New IssueRatings†:
Book-Entry Only
Moody’s Investors Service: Aa2
Standard & Poor’s: AASubject to compliance by the Agency with certain covenants, in the opinion of Chapman and Cutler LLP, Bond
Counsel, under present law, interest on the 2013 Bonds 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 2013 Bonds is not exempt
from present Illinois income taxes. See “Tax Matters” herein for a more complete discussion.
$20,970,000
Northwest Suburban Municipal Joint Action Water Agency
Cook, DuPage and Kane Counties, Illinois
Water Supply System Revenue Refunding Bonds, Series 2013
Dated Date of Delivery
Due May 1, as shown below
The Water Supply System Revenue Refunding Bonds, Series 2013 (the “2013 Bonds”), are being issued by the Northwest
Suburban Municipal Joint Action Water Agency (the “Agency”). The 2013 Bonds will be issued in fully registered form
and will be registered initially only in the name of Cede & Co., as registered owner and nominee of The Depository Trust
Company (“DTC”), New York, New York. DTC will act as securities depository for the 2013 Bonds. Purchasers of the 2013
Bonds will not receive certificates representing their interests in the 2013 Bonds purchased. Ownership by the beneficial
owners of the 2013 Bonds will be evidenced by book-entry only. Principal of and interest on the 2013 Bonds will be paid by
The Bank of New York Mellon Trust Company, N.A., Chicago, Illinois, as trustee, bond registrar and paying agent, to DTC,
which in turn will remit such payments to its participants for subsequent disbursement to the beneficial owners of the 2013
Bonds. As long as Cede & Co. is the registered owner as nominee of DTC, payments of the principal of and interest on the
2013 Bonds will be made to such registered owner, and disbursement of such payments will be the responsibility of DTC
and its participants. Individual purchases of the 2013 Bonds will be made in the principal amount of $5,000 or any integral
multiple thereof.
Interest on the 2013 Bonds (computed on the basis of a 360-day year of twelve 30‑day months) will be payable on
May 1, 2013, and semiannually on each May 1 and November 1 thereafter. The 2013 Bonds are not subject to redemption
prior to maturity.
Maturities, Amounts, Interest Rates and Yields
Year
(May 1)
2014
2015
2016
2017
Amount
$5,680,000
5,850,000
355,000
355,000
Interest
Rate
3%
3
2
2
Yield
0.50%
0.61
0.92
1.08
Year
(May 1)
2018
2019
2020
2021
Amount
$365,000
375,000
380,000
7,610,000
Interest
Rate
3%
3
3
4
Yield
1.33%
1.63
1.89
2.10
The 2013 Bonds are limited obligations of the Agency proceeds of which will be used, together with certain funds of
the Agency, to provide funds to refund the $20,115,000 outstanding principal amount of the Agency’s Water Supply System
Revenue Refunding Bonds, Series 2003, maturing in the years 2014 and 2015, to fund a deposit to the Debt Service Reserve
Fund, and to pay the costs of issuance of the 2013 Bonds. See “Plan of Finance” herein.
The 2013 Bonds, together with the $40,510,000 principal amount of Water Supply System Revenue Bonds that will remain
outstanding after the issuance of the 2013 Bonds and additional parity bonds that may be issued in the future, have a claim
for payment solely from, and are secured by, the Revenues of the Agency’s Water Supply System, after paying the Expense
of Operation and Maintenance, and from certain Funds and Accounts as provided in the General Resolution. Revenues of
the System consist primarily of payments received by the Agency pursuant to Water Supply Agreements for the sale of Lake
Michigan water to its members on a “take or pay” basis. Those payments are to be sufficient to meet all requirements of the
General Resolution, regardless of the Agency’s ability to supply water. The Agency does not have the power to levy taxes.
See “Security and Sources of Payment for the 2013 Bonds” herein.
The 2013 Bonds are offered when, as and if issued by the Agency and accepted by the Underwriter, subject to prior
sale, withdrawal or modification of the offer without notice, and subject to the approval of legality by Chapman and
Cutler LLP, Chicago, Illinois, Bond Counsel. Certain legal matters will be passed upon for the Agency by its counsel,
Ancel, Glink, Diamond, Bush, DiCianni & Krafthefer, P.C., Chicago, Illinois, and for the Underwriter by its counsel
Katten Muchin Rosenman LLP, Chicago, Illinois. Speer Financial, Inc., Chicago, Illinois, is acting as financial advisor
to the Agency. The 2013 Bonds in definitive form are expected to be delivered through the facilities of DTC, in New York,
New York, on or about March 28, 2013.
William Blair & Company
The date of this Official Statement is March 14, 2013.
† See “Credit Ratings” herein.
NORTHWEST SUBURBAN MUNICIPAL JOINT ACTION WATER AGENCY
901 Wellington Avenue
Elk Grove Village, Illinois 60007-3900
(847-981-4083)
BOARD OF DIRECTORS
Al Larson, Chairman
Craig Johnson
Rodney Craig
William McLeod
Irvana Wilks
Thomas Rooney
Billie D. Roth
Mayor
Mayor
President
Mayor
Mayor
Mayor
President
Village of Schaumburg
Village of Elk Grove Village
Village of Hanover Park
Village of Hoffman Estates
Village of Mount Prospect
City of Rolling Meadows
Village of Streamwood
OFFICERS
Al Larson
Michael Janonis
Christine Tromp
Chairman
Secretary
Treasurer
EXECUTIVE COMMITTEE
Michael Janonis, Chairman
Kenneth Fritz
Barry Krumstok
Juliana Maller
James Norris
Gary O’Rourke
Raymond Rummel
Manager
Manager
Manager
Manager
Manager
Manager
Manager
Village of Mount Prospect
Village of Schaumburg
City of Rolling Meadows
Village of Hanover Park
Village of Hoffman Estates
Village of Streamwood
Village of Elk Grove Village
ADMINISTRATION
Joseph G. Fennell, Executive Director
Kevin Lockhart, Deputy Director
BOND COUNSEL
AGENCY COUNSEL
Chapman and Cutler LLP Ancel, Glink, Diamond, Bush, DiCianni & Krafthefer, P.C.
Chicago, Illinois
Chicago, Illinois
TRUSTEE
The Bank of New York Mellon Trust Company, N.A.
Chicago, Illinois
FINANCIAL ADVISOR
Speer Financial, Inc.
Chicago, Illinois
No dealer, broker, salesman or other person has been authorized by the Agency or the
Underwriter to give any information or to make any representations other than those contained in this
Official Statement and if given or made, such other information or representations must not be relied
upon as statements having been authorized by the Agency, the Underwriter or any other entity. This
Official Statement does not constitute an offer to sell or the solicitation of an offer to buy, nor shall there
be any sale of the 2013 Bonds by any person, in any jurisdiction in which it is unlawful for such person to
make such offer, solicitation or sale. Unless otherwise indicated, the Agency is the source of all tables
and statistical and financial information contained in this Official Statement. The information set forth
herein relating to governmental bodies or from other sources is believed to be reliable. The information
and opinions expressed herein are subject to change without notice, and neither the delivery of this
Official Statement nor any sale made hereunder shall, under any circumstances, create any implication
that there has been no change in operations of the Agency since the date of this Official Statement.
This Official Statement should be considered in its entirety and no one factor considered less
important than any other by reason of its position in this Official Statement. Where statutes, reports or
other documents are referred to herein, reference should be made to such statutes, reports or other
documents for more complete information regarding the rights and obligations of parties thereto, facts and
opinions contained therein and the subject matter thereof.
The information contained in this Official Statement is tentative and subject to completion,
amendment, or other change without notice. Certain terms and conditions described herein are subject to
further negotiation. The Agency reserves the right to withdraw, amend or modify the terms and
conditions of this proposed financing at any time without any notice.
Any statements made in this Official Statement, including the Appendices, involving matters of
opinion or estimates, whether or not so expressly stated, are set forth as such and not as representations of
fact, and no representation is made that any of such estimates will be realized. This Official Statement
contains certain forward-looking statements and information that are based on the Agency’s beliefs as
well as assumptions made by and information currently available to the Agency. Such statements are
subject to certain risks, uncertainties and assumptions. Should one or more of these risks or uncertainties
materialize, or should underlying assumptions prove incorrect, actual results may vary materially from
those anticipated, estimated or expected.
The Underwriter has provided the following sentence for inclusion in this Official Statement.
The Underwriter has reviewed the information in this Official Statement in accordance with, and as part
of, its responsibilities to investors under the federal securities laws as applied to the facts and
circumstances of this transaction, but the Underwriter does not guarantee the accuracy or completeness of
such information. These securities have not been recommended by any federal or state securities
commission or regulatory authority. Furthermore, the foregoing authorities have not confirmed the
accuracy or determined the adequacy of this document. Any representation to the contrary is a criminal
offense.
Certain persons participating in this offering may engage in transactions that maintain or
otherwise affect the price of the 2013 Bonds. Specifically, the Underwriter may overallot in
connection with the offering, and may bid for, and purchase, the 2013 Bonds in the open market.
The prices and other terms respecting the offering and sale of the 2013 Bonds may be changed from
time to time by the Underwriter after the 2013 Bonds are released for sale, and the 2013 Bonds may
be offered and sold at prices other than the initial offering prices, including sales to dealers who
may sell the 2013 Bonds into investment accounts.
[THIS PAGE INTENTIONALLY LEFT BLANK]
TABLE OF CONTENTS
INTRODUCTION ........................................................................................................................................ 1
PLAN OF FINANCE .................................................................................................................................... 2
Refunding Program ............................................................................................................................... 2
Use of Proceeds and Agency Funds ...................................................................................................... 2
DESCRIPTION OF THE 2013 BONDS ...................................................................................................... 2
General .................................................................................................................................................. 2
No Optional Redemption ...................................................................................................................... 2
DESCRIBING BOOK-ENTRY ONLY ISSUANCE ................................................................................... 3
Book-Entry Only System ...................................................................................................................... 3
ANNUAL DEBT SERVICE REQUIREMENTS ......................................................................................... 5
SECURITY AND SOURCES OF PAYMENT FOR THE 2013 BONDS ................................................... 5
General .................................................................................................................................................. 5
Flow of Funds ....................................................................................................................................... 6
Additional Obligations .......................................................................................................................... 7
Member Deposits .................................................................................................................................. 7
Certain Covenants ................................................................................................................................. 7
RESERVE FUND INSURANCE POLICY .................................................................................................. 8
General .................................................................................................................................................. 8
Reorganization of MBIA....................................................................................................................... 9
National Public Finance Guarantee Corporation .................................................................................. 9
Regulation ............................................................................................................................................. 9
Financial Strength Ratings of National ............................................................................................... 10
Recent Litigation ................................................................................................................................. 10
National Financial Information ........................................................................................................... 10
Incorporation of Certain Documents by Reference............................................................................. 11
WATER SUPPLY AGREEMENTS ........................................................................................................... 11
General ................................................................................................................................................ 11
Quantities ............................................................................................................................................ 13
Payment Provisions ............................................................................................................................. 14
Certain Covenants ............................................................................................................................... 15
Defaults ............................................................................................................................................... 16
THE AGENCY ........................................................................................................................................... 17
Background ......................................................................................................................................... 17
Organization and Management ........................................................................................................... 17
THE WATER SUPPLY SYSTEM ............................................................................................................. 18
Existing Facilities ................................................................................................................................ 18
System Operation ................................................................................................................................ 19
THE CHICAGO CONTRACT ................................................................................................................... 23
CHICAGO DEPARTMENT OF WATER ................................................................................................. 25
STATE WATER ALLOCATIONS ............................................................................................................ 26
SERVICE AREA OF THE AGENCY........................................................................................................ 27
Service Area Location and Customers ................................................................................................ 27
Service Area Population ...................................................................................................................... 28
(i)
Service Area Economics ..................................................................................................................... 28
INFORMATION RELATING TO THE MEMBERS ................................................................................ 32
LITIGATION .............................................................................................................................................. 32
TAX MATTERS ......................................................................................................................................... 32
FINANCIAL STATEMENTS .................................................................................................................... 34
CREDIT RATINGS .................................................................................................................................... 34
CONTINUING DISCLOSURE .................................................................................................................. 35
THE UNDERTAKING ............................................................................................................................... 35
Annual Financial Information Disclosure ........................................................................................... 35
Reportable Events Disclosure ............................................................................................................. 36
Amendment; Waiver ........................................................................................................................... 37
Consequences of Failure to Provide Information ................................................................................ 37
Termination of Undertaking ................................................................................................................ 38
Revenue Test ....................................................................................................................................... 38
Additional Information........................................................................................................................ 38
Dissemination Agent ........................................................................................................................... 38
VERIFICATION OF MATHEMATICAL COMPUTATIONS ................................................................. 38
FINANCIAL ADVISOR ............................................................................................................................ 38
LEGAL MATTERS .................................................................................................................................... 39
UNDERWRITING ..................................................................................................................................... 39
AUTHORIZATION .................................................................................................................................... 40
APPENDIX A – Summary of Certain Provisions of the General Resolution
APPENDIX B – Form of Opinion of Bond Counsel
APPENDIX C – Financial Statements of the Agency for the Fiscal Year Ended April 30, 2012
APPENDIX D – CUSIPS
(ii)
SUMMARY STATEMENT
The Northwest Suburban Municipal Joint Action Water Agency (the “Agency”), proposes to issue
$20,970,000 Water Supply System Revenue Refunding Bonds, Series 2013 (the “2013 Bonds”). This
summary statement is subject in all respects to more complete information contained elsewhere in this
Official Statement, and specifically to the complete documents to which summary statements refer.
The Issuer. The Agency was created by its member municipalities pursuant to the Illinois Intergovernmental Cooperation Act, as amended, to construct and operate a water supply system (the
“System”) to obtain and transmit potable water drawn from Lake Michigan (“Lake Water”) to the water
systems of the member municipalities. The member municipalities have been granted allocations of the
Lake Water (“State Water Allocations”) by the Illinois Department of Natural Resources.
The membership of the Agency consists of seven contiguous home rule municipalities located in
northwest Cook, DuPage and Kane Counties, Illinois: Elk Grove Village, Hanover Park, Hoffman
Estates, Mount Prospect, Rolling Meadows, Schaumburg and Streamwood (the “Members”).
Members’ Service Area. The combined area of the Members is approximately 81.48 square
miles. The 2010 population of the Members was 315,346 having increased from 288,205 and 315,162 in
1990 and 2000, respectively. The Members serve approximately 94,727 water customers. Total water
consumption in the most recently ended fiscal years of the Members was 10.683 billion gallons or a daily
average of 29.268 million gallons. State Water Allocations, based in part on population forecasts for the
area, will increase from an aggregate of 37.95 million gallons per day (“MGD”) to 40.62 MGD between
2000 and 2020.
The Water Supply System. The Agency’s water supply system (the “System”) obtains treated
Lake Water from the water system of the City of Chicago at a site located near the eastern boundary of
O’Hare International Airport. From the delivery point, the System transmission mains extend west and
northwest in a 55-mile network to provide at least three service connections to each Member’s local water
system.
Construction of the System commenced in 1983 and was substantially completed in April 1986 at
a cost of $114.5 million. The System consists of transmission mains, related facilities including a major
pumping station, booster pumping stations, ground level and standpipe storage facilities and a control
system.
Operations. The Agency initiated operation of the System on December 10, 1985, and by
April 1, 1986, was delivering in excess of the minimum daily water requirements of the Members. Since
2003, the Agency has delivered an average of 32.770 MGD to the Members, including a System wide
maximum of 63.000 million gallons in July of 2005.
Purpose of the 2013 Bonds. Proceeds of the 2013 Bonds will be used, together with certain funds
of the Agency, to provide funds (i) to refund the $20,115,000 outstanding principal amount of Agency’s
Water Supply System Revenue Refunding Bonds, Series 2003, maturing on May 1 of the years 2014 and
2015, (ii) to fund a portion of the Agency’s Debt Service Reserve Fund, and (iii) to pay the costs of
issuance of the 2013 Bonds.
Security and Sources of Payment for the 2013 Bonds. The 2013 Bonds are limited obligations of
the Agency which, together with the Agency’s $9,200,000 outstanding principal amount of unrefunded
Water Supply System Revenue Refunding Bonds, Series 2003 (all of which mature on May 1, 2013), and
$31,310,000 outstanding principal amount of Water Supply System Revenue Refunding Bonds, Series
2008 (which mature serially on May 1 of the years 2013 to 2020, inclusive) and additional parity bonds
(iii)
that may be issued in the future, have a claim for payment solely from and are secured by a pledge of the
Revenues of the System and amounts in certain Funds and Accounts established by the General
Resolution, defined herein. The 2013 Bonds are not a debt of any Member. The Agency has no power to
levy taxes.
Debt Service Reserve Requirement. The Debt Service Reserve Requirement for other than the
Reduction Period (as defined and described below) is an amount equal to the maximum amount of
principal of and interest on all outstanding bonds issued under the General Resolution (the “Bonds”)
which is to become due in any 12-month period ending on May 1 (the “Debt Service Reserve
Requirement”). Upon the issuance of the 2013 Bonds, the applicable Debt Service Reserve Requirement
will be $11,030,506. The General Resolution permits debt service reserve fund insurance to be used as an
alternative to funding the Debt Service Reserve Fund with cash and investments in an amount equal to the
Debt Service Reserve Requirement. The Bank of New York Mellon Trust Company, N.A., Chicago,
Illinois, as trustee under the General Resolution (the “Trustee”), holds a debt service reserve fund
insurance policy (“Reserve Fund Insurance Policy”) of National Public Finance Guarantee Corporation,
an operating subsidiary of MBIA, Inc., in the face amount of $10,830,750. As of the date of issuance of
the 2013 Bonds, the Trustee will hold in the Debt Service Reserve Fund the Reserve Fund Insurance
Policy and Investment Obligations in an amount sufficient to satisfy the Debt Service Reserve
Requirement. The Reserve Fund Insurance Policy expires in accordance with its terms on May 1, 2015.
Resolution No. 03-08 of the Agency (adopted February 20, 2008) provides for a reduction in the
Debt Service Reserve Requirement for only the period from May 2, 2015 through April 30, 2016,
inclusive (the “Reduction Period”) to an amount equal to 50% of the maximum amount of principal of
and interest on all outstanding Bonds. In connection with the issuance of the 2013 Bonds, the Agency
will direct the Trustee to (i) assume that the Debt Service Reserve Requirement will remain unchanged
for the Reduction Period, (ii) retain any funds on deposit in the Debt Service Reserve Fund which would
otherwise be released as a result of the reduction of the Debt Service Reserve Requirement during the
Reduction Period and (iii) provide the Agency with the value of the cash and Investment Obligations on
deposit in the Debt Service Reserve Fund (excluding the amount of the expiring Reserve Fund Insurance
Policy on deposit therein) (the “Available Balance”) as of May 2, 2013. The Agency will agree to fund,
by not later than April 30, 2014, an amount not less than one-third of the difference between the Available
Balance and the full Debt Service Reserve Requirement (ignoring the Reduction Period) and to fund, by
not later than April 30, 2015, an amount sufficient to cause the amount of cash and Investment
Obligations on deposit in the Debt Service Reserve Fund (not including the amount of the expiring
Reserve Fund Insurance Policy on deposit therein) to equal the Debt Service Reserve Requirement
(ignoring the Reduction Period).
Certain Covenants. The Agency covenants in the General Resolution to adopt a budget and
establish fees and charges for its provision of water, including amounts due under the Water Supply
Agreements, sufficient to provide at all times adequate Revenues, together with other available amounts,
to meet all of its requirements under the General Resolution and the specific authorizing series
resolutions.
Water Supply Agreements. On December 31, 1982, each Member executed a 40-year agreement
with the Agency (the “Water Supply Agreement”) under which the Member is obligated to purchase
water from the Agency on a “take or pay” basis and to pay monthly its allocated share of all costs of the
Agency, including debt service on notes or bonds issued by the Agency. The obligation of each Member
to make all payments required by the Water Supply Agreement is unconditional and irrevocable,
regardless of the ability of the Agency to supply water.
(iv)
Each Member covenanted to establish and collect rates and charges for its water or combined
water and sewer system as required to produce revenues sufficient, among other things, to make all
payments under the Water Supply Agreement, except to the extent that certain funds are set aside in cash
or investments in a separate account designated for that purpose and appropriated to make payments
under the Water Supply Agreement. See “INFORMATION RELATING TO THE MEMBERS.”
As security for payment of its obligations under the Water Supply Agreement, each Member is
obligated to deposit and maintain with the Trustee in each fiscal year an amount equal to the maximum
amount of the Member’s estimated share of the Agency’s costs for any month in that fiscal year.
In the event of default of a Member, the aggregate monthly costs allocated to non-defaulting
Members will be automatically increased, without limitation, by the amount of any defaulting Member’s
unpaid obligation under its Water Supply Agreement.
The Chicago Contract. On June 24, 1982, the Agency and the City of Chicago (the “City”)
entered into a 40-year agreement under which the City agreed to sell quantities of Lake Water sufficient
to supply the projected water needs of the Agency and Members through the term of the agreement.
Minimum quantity purchase obligations of the Agency equal approximately 60 percent of the currently
projected water demands of the Members. The City is obligated to supply water up to a maximum
quantity which exceeds State Water Allocations of the Members through 2023. The cost of water
purchased from the City by the Agency may not exceed the lowest rate charged to any water customer of
the City. The current lowest volume rate charged any water customers of the City is $2.89 per
1,000 gallons, plus a credit for timely payment. The agreement provides for certain credits against the
Agency’s water purchase costs as described in this Official Statement. See “THE CHICAGO CONTRACT.”
Additional Bonds. The Agency may issue additional parity obligations for certain purposes,
subject to the tests identified and described under “Additional Agency Obligations” in the Summary of
Certain Provisions of the General Resolution, included as APPENDIX A.
Accounts and Reports. Under the General Resolution, the Agency has covenanted that within
120 days after the close of its fiscal year (currently ending April 30), it will file with the Trustee a copy of
its annual report along with an accountant’s certificate stating, among other things, whether the Agency is
in default with respect to any of the covenants, agreements or conditions on its part contained in the
General Resolution or any Series Resolution. Such report will be available to the holders of any Agency
Obligations who will file a written request for such document with the Trustee.
(v)
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OFFICIAL STATEMENT
$20,970,000
NORTHWEST SUBURBAN MUNICIPAL JOINT ACTION WATER AGENCY
(COOK, DUPAGE AND KANE COUNTIES, ILLINOIS)
WATER SUPPLY SYSTEM REVENUE REFUNDING BONDS, SERIES 2013
INTRODUCTION
This Official Statement, including the cover page, the Summary Statement and the Appendices, is
furnished by the Northwest Suburban Municipal Joint Action Water Agency (the “Agency”), to provide
information concerning the $20,970,000 principal amount of Water Supply System Revenue Refunding
Bonds, Series 2013 (the “2013 Bonds”), to be issued by the Agency. Proceeds of the 2013 Bonds will be
used, together with certain funds of the Agency, to provide funds to refund the $20,115,000 outstanding
principal amount of the Agency’s Water Supply System Revenue Refunding Bonds, Series 2003,
maturing in the years 2014 and 2015 (the “2003 Bonds to be Refunded”), to fund a deposit to the
Agency’s Debt Service Reserve Fund and to pay the costs of issuance of the 2013 Bonds. The 2013
Bonds are issued on a parity with the Agency’s $9,200,000 outstanding principal amount of Water Supply
System Revenue Refunding Bonds, Series 2003 maturing on May 1, 2013 (the “Unrefunded 2003
Bonds”) and the $31,310,000 outstanding principal amount of Water Supply System Revenue Refunding
Bonds, Series 2008 (the “2008 Bonds”). As described in APPENDIX A – “Summary of Certain Provisions
of the General Resolution – Additional Agency Obligations,” the Agency may issue additional parity
obligations, subject to the satisfaction of certain conditions described therein (the “Additional Bonds”).
The Agency is a municipal corporation and public body politic and corporate established by
seven municipalities pursuant to Article VII, Section 10 of the Constitution of the State of Illinois and the
Intergovernmental Cooperation Act of the State of Illinois, as amended (the “Act”). The Agency is
empowered under the Act to plan, construct, improve, extend, acquire, finance, operate and maintain a
joint water supply system to serve its members and other potential purchasers. The Agency is governed
by a Board of Directors (the “Board”) consisting of the President or Mayor of each hereinafter defined
Member.
