lan, th

e def

ined

ben

efit

s an

d e

mplo

yee

and e

mplo

yer

contr

ibuti

on l

evel

s ar

e gover

ned

by I

llin

ois

Com

pil

ed S

tatu

tes

(40 I

LC

S 5

/4-1

) an

d

may

be

amen

ded

only

by t

he

Illi

nois

leg

isla

ture

. T

he

Cit

y a

ccounts

for

the

pla

n a

s a

pen

sio

n t

rust

fu

nd

.

CIT

Y O

F A

UR

OR

A, IL

LIN

OIS

NO

TE

S T

O F

INA

NC

IAL

ST

AT

EM

EN

TS

(C

onti

nued

)

9.

DE

FIN

ED

BE

NE

FIT

PE

NS

ION

PL

AN

S (

Co

nti

nu

ed)

A

. P

lan D

escr

ipti

ons

(Conti

nued

)

Fi

refig

hter

s’ P

ensi

on P

lan

(Con

tinue

d)

The

Fire

fight

ers’

Pen

sion

Pla

n pr

ovid

es re

tirem

ent b

enef

its th

roug

h tw

o tie

rs o

f ben

efit

s as

wel

l as

dea

th a

nd d

isab

ilit

y b

enef

its.

T

ier

1 e

mplo

yee

s (t

hose

hir

ed p

rior

to J

anuar

y 1, 2011)

atta

inin

g t

he

age

of

50 o

r old

er w

ith 2

0 o

r m

ore

yea

rs o

f cr

edit

able

ser

vic

e ar

e en

titl

ed t

o r

ecei

ve

an a

nnual

ret

irem

ent

ben

efit

equal

to o

ne-

hal

f of

the

sala

ry a

ttac

hed

to t

he

rank h

eld a

t th

e dat

e of

reti

rem

ent.

T

he

annual

ben

efit

shal

l be

incr

ease

d b

y 2

.50%

of

such

sal

ary

for

each

addit

ional

yea

r of

serv

ice

over

20 y

ears

up t

o 3

0 y

ears

to a

max

imum

of

75.0

0%

of

such

sal

ary.

E

mplo

yee

s w

ith a

t le

ast

ten y

ears

but

less

than

20 y

ears

of

cred

ited

ser

vic

e m

ay r

etir

e at

or

afte

r ag

e 60 a

nd r

ecei

ve

a re

duce

d b

enef

it. T

he

month

ly b

enef

it o

f a

cover

ed e

mplo

yee

w

ho r

etir

ed w

ith 2

0 o

r m

ore

yea

rs o

f se

rvic

e af

ter

Januar

y 1

, 1977 s

hal

l be

incr

ease

d

annual

ly, fo

llow

ing t

he

firs

t an

niv

ersa

ry d

ate

of

reti

rem

ent

and b

e pai

d u

pon r

each

ing

the

age

of

at l

east

55 y

ears

, by 3

.00%

of

the

ori

gin

al p

ensi

on a

nd 3

.00%

com

pounded

an

nual

ly t

her

eaft

er.

Tie

r 2 e

mplo

yee

s (t

hose

hir

ed o

n o

r af

ter

Januar

y 1, 2011)

atta

inin

g t

he

age

of

55 o

r old

er w

ith t

en o

r m

ore

yea

rs o

f cr

edit

able

ser

vic

e ar

e en

titl

ed t

o r

ecei

ve

an a

nnual

re

tire

men

t ben

efit

equal

to t

he

aver

age

month

ly s

alar

y obta

ined

by d

ivid

ing t

he

tota

l sa

lary

of

the

fire

fighte

r duri

ng t

he

96 c

onse

cuti

ve

month

s of

serv

ice

wit

hin

the

last

120 m

onth

s of

serv

ice

in w

hic

h t

he

tota

l sa

lary

was

the

hig

hes

t by t

he

num

ber

of

mon

ths o

f ser

vice

in th

at p

erio

d. F

irefig

hter

s’ sa

lary

for p

ensi

on p

urpo

ses i

s cap

ped

at $

106,8

00, plu

s th

e le

sser

of

½ o

f th

e an

nual

chan

ge

in t

he

Consu

mer

Pri

ce I

ndex

or

3.0

0%

com

pounded

. T

he

annual

ben

efit

shal

l be

incr

ease

d b

y 2

.50%

of

such

sa

lary

for

each

addit

ional

yea

r of

serv

ice

over

20 y

ears

up t

o 3

0 y

ears

to a

max

imum

of

75.0

0%

of

such

sal

ary.

E

mplo

yee

s w

ith a

t le

ast

ten y

ears

may

ret

ire

at o

r af

ter

age

50 a

nd r

ecei

ve

a re

duce

d b

enef

it (

i.e.

, ½

% f

or

each

month

under

55).

T

he

month

ly

ben

efit

of

a T

ier

2 f

iref

ighte

r sh

all

be

incr

ease

d a

nnual

ly a

t ag

e 60 o

n t

he

Januar

y 1

st

afte

r th

e fi

refi

ghte

r re

tire

s, o

r th

e fi

rst

anniv

ersa

ry o

f th

e pen

sion s

tart

ing d

ate,

w

hic

hev

er i

s la

ter.

N

onco

mpoundin

g i

ncr

ease

s occ

ur

annual

ly,

each

Jan

uar

y th

erea

fter

. T

he

incr

ease

is

the

less

er o

f 3.0

0%

or

½ o

f th

e ch

ange

in t

he

Consu

mer

P

rice

Index

for

the

pro

ceed

ing c

alen

dar

yea

r.

Cover

ed e

mplo

yee

s ar

e re

quir

ed t

o c

ontr

ibute

9.4

55%

of

thei

r bas

e sa

lary

to t

he

Fire

fight

ers’

Pen

sion

Pla

n. I

f an

em

plo

yee

lea

ves

cover

ed e

mplo

ym

ent

wit

h l

ess

than

20 y

ears

of

serv

ice,

acc

um

ula

ted e

mplo

yee

contr

ibuti

ons

may

be

refu

nded

w

ithout

accu

mula

ted i

nte

rest

. T

he

Cit

y i

s re

quir

ed t

o f

inan

ce t

he

pla

n a

nd t

he

adm

inis

trat

ive

cost

s as

act

uar

iall

y d

eter

min

ed b

y a

n e

nro

lled

act

uar

y. E

ffec

tive

Jan

uar

y 1

, 2

01

1,

the

Cit

y h

as u

nti

l th

e ye

ar 2

040 t

o f

und 9

0%

of

the

pas

t se

rvic

es

cost

s for

the

Fire

fight

ers’

Pen

sion

Pla

n. F

or th

e ye

ar e

nded

Dec

embe

r 31,

201

1, th

e C

ity’s

con

tribu

tion

was

45.9

7%

of

cover

ed p

ayro

ll.

A-24

CIT

Y O

F A

UR

OR

A, IL

LIN

OIS

NO

TE

S T

O F

INA

NC

IAL

ST

AT

EM

EN

TS

(C

onti

nued

)

9.

DE

FIN

ED

BE

NE

FIT

PE

NS

ION

PL

AN

S (

Conti

nued

)

B

. S

ignif

ican

t In

ves

tmen

ts

Ther

e ar

e no s

ignif

ican

t in

ves

tmen

ts (

oth

er t

han

U.S

. G

over

nm

ent

guar

ante

ed

obli

gat

ions)

in a

ny o

ne

org

aniz

atio

n t

hat

rep

rese

nt

5.0

% o

r m

ore

of

pla

n n

et a

sset

s

for

eith

er t

he

Poli

ce o

r the

Fire

fight

ers’

Pen

sion

Pla

ns.

Info

rmat

ion

for I

MR

F is

not

av

aila

ble

.

C

. A

nn

ual

Pen

sio

n C

ost

s

Em

plo

yer

contr

ibuti

ons

hav

e bee

n d

eter

min

ed a

s fo

llow

s:

Illi

no

is

Mu

nic

ipal

Ret

irem

ent

Po

lice

Pen

sio

n

Fire

fight

ers’

Pen

sio

n

Act

uar

ial

Val

uat

ion D

ate

Dec

emb

er 3

1,

20

09

Dec

emb

er 3

1,

20

10

Dec

emb

er 3

1,

20

10

Act

uar

ial

Co

st M

eth

od

E

ntr

y-a

ge

No

rmal

Entr

y-a

ge

No

rmal

Entr

y-a

ge

No

rmal

Ass

et V

alu

atio

n M

etho

d

5 Y

ear

Sm

oo

thed

Mar

ket

Mar

ket

M

arket

Am

ort

izat

ion M

etho

d

Lev

el P

erce

nta

ge

of

Pay

roll

Lev

el P

erce

nta

ge

of

Pay

roll

Lev

el P

erce

nta

ge

of

Pay

roll

Am

ort

izat

ion P

erio

d

30

Yea

rs,

Op

en

30

Yea

rs,

Clo

sed

3

0 Y

ears

, C

lose

d

Sig

nif

ican

t A

ctuar

ial

Ass

um

pti

ons

a)

R

ate

of

Ret

urn

on

7.5

%

7.0

%

7.0

%

P

rese

nt

and

Futu

re A

sset

s C

om

po

und

ed

Co

mp

ound

ed

Co

mp

ound

ed

A

nnual

ly

Annual

ly

Annual

ly

b

) P

roje

cted

Sal

ary I

ncr

ease

-

4.0

%

5.5

%

5.5

%

A

ttri

buta

ble

to

Infl

atio

n

Co

mp

ound

ed

Co

mp

ound

ed

Co

mp

ound

ed

A

nnual

ly

Annual

ly

Annual

ly

c)

A

dd

itio

nal

Pro

ject

ed

.4

% t

o 1

0.0

%

No

t A

vai

lab

le

No

t A

vai

lab

le

S

alar

y I

ncr

ease

s -

S

enio

rity

/Mer

it

CIT

Y O

F A

UR

OR

A, IL

LIN

OIS

NO

TE

S T

O F

INA

NC

IAL

ST

AT

EM

EN

TS

(C

onti

nued

)

9.

DE

FIN

ED

BE

NE

FIT

PE

NS

ION

PL

AN

S (

Conti

nued

)

C.

An

nu

al P

ensi

on

Co

sts

(Co

nti

nu

ed)

Em

plo

yer

annual

pen

sion c

ost

s (A

PC

), a

ctual

contr

ibuti

ons

and t

he

net

pen

sion

obli

gat

ion (

NP

O)

are

as f

oll

ow

s.

The

NP

O i

s th

e cu

mula

tive

dif

fere

nce

bet

wee

n t

he

AP

C a

nd t

he

contr

ibuti

ons

actu

ally

mad

e.

C

alen

dar

Y

ear

Illi

nois

M

unic

ipal

R

etir

emen

t

P

oli

ce

Pen

sion

F

iref

ighte

rs’

Pen

sion

A

nnual

Pen

sion C

ost

2

00

9

$ 4

,470,5

90

$ 7

,84

7,9

98

$

6,7

33,0

56

(A

PC

) 2

01

0

4,1

63,6

52

9

,92

6,6

72

8,2

71,9

61

2

01

1

4,2

80,4

14

10

,38

6,0

34

8,5

64,1

54

A

ctual

Contr

ibuti

ons

20

09

$ 4

,470,5

90

$ 7

,82

1,0

00

$

6,7

29,0

00

2

01

0

3,8

22,9

90

9

,90

1,4

00

8,2

68,9

00

2

01

1

3,9

61,8

82

10

,36

4,8

21

8,5

74,4

74

P

erce

nta

ge

of

AP

C C

ontr

ibute

d

20

09

100.0

0%

99.6

6%

99.9

4%

20

10

91.8

2%

99.7

5%

99.9

6%

20

11

92.5

6%

99.8

0%

100.1

2%

N

PO

2

00

9

$

- $

1

,25

9,0

36

$

190,0

17

2

01

0

340,6

62

1

,28

4,3

08

193,0

78

2

01

1

659,1

94

1

,30

5,5

21

182,7

58

The

NP

O a

t D

ecem

ber

31, 2011 h

as b

een c

alcu

late

d a

s fo

llow

s:

Illi

nois

M

unic

ipal

R

etir

emen

t

P

oli

ce

Pen

sion

Fi

refig

hter

s’

Pen

sion

Annual

Req

uir

ed C

ontr

ibuti

on

$

4,2

73,1

27

$ 1

0,3

49

,01

9

$

8,5

58,5

90

Inte

rest

on N

et P

ensi

on O

bli

gat

ion

25,5

50

8

9,9

02

13,5

15

Adju

stm

ent

to A

nnual

Req

uir

ed C

ontr

ibuti

on

(1

8,2

63)

(5

2,8

87)

(7

,951)

Annual

Pen

sion C

ost

4,2

80,4

14

1

0,3

86

,03

4

8,5

64,1

54

Contr

ibuti

ons

Mad

e

3,9

61,8

82

1

0,3

64

,82

1

8,5

74,4

74

Incr

ease

(D

ecre

ase)

in N

et P

ensi

on O

bli

gat

ion

318,5

32

2

1,2

13

(10,3

20)

Net

Pen

sion O

bli

gat

ion, B

egin

nin

g o

f Y

ear

340,6

62

1

,28

4,3

08

193,0

78

NE

T P

EN

SIO

N O

BL

IGA

TIO

N,

EN

D O

F Y

EA

R

$

659,1

94

$

1,3

05

,52

1

$

182,7

58

The

NPO

is re

porte

d as

a li

abili

ty in

the

City

’s g

over

nm

enta

l ac

tivit

ies

colu

mn i

n t

he

gover

nm

ent-

wid

e fi

nan

cial

sta

tem

ents

at

Dec

ember

31,

2011.

A-25

CIT

Y O

F A

UR

OR

A, IL

LIN

OIS

NO

TE

S T

O F

INA

NC

IAL

ST

AT

EM

EN

TS

(C

onti

nued

)

9.

DE

FIN

ED

BE

NE

FIT

PE

NS

ION

PL

AN

S (

Conti

nued

)

D

. F

unded

Sta

tus

The

funded

sta

tus

of

the

pla

ns

as o

f D

ecem

ber

31, 2011, bas

ed o

n a

ctuar

ial

val

uat

ions

per

form

ed a

s of

the

sam

e dat

e, i

s as

foll

ow

s. T

he

actu

aria

l as

sum

pti

ons

use

d t

o d

eter

min

e th

e fu

nded

sta

tus

of

the

pla

ns

are

the

sam

e ac

tuar

ial

assu

mpti

ons

use

d t

o d

eter

min

e th

e em

plo

yer

AP

C o

f th

e pla

ns

as d

iscl

ose

d i

n N

ote

9-C

:

Illi

no

is

Mu

nic

ipal

Ret

irem

ent

Po

lice

Pen

sio

n

Fir

efig

hter

s’

Pen

sio

n

Act

uar

ial

Acc

rued

Lia

bil

ity (

AA

L)

$

10

9,8

69

,90

3

$

26

3,2

90

,57

5

$

20

3,4

97

,11

4

Act

uar

ial

Val

ue

of

Pla

n A

sset

s

71

,71

4,5

55

13

1,8

42

,90

5

1

06

,72

1,2

05

Un

fund

ed A

ctu

aria

l A

ccru

ed L

iab

ilit

y

(U

AA

L)

3

8,1

55

,34

8

1

31

,44

7,6

70

9

6,7

75

,90

9

Fund

ed R

atio

(A

ctu

aria

l V

alu

e o

f P

lan

A

sset

s/A

AL

)

6

5.2

7%

5

0.0

8%

5

2.4

4%

Co

ver

ed P

ayro

ll (

Act

ive

Pla

n M

emb

ers)

$

3

7,3

57

,81

9

$

25

,92

2,3

46

$

1

8,6

53

,04

3

UA

AL

as

a P

erce

nta

ge

of

Co

ver

ed P

ayro

ll

1

02

.13

%

5

07

.08

%

5

18

.82

%

See

the

sched

ule

s of

fundin

g p

rogre

ss i

n t

he

requir

ed s

upple

men

tary

info

rmat

ion

imm

edia

tely

foll

ow

ing t

he

note

s to

fin

anci

al s

tate

men

ts f

or

addit

ional

info

rmat

ion

rela

ted t

o t

he

funded

sta

tus

of

the

pla

ns.

10.

RIS

K M

AN

AG

EM

EN

T

Th

e C

ity i

s ex

po

sed

to

var

iou

s ri

sks

of

loss

, in

cludin

g b

ut

not

lim

ited

to, pro

per

ty a

nd

casu

alty

, gen

eral

and p

ubli

c off

icia

ls’ l

iab

ilit

y,

wo

rker

s’ c

ompe

nsat

ion

and

empl

oyee

’s

hea

lth. T

he

Cit

y u

ses

a co

mbin

atio

n o

f purc

has

ed t

hir

d p

arty

indem

nit

y i

nsu

rance

and s

elf-

insu

rance

wit

h s

pec

ific

and a

ggre

gat

e st

op-l

oss

co

ver

age

to l

imit

its

ex

po

sure

to

lo

sses

.

The

cover

ages

by a

rea

are

as f

oll

ow

s:

P

roper

ty I

nsu

rance

T

he

Cit

y h

as p

urc

has

ed t

hir

d p

arty

indem

nit

y c

over

age

for

pro

per

ty a

nd c

asual

ty l

oss

es.

The

Cit

y i

s co

ver

ed u

p t

o 9

0.0

% o

f th

e re

pla

cem

ent

cash

val

ue

for

pro

per

ty, w

ith

a s

elf-

insu

red r

eten

tion o

f $50,0

00 p

er o

ccurr

ence

, w

hic

h i

s th

e sa

me

cover

age

as t

he

pri

or

yea

r.

L

iabil

ity I

nsu

rance

T

he

Cit

y i

s se

lf-i

nsu

red f

or

gen

eral

lia

bil

ity i

nsu

rance

up t

o $

2,0

00,0

00. T

he

Cit

y h

as

purc

has

ed s

pec

ific

sto

p-l

oss

cover

age

for

clai

ms

from

$2,0

00,0

00 t

o $

20,0

00,0

00, w

hic

h i

s

the

sam

e co

ver

age

as t

he

pri

or

yea

r.

The

Cit

y h

as h

ired

a t

hir

d p

arty

ad

min

istr

ato

r to

revie

w, pro

cess

and p

ay c

laim

s as

dire

cted

by

the

City

’s h

um

an r

esourc

es d

irec

tor/

risk

man

ager

.