The 2013 Bonds are authorized and issued pursuant to the Act and the Agency’s Water Supply
System Revenue Bond and Note General Resolution (the “General Resolution”), adopted December 17,
1982, as supplemented, and a resolution adopted December 5, 2012 (the “2013 Series Resolution”). The
2013 Bonds, the 2008 Bonds, the Unrefunded 2003 Bonds and any Additional Bonds are referred to as
the “Bonds.” The General Resolution and any resolution of the Agency authorizing the issuance of a
Series of Bonds in accordance with the General Resolution, including the 2013 Series Resolution (each, a
“Series Resolution”), are referred to together as the “Resolutions.”
The summaries of and references to all documents, statutes, reports and other instruments referred
to in this Official Statement do not purport to be complete and are qualified in their entirety by reference
to each such document, statute, report or instrument. Terms not defined in this Official Statement shall
have the meanings set forth in the respective documents.
PLAN OF FINANCE
Refunding Program
A portion of the proceeds of the 2013 Bonds, together with funds of the Agency in the amount of
$438,882.50 currently on deposit with the Trustee in the Debt Service Fund established under the General
Resolution (the “Agency Funds”), will be used to refund the 2003 Bonds to be Refunded on their
redemption date of May 1, 2013 at a redemption price equal to the principal amount thereof plus accrued
interest to the date of redemption.
Upon delivery of the 2013 Bonds, there will be deposited into the Bond Redemption Account of
the Debt Service Fund proceeds of the 2013 Bonds and the Agency Funds, as described above, which will
be used to purchase direct obligations of the United States of America (“Government Securities”) to be
held in trust by the Trustee. The Government Securities will mature in amounts and bear interest at rates
sufficient, without reinvestment, to pay the redemption price of the 2003 Bonds to be Refunded on the
redemption date of May 1, 2013. Upon deposit of the moneys and Government Securities with the
Trustee, the Trustee will be irrevocably instructed to redeem the 2003 Bonds to be Refunded and the 2003
Bonds to be Refunded will be defeased and no longer outstanding under the General Resolution.
Use of Proceeds and Agency Funds
The proceeds of the 2013 Bonds, together with the Agency Funds, will be applied or deposited
approximately as summarized below.
Deposit to Bond Redemption Account .........
Deposit to Debt Service Reserve Fund .........
Payment of Costs of Issuance(1) ....................
Total .......................................................
(1)
$20,616,340
2,097,000
322,818(1)
$23,036,158
Includes Underwriter’s discount.
DESCRIPTION OF THE 2013 BONDS
General
The 2013 Bonds will be dated the date of issue thereof, and will mature (without option of prior
redemption) on the dates and in the principal amounts shown on the cover page of the Official Statement.
The 2013 Bonds will bear interest, payable semiannually on each May 1 and November 1, commencing
May 1, 2013, at the rates shown on the cover page of the Official Statement. The interest so payable on
each 2013 Bond will be paid to the person in whose name such 2013 Bond is registered at the close of
business on the applicable record date (the April 15 or October 15, as the case may be, next preceding the
interest payment date).
The 2013 Bonds are issuable only as fully registered bonds, registered in the name of Cede &
Co., as nominee for The Depository Trust Company, of New York, New York (“DTC”), as securities
depository for the 2013 Bonds. Principal and redemption price of, and interest on, the 2013 Bonds are
payable to DTC. Such payments will be distributed by DTC and its participants. See “DESCRIBING
BOOK-ENTRY ONLY ISSUANCE” herein.
No Optional Redemption
The 2013 Bonds are not subject to redemption prior to maturity.
-2-
DESCRIBING BOOK-ENTRY ONLY ISSUANCE
Book-Entry Only System
The information in this section has been furnished by DTC. No representation is made by
the Agency, Bond Counsel, Agency Counsel, the Underwriter or the Trustee as to the completeness
or accuracy of such information or as to the absence of material adverse changes in such
information subsequent to the date hereof. No attempt has been made by the Agency, Bond
Counsel, Agency Counsel, the Underwriter or the Trustee to determine whether DTC is or will be
financially or otherwise capable of fulfilling its obligations. Neither the Agency nor the Trustee will
have any responsibility or obligation to DTC participants, indirect participants or the persons for
which they act as nominees with respect to the 2013 Bonds, or for any principal or interest payment
thereof.
DTC will act as securities depository for the 2013 Bonds. The 2013 Bonds will be issued as fully
registered bonds registered in the name of Cede & Co. (DTC’s partnership nominee) or such other name
as may be requested by an authorized representative of DTC. One fully registered bond certificate will be
issued for each maturity of the 2013 Bonds, in the aggregate principal amount of such maturity, and will
be deposited with DTC.
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, as amended (the “Exchange Act”). 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 is rated “AA+” by Standard & Poor’s Ratings Services. The DTC Rules
applicable to its Participants are on file with the Securities and Exchange Commission (the
“Commission”). More information about DTC can be found at www.dtcc.com and www.dtc.org.
Purchases of 2013 Bonds under the DTC system must be made by or through Direct Participants,
which will receive a credit for the 2013 Bonds on DTC’s records. The ownership interest of each actual
purchaser of each 2013 Bond (“Beneficial Owner”) is in turn to be recorded on the Direct and Indirect
Participants’ records. Beneficial Owners will not receive written confirmation from DTC of their
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
2013 Bonds 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
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ownership interests in 2013 Bonds, except in the event that use of the book-entry system for the 2013
Bonds is discontinued.
To facilitate subsequent transfers, all 2013 Bonds deposited by Direct Participants with DTC are
registered in the name of DTC’s partnership nominee, Cede & Co., or such other name as may be
requested by an authorized representative of DTC. The deposit of 2013 Bonds 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 2013 Bonds; DTC’s records
reflect only the identity of the Direct Participants to whose accounts such 2013 Bonds are credited, which
may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible
for keeping account of their holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to Direct Participants, by Direct
Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial
Owners will be governed by arrangements among them, subject to any statutory or regulatory
requirements as may be in effect from time to time. Beneficial Owners of 2013 Bonds may wish to take
certain steps to augment transmission to them of notices of significant events with respect to the 2013
Bonds, such as redemptions, tenders, defaults, and proposed amendments to the 2013 Bond documents.
For example, Beneficial Owners of 2013 Bonds may wish to ascertain that the nominee holding the 2013
Bonds 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.
Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to
the 2013 Bonds unless authorized by a Direct Participant in accordance with DTC’s Procedures. Under
its usual procedures, DTC mails an Omnibus Proxy to the Agency as soon as possible after the record
date. The Omnibus Proxy assigns Cede & Co.’s consenting or voting rights to those Direct Participants to
whose accounts the 2013 Bonds are credited on the record date (identified in a listing attached to the
Omnibus Proxy).
Payments on the 2013 Bonds will be made to Cede & Co., or such other nominee as may be
requested by an authorized representative of DTC. DTC’s practice is to credit Direct Participants’
accounts upon DTC’s receipt of funds and corresponding detailed information from the Agency or
Trustee, 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 bonds 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 Trustee, or the
Agency, 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 Agency
or the Trustee, 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.
DTC may discontinue providing its services as securities depository with respect to the 2013
Bonds at any time by giving reasonable notice to the Agency or the Trustee. Under such circumstances,
in the event that a successor securities depository is not obtained, 2013 Bond certificates are required to
be printed and delivered.
The Agency may decide to discontinue use of the system of book-entry transfers through DTC (or
a successor securities depository). In that event, 2013 Bond certificates will be printed and delivered to
DTC.
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The information in this section concerning DTC and DTC’s book-entry system has been obtained
from DTC, and the Agency takes no responsibility for the accuracy thereof.
The Agency will have no responsibility or obligation to any Securities Depository, any
Participants in the Book-Entry System or the Beneficial Owners with respect to (i) the accuracy of any
records maintained by the Securities Depository or any Participant; (ii) the payment by the Securities
Depository or by any Participant of any amount due to any Beneficial Owner in respect of the principal
amount of, or interest on, any Bonds; (iii) the delivery of any notice by the Securities Depository or any
Participant; or (iv) any other action taken by the Securities Depository or any Participant.
ANNUAL DEBT SERVICE REQUIREMENTS
The following table shows the annual debt service requirements of the Agency’s Water Supply
System Revenue Bonds after giving effect to the issuance of the 2013 Bonds and the refunding of the
2003 Bonds to be Refunded.
Bond Year
Ending May 1
Total
Debt Service
2003 Bonds
2008 Bonds
2013 Bonds
2013
2014
2015
2016
2017
2018
2019
2020
2021
$9,430,000
$ 1,536,513
1,536,513
1,536,513
7,211,513
7,214,638
7,213,888
7,216,000
7,218,750
$
63,993
6,378,100
6,377,700
707,200
700,100
703,000
702,050
695,800
7,914,400
$11,030,506
7,914,613
7,914,213
7,918,713
7,914,738
7,916,888
7,918,050
7,914,550
7,914,400
Total
$9,430,000
$40,684,325
$24,242,343
$74,356,671
________________________________
Note: Individual column totals may not exactly sum due to rounding.
SECURITY AND SOURCES OF PAYMENT FOR THE 2013 BONDS
General
The 2013 Bonds are revenue obligations. The 2013 Bonds are limited obligations of the Agency
which, together with the Unrefunded 2003 Bonds, the 2008 Bonds and additional parity bonds which may
be issued in the future, have a claim for payment solely from and are secured by a pledge of the Revenues
of the System and amounts in the various Funds and Accounts established by the Resolutions, and from
amounts required by the Resolutions to be deposited in those Funds and Accounts, including amounts
from eminent domain proceedings, proceeds of insurance or sales or exchanges of property and proceeds
of the sale of notes and bonds of the Agency, all as and to the extent and in the priority provided by the
Resolutions. The 2013 Bonds are not a debt of any Member. The Agency has no power to levy taxes.
Revenues of the System, as defined in the General Resolution, consist of: (a) all receipts derived
from the hereinafter defined Agreements or any other contract for the supply of water, other than deposits
in the Member Deposit Funds or similar funds for Agency customers; (b) all income derived from the
investment of moneys held pursuant to the Resolutions and required to be deposited in the Revenue Fund;
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and (c) all income, fees, water service charges and all rates, rents and receipts derived by the Agency
directly or indirectly from the ownership and operation of the System and the sale of water.
Flow of Funds
All Revenues are to be immediately deposited into the Revenue Fund. Deposits of Revenues held
by the Trustee in the Revenue Fund are required to be paid monthly by the Trustee to the following Funds
and Accounts established under the Resolutions, in the following order and amounts.
(1)
Operation and Maintenance Fund. A sum which, together with amounts already on
deposit in the Operation and Maintenance Fund, is sufficient to pay the Expense of Operation and
Maintenance (exclusive of Water Purchase Costs and Power Costs) for the current month and the next
two months, Water Purchase Costs for the current month and Power Costs for the current month and the
next month.
(2)
Debt Service Fund. An amount equal to one-sixth of the interest to come due on Bonds
on the next interest payment date until there shall be on deposit the full amount of that interest and an
amount equal to one-twelfth of the principal to come due on Bonds on the next principal payment date
until there shall be on deposit the full amount of that principal. The Trustee will apply amounts in the
Debt Service Fund to the payment of principal of, redemption premium, if any, and interest on Bonds.
(3)
Debt Service Reserve Fund. Any amount required so that the value of the Debt Service
Reserve Fund is equal to the maximum amount of principal of and interest on outstanding Bonds of the
Agency which is to come due in a 12-month period ending on May 1 (the “Debt Service Reserve
Requirement”). The value of the Debt Service Reserve Fund from time to time shall be the value of the
investments of the fund plus the Surety Bond Coverage of the Reserve Fund Insurance Policy or any
Substitute Surety Bond and of any reserve fund insurance policy issued upon the issuance of Additional
Bonds. In the event a drawing is made on the Reserve Fund Insurance Policy or moneys are withdrawn
from the Debt Service Reserve Fund, the Agency shall be obligated to reinstate the maximum limits of
such Reserve Fund Insurance Policy and to restore any moneys withdrawn so that within 12 months
following such drawing or withdrawal the amount on deposit in the Debt Service Reserve Fund (including
the Surety Bond Coverage) equals the Debt Service Reserve Requirement. Presently, the Debt Service
Reserve Requirement is met in part by a Reserve Fund Insurance Policy provided by National Public
Finance Guarantee Corporation, an operating subsidiary of MBIA Inc. (“NPFGC”), which expires in
accordance with its terms on May 1, 2015. Resolution No. 03-08 of the Agency provides for a reduction
in the Debt Service Reserve Requirement from May 2, 2015 through April 30, 2016, inclusive, but only
for that period of time. In connection with the issuance of the 2013 Bonds, the Agency will direct the
Trustee to assume that the Debt Service Reserve Requirement will remain unchanged for that period and
will establish a funding mechanism to fund the Debt Service Reserve Fund at the full Debt Service
Reserve Requirement following the expiration of the Reserve Fund Insurance Policy, without giving
effect to such reduction. See “SUMMARY STATEMENT – DEBT SERVICE RESERVE REQUIREMENT”
and “RESERVE FUND INSURANCE POLICY.”
(4)
Bond Anticipation Note Debt Service Fund*. The amount specified in each Notes Series
Resolution as the Notes Interest Deposit Requirement for that month for that Series and the amount
specified in each Notes Series Resolution as the Notes Principal Deposit Requirement for that month for
that Series. The Trustee will apply amounts in the Bond Anticipation Note Debt Service Fund to the
payment of principal of, redemption price, if any, and interest on Notes.
* No Bond Anticipation Notes have been outstanding since May 1, 1985.
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If at any time the amounts in the Debt Service Fund and Debt Service Reserve Fund are
insufficient to make required payments on the Bonds, and upon depletion of the Accounts in the General
Fund as provided in the General Resolution, the Trustee may withdraw from the Bond Anticipation Note
Debt Service Fund amounts sufficient to pay interest on or principal of the Bonds then due. No such
withdrawal shall ever be made from any Note Capitalized Interest Account.
(5)
Replacements and Contingencies Account in the General Fund. $50,000 per month to
accumulate and maintain a required balance of $3,000,000 in the Account. The amount of the required
monthly deposit to or balance in the Account may be increased from time to time by the Agency. As of
December 31, 2012, such Account had a balance of $4,117,954.
(6)
General Reserve Account in the General Fund. The amount, if any, remaining in the
Revenue Fund after payment or credit to all other Funds and Accounts. The amounts in the General
Reserve Account may be used by the Agency to pay debt service on subordinate obligations and to pay
costs of extensions and improvements to the System, may be deposited in the Revenue Fund as a credit
against payments due under the Agreements or may be deposited in the Construction Fund, the Bond
Redemption Account or the Note Redemption Account.
All Funds and Accounts are held by the Trustee with the exception of the Operation and
Maintenance Fund which is held by the Agency.
Additional Obligations
The Agency may issue additional parity obligations for certain purposes, subject to the tests
identified and described under “Additional Agency Obligations” in the Summary of Certain Provisions of
the General Resolution, included as APPENDIX A. The Agency may also issue Additional Agency
Obligations to refund Agency Obligations.
Member Deposits
As security for payment of its obligations under the Agreements, each Member is obligated to
deposit and maintain with the Trustee in each fiscal year an amount equal to the maximum amount of the
Member’s estimated share of the Agency’s costs for any month in that fiscal year. Any amounts
withdrawn from a Member’s Deposit Fund by the Trustee to pay amounts due and unpaid from such
Member under the Agreement are required to be immediately restored by the Member.
Certain Covenants
The Agency covenants in the General Resolution to establish fees and charges for its provision of
water, including amounts due under the Agreements, sufficient to provide Revenues at all times adequate,
together with other available amounts, to meet all of its requirements under the Resolutions, including
making in timely fashion all the required deposits and credits in the various Funds and Accounts.
The Agency covenants in the General Resolution to adopt a budget not less than 30 days prior to
the beginning of each fiscal year which will set forth a detailed estimate of the Revenues and the Expense
of Operation and Maintenance of the Agency for such fiscal year. In accordance with the Agreements,
the budget will also set forth the estimated share of costs of the Agency by month for each Member.
Following the end of each quarter of each fiscal year, the Agency shall review its estimates set forth in the
budget for such year and, in the event such estimates do not substantially correspond with actual
Revenues and the Expense of Operation and Maintenance or other requirements, adopt an amended
budget.
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See “Summary of the General Resolution” included as APPENDIX A for further discussion of
certain of the terms and provisions of the General Resolution.
RESERVE FUND INSURANCE POLICY
General
In 1986, Municipal Bond Insurance Association, now known as MBIA Corp. (“MBIA”) issued a
surety bond (the “Reserve Fund Insurance Policy”) in the amount of $10,830,750. The Reserve Fund
Insurance Policy expires in accordance with its terms on May 1, 2015. The Reserve Fund Insurance
Policy provides that upon notice to MBIA of insufficient amounts being on deposit in the Debt Service
Fund to pay the principal of (at maturity or pursuant to mandatory redemption requirements) and interest
on the Bonds up to the face amount of the Reserve Fund Insurance Policy, MBIA will promptly deposit
with the Trustee an amount sufficient to pay the principal of and interest on the Bonds or the available
amount of the Reserve Fund Insurance Policy, whichever is less. The available amount of the Reserve
Fund Insurance Policy is the face amount of the Reserve Fund Insurance Policy less the amount of any
previous deposits by MBIA with the Trustee, which have not been reimbursed by the Agency. The
Agency is required to reimburse MBIA, within one year, the amount of any deposit made by MBIA with
the Trustee under the Reserve Fund Insurance Policy. Such reimbursement shall be made only after all
required deposits to the Operation and Maintenance Fund and the Debt Service Fund have been made.
The Agency is required to reimburse MBIA, with interest, until the face amount of the Reserve Fund
Insurance Policy is reinstated before any deposit is made to the General Fund. No optional redemption of
Bonds may be made until any Reserve Fund Insurance Policy is so reinstated. The Reserve Fund
Insurance Policy will be held by the Trustee in the Debt Service Reserve Fund and is provided in addition
to the Agency depositing funds or Investment Obligations equal to the Debt Service Reserve Requirement
for outstanding Bonds.
The Reserve Fund Insurance Policy does not insure against loss of any prepayment premium
which may at any time be payable with respect to any 2013 Bonds. The Reserve Fund Insurance Policy
does not, under any circumstance, insure against loss relating to: (i) optional or mandatory redemptions
(other than mandatory sinking fund redemptions); (ii) any payments to be made on an accelerated basis;
(iii) payments of the purchase price of 2013 Bonds upon tender by an owner thereof; or (iv) any
Preference relating to (i) through (iii) above. The Reserve Fund Insurance Policy also does not insure
against nonpayment of principal of or interest on the 2013 Bonds resulting from the insolvency,
negligence or any other act or omission of the Trustee or any other paying agent for the 2013 Bonds.
The following information has been furnished by National Public Finance Guarantee Corporation
(“National”) for use in this Official Statement.
National does not accept any responsibility for the accuracy or completeness of this Official
Statement or any information or disclosure contained herein, or omitted herefrom, other than with respect
to the accuracy of the information regarding the Reserve Fund Insurance Policy and National set forth
under the heading “National Public Finance Guarantee Corporation”. Additionally, National makes no
representation regarding the 2013 Bonds or the advisability of investing in the 2013 Bonds.
Neither the Agency, the Trustee, nor the Underwriter make any representation as to the
completeness or the accuracy of information provided by National or as to the absence of material adverse
changes in such information subsequent to the date hereof.
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Reorganization of MBIA
On February 18, 2009, MBIA Inc., the parent holding company of MBIA Corp., announced that it
had established a new U.S. public finance financial guarantee insurance company within the MBIA Inc.
group by restructuring MBIA Corp. and its subsidiaries through a series of transactions (the
“Transactions”). As part of the Transactions, (i) the stock of MBIA Insurance Corp. of Illinois (which,
effective March 19, 2009 was renamed National Public Finance Guarantee Corporation), an existing
public finance financial guarantee insurance subsidiary of MBIA Corp., was transferred to a newly
established intermediate holding company, National Public Finance Guarantee Holdings, Inc. (“National
Holdings”), also a subsidiary of MBIA Inc.; and (ii) effective January 1, 2009, MBIA Corp. ceded to
National all of MBIA Corp.’s U.S. public finance business, including the Reserve Fund Insurance Policy,
pursuant to that certain Amended and Restated Quota Share Reinsurance Agreement between MBIA
Corp. and National (the “Reinsurance Agreement”). Pursuant to the Reinsurance Agreement, MBIA
Corp. paid to National approximately $2.89 billion (which equals the net unearned premium, loss and loss
adjustment expense reserves, net of the 22 percent ceding commission that MBIA Corp. received) as a
premium to reinsure the policies covered under the Reinsurance Agreement (each a “Covered Policy”).
The Reserve Fund Insurance Policy is a Covered Policy. National was further capitalized with $2.09
billion from funds distributed by MBIA Corp. to MBIA Inc. as a dividend and return of capital, which
was ultimately contributed to National through National Holdings. The Reinsurance Agreement provides
a cut-through provision enabling the holder of a Covered Policy to make a claim for payment directly
against National. In addition, National has also issued second-to-pay policies for the benefit of the holder
of a Covered Policy, granting such policyholder the right to make a claim directly against National if
MBIA Corp. did not honor such claim.
National Public Finance Guarantee Corporation
National is an operating subsidiary of MBIA Inc., a New York Stock Exchange listed company.
MBIA Inc. is not obligated to pay the debts of or claims against National. National is domiciled in the
State of New York and is licensed to do business in and subject to regulation under the laws of all
50 states, the District of Columbia and the Commonwealth of Puerto Rico.
The principal executive offices of National are located at 113 King Street, Armonk, New York
10504 and the main telephone number at that address is (914) 765-3333.
Regulation
As a financial guaranty insurance company licensed to do business in the State of New York,
National is also subject to the New York Insurance Law which, among other things, prescribes minimum
capital requirements and contingency reserves against liabilities for National, limits the classes and
concentrations of investments that are made by National and requires the approval of policy rates and
forms that are employed by National. State law also regulates the amount of both the aggregate and
individual risks that may be insured by National, the payment of dividends by National, changes in
control with respect to National and transactions among National and its affiliates.
The Policy is not covered by the Property/Casualty Insurance Security Fund specified in
Article 76 of the New York Insurance Law.
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Financial Strength Ratings of National
National’s current financial strength ratings from the major rating agencies are summarized
below:
Agency
Ratings
Outlook
S&P
Moody’s
BBB
Baa2
Developing
Negative
Each rating of National should be evaluated independently. The ratings reflect the respective
rating agency’s current assessment of the creditworthiness of National and its ability to pay claims on its
policies of insurance. Any further explanation as to the significance of the above ratings may be obtained
only from the applicable rating agency.
The above ratings are not recommendations to buy, sell or hold the 2013 Bonds, and such ratings
may be subject to revision or withdrawal at any time by the rating agencies. Any downward revision or
withdrawal of any of the above ratings may have an adverse effect on the market price of the 2013 Bonds.
National does not guaranty the market price of the 2013 Bonds nor does it guaranty that the ratings on the
2013 Bonds will not be revised or withdrawn.
Recent Litigation
In the normal course of operating its business, National may be involved in various legal
proceedings. Additionally, MBIA Inc. may be involved in various legal proceedings that directly or
indirectly impact National. For information concerning material litigation involving National and MBIA
Inc., including but not limited to certain actions relating to the Transactions entitled ABN AMRO Bank
N.V. et al. v. MBIA Inc. et al., ABN AMRO Bank N.V. et al. v. Eric Dinallo, in his capacity as
Superintendent of the New York State Insurance Department, the New York State Insurance Department,
MBIA Inc. et al., and Barclays Bank PLC., et al. v. James Wrynn , in his capacity as Superintendent of
the New York State Insurance Department, the New York State Insurance Department, MBIA Inc. et al.,
see MBIA Inc.’s Annual Report on Form 10-K for the year ended December 31, 2011 and Quarterly
Report on Form 10-Q for the quarter ended September 30, 2012, which is hereby incorporated by
reference into this appendix and shall be deemed to be a part hereof, as well as the information posted on
MBIA Inc.’s web site at http://www.mbia.com.
MBIA Inc. and National are defending against the aforementioned actions and expect ultimately
to prevail on the merits. There is no assurance, however, that they will prevail in these actions. Adverse
rulings in these actions could have a material adverse effect on National’s ability to implement its strategy
and on its business, results of operations and financial condition.
Other than as described above and referenced herein, there are no other material lawsuits pending
or, to the knowledge of National, threatened, to which National is a party.
National Financial Information
Based upon statutory financials, as of September 30, 2012, National had cash and admitted assets
of $5.9 billion (unaudited), total liabilities of $4.1 billion (unaudited), and total surplus of $1.8 billion
(unaudited) determined in accordance with statutory accounting practices prescribed or permitted by
insurance regulatory authorities.
For further information concerning National, see the financial statements of MBIA Inc. and its
subsidiaries as of December 31, 2011, prepared in accordance with generally accepted accounting
-10-
principles, included in the Annual Report on Form 10-K of MBIA Inc. for the year ended December 31,
2011, which are hereby incorporated by reference into this appendix and shall be deemed to be a part
hereof.
Incorporation of Certain Documents by Reference
The following documents filed by MBIA Inc. with the Securities and Exchange Commission (the
“SEC”) are incorporated by reference into this Official Statement:
MBIA Inc.’s Quarterly Report on Form 10Q for the quarter ended September 30, 2012;
MBIA Inc.’s Annual Report on Form 10-K for the year ended December 31, 2011;
Any documents, including any financial statements of National that are included therein or
attached as exhibits thereto, or any Form 8-K, filed by MBIA Inc. pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act after the date of MBIA Inc.’s most recent Quarterly Report on Form 10-Q or
Annual Report on Form 10-K, and prior to the termination of the offering of the 2013 Bonds offered
hereby shall be deemed to be incorporated by reference in this appendix and to be a part hereof from the
respective dates of filing such documents.
Any statement contained in a document incorporated or deemed to be incorporated by reference
herein, or contained in this appendix, shall be deemed to be modified or superseded for purposes of this
appendix to the extent that a statement contained herein or in any other subsequently filed document
which also is or is deemed to be incorporated by reference herein modifies or supersedes such statement.
Any such statement so modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this appendix.
MBIA Inc., files annual, quarterly and special reports, information statements and other
information with the SEC under File No. 1-9583. Copies of MBIA Inc.’s SEC filings (including MBIA
Inc.’s Quarterly Report on Form 10Q for the quarter ended September 30, 2012 and Annual Report on
Form 10-K for the year ended December 31, 2011) are available (i) over the Internet at the SEC’s web
site at http://www.sec.gov; (ii) at the SEC’s public reference room in Washington D.C.; (iii) over the
Internet at MBIA Inc.’s web site at http://www.mbia.com; and (iv) at no cost, upon request to National at
its principal executive offices.
WATER SUPPLY AGREEMENTS
General
The Water Supply Agreements (the “Agreements”) between the Agency and the Members are
substantially uniform for each Member except for identifying information, quantities of water, distance
and capacity shares (as defined below) and points of delivery of water.
Each Member executed an Agreement with the Agency on December 31, 1982, for a term of 40
years, extending to December 31, 2022. The Agreements are irrevocable and may not be terminated or
amended in any manner except as provided in the General Resolution. The Agreements were amended in
1997 to reduce Agency storage requirements. See “THE WATER SUPPLY SYSTEM – Existing Facilities.”
Take or Pay Obligation. Each Member is obligated, on a “take or pay” basis, to purchase or in
any event to pay for a minimum annual quantity of water regardless of the ability of the Agency to
complete the System or to supply water. Such payments are not subject to reduction whether by setoff or
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otherwise and are not conditional upon the performance or nonperformance of any party of any agreement
for any cause whatever.
At the time the Agreements were executed, five of the Members (Elk Grove Village, Hanover
Park, Hoffman Estates, Mount Prospect and Schaumburg) were home rule municipalities, which had been
authorized under provisions of the Illinois Constitution, without statutory authority, to enter into the
Agreements, including the “take or pay” provisions.
In January 1985, the State of Illinois adopted legislation to state explicitly the Illinois law on the
“take or pay” aspects of the Agreements. This legislation, which governs non-home rule municipalities,
provides:
Any such contract made by a municipality for a supply of water with a municipal joint
action water agency under the provisions of the Intergovernmental Cooperation Act may
contain provisions whereby the municipality is obligated to pay for such supply of water
without setoff or counterclaim and irrespective of whether such supply of water is ever
furnished, made available or delivered to the municipality or whether any project for the
supply of water contemplated by any such contract is completed, operable or operating
and notwithstanding any suspension, interruption, interference, reduction or curtailment
of the supply of water from such project. Any such contract with a municipal joint action
water agency may provide that if one or more of the other purchasers of water defaults in
the payment of its obligations under such contract or a similar contract made with the
supplier of the water, one or more of the remaining purchasers party to such contract or
such similar contract shall be required to pay for all or a portion of the obligations of the
defaulting purchasers.
This was stated to be declarative of existing Illinois law. Subsequent to the adoption of this
legislation, the two Members (Rolling Meadows and Streamwood), which were then non-home rule
municipalities, each ratified the Agreements. Both Members are now home rule units.
In the opinion of Bond Counsel, the Agreements, including without limitation, the unconditional
and irrevocable obligation of Members to make payments under the Agreements notwithstanding a
failure, delay, interruption or reduction of water delivery by the Agency, are valid and legally binding
limited obligations of the Members, payable from the revenues of the Members’ respective waterworks or
combined waterworks and sewerage systems, in accordance with the terms of the Agreements.
Source of Payment. The payments required to be made by each Member under the Agreements
are required to be made solely from the revenues derived from the operation of the waterworks or
combined waterworks and sewerage system of the Member, as applicable (each a “Local System”).
Members are not prohibited by the Agreements, however, from using any other available funds to make
the payments under the Agreements. Each Member has agreed that its obligation to make payments
required by the Agreements from revenues of its Local System presently is, and will continue to be,
payable from the operation and maintenance account of its Local System and from all other accounts of
its Local System in which there are available funds. Under the Agreements, each Member agrees that all
future revenue bond ordinances of the Member will provide that amounts payable under the Agreements
will have priority over the claim of those future revenue bonds to revenues of the Local System.
No Member has any outstanding Local System revenue bonds.
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Quantities
Requirements Obligation. Each Member agrees to purchase all Lake Water necessary to meet all
water demands of its Local System, but not in excess of the Member’s State Water Allocation or the
Maximum Quantity, which the Agency is obligated to deliver on any day. The Members may not
purchase water from any other source except to the extent that a Member’s total requirement exceeds the
Maximum Quantity that it is entitled to purchase from the Agency.
Minimum Quantity Purchase Obligation. Each Member must purchase or in any event pay for a
Minimum Quantity of Lake Water. The aggregate of the Minimum Quantities of the Members
corresponds to the minimum purchase obligation of the Agency under the Chicago Contract. Hanover
Park and Rolling Meadows used less than the Minimum Quantity Purchase Obligations in 2012 but paid
such amount. See “THE CHICAGO CONTRACT.” The Minimum Quantity may not be reduced or assigned
under any circumstance.
Minimum Quantity Purchase Obligations and Actual Fiscal 2012 Purchases
(Millions of Gallons per year)
Minimum Quantity
Purchase Obligations
Actual Purchases
Fiscal Year
Fiscal Year
Member
2007
2008
2009
2010
2011
2012
2010
2015
2022
2,101.67
1,073.47
1,910.41
1,481.90
908.85
3,447.06
1,200.85
2,098.54
1,016.09
1,951.81
1,430.42
910.23
3,420.98
1,236.29
1,864.81
946.25
1,834.62
1,369.13
994.85
3,213.31
1,204.67
1,780.69
947.97
1,938.07
1,327.48
904.62
3,118.06
1,168.46
1,848.89
930.35
1,792.01
1,303.70
812.30
3,082.23
1,083.55
1,828.90
921.29
1,755.21
1,250.06
770.94
3,079.38
1,077.00
1,692
932
1,549
1,090
785
2,685
757
1,748
980
1,570
1,123
811
2,843
780
1,803
1,029
1,592
1,155
837
3,001
803
Total .................... 12,124.21
12,064.36
11,427.64
11,185.35
10,853.03
10,682.78
9,490
9,855
10,220
Elk Grove Village ......
Hanover Park .............
Hoffman Estates .........
Mount Prospect ..........
Rolling Meadows .......
Schaumburg ...............
Streamwood ...............
Maximum Quantity. Each Member has the right to purchase each day 1.8 times the Maximum
Quantity (expressed in terms of average daily consumption) as set forth in the Agreement although the
total amount of Lake Water sold by the Agency to a Member in any year may not exceed its State Water
Allocation, including any allowable excess then in effect. The Agency’s obligation to furnish water is
subject to the receipt of sufficient water under the Chicago Contract and to the ability of the Agency to
deliver Lake Water to the Member. The Maximum Quantity of a Member may be reduced (but not below
that Member’s Minimum Quantity purchase obligation), assigned or increased subject to the approval of
the Agency and provided that the sum of Maximum Quantities for all Members and other Agency
customers shall in any fiscal year at least equal the original total of Maximum Quantities. Any change in
the Maximum Quantity will in no way alter the Minimum Quantity purchase obligation of each Member.
The Maximum Quantities for representative fiscal years for each Member are set forth below.
-13-
Maximum Quantity and Actual Fiscal Year Purchases
(Millions of Gallons per year)
Maximum Quantity Purchase
Obligations
Actual Purchases
Fiscal Year
Fiscal Year
Member
2007
2008
2009
2010
2011
2012
2010
2015
2022
Elk Grove Village ..
Hanover Park .........
Hoffman Estates ....
Mount Prospect ......
Rolling Meadows...
Schaumburg ...........
Streamwood ...........
2,101.67
1,073.47
1,910.41
1,481.90
908.85
3,447.06
1,200.85
2,098.54
1,016.09
1,951.81
1,430.42
910.23
3,420.98
1,236.29
1,864.81
946.25
1,834.62
1,369.13
994.85
3,213.31
1,204.67
1,780.69
947.97
1,938.07
1,327.48
904.62
3,118.06
1,168.46
1,848.89
930.35
1,792.01
1,303.70
812.30
3,082.23
1,083.55
1,828.90
921.29
1,755.21
1,250.06
770.94
3,079.38
1,077.00
3,323
1,825
3,047
2,141
1,541
5,249
1,486
3,417
1,913
3,074
2,195
1,586
5,541
1,525
3,515
2,006
3,103
2,251
1,632
5,851
1,565
Total.................
12,124.21
12,064.36
11,427.64
11,185.35
10,853.03
10,682.78
18,612
19,252
19,921
Payment Provisions
Shares of Agency Costs. Each Member has agreed and is obligated to pay monthly its allocated
share of all of the Agency’s costs. Amounts due each month are composed of: (a) Water Purchase Costs,
(b) Power Costs, (c) Operation and Maintenance Costs, (d) Fixed Costs, (e) Underconsumption Costs, if
any, and (f) Member Default Costs, if any. The definition of each cost and the method of calculation is
summarized below.
(a)
Water Purchase Costs are the amounts payable under the Chicago Contract and amounts
payable for any water purchased from any other sources. A Member’s share of Water Purchase Costs will
be that proportion which the delivered quantity of water to that Member in the preceding month under the
Agreement was to the total delivered quantities for all Members in that preceding month.
(b)
Power Costs are the amounts required (or reasonably estimated to be required in the case
of a future month) to be paid by the Agency in a month for energy used in connection with operation of
the System. A Member’s share of the Power Costs will be that proportion which the delivered quantity of
water for that Member in the preceding month under the Agreement was to the total delivered quantities
for all Members in that preceding month. Prior to System commencement these costs were shared
equally among Members.
(c)
Operation and Maintenance Costs are the amounts required by the General Resolution to
be paid to the Agency’s Operation and Maintenance Fund each month except Water Purchase Costs and
Power Costs. A Member’s share of such costs will be that proportion which the Member’s water use in
the preceding year (or Minimum Quantity if larger) was of the total water use (or Minimum Quantity if,
larger) of all the Members. Prior to System commencement these costs were shared equally among
Members.
(d)
Fixed Costs are all amounts required by the Resolutions to be paid to the various
Accounts in the Debt Service Fund and the General Fund. A Member’s share of such costs will be
determined for each fiscal year according to a weighted cost allocation formula set forth in the
Agreement. The formula takes into account the Member’s distance share as defined below, the Member’s
capacity share as defined below, and two times the Member’s proportionate share of total water use for
the most recent calendar year. A capacity share is the Member’s proportionate share of the capacity of
the System for the remaining term of the Agreement. A distance share is based upon the distance of the
Member from the connection point of the System to the Chicago system. A water use share for a year
will be the same ratio used for allocating Operation and Maintenance Costs. A reconciliation of the
-14-
allocation of Fixed Costs will be made annually to reflect each Member’s actual water use (or Minimum
Quantity, if larger).
(e)
Underconsumption Costs are amounts the Agency must pay under the Chicago Contract
as a result of failure of the Agency in a year to accept delivery of the minimum purchase quantity under
the Chicago Contract. Those costs will be shared among those Members who failed to take their
Minimum Quantity in that year.
(f)
Member Default Costs are the shares of costs unpaid in a month. If in any month any
Member fails to make any payment due, then the unpaid obligation of that Member will be pro-rated
among the other Members and will be payable by them, without limitation, in addition to their regular
monthly payments due, in the next month.
Payment Terms. The Agency bills each Member by the fifth day of each month and payments are
due on the 25th day of that month with late charges of three percent on all unpaid amounts. Interest
accrues on all unpaid amounts at the rate of one percent per month or portion thereof beginning with the
following month.
Member Deposit. To secure its obligation under the Agreement, each Member is required to
maintain on deposit with the Agency an amount equal in each fiscal year to the sum of its estimated
maximum monthly share of Water Purchase Costs, Power Costs, Operation and Maintenance Costs and
Fixed Costs. In the event a Member is delinquent in remitting its monthly payment, the deposit will be
applied by the Trustee to the Member’s Payment for that month. The Member is required to immediately
restore the deposit to the required amount.
Credits. The Agency agrees to cause the Trustee to deposit available amounts in the General
Reserve Account to the Revenue Credits Account and to credit those amounts to Members which have
paid Member Default Costs until the amount so deposited and credited equals the amount of Default
Costs and interest on that amount to the date of the credit.
The Agency also agrees to credit to Members any amounts which are transferred from the
General Reserve Account for deposit in the Revenue Credits Account on the basis of (i) their shares of
Fixed Costs if the amounts are derived from investment income or from an initial capital contribution of
an additional municipality or an Agency customer or (ii) their shares of all costs if the amounts are
derived from sales of water to Agency customers or from late charges paid by Members.
Certain Covenants
Rate Covenant. Each Member has covenanted to establish and collect rates and charges for its
customers as required to produce revenues sufficient (a) to make all payments under the Agreement and
to pay all other costs of operation and maintenance of the Member’s Local System, (b) to make all
deposits in all funds and accounts required by ordinances providing for bonds to be paid from revenues of
the Member’s Local System and (c) to pay the principal of and interest on all bonds of the Member which
by their terms are payable from the revenues of the Member’s Local System. Such rates and charges are
not required, however, to be sufficient to produce amounts required for making payments under the
Agreement during the longer of the immediately succeeding six months or the remainder of the current
fiscal year to the extent that available amounts sufficient for paying amounts required for those payments
shall have been set aside in cash or investments in a separate account in the revenue fund of the Member’s
Local System designated for those purposes and appropriated to make payments under the Agreement.
Certain Other Member Covenants. Each Member covenants among other things to operate,
maintain and improve its Local System and to use its best efforts to continue serving all present customers
-15-
of the Local System. Each Member also agrees to cooperate in the construction of the System and in the
issuance of the Agency’s obligations. Each Member covenants to use its best efforts to maintain a State
Water Allocation that satisfies its water requirements from time to time.
Agency Covenants. The Agency covenants, among other things, to operate and maintain the
System in order to be able to perform its obligation to supply Lake Water to the Members. Consequently,
the Agency also covenants to acquire and construct Additional Facilities as they are needed to supply
sufficient quantities of Lake Water to the Members. In connection with both covenants, the Agency’s
additional agreement to perform all of its covenants under the General Resolution incorporates a
requirement that at least once in each three-year period it will cause the Consulting Engineer to prepare
and file reports with the Agency and the Trustee stating which repairs, replacements, renewals or
additions are necessary or expected to become necessary to keep the System in proper working order and
condition and in good repair and whether the deposits being made in the Replacements and Contingencies
Account, and the Replacements and Contingencies Requirement, are adequate to provide and maintain an
adequate Account for paying reasonably projected Costs of Replacements and Contingencies and, if they
are not, any recommendation as to changes in the monthly deposits and the Replacements and
Contingencies Requirement. Burns & McDonnell, the Consulting Engineer to the System, completed its
most recent triennial report in 2011 (the “Bond Resolution Triennial Condition and Operating Report –
2011”).
Defaults
Member Defaults. The following events are defaults of a Member under the Agreement:
(1)
failure to pay when due any amounts payable under the Agreement;
(2)
failure to maintain its Member deposit in the required amount;
(3)
failure to take delivery of the Member’s water requirements as described above
under “Quantities Requirements Obligation”; and
(4)
failure to perform any other obligation and continuation of that failure after
30 days’ written notice of failure.
In the event of a default described in (1) or (2) above the Agency will have the right to apply the
Member deposit and to collect the late charge and interest provided in the Agreement. In the event of a
default described in (2), (3) or (4) above the Member agrees that the Agency will have the right to
mandamus and specific performance. The specified remedies are in addition to any other remedy which
the Agency may have at law or in equity or under the Agency Agreement or under the Agreement.
Agency Default. Failure by the Agency to perform its obligation under the Agreement will be an
Agency default unless such failure is caused by an event or condition beyond the reasonable control of the
Agency. In the event of default by the Agency, the Member may bring an action against the Agency
including an action in equity and actions for mandamus and specific performance but the Member agrees
that it will have no right whether or not there is an Agency default to cancel or rescind the Agreement, to
withhold payments due or to become due under the Agreement to recover amounts previously paid under
the Agreement or to reduce or set-off against amounts due or to become due under the Agreement and
will have no claim on the Operation and Maintenance Fund or any Fund or Account held by the Trustee.
-16-
THE AGENCY
Background
The Agency was established in March 1981 upon adoption of an Agency Agreement (the
“Agency Agreement”), pursuant to the Act by the Village of Elk Grove Village, Village of Hanover Park,
Village of Hoffman Estates, Village of Mount Prospect, City of Rolling Meadows, Village of
Schaumburg and the Village of Streamwood (each, a “Member”). The Members form a contiguous
geographic service area which is located 15 to 30 miles northwest of downtown Chicago. Under the
Agency Agreement, additional members may join the Agency upon the unanimous approval of the
Members.
The Agency was created to finance, build and operate a water supply system to deliver Lake
Water to the Members of the Agency. The Agency is empowered to plan, finance, construct and operate
the System. It is also authorized to contract for the purchase and resale of water. Members may, for the
purpose of and upon request by the Agency, exercise the power of eminent domain and convey property
so acquired to the Agency at cost.
The rates established by the Agency for the sale of water, as well as all other aspects of its
budgeting, operating and financing activities, are not currently subject to regulation by any state or federal
administrative agency. All property, income and receipts of or transactions by the Agency are presently
exempt from property or income taxation.
Organization and Management
Board of Directors. The Agency is governed by the Board, which consists of one elected official
from each Member. The current Directors are listed on the second page of this Official Statement. Each
Director has an equal vote. The officers of the Agency are appointed by the Board, Members of the
Board and officers serve without compensation.
The Board determines the general policy of the Agency, makes all appropriations, approves
contracts for sale or purchase of water, adopts resolutions providing for the issuance of bonds or notes by
the Agency, adopts by-laws, rules and regulations, and exercises such powers and performs such duties as
may be prescribed in the Agency Agreement or the by-laws.
The individuals listed below currently serve as the duly appointed officers of the Agency:
Affiliation
Officer
Al Larson
Chairman
Michael Janonis Secretary
Christine Tromp Treasurer
President
Manager
Director of Finance
Village of Schaumburg
Village of Mount Prospect
Village of Elk Grove Village
Executive Committee. The Executive Committee of the Agency consists of the Village Manager
or other appointed official of each Member as designated by the Member. The current members of the
Executive Committee are listed on the second page of this Official Statement. Each member of the
Executive Committee is entitled to one vote on the Committee. The officers of the Executive Committee
are elected from its members. Marc Hummel, Manager of Hanover Park, presently serves as chairman.
The daily operation of the Agency is conducted under the direction and supervision of the Executive
Committee, subject to the general policy decisions of the Board. The Executive Committee is responsible
for carrying out the policy decisions of the Board. Members of the Executive Committee serve without
compensation.
-17-
Administration. The full-time staff of the Agency consists of 14 employees. The Executive
Director acts as the administrative head of the Agency and is directly responsible to the Executive
Committee for the administration of the Agency. The Executive Director is appointed by the Executive
Committee on the basis of administrative and executive qualifications.
Joseph G. Fennell. Executive Director, joined the Agency in February, 1997. Prior to that time,
Mr. Fennell served as Director of Public Services for the Village of Woodridge, Illinois. Mr. Fennell is a
graduate of Lewis University and holds a Master’s Degree in Public Administration from Northern
Illinois University.
The Deputy Director is appointed by the Executive Committee and reports to the Executive
Director. The Deputy Director is responsible for the development of payroll systems, investments,
maintenance of financial records and reports, and aspects of the capital and operating budgets of the
Agency.
Kevin Lockhart, Deputy Director, became associated with the Agency in June, 2011. Prior to that
time Mr. Lockhart spent eight years in banking and over 18 years in finance positions in state and local
government. Mr. Lockhart is a graduate of Illinois State University with a degree in Finance and earned
his MBA from Lewis University.
Steven Pittman was appointed Water Operations Manager in November 1993. Mr. Pittman was
employed by the City of Evanston, Illinois, for sixteen years prior to his appointment to his present
position, serving as chief of the Pumping Division and Maintenance Supervisor. He has a Class “A”
Illinois Water Operator’s License and a supervising Electrician’s License from the City of Chicago.
THE WATER SUPPLY SYSTEM
Existing Facilities
The System, completed in April 1986 at a cost of $114.5 million (which included $13.7 million of
net capitalized interest), receives its water supply from the City of Chicago at the Main Pumping/Storage
Station located at O’Hare Airport (the “O’Hare Site”). Ground storage reservoirs at the O’Hare Site serve
the dual roles of the terminal point of the Chicago delivery system and the suction source for the
Agency’s Main Pumping Station. The System includes pumping stations, reservoirs to receive Lake
Water from Chicago, standpipe storage facilities, a looped transmission main network and multiple
delivery points to furnish water to each member.
The System includes about 55 miles of transmission mains the sizes of which range from
90 inches in diameter at the O’Hare Site to 12 inches for certain lines extending into areas of the
periphery of the System. The Agency’s transmission mains convey water from the Main Pumping Station
to each Member community. Storage volume and pumping capacity have been sufficient to meet all
System demands to date.
The Main Pumping Station has seven pumps with a total rated capacity of 128 MGD and a firm
rated capacity of 98 MGD. All Lake Water received from the City is pumped from the Main Pumping
Station located at the O’Hare Site into a looped transmission main network at sufficient pressure to serve
the entire water demands of three Members and a portion of a fourth Member’s demands directly. Four
satellite booster pumping stations pump water directly from the looped transmission main network into
transmission mains at sufficiently elevated pressures to serve the other Members.
-18-
The System has been designed and constructed with the following distinctive features. The size
and configuration of the transmission mains as well as the location of storage and pumping facilities were
designed to minimize the energy requirements of the System. Each pumping station has a standby power
source in the event of a localized or regional power failure, thereby improving the reliability of the
System. The looped transmission system was designed to increase the reliability of service in the event of
failure of a portion of the main. The locations of the water delivery points for each Member were selected
to minimize local capital expenditures and also to maintain reliability of service in the event of delivery
point malfunctions. Water is also delivered into each Members Local System, rather than receiving
reservoirs, allowing the System pressure to be used by each Member to distribute water.
Every three years the Agency causes to be prepared a Consulting Engineer Report that evaluates
the sufficiency of the System to meet customer demands. The Bond Resolution Triennial Condition and
Operating Report – 2011 dealt primarily with the present system conditions, the operations of the System
and the proper level of the Replacements and Contingencies Account. The Bond Resolution Triennial
Condition and Operating Report – 2011 indicated that water storage volume at the O’Hare Site is
sufficient to meet the contractual minimums under the Agreements of 20 million gallons. The report also
concluded that the System is complete and that its components are operating satisfactorily and are
properly maintained. All System improvements and replacements for the foreseeable future are funding
through existing revenues available to the Agency.
System Operation
Pumpage data for the years 2004 to 2012 is set forth in the following table.