CIT

Y O

F A

UR

OR

A, IL

LIN

OIS

NO

TE

S T

O F

INA

NC

IAL

ST

AT

EM

EN

TS

(C

onti

nued

)

10

. R

ISK

MA

NA

GE

ME

NT

(C

on

tin

ued

)

W

orke

rs’ C

ompe

nsat

ion

Th

e C

ity i

s se

lf-in

sure

d fo

r wor

kers

’ com

pens

atio

n. I

n or

der t

o lim

it its

exp

osur

e to

loss

es,

the

Cit

y h

as p

urc

has

ed s

pec

ific

sto

p-l

oss

cover

age

lim

itin

g i

ts e

xposu

re t

o $

600,0

00 p

er

occ

urr

ence

, w

hic

h i

s th

e sa

me

cover

age

as t

he

pri

or

yea

r, w

ith s

pec

ific

ex

cess

cover

age

pro

vid

ing i

nsu

rance

above

$600,0

00 p

er o

ccurr

ence

up t

o t

he

stat

uto

ry m

axim

um

. T

he

Cit

y h

as h

ired

a t

hir

d p

arty

ad

min

istr

ato

r to

rev

iew

, pro

cess

and p

ay c

laim

s, a

s dir

ecte

d b

y

the

City

’s h

um

an r

esourc

es d

irec

tor/

risk

man

ager

. C

laim

s in

curr

ed a

re c

har

ged

to t

he

City

’s P

rope

rty a

nd C

asua

lty In

sura

nce

Fund

.

A re

conc

iliat

ion

of th

e cl

aim

s lia

bilit

y fo

r wor

kers

’ com

pens

atio

n an

d ge

nera

l lia

bilit

y is

as

foll

ow

s:

Wor

kers

’ Com

pensa

tion

Gen

eral

Lia

bil

ity

2

01

1

20

10

2

01

1

20

10

CL

AIM

S P

AY

AB

LE

, JA

NU

AR

Y 1

$

2

,86

5,2

39

$

3

,48

3,0

94

$

3

,64

9,8

90

$

4

,45

2,3

40

A

dd

Cla

ims

Incu

rred

an

d C

laim

s

Ad

just

men

t

3,6

38

,96

8

2

,67

0,7

76

1,7

98

,58

4

5

37

,38

2

L

ess

Cla

ims

Pai

d

3

,05

2,9

43

3,2

88

,63

1

1

,83

1,9

47

1,3

39

,83

2

CL

AIM

S P

AY

AB

LE

, D

EC

EM

BE

R 3

1

$

3,4

51

,26

4

$

2,8

65

,23

9

$

3,6

16

,52

7

$

3,6

49

,89

0

H

ealt

h C

are

and I

nsu

rance

Ben

efit

s

T

he

Cit

y i

s par

tial

ly s

elf-

insu

red f

or

hea

lth c

are

ben

efit

s pro

vid

ed t

o i

ts e

mplo

yee

s, r

etir

ees

and t

hei

r dep

enden

ts. S

uch

em

plo

yee

s m

ay e

lect

to r

ecei

ve

ben

efit

s under

a H

ealt

h C

are

Mai

nten

ance

Org

aniz

atio

n (H

MO

) pro

gram

or u

nder

the

City

’s se

lf-in

sura

nce

pro

gra

m.

The

sam

e co

ver

age

is o

ffer

ed t

o i

ndiv

idual

s w

ho, upon t

erm

inat

ion,

qual

ify

for

reti

rem

ent.

Such

indiv

idual

s re

imburs

e th

e C

ity a

sti

pula

ted m

onth

ly p

rem

ium

char

ge

and r

ecei

ve

cover

age.

U

nder

the

HM

O o

pti

on, al

l co

ver

ed h

ealt

h c

har

ges

are

the

resp

onsi

bil

ity o

f th

e

HM

O, th

e C

ity p

ays

the

pre

miu

ms

for

this

cover

age

in e

xce

ss o

f th

e em

plo

yee

/ret

iree

con

trib

uti

on

.

Fo

r th

e se

lf-i

nsu

rance

pro

gra

m t

he

Cit

y h

as p

urc

has

ed s

top

-lo

ss c

ov

erag

e to

lim

it i

ts

exposu

re t

o l

oss

es f

rom

sel

f-in

sure

d h

ealt

h i

nsu

rance

. T

he

spec

ific

sto

p-l

oss

cover

age,

on

a poli

cy y

ear

of

Januar

y 1

- D

ecem

ber

31,

2011,

is $

325,0

00 p

er i

ndiv

idual

, w

hic

h i

s th

e

sam

e co

ver

age

as t

he

pri

or

yea

r, w

ith a

n a

ggre

gat

e sp

ecif

ic a

ttac

hm

ent

of

$40,0

00.

Ther

efore

, cl

aim

s in

ex

cess

of

$325,0

00 p

er i

ndiv

idual

are

aggre

gat

ed u

nti

l th

e am

ount

reac

hes

$40,0

00, w

ith e

xce

ss a

mounts

above

this

rei

mburs

ed b

y t

he

aggre

gat

e sp

ecif

ic

carr

ier,

up t

o $

2,0

00,0

00 p

er p

oli

cy y

ear.

A-26

CIT

Y O

F A

UR

OR

A, IL

LIN

OIS

NO

TE

S T

O F

INA

NC

IAL

ST

AT

EM

EN

TS

(C

onti

nued

)

10

. R

ISK

MA

NA

GE

ME

NT

(C

on

tin

ued

)

H

ealt

h C

are

and I

nsu

rance

Ben

efit

s (C

onti

nued

)

Hea

lth

In

sura

nce

2

01

1

20

10

CL

AIM

S P

AY

AB

LE

, JA

NU

AR

Y 1

$

1

,27

2,2

83

$

1

,62

3,9

74

A

dd

Cla

ims

Incu

rred

17

,92

6,1

62

19

,67

1,2

85

L

ess

Cla

ims

Pai

d

1

8,0

20

,79

6

2

0,0

22

,97

6

CL

AIM

S P

AY

AB

LE

, D

EC

EM

BE

R 3

1

$

1,1

77

,64

9

$

1,2

72

,28

3

L

ife

insu

rance

ben

efit

s fo

r ea

ch c

ity e

mplo

yee

are

pro

vid

ed t

hro

ugh i

nsu

rance

.

T

he

insu

rance

pro

gra

ms

are

funded

thro

ugh m

onth

ly c

har

ges

to t

he

var

ious

city

funds

and

the

term

inat

ed i

ndiv

idual

s, a

nd a

re a

ccounte

d f

or

in t

he

Pro

per

ty a

nd C

asual

ty I

nsu

rance

Fund a

nd t

he

Em

plo

yee

Hea

lth I

nsu

rance

Fund. T

he

exce

ss o

f su

ch c

har

ges

over

hea

lth

care

cla

ims

pai

d, pre

miu

ms

for

insu

rance

cover

age

in e

xce

ss o

f se

lf-i

nsu

red a

mounts

,

pre

miu

ms

for

gro

up l

ife

insu

rance

and c

har

ges

for

adm

inis

trat

ion o

f th

e pro

gra

m, if

any, is

report

ed a

s an

oper

atin

g t

ransf

er.

S

ettl

ed c

laim

s did

not

exce

ed t

he

insu

rance

cover

age

in t

he

curr

ent

yea

r or

the

pri

or

two

fisc

al y

ears

.

11.

CO

NT

ING

EN

T L

IAB

ILIT

IES

A

. L

itig

atio

n

The

Cit

y i

s a

def

endan

t in

var

ious

law

suit

s.

Alt

ho

ugh

th

e o

utc

om

e of

thes

e la

wsu

its

is n

ot p

rese

ntly

det

erm

inab

le, i

n th

e op

inio

n of

the

City

’s a

ttorn

ey th

e re

solu

tion

of

thes

e m

atte

rs w

ill

not

hav

e a

mat

eria

l ad

ver

se e

ffec

t on t

he

finan

cial

condit

ion o

f th

e

Cit

y. A

s dis

close

d i

n N

ote

10, a

liab

ilit

y o

f $

3,6

16

,52

7 h

as b

een a

ccru

ed f

or

pro

bab

le l

oss

es o

n l

iabil

ity c

laim

s.

B

. G

rants

Am

ounts

rec

eived

and r

ecei

vab

le f

rom

gra

nto

r ag

enci

es a

re s

ubje

ct t

o a

udit

and

adju

stm

ent

by g

ranto

r ag

enci

es, pri

nci

pal

ly t

he

feder

al g

over

nm

ent.

A

ny d

isal

low

ed

clai

ms,

incl

udin

g a

mounts

alr

eady c

oll

ecte

d, m

ay c

onst

itute

a l

iabil

ity o

f th

e

appli

cable

funds.

T

he

amount,

if

any,

of

expen

dit

ure

s w

hic

h m

ay b

e dis

allo

wed

by

the

gra

nto

r ca

nnot

be

det

erm

ined

at

this

tim

e al

though t

he

Cit

y e

xpec

ts s

uch

amounts

, if

any, to

be

imm

ater

ial.

CIT

Y O

F A

UR

OR

A, IL

LIN

OIS

NO

TE

S T

O F

INA

NC

IAL

ST

AT

EM

EN

TS

(C

onti

nued

)

12.

DE

VE

LO

PM

EN

T A

SS

IST

AN

CE

T

he

Cit

y h

as e

nte

red i

nto

var

ious

agre

emen

ts w

ith p

rivat

e org

aniz

atio

ns

to e

nco

ura

ge

econom

ic d

evel

opm

ent

in t

he

Cit

y. S

om

e of

thes

e ag

reem

ents

pro

vid

e fo

r re

bat

ing a

port

ion o

f pro

per

ty t

axes

and/o

r sa

les

tax

es t

o t

he

pri

vat

e org

aniz

atio

ns

if c

erta

in

ben

chm

arks

of

dev

elopm

ent

are

achie

ved

. D

uri

ng t

he

fisc

al y

ear

ended

Dec

ember

31,

2011, ap

pro

xim

atel

y $

6,0

51,3

58 i

n p

roper

ty t

axes

and $

708,3

19 i

n s

ales

tax

es w

ere

rebat

ed

under

thes

e ag

reem

ents

. A

ppro

xim

atel

y $

12,7

08,5

15 i

n p

roper

ty t

axes

and $

2,9

26,7

97 i

n

sale

s ta

xes

may

be

rebat

ed i

f ce

rtai

n c

rite

ria

are

met

in f

utu

re y

ears

.

13.

INT

ER

FU

ND

AC

CO

UN

TS

D

ue

from

/to o

ther

funds

at D

ecem

ber

31

, 2

01

1 c

on

sist

of

the

foll

ow

ing:

Du

e F

rom

D

ue

To

Gen

eral

$

1

06

,15

9

$

102,8

54

No

nm

ajo

r G

over

nm

enta

l

-

106,1

59

Fid

uci

ary

1

02

,85

4

-

TO

TA

L

$

20

9,0

13

$

209,0

13

Inte

rfund t

ransf

ers

duri

ng t

he

yea

r en

ded

Dec

ember

31, 2011 c

onsi

sted

of

the

foll

ow

ing:

Tra

nsf

er I

n

Tra

nsf

er O

ut

No

nm

ajo

r G

over

nm

enta

l $

13

,47

9,0

00

$ 1

2,6

79,0

00

Wat

er a

nd

Sew

er

-

1,0

00,0

00

No

nm

ajo

r E

nte

rpri

se

2

00

,00

0

-

TO

TA

L

$ 1

3,6

79

,00

0

$ 1

3,6

79,0

00

T

he

purp

ose

s of

signif

ican

t in

terf

und t

ransf

ers

are

as f

oll

ow

s:

� $13,4

79,0

00 t

ransf

erre

d t

o t

he

nonm

ajor

gover

nm

enta

l fu

nds

from

oth

er f

unds.

T

his

amount

rela

tes

pri

mar

ily t

o r

outi

ne

annual

tra

nsf

ers

of

$4,6

17,1

00, $1,7

14,8

00,

$3,6

66,8

00 a

nd $

1,0

00,0

00 t

o t

he

Deb

t S

ervic

e F

und f

rom

the

Gam

ing T

ax F

und,

Sto

rmw

ater

Man

agem

ent

Fee

Fund, S

afet

y, H

ealt

h a

nd P

ubli

c E

nhan

cem

ent

Fee

Fund a

nd W

ater

and S

ewer

Fund, re

spec

tivel

y, fo

r th

e pay

men

t of

gen

eral

obli

gat

ion

bond d

ebt

serv

ice.

T

he

tran

sfer

s w

ill

not

be

repai

d.

A-27

CIT

Y O

F A

UR

OR

A, IL

LIN

OIS

NO

TE

S T

O F

INA

NC

IAL

ST

AT

EM

EN

TS

(C

onti

nued

)

13.

INT

ER

FU

ND

AC

CO

UN

TS

(C

onti

nued

)

� $12,6

79,0

00 t

ransf

erre

d f

rom

the

nonm

ajor

gover

nm

enta

l fu

nds

to o

ther

funds.

T

his

am

ount

rela

tes

pri

mar

ily t

o r

outi

ne

annual

tra

nsf

ers

of

(a)

$3,6

66,8

00 f

rom

the

Saf

ety, H

ealt

h a

nd P

ubli

c E

nhan

cem

ent

Fund

, (b

) $1,7

14,8

00 f

rom

the

Sto

rmw

ater

M

anag

emen

t F

ee F

und a

nd (

c) $

4,6

17,1

00 f

rom

the

Gam

ing T

ax F

und t

o t

he

Deb

t S

ervic

e F

und f

or

the

pay

men

t of

gen

eral

obli

gat

ion b

ond d

ebt

serv

ice.

T

he

tran

sfer

s w

ill

not

be

repai

d.

�

$1,0

00,0

00 t

ransf

erre

d f

rom

the

Wat

er a

nd S

ewer

Fu

nd

to

oth

er f

un

ds.

T

his

am

ou

nt

rela

tes

to a

routi

ne

annual

tra

nsf

er t

o t

he

Deb

t S

ervic

e F

und f

or

the

pay

men

t of

deb

t se

rvic

e on c

erta

in g

ener

al o

bli

gat

ion b

onds.

T

he

tran

sfer

wil

l not

be

repai

d.

14.

INT

ER

GO

VE

RN

ME

NT

AL

AG

RE

EM

EN

T

A

. F

ox

Val

ley P

ark D

istr

ict

On S

epte

mber

30, 1989, th

e F

ox

Val

ley P

ark D

istr

ict

(the

Par

k D

istr

ict)

ente

red i

nto

an

agre

emen

t w

ith t

he

Cit

y t

o j

oin

tly c

onst

ruct

thre

e fa

mil

y a

quat

ic c

ente

rs f

or

the

join

t use

by t

he

citi

zens

of

both

gover

nm

enta

l ag

enci

es. T

he

agre

emen

t sp

ecif

ies

that

th

e C

ity w

ill

finan

ce a

ll c

onst

ruct

ion c

ost

s of

the

cente

rs. T

he

Par

k D

istr

ict

wil

l re

pay

the

Cit

y 5

0%

of

the

const

ruct

ion c

ost

s on D

ecem

ber

31 o

f ea

ch f

ull

yea

r of

oper

atio

ns

at a

min

imum

of

$200,0

00 p

er c

ente

r per

yea

r ex

clusi

ve

of

any a

ccru

ed

inte

rest

on i

ndeb

tednes

s in

curr

ed b

y t

he

Cit

y a

nd e

xcl

usi

ve

of

any i

nte

rest

on

def

erre

d p

aym

ents

fro

m t

he

Par

k D

istr

ict

to t

he

Cit

y.

All

rea

l es

tate

and a

ll o

ther

per

sonal

pro

per

ty a

t sa

id c

ente

rs s

hal

l be

titl

ed i

n t

he

nam

es o

f th

e C

ity a

nd t

he

Par

k D

istr

ict,

eac

h t

o o

wn a

n i

ndiv

idual

50%

inte

rest

. T

he

Par

k D

istr

ict

agre

ed t

o b

e fu

lly r

esponsi

ble

for

all

dai

ly o

per

atio

ns

incl

udin

g

man

agem

ent

and a

dm

inis

trat

ion o

f th

e fa

mil

y a

quat

ic c

ente

rs. I

n a

ddit

ion, th

e pri

nci

pal

am

ount

of

the

rece

ivab

le t

o b

e pai

d b

y t

he

Par

k D

istr

ict

is r

ecord

ed i

n t

he

Deb

t S

ervic

e F

und o

ffse

t by d

efer

red r

even

ue

in t

he

fund f

inan

cial

sta

tem

ents

, but

reco

gniz

ed a

s re

ven

ue

in t

he

gover

nm

ent-

wid

e fi

nan

cial

sta

tem

ents

. T

he

rece

ivab

le

to b

e pai

d b

y t

he

Par

k D

istr

ict

each

yea

r is

as

foll

ow

s:

S

pla

sh

Co

un

try

2

01

2

$

2

00

,00

0

20

13

2

00

,00

0

20

14

2

00

,00

0

20

15

2

00

,00

0

20

16

2

00

,00

0

2017-2

018

32

9,7

50

T

OT

AL

RE

CE

IVA

BL

E

$

1

,32

9,7

50

CIT

Y O

F A

UR

OR

A, IL

LIN

OIS

NO

TE

S T

O F

INA

NC

IAL

ST

AT

EM

EN

TS

(C

onti

nued

)

14.

INT

ER

GO

VE

RN

ME

NT

AL

AG

RE

EM

EN

T (

Conti

nued

)

B

. F

ox

Met

ro W

ater

Rec

lam

atio

n D

istr

ict

On A

pri

l 19, 2006, th

e F

ox

Met

ro W

ater

Rec

lam

atio

n D

istr

ict

(the

Dis

tric

t) e

nte

red

into

an a

gre

emen

t w

ith t

he

Cit

y t

o c

onst

ruct

a n

ew s

anit

ary s

ewer

syst

em a

nd o

ther

impro

vem

ents

in t

he

dow

nto

wn a

rea.

T

he

agre

emen

t sp

ecif

ies

that

th

e C

ity w

ill

finan

ce a

ll c

onst

ruct

ion c

ost

s of

the

impro

vem

ents

. I

n r

eturn

, th

e D

istr

ict

wil

l pay

the

Cit

y 5

0%

of

the

deb

t se

rvic

e pay

men

ts r

elat

ed t

o t

he

2006 W

ater

work

s an

d

Sew

erag

e se

rial

rev

enue

bonds

as w

ell

as a

ddit

ional

am

ounts

to b

e det

erm

ined

upon

com

ple

tion o

f th

e im

pro

vem

ents

.

The

Dis

tric

t sh

all

ow

n, oper

ate

and m

ainta

in t

he

sanit

ary

sew

er i

mpro

vem

ents

. T

he

Cit

y s

hal

l ow

n, oper

ate

and m

ainta

in t

he

rem

ainin

g i

mpro

vem

ents

, w

hic

h i

ncl

ude

cert

ain s

torm

sew

er, w

ater

mai

n a

nd d

uct

im

pro

vem

ents

. T

he

pri

nci

pal

am

ount

of

the

rece

ivab

le t

o b

e pai

d b

y t

he

Dis

tric

t is

rec

ord

ed i

n t

he

Wat

er a

nd S

ewer

Fund.