Summary Pumpage Data – 2004 – 2012
(Millions of Gallons)
Daily Pumpage
Fiscal
Year
Average
Maximum
Total Annual Sales
Delivered
Total Annual Sales
Purchased
Percent
Unaccounted For (1)
2004
2005
2006
2007
2008
2009
2010
2011
2012
34.598
33.542
36.251
33.217
33.053
31.308
30.645
29.734
28.820
41.021
40.147
50.000
41.937
40.746
37.690
37.470
36.760
39.571
12,628
12,242
13,231
12,124
12,064
11,428
11,185
10,853
10,683
12,906
12,491
13,614
12,397
12,344
11,687
11,398
11,032
10,871
2.15%
1.99%
2.81%
2.20%
2.27%
2.22%
1.86%
1.62%
1.73%
________________________________
(1) Members are billed monthly for the total cost of water purchased from the City of Chicago.
-19-
Agency sale of water to the Members Local Systems is set forth in the following table below
along with historical pumpage figures for the Members.
Historical Pumpage of Members and Agency Sales to Members’ Local Systems
(Millions of Gallons per year)
Fiscal
Year
Ended
April 30
Elk
Grove
Village
Hanover
Park
Hoffman
Estates
Mount
Prospect
Rolling
Meadows
Schaumburg
Streamwood
Total
914
933
1,017
1,067
965
948
921
1,402
1,389
1,817
1,977
1,955
1,938
1,755
1,681
1,759
1,654
1,577
1,481
1,327
1,250
988
1,034
1,073
1,068
952
905
771
2,195
2,796
3,624
3,773
3,505
3,118
3,079
828
870
1,204
1,248
1,210
1,168
1,077
10,022
11,261
12,931
13,329
12,244
11,185
10,682
991
965
1,081
1,073
1,016
946
948
930
921
1,937
1,955
2,125
1,910
1,952
1,835
1,938
1,792
1,755
1,519
1,481
1,655
1,482
1,430
1,369
1,327
1,304
1,250
974
952
1,001
909
910
995
905
812
771
3,608
3,505
3,761
3,447
3,421
3,213
3,118
3,082
3,079
1,245
1,210
1,275
1,201
1,236
1,205
1,168
1,084
1,077
12,629
12,243
13,230
12,124
12,064
11,428
11,185
10,853
10,683
Historical Pumpage
1980
1990
1995
2000
2005
2010
2012
2,014
2,480
2,542
2,619
2,176
1,781
1,829
Agency Sales
2004
2005
2006
2007
2008
2009
2010
2011
2012
2,355
2,175
2,332
2,102
2,099
1,865
1,781
1,849
1,829
The following table shows the variable and fixed debt service costs billed by the Agency to each
Member in fiscal 2012, along with the average cost per 1,000 gallons of water purchased by each
Member.
Fiscal 2008 Billing Summary
Members
Variable Costs
Elk Grove Village ..
Hanover Park .........
Hoffman Estates ....
Mount Prospect ......
Rolling Meadows...
Schaumburg ...........
Streamwood ...........
$ 370,111
183,890
331,765
259,734
158,891
606,965
207,194
Total ..............
$2,118,550
Total
Percent
Cost
(1000) Gal
$1,505,256
849,531
1,369,024
973,652
700,345
2,449,310
693,721
$ 1,875,367
1,033,421
1,700,789
1,233,386
859,236
3,056,275
900,915
17.59%
9.69%
15.96%
11.57%
8.06%
28.67%
8.45%
$2.41
2.54
2.39
2.38
2.46
2.41
2.25
$8,540,839
$10,659,389
100.00%
Debt Service
-20-
Fiscal 2009 Billing Summary
Members
Variable Costs
Debt Service
Total
Percent
Elk Grove Village ...
Hanover Park ..........
Hoffman Estates .....
Mount Prospect .......
Rolling Meadows....
Schaumburg ............
Streamwood ............
$417,126
207,250
373,909
292,729
179,075
684,068
233,514
$ 974,587
635,864
9,805,332
677,457
487,294
1,586,683
600,205
$ 1,391,713
843,114
10,179,241
970,186
666,369
2,270,751
833,719
8.11%
4.91%
59.34%
5.66%
3.88%
13.24%
4.86%
Total ................
$2,387,671
$14,767,422
$17,155,093
100.00%
Cost
(1000) Gal
$2.35
2.51
2.35
2.32
2.29
2.30
2.32
Fiscal 2010 Billing Summary
Members
Variable Costs
Debt Service
Total
Percent
Elk Grove Village ...
Hanover Park ..........
Hoffman Estates .....
Mount Prospect .......
Rolling Meadows....
Schaumburg ............
Streamwood ............
$ 397,282
198,759
380,916
282,011
196,625
667,670
248,568
$ 905,171
592,341
917,087
632,196
456,650
1,478,964
560,707
$1,302,453
791,100
1,298,003
914,207
653,275
2,146,634
809,275
16.46%
10.00%
16.40%
11.55%
8.25%
27.12%
10.22%
Total ................
$2,371,831
$5,543,116
$7,914,947
100.00%
Cost
(1000) Gal
$2.71
2.81
2.64
2.67
2.69
2.66
2.67
Fiscal 2011 Billing Summary
Members
Variable Costs
Debt Service
Total
Percent
Elk Grove Village ..
Hanover Park .........
Hoffman Estates ....
Mount Prospect ......
Rolling Meadows...
Schaumburg ...........
Streamwood ...........
$ 395,902
211,791
438,311
302,704
216,108
706,986
267,659
$ 768,275
522,971
851,379
570,733
433,897
1,315,629
513,017
$1,164,177
734,762
1,289,690
873,437
650,005
2,022,615
780,676
15.49%
9.78%
17.16%
11.62%
8.65%
26.91%
10.39%
Total ................
$2,539,461
$4,975,901
$7,515,362
100.00%
-21-
Cost
(1000) Gal
$2.77
2.93
2.86
2.81
2.94
2.80
2.86
Fiscal 2012 Billing Summary
Members
Variable Costs
Debt Service
Total
Percent
Elk Grove Village ..
Hanover Park .........
Hoffman Estates ....
Mount Prospect ......
Rolling Meadows...
Schaumburg ...........
Streamwood ...........
$ 440,136
225,265
425,846
308,667
194,606
737,371
266,316
$ 970,414
660,565
1,075,381
720,901
548,058
1,661,774
647,995
$1,410,550
885,830
1,501,227
1,029,568
742,664
2,399,145
914,311
15.88%
9.97%
16.90%
11.59%
8.36%
27.01%
10.29%
Total ................
$2,598,207
$6,285,088
$8,883,295
100.00%
Cost
(1000) Gal
$2.97
3.16
3.05
3.02
3.16
2.97
3.05
Historical Agency Operating Results
($000s Except Unit Costs) (1)
Annual Water Purchased
(million gallons) ........................
Annual Water Delivered
(million gallons) ........................
2004
2005
2006
2007
2008
2009
2010
2011
2012
12,906
12,491
13,614
12,397
12,344
11,687
11,398
11,032
10,871
12,628
12,242
13,231
12,124
12,064
11,428
11,185
10,853
10,683
Revenue from Members ................
$25,357
$27,099
$29,525
$27,663
$29,187
$28,075
$30,074
$30,655
$32,267
Average Cost of Water
Delivered (1000) gal ..................
$2.01
$2.21
$2.23
$2.28
$2.40
$2.34
$2.68
$2.83
$3.03
Variable Costs
Water Purchase:
Unit Cost (1000) gal ..................
$1.194
$1.272
$1.308
$1.330
$1.388
$1.637
$1.834
$2.010
$2.104
Annual Cost ...............................
$15,924
$16,020
$17,885
$16,455
$17,171
$18,912
$20,831
$21,961
$22,761
Operation & Maintenance:
Power .........................................
Personnel ...................................
Insurance & Others ....................
$1,090
1,163
629
$1,066
1,230
738
$1,155
1,315
892
$1,114
1,211
887
$1,152
1,441
695
$1,117
1,519
758
$1,209
1,584
730
$1,067
1,659
757
$601
1,691
880
Total O&M Costs...................
$2,882
$3,034
$3,362
$3,212
$3,288
$3,394
$3,523
$3,483
$3,172
Total Variable Costs ..............
$18,806
$19,054
$21,247
$19,667
$20,459
$22,306
$24,354
$25,444
$25,933
Net Operating Revenues ...............
Interest Expense ............................
Interest Earnings (2) ......................
Net Annual Change .......................
Account Balances
Member Deposits (3) ....................
O&M Reserve (4) ..........................
Replacements &
Contingencies (5).......................
Total .......................................
6,551
(4,717)
923
2,757
8,045
(4,385)
813
4,473
8,278
(4,423)
1,076
4,931
7,996
(4,246)
1,258
5,008
10,035
(3,262)
1,159
7,932
6,704
(3,697)
922
3,929
5,720
(3,562)
806
2,964
5,211
(3,550)
822
2,483
6,334
(3,524)
802
3,612
2,494
1,956
2,517
1,992
2,591
2,105
2,707
2,267
2,816
2,399
2,846
2,459
2,845
2,461
2,846
2,453
2,847
2,447
4,220
4,123
4,164
4,224
4,268
4,212
4,212
4,217
4,117
$8,670
$8,632
$8,860
$9,198
$9,483
$9,517
$9,518
$9,516
$9,411
________________________________
Notes:
(1) Source: Annual Reports.
(2) Earnings on Debt Service Fund and Replacements and Contingencies Account only. Interest earnings on Member Deposits and the
O&M Fund Reserve are credited directly to those accounts and are not reported as non-operating income.
(3) Equal to maximum estimated variable and fixed costs for one month.
(4) Equal to one month's estimated variable costs.
(5) Current minimum required balance is $3.0 million.
-22-
Projected Agency Operating Results(1)
(audited)
2012
(current
budget)
2013
(proposed
budget)
2014
(estimated)
2015
Delivered Water (000) (1) ............
Purchased Water (000) .................
Cost per 1000 Gallon ....................
Chicago Rate (blended) ................
$10,682,767
10,870,507
$2.01
$2.10
11,583,000
11,814,660
$2.64
$2.64
11,642,000
11,874,840
$3.04
$3.04
11,642,000
11,874,840
$3.63
$3.50
Total Water Cost ...................
$22,828,065
$31,190,702
$36,099,514
$43,071,232
Power ............................................
Administration ..............................
Pumping & Distribution ...............
O&M Capital ................................
Debt Service Payments .................
Debt Service Reserve....................
Surplus ..........................................
$588,928
783,143
1,759,544
431,828
3,522,263
$867,581
722,511
1,914,901
279,500
12,202,236
2,604,271
9,689,977
(4,719,128)
11,267,601
$766,990
751,097
1,919,769
127,000
7,927,313
1,025,532
–
12,517,701
$782,330
781,141
2,015,757
100,000
7,928,688
1,250,825
–
12,858,741
Total ......................................
$32,518,042
$42,458,303
$48,617,215
$55,929,973
Surplus Balance
Over Previous Year .....................
$9,165,586
$5,293,800
$5,346,738
$5,400,205
Total Costs.............................
6.20%
30.60%
14.50%
15.00%
3.67
4.18
20.40%
13.90%
Average Cost to Members ............
3.04
Net Rate Increase ..........................
7.90%
4.8
15.00%
________________________________
(1) Unaccounted for water estimated at 2%.
THE CHICAGO CONTRACT
The Agency has entered into a water purchase agreement (the “Chicago Contract”) with the City
of Chicago (the “City”) for a term of 40 years, extending to June 24, 2022, to provide Lake Water for
resale to its seven Members and, with the prior written consent of the City, to any additional Members or
Agency customers. Payments by the Agency to the City began in March 1986, with commencement of
operation of the System.
The City’s obligation to furnish Lake Water will not exceed in any calendar day in any calendar
year the following daily amounts expressed in million gallons per day.
Maximum Daily Supply
From
Through End of
2006
2011
2016
2010
2015
Last full calendar year
within term of agreement
-23-
MGD
93
96
99
The quantities of Lake Water Supplied by the City to the Agency, on an annual basis, will not
exceed the aggregate State Water Allocations, including any allowable excess, in effect from time to time
for the Members and Agency customers.
The Agency is obligated to purchase, or in any event to pay for, annually no less than the
following amounts of Lake Water expressed in million gallons per year (“MGY”).
Maximum Annual Purchase Amounts
From
Through End of
2006
2011
2016
2010
2015
Last full calendar year
within term of agreement
MGD
9,490
9,855
10,220
The Agency may purchase its water needs in excess of the minimum annual purchase amounts
from any other source. The cost of water purchased from the City may not exceed the lowest volume rate
(including any volume discounts) fixed by the City for Lake Water furnished through meters to any
customer of the City, currently $2.89 per 1,000 gallons, including a credit for timely payment. The City
will bill the Agency quarterly for Lake Water delivered in the preceding three months and annually for
any quantities the Agency failed to purchase under the minimum annual purchase commitment. The City
may require the Agency to maintain a deposit of an amount equal to the estimated bill at the then
prevailing rate for Lake Water furnished during a 30-day period. To date, the City has not asked for any
such deposit.
The City has leased to the Agency, and granted to it related easements on, certain properties
located on the O’Hare Site for the construction of certain transmission mains, a pumping station,
receiving reservoirs and other facilities constituting a portion of the System as originally constructed to
provide the interconnection with the City’s water mains terminating on the eastern boundary of the
airport. The facilities and reservoirs located on the O’Hare Site were purchased by the City from the
Agency at a price of $38,767,034 plus the cost of any additional facilities and reservoirs located at the
O’Hare Site through a buy-back arrangement with periodic payments to the Agency in the form of credits
against charges for Lake Water supplied to the Agency. For amounts up to the minimum annual purchase
amounts, there was a credit equal to 12 percent of the net charges. For amounts furnished during a
calendar year above the minimum annual purchase amounts the credits were equal 25 percent of net
charges. The Agency credits were received through fiscal 2003 at which time the value of the credits
aggregated the cost of the facilities subject to the buy-back. Conveyance of the properties by the Agency
to the City will not occur until the later of (i) the date all of the obligations issued in whole or in part to
finance the System as originally constructed and additions thereto, and any obligations issued to refund
any of such obligations, have been paid in full or (ii) such time as the credits granted by the City equal the
costs of the properties, including construction and related financing costs, as determined under the
contract.
All facilities and reservoirs situated on the O’Hare Site are under the control of the Agency
during the term of the contract without regard to whether title to the properties is held by the Agency or
the City. The Agency will continue to operate, maintain, replace and improve the facilities and reservoirs
provided that the cost of any expansions or additions are to be added to buy-back costs.
-24-
CHICAGO DEPARTMENT OF WATER
The City of Chicago Department of Water operates one of the largest municipal water systems in
the world. The City’s system currently serves the City of Chicago and 123 suburban communities with a
total service area covering approximately 4,232 square miles and a population according to the 2000
Census of approximately 5 million, which is 60.44% of the Chicago Primary Metropolitan Statistical
Area. The system’s average daily pumpage is some 1,000 MGD. The replacement value of the system is
estimated at over $5 billion.
The Department is headed by the Commissioner of Water, currently John Spatz, who is appointed
by the Mayor with the advice and consent of the City Council. The Commissioner reports directly to the
Mayor. Rates are established by ordinance of the City Council. All suburban municipal customers
purchasing water for resale and located within the boundaries of the Greater Chicago Metropolitan
Sanitary District are charged the same rate as City residents. Under the Chicago Contract the City may
not impose a surcharge for service to the Agency or by the Agency outside the limits of the Metropolitan
Water Reclamation District of Greater Chicago or outside the corporate limits of any Member.
City of Chicago
Water Rate History
Effective Date
Net Water Rate
($ Per 1,000 Gallons)
Total Increase
January 1, 1977
May 1, 1981
May 1, 1985
May 1, 1989
September 13, 1991
January 1, 1992
January 1, 1996
January 1, 1997
January 1, 1998
January 1, 1999
January 1, 2000
January 1, 2001
January 1, 2002
January 1, 2003
January 1, 2004
January 1, 2005
January 1, 2006
January 1, 2007
January 1, 2008
January 1, 2009
January 1, 2010
January 1, 2011
January 1, 2012
January 1, 2013
$0.458
0.694
0.771
0.893
0.948
0.985
1.005
1.024
1.045
1.045
1.087
1.130
1.175
1.223
1.27
1.30
1.33
1.33
1.53
1.76
2.01
2.01
2.51
2.89
–
51.5%
11.1
15.8
6.2
3.9
2.0
1.9
2.1
0.0
4.0
4.0
4.0
4.1
3.8
2.4
2.3
0.0
15.0
15.0
14.2
0.0
24.9
15.1
Supply and Water Quality. The City reports that its water quality consistently meets or exceeds
federal and state standards. The Department of Water operates and maintains two of the world’s largest
water treatment plants. The James W. Jardin plant, completed in 1964, has been rated as capable of
providing a sustainable filtering capacity of 1,440 MGD, and the South Water Filtration Plant, opened in
-25-
1944, is rated at 720 MGD. The combined peak treatment capability of 2,550 MGD is over 2-1/2 times
the current average daily pumpage. All related facilities are sized commensurately. The City has three
active intake tunnels which extend several miles into Lake Michigan, and two shore intakes. The primary
distribution network and pumping system has an aggregate capacity equal to the peak treatment capability
of the two purification plants combined. The system contains more than 4,200 miles of transmission
mains.
STATE WATER ALLOCATIONS
The amount of water which the State of Illinois and its political subdivisions are permitted to
divert from Lake Michigan is limited by an order of the United States Supreme Court to approximately
3,200 cubic feet per second. The allocation of Lake Water among Illinois communities is the
responsibility of the Illinois Department of Natural Resources. Each Member has received an allocation
of Lake Water from the Department for the period ending September 30, 2030.
An allocation of Lake Water may be modified or terminated in certain circumstances:
(1) evidence of a substantial change in circumstances which results in a change in water needs;
(2) violation of a permit condition or failure or neglect properly to utilize an allocation; (3) a
determination that a total reallocation is necessary to best utilize the Lake Michigan diversion to preserve
the health, safety and welfare of the Northeastern Illinois Metropolitan Region; or (4) a determination that
needs for dilution in the Sanitary and Ship Canal have changed. In the determination of a modification
proceeding, the Department is required to determine the effect of a modification on any securities, debt
obligations or contractual obligations of any permittee whose allocation is the subject of the modification
proceeding and is required to avoid any material adverse effect on those obligations.
One condition to the allocation permits is that the total amount of water not accounted for by a
Member not exceed specified percentages (currently eight percent). All members are operating below the
eight percent lost water requirement as of the most recent report of the Department of Natural Resources
(December of 2012).
Certain Members’ water consumption over the 40-year period, as projected for purposes of
system sizing, is in excess of their allocations. All Members have covenanted in the Water Supply
Agreement to use their best efforts to have their allocations meet their water requirements.
The State of Illinois, the seven other Great Lakes States, the United States and the Metropolitan
Water Reclamation District of Greater Chicago, on July 29, 1996, entered into a Memorandum of
Understanding (“MOU”) with respect to water diversion from Lake Michigan. The MOU was designed
to address a dispute among the States as to an alleged violation of the decrees of the Supreme Court of the
United States limiting the total amount of water diverted by the State of Illinois and its political
subdivisions. The other Great Lakes States had contended that the water being diverted exceeded the
Supreme Court’s limit of 3200 cubic feet per second.
The MOU sets forth measures governing the measurement of Lake Michigan diversion. It also
provides for undertakings by the State of Illinois to reduce diversion to the Supreme Court limit and to
under-divert until past over-diversions are made up. This could, in effect, reduce the total allowed
diversion until 2015 to below 3100 cubic feet per second. Among the State of Illinois’ undertakings are
measures to reduce leakage at the Chicago River Controlling Works, reducing diversion for navigation
makeup, and to initiate allocation proceedings by the State regarding all domestic and industrial Illinois
Lake Michigan water issues. The MOU also provides that the State of Illinois shall use its power to
ensure that municipalities using water from Lake Michigan comply with allocation limits, unaccountedfor flow requirements and legally required conservation measures.
-26-
The State of Illinois has not initiated any proceeding to reduce allocations of Lake Michigan
water.
The Agency is unable to predict whether any of these undertakings will have any effect on
allocations of any of its Members.
The current allocations of Members, as of the 2009 allocations determined by the Illinois
Department of Natural Resources, are shown in the following table:
State Water Allocations
(Millions of Gallons per day)
Actual
Usage
2012
2010
2015
2020
2025
2025
Elk Grove Village .....
Hanover Park ............
Hoffman Estates ........
Mount Prospect .........
Rolling Meadows ......
Schaumburg ..............
Streamwood ..............
5.011
2.524
4.809
3.425
2.112
8.437
2.951
7.703
3.066
6.101
4.477
3.019
10.500
3.548
7.902
3.100
6.441
4.536
3.094
10.785
3.645
8.114
3.133
6.794
4.596
3.169
11.071
3.743
8.114
3.167
7.057
4.656
3.244
11.356
3.841
8.114
3.197
7.288
4.711
3.314
11.636
3.938
Total ...................
29.268
38.414
39.503
40.620
41.435
42.198
________________________________
Source: Illinois Department of Natural Resources Order LMO-99-3.
Allocations in intervening years shall be determined by straight line interpolation.
SERVICE AREA OF THE AGENCY
Service Area Location and Customers
The service area of the Agency consists of the combined geographical area served by the
respective Local Systems presently operated by the Members. The service area of the Agency includes
approximately 81.48 square miles and currently encompasses some 82,477 residential and 7,491
nonresidential water users. The aggregate number of water users, by class of customer, served by the
Members during the periods indicated are set forth in the following table:
Aggregate Customers Served by Members
Most Recent Fiscal Year Ended (1)
1985
1990
2000
2012
Residential .................................
Commercial and Industrial.........
Other ..........................................
63,698
4,973
803
75,003
5,867
1,247
85,409
7,481
76
86,703
8,024
Total ....................................
69,474
82,117
92,966
84,727
________________________________
(1) Fiscal Year ends on April 30 for Elk Grove Village, Hanover Park and Schaumburg; Fiscal Year ends on December 31 for Hoffman
Estates, Mount Prospect, Rolling Meadows and Streamwood.
-27-
Approximately 25% of the water users in Mount Prospect are and will continue to be supplied
water by Citizens Utilities Company of Illinois, a for-profit corporation operating pursuant to a franchise
granted by the Village of Mount Prospect. Statistical information relating to the Local System of Mount
Prospect does not include customers of Citizens Utilities Company of Illinois.
Service Area Population
The historical and projected growth in population of each Member is set forth in the table below.
Also shown are comparable statistics relating to the City of Chicago and Cook County, Illinois. Each of
the Member communities is a home rule unit under the 1970 Illinois Constitution and accordingly has no
tax rate or debt limits nor is required to conduct a referendum to authorize the issuances of debt or to
increase property taxes.
Comparative Population Statistics
2040(2)
1980
1990
2000
2010
Elk Grove Village ....
Hanover Park ...........
Hoffman Estates .......
Mount Prospect ........
Rolling Meadows .....
Schaumburg .............
Streamwood .............
28,907
28,850
37,272
52,634
20,167
53,305
23,456
33,429
32,895
46,561
53,170
22,591
68,586
30,987
34,727
38,278
49,495
56,265
24,604
75,386
36,407
33,127
37,973
51,895
54,167
24,099
74,277
39,858
41,745
45,305
60,189
63,830
26,568
90,944
42,174
Total ......................
244,591
288,205
315,162
315,346
370,755
City of Chicago ........
Cook County ............
3,005,072
5,233,655
2,783,726
5,105,067
2,896,016
5,376,741
2,695,598
5,194,675
3,264,099
6,182,487
Projected
________________________________
Note:
(1) Source: Chicago Metropolitan Agency for Planning, 2040 Forecast of Population, Households and Employment, developed in
support of the GO TO 2040 comprehensive regional plan adopted on October 13, 2010.
(2) Chicago Metropolitan Agency for Planning has prepared a 2040 population forecast for long-term planning purposes. They have
not prepared a population estimate for the Chicago Metropolitan Area for 2020 or any date between 2010 and 2040.
Service Area Economics
The following table sets forth for each Member its equalized assessed valuation as of January 1 of
each of the last five tax years and its per capita assessed value and total true and per capita true value for
2012 (based upon January 1, 2012 property values). Taxes are not pledged to make payments under the
Water Supply Agreements.