The

rece

ivab

le t

o b

e pai

d b

y t

he

Dis

tric

t ea

ch y

ear

is a

s fo

llow

s:

20

12

$

14

6,6

95

20

13

1

53

,56

3

20

14

1

60

,50

5

20

15

1

67

,52

6

20

16

1

74

,62

7

2017-2

021

99

5,9

15

2022-2

026

1,2

47

,24

1

2027-2

031

1,5

78

,84

2

2032-2

036

2,0

23

,49

9

TO

TA

L R

EC

EIV

AB

LE

$

6,6

48

,41

3

15.

OT

HE

R P

OS

TE

MP

LO

YM

EN

T B

EN

EF

ITS

P

lan D

escr

ipti

on

In

ad

dit

ion

to

pro

vid

ing t

he

pen

sio

n b

enef

its

des

crib

ed, th

e C

ity p

rov

ides

po

stem

plo

ym

ent

hea

lth c

are

and l

ife

insu

rance

ben

efit

s (O

PE

B)

for

reti

red e

mplo

yee

s th

rough a

sin

gle

-

emplo

yer

def

ined

ben

efit

pla

n. T

he

ben

efit

s, b

enef

it l

evel

s, e

mplo

yee

contr

ibuti

ons

and

emplo

yer

contr

ibuti

ons

are

gover

ned

by t

he

Cit

y a

nd c

an b

e am

ended

by t

he

Cit

y t

hro

ugh

its

per

sonnel

man

ual

and u

nio

n c

ontr

acts

. T

he

OP

EB

pla

n i

ssues

a s

epar

ate

report

that

incl

udes

req

uir

ed s

upple

men

tary

info

rmat

ion a

nd t

rend i

nfo

rmat

ion. T

his

rep

ort

can

be

obta

ined

fro

m t

he

Tre

asure

r of

the

pla

n a

t 44 E

. D

ow

ner

Pla

ce, A

uro

ra, IL

60507

-2067.

The

acti

vit

y o

f th

e pla

n i

s re

port

ed i

n t

he

City

’s R

etire

e H

ealt

h I

nsu

rance

Tru

st F

und.

A-28

CIT

Y O

F A

UR

OR

A, IL

LIN

OIS

NO

TE

S T

O F

INA

NC

IAL

ST

AT

EM

EN

TS

(C

onti

nued

)

15.

OT

HE

R P

OS

TE

MP

LO

YM

EN

T B

EN

EF

ITS

(C

onti

nued

)

B

enef

its

Pro

vid

ed

T

he

Cit

y p

rovid

es p

ost

emplo

ym

ent

hea

lth c

are

and l

ife

insu

rance

ben

efit

s to

its

ret

iree

s.

To b

e el

igib

le fo

r ben

efits

, an

empl

oyee

mus

t qua

lify

for r

etire

men

t und

er o

ne o

f the

City

’s

reti

rem

ent

pla

ns.

E

lect

ed o

ffic

ials

are

eli

gib

le f

or

ben

efit

s if

they

qual

ify f

or

reti

rem

ent

thro

ugh

IM

RF

.

A

ll h

ealt

h c

are

ben

efit

s ar

e pr

ovid

ed th

roug

h th

e C

ity’s

self-

insu

red h

ealt

h p

lan. T

he

ben

efit

lev

els

are

the

sam

e as

those

aff

ord

ed t

o a

ctiv

e em

plo

yee

s. B

enef

its

incl

ude

gen

eral

inpat

ient

and o

utp

atie

nt

med

ical

ser

vic

es;

men

tal,

ner

vous

and s

ubst

ance

abuse

car

e; v

isio

n

care

; den

tal

care

; an

d p

resc

ripti

ons.

U

pon a

ret

iree

rea

chin

g a

ge

65 y

ears

of

age,

Med

icar

e

beco

mes

the

prim

ary

insu

rer a

nd th

e C

ity’s

pla

n be

com

es se

cond

ary.

Unt

il a

retir

ee

reac

hes

age

65, $5,0

00 o

f li

fe i

nsu

rance

cover

age

is p

rovid

ed a

t no c

ost

.

M

ember

ship

A

t D

ecem

ber

31, 2011, m

ember

ship

consi

sted

of:

Ret

iree

s an

d B

enef

icia

ries

Curr

entl

y R

ecei

vin

g

B

enef

its

44

7

Ter

min

ated

Em

plo

yee

s E

nti

tled

to

Ben

efit

s but

not

yet

Rec

eivin

g T

hem

-

Act

ive

Em

plo

yee

s

87

9

TO

TA

L

1

,32

6

Par

tici

pat

ing E

mplo

yer

s

1

F

undin

g P

oli

cy

T

he

Cit

y n

egoti

ates

the

contr

ibuti

on p

erce

nta

ges

bet

wee

n t

he

Cit

y a

nd e

mplo

yee

s th

rough

the

unio

n c

ontr

acts

and p

erso

nnel

poli

cy.

All

ret

iree

s co

ntr

ibute

20%

-29%

of

the

actu

aria

lly d

eter

min

ed p

rem

ium

to t

he

pla

n a

nd t

he

Cit

y c

ontr

ibute

s th

e re

mai

nder

to c

over

the

cost

of

pro

vid

ing t

he

ben

efit

s to

the

reti

rees

via

the

self

-insu

red p

lan. S

ince

the

Cit

y i

s

self

-insu

red, th

is a

mount

fluct

uat

es o

n a

n a

nnual

bas

is. F

or

the

fisc

al y

ear

ended

Dec

ember

31, 2011, re

tire

es c

ontr

ibute

d $

1,6

54

,35

1 a

nd

th

e C

ity c

on

trib

ute

d $

4,5

80

,04

6.

Act

ive

emplo

yee

s do n

ot

contr

ibute

to t

he

pla

n u

nti

l re

tire

men

t.

CIT

Y O

F A

UR

OR

A, IL

LIN

OIS

NO

TE

S T

O F

INA

NC

IAL

ST

AT

EM

EN

TS

(C

onti

nued

)

15.

OT

HE

R P

OS

TE

MP

LO

YM

EN

T B

EN

EF

ITS

(C

onti

nued

)

A

nn

ual

OP

EB

Co

sts

and

Net

OP

EB

Ob

ligat

ion

T

he

City

’s a

nnua

l OPE

B c

ost,

the

perc

enta

ge o

f annual

OP

EB

cost

contr

ibute

d t

o t

he

pla

n

and t

he

net

OP

EB

obli

gat

ion f

or

2009,

2010 a

nd 2

011 w

ere

as f

oll

ow

s:

F

isca

l

Yea

r

Ended

Annual

OP

EB

Cost

Em

plo

yer

Co

ntr

ibu

tio

ns

Per

cen

tage

of

Annual

OP

EB

Cost

Co

ntr

ibu

ted

Net

OP

EB

Ob

ligat

ion

(Ass

et)

Dec

ember

31, 2009

$

13

,09

9,4

82

$

6

,91

1,9

69

52

.77

%

$

49

,08

0,6

41

Dec

emb

er 3

1,

20

10

13

,67

4,9

43

4,5

48

,78

6

3

3.2

6%

58

,20

6,7

98

Dec

emb

er 3

1,

20

11

13

,33

1,0

86

4,5

80

,04

6

3

4.3

6%

66

,95

7,8

38

T

he

net

OP

EB

obli

gat

ion (

NO

PE

BO

) as

Dec

ember

31, 2011 w

as c

alcu

late

d a

s fo

llow

s:

An

nu

al R

equ

ired

Co

ntr

ibu

tio

n

$

11

,77

3,6

85

Inte

rest

on N

et O

PE

B O

bli

gat

ion

4,0

74

,47

6

Adju

stm

ent

to A

nnual

Req

uir

ed C

ontr

ibuti

on

(2,5

17,0

75)

An

nu

al O

PE

B C

ost

13

,33

1,0

86

Co

ntr

ibu

tio

ns

Mad

e

4,5

80

,04

6

Incr

ease

in

Net

OP

EB

Ob

ligat

ion

8,7

51

,04

0

Net

OP

EB

Obli

gat

ion, B

egin

nin

g o

f Y

ear

5

8,2

06

,79

8

NE

T O

PE

B O

BL

IGA

TIO

N, E

ND

OF

YE

AR

$

6

6,9

57

,83

8

F

unded

Sta

tus

and F

undin

g P

rogre

ss.

The

funded

sta

tus

of

the

pla

n a

s of

Dec

ember

31,

20

11

was

as

foll

ow

s:

Act

uar

ial

Acc

rued

Lia

bil

ity (

AA

L)

$

16

5,2

42

,26

1

Act

uar

ial

Val

ue

of

Pla

n A

sset

s

24

,19

9,7

74

Unfu

nded

Act

uar

ial

Acc

rued

Lia

bil

ity (

UA

AL

)

14

1,0

42

,48

7

Funded

Rat

io (

Act

uar

ial

Val

ue

of

Pla

n A

sset

s/A

AL

)

14.6

5%

Cover

ed P

ayro

ll (

Act

ive

Pla

n M

ember

s)

$

65

,23

7,5

49

UA

AL

as

a P

erce

nta

ge

of

Cover

ed P

ayro

ll

216.2

0%

A-29

CIT

Y O

F A

UR

OR

A, IL

LIN

OIS

NO

TE

S T

O F

INA

NC

IAL

ST

AT

EM

EN

TS

(C

onti

nued

)

15.

OT

HE

R P

OS

TE

MP

LO

YM

EN

T B

EN

EF

ITS

(C

onti

nued

)

A

nn

ual

OP

EB

Co

sts

and

Net

OP

EB

Ob

ligat

ion

(C

on

tin

ued

)

A

ctuar

ial

val

uat

ions

of

an o

ngoin

g p

lan i

nvolv

e es

tim

ates

of

the

val

ue

of

report

ed a

mounts

and a

ssum

pti

ons

about

the

pro

bab

ilit

y o

f occ

urr

ence

of

even

ts f

ar i

nto

the

futu

re.

Ex

ample

s in

clude

assu

mpti

ons

about

futu

re e

mplo

ym

ent,

mort

alit

y a

nd t

he

hea

lthca

re c

ost

tren

d. A

mounts

det

erm

ined

reg

ardin

g t

he

funded

sta

tus

of

the

pla

n a

nd t

he

AR

Cs

of

the

emplo

yer

are

subje

ct t

o c

onti

nual

rev

isio

n a

s ac

tual

res

ult

s ar

e co

mpar

ed w

ith p

ast

expec

tati

ons

and n

ew e

stim

ates

are

mad

e ab

out

the

futu

re.

The

sched

ule

of

fundin

g

pro

gre

ss, pre

sente

d a

s re

quir

ed s

upple

men

tary

info

rmat

ion f

oll

ow

ing t

he

note

s to

fin

anci

al

stat

emen

ts, pre

sents

mult

i-yea

r tr

end i

nfo

rmat

ion t

hat

show

s w

het

her

the

actu

aria

l val

ue

of

pla

n a

sset

s is

incr

easi

ng o

r dec

reas

ing o

ver

tim

e re

lati

ve

to t

he

actu

aria

l ac

crued

lia

bil

itie

s

for

ben

efit

s.

A

ctuar

ial

Met

hods

and A

ssum

pti

ons.

Pro

ject

ions

of

ben

efit

s fo

r fi

nan

cial

rep

ort

ing

purp

ose

s ar

e bas

ed o

n t

he

subst

anti

ve

pla

n (

the

pla

n a

s under

stood b

y t

he

emplo

yer

and

pla

n m

ember

s) a

nd i

ncl

ude

the

types

of

ben

efit

s pro

vid

ed a

t th

e ti

me

of

each

val

uat

ion a

nd

the

his

tori

cal

pat

tern

of

shar

ing o

f ben

efit

cost

s bet

wee

n t

he

emplo

yer

and p

lan m

ember

s to

that

poin

t.

The

actu

aria

l m

ethods

and a

ssum

pti

ons

use

d i

ncl

ude

tech

niq

ues

that

are

des

igned

to r

educe

short

-ter

m v

ola

tili

ty i

n a

ctuar

ial

accr

ued

lia

bil

itie

s an

d t

he

actu

aria

l

val

ue

of

asse

ts, co

nsi

sten

t w

ith t

he

long-t

erm

per

spec

tive

of

the

calc

ula

tions.

In

the

Dec

ember

31, 2011 a

ctuar

ial

val

uat

ion, th

e en

try-a

ge

actu

aria

l co

st m

ethod w

as

use

d. T

he

actu

aria

l as

sum

pti

ons

incl

uded

7.0

% i

nves

tmen

t ra

te o

f re

turn

(net

of

adm

inis

trat

ive

expen

ses)

and a

n i

nit

ial

annual

hea

lthca

re c

ost

tre

nd r

ate

of

7.5

% r

educe

d b

y

0.2

5%

eac

h y

ear

to a

rriv

e at

an u

ltim

ate

hea

lthca

re c

ost

tre

nd r

ate

of

5.0

%. B

oth

rat

es

incl

ude

a 3.0

% i

nfl

atio

n a

ssum

pti

on.

The

actu

aria

l val

ue

of

asse

ts w

as b

ased

on f

air

val

ue

at D

ecem

ber

31, 2011. T

he

pla

n’s

unfu

nded

act

uar

ial

accr

ued

lia

bil

ity i

s b

ein

g a

mo

rtiz

ed

as a

lev

el p

erce

nta

ge

of

pro

ject

ed p

ayro

ll o

n a

n o

pen

30-y

ear

bas

is.

16

. S

PE

CIA

L I

TE

M

Duri

ng t

he

yea

r en

ded

Dec

ember

31, 2011, th

e C

ity t

ran

sfer

red

lan

d t

o t

he

Illi

no

is S

tate

To

ll H

igh

way

Au

tho

rity

in

th

e am

ou

nt

of

$6

,95

7,2

29

.

17.

CO

MP

ON

EN

T U

NIT

- A

UR

OR

A P

UB

LIC

LIB

RA

RY

A

. F

inan

cial

Info

rmat

ion

Fin

anci

al s

tate

men

ts f

or

the

Auro

ra P

ubli

c L

ibra

ry (

the

Lib

rary

), i

ncl

udin

g

gover

nm

ent-

wid

e an

d fu

nd fi

nanc

ial s

tate

men

ts, a

re a

vaila

ble

in th

e Li

brar

y’s

separ

atel

y a

udit

ed f

inan

cial

sta

tem

ents

as

of

Dec

ember

31, 2011, w

hic

h c

an b

e

obta

ined

from

the

Libr

ary’

s adm

inis

trativ

e of

fices

loca

ted

at 1

E. B

ento

n St

reet

, A

uro

ra, Il

linois

6050

5.

CIT

Y O

F A

UR

OR

A, IL

LIN

OIS

NO

TE

S T

O F

INA

NC

IAL

ST

AT

EM

EN

TS

(C

onti

nued

)

17.

CO

MP

ON

EN

T U

NIT

- A

UR

OR

A P

UB

LIC

LIB

RA

RY

(C

on

tin

ued

)

B

. D

eposi

ts a

nd I

nves

tmen

ts

Lib

rary

Dep

osi

ts w

ith

Fin

anci

al I

nst

itu

tio

ns

Cust

odia

l cr

edit

ris

k f

or

dep

osi

ts w

ith f

inan

cial

in

stit

uti

on

s is

th

e ri

sk t

hat

in

th

e

even

t of

a ban

k’s

failu

re, t

he L

ibra

ry’s

dep

osits

may

not

be

retu

rned

to it

. Th

e C

ity’s

in

ves

tmen

t poli

cy r

equir

es p

ledgin

g o

f co

llat

eral

wit

h a

fai

r val

ue

of

110%

of

all

ban

k b

alan

ces

in e

xce

ss o

f fe

der

al d

eposi

tory

insu

rance

wit

h c

oll

ater

al h

eld b

y t

he

City

or i

ts a

gent

, in

the

City

’s n

ame.

Lib

rary

Inves

tmen

ts

The

foll

ow

ing t

able

pre

sents

the

inves

tmen

ts a

nd m

atur

ities

of t

he L

ibra

ry’s

deb

t se

curi

ties

as

of

Dec

ember

31, 2011:

In

ves

tmen

t M

atu

riti

es (

in Y

ears

)

Inves

tmen

t T

yp

e F

air

Val

ue

Les

s th

an 1

1

-5

6-1

0

Gre

ater

th

an 1

0

U.S

. A

gen

cy O

bli

gat

ion

s $

2

,99

9,8

33

$

1

,99

9,4

33

$

1

,00

0,4

00

$

-

$

-

Sta

te a

nd

Lo

cal

Ob

ligat

ion

s

5,5

59

,25

0

3

,02

3,5

05

2,5

35

,74

5

-

-

TO

TA

L

$

8,5

59

,08

3

$

5,0

22

,93

8

$

3,5

36

,14

5

$

- $

-

In a

ccor

danc

e w

ith th

e C

ity’s

inve

stm

ent p

olic

y, th

e Li

brar

y lim

its it

s ex

posu

re t

o

inte

rest

rat

e ri

sk b

y s

truct

uri

ng t

he

port

foli

o s

o t

hat

sec

uri

ties

mat

ure

to m

eet

cash

requir

emen

ts f

or

ongoin

g o

per

atio

ns,

ther

eby a

vo

idin

g t

he

nee

d t

o s

ell

secu

riti

es o

n

the

open

mar

ket

pri

or

to m

aturi

ty a

nd i

nves

ting o

per

atin

g f

unds

pri

mar

ily i

n s

hort

er-

term

sec

uri

ties

, m

oney

mar

ket

mu

tual

fu

nd

s o

r si

mil

ar i

nv

estm

ent

po

ols

. U

nle

ss

mat

ched

to a

spec

ific

cas

h f

low

, th

e L

ibra

ry d

oes

not

dir

ectl

y i

nves

t in

sec

uri

ties

mat

uri

ng m

ore

than

thre

e yea

rs f

rom

the

dat

e of

purc

has

e.

The

Lib

rary

lim

its

its

exposu

re t

o c

redit

ris

k, th

e ri

sk t

hat

the

issu

er o

f a

deb

t se

curi

ty

wil

l not

pay

its

par

val

ue

upon m

aturi

ty, by p

rim

aril

y i

nves

ting i

n U

.S. T

reas

ury

obli

gat

ions,

U.S

. G

over

nm

ent

agen

cy n

ote

s, a

nd

sta

te a

nd

lo

cal

ob

ligat

ion

s ra

ted

in

the

hig

hes

t tw

o c

ateg

ori

es b

y n

atio

nal

rat

ing a

gen

cies

. T

he

money

mar

ket

mutu

al

funds

are

rate

d A

AA

. T

he

stat

e an

d l

oca

l obli

gat

ions

are

rate

d A

a3 t

o A

aa b

y

Moo

dy’s

. C

erta

in U

.S. ag

ency

obli

gat

ions

are

not

rate

d.

A-30

CIT

Y O

F A

UR

OR

A, IL

LIN

OIS

NO

TE

S T

O F

INA

NC

IAL

ST

AT

EM

EN

TS

(C

onti

nued

)

17.