-28-
Equalized Assessed Valuation for Taxing Purposes
($000s except per capita amounts)
Levy
Years
Elk Grove
Village
Hanover
Park
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
$1,916,292
1,883,491
2,067,715
2,200,471
2,212,236
2,541,484
2,639,335
2,497,817
2,340,308
2,113,894
$539,115
561,449
617,180
656,485
687,946
746,188
789,205
810,756
743,653
695,936
Hoffman
Estates
Mount
Prospect
Rolling
Meadows
Schaumburg
Streamwood
$1,176,428
1,171,201
1,343,232
1,451,885
1,508,313
1,773,558
1,885,037
1,912,123
1,739,393
1,553,747
$1,355,301
1,321,887
1,491,177
1,594,976
1,597,309
1,870,325
1,979,496
2,017,411
1,834,681
1,694,953
$813,117
787,489
903,703
959,039
965,178
1,085,114
1,152,685
1,146,153
1,003,838
906,794
$3,293,594
3,236,343
3,699,931
3,959,856
3,913,188
4,500,519
4,724,118
4,552,440
4,052,978
3,614,766
$598,288
596,130
693,536
767,608
817,973
953,262
1,002,081
1,052,488
961,609
870,322
None of the Members has outstanding revenue bonds payable from their water systems. Each of
the Members has general obligation debt outstanding that is rated by one or more rating services, which
ratings are subject to change and express only the views of the respective rating agency. There is no
assurance that the ratings will continue for any period of time or that they will not be revised or
withdrawn by the rating agency if, in its sole judgment, circumstances so warrant. In any case, the 2013
Bonds are not a debt of any Member and the taxing power of any Member has not been pledged as
security for the 2013 Bonds. The present ratings of each of the Members are set out below:
Member General Obligation Bond Ratings
Elk Grove Village........
Hanover Park ...............
Hoffman Estates ..........
Mount Prospect ...........
Rolling Meadows ........
Schaumburg.................
Streamwood.................
Moody’s
Standard & Poor’s
Aaa
Aa2
Aa2
Aa2
A1
Aaa
NR
NR
AA
AA+
AA+
A+
AA+
AA
-29-
The following table sets forth the population of the Members along with details of dwelling units
and median home values monthly rent and family income for each Member. For comparison purposes,
the same statistics are set forth for Cook County and the State of Illinois.
Census Statistics – Population, Dwelling Units and Wealth
Members
2010 Census
Percent Increase
Population
From 2000
Number of Dwelling Units
Percentage
2010
Increase
2000
Schaumburg .........
Mount Prospect ....
Hoffman Estates ..
Elk Grove Village
Hanover Park .......
Streamwood .........
Rolling Meadows.
74,227
54,167
51,895
33,127
37,973
39,858
24,099
-1.54%
-3.73
4.85
-4.61
-0.80
9.48
-2.05
31,799
21,585
17,034
13,278
11,105
12,095
8,923
33,627
21,754
18,880
13,308
11,723
13,373
9,465
5.75%
0.78
10.84
0.23
5.57
10.57
6.07
Total .............
315,346
0.06%
115,819
122,130
5.45%
Cook County ........
State of Illinois ....
5,194,675
12,830,632
-3.39%
3.31%
1,974,181
4,591,779
2,173,433
5,267,614
10.09%
14.72%
Members
2010
Median Home Value
2010
Median Monthly Rent
2010
Median Family Income
Schaumburg ...........
Mount Prospect ......
Hoffman Estates ....
Elk Grove Village ..
Hanover Park .........
Streamwood ...........
Rolling Meadows...
$261,000
337,700
301,500
298,900
219,400
230,700
274,700
$1,147
905
1,028
955
958
1,410
1,048
$82,865
83,608
99,441
86,208
64,519
76,643
72,932
Cook County ..........
State of Illinois ......
265,800
202,500
900
834
65,039
68,236
The following table sets forth a comparison of the distribution of the 2000 median family income
of the Members and related areas.
Median Family Income
Members ....................
Cook County ..............
State of Illinois ..........
Less Than $24,999
$25,000-$49,999
$50,000-$99,999
Over $100,000
7.18%
17.16%
14.17%
18.67%
21.37%
21.06%
38.49%
32.31%
35.27%
35.65%
29.16%
29.50%
-30-
The following table sets forth information regarding the number and value of building permits
issued by the Members for the year shown.
Building Permits Issued by the Members
2007
2006
Elk Grove Village .....
Hanover Park ............
Hoffman Estates .......
Mount Prospect .........
Rolling Meadows......
Schaumburg ..............
Streamwood ..............
Number of
Permits
Value
Number of
Permits
Value
Number of
Permits
Value
7
48
139
30
17
31
34
$12,780,000
5,755,089
38,025,007
9,933,288
9,974,940
9,924,751
4,844,208
3
19
198
12
3
25
26
$890,000
2,013,348
33,305,167
3,942,866
1,105,000
9,535,325
3,535,490
1
0
48
6
2
12
35
$320,000
0
8,640,383
2,075,000
1,260,000
4,468,750
4,433,450
2010
2009
Elk Grove Village ....
Hanover Park ...........
Hoffman Estates ......
Mount Prospect ........
Rolling Meadows.....
Schaumburg .............
Streamwood .............
2008
Number of
Permits
0
0
13
8
0
1
52
Value
Number of
Permits
$0
0
2,163,571
2,688,000
0
354,000
6,940,000
1
20
10
3
1
0
6
2011
Value
Number of
Permits
Value
$340,000
2,072,155
1,957,947
799,496
260,000
0
728,419
0
16
2
3
2
1
14
$0
1,672,880
723,400
897,288
530,000
250,000
1,735,939
________________________________
Source:
U.S. Bureau of the Census
Includes only new privately-owned residential housing units authorized by building permits.
Residential housing units include single family, two family, three and four family and five or more family
units.
Unemployment Rates of Members
With at Least 33,000 Population
Elk Grove Village.......
Hanover Park ..............
Hoffman Estates .........
Mount Prospect ..........
Schaumburg................
Streamwood................
Cook County ..............
State of Illinois ...........
U.S..............................
2008
2009
2010
2011
2012
5.5%
7.5%
5.8%
5.3%
5.4%
6.9%
7.4%
6.7%
6.0%
4.7%
6.7%
4.9%
4.6%
4.7%
6.1%
6.7%
6.2%
5.5%
4.5%
6.3%
4.5%
4.4%
4.4%
5.8%
6.4%
5.7%
5.1%
3.3%
4.8%
3.4%
3.2%
3.2%
4.2%
4.7%
4.5%
4.6%
3.5%
6.4%
3.5%
3.3%
3.6%
5.2%
5.1%
5.3%
4.8%
The trends indicated in the tables presented above may or may not reflect current trends.
-31-
INFORMATION RELATING TO THE MEMBERS
Each Member is a municipal corporation existing under the laws of the State of Illinois. Each
Village or City has a professional Manager who oversees the daily operations of the Village or City,
respectively. Each Member owns and operates its Local System for its customers. Water rates for
Members are established by their respective Village Boards or City Councils and are not subject to
regulation by any agency.
LITIGATION
The Agency is not a party to, nor has it been threatened with, any litigation concerning the
Agency Agreement, the 2013 Bonds, the Water Supply Agreements or the Chicago Contract. No
Member is a party to any litigation concerning the Agency, the 2013 Bonds or the Water Supply
Agreements. At the time of delivery of the 2013 Bonds, the Agency will certify that there is no litigation
or other proceeding pending or, to the knowledge of the Agency threatened, in any court, agency or other
administrative body (either state or federal) restraining or enjoining the issuance, sale or delivery of the
2013 Bonds or the collection of Revenues, or in any way questioning or affecting (i) the proceedings
under which the 2013 Bonds are to be issued, (ii) the validity of any provision of the 2013 Bonds, the
General Resolution or the 2013 Series Resolution, (iii) the respective pledges by the Agency under the
General Resolution or (iv) the legal existence of the Agency, the title to office of the present officials of
the Agency, or the authority of the Agency to own and operate the System.
TAX MATTERS
Federal tax law contains a number of requirements and restrictions which apply to the 2013
Bonds, including investment restrictions, periodic payments of arbitrage profits to the United States,
requirements regarding the proper use of bond proceeds and the facilities financed therewith, and certain
other matters. The Agency has covenanted to comply with all requirements that must be satisfied in order
for the interest on the 2013 Bonds to be excludable from gross income for federal income tax purposes.
Failure to comply with certain of such covenants could cause interest on the 2013 Bonds to become
includible in gross income for federal income tax purposes retroactively to the date of issuance of the
2013 Bonds.
Subject to the Agency’s compliance with the above referenced covenants, under present law, in
the opinion of Bond Counsel, interest on the 2013 Bonds is excludable 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 2013
Bonds 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 Agency and its
Members with respect to certain material facts within the Agency’s and such Members’ knowledge and
upon the mathematical computation of the yield on the 2013 Bonds and the yield on certain investments
by Robert Thomas CPA, LLC, Certified Public Accountants. 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 a 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, if any, depends upon the corporation’s alternative minimum taxable income (“AMTI”), which
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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
include certain tax-exempt interest, including interest on the 2013 Bonds.
Ownership of the 2013 Bonds 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 2013 Bonds
should consult their tax advisors as to applicability of any such collateral consequences.
The issue price (the “Issue Price”) for each maturity of the 2013 Bonds is the price at which a
substantial amount of such maturity of the 2013 Bonds is first sold to the public. The Issue Price of a
maturity of the 2013 Bonds may be different from the price set forth, or the price corresponding to the
yield set forth, on the cover page hereof.
Owners of 2013 Bonds who dispose of 2013 Bonds prior to the stated maturity (whether by sale,
redemption or otherwise), purchase 2013 Bonds in the initial public offering, but at a price different from
the Issue Price or purchase 2013 Bonds subsequent to the initial public offering should consult their own
tax advisors.
If a 2013 Bond is purchased at any time for a price that is less than the 2013 Bond’s stated
redemption price at maturity, the purchaser will be treated as having purchased a 2013 Bond 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 a 2013 Bond is
disposed of (to the extent such accrued discount does not exceed gain realized) or, at the purchaser’s
election, as it accrues. The applicability of the market discount rules may adversely affect the liquidity or
secondary market price of such 2013 Bond. Purchasers should consult their own tax advisors regarding
the potential implications of market discount with respect to the 2013 Bonds.
An investor may purchase a 2013 Bond 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 2013 Bonds 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. 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 2013 Bond. Investors who
purchase a 2013 Bond at a premium should consult their own tax advisors regarding the amortization of
bond premium and its effect on the Bond’s basis for purposes of computing gain or loss in connection
with the sale, exchange, redemption or early retirement of the 2013 Bond.
There are or may be pending in the Congress of the United States 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 2013 Bonds. It cannot be predicted whether or in what
form any such proposal might be enacted or whether, if enacted, it would apply to bonds issued prior to
enactment. Prospective purchasers of the 2013 Bonds 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
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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 2013 Bonds. If an audit is
commenced, under current procedures the Service may treat the Agency as a taxpayer and the
Bondholders may have no right to participate in such procedure. The commencement of an audit could
adversely affect the market value and liquidity of the 2013 Bonds until the audit is concluded, regardless
of the ultimate outcome.
Payments of interest on, and proceeds of the sale, redemption or maturity of, tax-exempt
obligations, including the 2013 Bonds, are in certain cases required to be reported to the Service.
Additionally, backup withholding may apply to any such payments to any 2013 Bond 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 2013 Bond 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 2013 Bonds is not exempt from present State of Illinois income taxes. Ownership
of the Bonds 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 2013 Bonds.
Prospective purchasers of the 2013 Bonds should consult their tax advisors regarding the applicability of
any such state and local taxes.
FINANCIAL STATEMENTS
The audited financial statements of the Agency (the “Financial Statements”) set forth in
APPENDIX C have been examined by Sikich LLP, Aurora, Illinois, certified public accountants (the
“Auditor”), whose report on the Financial Statements for the Fiscal Year ended April 30, 2012 is included
as APPENDIX C. The Financial Statements, including the independent auditor’s report accompanying the
Financial Statements, has been prepared by the Auditor, and approved by formal action of the Board of
Directors of the Agency. The Agency has not requested the Auditor to update information contained in
the Financial Statements; nor has the Agency requested that the Auditor consent to the use of the
Financial Statements in this Official Statement. Other than as expressly set forth in this Official
Statement, the financial information contained in the Financial Statements has not been updated since the
date of the Financial Statements. The inclusion of the Financial Statements in this Official Statement in
and of itself is not intended to demonstrate the fiscal condition of the Agency since the date of the
Financial Statements.
CREDIT RATINGS
Moody’s and S&P have assigned ratings for the 2013 Bonds of “Aa2” and “AA-”, respectively.
No application was made to any other rating agency for the purpose of obtaining an additional rating on
the 2013 Bonds. 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. The Agency has
furnished to the rating agencies certain information and materials relating to the 2013 Bonds and the
Agency, including certain information and materials which may not have been included in this Official
Statement. Generally, rating agencies base their ratings on such information and materials and
investigations, studies and assumptions by the respective rating agency. There is no assurance that such
ratings will continue for any given period of time or that they will not be revised downward or withdrawn
entirely by such rating agencies if, in their judgment, circumstances so warrant. Any such downward
revision or withdrawal of such ratings may have an adverse effect on the market price of the 2013 Bonds.
-34-
The Agency and the Underwriter have undertaken no responsibility either to bring to the attention of the
registered owners of the 2013 Bonds any proposed change in or withdrawal of such ratings or to oppose
any such revision or withdrawal (other than to comply with any applicable continuing disclosure
requirements).
CONTINUING DISCLOSURE
The Agency, the Village of Schaumburg (“Schaumburg”) and Speer Financial, Inc., as
dissemination agent, will enter into a Continuing Disclosure Undertaking (an “Undertaking”) for the
benefit of the beneficial owners of the 2013 Bonds to send certain information annually and to provide
notice of certain events to certain information 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 Exchange Commission (the “Commission”) under the Securities Exchange Act of 1934. 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.”
With the exception of its 2010 Audited Financial Statement, the Agency did not file its Annual
Financial Information Disclosure or Audited Financial Statements (described below) in a timely manner
for the fiscal years ended April 30, 2008 through 2012. The Agency subsequently filed the truant Annual
Financial Information Disclosure and Audited Financial Statements along with a failure to file notice
relating thereto on EMMA. The Agency has engaged Speer Financial, Inc. as its Dissemination Agent
(described below) to assist with ensuring compliance with its continuing disclosure obligations going
forward. Schaumburg 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 Agency or Schaumburg to comply with the Undertaking will not constitute a
default under the Resolutions or the Agreements and beneficial owners of the Bonds are limited to the
remedies described in the Undertaking. See “THE UNDERTAKING - Consequences of Failure to
Provide Information.” The Agency and Schaumburg will be required to 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 Bonds in the secondary market.
Consequently, such a failure may adversely affect the transferability and liquidity of the Bonds and their
market price.
THE UNDERTAKING
The following is a brief summary of certain provisions of the Undertaking and does not purport to
be complete. The statements made under this caption are subject to the detailed provisions of the
Undertaking, copies of which are available upon request from the Agency.
Annual Financial Information Disclosure
The Agency covenants that it will disseminate its Annual Financial Information (as described
below) and the Agency and Schaumburg covenant that they will disseminate their Audited Financial
Statements (as described below) annually 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. The Agency and Schaumburg are required to deliver such information within 210 days after
the last day of their respective fiscal year. MSRB Rule G-32 requires all EMMA filings to be in word-
-35-
searchable PDF format. This requirement extends to all documents to be filed with EMMA, including
financial statements and other externally prepared reports.
“Annual Financial Information” means:
(1)
Minimum Quantity Purchase Obligations and Actual Fiscal 2012 Purchases (as it
pertains to Actual Purchases);
(2)
Purchases);
Maximum Quantity and Actual Fiscal Year Purchases (as it pertains to Actual
(3)
Summary Pumpage Data – 2004-2012;
(4)
Historical Pumpage of Members and Agency Sales to Members’ Local Systems;
(5)
Fiscal 2012 Billing Summary; and
(6)
Historical Agency Operating Results;
The Annual Financial Information will be filed each year within 210 days after the last day of the
Agency’s Fiscal Year.
The Audited Financial Statements means the audited annual financial statements of the Agency or
Schaumburg, as applicable, prepared in accordance with generally accepted accounting principles as
modified by the positions of the Governmental Accounting Standards Board and as may further be
modified by express requirements of State law, to be provided to EMMA with the Annual Financial
Information, or within 30 days after availability to the Agency or Schaumburg, as applicable, if later.
Reportable Events Disclosure
The Agency and Schaumburg covenant that they 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 or the State 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 filed with EMMA, including financial statements and other externally prepared reports. The
“Events” are:
•
•
•
•
•
•
•
•
•
•
•
Principal and interest payment delinquencies
Non-payment related defaults, if material
Unscheduled draws on debt service reserves reflecting financial difficulties
Unscheduled draws on credit enhancements reflecting financial difficulties
Substitution of credit or liquidity providers, or their failure to perform
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-exempt status of the security
Modifications to the rights of security holders
Bond calls, if material, and tender offers
Defeasances
Release, substitution or sale of property securing repayment of the securities, if material
Rating changes
-36-
•
•
•
Bankruptcy, insolvency, receivership or similar event of the Agency*
The consummation of a merger, consolidation, or acquisition involving the Agency or the sale of
all or substantially all of the assets of the Agency, 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 to any such actions, other than pursuant to its terms, if material
Appointment of a successor or additional trustee or the change of name of a trustee, if material
Amendment; Waiver
Notwithstanding any other provision of the Undertaking, the Agency and Schaumburg may
amend the Undertaking, and any provision of the Undertaking may be waived, if:
(a)
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 change in the
identity, nature, or status of the Agency or Schaumburg, or type of business conducted; or
(b)
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
(c)
The amendment or waiver does not materially impair the interests of the
beneficial owners of the Bonds, as determined either by parties unaffiliated with the Agency and
Schaumburg (such as Bond Counsel) or by approving vote of Bondholders pursuant to the terms
of the General Resolution at the time of the amendment.
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 Agency and
Schaumburg shall, if required, make such dissemination to such central post office, governmental agency
or similar entity without the necessity of amending the Undertaking.
Consequences of Failure to Provide Information
The Agency or Schaumburg, as applicable, 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 is due under the Undertaking.
In the event of a failure of the Agency or Schaumburg to comply with any provision of the
Undertaking, the beneficial owner of any 2013 Bond may seek mandamus or specific performance by
court order, to cause the Agency or Schaumburg, as applicable, to comply with the obligations under the
Undertaking. A default under the Undertaking shall not be deemed an Event of Default under the
Resolutions or a default under the Agreements and the sole remedy under any Undertaking in the event of
any failure of the Agency to comply with the Undertaking shall be an action to compel performance.
* This event is considered to occur when any of the following occur: the appointment of a receiver, fiscal agent or similar officer for the
Agency 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 Agency, 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 Agency.
-37-
Termination of Undertaking
The Undertaking shall be terminated if the Agency shall no longer have any legal liability for any
obligation on or relating to payment of the 2013 Bonds under the Resolutions.
The Agency shall give notice to each NRMSIR or to the MSRB in a timely manner if this
paragraph is applicable.
Revenue Test
For so long as a Member represents 20% or more of the Revenues of the System, as determined
annually by the Agency, such Member shall be requested to become a party of the Undertaking subject to
Annual Financial Statement and Reportable Events disclosure requirements. If a Member becomes a
party to the Undertaking and subsequently drops below 20% of the Revenues of the System, such
Member shall be released from the Undertaking. Schaumburg is the only Member currently representing
more than 20% of the Revenues of the System.
Additional Information
Nothing in the Undertaking shall be deemed to prevent the Agency or Schaumburg 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 material Event, in addition to that which is
required by the Undertaking. If the Agency or Schaumburg chooses to include any information from any
document or notice of occurrence of a material Event in addition to that which is specifically required by
the Undertaking, the Agency or Schaumburg, as applicable, shall have no obligation under the
Undertaking to update such information or include it in any future disclosure or notice of occurrence of a
material Event.
Dissemination Agent
The Agency 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. Speer Financial, Inc. has been appointed as the
Dissemination Agent.
VERIFICATION OF MATHEMATICAL COMPUTATIONS
Robert Thomas, CPA, LLC of Shawnee Mission, Kansas will deliver to the Agency its
verification report indicating that it has examined, in accordance with standards established by the
American Institute of Certified Public Accounts, the information and assertions provided by the Agency
and its representatives. Included in the scope of its examination will be a verification of the mathematical
accuracy of the computation of the adequacy of the cash and the maturing principal of, an interest on, the
Government Securities deposited in the Bond Redemption Account of the Debt Service Fund to pay,
when due and upon redemption principal of and interest on the 2003 Bonds to be Refunded.
FINANCIAL ADVISOR
The Agency has engaged Speer Financial, Inc. as financial advisor (the “Financial Advisor”), in
connection with the issuance and sale of the 2013 Bonds. The Financial Advisor will not participate in
the underwriting of the 2013 Bonds. The Financial Advisor has assisted in compiling the financial
-38-
information included in this Official Statement. 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 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.
LEGAL MATTERS
Certain legal matters incident to the authorization, issuance and sale of the 2013 Bonds are
subject to the approving legal opinion of Chapman and Cutler LLP, as Bond Counsel (the “Bond
Counsel”), who has been retained by, and acts as, Bond Counsel to the Agency. 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 2013
Bonds 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 Agency supplied the information under the heading “TAX MATTERS” and has
reviewed the statements describing its approving opinion and the information under the headings
“DESCRIPTION OF THE 2013 BONDS,” “SECURITY AND SOURCES OF PAYMENT FOR THE 2013 BONDS,”
“RESERVE FUND INSURANCE POLICY” (first paragraph only), “WATER SUPPLY AGREEMENTS,” and
APPENDIX A – “Summary of Certain Provisions of the General Resolution” (excluding forecasts,
projections, estimates or any other financial or economic information in connection therewith) solely to
determine whether such descriptions and information are accurate summaries of the terms of the Bonds
and the Resolutions in all material respects. This review was undertaken solely at the request and for the
benefit of the Agency and did not include any obligation to establish or confirm factual matters set forth
herein. Certain legal matters in conjunction with the issue of the 2013 Bonds will be passed upon for the
Agency by its counsel, Ancel, Glink, Diamond, Bush, DiCianni & Krafthefer, P.C., Chicago, Illinois, and
for the Underwriter by its counsel Katten Muchin Rosenman LLP, Chicago, Illinois.
UNDERWRITING
Subject to the terms and conditions of a purchase contract, the Agency has agreed to sell to
William Blair & Company, L.L.C., Chicago, Illinois (the “Underwriter”), and the Underwriter has agreed
to purchase from the Agency the 2013 Bonds.
The 2013 Bonds are being purchased by the Underwriter pursuant to a purchase contract for a
purchase price of $22,460,970.85 (reflecting an Underwriter’s discount of $136,305 and an original issue
premium of $1,627,275.85).
The initial public offering prices for the 2013 Bonds are set forth on the cover of this Official
Statement. The purchase contract provides that the Underwriter will purchase all of the 2013 Bonds if
any are purchased. The obligations of the Agency to deliver the 2013 Bonds and of the Underwriter to
accept delivery of the 2013 Bonds are subject to various conditions contained in the purchase contract.
The Underwriter may offer and sell 2013 Bonds to certain dealers at prices lower than the public
offering prices stated on the cover of this Official Statement.
-39-
AUTHORIZATION
The Agency has authorized the distribution of this Official Statement.
/s/ Al Larson
Chairman, Board of Directors
NORTHWEST SUBURBAN MUNICIPAL JOINT
ACTION WATER AGENCY
/s/ Joseph G. Fennell
Executive Director
NORTHWEST SUBURBAN MUNICIPAL JOINT
ACTION WATER AGENCY
-40-
APPENDIX A
SUMMARY OF CERTAIN PROVISIONS OF THE GENERAL RESOLUTION
The following is a summary of certain provisions of the General Resolution. This summary is not
a full statement of the terms of the General Resolution and accordingly is qualified by reference to the
General Resolution and is subject to the full text of the General Resolution. Capitalized terms not defined
in this summary or in the Official Statement have the respective meanings set forth in the General
Resolution.
Resolution and Series Resolutions Constitute Contract
In consideration of the purchase and acceptance of any Bonds or Notes (“Agency Obligations”)
issued under the General Resolution by their Holders from time to time, the General Resolution
constitutes a contract between the Agency and the Holders of the Agency Obligations. The pledges,
grants, assignments, covenants, liens and security interests provided for and set forth in the General
Resolution to be performed by the Agency will be for the benefit, protection and security of the Holders
of any and all of the Agency Obligations. Each Series Resolution will constitute a contract between the
Agency and the Holders of the Agency Obligations of that Series.
Authorization of Agency Obligations
There is authorized and created by the General Resolution an issue of bonds of the Agency, to be
known and designated as Water Supply System Revenue Bonds. The Bonds may be issued from time to
time in Series of Bonds, as provided by Series Resolutions. The Bonds may be issued for any purpose
which under the Act, including as it may be amended, revenue bonds of the Agency may lawfully be
issued.
There is also authorized and created under the General Resolution an issue of notes of the
Agency, to be known and designated as Water Supply System Bond Anticipation Notes. The Bond
Anticipation Notes may be issued from time to time in Series of Notes, as provided by Series Resolutions.
The Bond Anticipation Notes may be issued for any purpose which under the Act, including as it may be
amended, notes of the Agency may lawfully be issued.
The Agency Obligations will be revenue bonds or notes. They will be limited obligations of the
Agency with a claim for payment, as to interest, premium and principal, solely from Revenues and
amounts in the various Funds and Accounts established by the General Resolution, including without
limitation, amounts received from eminent domain proceedings, proceeds of insurance or sales or
exchanges of property and proceeds of notes and bonds of the Agency, or otherwise, all as and to the
extent and in the priority as provided in the General Resolution and the Series Resolutions.
Nothing in the General Resolution or in any Series Resolution prohibits the use for any payment
of principal or premium of or interest on Agency Obligations of any other funds which lawfully may be
used for that purpose.
Pledge Effected by the General Resolution
Under the General Resolution, the Revenue Fund, the Debt Service Fund, the Debt Service
Reserve Fund, the Bond Anticipation Note Debt Service Fund, the General Fund, the Member Deposit
Funds, the Construction Fund and the Cost of Issuance Accounts will be funds held in trust for the
Holders of the Agency Obligations, as and to the extent provided in the General Resolution and the Series
Resolutions and subject to use and disbursement as provided in the General Resolution. All Revenues
are, by the General Resolution, pledged and assigned to the Trustee for the benefit of the Holders of the
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Agency Obligations. The Holders of the Agency Obligations are granted a lien on and security interest in
those Revenues, subject to use and disbursement as provided in the General Resolution. The Revenue
Fund, the Debt Service Fund, the Debt Service Reserve Fund, the Bond Anticipation Note Debt Service
Fund, the General Fund, the Construction Fund, and the Cost of Issuance Accounts are each, by the
General Resolution, pledged and assigned to the Holders of the Agency Obligations, and the Holders of
the Agency Obligations are granted a lien on and security interest in those Funds and Accounts, subject to
use and disbursement as provided in the General Resolution and the Series Resolutions. The Member
Deposit Funds are pledged and assigned, up to the amount which will from time to time be required to be
deposited in the Revenue Fund from those Funds, to the Holders of the Agency Obligations, and the
Holders of the Agency Obligations are granted a lien on and security interest in the Member Deposit
Funds to that extent, subject to use and disbursement as provided in the General Resolution. The General
Resolution provides that the pledges, assignments, security interests and liens described in this paragraph
are valid and binding from the date the Agency Obligations are issued, without any physical delivery or
further action, and shall be valid and binding as against, and prior to any claim of all other parties having
claims of any and in tort contract or otherwise against the Agency or any Municipality or any other
person, irrespective of whether the other parties have notice of the lien or security interest. Providers of
Debt Service Reserve Policies are given a similar security interest in the Revenues and various Funds and
Accounts, subordinate to the claims of the Holders of the Agency Obligations.
The Agency by the General Resolution assigns to the Trustee its rights to enforce the Water
Supply Agreements, including without limitation the covenants set forth in the Water Supply Agreements.
The Trustee will have the right to enforce the Water Supply Agreements at law or in equity with or
without the further consent or participation of the Agency. The Assignment to the Trustee of the right to
enforce the Water Supply Agreements will not prevent the Agency from enforcing the Water Supply
Agreements on its own behalf to the extent that such enforcement by the Agency will not adversely affect
the rights of the Holders of the Agency Obligations and is not inconsistent with any action for
enforcement brought by the Trustee.
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Application of Revenues
Revenues are pledged by the General Resolution to payment of principal and Redemption Price
of and interest on the Agency Obligations, subject to the provisions of the General Resolution permitting
application for other purposes. The General Resolution establishes the following separate and distinct
Funds and Accounts for the application of Revenues:
Fund
Held By
Revenue Fund ........................................................
Trustee
Operation and Maintenance Fund ..........................
Agency
Debt Service Fund ..................................................
Bond Principal Amount
Bond Interest Account
Bond Capitalized Interest Accounts
Bond Redemption Account
Trustee
Debt Service Reserve Fund ....................................
Trustee
Bond Anticipation Note Debt Service Fund ..........
Note Principal Account
Note Interest Account
Note Capitalized Interest Accounts
Note Redemption Account
Trustee
General Fund ..........................................................
Replacements and Contingencies Account
General Reserve Account
Subordinate Obligations Account
Revenue Credits Account
Improvements and Extensions Account
General Surplus Account
Trustee
All Revenues received are to be deposited promptly in the Revenue Fund upon their receipt.
Amounts in the Revenue Fund are to be paid as they become available monthly to the following Funds
and Accounts in the following order of priority for application as follows:
(1)
To the Operation and Maintenance Fund, a sum which, together with amounts
already on deposit in the Operation and Maintenance Fund, will be sufficient to enable the
Agency (a) to pay the Expense of Operation and Maintenance (exclusive of Water Purchase Costs
and Power Costs) for the then current month and for the next two months, (b) to pay Water
Purchase Costs for the then current month, and (c) to pay Power Costs for the then current month
and the next month. That sum is required to be paid to the Operation and Maintenance Fund as
soon as practicable in each month after deposit of Revenues in the Revenue Fund.
Amounts in the Operation and Maintenance Fund are required to be used by the Agency
solely for paying the Expense of Operation and Maintenance. Amounts in the Operation and
Maintenance Fund may be disbursed upon such authorization as the Agency may from time to
time determine. If at any time the amounts on deposit in the Operation and Maintenance Fund,
after the deposits for the month have been made, are insufficient to pay the Expense of Operation
and Maintenance in timely fashion, the Trustee is required, upon the request of an Authorized
Officer, after all payments to the Operation and Maintenance Fund from the General Reserve
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Account have been made, as described below, to withdraw moneys from the Replacements and
Contingencies Account in order to make up any such deficiency.
(2)
To the Bond Principal Account and the Bond Interest Account in the Debt
Service Fund, an amount equal to the sum of (a) one-sixth of the interest to come due on the
Bonds on the next interest payment date (other than interest for the payment of which sufficient
amounts have been deposited in a Bond Capitalized Interest Account), until there is on deposit in
the Bond Interest Account the full amount of that interest, and (b) beginning the twelfth month
prior to the first date that any payment of principal on Bonds is due, one-twelfth of the principal
to come due on the next principal payment date on Bonds, either at maturity or pursuant to
Sinking Fund Installments, until there is on deposit in the Bond Principal Account the full amount
of that principal. All amounts deposited in the Debt Service Fund each month for credit to the
Bond Interest Account and the Bond Principal Account are required to be credited equally and
ratably to those Accounts in proportion to the amount which is required to be credited in that
month to those Accounts.
The Trustee will apply amounts in the Bond Principal Account and the Bond Interest
Account to the payment of principal of and interest on the Bonds. If at any time, after all
payments to the Debt Service Fund from the General Reserve Account have been made, the
amounts in the Bond Interest Account or the Bond Principal Accounts are insufficient to pay,
respectively, the interest on the Bonds to be paid from the Bond Interest Account as it comes due,
or to pay principal on Bonds at maturity or pursuant to Sinking Fund Installments, the Trustee is
required to transfer amounts from the following Funds and Accounts in the following order of
priority sufficient to make up any such deficiency: the Bond Redemption Account in the Debt
Service Fund, the Debt Service Reserve Fund, the Replacements and Contingencies Account
(after any required payments to the Operation and Maintenance Fund) and the Bond Anticipation
Note Debt Service Fund.
(3)
To the Bond Redemption Account in the Debt Service Fund, an amount
sufficient to reimburse that Account for prior unreimbursed transfers to the Bond Principal
Account and the Bond Interest Account. Amounts in the Bond Redemption Accounts shall be
used to reimburse any amounts due to Providers of Debt Service Reserve Policies for Surety
Bond Payments, and remaining amounts may be used by the Trustee at the direction of any
Authorized Officer to redeem or purchase Bonds. No purchase of Bonds is to be at any price in
excess of the Redemption Price of the Bonds on optional redemption at the next optional
redemption date, plus accrued and unpaid interest to the date of redemption.
(4)
To the Debt Service Reserve Fund, the amount, if any, required so that the value
of this Fund equals the Debt Service Reserve Requirement. Amounts in the Debt Service Reserve
Fund shall be transferred by the Trustee to make all needed reimbursements for any Surety Bond
Payments, with interest and with all other amounts due to the Providers. Remaining amounts in
the Debt Service Reserve Fund are required to be transferred by the Trustee and deposited in the
Debt Service Fund to the credit of the Bond Principal Account and the Bond Interest Account, if
any deficiency exists in those Accounts, in order to pay the principal of the Bonds at maturity or
pursuant to Sinking Fund Installments and to pay interest on the Bonds, as such amounts come
due.
If in any month, after the deposit of Revenues to the Debt Service Reserve Fund has been
made, the value of the Fund remains less than the Debt Service Reserve Requirement, the Trustee
is required to transfer moneys from the General Reserve Account (after making any required
payments from that Account to the Operation and Maintenance Fund and the Debt Service Fund)
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to the Debt Service Reserve Fund in an amount so that the value of the Fund after those transfers
is equal to the Debt Service Reserve Requirement. If moneys on deposit in the Debt Service
Reserve Fund exceed the Debt Service Reserve Requirement, the excess will be deposited in the
Debt Service Fund to the credit of the Bond Redemption Account as soon as practicable in May
of each year or on any date that Bonds are redeemed. The value of the Debt Service Reserve
Fund from time to time shall be the value of the investments of the Fund plus the Surety Bond
Coverage of the Reserve Fund Insurance Policy, any Substitute Surety Bond and any Reserve
Fund Insurance Policy issued upon the issuance of Additional Bonds.∗
Debt Service Reserve Requirement means, as of any date, an amount equal to the
maximum sum of (1) the amount of interest on Bonds (other than interest to be paid from a Bond
Capital Interest Account) and (2) principal of Bonds at maturity in case of Serial Bonds and
pursuant to Sinking Fund Installments in the case of Term Bonds, which is to come due on all
Outstanding Bonds of the Agency in that or any succeeding twelve month period ending on any
May 1. Between May 2, 2015 and April 30, 2016, inclusive, and for that period of time only, the
Debt Service Reserve Requirement will be 50% of the maximum amount of principal and interest
payable in any year on bonds issued under the General Resolution. See “SUMMARY
STATEMENT – DEBT SERVICE RESERVE REQUIREMENT” for a discussion of an alternative
funding mechanism for the Debt Service Reserve Fund during such period of reduction.
(5)
To the Note Interest Account and the Note Principal Account in the Bond
Anticipation Note Debt Service Fund, an amount equal to the sum of (a) the Notes Interest
Deposit Requirement for each Series of Notes for that month, and (b) the Notes Principal Deposit
Requirement for each Series of Notes for that month. All amounts deposited in the Bond
Anticipation Note Debt Service Fund in each month for credit to the Note Interest Account and
the Note Principal Account are required to be credited equally and ratably to those Accounts in
proportion to the amounts which are required to be credited in that month to those Accounts.
The Trustee will apply amounts in the Note Principal Account and the Note Interest
Account to the payment of principal of and interest on the Notes. Amounts in the Bond
Anticipation Note Debt Service Fund (other than amounts in a Note Capitalized Interest Account)
will be transferred and credited by the Trustee to the Debt Service Fund to the credit of the Bond
Principal Account and the Bond Interest Account, if the amounts in those Accounts in the Debt
Service Fund, after all transfers to those Accounts from the General Reserve Account, the Bond
Redemption Account, the Debt Service Reserve Fund, and the Replacements and Contingencies
Account, are insufficient to pay principal of the Bonds at maturity or pursuant to Sinking Fund
Installments and to pay interest on the Bonds, as such amounts come due.
∗
The term “Substitute Surety Bond” means a surety bond or other obligation provided by an insurance company or other institution
other than NPFGC, which company or institution provides surety bonds or other similar obligations for municipal bonds, which are
rated in one of the top two ratings by Moody’s Investors Service, Inc. and by Standard & Poor’s Ratings Services; provided that the
legal rights under the surety bond or other obligation must, in the opinion of nationally recognized bond counsel selected by the
Agency, be not less favorable to the holders of Bonds than would be the Surety Bond (Reserve Fund Insurance Policy) issued by
MBIA on the date of issuance of the 1985 Bonds; and provided further that if, at the time the Substitute Surety Bond is to become
effective, any of the Bonds are covered by a policy of insurance issued by MBIA or NPFGC (other than a Surety Bond), the issuer
of the Substitute Surety Bond must be satisfactory to MBIA. The term “Surety Bond Coverage” shall mean, as of any date, the
amount then available to pay principal of and interest on the Bonds under a Surety Bond or Substitute Surety Bond; provided that if
the Surety Bond or Substitute Surety Bond is subject to ceasing effectiveness within five years of the date of determination and
before the final maturity of the Bond upon the issuance of which it (or its predecessor) was obtained the Surety Bond Coverage
shall be reduced by an amount equal to the product of the amount of the Surety Bond Coverage (calculated as if no unreimbursed
amounts had been drawn on the Surety Bond or Substitute Surety Bond and without regard to this proviso) and a fraction, the
denominator of which shall be 60 and the numerator of which shall be 60 minus the number of months prior to the date the Surety
Bond or Substitute Surety Bond is subject to ceasing effectiveness.
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If at any time the amounts in the Note Interest Account or the Note Principal Account,
after credits to those Accounts from the General Reserve Account, are insufficient to pay,
respectively, the interest on the Notes to be paid from the Note Interest Account as it comes due,
or principal on Notes at maturity or pursuant to mandatory redemption, the Trustee is required to
transfer amounts from the following Funds and Accounts in the following order of priority
sufficient to make up any such deficiency: the Note Redemption Account in the Bond
Anticipation Note Debt Service Fund and the Replacements and Contingencies Account (after
any required payment to the Operation and Maintenance Fund and the Debt Service Fund).
(6)
To the Note Redemption Account in the Bond Anticipation Note Debt Service
Fund, an amount sufficient to reimburse that Account for prior unreimbursed transfers to the Note
Principal Account and the Note Interest Account. Amounts in the Note Redemption Account
shall be used to reimburse any amounts due to Providers of Debt Service Reserve Policies for
Surety Bond Payments and remaining amounts may be used by the Trustee at the direction of an
Authorized Officer to redeem or purchase Notes. No purchase of Notes is to be at any price in
excess of the Redemption Price of the Notes on optional redemption at the next optional
redemption date, plus accrued and unpaid interest.
(7)
To the Replacements and Contingencies Account in the General Fund, an amount
equal to the sum of (a) $50,000 (or such greater amount as may be required by any Series
Resolution or any other resolution of the Board) and (b) the lesser of (i) the amount by which,
prior to any credit in that month, the value of the Replacements and Contingencies Account is
less than the Replacements and Contingencies Requirement; or (ii) the total amount which has
been paid to the Debt Service Fund, the Bond Anticipation Note Debt Service Fund or the
Operation and Maintenance Fund from the Replacements and Contingencies Account which has
not been previously reimbursed to the Replacements and Contingencies Account. The
Replacements and Contingencies Requirement is the sum of $3,000,000 or such greater amount
as may be set by a Series Resolution or pursuant to any other resolution of the Agency from time
to time setting a greater requirement.
If at any time there are insufficient amounts in the Operation and Maintenance Fund to
pay the Expense of Operation and Maintenance as it comes due, in the Debt Service Fund to pay
interest on or principal of the Bonds at maturity or pursuant to Sinking Fund Installments, or in
the Bond Anticipation Note Debt Service Fund to pay principal of or interest on the Bond
Anticipation Notes as such amounts come due, the Trustee is required to withdraw amounts from
the Replacements and Contingencies Account and credit those amounts to the Operation and
Maintenance Fund, the Debt Service Fund, or the Bond Anticipation Note Debt Service Fund (in
that order of priority) to make up any such deficiency.
Amounts in the Replacements and Contingencies Account are required to be used to pay
the Costs of Replacements and Contingencies. The Trustee is to make disbursements from the
Replacements and Contingencies Account upon receiving a direction from an Authorized Officer
showing in reasonable detail the purposes for which expenditures are to be made, and stating that
the expenditures are for Costs of Replacements and Contingencies. Any directed disbursement of
$100,000 or more is to be accompanied by a certificate of the Consulting Engineer stating that
any replacements being paid for represent actual replacements or betterments of physical property
or that any repair, reconstruction or relocation is an extraordinary item not properly chargeable as
an ordinary Expense of Operation and Maintenance.
After all required deposits have been made in each month to the Replacements and
Contingencies Account and after all required credits and payments have been made to other
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Funds and Accounts (as described above), the Trustee is required to credit to the General Reserve
Account the amount, if any, by which the value of the Replacement and Contingencies Account
exceeds the Replacements and Contingencies Requirement.
(8)
To the General Reserve Account in the General Fund, all amounts in the Revenue
Fund not required to be paid to or credited to any other Fund or Account. Amounts credited to
the General Reserve Account in any month are required to be credited to the following Accounts
in the following priority: (i) to the Subordinate Obligations Account, all amounts which are
required so to be credited by the term of any resolution providing for the issuance of such
Obligations; (ii) to the Replacements and Contingencies Account the amount by which the value
of that Account is less than the Replacements and Contingencies Requirement; (iii) to the
Revenue Credits Account all amounts which the Agency from time to time may direct the Trustee
so to credit; (iv) to the Improvements and Extensions Account, all amounts which the Agency
shall from time to time direct the Trustee so to credit; (v) to the General Surplus Account, all
remaining amounts.
If at any time there is any deficiency in the amounts credited to or paid to any Funds of
Accounts from the Revenue Fund, amounts in the General Reserve Account are required to be
used to make up the deficiency in the order in which those Funds or Accounts are to have
amounts in the Revenue Fund used to be deposited and credited to those Funds and Accounts,
until each such Fund and Account in order has no deficiency of such deposits and credits.
Amounts in the General Reserve Account are to be taken from the various sub-accounts of the
General Reserve Account and used for such credits in the reverse order of priority specified
above.
Amounts credited to the Subordinate Obligations Account are to be used by the Trustee
for paying interest on, premium, if any and principal of all Subordinate Obligations as such
amounts come due or for redeeming or purchasing those Obligations, all pursuant to the
requirements, if any, of any resolution of the Agency authorizing the issuance of such
Obligations. Amounts in the Revenue Credits Account as of the first day of each month are to be
withdrawn from that sub-account and deposited in the Revenue Fund. Amounts credited to the
Improvements and Extensions Account are to be used as directed by the Agency to pay costs of
the Agency of improving or extending the System, or for repairing or reconstructing the System
in the event of loss or damage to it. Amounts in the General Surplus Account may be credited to
any other sub-account in the General Reserve Account or paid to the Operation and Maintenance
Fund, the Construction Fund, the Bond Redemption Account or the Note Redemption Accounts,
directed by an authorized Officer.
Member Deposit Funds
The General Resolution establishes the Member Deposit Funds, to be held by the Trustee, into
which will be paid the deposits of the Members pursuant to the Water Supply Agreement between the
Agency and each Member. All amounts received from a Member in excess of the amounts which are due
from that Member as payment of its other obligations under its Water Supply Agreement are to be
deposited in the Member Deposit Fund for that Member.
If any Member shall have failed to pay in full all of the amounts due under the Water Supply
Agreement by the end of the first business day following the 25th day of any month, the Trustee is
required to withdraw an amount equal to the amount due but unpaid by that Member from the Member
Deposit Fund for that Member, deposit that amount in the Revenue Fund and notify the Agency of that
Member’s failure to pay. Amounts in a Member Deposit Fund which the Trustee’s Annual Report states
are in excess of the amount required under the Water Supply Agreement with that Member to be
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maintained in the Member Deposit Fund for that Member are required to be paid by the Trustee to that
Member. Interest and other investment earnings on a Member Deposit Fund are required to be deposited
in that Fund.
Security for Deposits and Investment of Funds
The General Resolution provides that all moneys held under the General Resolution by the
Trustee will be continuously and fully secured for the benefit of the Agency and the Holders of the
Agency Obligations, by Investment Obligations of a market value equal at all times to the amount of the
deposit so held by the Trustee. However, it is not necessary for the Trustee to give security for such
amount of moneys as is insured by federal deposit insurance, for the Trustee to give security for any
moneys which are represented by Investment Obligations purchased under the provisions of the General
Resolution as an investment of such moneys, or for any Paying Agent to give security for the deposit of
any moneys held by it in trust for the Holders of any Agency Obligations.
The General Resolution provides that, upon the direction of an Authorized Officer of the Agency,
moneys in the Funds and Accounts established by the General Resolution shall be invested by the Trustee
in Investment Obligations so that the maturity date or date of redemption at the option of the holder of
such Investment Obligations shall coincide, as nearly as practicable, with the times at which moneys in
those Funds and Accounts will be required for the purposes as provided in the General Resolution.
Moneys in the Debt Service Reserve Fund are required to be invested by the Trustee upon the
direction of an Authorized Officer, in investment Obligations the maximum maturity of which will not be
more than five years from the date of such investment; provided, however, that at least 25% of the
moneys in the Debt Service Reserve Fund are required from time to time to be invested in Investment
Obligations the average maturity of which is not more than two years from the date of any investment.
In computing the value of any Fund or Account held by the Trustee under the provisos of the
General Resolution, except the Debt Service Reserve Fund, obligations purchased as an investment of
moneys in such Fund or Account are to be valued at the cost or market price of such obligations
whichever is lower, exclusive of accrued interest. In computing the value of the Debt Service Reserve
Fund, Obligations purchased as an investment of moneys in that Fund are to be valued at par, or if
purchased at less than par, at their cost to the Agency.
The Trustee is required to sell at the best price obtainable, or present for redemption, any
obligations purchased by it as an investment whenever it is necessary in order to provide moneys to meet
any payment or transfer from the Fund or Account for which such investment was made. The Trustee is
required to advise the Agency in writing, on or before the last day of each calendar month, of the details
of all investments held for the credit of each Fund and Account in its custody under the provisions of the
General Resolution as of the end of the preceding month.
Additional Agency Obligations
(1)
described.
The Agency will not issue any Additional Agency Obligations except as hereinafter
(2)
Additional Agency Obligations may at any time and from time to time be issued as
described in this paragraph to pay the Cost of Construction of the Initial Project. Additional Agency
Obligations may also at any time and from time to time be issued as described in this paragraph to pay
costs of paying, refunding or redeeming any Notes issued for paying the Cost of Construction of the
Initial Project (including any Refunding Initial Notes and any other Notes issued to pay, refund or redeem
Notes Refunding Initial Notes issued to pay such Cost of Construction or subsequent Notes in a
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succession of refunding Notes). When Additional Agency Obligations are issued as described in this
paragraph for the purpose specified above, proceeds of those Additional Agency obligations may also be
used to pay Costs of Issuance, to pay capitalized interest, to fund the Debt Service Reserve Fund, to pay
bond insurance premiums or to pay commitment fees to banks under a Bank Credit Facility. Additional
Agency Obligations may be issued as described in this paragraph only if the Debt Service Reserve Fund
test is met as described in paragraph (5) below (with respect to the issuance of Bonds) and if the contract
test is met as described in paragraph (7) below.
(3)
In addition to Additional Agency Obligations which may be issued as described in
paragraph (2) above, the Agency may also at any time and from time to time issue Additional Agency
Obligations for the purpose of paying Costs of Construction of any portion of the System. Additional
Agency Obligations may also at any time and from time to time be issued, as described in this paragraph
to pay, refund or redeem Agency Obligations issued for any purpose described in this paragraph. When
Additional Agency Obligations are issued as described in this paragraph for the purposes specified above
in this paragraph, proceeds of those Additional Agency Obligations may also be used to pay Costs of
Issuance, to pay capitalized interest, to fund the Debt Service Reserve Fund, to pay bond insurance
premiums, or to pay commitment fees to banks under a Bank Credit Facility. Additional Agency
Obligations may be issued as described in this paragraph only if the Debt Service Reserve Fund test of
paragraph (5) below (with respect to the issuance of Bonds) is met, if the Funds and Accounts test of
paragraph (6) below is met, if either the contract test of paragraph (7) below is met or the projected
earnings test of paragraph (8) below is met, and if the continued operations test of paragraph (9) below is
met, if it is applicable as described in that paragraph.