CO

MP

ON

EN

T U

NIT

- A

UR

OR

A P

UB

LIC

LIB

RA

RY

(C

on

tin

ued

)

B.

Dep

osi

ts a

nd

In

ves

tmen

ts (

Co

nti

nu

ed)

Lib

rary

Inves

tmen

ts (

Conti

nued

)

C

ust

odia

l cr

edit

ris

k f

or

inves

tmen

ts i

s th

e ri

sk t

hat

, in

the

even

t of

the

fail

ure

of

the

counte

rpar

ty t

o t

he

inves

tmen

t, t

he

Lib

rary

wil

l not

be

able

to r

ecover

the

val

ue

of

its

inves

tmen

ts t

hat

are

in p

oss

essi

on o

f an

ou

tsid

e p

arty

. T

o l

imit

its

ex

po

sure

, th

e C

ity’s

inve

stm

ent p

olic

y re

quire

s all

secu

rity

trans

actio

ns th

at a

re e

xpos

ed to

cu

stodia

l cr

edit

ris

k t

o b

e pro

cess

ed o

n a

del

iver

y ver

sus

pay

men

t (D

VP

) bas

is w

ith

the

under

lyin

g i

nves

tmen

ts h

eld b

y a

thir

d p

arty

act

ing

as th

e C

ity’s

age

nt se

para

te

from

wher

e th

e in

ves

tmen

t w

as p

urc

has

ed o

r by t

he

trust

dep

artm

ent

of

the

ban

k

whe

re p

urch

ased

, in

the

City

’s n

ame.

The

mon

ey m

arke

t mut

ual f

unds

are

not

su

bje

ct t

o c

ust

odia

l cr

edit

ris

k.

Conce

ntr

atio

n o

f cr

edit

ris

k -

The

inves

tmen

t port

foli

o o

f th

e L

ibra

ry s

hal

l not

exce

ed t

he

div

ersi

fica

tion s

tandar

ds

bel

ow

:

Div

ersi

fica

tion b

y I

nst

rum

ent

P

erce

nt

of

Port

foli

o

C

om

mer

cial

Pap

er

10%

Il

lin

ois

Fu

nd

s

50%

N

o f

inan

cial

in

stit

uti

on

sh

all

ho

ld m

ore

th

an 2

0%

of

the

Libr

ary’

s tot

al in

vest

men

t port

foli

o. F

urt

her

more

, th

e am

ount

of

monie

s dep

osi

ted a

nd/o

r in

ves

ted i

n a

fi

nan

cial

inst

ituti

on s

hal

l not

exce

ed 7

5%

of

the

capit

al s

tock

and s

urp

lus

of

such

in

stit

uti

on

.

Th

e C

ity’s

inve

stm

ent p

olic

y do

es n

ot sp

ecifi

cally

pro

hib

it t

he

use

of

or

the

inves

tmen

t in

der

ivat

ives

.

C.

Rec

eivab

les

Pro

per

ty t

axes

for

the

2011 l

evy y

ear

atta

ch a

s an

enfo

rcea

ble

lie

n o

n J

anuar

y 1,

2011, on p

roper

ty v

alues

ass

esse

d a

s of

the

sam

e dat

e.

Tax

es a

re l

evie

d b

y

Dec

ember

of

the

sam

e yea

r by

pas

sage

of

a ta

x l

evy o

rdin

ance

. T

ax b

ills

are

pre

par

ed b

y t

he

counti

es a

nd i

ssued

on o

r ab

out

May

1,

2012 a

nd A

ugust

1,

2012,

and a

re p

ayab

le i

n t

wo i

nst

allm

ents

, on o

r ab

out

June

1,

2012 a

nd S

epte

mber

1, 2012.

The

counti

es c

oll

ect

such

tax

es a

nd r

emit

s th

em p

erio

dic

ally

.

The

Lib

rary

rec

ogniz

es p

roper

ty t

ax r

even

ues

when

they

bec

om

e both

mea

sura

ble

an

d a

vai

lable

in t

he

fisc

al y

ear

that

the

tax

lev

y i

s in

tended

to f

inan

ce. T

her

efore

, th

e en

tire

2011 t

ax l

evy h

as b

een r

ecord

ed a

s def

erre

d r

even

ue

on t

he

finan

cial

st

atem

ents

.

CIT

Y O

F A

UR

OR

A, IL

LIN

OIS

NO

TE

S T

O F

INA

NC

IAL

ST

AT

EM

EN

TS

(C

onti

nued

)

17.

CO

MP

ON

EN

T U

NIT

- A

UR

OR

A P

UB

LIC

LIB

RA

RY

(C

on

tin

ued

)

D

. C

apit

al A

sset

s

The

foll

ow

ing i

s a

sum

mar

y of

the

capit

al a

sset

act

ivit

y f

or

the

yea

r en

ded

Dec

ember

31, 2011:

Beg

innin

g

Bal

ance

Incr

ease

s

Dec

reas

es

Endin

g

Bal

ance

GO

VE

RN

ME

NT

AL

AC

TIV

ITIE

S

C

apit

al A

sset

s not

Bei

ng D

epre

ciat

ed

L

and a

nd L

and I

mpro

vem

ents

$

3,1

89,6

38

$

191,5

48

$

- $

3,3

81,1

86

C

onst

ruct

ion i

n P

rogre

ss

8,3

64

1,0

88,7

12

-

1,0

97,0

76

Tota

l C

apit

al A

sset

s not

Bei

ng D

epre

ciat

ed

3,1

98,0

02

1,2

80,2

60

-

4,4

78,2

62

C

apit

al A

sset

s B

eing D

epre

ciat

ed

B

uil

din

gs

10,3

75,3

62

-

-

10,3

75,3

62

M

achin

ery a

nd E

quip

men

t

233,8

98

-

-

233,8

98

V

ehic

les

210,0

59

-

-

210,0

59

Tota

l C

apit

al A

sset

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eing D

epre

ciat

ed

10,8

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19

-

-

10,8

19,3

19

L

ess

Acc

um

ula

ted D

epre

ciat

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or

B

uil

din

gs

2,7

93,7

23

207,5

07

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3,0

01,2

30

M

achin

ery a

nd E

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62

9,9

41

-

199,1

03

V

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196,9

28

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29

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210,0

57

Tota

l A

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79,8

13

230,5

77

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90

Tota

l C

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al A

sset

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eing D

epre

ciat

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et

7,6

39,5

06

(2

30,5

77)

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08,9

29

GO

VE

RN

ME

NT

AL

AC

TIV

ITIE

S

C

AP

ITA

L A

SS

ET

S, N

ET

$ 1

0,8

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$

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49,6

83

$

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91

Dep

reci

atio

n e

xpen

se w

as c

har

ged

to f

unct

ions/

pro

gra

ms

of

the

gover

nm

enta

l ac

tivit

ies

as f

oll

ow

s:

G

OV

ER

NM

EN

TA

L A

CT

IVIT

IES

C

ult

ure

and R

ecre

atio

n

$

230,5

77

TO

TA

L D

EP

RE

CIA

TIO

N E

XP

EN

SE

- G

OV

ER

NM

EN

TA

L A

CT

IVIT

IES

$

230,5

77

A-31

CIT

Y O

F A

UR

OR

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LIN

OIS

NO

TE

S T

O F

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NC

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ST

AT

EM

EN

TS

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onti

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MP

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EN

T U

NIT

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UR

OR

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UB

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RA

RY

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onti

nued

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E

. L

ong-T

erm

Deb

t

1.

Bonds

pay

able

at

Dec

ember

31, 2011 a

re c

om

pri

sed o

f th

e fo

llow

ing:

G

ener

al O

bli

gat

ion

Bo

nd

s

$

3,1

70

,00

0 2

00

1A

Co

rpo

rate

Pu

rpo

se s

eria

l b

on

ds,

du

e in

an

nu

al

inst

allm

ents

of

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05

,00

0 t

o $

25

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00

fro

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anu

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3 t

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Jan

uar

y 1

, 2

02

1,

inte

rest

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m 4

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to

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%.

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ile

a gen

eral

ob

ligat

ion

of

the

Cit

y,

the

pri

nci

pal

an

d i

nte

rest

is

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e re

pai

d

with

the

Libr

ary’

s tax

levy

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1

60

,00

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,74

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00

20

11

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Pu

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g s

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e in

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ual

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stal

lmen

ts o

f $

95

,00

0 t

o $

33

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00

fro

m D

ecem

ber

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20

12

to

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emb

er 3

0,

20

22

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tere

st f

rom

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o 3

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ile

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eral

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ligat

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y, th

e p

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cip

al a

nd

in

tere

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s

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e re

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ith

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e L

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ry’s

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L

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00

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0

2.

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t S

ervic

e to

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uri

ty

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nnual

deb

t se

rvic

e re

quir

emen

ts t

o m

aturi

ty a

re a

s fo

llow

s:

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rpo

rate

Pu

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ial

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nd

s

Yea

r

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nci

pal

In

tere

st

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12

$

26

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00

$

8

7,3

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13

2

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20

14

2

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15

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20

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9

CIT

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t (C

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in L

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Deb

t

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ges

in l

ong-t

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deb

t duri

ng t

he

yea

r en

ded

Dec

ember

31, 2011 i

s as

foll

ow

s:

Bal

ance

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y 1

Ad

dit

ions

Del

etio

ns

Bal

ance

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emb

er 3

1

Curr

ent

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rtio

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ligat

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ond

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A-32

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A-33

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2006

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55

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49

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5

6.3

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82

,83

2,7

94

$

22,3

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58

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3

71

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%

2007

115,6

24,6

49

204,3

96,0

08

5

6.5

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88

,77

1,3

59

23,3

62,7

36

3

79

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%

2008

102,4

71,4

98

223,6

97,4

02

4

5.8

1%

12

1,2

25

,90

4

24,9

13,9

11

4

86

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%

2009

114,0

40,8

58

236,7

96,4

07

4

8.1

6%

12

2,7

55

,54

9

26,1

58,1

49

4

69

.28

%

2010

126,7

55,2

89

247,5

67,6

88

5

1.2

0%

12

0,8

12

,39

9

25,0

07,8

15

4

83

.10

%

2011

131,8

42,9

05

263,2

90,5

75

5

0.0

8%

13

1,4

47

,67

0

25,9

22,3

46

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A-37

__________________________________

THIS PAGE INTENTIONALLY

LEFT BLANK

_________________________________

APPENDIX B

DESCRIBING BOOK-ENTRY-ONLY ISSUANCE

1. The Depository Trust Company (“DTC”), New York, New York, will act as securities depository for the Debt (the “Securities”). The Securities will be issued as fully-registered securities 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 Security certificate will be issued for each issue of the Securities, each in the aggregate principal amount of such issue, and will be deposited with DTC.

2. DTC, the world’s largest securities 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 3.5 million issues of U.S. and non-U.S. equity issues, corporate and municipal debt issues, and money market instruments (from over 100 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 & Clearing Corporation (“DTCC”). DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly (“Indirect Participants”). DTC has a Standard & Poor’s rating of AA+. The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at www.dtcc.com.

3. Purchases of Securities under the DTC system must be made by or through Direct Participants, which

will receive a credit for the Securities on DTC’s records. The ownership interest of each actual purchaser of each Security (“Beneficial Owner”) is in turn to be recorded on the Direct and Indirect Participants’ records. Beneficial Owners will not receive written confirmation from DTC of their purchase. 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 Securities are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in Securities, except in the event that use of the book-entry system for the Securities is discontinued.

4. To facilitate subsequent transfers, all Securities 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 Securities with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Securities; DTC’s records reflect only the identity of the Direct Participants to whose accounts such Securities 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.

B-1

5. 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 the 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 notices be provided directly to them.

6. Redemption notices shall be sent to DTC. If less than all of the Securities within an issue are being redeemed, DTC’s practice is to determine by lot the amount of the interest of each Direct Participant in such issue to be redeemed.

7. Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to Securities unless authorized by a Direct Participant in accordance with DTC’s MMI Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the City 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 Securities are credited on the record date (identified in a listing attached to the Omnibus Proxy).

8. Redemption proceeds, distributions, and dividend payments on the Securities 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 the City or the Paying 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, the Paying Agent, or the City, 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 City or the Paying Agent, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants.

9. A Beneficial Owner shall give notice to elect to have its Securities purchased or tendered, through its Participant, to any Tender/Remarketing Agent, and shall effect delivery of such Securities by causing the Direct Participant to transfer the Participant’s interest in the Securities, on DTC’s records, to any Tender/Remarketing Agent. The requirement for physical delivery of Securities in connection with an optional tender or a mandatory purchase will be deemed satisfied when the ownership rights in the Securities are transferred by Direct Participants on DTC’s records and followed by a book-entry credit of tendered Securities to any Tender/Remarketing Agent’s DTC account.

10. DTC may discontinue providing its services as depository with respect to the Securities at any time by giving reasonable notice to the City or the Paying Agent. Under such circumstances, in the event that a successor depository is not obtained, Security certificates are required to be printed and delivered.

11. The City may decide to discontinue use of the system of book-entry-only transfers through DTC (or a successor securities depository). In that event, Security certificates will be printed and delivered to DTC.

12. The information in this section concerning DTC and DTC’s book-entry system has been obtained from sources that the City believes to be reliable, but the City takes no responsibility for the accuracy thereof.

B-2

__________________________________


LEFT BLANK

_________________________________

APPENDIX C

PROPOSED FORM OF OPINION OF BOND COUNSEL

[LETTERHEAD OF CHAPMAN AND CUTLER LLP]

(To Be Dated the Date of Issuance)

City of Aurora, Kane, DuPage, Will and Kendall Counties, Illinois

Aurora, Illinois

Re: City of Aurora, Kane, DuPage, Will and Kendall Counties, Illinois $22,400,000 General Obligation Library Bonds, Series 2012A

Ladies and Gentlemen:

We hereby certify that we have examined a certified copy of the proceedings of the City Council of the City of Aurora, Kane, DuPage, Will and Kendall Counties, Illinois (the “City”), passed preliminary to the issuance by the City of its General Obligation Library Bonds, Series 2012A (the “Bonds”), in the aggregate principal amount of $22,400,000, dated the date hereof, due on December 30 of the years and in the principal amounts, and bearing interest at the respective rates per annum, as follows:

YEAR PRINCIPAL AMOUNT

INTEREST RATE YEAR

PRINCIPAL AMOUNT

INTEREST RATE

2013 2028 2014 2029 2015 2030 2016 2031 2017 2032 2018 2033 2019 2034 2020 2035 2021 2036 2022 2037 2023 2038 2024 2039 2025 2040 2026 2041 2027

C-1

and we are of the opinion that such proceedings show lawful authority for said issue under the Constitution and the laws of the State of Illinois now in force.

The Bonds maturing on or after December 30, 2022, are subject to redemption prior to maturity at the option of the City, on December 30, 2021, or on any date thereafter, as a whole or in part, and if in part in any order of maturity selected by the City (less than all of a single maturity to be so redeemed to be selected by lot within such maturity in the manner provided in the ordinance of the City authorizing the issuance of the Bonds) at a redemption price equal to 100% of the principal amount thereof being redeemed plus accrued interest to the date fixed for redemption.

We further certify that we have examined the form of Bond prescribed for said issue, and find the same in due form of law, and in our opinion said issue, to the amount named, is valid and legally binding upon the City, and all taxable property in the City is subject to the levy of taxes to pay the same without limitation as to rate or amount, except that the rights of the owners of the Bonds and the enforceability of the Bonds may be limited by bankruptcy, insolvency, moratorium, reorganization and other similar laws affecting creditor’s rights and by equitable principles, whether considered at law or in equity, including the exercise of judicial discretion.

It is also our opinion that, subject to the compliance by the City with certain covenants, under present law, interest on the Bonds is excludible from the gross income of the owners thereof for federal income tax purposes, and is not included as an item of tax preference in computing the alternative minimum tax for individuals and corporations under the Internal Revenue Code of 1986, as amended, but is taken into account, however in computing an adjustment used in determining the federal alternative minimum tax for certain corporations. Failure to comply with certain of such covenants of the City could cause the interest on the Bonds to be included in gross income for federal income tax purposes retroactively to the date of the issuance of the Bonds. Ownership of the Bonds may result in other federal tax consequences to certain taxpayers, and we express no opinion regarding any such collateral consequences arising with respect to the Bonds.

We express no opinion herein as to the accuracy, adequacy or completeness of the Official Statement relating to the Bonds or any other information furnished to any person in connection with any offer or sale of the Bonds.

In rendering this opinion, we have relied upon certifications of the City with respect to certain material facts solely within the knowledge of the City. Our opinion represents our legal judgment based upon our review of the law and the facts that we deem relevant to render such opinion, and is not a guarantee of result. This opinion is given as of the date hereof, and we assume no obligation to revise or supplement this opinion to reflect any facts or circumstances that may hereafter come to our attention or any changes in law that may hereafter occur.

Respectfully submitted,

CLJarik/lk

C-2


City of Aurora, Kane, DuPage, Will and Kendall Counties, Illinois Aurora, Illinois

Re: City of Aurora, Kane, DuPage, Will and Kendall Counties, Illinois $__________ General Obligation Refunding Bonds, Series 2012B


We hereby certify that we have examined a certified copy of the proceedings of the City Council of the City of Aurora, Kane, DuPage, Will and Kendall Counties, Illinois (the “City”), passed preliminary to the issuance by the City of its General Obligation Refunding Bonds, Series 2012B (the “Bonds”), in the aggregate principal amount of $_________, dated the date hereof, maturing on December 30 of the years and in the principal amounts, and bearing interest at the respective rates per annum, as follows:

YEAR

PRINCIPAL AMOUNT

INTEREST RATE

2013 $ % 2014 2015 2016 2017 2018 2019 2020 2022 2023 2024


The Bonds maturing on and after December 30, 2022, are subject to redemption prior to maturity at the option of the City, in whole or in part in any order of maturity selected by the City (less than all of a single maturity to be so redeemed to be selected by lot within such maturity in the manner provided in the ordinance of the City authorizing the issuance of the Bonds), on December 30, 2021, and on any date thereafter, at a redemption price of 100% of the principal amount thereof being redeemed plus accrued interest to the date fixed for redemption.

C-3


It is also our opinion that, subject to the compliance by the City with certain covenants, under present law, interest on the Bonds is excludible from the gross income of the owners thereof for federal income tax purposes, and is not included as an item of tax preference in computing the alternative minimum tax for individuals and corporations under the Internal Revenue Code of 1986, as amended, but is taken into account, however, in computing an adjustment used in determining the federal alternative minimum tax for certain corporations. Failure to comply with certain of such covenants of the City could cause the interest on the Bonds to be included in gross income for federal income tax purposes retroactively to the date of the issuance of the Bonds. Ownership of the Bonds may result in other federal tax consequences to certain taxpayers, and we express no opinion regarding any such collateral consequences arising with respect to the Bonds.