The 2013 Bonds are being issued pursuant to the authorization described in the preceding
paragraph, with the Agency meeting the contract test of paragraph (7) below, and the continued
operations test of paragraph (9) below being inapplicable.
(4)
(a)
Notwithstanding any other provision, the Agency may issue Additional Agency
Obligations to pay, redeem or refund Agency Obligations if there will be in the judgment of the Agency
no money available to make payments of interest on or principal of those Agency Obligations (at maturity
or on Sinking Fund Installment dates) as such amounts come due, and (with respect to the issuance of
Bonds) the Debt Service Reserve Fund test of paragraph (5) below is met.
(b)
In addition to Additional Agency Obligations which may be issued as described
in paragraphs (2) and (3) and subparagraph (a) of this Paragraph (4), the Agency may issue Additional
Agency Obligations to pay, redeem or refund any Agency Obligations if the total amount of principal of
(at maturity or on Sinking Fund Installment dates) and interest on all Agency Obligations to be
Outstanding after the issuance of the Additional Agency Obligations will be not in excess of such
principal of and interest on all Agency Obligations Outstanding prior to the issuance of those Additional
Agency Obligations in each Fiscal Year in which there was to be any principal of (at maturity or on
Sinking Fund Installment dates) or interest due on those Outstanding Agency Obligations, if the Debt
Service Reserve Fund test of paragraph (5) below is met and if the contract test of paragraph (7) below is
met.
(5)
The Debt Service Reserve Fund test applies to the issuance of Bonds and is met if, as
evidenced by the advice of the Trustee, the value of the Debt Service Reserve Fund, upon the application
of the proceeds of the bonds and then being issued as provided in the Series Resolution for those Bonds,
shall not be less than the Debt Service Reserve Requirement. The value of the Debt Service Reserve
Fund from time to time shall be the value of the investments of the Fund plus the Surety Bond Coverage
of the Reserve Fund Insurance Policy, any Substitute Surety Bond and any Reserve Fund Insurance
Policy issued upon the issuance of the Additional Bonds.
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(6)
The Funds and Accounts test is met with respect to the issuance of Additional Agency
Obligations if, as of the end of the last month prior to the date of the issuance of the Additional Agency
Obligations, all required deposits, payments and credits required to be made from amounts in the Revenue
Fund to the various Funds and Accounts established by the General Resolution shall have been made,
there being no deficiency in any such Fund or Account.
(7)
The contract test is met if the Trustee shall have received a Counsel’s Opinion and a
certificate of a Consulting Engineer as provided in this paragraph. The Counsel’s Opinion shall be from a
nationally recognized bond counsel and shall state there are in existence valid and legally binding Water
Supply Agreements with Members which shall obligate the Municipalities together, on a take or pay
basis, to pay amounts to the Trustee sufficient to make all required deposits in and credits to and
payments from the Revenue Fund as provided in the General Resolution during the full period that any
such Agency Obligations are to be Outstanding. The certificate of the Consulting Engineer shall state that
in the opinion of the Consulting Engineer, the Members will be able to charge and collect sufficient rates
and charges for the use of water in order to meet all their costs and obligations payable from water
revenues, including the making of timely payment of all amounts under the Water Supply Agreements.
(8)
The projected earnings test is met if the Agency shall have received a certificate of a
Consulting Engineer showing that the Net Revenues which it projects the Agency will receive in the first
full Fiscal Year beginning after the additional facilities, the Cost of Construction of which is to be
financed by the Additional Agency Obligations, are first placed in service, will not be less than 110% of
the maximum amount of interest on and principal of (at maturity or on Sinking Fund Installment dates) all
Agency Obligations to be Outstanding upon the issuance of the Additional Agency Obligations, in that or
in any future Fiscal Year, in which the previously issued Agency Obligations are to remain Outstanding.
Amounts in the Revenue Credits Account which are transferred to the Revenue Fund shall be included in
this calculation as Revenues.
(9)
The continued operations test is applicable when Additional Agency Obligations are
being issued to pay the Cost of Construction of any portion of the System. This test is met if the Trustee
shall have received a certificate from the Consulting Engineer prior to the time that the Additional
Agency Obligations are to be issued that the ability of the Agency to perform its obligations under the
Water Supply Agreements will not be impaired by the operations of the System upon the completion of
the portion of the System for the payment of the Cost of Construction of which Additional Agency
Obligations are then being issued.
Maintenance of Existence
The Agency is required not to terminate or dissolve itself. It is required not to permit any of the
Members to withdraw from the Agency. It is required to take all necessary actions to maintain its
existence under the Act.
Construction of Additional Facilities
The Agency is required to use its best efforts to cause the Additional Facilities to be acquired and
constructed when they are needed in order for the Agency to meet its obligations to supply water pursuant
to the Water Supply Agreements.
Operations and Maintenance of System; Extensions and Improvements
The Agency is required at all times to cause the System to be operated properly and in an efficient
and economical manner. It is required to cause the System to be maintained, preserved, and kept, in good
repair, working order and condition, and is required from time to time to cause to be made, all necessary
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and proper repairs, replacements, reconstruction and renewals so that at all times the operation of the
System may be conducted properly and advantageously.
At least once in each three Fiscal Years, beginning with the Fiscal Year starting after the System
Commencement Date, the Agency is required to cause to be prepared a report from the Consulting
Engineer stating which repairs, replacements, renewals or additions are necessary or expected to become
necessary in order to keep the System in proper working order and condition and in good repair. The
Agency is required to file the report with the Trustee. Prior to constructing or acquiring any extension,
improvement, replacement or renewal of the System the total cost of which the Agency reasonably
believes will exceed $200,000, the Agency is required to file with the Trustee a certificate signed by the
Consulting Engineer stating that in the signer’s opinion, the extension, improvement, replacement or
renewal contemplated will not materially adversely affect the ability of the Agency to comply with its
obligations under the General Resolutions.
Disposition of Property
The Agency agrees not to sell, lease or otherwise dispose of any portion of the System, except as
follows:
(1)
The Agency may sell or exchange at any time and from time to time any property
or facilities constituting part of the System if it shall determine that such property or facilities are
not useful in the operation of the System, and (a) the proceeds of such sale are $100,000 or less,
or it shall file with the Trustee a certificate of an Authorized Officer stating, in the opinion of the
signer, that the fair market value of the property or facilities exchanged is $100,000 or less, or
(b) if the sale proceeds or fair market value exceeds $100,000 there shall be filed with the Trustee
a certificate of the Consulting Engineer stating, in the opinion of the signer, that the sale or
exchange of such property or facilities will not impair the ability of the Agency to comply during
the current or any future Fiscal Year with the provisions of the General Resolution described
above under the heading “Operations and Maintenance of System; Extensions and
Improvements.” The proceeds of any such sale or exchange not used to acquire other property
necessary or desirable for the safe or efficient operations of the System shall be deposited upon
their receipt in the Bond Redemption Account of the Debt Service Fund.
(2)
Upon any termination of the construction of the Initial Project prior to its
substantial completion, the Agency may sell or exchange any or all property or facilities
constituting part of the Initial Project, subject, however, to the rights of the Members under the
Water Supply Agreements. The proceeds of any such sale or exchange are required to be
deposited in the Bond Redemption Account of the Debt Service Fund.
(3)
The Agency may sell that portion of the System to the City of Chicago as is
provided so to be sold in the Chicago Contract as in effect on the date of adoption of the General
Resolution if it obtains and delivers to the Trustee a Counsel’s Opinion stating that this sale will
not be inconsistent with the provisions of the General Resolution described above under the
heading “Operations and Maintenance of System; Extensions and Improvements.”
Charges and Collections
(1)
The Agency agrees to retain the right to establish charges and cause to be collected
amounts with respect to the use of the System and the sale of water from the System as provided in the
General Resolution.
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(2)
The Agency agrees to establish fees and charges for its provision of water, including
amounts due under the Water Supply Agreements sufficient to provide at all times adequate Revenues,
together with other available amounts, to meet all of its requirements under the General Resolution and
the Series Resolutions, including making in timely fashion all the required deposits and credits in the
various Funds and Accounts.
(3)
The Agency agrees not to furnish or supply or cause to be furnished or supplied any
water from the System to any person at a price less than provided in the Water Supply Agreement or
Customer Agreement for that person; or if there is no such agreement at a price less than the additional
cost to the Agency of providing such water (except during an emergency affecting that person’s water
supply system). The Agency will enforce the payment of any and all accounts, including from its
Members, owing to the Agency by reason of its ownership and operation of the System by discontinuing
the delivery of water, if feasible without jeopardizing public health or safety, or by filing suit for the
amounts owing, as soon as practicable after any such accounts are overdue and in any event within
120 days, or by both such discontinuance and by filing suit.
Receipt by Trustee of Payments Under and Enforcement of Agreements
The Agency and the Trustee are required to receive and immediately deposit in the Revenue Fund
for the purposes set forth in the General Resolution all amounts (other than amounts for deposit in
Member Deposit Funds or similar funds for Agency Customers) payable to either of them pursuant to the
Water Supply Agreements, the Customer Agreements or any other contract for the sale of water. The
Agency will enforce or cause to be enforced the provisions of the Chicago Contract, the Water Supply
Agreements, the Customer Agreements, if any, and all other contracts for the sale of water and shall duly
perform its covenants and agreements under such agreements. The Agency will not consent or agree to or
permit any rescission of or amendment to or otherwise take any action under or in connection with the
Chicago Contract or the Water Supply Agreement which will reduce the payments required under the
Water Supply Agreements or the right to receive water under the Chicago Contract or which will in any
manner materially impair or materially adversely affect the rights of the Agency under those agreements
or the rights or security of the Holders of the Agency Obligations under the General Resolution.
Insurance and Eminent Domain
(1)
The Agency agrees to keep or cause to be kept the properties of the System which are of
an insurable nature and of the character usually insured by those constructing or operating properties
similar to the System insured against loss or damage, including fire and extended coverage, vandalism,
malicious mischief, collapse, boiler and sprinkler leakage and against such other risks as may be deemed
necessary or advisable by the Board with such exceptions as are ordinarily required by insurers of
structures or facilities of similar type, in an amount not less than the lesser of (a) one hundred percent
(100%) of the replacement value of the System, as certified by the Consulting Engineer in writing, which
certificate shall be filed with the Agency and with the Trustee, or (b) the total principal amount of
Outstanding Agency Obligations; provided, however, that such amount of insurance is required at all
times to be sufficient to comply with any legal or contractual requirement which, if breached, would
result in assumption by the Agency of a portion of any loss or damage as co-insurer, and that such
insurance may provide for the deduction from each claim for loss or damage (except in case of a total
loss) of not more than two percent (2%) of the total amount of insurance required by the application of the
co-insurance clauses; and provided further, that if at any time the Agency is unable to obtain such
insurance to the extent above required, either as to amount of such insurance or as to the risks covered
thereby, it will not constitute an Event of Default under the provisions of the General Resolution if the
Agency shall maintain such insurance to the extent reasonably obtainable.
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(2)
Any such insurance is required to be in the form of policies or contracts for insurance
with insurers of good standing and shall be payable to the Trustee.
(3)
If any useful portion of the System is damaged, destroyed, condemned or otherwise lost
through the exercise of eminent domain or otherwise, the Agency will as expeditiously as possible,
continuously and diligently prosecute or cause to be prosecuted the repair, reconstruction, replacement or
relocation of such portion of the System to the extent recommended by the Consulting Engineer or the
Design Engineer. The proceeds of any insurance (other than any business interruption loss insurance) and
the award from any condemnation or other eminent domain proceeding, paid on account of such damage,
destruction or loss is required to be deposited by the Trustee in the General Fund to the credit of the
Improvements and Extensions Account and made available for, and to the extent necessary be applied to,
the cost of such repair, reconstruction, replacement or relocation. The proceeds of any insurance and the
award from any condemnation or other eminent domain proceeding, not applied within 36 months after
their receipt by the Agency to repairing, reconstructing, replacing or relocating damaged, destroyed or
taken property, or in respect of which notice in writing of intention to apply the same to the work of
repairing, reconstructing, replacing or relocating the property damaged, destroyed or taken is not given to
the Trustee by the Agency within such 36 months, or which the Agency at any time notifies the Trustee
are not to be so applied, are required to be deposited in the Debt Service Fund to the credit of the Bond
Redemption Account. Notwithstanding the foregoing, in the event that payments are made from the
Replacements and Contingencies Account for any such repairing, reconstructing, replacing or relocating
of property damaged, destroyed or taken prior to the availability of insurance or other proceeds, such
proceeds when received are required to be deposited in the Replacements and Contingencies Account to
the extent of such payments from that Account.
(4)
If the proceeds of insurance or the award from any condemnation or other eminent
domain proceeding, authorized by the foregoing to be applied to the reconstruction or replacement of any
portion of the System are insufficient or unavailable for such purpose the deficiency may be supplied out
of moneys in the Replacements and Contingencies Account to the extent, as shown by a certificate of any
Authorized Officer filed with the Trustee, not needed to be reserved for the purposes provided for that
Account.
(5)
The proceeds of business interruption loss insurance, if any, will be deposited in the
Revenue Fund.
Replacements and Contingencies Deposit Changes; Reports of Consulting Engineers
The Agency is required from time to time to increase the monthly deposit requirement in the
Replacements and Contingencies Account or the Replacements and Contingencies Requirement, or both,
as shall be necessary so that the amounts in this Account will at all times be sufficient to pay reasonably
expected Costs of Replacements and Contingencies when those amounts come due.
The Agency is required at least once in each three year period, to cause the Consulting Engineer
to file with the Agency, each Municipality and the Trustee, a report as to whether the deposits being made
in the Replacements and Contingencies Account, and the Replacements and Contingencies Requirement,
are adequate to provide and maintain an adequate Account for paying reasonably projected Costs of
Replacements and Contingencies and, if they are not, any recommendation as to changes in the monthly
deposits and the Replacements and Contingencies Requirement. Upon receiving any such Report making
such a recommendation, the Board is required by resolution to consider and determine whether and to
what extent compliance with the requirements of the General Resolution requires the making of changes
in the deposit requirement and the Replacements and Contingencies Requirement and is required to make
any such needed changes.
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Accounts and Reports
The Agency shall annually, within 120 days after the close of each fiscal year, cause to be filed
with the Trustee a copy of an annual report for such fiscal year accompanied by an accountant’s
certificate stating, among other things, whether the Agency is in default with respect to any of the
covenants, agreements or conditions on its part contained in the General Resolution or any Series
Resolution. Such report shall be available to the holders of any Agency Obligations who shall file a
written request for such document with the Trustee.
State Water Allocation
The Agency is required to use its best efforts to maintain each Member’s State Water Allocation
at its current level and to aid the Members in increasing their respective State Water Allocations, so long
as any of the Agency Obligations are Outstanding.
Modification of General Resolution
The General Resolution includes provisions by which the Agency may, by Supplemental
Resolution, modify the General Resolution or any Series Resolution without the consent of the Holders of
Agency Obligations in order to further secure or provide for payment of Agency Obligations to impose
further limitation on or surrender rights of the Agency, and with the consent of the Trustee, modifications
to correct ambiguities, defects or inconsistent provisions.
Other than these modifications, the General Resolution may not be amended while any of the
Agency Obligations are Outstanding except with the consent of the Holders of 66-2/3% in principal
amount of all the Bonds then Outstanding (other than Bonds of a Series which is unaffected by such
modification or amendment) and the consent of the Holders of 66-2/3% in principal amount of all the
Notes then Outstanding (other than Notes of a Series which is unaffected by such modification or
amendment) by written instrument. No such modification or amendment may extend the maturity of or
reduce the interest rate on, or otherwise alter or impair the obligation of the Agency to pay the principal
of, Redemption Price, if any, or interest on any Agency Obligation at the time and place and at the rate
and in the currency provided in such Agency Obligation without the express consent of the Holder of that
Agency Obligation, nor permit the creation by the Agency of any mortgage, pledge, lien or security
interest on the System, or upon any Revenues or moneys held pursuant to the General Resolution, other
than those contemplated by the General Resolution, nor permit the preference or priority of any Bond or
Bonds over any other Bond or Bonds or of any Note or Notes over any other Note or Notes, nor reduce
the percentages or Bonds and Notes required for the written consent to an amendment or modification,
nor modify any of the rights or obligations of the Trustee or any Paying Agent at the time acting pursuant
to the General Resolution without the written consent of the Trustee or any such Paying Agent. For
purposes of modification of the General Resolution, the principal amount of any Agency Obligation
issued at an original issue discount in excess of 2% of its face amount is to be its compound accreted
value.
Defeasance
If the Agency shall pay or cause to be paid, or there shall otherwise be paid, to the Holders of the
Agency Obligations then Outstanding, the principal and interest and Redemption Price, if any, to become
due thereon, at the times and in the manners stipulated in the Agency Obligations, the General Resolution
and the Series Resolutions, then and in that event the covenants, agreements and other obligations of the
Agency to the Holders of the Agency Obligations shall be discharged and satisfied.
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Agency Obligations for the payment and redemption of which moneys shall have been set aside
and shall be held in trust by the Trustee or Paying Agents (through deposit by the Agency of funds for
such payment or redemption or otherwise), whether at or prior to maturity or the redemption date of such
Agency Obligations, shall be deemed to have been paid within the meaning and with the effect expressed
in the paragraph above. All Outstanding Agency Obligations of any Series shall, prior to the maturity or
redemption thereof, be deemed to have been paid within the meaning and with the effect expressed in the
paragraph above if there shall have been deposited with the Trustee or Paying Agents either moneys in an
amount which shall be sufficient, or Investment Obligations the principal of and interest on which when
due will provide moneys which, when added to the moneys, if any, deposited with the Trustee or Paying
Agents at the same time, shall be sufficient to pay when due the principal or Redemption Price, if
applicable, and interest due and to become due on those Agency Obligations on and prior to the
Redemption Date or maturity date thereof, as the case may be, and the Agency shall have given the
Trustee irrevocable instructions to publish notice of redemption of such Agency Obligations as provided
in the General Resolution. Neither Investment Obligations nor moneys deposited with the Trustee nor
principal of or interest on any such Investment Obligations shall be withdrawn or used for any purpose
other than, and shall be held in trust for, the payment of the principal or Redemption Price, if applicable,
of and interest on those Agency Obligations.
For purposes of defeasance of Agency Obligations, Investment Obligations means only direct
Obligations of the United States of America.
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APPENDIX B
FORM OF
OPINION OF BOND COUNSEL
[Date of Issuance of 2013 Bonds]
We hereby certify that we have examined certified copy of the proceedings (the “Proceedings”)
of the Board of Directors of the Northwest Suburban Municipal Joint Action Water Agency, Cook,
DuPage and Kane Counties, Illinois (the “Agency”) passed preliminary to the issue by the Agency of its
fully registered Water Supply System Revenue Refunding Bonds, Series 2013 (the “Series 2013 Bonds”),
dated the date hereof, to the amount of $20,970,000, issued in the denomination of $5,000 or integral
multiples thereof. The Series 2013 Bonds mature on May 1 of the years and in the amounts and bear
interest at the respective rates percent per annum as follows:
YEAR
AMOUNT
2014
2015
2016
2017
2018
2019
2020
2021
$5,680,000
5,850,000
355,000
355,000
365,000
375,000
380,000
7,610,000
INTEREST RATE
3.00%
3.00
2.00
2.00
3.00
3.00
3.00
4.00
Each of the Series 2013 Bonds bears interest from its date until paid, such interest being payable
semiannually on May 1 and November 1 of each year, commencing on May 1, 2013.
The Series 2013 Bonds are issued pursuant to the Water Supply System Revenue Bond and Note
General Resolution of the Agency (the “General Resolution”), adopted by the Board of Directors of the
Agency (the “Board”) on December 17, 1982, as supplemented and amended from time to time,
including by certain parity series resolutions and by the series resolution for the Series 2013 Bonds
adopted by the Board on December 5, 2013 (the “2013 Series Resolution”, the General Resolution as so
supplemented and amended, including by the 2013 Series Resolution, being referred to as the “Bond
Resolution”).
The Series 2013 Bonds are being issued for the purpose of (i) refunding certain of the outstanding
Water Supply System Revenue Bonds, Series 2003, of the Agency (the “Series 2003 Bonds”), (ii) making
a necessary deposit to the Debt Service Reserve Fund established by and held under the Bond Resolution
and (iii) paying the costs of issuance of the Series 2013 Bonds.
In our capacity as bond counsel, we have examined, among other things, the following:
(a)
a certified copy of the Proceedings;
(b)
a certified copy of the Bond Resolution;
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(c)
an executed copy of the written determination of the Chairman of the Agency
delivered pursuant to the 2013 Series Resolution establishing and approving the terms and
conditions of the Series 2013 Bonds (the “Determination”);
(d)
a certified and conformed copy of the Water Supply Agreement, dated
December 31, 1982, as supplemented and amended (the “Water Supply Agreement”), by and
between the Agency and each of the Villages of Elk Grove Village, Hanover Park, Hoffman
Estates, Mount Prospect, Schaumburg and Streamwood, Illinois, and the City of Rolling
Meadows, Illinois (collectively, the “Members”); and
(e)
such other certifications, documents, proceedings, showings and related matters
of law as we have deemed necessary in order to render this opinion.
Based upon such examination, we are of the opinion that:
1.
The Agency is a legally existing public body politic and corporate and a municipal
corporation under the Constitution and laws of the State of Illinois.
2.
The Agency has the legal right and power to adopt the General Resolution and the 2013
Series Resolution. The General Resolution and the 2013 Series Resolution have each been duly and
lawfully adopted by the Board and the Determination of the Chairman has been duly executed on behalf
of the Agency and the General Resolution, the 2013 Series Resolution and the Determination are each in
full force and effect and are each valid and binding upon the Agency. The 2013 Series Resolution and the
Determination conform to the requirements of the General Resolution.
3.
The Proceedings show lawful authority for the issuance of the Series 2013 Bonds under
the laws of the State of Illinois now in force. The Series 2013 Bonds are valid and binding limited
obligations of the Agency entitled to the benefits of the Bond Resolution which, together with (i) the
Series 2003 Bonds remaining outstanding after the issuance of the Series 2013 Bonds and the application
of the proceeds thereof, (ii) the Water Supply System Revenue Refunding Bonds, Series 2008, of the
Agency and (iii) any additional Water Supply System Revenue Bonds which may be issued in the future
on a parity basis under the terms of the Bond Resolution, have a claim for payment, as to interest,
premium and principal, solely from the revenues of the Agency’s water supply system (the “System”),
after paying the expenses of operation and maintenance of the System, and from amounts in the various
Funds and Accounts established by the Bond Resolution, including from amounts required by the Bond
Resolution to be deposited in those Funds and Accounts, all as and to the extent and in the priority as
provided in the Bond Resolution. Such revenues of the System are to be derived primarily from
payments to be made by the Members pursuant to the Water Supply Agreement. Payments under the
Water Supply Agreement are required to be made from the revenues of the respective waterworks or
combined waterworks and sewerage systems of the Members, each being a “Local System” and
collectively, the “Local Systems”. The revenues of each Member’s Local System are referred to herein
respectively as “Local System Revenues”.
4.
The form of the Series 2013 Bonds prescribed for said issue by the Bond Resolution is in
due form of law.
5.
The assignment, pledge and grant of a lien and security interest, for the benefit of the
owners of the Series 2013 Bonds, with respect to the Revenues (as defined in the Bond Resolution), and
the assignment and provision for direct payment to the Trustee of all amounts owed by Members under
each of the Water Supply Agreements, all for use and disposition for the purposes and in the priority
provided in the Bond Resolution, are valid and legally effective.
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6.
The assignment, pledge and grant of a lien and security interest, for the benefit of the
owners of the Series 2013 Bonds, with respect to the various Funds and Accounts, as established by the
Bond Resolution, are valid and legally effective.
7.
There are in existence valid and legally binding Water Supply Agreements between the
Agency and the Members which obligate the Members together, on a take or pay basis, to pay amounts to
The Bank of New York Mellon Trust Company, N.A., as Trustee, sufficient to make all required deposits
in and credits to and payments from the Revenue Fund established under the Bond Resolution as provided
in the Bond Resolution during the full period that the Series 2013 Bonds are to be outstanding within the
meaning of the Bond Resolution. Each Water Supply Agreement is enforceable by the Agency or the
Trustee in accordance with its terms.
8.