In rendering this opinion, we have relied upon certifications of the City with respect to certain material facts solely within the knowledge of the City, and on the mathematical computation of the yield on the Bonds and the yield on certain investments by Dunbar Breitweiser & Co., LLP, Certified Public Accountants. Our opinion represents our legal judgment based upon our review of the law and the facts that we deem relevant to render such opinion, and is not a guarantee of result. This opinion is given as of the date hereof, and we assume no obligation to revise or supplement this opinion to reflect any facts or circumstances that may hereafter come to our attention or any changes in law that may hereafter occur.


CLJarik/ljk

C-4



Re: City of Aurora, Kane, DuPage, Will and Kendall Counties, Illinois $__________ General Obligation Refunding Bonds, Series 2012C


We hereby certify that we have examined a certified copy of the proceedings of the City Council of the City of Aurora, Kane, DuPage, Will and Kendall Counties, Illinois (the “City”), passed preliminary to the issuance by the City of its General Obligation Refunding Bonds, Series 2012C (the “Bonds”), in the aggregate principal amount of $_________, dated the date hereof, maturing on December 30 of the years and in the principal amounts, and bearing interest at the respective rates per annum, as follows:

YEAR

PRINCIPAL AMOUNT

INTEREST RATE

2013 $ % 2014 2015 2016 2017


The Bonds are not subject to redemption prior to maturity at the option of the City.


C-5

It is also our opinion that, subject to the compliance by the City with certain covenants, under present law, interest on the Bonds is excludible from the gross income of the owners thereof for federal income tax purposes, and is not included as an item of tax preference in computing the alternative minimum tax for individuals and corporations under the Internal Revenue Code of 1986, as amended, but is taken into account, however, in computing an adjustment used in determining the federal alternative minimum tax for certain corporations. Failure to comply with certain of such covenants of the City could cause the interest on the Bonds to be included in gross income for federal income tax purposes retroactively to the date of the issuance of the Bonds. Ownership of the Bonds may result in other federal tax consequences to certain taxpayers, and we express no opinion regarding any such collateral consequences arising with respect to the Bonds.


In rendering this opinion, we have relied upon certifications of the City with respect to certain material facts solely within the knowledge of the City. Our opinion represents our legal judgment based upon our review of the law and the facts that we deem relevant to render such opinion, and is not a guarantee of result. This opinion is given as of the date hereof, and we assume no obligation to revise or supplement this opinion to reflect any facts or circumstances that may hereafter come to our attention or any changes in law that may hereafter occur.


CLJarik/ljk

C-6



Re: City of Aurora, Kane, DuPage, Will and Kendall Counties, Illinois $____________ Refunding Debt Certificates, Series 2012D (Special Service Area Number 34 Project)

We hereby certify that we have examined a certified copy of the proceedings of the City Council of the City of Aurora, Kane, DuPage, Will and Kendall Counties, Illinois (the “City”), passed preliminary to the issuance by the City of its Refunding Debt Certificates, Series 2012D (Special Service Area Number 34 Project) (the “Certificates”). The Certificates in the aggregate principal amount of $____________, are dated the date hereof, are issued in fully registered form, mature serially on December 30 of the years and in the respective principal amounts, and bear interest at the respective rates per annum, as follows:

YEAR

PRINCIPAL AMOUNT

INTEREST RATE

2013 $ % 2014 2015 2016 2017 2018 2019 2020


The Certificates are not subject to redemption prior to maturity at the option of the City.

We further certify that we have examined the form of Certificate prescribed for said issue, and find the same in due form of law, and in our opinion said issue, to the amount named, is valid and legally binding upon the City, constituting direct obligations of the City, payable from its corporate funds and such other sources as are pledged in the ordinance of the City authorizing the issuance of the Certificates and otherwise lawfully available, except as limited by bankruptcy, insolvency, moratorium, reorganization and other similar laws affecting creditor’s rights and by equitable principles , whether considered at law or in equity, including the exercise of judicial discretion.

C-7

It is also our opinion that, subject to the compliance by the City with certain covenants, under present law, interest on the Certificates is not includible in gross income of the owners thereof for federal income tax purposes, and is not included as an item of tax preference in computing the alternative minimum tax for individuals and corporations under the Internal Revenue Code of 1986, as amended, but is taken into account, however, in computing an adjustment used in determining the federal alternative minimum tax for certain corporations. Failure to comply with certain of such covenants of the City could cause interest on the Certificates to be included in gross income for federal income tax purposes retroactively to the date of issuance of the Certificates. Ownership of the Certificates may result in other federal tax consequences to certain taxpayers, and we express no opinion regarding any such collateral consequences arising with respect to the Certificates.

We express no opinion herein as to the accuracy or completeness of the Official Statement relating to the Certificates or any other information furnished to any person in connection with any offer or sale of the Bonds.

In rendering this opinion, we have relied upon certifications of the City and others with respect to certain material facts solely within the respective knowledge of the City and others, relating to the application of the proceeds of the Certificates. Our opinion represents our legal judgment based upon our review of the law and the facts that we deem relevant to render such opinion, and is not a guarantee of result. This opinion is given as of the date hereof, and we assume no obligation to revise or supplement this opinion to reflect any facts or circumstances that may hereafter come to our attention or any changes in law that may hereafter occur. CLJarik/ljk

C-8

__________________________________


LEFT BLANK

_________________________________

REVISED OFFICIAL BID FORM (OPEN SPEER AUCTION INTERNET SALE) City of Aurora September 25, 2012 44 East Downer Place Speer Financial, Inc. Aurora, Illinois 60507-3302

Members of the City Council:

For the $19,200,000 General Obligation Library Bonds, Series 2012A of the City of Aurora, Kane, DuPage, Kendall and Will Counties, Illinois, as described in the annexed Revised Official Notice of Sale, which is expressly made a part of this bid, we will pay you $_______________________ (no less than $19,120,000) for 2012A Bonds bearing interest as follows (each rate a multiple of 1/8 or 1/100 of 1%). MATURITIES – DECEMBER 30

$145,000 ... 2013 ________% $660,000 ... 2023 ________% $ 825,000 ... 2032 ________% 270,000 ... 2014 ________% 675,000 ... 2024 ________% 850,000 ... 2033 ________% 270,000 ... 2015 ________% 690,000 ... 2025 ________% 875,000 ... 2034 ________% 270,000 ... 2016 ________% 710,000 ... 2026 ________% 900,000 ... 2035 ________% 270,000 ... 2017 ________% 725,000 ... 2027 ________% 925,000 ... 2036 ________% 280,000 ... 2018 ________% 745,000 ... 2028 ________% 955,000 ... 2037 ________% 275,000 ... 2019 ________% 760,000 ... 2029 ________% 990,000 ... 2038 ________% 290,000 ... 2020 ________% 780,000 ... 2030 ________% 1,020,000 ... 2039 ________% 540,000 ... 2021 ________% 805,000 ... 2031 ________% 1,055,000 ... 2040 ________% 550,000 ... 2022 ________% 1,095,000 ... 2041 ________%

Consecutive maturities may be aggregated into no more than five term bonds at the option of the bidder, in which case the mandatory redemption provisions shall be on the same schedule as above.

Maturities: _______ Term Maturity _______ Maturities: _______ Term Maturity _______ Maturities: _______ Term Maturity _______

Maturities: _______ Term Maturity _______ Maturities: _______ Term Maturity _______

The 2012A Bonds are to be executed and delivered to us in accordance with the terms of this bid accompanied by the approving legal opinion of Chapman and Cutler LLP, Chicago, Illinois. The City will pay for the legal opinion. The underwriter agrees to apply for CUSIP numbers within 24 hours and pay the fee charged by the CUSIP Service Bureau and will accept the 2012A Bonds with the CUSIP numbers as entered on the 2012A Bonds.

As evidence of our good faith, we have wire transferred or enclosed herewith a check or Surety Bond payable to the order of the Treasurer of the City in

the amount of TWO PERCENT OF PAR (the “Deposit”) under the terms provided in your Revised Official Notice of Sale. Attached hereto is a list of members of our account on whose behalf this bid is made.

Form of Deposit Account Manager Information Bidders Option Insurance Check One: Name Certified/Cashier’s Check [ ] Financial Surety Bond [ ] Address Wire Transfer [ ] By Amount: $384,000 City State/Zip Direct Phone ( ) FAX Number ( ) E-Mail Address

The foregoing bid was accepted and the 2012A Bonds sold by ordinance of the City on September 25, 2012, and receipt is hereby acknowledged of

the good faith Deposit which is being held in accordance with the terms of the annexed Revised Official Notice of Sale. CITY OF AURORA KANE, DUPAGE, KENDALL AND WILL COUNTIES, ILLINOIS Mayor

----------------------- NOT PART OF THE BID ----------------------- (Calculation of true interest cost)

Gross Interest $

Less Premium/Plus Discount $

True Interest Cost $

True Interest Rate %

TOTAL BOND YEARS 359,173.33

AVERAGE LIFE 18.707 Years

We have purchased insurance from:

Name of Insurer

(Please fill in)

_____________________ Premium: _____________ Maturities: (Check One) [__] ______________Years [__] All

REVISED OFFICIAL NOTICE OF SALE

$19,200,000 CITY OF AURORA

Kane, DuPage, Kendall and Will Counties, Illinois General Obligation Library Bonds, Series 2012A

The City of Aurora, Kane, DuPage, Kendall and Will Counties, Illinois (the “City”), will receive electronic bids on the SpeerAuction (“SpeerAuction”) website address “www.SpeerAuction.com” for its $19,200,000 General Obligation Library Bonds, Series 2012A (the “2012A Bonds”), on an all or none basis between 9:00 A.M. and 9:15 A.M., C.D.T., Tuesday, September 25, 2012. To bid, bidders must have: (1) completed the registration form on the SpeerAuction website, and (2) requested and received admission to the City’s sale (as described below). Award will be made or all bids rejected at a meeting of the City on that date. The City reserves the right to change the date or time for receipt of bids. Any such change shall be made not less than twenty-four (24) hours prior to the revised date and time for receipt of the bids for the 2012A Bonds and shall be communicated by publishing the changes in the Amendments Page of the SpeerAuction webpage and through Thompson Municipal News.

The 2012A Bonds will constitute valid and legally binding obligations of the City payable both as to principal and interest from ad valorem taxes levied against all taxable property therein without limitation as to rate or amount, except that the rights of the owners of the 2012A Bonds and the enforceability of the 2012A Bonds may be limited by bankruptcy, insolvency, moratorium, reorganization and other similar laws affecting creditors’ rights and by equitable principles, whether considered at law or in equity, including the exercise of judicial discretion. Bidding Details Bidders should be aware of the following bidding details associated with the sale of the 2012A Bonds.

(1) All bids must be submitted on the SpeerAuction website at www.SpeerAuction.com. No telephone, telefax or personal delivery bids will be accepted. The use of SpeerAuction shall be at the bidder’s risk and expense and the City shall have no liability with respect thereto, including (without limitation) liability with respect to incomplete, late arriving and non-arriving bid. Any questions regarding bidding on the SpeerAuction website should be directed to Grant Street Group at (412) 391-5555 x 370.

(2) Bidders may change and submit bids as many times as they like during the bidding time period; provided, however, each and any bid submitted subsequent to a bidder’s initial bid must result in a lower true interest cost (“TIC”) with respect to a bid, when compared to the immediately preceding bid of such bidder. In the event that the revised bid does not produce a lower TIC with respect to a bid the prior bid will remain valid.

(3) If any bid in the auction becomes a leading bid two (2) minutes prior to the end of the auction, then the auction will be automatically extended by two (2) minutes from the time such bid was received by SpeerAuction. The auction end time will continue to be extended, indefinitely, until a single leading bid remains the leading bid for at least two minutes.

(4) The last valid bid submitted by a bidder before the end of the bidding time period will be compared to all other final bids submitted by others to determine the winning bidder or bidders.

(5) During the bidding, no bidder will see any other bidder’s bid, but bidders will be able to see the ranking of their bid relative to other bids (i.e., “Leader”, “Cover”, “3rd” etc.)

(6) On the Auction Page, bidders will be able to see whether a bid has been submitted.

Rules of SpeerAuction Bidders must comply with the Rules of SpeerAuction in addition to the requirements of this Revised Official Notice of Sale. To the extent there is a conflict between the Rules of SpeerAuction and this Revised Official Notice of Sale, this Revised Official Notice of Sale shall control. Rules

(1) A bidder (“Bidder”) submitting a winning bid (“Winning Bid”) is irrevocably obligated to purchase the 2012A Bonds at the rates and prices of the winning bid, if acceptable to the City, as set forth in the related Revised Official Notice of Sale. Winning Bids are not officially awarded to Winning Bidders until formally accepted by the City.

(2) Neither the City, Speer Financial, Inc., nor Grant Street Group (the “Auction Administrator”) is responsible for technical difficulties that result in loss of Bidder’s internet connection with SpeerAuction, slowness in transmission of bids, or other technical problems.

(3) If for any reason a Bidder is disconnected from the Auction Page during the auction after having submitted a Winning Bid, such bid is valid and binding upon such Bidder, unless the City exercises its right to reject bids, as set forth herein.

(4) Bids which generate error messages are not accepted until the error is corrected and bid is received prior to the deadline. (5) Bidders accept and agree to abide by all terms and conditions specified in the Revised Official Notice of Sale (including amendments,

if any) related to the auction. (6) Neither the City, Speer Financial, Inc., nor the Auction Administrator is responsible to any bidder for any defect or inaccuracy in the

Revised Official Notice of Sale, amendments, or Preliminary Official Statement as they appear on SpeerAuction.

City of Aurora, Kane, DuPage, Kendall and Will Counties, Illinois $19,200,000 General Obligation Library Bonds, Series 2012A Revised Official Notice of Sale (Page 2 of 4)

(7) Only Bidders who request and receive admission to an auction may submit bids. SpeerAuction and the Auction Administrator

reserve the right to deny access to SpeerAuction website to any Bidder, whether registered or not, at any time and for any reason whatsoever, in their sole and absolute discretion.

(8) Neither the City, Speer Financial, Inc., nor the Auction Administrator is responsible for protecting the confidentiality of a Bidder’s SpeerAuction password.

(9) If two bids submitted in the same auction by the same or two or more different Bidders result in same True Interest Cost, the first confirmed bid received by SpeerAuction prevails. Any change to a submitted bid constitutes a new bid, regardless of whether there is a corresponding change in True Interest Cost.

(10) Bidders must compare their final bids to those shown on the Observation Page immediately after the bidding time period ends, and if they disagree with the final results shown on the Observation Page they must report them to SpeerAuction within 15 minutes after the bidding time period ends. Regardless of the final results reported by SpeerAuction, 2012A Bonds are definitively awarded to the winning bidder only upon official award by the City. If, for any reason, the City fails to: (i) award 2012A Bonds to the winner reported by SpeerAuction, or (ii) deliver 2012A Bonds to winning bidder at settlement, neither the City, Speer Financial, Inc., nor the Auction Administrator will be liable for damages.

The City reserves the right to reject all proposals, to reject any bid proposal not conforming to this Revised Official Notice of Sale, and to waive any irregularity or informality with respect to any proposal. Additionally, the City reserves the right to modify or amend this Revised Official Notice of Sale; however, any such modification or amendment shall not be made less than twenty-four (24) hours prior to the date and time for receipt of bids on the 2012A Bonds and any such modification or amendment will be announced on the Amendments Page of the SpeerAuction webpage and through Thompson Municipal News. The 2012A Bonds will be in fully registered form in the denominations of $5,000 and integral multiples thereof in the name of Cede & Co. as nominee of The Depository Trust Company (“DTC”), New York, New York, to which principal and interest payments on the 2012A Bonds will be paid. Individual purchases will be in book-entry only form. Interest on each 2012A Bond shall be paid by check or draft of the Debt Registrar to the person in whose name such bond is registered at the close of business on the fifteenth day of the month in which an interest payment date occurs. The principal of the 2012A Bonds shall be payable in lawful money of the United States of America at the principal office maintained for the purpose by the Debt Registrar in Chicago, Illinois. Semiannual interest is due June 30 and December 30 of each year commencing June 30, 2013, and is payable by Amalgamated Bank of Chicago, Chicago, Illinois (the “Debt Registrar”). The 2012A Bonds are dated the date of delivery.

If the winning bidder is not a direct participant of DTC and does not have clearing privileges with DTC, the 2012A Bonds will be issued as Registered Bonds in the name of the purchaser. At the request of such winning bidder, the City will assist in the timely conversion of the Registered Bonds into book-entry bonds with DTC as described herein.

MATURITIES – DECEMBER 30

$145,000 ... 2013 $660,000 ... 2023 $ 825,000 ... 2032 270,000 ... 2014 675,000 ... 2024 850,000 ... 2033 270,000 ... 2015 690,000 ... 2025 875,000 ... 2034 270,000 ... 2016 710,000 ... 2026 900,000 ... 2035 270,000 ... 2017 725,000 ... 2027 925,000 ... 2036 280,000 ... 2018 745,000 ... 2028 955,000 ... 2037 275,000 ... 2019 760,000 ... 2029 990,000 ... 2038 290,000 ... 2020 780,000 ... 2030 1,020,000 ... 2039 540,000 ... 2021 805,000 ... 2031 1,055,000 ... 2040 550,000 ... 2022 1,095,000 ... 2041

Any consecutive maturities may be aggregated into no more than five term bonds at the option of the bidder,

in which case the mandatory redemption provisions shall be on the same schedule as above. The 2012A Bonds due December 30, 2013-2021, inclusive, are non-callable. The 2012A Bonds due December 30, 2022-2041, inclusive, are callable in whole or in part and on any date on or after December 30, 2021, at a price of par and accrued interest. If less than all the 2012A Bonds are called, they shall be redeemed in any order of maturity as determined by the City and within any maturity by lot. All interest rates must be in multiples of one-eighth or one one-hundredth of one percent (1/8 or 1/100 of 1%), and not more than one rate for a single maturity shall be specified. The rates bid for maturities shall be in non-descending order. The differential between the highest rate bid and the lowest rate bid shall not exceed five percent (5%). All bids must be for all of the 2012A Bonds, must be for not less than $19,120,000. Award of the 2012A Bonds: The 2012A Bonds will be awarded on the basis of true interest cost, determined in the following manner. True interest cost shall be computed by determining the annual interest rate (compounded semi-annually) necessary to discount the debt service payments on the 2012A Bonds from the payment dates thereof to the dated date and to the bid price. For the purpose of calculating true interest cost, the 2012A Bonds shall be deemed to become due in the principal amounts and at the times set forth in the table of maturities set forth above. In the event two or more qualifying bids produce the identical lowest true interest cost, the winning bid shall be the bid that was submitted first in time on the SpeerAuction webpage.


The 2012A Bonds will be awarded to the bidder complying with the terms of this Revised Official Notice of Sale whose bid produces the lowest true interest cost rate to the City as determined by the City’s Financial Advisor, which determination shall be conclusive and binding on all bidders; provided, that the City reserves the right to reject all bids or any non-conforming bid and reserves the right to waive any informality in any bid. Bidders should verify the accuracy of their final bids and compare them to the winning bids reported on the SpeerAuction Observation Page immediately after the bidding. The true interest cost of each bid will be computed by SpeerAuction and reported on the Observation Page of the SpeerAuction webpage immediately following the date and time for receipt of bids. These true interest costs are subject to verification by the City’s Financial Advisor, will be posted for information purposes only and will not signify an actual award of any bid or an official declaration of the winning bid. The City or its Financial Advisor will notify the bidder to whom the 2012A Bonds will be awarded, if and when such award is made. The winning bidder will be required to make the standard filings and maintain the appropriate records routinely required pursuant to MSRB Rules G-8, G-11 and G-32. The winning bidder will be required to pay the standard MSRB charge for 2012A Bonds purchased. In addition, the winning bidder who is a member of the Securities Industry and Financial Markets Association (“SIFMA”) will be required to pay SIFMA’s standard charge per bond.

Each bid shall be accompanied by a certified or cashier’s check on, or a wire transfer from, a solvent bank or trust company or a Financial Surety Bond for TWO PERCENT OF PAR payable to the Treasurer of the City 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 2012A Bonds and all others will be promptly returned. Should the successful bidder fail to take up and pay for the 2012A Bonds when tendered in accordance with this Notice of Sale and said bid, said Deposit shall be retained as full and liquidated damages to the City caused by failure of the bidder to carry out the offer of purchase. Such Deposit will otherwise be applied on the purchase price upon delivery of the 2012A Bonds. No interest on the Deposit will accrue to the purchaser.

If a wire transfer is used for the Deposit, it must be sent according to the following wire instructions:

Amalgamated Bank of Chicago Corporate Trust

One West Monroe Chicago, IL 60603 ABA # 071003405

Credit To: 3281 Speer Bidding Escrow RE: City of Aurora, Kane, DuPage, Kendall and Will Counties, Illinois bid for

$19,200,000 General Obligation Library Bonds, Series 2012A

The wire shall arrive in such account no later than 30 minutes prior to the date and time of the sale of the 2012A Bonds. Contemporaneously with such wire transfer, the bidder shall send an email to [email protected] with the following information: (1) indication that a wire transfer has been made, (2) the amount of the wire transfer, (3) the issue to which it applies, and (4) the return wire instructions if such bidder is not awarded the 2012A Bonds. The City and any bidder who chooses to wire the Deposit hereby agree irrevocably that Speer Financial, Inc. (“Speer”) shall be the escrow holder of the Deposit wired to such account subject only to these conditions and duties: (i) if the bid is not accepted, Speer shall, at its expense, promptly return the Deposit amount to the unsuccessful bidder; (ii) if the bid is accepted, the Deposit shall be forwarded to the City; (iii) Speer shall bear all costs of maintaining the escrow account and returning the funds to the bidder; (iv) Speer shall not be an insurer of the Deposit amount and shall have no liability except if it willfully fails to perform, or recklessly disregards, its duties specified herein; and (v) income earned on the Deposit, if any, shall be retained by Speer.

If a Financial Surety Bond is used for the Deposit, 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 Speer 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 2012A 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 Speer, or the City not later than 3:00 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. The City covenants and agrees to enter into a written agreement or contract, constituting an undertaking (the “Undertaking”) to provide ongoing disclosure about the City for the benefit of the beneficial owners of the 2012A Bonds on or before the date of delivery of the 2012A Bonds as required under Section (b)(5) of Rule 15c2-12 (the “Rule”) adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934. The Undertaking shall be as described in the Official Statement, with such changes as may be agreed in writing by the Underwriter. The City represents that it is in compliance with each and every undertaking previously entered into it pursuant to the Rule. The Underwriter's obligation to purchase the 2012A Bonds shall be conditioned upon the City delivering the Undertaking on or before the date of delivery of the 2012A Bonds.


By submitting a bid, any bidder makes the representation that it understands Bond Counsel represents the City in the 2012A Bond transaction and, if such bidder has retained Bond Counsel in an unrelated matter, such bidder represents that the signatory to the bid is duly authorized to, and does consent to and waive of and on behalf of such bidder any conflict of interest of Bond Counsel arising from any adverse position to the City in this matter; such consent and waiver shall supersede any formalities otherwise required in any separate understandings, guidelines or contractual arrangements between the bidder and Bond Counsel. The 2012A 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 or about October 2, 2012. Should delivery be delayed beyond sixty (60) days from the date of sale for any reason beyond the control of the City except failure of performance by the purchaser, the City may cancel the award or the purchaser may withdraw the good faith deposit and thereafter the purchaser's interest in and liability for the 2012A Bonds will cease. The Official Statement, when further supplemented by an addendum or addenda specifying the maturity dates, principal amounts, and interest rates of the 2012A Bonds, and any other information required by law or deemed appropriate by the City, shall constitute a “Final Official Statement” of the City with respect to the 2012A Bonds, as that term is defined in the Rule. By awarding the 2012A Bonds to any underwriter or underwriting syndicate, the City agrees that, no more than seven (7) business days after the date of such award, it shall provide, without cost to the senior managing underwriter of the syndicate to which the 2012A Bonds are awarded, up to 100 copies of the Final Official Statement to permit each “Participating Underwriter” (as that term is defined in the Rule) to comply with the provisions of such Rule. The City shall treat the senior managing underwriter of the syndicate to which the 2012A Bonds are awarded as its designated agent for purposes of distributing copies of the Final Official Statement to each Participating Underwriter. Any underwriter executing and delivering a Revised Official Bid Form with respect to the 2012A Bonds agrees thereby that if its bid is accepted by the City it shall enter into a contractual relationship with all Participating Underwriters of the 2012A Bonds for purposes of assuring the receipt by each such Participating Underwriter of the Final Official Statement. By submission of its bid, the senior managing underwriter of the successful bidder agrees to supply all necessary pricing information and any Participating Underwriter identification necessary to complete the Official Statement within 24 hours after award of the 2012A Bonds. Additional copies of the Final Official Statement may be obtained by Participating Underwriters from the printer at cost. The City will, at its expense, deliver the 2012A Bonds to the purchaser in New York, New York, through the facilities of DTC and will pay for the bond attorney’s opinion. At the time of closing, the City will also furnish to the purchaser the following documents, each dated as of the date of delivery of the 2012A Bonds: (1) the unqualified opinion of Chapman and Cutler LLP, Chicago, Illinois, that the 2012A Bonds are lawful and enforceable obligations of the City in accordance with their terms and are payable from ad valorem taxes levied against all taxable property of the City, except that the rights of the owners of the 2012A Bonds and the enforceability of the 2012A Bonds may be limited by bankruptcy, insolvency, moratorium, reorganization and other similar laws affecting creditors’ rights and by equitable principles, whether considered at law or in equity, including the exercise of judicial discretion; (2) the opinion of said attorneys that the interest on the 2012A Bonds is exempt from federal income taxes as and to the extent set forth in the Official Statement for the 2012A Bonds; and (3) a no litigation certificate by the City. The City does not intend to designate the 2012A Bonds as “qualified tax-exempt obligations” pursuant to the small issuer exception provided by Section 265(b) (3) of the Internal Revenue Code of 1986, as amended.

The City has authorized the printing and distribution of an Official Statement containing pertinent information relative to the City and the 2012A Bonds. Copies of such Official Statement or additional information may be obtained from Mr. Brian Caputo, Chief Financial Officer/City Treasurer, City of Aurora, 44 East Downer Place, Aurora, Illinois 60507-3302 or an electronic copy of this Official Statement is available from the www.speerfinancial.com web site under “Debt Auction Center/Competitive Sales Calendar” from the Independent Public Finance Consultants to the City, Speer Financial, Inc., One North LaSalle Street, Suite 4100, Chicago, Illinois 60602, telephone (312) 346-3700.

/s/ THOMAS J. WEISNER /s/ BRIAN W. CAPUTO Mayor Chief Financial Officer/City Treasurer CITY OF AURORA CITY OF AURORA Kane, DuPage, Kendall and Will Counties, Illinois Kane, DuPage, Kendall and Will Counties, Illinois

OFFICIAL BID FORM (OPEN SPEER AUCTION INTERNET SALE) City of Aurora September 11, 2012 44 East Downer Place Speer Financial, Inc. Aurora, Illinois 60507-3302


For the $7,020,000* General Obligation Refunding Bonds, Series 2012B of the City of Aurora, Kane, DuPage, Kendall and Will Counties, Illinois, as described in the annexed Official Notice of Sale, which is expressly made a part of this bid, we will pay you $_______________________ (no less than $6,970,000) for 2012B Bonds bearing interest as follows (each rate a multiple of 1/8 or 1/100 of 1%). The discount is subject to adjustment allowing the same $___________ gross spread per $1,000 bond as bid herein. MATURITIES* - DECEMBER 30

$505,000 ... 2013 ________% $565,000 ... 2017 ________% $610,000 ... 2021 ________% 545,000 ... 2014 ________% 570,000 ... 2018 ________% 630,000 ... 2022 ________% 550,000 ... 2015 ________% 585,000 ... 2019 ________% 645,000 ... 2023 ________% 550,000 ... 2016 ________% 600,000 ... 2020 ________% 665,000 ... 2024 ________%

Consecutive maturities may be aggregated into no more than five term bonds at the option of the bidder, in which case the mandatory redemption provisions shall be on the same schedule as above.

Maturities: _______ Term Maturity _______ Maturities: _______ Term Maturity _______ Maturities: _______ Term Maturity _______


The 2012B Bonds are to be executed and delivered to us in accordance with the terms of this bid accompanied by the approving legal opinion of Chapman and Cutler LLP, Chicago, Illinois. The City will pay for the legal opinion. The underwriter agrees to apply for CUSIP numbers within 24 hours and pay the fee charged by the CUSIP Service Bureau and will accept the 2012B Bonds with the CUSIP numbers as entered on the 2012B Bonds.


the amount of TWO PERCENT OF PAR (the “Deposit”) under the terms provided in your Official Notice of Sale. Attached hereto is a list of members of our account on whose behalf this bid is made.


The foregoing bid was accepted and the 2012B Bonds sold by ordinance of the City on September 11, 2012, and receipt is hereby acknowledged of

the good faith Deposit which is being held in accordance with the terms of the annexed Official Notice of Sale. CITY OF AURORA KANE, DUPAGE, KENDALL AND WILL COUNTIES, ILLINOIS *Subject to change. Mayor


Bid Post Sale Revision

Gross Interest $







Name of Insurer

(Please fill in)


OFFICIAL NOTICE OF SALE

$7,020,000* CITY OF AURORA

Kane, DuPage, Kendall and Will Counties, Illinois General Obligation Refunding Bonds, Series 2012B

The City of Aurora, Kane, DuPage, Kendall and Will Counties, Illinois (the “City”), will receive electronic bids on the SpeerAuction (“SpeerAuction”) website address “www.SpeerAuction.com” for its $7,020,000* General Obligation Refunding Bonds, Series 2012B (the “2012B Bonds”), on an all or none basis between 9:30 A.M. and 9:45 A.M., C.S.T., Tuesday, September 11, 2012. To bid, bidders must have: (1) completed the registration form on the SpeerAuction website, and (2) requested and received admission to the City’s sale (as described below). Award will be made or all bids rejected at a meeting of the City on that date. The City reserves the right to change the date or time for receipt of bids. Any such change shall be made not less than twenty-four (24) hours prior to the revised date and time for receipt of the bids for the 2012B Bonds and shall be communicated by publishing the changes in the Amendments Page of the SpeerAuction webpage and through Thompson Municipal News.

The 2012B Bonds will constitute valid and legally binding obligations of the City payable both as to principal and interest from ad valorem taxes levied against all taxable property therein without limitation as to rate or amount, except that the rights of the owners of the 2012B Bonds and the enforceability of the 2012B Bonds may be limited by bankruptcy, insolvency, moratorium, reorganization and other similar laws affecting creditors’ rights and by equitable principles, whether considered at law or in equity, including the exercise of judicial discretion. Bidding Details Bidders should be aware of the following bidding details associated with the sale of the 2012B Bonds.







Rules of SpeerAuction Bidders must comply with the Rules of SpeerAuction in addition to the requirements of this Official Notice of Sale. To the extent there is a conflict between the Rules of SpeerAuction and this Official Notice of Sale, this Official Notice of Sale shall control. Rules

(1) A bidder (“Bidder”) submitting a winning bid (“Winning Bid”) is irrevocably obligated to purchase the 2012B Bonds at the rates and prices of the winning bid, if acceptable to the City, as set forth in the related Official Notice of Sale. Winning Bids are not officially awarded to Winning Bidders until formally accepted by the City.



(4) Bids which generate error messages are not accepted until the error is corrected and bid is received prior to the deadline. (5) Bidders accept and agree to abide by all terms and conditions specified in the Official Notice of Sale (including amendments, if any)

related to the auction.

*Subject to change.

City of Aurora, Kane, DuPage, Kendall and Will Counties, Illinois $7,020,000* General Obligation Refunding Bonds, Series 2012B Official Notice of Sale (Page 2 of 4)

(6) Neither the City, Speer Financial, Inc., nor the Auction Administrator is responsible to any bidder for any defect or inaccuracy in the

Official Notice of Sale, amendments, or Preliminary Official Statement as they appear on SpeerAuction. (7) Only Bidders who request and receive admission to an auction may submit bids. SpeerAuction and the Auction Administrator




(10) Bidders must compare their final bids to those shown on the Observation Page immediately after the bidding time period ends, and if they disagree with the final results shown on the Observation Page they must report them to SpeerAuction within 15 minutes after the bidding time period ends. Regardless of the final results reported by SpeerAuction, 2012B Bonds are definitively awarded to the winning bidder only upon official award by the City. If, for any reason, the City fails to: (i) award 2012B Bonds to the winner reported by SpeerAuction, or (ii) deliver 2012B Bonds to winning bidder at settlement, neither the City, Speer Financial, Inc., nor the Auction Administrator will be liable for damages.

The City reserves the right to reject all proposals, to reject any bid proposal not conforming to this Official Notice of Sale, and to waive any irregularity or informality with respect to any proposal. Additionally, the City reserves the right to modify or amend this Official Notice of Sale; however, any such modification or amendment shall not be made less than twenty-four (24) hours prior to the date and time for receipt of bids on the 2012B Bonds and any such modification or amendment will be announced on the Amendments Page of the SpeerAuction webpage and through Thompson Municipal News. The 2012B Bonds will be in fully registered form in the denominations of $5,000 and integral multiples thereof in the name of Cede & Co. as nominee of The Depository Trust Company (“DTC”), New York, New York, to which principal and interest payments on the 2012B Bonds will be paid. Individual purchases will be in book-entry only form. Interest on each 2012B Bond shall be paid by check or draft of the Debt Registrar to the person in whose name such bond is registered at the close of business on the fifteenth day of the month in which an interest payment date occurs. The principal of the 2012B Bonds shall be payable in lawful money of the United States of America at the principal office maintained for the purpose by the Debt Registrar in Chicago, Illinois. Semiannual interest is due June 30 and December 30 of each year commencing June 30, 2013, and is payable by Amalgamated Bank of Chicago, Chicago, Illinois (the “Debt Registrar”). The 2012B Bonds are dated the date of delivery.

If the winning bidder is not a direct participant of DTC and does not have clearing privileges with DTC, the 2012B Bonds will be issued as Registered Bonds in the name of the purchaser. At the request of such winning bidder, the City will assist in the timely conversion of the Registered Bonds into book-entry bonds with DTC as described herein.

MATURITIES* – DECEMBER 30

$505,000 ... 2013 $565,000 ... 2017 $610,000 ... 2021 545,000 ... 2014 570,000 ... 2018 630,000 ... 2022 550,000 ... 2015 585,000 ... 2019 645,000 ... 2023 550,000 ... 2016 600,000 ... 2020 665,000 ... 2024

Any consecutive maturities may be aggregated into no more than five term bonds at the option of the bidder,

in which case the mandatory redemption provisions shall be on the same schedule as above. The 2012B Bonds due December 30, 2013-2021, inclusive, are non-callable. 2012B Bonds due December 30, 2022-2024, inclusive, are callable in whole or in part and on any date on or after December 30, 2021, at a price of par and accrued interest. If less than all the 2012B Bonds are called, they shall be redeemed in any order of maturity as determined by the City and within any maturity by lot. All interest rates must be in multiples of one-eighth or one one-hundredth of one percent (1/8 or 1/100 of 1%), and not more than one rate for a single maturity shall be specified. The rates bid for maturities shall be in non-descending order. The differential between the highest rate bid and the lowest rate bid shall not exceed three percent (3%). All bids must be for all of the 2012B Bonds, must be for not less than $6,970,000.

Award of the 2012B Bonds: The 2012B Bonds will be awarded on the basis of true interest cost, determined in the following manner. True interest cost shall be computed by determining the annual interest rate (compounded semi-annually) necessary to discount the debt service payments on the 2012B Bonds from the payment dates thereof to the dated date and to the bid price. For the purpose of calculating true interest cost, the 2012B Bonds shall be deemed to become due in the principal amounts and at the times set forth in the table of maturities set forth above. In the event two or more qualifying bids produce the identical lowest true interest cost, the winning bid shall be the bid that was submitted first in time on the SpeerAuction webpage.

*Subject to change.


The 2012B Bonds will be awarded to the bidder complying with the terms of this Official Notice of Sale whose bid produces the lowest true interest cost rate to the City as determined by the City’s Financial Advisor, which determination shall be conclusive and binding on all bidders; provided, that the City reserves the right to reject all bids or any non-conforming bid and reserves the right to waive any informality in any bid. Bidders should verify the accuracy of their final bids and compare them to the winning bids reported on the SpeerAuction Observation Page immediately after the bidding.

The discount, if any, is subject to pro rata adjustment if the maturity amounts of the 2012B Bonds are changed, allowing the same dollar amount of profit per $1,000 bond as submitted on the Official Bid Form. The dollar amount of profit must be written on the Official Bid Form for any adjustment to be allowed, and is subject to verification. The true interest cost of each bid will be computed by SpeerAuction and reported on the Observation Page of the SpeerAuction webpage immediately following the date and time for receipt of bids. These true interest costs are subject to verification by the City’s Financial Advisor, will be posted for information purposes only and will not signify an actual award of any bid or an official declaration of the winning bid. The City or its Financial Advisor will notify the bidder to whom the 2012B Bonds will be awarded, if and when such award is made. The winning bidder will be required to make the standard filings and maintain the appropriate records routinely required pursuant to MSRB Rules G-8, G-11 and G-32. The winning bidder will be required to pay the standard MSRB charge for 2012B Bonds purchased. In addition, the winning bidder who is a member of the Securities Industry and Financial Markets Association (“SIFMA”) will be required to pay SIFMA’s standard charge per bond.

Each bid shall be accompanied by a certified or cashier’s check on, or a wire transfer from, a solvent bank or trust company or a Financial Surety Bond for TWO PERCENT OF PAR payable to the Treasurer of the City 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 2012B Bonds and all others will be promptly returned. Should the successful bidder fail to take up and pay for the 2012B Bonds when tendered in accordance with this Notice of Sale and said bid, said Deposit shall be retained as full and liquidated damages to the City caused by failure of the bidder to carry out the offer of purchase. Such Deposit will otherwise be applied on the purchase price upon delivery of the 2012B Bonds. No interest on the Deposit will accrue to the purchaser.





$7,020,000* General Obligation Refunding Bonds, Series 2012B

The wire shall arrive in such account no later than 30 minutes prior to the date and time of the sale of the 2012B Bonds. Contemporaneously with such wire transfer, the bidder shall send an email to [email protected] with the following information: (1) indication that a wire transfer has been made, (2) the amount of the wire transfer, (3) the issue to which it applies, and (4) the return wire instructions if such bidder is not awarded the 2012B Bonds. The City and any bidder who chooses to wire the Deposit hereby agree irrevocably that Speer Financial, Inc. (“Speer”) shall be the escrow holder of the Deposit wired to such account subject only to these conditions and duties: (i) if the bid is not accepted, Speer shall, at its expense, promptly return the Deposit amount to the unsuccessful bidder; (ii) if the bid is accepted, the Deposit shall be forwarded to the City; (iii) Speer shall bear all costs of maintaining the escrow account and returning the funds to the bidder; (iv) Speer shall not be an insurer of the Deposit amount and shall have no liability except if it willfully fails to perform, or recklessly disregards, its duties specified herein; and (v) income earned on the Deposit, if any, shall be retained by Speer.


Illinois and such bond must be submitted to Speer 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 2012B 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 Speer, or the City not later than 3:00 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.

The City covenants and agrees to enter into a written agreement or contract, constituting an undertaking (the “Undertaking”) to provide ongoing disclosure about the City for the benefit of the beneficial owners of the 2012B Bonds on or before the date of delivery of the 2012B Bonds as required under Section (b)(5) of Rule 15c2-12 (the “Rule”) adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934. The Undertaking shall be as described in the Official Statement, with such changes as may be agreed in writing by the Underwriter. The City represents that it is in compliance with each and every undertaking previously entered into it pursuant to the Rule. *Subject to change.


The Underwriter's obligation to purchase the 2012B Bonds shall be conditioned upon the City delivering the Undertaking on or before the date of delivery of the 2012B Bonds.

By submitting a bid, any bidder makes the representation that it understands Bond Counsel represents the City in the 2012B Bond

transaction and, if such bidder has retained Bond Counsel in an unrelated matter, such bidder represents that the signatory to the bid is duly authorized to, and does consent to and waive of and on behalf of such bidder any conflict of interest of Bond Counsel arising from any adverse position to the City in this matter; such consent and waiver shall supersede any formalities otherwise required in any separate understandings, guidelines or contractual arrangements between the bidder and Bond Counsel. The 2012B 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 or about October 2, 2012. Should delivery be delayed beyond sixty (60) days from the date of sale for any reason beyond the control of the City except failure of performance by the purchaser, the City may cancel the award or the purchaser may withdraw the good faith deposit and thereafter the purchaser's interest in and liability for the 2012B Bonds will cease. The Official Statement, when further supplemented by an addendum or addenda specifying the maturity dates, principal amounts, and interest rates of the 2012B Bonds, and any other information required by law or deemed appropriate by the City, shall constitute a “Final Official Statement” of the City with respect to the 2012B Bonds, as that term is defined in the Rule. By awarding the 2012B Bonds to any underwriter or underwriting syndicate, the City agrees that, no more than seven (7) business days after the date of such award, it shall provide, without cost to the senior managing underwriter of the syndicate to which the 2012B Bonds are awarded, up to 100 copies of the Final Official Statement to permit each “Participating Underwriter” (as that term is defined in the Rule) to comply with the provisions of such Rule. The City shall treat the senior managing underwriter of the syndicate to which the 2012B Bonds are awarded as its designated agent for purposes of distributing copies of the Final Official Statement to each Participating Underwriter. Any underwriter executing and delivering an Official Bid Form with respect to the 2012B Bonds agrees thereby that if its bid is accepted by the City it shall enter into a contractual relationship with all Participating Underwriters of the 2012B Bonds for purposes of assuring the receipt by each such Participating Underwriter of the Final Official Statement. By submission of its bid, the senior managing underwriter of the successful bidder agrees to supply all necessary pricing information and any Participating Underwriter identification necessary to complete the Official Statement within 24 hours after award of the 2012B Bonds. Additional copies of the Final Official Statement may be obtained by Participating Underwriters from the printer at cost. The City will, at its expense, deliver the 2012B Bonds to the purchaser in New York, New York, through the facilities of DTC and will pay for the bond attorney’s opinion. At the time of closing, the City will also furnish to the purchaser the following documents, each dated as of the date of delivery of the 2012B Bonds: (1) the unqualified opinion of Chapman and Cutler LLP, Chicago, Illinois, that the 2012B Bonds are lawful and enforceable obligations of the City in accordance with their terms and are payable from ad valorem taxes levied against all taxable property of the City, except that the rights of the owners of the 2012B Bonds and the enforceability of the 2012B Bonds may be limited by bankruptcy, insolvency, moratorium, reorganization and other similar laws affecting creditors’ rights and by equitable principles, whether considered at law or in equity, including the exercise of judicial discretion; (2) the opinion of said attorneys that the interest on the 2012B Bonds is exempt from federal income taxes as and to the extent set forth in the Official Statement for the 2012B Bonds; and (3) a no litigation certificate by the City. The City does not intend to designate the 2012B Bonds as “qualified tax-exempt obligations” pursuant to the small issuer exception provided by Section 265(b) (3) of the Internal Revenue Code of 1986, as amended.

The City has authorized the printing and distribution of an Official Statement containing pertinent information relative to the City and the 2012B Bonds. Copies of such Official Statement or additional information may be obtained from Mr. Brian Caputo, Chief Financial Officer/City Treasurer, City of Aurora, 44 East Downer Place, Aurora, Illinois 60507-3302 or an electronic copy of this Official Statement is available from the www.speerfinancial.com web site under “Debt Auction Center/Competitive Sales Calendar” from the Independent Public Finance Consultants to the City, Speer Financial, Inc., One North LaSalle Street, Suite 4100, Chicago, Illinois 60602, telephone (312) 346-3700.

/s/ THOMAS J. WEISNER /s/ BRIAN W. CAPUTO Mayor Chief Financial Officer/City Treasurer CITY OF AURORA CITY OF AURORA Kane, DuPage, Kendall and Will Counties, Illinois Kane, DuPage, Kendall and Will Counties, Illinois *Subject to change.



For the $3,315,000* General Obligation Refunding Bonds, Series 2012C of the City of Aurora, Kane, DuPage, Kendall and Will Counties, Illinois, as described in the annexed Official Notice of Sale, which is expressly made a part of this bid, we will pay you $_______________________ (no less than $3,300,000) for 2012C Bonds bearing interest as follows (each rate a multiple of 1/8 or 1/100 of 1%). The discount is subject to adjustment allowing the same $___________ gross spread per $1,000 bond as bid herein. MATURITIES* - DECEMBER 30

$645,000 ... 2013 ________% $660,000 ... 2015 ________% $675,000 ... 2016 ________% 655,000 ... 2014 ________% 680,000 ... 2017 ________%

Consecutive maturities may be aggregated into no more than two term bonds at the option of the bidder, in which case the mandatory redemption provisions shall be on the same schedule as above.


The 2012C Bonds are to be executed and delivered to us in accordance with the terms of this bid accompanied by the approving legal opinion of Chapman and Cutler LLP, Chicago, Illinois. The City will pay for the legal opinion. The underwriter agrees to apply for CUSIP numbers within 24 hours and pay the fee charged by the CUSIP Service Bureau and will accept the 2012C Bonds with the CUSIP numbers as entered on the 2012C Bonds.




The foregoing bid was accepted and the 2012C Bonds sold by ordinance of the City on September 11, 2012, and receipt is hereby acknowledged of

the good faith Deposit which is being held in accordance with the terms of the annexed Official Notice of Sale. CITY OF AURORA KANE, DUPAGE, KENDALL AND WILL COUNTIES, ILLINOIS *Subject to change. Mayor



Gross Interest $







Name of Insurer

(Please fill in)




Kane, DuPage, Kendall and Will Counties, Illinois General Obligation Refunding Bonds, Series 2012C

The City of Aurora, Kane, DuPage, Kendall and Will Counties, Illinois (the “City”), will receive electronic bids on the SpeerAuction (“SpeerAuction”) website address “www.SpeerAuction.com” for its $3,315,000* General Obligation Refunding Bonds, Series 2012C (the “2012C Bonds”), on an all or none basis between 10:00 A.M. and 10:15 A.M., C.S.T., Tuesday, September 11, 2012. To bid, bidders must have: (1) completed the registration form on the SpeerAuction website, and (2) requested and received admission to the City’s sale (as described below). Award will be made or all bids rejected at a meeting of the City on that date. The City reserves the right to change the date or time for receipt of bids. Any such change shall be made not less than twenty-four (24) hours prior to the revised date and time for receipt of the bids for the 2012C Bonds and shall be communicated by publishing the changes in the Amendments Page of the SpeerAuction webpage and through Thompson Municipal News.

The 2012C Bonds will constitute valid and legally binding obligations of the City payable both as to principal and interest from ad valorem taxes levied against all taxable property therein without limitation as to rate or amount, except that the rights of the owners of the 2012C Bonds and the enforceability of the 2012C Bonds may be limited by bankruptcy, insolvency, moratorium, reorganization and other similar laws affecting creditors’ rights and by equitable principles, whether considered at law or in equity, including the exercise of judicial discretion. Bidding Details Bidders should be aware of the following bidding details associated with the sale of the 2012C Bonds.








(1) A bidder (“Bidder”) submitting a winning bid (“Winning Bid”) is irrevocably obligated to purchase the 2012C Bonds at the rates and prices of the winning bid, if acceptable to the City, as set forth in the related Official Notice of Sale. Winning Bids are not officially awarded to Winning Bidders until formally accepted by the City.




related to the auction.

*Subject to change.

City of Aurora, Kane, DuPage, Kendall and Will Counties, Illinois $3,315,000* General Obligation Refunding Bonds, Series 2012C Official Notice of Sale (Page 2 of 4)

(6) Neither the City, Speer Financial, Inc., nor the Auction Administrator is responsible to any bidder for any defect or inaccuracy in the

Official Notice of Sale, amendments, or Preliminary Official Statement as they appear on SpeerAuction. (7) Only Bidders who request and receive admission to an auction may submit bids. SpeerAuction and the Auction Administrator




(10) Bidders must compare their final bids to those shown on the Observation Page immediately after the bidding time period ends, and if they disagree with the final results shown on the Observation Page they must report them to SpeerAuction within 15 minutes after the bidding time period ends. Regardless of the final results reported by SpeerAuction, 2012C Bonds are definitively awarded to the winning bidder only upon official award by the City. If, for any reason, the City fails to: (i) award 2012C Bonds to the winner reported by SpeerAuction, or (ii) deliver 2012C Bonds to winning bidder at settlement, neither the City, Speer Financial, Inc., nor the Auction Administrator will be liable for damages.

The City reserves the right to reject all proposals, to reject any bid proposal not conforming to this Official Notice of Sale, and to waive any irregularity or informality with respect to any proposal. Additionally, the City reserves the right to modify or amend this Official Notice of Sale; however, any such modification or amendment shall not be made less than twenty-four (24) hours prior to the date and time for receipt of bids on the 2012C Bonds and any such modification or amendment will be announced on the Amendments Page of the SpeerAuction webpage and through Thompson Municipal News. The 2012C Bonds will be in fully registered form in the denominations of $5,000 and integral multiples thereof in the name of Cede & Co. as nominee of The Depository Trust Company (“DTC”), New York, New York, to which principal and interest payments on the 2012C Bonds will be paid. Individual purchases will be in book-entry only form. Interest on each 2012C Bond shall be paid by check or draft of the Debt Registrar to the person in whose name such bond is registered at the close of business on the fifteenth day of the month in which an interest payment date occurs. The principal of the 2012C Bonds shall be payable in lawful money of the United States of America at the principal office maintained for the purpose by the Debt Registrar in Chicago, Illinois. Semiannual interest is due June 30 and December 30 of each year commencing June 30, 2013, and is payable by Amalgamated Bank of Chicago, Chicago, Illinois (the “Debt Registrar”). The 2012C Bonds are dated the date of delivery.

If the winning bidder is not a direct participant of DTC and does not have clearing privileges with DTC, the 2012C Bonds will be issued as Registered Bonds in the name of the purchaser. At the request of such winning bidder, the City will assist in the timely conversion of the Registered Bonds into book-entry bonds with DTC as described herein.


$645,000 ... 2013 $660,000 ... 2015 $675,000 ... 2016 655,000 ... 2014 680,000 ... 2017

Any consecutive maturities may be aggregated into no more than two term bonds at the option of the bidder,

in which case the mandatory redemption provisions shall be on the same schedule as above. The 2012C Bonds are not subject to optional redemption prior to maturity. All interest rates must be in multiples of one-eighth or one one-hundredth of one percent (1/8 or 1/100 of 1%), and not more than one rate for a single maturity shall be specified. The rates bid for maturities shall be in non-descending order. The differential between the highest rate bid and the lowest rate bid shall not exceed two percent (2%). All bids must be for all of the 2012C Bonds, must be for not less than $3,300,000.

Award of the 2012C Bonds: The 2012C Bonds will be awarded on the basis of true interest cost, determined in the following manner. True interest cost shall be computed by determining the annual interest rate (compounded semi-annually) necessary to discount the debt service payments on the 2012C Bonds from the payment dates thereof to the dated date and to the bid price. For the purpose of calculating true interest cost, the 2012C Bonds shall be deemed to become due in the principal amounts and at the times set forth in the table of maturities set forth above. In the event two or more qualifying bids produce the identical lowest true interest cost, the winning bid shall be the bid that was submitted first in time on the SpeerAuction webpage.

*Subject to change.


The 2012C Bonds will be awarded to the bidder complying with the terms of this Official Notice of Sale whose bid produces the lowest true interest cost rate to the City as determined by the City’s Financial Advisor, which determination shall be conclusive and binding on all bidders; provided, that the City reserves the right to reject all bids or any non-conforming bid and reserves the right to waive any informality in any bid. Bidders should verify the accuracy of their final bids and compare them to the winning bids reported on the SpeerAuction Observation Page immediately after the bidding.

The discount, if any, is subject to pro rata adjustment if the maturity amounts of the 2012C Bonds are changed, allowing the same dollar amount of profit per $1,000 bond as submitted on the Official Bid Form. The dollar amount of profit must be written on the Official Bid Form for any adjustment to be allowed, and is subject to verification. The true interest cost of each bid will be computed by SpeerAuction and reported on the Observation Page of the SpeerAuction webpage immediately following the date and time for receipt of bids. These true interest costs are subject to verification by the City’s Financial Advisor, will be posted for information purposes only and will not signify an actual award of any bid or an official declaration of the winning bid. The City or its Financial Advisor will notify the bidder to whom the 2012C Bonds will be awarded, if and when such award is made. The winning bidder will be required to make the standard filings and maintain the appropriate records routinely required pursuant to MSRB Rules G-8, G-11 and G-32. The winning bidder will be required to pay the standard MSRB charge for 2012C Bonds purchased. In addition, the winning bidder who is a member of the Securities Industry and Financial Markets Association (“SIFMA”) will be required to pay SIFMA’s standard charge per bond.

Each bid shall be accompanied by a certified or cashier’s check on, or a wire transfer from, a solvent bank or trust company or a Financial Surety Bond for TWO PERCENT OF PAR payable to the Treasurer of the City 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 2012C Bonds and all others will be promptly returned. Should the successful bidder fail to take up and pay for the 2012C Bonds when tendered in accordance with this Notice of Sale and said bid, said Deposit shall be retained as full and liquidated damages to the City caused by failure of the bidder to carry out the offer of purchase. Such Deposit will otherwise be applied on the purchase price upon delivery of the 2012C Bonds. No interest on the Deposit will accrue to the purchaser.





$3,315,000* General Obligation Refunding Bonds, Series 2012C

The wire shall arrive in such account no later than 30 minutes prior to the date and time of the sale of the 2012C Bonds. Contemporaneously with such wire transfer, the bidder shall send an email to [email protected] with the following information: (1) indication that a wire transfer has been made, (2) the amount of the wire transfer, (3) the issue to which it applies, and (4) the return wire instructions if such bidder is not awarded the 2012C Bonds. The City and any bidder who chooses to wire the Deposit hereby agree irrevocably that Speer Financial, Inc. (“Speer”) shall be the escrow holder of the Deposit wired to such account subject only to these conditions and duties: (i) if the bid is not accepted, Speer shall, at its expense, promptly return the Deposit amount to the unsuccessful bidder; (ii) if the bid is accepted, the Deposit shall be forwarded to the City; (iii) Speer shall bear all costs of maintaining the escrow account and returning the funds to the bidder; (iv) Speer shall not be an insurer of the Deposit amount and shall have no liability except if it willfully fails to perform, or recklessly disregards, its duties specified herein; and (v) income earned on the Deposit, if any, shall be retained by Speer.


Illinois and such bond must be submitted to Speer 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 2012C 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 Speer, or the City not later than 3:00 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.

The City covenants and agrees to enter into a written agreement or contract, constituting an undertaking (the “Undertaking”) to provide ongoing disclosure about the City for the benefit of the beneficial owners of the 2012C Bonds on or before the date of delivery of the 2012C Bonds as required under Section (b)(5) of Rule 15c2-12 (the “Rule”) adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934. The Undertaking shall be as described in the Official Statement, with such changes as may be agreed in writing by the Underwriter. The City represents that it is in compliance with each and every undertaking previously entered into it pursuant to the Rule. *Subject to change.


The Underwriter's obligation to purchase the 2012C Bonds shall be conditioned upon the City delivering the Undertaking on or before the date of delivery of the 2012C Bonds.

By submitting a bid, any bidder makes the representation that it understands Bond Counsel represents the City in the 2012C Bond

transaction and, if such bidder has retained Bond Counsel in an unrelated matter, such bidder represents that the signatory to the bid is duly authorized to, and does consent to and waive of and on behalf of such bidder any conflict of interest of Bond Counsel arising from any adverse position to the City in this matter; such consent and waiver shall supersede any formalities otherwise required in any separate understandings, guidelines or contractual arrangements between the bidder and Bond Counsel. The 2012C 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 or about October 2, 2012. Should delivery be delayed beyond sixty (60) days from the date of sale for any reason beyond the control of the City except failure of performance by the purchaser, the City may cancel the award or the purchaser may withdraw the good faith deposit and thereafter the purchaser's interest in and liability for the 2012C Bonds will cease. The Official Statement, when further supplemented by an addendum or addenda specifying the maturity dates, principal amounts, and interest rates of the 2012C Bonds, and any other information required by law or deemed appropriate by the City, shall constitute a “Final Official Statement” of the City with respect to the 2012C Bonds, as that term is defined in the Rule. By awarding the 2012C Bonds to any underwriter or underwriting syndicate, the City agrees that, no more than seven (7) business days after the date of such award, it shall provide, without cost to the senior managing underwriter of the syndicate to which the 2012C Bonds are awarded, up to 100 copies of the Final Official Statement to permit each “Participating Underwriter” (as that term is defined in the Rule) to comply with the provisions of such Rule. The City shall treat the senior managing underwriter of the syndicate to which the 2012C Bonds are awarded as its designated agent for purposes of distributing copies of the Final Official Statement to each Participating Underwriter. Any underwriter executing and delivering an Official Bid Form with respect to the 2012C Bonds agrees thereby that if its bid is accepted by the City it shall enter into a contractual relationship with all Participating Underwriters of the 2012C Bonds for purposes of assuring the receipt by each such Participating Underwriter of the Final Official Statement. By submission of its bid, the senior managing underwriter of the successful bidder agrees to supply all necessary pricing information and any Participating Underwriter identification necessary to complete the Official Statement within 24 hours after award of the 2012C Bonds. Additional copies of the Final Official Statement may be obtained by Participating Underwriters from the printer at cost. The City will, at its expense, deliver the 2012C Bonds to the purchaser in New York, New York, through the facilities of DTC and will pay for the bond attorney’s opinion. At the time of closing, the City will also furnish to the purchaser the following documents, each dated as of the date of delivery of the 2012C Bonds: (1) the unqualified opinion of Chapman and Cutler LLP, Chicago, Illinois, that the 2012C Bonds are lawful and enforceable obligations of the City in accordance with their terms and are payable from ad valorem taxes levied against all taxable property of the City, except that the rights of the owners of the 2012C Bonds and the enforceability of the 2012C Bonds may be limited by bankruptcy, insolvency, moratorium, reorganization and other similar laws affecting creditors’ rights and by equitable principles, whether considered at law or in equity, including the exercise of judicial discretion; (2) the opinion of said attorneys that the interest on the 2012C Bonds is exempt from federal income taxes as and to the extent set forth in the Official Statement for the 2012C Bonds; and (3) a no litigation certificate by the City. The City does not intend to designate the 2012C Bonds as “qualified tax-exempt obligations” pursuant to the small issuer exception provided by Section 265(b) (3) of the Internal Revenue Code of 1986, as amended.

The City has authorized the printing and distribution of an Official Statement containing pertinent information relative to the City and the 2012C Bonds. Copies of such Official Statement or additional information may be obtained from Mr. Brian Caputo, Chief Financial Officer/City Treasurer, City of Aurora, 44 East Downer Place, Aurora, Illinois 60507-3302 or an electronic copy of this Official Statement is available from the www.speerfinancial.com web site under “Debt Auction Center/Competitive Sales Calendar” from the Independent Public Finance Consultants to the City, Speer Financial, Inc., One North LaSalle Street, Suite 4100, Chicago, Illinois 60602, telephone (312) 346-3700.




For the $3,285,000* Refunding Debt Certificates, Series 2012D (Special Service Area Number 34 Project) of the City of Aurora, Kane, DuPage, Kendall and Will Counties, Illinois, as described in the annexed Official Notice of Sale, which is expressly made a part of this bid, we will pay you $_______________________ (no less than $3,250,000) for 2012D Certificates bearing interest as follows (each rate a multiple of 1/8 or 1/100 of 1%). The discount is subject to adjustment allowing the same $___________ gross spread per $1,000 certificate as bid herein. MATURITIES* – DECEMBER 30

$505,000 ... 2013 ________% $520,000 ... 2016 ________% $300,000 ... 2018 ________% 500,000 ... 2014 ________% 255,000 ... 2017 ________% 315,000 ... 2019 ________% 485,000 ... 2015 ________% 405,000 ... 2020 ________%

Consecutive maturities may be aggregated into no more than four term certificates at the option of the bidder, in which case the mandatory redemption provisions shall be on the same schedule as above.



The 2012D Certificates are to be executed and delivered to us in accordance with the terms of this bid accompanied by the approving legal opinion of Chapman and Cutler LLP, Chicago, Illinois. The City will pay for the legal opinion. The underwriter agrees to apply for CUSIP numbers within 24 hours and pay the fee charged by the CUSIP Service Bureau and will accept the 2012D Certificates with the CUSIP numbers as entered on the 2012D Certificates.




The foregoing bid was accepted and the 2012D Certificates sold by ordinance of the City on September 11, 2012, and receipt is hereby

acknowledged of the good faith Deposit which is being held in accordance with the terms of the annexed Official Notice of Sale. CITY OF AURORA KANE, DUPAGE, KENDALL AND WILL COUNTIES, ILLINOIS *Subject to change. Mayor



Gross Interest $




TOTAL Certificate YEARS 14,372.13



Name of Insurer

(Please fill in)




Kane, DuPage, Kendall and Will Counties, Illinois Refunding Debt Certificates, Series 2012D (Special Service Area Number 34 Project)

The City of Aurora, Kane, DuPage, Kendall and Will Counties, Illinois (the “City”), will receive electronic bids on the SpeerAuction (“SpeerAuction”) website address “www.SpeerAuction.com” for its $3,285,000* Refunding Debt Certificates, Series 2012D (Special Service Area Number 34 Project) (the “2012D Certificates”), on an all or none basis between 10:30 A.M. and 10:45 A.M., C.S.T., Tuesday, September 11, 2012. To bid, bidders must have: (1) completed the registration form on the SpeerAuction website, and (2) requested and received admission to the City’s sale (as described below). Award will be made or all bids rejected at a meeting of the City on that date. The City reserves the right to change the date or time for receipt of bids. Any such change shall be made not less than twenty-four (24) hours prior to the revised date and time for receipt of the bids for the 2012D Certificates and shall be communicated by publishing the changes in the Amendments Page of the SpeerAuction webpage and through Thompson Municipal News.

The 2012D Certificates are payable from any monies of the City legally available and annually appropriated for the purpose of payment of debt service. The 2012D Certificates evidence indebtedness incurred under an installment purchase agreement. There is no statutory authority for the levy of a separate tax in addition to other County taxes or for the levy of a special tax unlimited as to rate or amount to pay interest or principal due on the installment purchase agreement or the 2012D Certificates. Bidding Details Bidders should be aware of the following bidding details associated with the sale of the 2012D Certificates.








(1) A bidder (“Bidder”) submitting a winning bid (“Winning Bid”) is irrevocably obligated to purchase the 2012D Certificates at the rates and prices of the winning bid, if acceptable to the City, as set forth in the related Official Notice of Sale. Winning Bids are not officially awarded to Winning Bidders until formally accepted by the City.




related to the auction. (6) Neither the City, Speer Financial, Inc., nor the Auction Administrator is responsible to any bidder for any defect or inaccuracy in the

Official Notice of Sale, amendments, or Preliminary Official Statement as they appear on SpeerAuction.

*Subject to change.

City of Aurora, Kane, DuPage, Kendall and Will Counties, Illinois $3,285,000* Refunding Debt Certificates, Series 2012D (Special Service Area Number 34 Project) Official Notice of Sale (Page 2 of 4)

(7) Only Bidders who request and receive admission to an auction may submit bids. SpeerAuction and the Auction Administrator




(10) Bidders must compare their final bids to those shown on the Observation Page immediately after the bidding time period ends, and if they disagree with the final results shown on the Observation Page they must report them to SpeerAuction within 15 minutes after the bidding time period ends. Regardless of the final results reported by SpeerAuction, 2012D Certificates are definitively awarded to the winning bidder only upon official award by the City. If, for any reason, the City fails to: (i) award 2012D Certificates to the winner reported by SpeerAuction, or (ii) deliver 2012D Certificates to winning bidder at settlement, neither the City, Speer Financial, Inc., nor the Auction Administrator will be liable for damages.

The City reserves the right to reject all proposals, to reject any bid proposal not conforming to this Official Notice of Sale, and to waive any irregularity or informality with respect to any proposal. Additionally, the City reserves the right to modify or amend this Official Notice of Sale; however, any such modification or amendment shall not be made less than twenty-four (24) hours prior to the date and time for receipt of bids on the 2012D Certificates and any such modification or amendment will be announced on the Amendments Page of the SpeerAuction webpage and through Thompson Municipal News. The 2012D Certificates will be in fully registered form in the denominations of $5,000 and integral multiples thereof in the name of Cede & Co. as nominee of The Depository Trust Company (“DTC”), New York, New York, to which principal and interest payments on the 2012D Certificates will be paid. Individual purchases will be in book-entry only form. Interest on each 2012D Certificate shall be paid by check or draft of the Debt Registrar to the person in whose name such certificate is registered at the close of business on the fifteenth day of the month in which an interest payment date occurs. The principal of the 2012D Certificates shall be payable in lawful money of the United States of America at the principal office maintained for the purpose by the Debt Registrar in Chicago, Illinois. Semiannual interest is due June 30 and December 30 of each year commencing June 30, 2013, and is payable by Amalgamated Bank of Chicago, Chicago, Illinois (the “Debt Registrar”). The 2012D Certificates are dated the date of delivery.

If the winning bidder is not a direct participant of DTC and does not have clearing privileges with DTC, the 2012D Certificates will be issued as Registered Certificates in the name of the purchaser. At the request of such winning bidder, the City will assist in the timely conversion of the Registered Certificates into book-entry certificates with DTC as described herein.


$505,000 ... 2013 $520,000 ... 2016 $300,000 ... 2018 500,000 ... 2014 255,000 ... 2017 315,000 ... 2019 485,000 ... 2015 405,000 ... 2020

Any consecutive maturities may be aggregated into no more than four term certificates at the option of the bidder,

in which case the mandatory redemption provisions shall be on the same schedule as above. The 2012D Certificates are not subject to optional redemption prior to maturity. All interest rates must be in multiples of one-eighth or one one-hundredth of one percent (1/8 or 1/100 of 1%), and not more than one rate for a single maturity shall be specified. The rates bid for maturities shall be in non-descending order. The differential between the highest rate bid and the lowest rate bid shall not exceed three percent (3%). All bids must be for all of the 2012D Certificates, must be for not less than $3,250,000. Award of the 2012D Certificates: The 2012D Certificates will be awarded on the basis of true interest cost, determined in the following manner. True interest cost shall be computed by determining the annual interest rate (compounded semi-annually) necessary to discount the debt service payments on the 2012D Certificates from the payment dates thereof to the dated date and to the bid price. For the purpose of calculating true interest cost, the 2012D Certificates shall be deemed to become due in the principal amounts and at the times set forth in the table of maturities set forth above. In the event two or more qualifying bids produce the identical lowest true interest cost, the winning bid shall be the bid that was submitted first in time on the SpeerAuction webpage. The 2012D Certificates will be awarded to the bidder complying with the terms of this Official Notice of Sale whose bid produces the lowest true interest cost rate to the City as determined by the City’s Financial Advisor, which determination shall be conclusive and binding on all bidders; provided, that the City reserves the right to reject all bids or any non-conforming bid and reserves the right to waive any informality in any bid. Bidders should verify the accuracy of their final bids and compare them to the winning bids reported on the SpeerAuction Observation Page immediately after the bidding. *Subject to change.


The discount, if any, is subject to pro rata adjustment if the maturity amounts of the 2012D Certificates are changed, allowing the same dollar amount of profit per $1,000 certificate as submitted on the Official Bid Form. The dollar amount of profit must be written on the Official Bid Form for any adjustment to be allowed, and is subject to verification. The true interest cost of each bid will be computed by SpeerAuction and reported on the Observation Page of the SpeerAuction webpage immediately following the date and time for receipt of bids. These true interest costs are subject to verification by the City’s Financial Advisor, will be posted for information purposes only and will not signify an actual award of any bid or an official declaration of the winning bid. The City or its Financial Advisor will notify the bidder to whom the 2012D Certificates will be awarded, if and when such award is made. The winning bidder will be required to make the standard filings and maintain the appropriate records routinely required pursuant to MSRB Rules G-8, G-11 and G-32. The winning bidder will be required to pay the standard MSRB charge for 2012D Certificates purchased. In addition, the winning bidder who is a member of the Securities Industry and Financial Markets Association (“SIFMA”) will be required to pay SIFMA’s standard charge per certificate.

Each bid shall be accompanied by a certified or cashier’s check on, or a wire transfer from, a solvent bank or trust company or a Financial Surety Bond for TWO PERCENT OF PAR payable to the Treasurer of the City 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 2012D Certificates and all others will be promptly returned. Should the successful bidder fail to take up and pay for the 2012D Certificates when tendered in accordance with this Notice of Sale and said bid, said Deposit shall be retained as full and liquidated damages to the City caused by failure of the bidder to carry out the offer of purchase. Such Deposit will otherwise be applied on the purchase price upon delivery of the 2012D Certificates. No interest on the Deposit will accrue to the purchaser.





$3,285,000* Refunding Debt Certificates, Series 2012D (Special Service Area Number 34 Project)

The wire shall arrive in such account no later than 30 minutes prior to the date and time of the sale of the 2012D Certificates. Contemporaneously with such wire transfer, the bidder shall send an email to [email protected] with the following information: (1) indication that a wire transfer has been made, (2) the amount of the wire transfer, (3) the issue to which it applies, and (4) the return wire instructions if such bidder is not awarded the 2012D Certificates. The City and any bidder who chooses to wire the Deposit hereby agree irrevocably that Speer Financial, Inc. (“Speer”) shall be the escrow holder of the Deposit wired to such account subject only to these conditions and duties: (i) if the bid is not accepted, Speer shall, at its expense, promptly return the Deposit amount to the unsuccessful bidder; (ii) if the bid is accepted, the Deposit shall be forwarded to the City; (iii) Speer shall bear all costs of maintaining the escrow account and returning the funds to the bidder; (iv) Speer shall not be an insurer of the Deposit amount and shall have no liability except if it willfully fails to perform, or recklessly disregards, its duties specified herein; and (v) income earned on the Deposit, if any, shall be retained by Speer.


Illinois and such bond must be submitted to Speer 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 2012D Certificates 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 Speer, or the City not later than 3:00 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.

The City covenants and agrees to enter into a written agreement or contract, constituting an undertaking (the “Undertaking”) to provide ongoing disclosure about the City for the benefit of the beneficial owners of the 2012D Certificates on or before the date of delivery of the 2012D Certificates as required under Section (b)(5) of Rule 15c2-12 (the “Rule”) adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934. The Undertaking shall be as described in the Official Statement, with such changes as may be agreed in writing by the Underwriter. The City represents that it is in compliance with each and every undertaking previously entered into it pursuant to the Rule. The Underwriter's obligation to purchase the 2012D Certificates shall be conditioned upon the City delivering the Undertaking on or before the date of delivery of the 2012D Certificates.

*Subject to change.


By submitting a bid, any bidder makes the representation that it understands Bond Counsel represents the City in the 2012D Certificate

transaction and, if such bidder has retained Bond Counsel in an unrelated matter, such bidder represents that the signatory to the bid is duly authorized to, and does consent to and waive of and on behalf of such bidder any conflict of interest of Bond Counsel arising from any adverse position to the City in this matter; such consent and waiver shall supersede any formalities otherwise required in any separate understandings, guidelines or contractual arrangements between the bidder and Bond Counsel. The 2012D Certificates 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 or about October 1, 2012. Should delivery be delayed beyond sixty (60) days from the date of sale for any reason beyond the control of the City except failure of performance by the purchaser, the City may cancel the award or the purchaser may withdraw the good faith deposit and thereafter the purchaser's interest in and liability for the 2012D Certificates will cease. The Official Statement, when further supplemented by an addendum or addenda specifying the maturity dates, principal amounts, and interest rates of the 2012D Certificates, and any other information required by law or deemed appropriate by the City, shall constitute a “Final Official Statement” of the City with respect to the 2012D Certificates, as that term is defined in the Rule. By awarding the 2012D Certificates to any underwriter or underwriting syndicate, the City agrees that, no more than seven (7) business days after the date of such award, it shall provide, without cost to the senior managing underwriter of the syndicate to which the 2012D Certificates are awarded, up to 100 copies of the Final Official Statement to permit each “Participating Underwriter” (as that term is defined in the Rule) to comply with the provisions of such Rule. The City shall treat the senior managing underwriter of the syndicate to which the 2012D Certificates are awarded as its designated agent for purposes of distributing copies of the Final Official Statement to each Participating Underwriter. Any underwriter executing and delivering an Official Bid Form with respect to the 2012D Certificates agrees thereby that if its bid is accepted by the City it shall enter into a contractual relationship with all Participating Underwriters of the 2012D Certificates for purposes of assuring the receipt by each such Participating Underwriter of the Final Official Statement. By submission of its bid, the senior managing underwriter of the successful bidder agrees to supply all necessary pricing information and any Participating Underwriter identification necessary to complete the Official Statement within 24 hours after award of the 2012D Certificates. Additional copies of the Final Official Statement may be obtained by Participating Underwriters from the printer at cost. The City will, at its expense, deliver the 2012D Certificates to the purchaser in New York, New York, through the facilities of DTC and will pay for the bond attorney’s opinion. At the time of closing, the City will also furnish to the purchaser the following documents, each dated as of the date of delivery of the 2012D Certificates: (1) the unqualified opinion of Chapman and Cutler LLP, Chicago, Illinois, that the 2012D Certificates are lawful and enforceable lawful and enforceable obligations of the City in accordance with their terms; (2) the opinion of said attorneys that the interest on the 2012D Certificates is exempt from federal income taxes as and to the extent set forth in the Official Statement for the 2012D Certificates; and (3) a no litigation certificate by the City. The City does not intend to designate the 2012D Certificates as “qualified tax-exempt obligations” pursuant to the small issuer exception provided by Section 265(b) (3) of the Internal Revenue Code of 1986, as amended.

The City has authorized the printing and distribution of an Official Statement containing pertinent information relative to the City and the 2012D Certificates. Copies of such Official Statement or additional information may be obtained from Mr. Brian Caputo, Chief Financial Officer/City Treasurer, City of Aurora, 44 East Downer Place, Aurora, Illinois 60507-3302 or an electronic copy of this Official Statement is available from the www.speerfinancial.com web site under “Debt Auction Center/Competitive Sales Calendar” from the Independent Public Finance Consultants to the City, Speer Financial, Inc., One North LaSalle Street, Suite 4100, Chicago, Illinois 60602, telephone (312) 346-3700.


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