Assuming compliance by the Members with the agreements contained in each Member’s
Water Supply Agreement and described in the final sentence of this paragraph, the amounts payable by
each Member under its Water Supply Agreement will be payable, under any Member ordinance
authorizing revenue obligations payable from their respective Local System Revenues (“Local System
Revenue Obligations”), from the Member’s Local System Revenues and will constitute proper expenses
of operation and maintenance of the Member’s Local System. In the event Local System Revenue
Obligations are issued by any Members, the Local System Revenues of such Members are generally to be
used first to pay operation and maintenance expenses of the Local Systems, then to pay principal of and
interest on the Local System Revenue Obligations and to make deposits in reserve and depreciation funds,
with any amounts remaining to be deposited in surplus accounts. Each Member represents and warrants
in its Water Supply Agreement that the payments it is required to make under the Water Supply
Agreement constitute operation expenses of the Member’s Local System. Further, each Member agrees
in its Water Supply Agreement to (i) establish and collect Local System rates and charges to produce
Local System Revenues sufficient to make all payments required to be made under the Water Supply
Agreement, and (ii) to provide in all future ordinances of the Member authorizing Local System Revenue
Obligations that Local System Revenues may be used to pay principal of and interest on the Local System
Revenue Obligations only to the extent that the Local System Revenues exceed the amounts required to
pay the operation and maintenance expenses of the Local System, including all amounts payable from
time to time under the Water Supply Agreement.
9.
Subject to the Agency’s compliance with certain covenants, under present law, interest on
the Series 2013 Bonds 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 alternative minimum tax for
individuals and corporations under the Internal Revenue Code of 1986, as amended, but is taken into
account in computing an adjustment used in determining the federal alternative minimum tax for certain
corporations. Failure to comply with certain of such Agency covenants could cause interest on the Series
2013 Bonds to be includible in gross income for federal income tax purposes retroactively to the date of
issuance of the Series 2013 Bonds. Ownership of the Series 2013 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 Series 2013 Bonds. In rendering our opinion on tax exemption, we have relied
on the mathematical computation of the yield on the Series 2013 Bonds and the yield on certain
investments by Robert Thomas CPA, LLC, Certified Public Accountants.
The rights of the registered owners of the Series 2013 Bonds and the enforceability of provisions
of the Series 2013 Bonds, the Bond Resolution and the Water Supply Agreements may be subject to
bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors’ rights.
Enforcement of provisions of the Series 2013 Bonds, the Bond Resolution and the Water Supply
Agreements by an equitable or similar remedy is subject to general principles of law or equity governing
such a remedy, including the exercise of judicial discretion whether to grant any particular form of relief.
B-3
We express no opinion herein as to the accuracy, adequacy or completeness of the Official
Statement relating to the Series 2013 Bonds.
In rendering this opinion, we have relied upon certifications of the Agency and the Members with
respect to certain material facts within the Agency’s and such Members’ knowledge. 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 a 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 that may hereafter occur.
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APPENDIX C
FINANCIAL STATEMENTS OF THE AGENCY
for the Fiscal Year
Ended April 30, 2012
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NORTHWEST SUBURBAN MUNICIPAL
JOINT ACTION WATER AGENCY
Elk Grove Village, Illinois
COMPREHENSIVE ANNUAL FINANCIAL REPORT
As of and for the Year Ended April 30, 2012
Prepared by:
Fiscal Department of the
Northwest Suburban Municipal
Joint Action Water Agency
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NORTHWEST SUBURBAN MUNICIPAL JOINT ACTION WATER AGENCY
Elk Grove Village, Illinois
TABLE OF CONTENTS
As of and for the Year Ended April 30, 2012
INTRODUCTORY SECTION
Transmittal Letter
i- iii
Officers and Officials
iv
Organizational Chart
v
Certificate of Achievement for Excellence in Financial Reporting
vi
FINANCIAL SECTION
Independent Auditors' Report
1 -2
Required Supplementary Information
Management's Discussion and Analysis
3- 10
Basic Financial Statements
Statement of Net Assets
11 - 12
Statement of Revenues. Expenses, and Changes in Net Assets
13
Statement of Cash Flows
14
Notes to Financial Statements
15-36
Required Supplementary Information
Schedule of Employer Contributions and
Schedule of Funding Progress- Illinois Municipal Retirement Fund
37
Schedule of Employer Contributions and
Schedule of Funding Progress- Other Postemployment Benefit Plan
38
Supplementary Information
Budgetary Information
39
Schedule of Changes in Net Assets - Restricted Accounts
40
Schedule of Operating Expenses- Budget and ActualOperations and Maintenance Account
41-42
Long-Term Debt Requirements
Water Special Obligation Bonds, Series 1997A
Water Supply System Revenue Refunding Bonds, Series 2003
Water Supply System Revenue Refunding Bonds, Series 2008
43
44
45
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NORTHWEST SUBURBAN MUNICIPAL JOINT ACTION WATER AGENCY
Elk Grove Village, Illinois
TABLE OF CONTENTS (cont.)
As of and for the Year Ended April 30, 2012
FINANCIAL SECTION (cont.)
Supplementary Information (cont .)
Schedule of Insurance in Force
Schedule of Change in Trustee Accounts- Bank. of New York
Schedule of Change in Account Balances - Members' Deposit Accounts
46
47-48
49
STATISTICAL SECTION- UNAUDITED
Net Assets by Component, Last Eight Fiscal Years
50
Change in Net Assets, Last Eight Fiscal Years
51
Schedule of Revenue by Source, Last Ten Fiscal Years
52
Schedule of Expenses by Function, Last Ten Fiscal Years
53
Census
54
Delivered Water Average Per Day (Million Gallons), Last Ten Fiscal Years
55
Ratios of Outstanding Debt by Type, Last Ten Fiscal Years
56
Schedule of Revenue Bond Coverage, Last Ten Fiscal Years
57
Demographic and Economic Information, Last Ten Calendar Years
58
Principal Employers, Current Year and Nine Years Ago
59
Full-Time Equivalent Employees, Last Ten Fiscal Years
60
Operating Indicators, Last Ten Fiscal Years
61
Capital Asset Statistics by Function, Last Ten Years
62
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NoRTHWEST SuBURBAN MuNICIPAL
JoiNT AcTION WATER AGENCY
901 WELLINGTON AVENUE
ELK GROVE VILLAGE, ILLINOIS 60007-3900
TELEPHONE 847/981-4083
FAX 847/981-4085
October 11, 2012
Chairman AI Larson
Members of the Board of Directors
Members of the Executive Committee
Northwest Suburban Municipal Joint Action Water Agency
The Comprehensive Annual Financial Report (CAFR) of the Northwest Suburban Municipal Joint Action
Water Agency for the fiscal year ended April 30, 2012 is submitted herewith. Responsibility for both the
accuracy of the data and the completeness and fairness of the presentation, including all disclosures,
rests with the Agency. This report was prepared in conformity with generally accepted accounting
principles. The CAFR includes an independent audit, as required by state statute and our Water
Revenue Bonds. To the best of our knowledge and belief, the enclosed data are accurate in all material
respects and are reported in a manner that presents fairly the financial position and changes in financial
positions of the Agency. All disclosures necessary to enable the reader to gain an understanding of the
Agency's financial activity have been included.
The Northwest Suburban Municipal Joint Action Water Agency is an intergovernmental agency created
under the Illinois Intergovernmental Cooperation Act to construct and operate a water supply system to
obtain and transmit treated potable water, drawn from Lake Michigan, to the water systems of the
member municipalities.
The membership of the Agency consists of seven contiguous municipalities located in Northwest Cook,
DuPage and Kane counties in Illinois: Elk Grove Village, Hanover Park, Hoffman Estates, Mount
Prospect, Rolling Meadows, Schaumburg and Streamwood.
The financial reporting entity (the Agency) includes all operations of the primary government. The
Agency has no component unit. Component units are legally separate entities for which the primary
government is financially accountable.
The Agency is governed by a Board of Directors that consists of one elected official from each member.
Each Director has an equal vote. The officers of the Agency are appointed by the Board of Directors.
The Board of Directors determines the general policies of the Agency, makes all appropriations, approves
contracts for sale or purchase of water, adopts resolutions providing for the issuance of bonds and notes
by the Agency, adopts by-laws, rules and regulations and exercises such powers and performs such
duties as may be prescribed in the Agency Agreement or its By-Laws.
The operation of the Agency is conducted under the direction of the Executive Committee, subject to the
general policy decisions of the Board of Directors. The Executive Committee is responsible for carrying
out the policy decisions of the Board of Directors. The Executive Committee consists of the Village
manager or other appointed official of each member community. Each member is entitled to one vote on
the committee.
SCHAUMBURG
HOFFMAN ESTATES
ROLLING MEADOWS
ELK GROVE VILLAGE
MOUNT PROSPECT
HANOVER PARK
STREAMWOOD
ECONOMIC CONDITION AND OUTLOOK
The seven member municipalities have a current population of approximately 314,284 people located in a
contiguous geographic area of approximately seventy-eight square miles. Although the area is primarily
single-family residential, there are significant industrial and commercial areas. The service area is
adjacent to O'Hare International Airport, one of the world's busiest airports.
OTHER INFORMATION
The Agency engaged the independent certified public accounting firm of Baker Tilly Virchow Krause, LLP
to render an opinion on the financial statements. As independent auditors, Baker Tilley also provided an
objective outside review of management's performance in reporting operating results and financial
condition. All requirements have been complied with and the auditor's opinion is included in the Financial
Section of the report
AWARD
The Government Finance Officers Association of the United States and Canada (GFOA) awarded a
Certificate of Achievement for Excellence in Financial Reporting to the Agency for its Comprehensive
Annual Financial Report for the fiscal year ended April 30, 2011. The Certificate of Achievement is a
prestigious national award that recognizes conformance with the highest standards for preparation of
state and local government financial reports .
In order to be awarded a Certificate of Achievement, a government unit must publish an easily readable
and efficiently organized comprehensive annual financial report, whose contents conform to program
standards. Such CAFR must satisfy both generally accepted accounting principles and applicable legal
requirements .
A Certificate of Achievement is valid only for one year. The Northwest Suburban Municipal Joint Action
Water Agency has received a Certificate of Achievement for the last eighteen consecutive years (fiscal
years ended 1992-2011 ). We believe our current report continues to conform ,to the Certificate of
Achievement program requirements, and are submitting it to GFOA
ACKNOWLEDGEMENT
Special acknowledgement to our Executive Director, Joseph Fennell, and all Agency employees for their
ongoing efforts in keeping the water and paperwork flowing in an efficient and economical manner.
Additionally, I would like to acknowledge the Chairman, the Board of Directors and the Executive
Committee for their leadership and support in planning and conducting the financial operations of the
Agency in a responsible and progressive manner.
;;::c~_aKevin C. Lockhart
Deputy Director
iii
NORTHWEST SUBURBAN MUNICIPAL
JOINT ACTION WATER AGENCY
OFFICERS AND OFFICIALS
As of April 30, 2012
BOARD OF DIRECTORS
Village of Elk Grove Village
Village of Hanover Park
Village of Hoffinan Estates
Village of Mount Prospect
City of Rolling Meadows
Village of Schaumburg
Village of Streamwood
Crajg Johnson
Rodney Craig
William McLeod
Irvana Wilks
Thomas Rooney
AI Larson, Chairman
Billie Roth
Secretary
Treasurer
Michael Janonis
Christine Tromp
EXECUTIVE COMMITTEE
Village of Elk Grove Village
Village of Hanover Park
Village of Hoffman Estates
Village of Mount Prospect
City of Rolling Meadows
Village of Schaumburg
Village of Streamwood
Raymond Rummel
Howard Killian, Alternate
James Norris
Michael Janonis , Chairman
Barry Krumstock
Kenneth Fritz
Gary O 'Rourke
EXECUTIVE DIRECTOR
Joseph Fennell
iv
Northwest Suburban Municipal Joint Action Water Agency
Organization Chart
I
Board of
Directors
l
Executive
Committee
I
<
Executive
Director
_l
Operations
Manager
Secretary
l
Foreman
_j_
_l_
Operators
Maintenance
Cs)
(3)
Scheduler
Deputy
Director
Certificate of
Achievement
for Excellence
in Financial
Reporting
Presented to
Northwest Suburban Municipal
Joint Action Water Agency
Illinois
For its Comprehensive Annual
Financial Report
for the Fiscal Year Ended
April 30, 2011
A Certificate of Achievement for Excellence in Financial
Reporting is presented by the Government Finance Offi~
Association of the United States and Canada to
government units and public employee retiremenl
systems whose comprehensive annual financial
reports (CAFR.s) achieve the h.igbest
standards in government accounting
and financial reporti.og.
President
Executive Director
vi
THIS PAGE IS INTENTIONALLY LEFT BLANK
·~AKE R TILlY
Dakcr Tilly Vi rc how Ku use, LLP
1301 W 22nd St, Sc< 400
O ak D roo k , l LG O S2 3-33~ 9
!ci 63D9903 13 l
(, x G 0 990 003!>
bakerti lly.c<>m
INDEPENDENT AUDITORS' REPORT
To the Members of the Board of Directors
Northwest Suburban Municipal Joint Action Water Agency
Elk Grove Village, Illinois
We have audited the basic financial statements of the Northwest Suburban Municipal Joint Action Water
Agency, Elk Grove Village, Illinois, as of and for the year ended April30, 2012, as listed in the accompanying
table of contents. These basic financial statements are the responsibility of the Northwest Suburban Municipal
Joint Action Water Agency's management. Our responsibility is to express an opinion on these basic financial
statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in the United States of
America. Those standards require that we plan and perform the audit to obtain reaSQnable assurance about
whether the financial statements are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the basic financial statements. An audit also
includes assessing the accounting principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the basic financial statements referred to previously present fairly, in all material respects. the
financial position of the Northwest Suburban Municipal Joint Action Water Agency as of April30, 2012, and the
changes in its financial position and its cash flows for the year then ended, in conformity with accounting
principles generally accepted in the United States of America.
Accounting principles generally accepted in the United States of America require that the required
supplementary infonnation as listed in the table of contents be presented to supplement the basic financial
statements. Such information, although not a part of the basic financial statements, is required by the
Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for
placing the basic financial statements in an appropriate operational, economical, or historical context. We have
applied certain limited procedures to the required supplementary information in accordance with auditing
standards generally accepted in the United States of America, which consisted of inquiries of management
about the methods of preparing the information and comparing the information for consistency with
management's responses to our inquiries, the basic financial statements, and other knowledge we obtained
during the audit of the basic financial statements. We do not express an opinion or provide any assurance on
the information because the limited procedures do not provide us with sufficient evidence to express an opinion
or provide any assurance.
Page 1
Members of the Board of Directors
Northwest Suburban Municipal Joint Action Water Agency
Elk Grove Village, Illinois
Our audit was conducted for the purpose of forming an opinion on the financial statements that collectively
comprise the Northwest Suburban Municipal Joint Action Water Agency's basic financial statements. The
supplementary information as listed in the table of contents is presented for purposes of additional analysis and
is not a required part of the basic financial statements. Such information is the responsibility of management
and was derived from and relates directly to the underlying accounting and other records used to prepare
financial statements. The supplementary information has been subjected to the auditing procedures applied in
the audit of the basic financial statements and certain procedures, including comparing and reconciling such
information directly to the underlying accounting and other records used to prepare the financial statements or
to the financial statements themselves, and other procedures in accordance with auditing standards generally
accepted in the United States of America. In our opinion, is fairly stated in all material respects in relation to the
basic financial statements as a whole .
Our audit was conducted for the purpose of forming an opinion on the financial statements that collectively
comprise the Northwest Suburban Municipal Joint Action Water Agency's basic financial statements. The
introductory section and statistical section listed in the table of contents are presented for purposes of additional
analysis and are not a required part of the basic financial statements. Such information has not been subjected
to the auditing procedures applied in the audit of the basic financial statements, and accordingly, we do not
express an opinion or provide any assurance on it.
2Jwz_ '1-1)~ ~' LL?
Oak Brook, Illinois
October 11, 2012
Page 2
Management's Discussion & Analysis
Overview of the Annual Financial Report
Management's Discussion and Analysis (MD&A) serves as an introduction to, and should be
read in conjunction with, the basic audited financial statements and supplementary
information. The MD&A represents management's examination and analysis of the Agency's
financial condition and performance. Summary financial statement data, key financial and
operational indicators used in the Agency's budget, bond resolution and other management
tools were used for this analysis.
The financial statements report information about the Agency using full accrual accounting
methods as utilized by similar business activities in the private sector. However, (ateregulated accounting principles applicable to private sector utilities are not required to be used
by government utilities and have not been used in this report. The financial statements
include a statement of net assets, a statement of revenues. expenses and changes in net
assets, a statement of cash flows and notes to the financial statements.
The statement of net assets presents the financial position of the Agency on a full accrual
historical cost basis. The statement of net assets presents information on all of the Agency's
assets and liabilities with the difference reported as net assets. Over time, increases and
decreases in net assets are one indicator of whether the financial position of the Agency is
improving or deteriorating.
While the statement of net assets provides information about the nature and amount of
resources and obligation at year-end, the statement of revenues, expenses and changes
in net assets presents the results of the business activities over the course of the fiscal year
and information as to how the net assets changed during the year. All changes in net assets
are reported as soon as the underlying event giving rise to the change occurs, regardless of
the timing of the related cash flows. This statement also provides certain information about
the Agency's recovery of its costs.
The statement of cash flows presents changes in cash and cash equivalents resulting from
operational, financing and investing activities. This statement presents cash receipts and
cash disbursement information without consideration of the earnings event, when an
obligation arises, or depreciation of capital assets.
The notes to the financial statements provide required disclosures and other information
that are essential to a full understanding of material data provided in the statements. The
notes present information about the Agency's accounting policies, significant account
balances and activities, material risks, obligations, commitments, contingencies and
subsequent events, if any. Supplementary information such as debt coverage data is
provided.
(See independent auditors' report)
Page 3
Financial Analysis
The following comparative condensed financial statements and other selected information
serve as the key financial data and indicators for management, monitoring and planning .
General Trends and Significant Events
The following information details the water pumped to members and net cost as purchased
from the City of Chicago.
The volume of water sold in fiscal year 2011-2012 was approximately 10.62 billion gallons, a
decrease of 1.57% from fiscal year 2010-2011. Weather and water conservation continue to
be big determinates of water usage.
Pumpage by Fiscal Year
Fiscal Year
2011-2012
2010-2011
2009-2010
2008-2009
2007-2008
2006-2007
2005-2006
Pumped (Gallons)
10,682,767,000
10,853,019,000
11 '185,344,000
11,427,627,000
12,064,366,000
12,123,968,000
13,231,528,000
Net Cost per Thousand Gallons of Water Charged to Members
The net cost per thousand gallons is simply the average member payments divided by total
water pumped to each member community. Member payments are based on formulas that
seek to reimburse the Agency for cash expenditures .
Fiscal Year
2011-2012
2010-2011
2009-2010
2008-2009
2007-2008
2006-2007
2005-2006
Pumped Cost
3.03
2.83
2.68
2.34
2.40
2.29
2.23
{See independent auditors' report)
Page 4
Cost of water purchased from the City of Chicago (1,000) gallons
Fiscal Year
2011~2012
2010~2011
2009~2010
2008-2009
2007~2008
2006-2007
2005-2006
Gallons (000)
10,870,507
11,031,683
11,397,706
11,687,257
12,344,392
12,396,882
13,614,292
Gross Cost
22,872,841
22,173,683
20,901,827
19,080,930
17,133,041
16,487,853
17,812,561
Cost
2.104
2.01
1.834
1.637
1.388
1.330
1.308
Financial Condition
The following tables indicate that the Agency's financial condition remained strong at year-end
with adequate liquid assets, reliable plants and systems to meet demand and a reasonable
level of unrestricted net assets. The current financial condition, technical support staff
capabilities and operating and expansion plans to meet anticipated customer needs are well
balanced and under control. The Agency purchases all water from the City of Chicago who
raised their rates by 25% on January 1, 2012. This increase resulted in a corresponding rate
increase by the Agency which resulted in the large increases in Other Noncurrent Assets,
Current liabilities, Operating Revenues and Operating Expenses. The following charts
summarize the statement of net assets with comparisons to the prior year.
Statement of Net Assets
2011
2012
Total Current Assets
$
12,084,455
$
Change
11,834,195
$
250,260
%of Change
2.1%
Noncurrent Assets
Net Capital Assets
47.355.448
48,524.786
(1 '169,338)
-2.4%
Other Noncurrent Assets
26,532,875
23,972.901
2.559.974
10.7%
85,972,778
84.331,882
1,640,896
1.9%
Total Assets
Current Liabilities
Long Term Liabilities
Total Liabilities
4,675,472
4,196,659
478,813
11.4%
74,990.050
75,617,884
(627,834)
-0.8%
79,665,522
79 814,543
(149,021)
-0.2%
(17 ,628, 436)
Net Assets
ln\ested Capital Assets
(net of related debt)
Restricted
Unrestricted
Total Net Assets (Deficit)
$
(16, 790, 890)
(837.546)
5.0%
9,161,217
9.268,337
(107,120)
-1.2%
14,774,475
11,859,892
6,307,256
$
4,337,339
$
2,914,583
24.6%
1,969,917
45.4%
(See independent auditors' report)
Page 5
The Agency has had deficits and profits because of its billing method of receiving payments
for cash-only disbursements. Such items as depreciation and amortization are not billed while
an item such as bond principal is billed. The net deficit position will become positive as bond
principal is retired.
Statement of Revenue§ Exeenses and Changes in Net Assets
2011_
2012
Re-..enues
Operating Re-..enues-Charges for Sen-ices
Non-Operating Re-..enues-ln-..es tm ent Income
$
32.266,959
807 627
Change
30,654,804
821 693
$
$
1,612,155
(14,066)
33,074,586
3 1,476,497
22,760.616
8,344,053
21.961.240
9,231.181
799.376
(887, 128)
31' 104,669
31 , 192,421
(87,752)
Change in Net Assets
1.969,917
284,076
1,685,841
Net Assets May 1
4,337,339
4.053,263
284,076
Expenses
Purchases of Water
All other
Net Assets April 30
$
6,307,256
4,337,339
$
1,598,089
$
1,969,917
The following table shows the Agency's ability to generate net operating cash.
provided by operating activities is shown in total dollars.
Net cash
2012
Total Operating Revenues
$
32,266,959
6. 263,805
Net Cash From Operations
Net Operating Gash-% of Operating Revenue
19.41%
Change
$
30,654,804
5, 063,548
16.52%
$
1,612,155
1,200,257
74.45%
The Agency bills its membe(S one month in arrears for cash paid out in the previous month.
In addition, the Agency has advance billed approximately one month of operation and
maintenance and three months of debt service payments. The Agency pays its water supplier
quarterly in arrears. The Agency maintains total deposits combined in .the Operations and
Maintenance and Trustee Accounts of $5,308,635.
(See independent auditors' report)
Page 6
Results of Operations
Operating Revenues: Revenues from Operations fall into one category: member charges.
The following chart depicts water revenues for the last five fiscal years:
2010-2011
2011-2012
2009-2010
2007-2008
2008-2009
Elk Gro~ Village
Hanover Park
Hoffman Estates
Mount Prospect
Rolling Meadows
Schaumburg
Streamwood
$
5,440,530
2,914,822
5,359,250
3,779,685
2,437,019
9,159,966
3,288,239
$
4,677,641
2,503,423
4, 713,490
3,342,871
2,191,888
7 ,944,131
2,847,792
$
4,417,221
2,452,450
4,731,300
3,258,535
2,253,579
7,648,026
2,867,517
$
4,618,347
2,484,073
4,531,389
3,346,323
2,391,752
7,827,446
2,927,645
$
5,056,018
2,575,997
4,655,414
3,402,751
2,238,491
8,231,389
2, 780,527
Total
$
32,379,511
$
28,221,236
$
27,628,628
$
28,126,975
$
28,940,587
Expenses
The Agency operates and maintains a potable water delivery system. The Agency purchases
water from the City of Chicago and transports the water through a fifty-five mile transmission
main to its seven member communities. Wages and fringe benefits increased from fiscal year
2010-2011 to 2011-2012 by $32,793. The Agency granted a 2.0% wage increase to all
employees at the beg inning of 2011-2012. Salary and related benefits for the last six years
are as follows:
Wages and Fringe Benefits
2011-2012
2010-2011
2009-2010
2008-2009
2007-2008
2006-2007
$
1,691,082
1,658,289
1,584,005
1,518,758
1,440,687
1,120, 785
(See independent auditors' report)
Page 7
Rate Covenant
In the Bond Resolution the Agency covenants and agrees that it will at all times provide
sufficient revenues for the safe and proper operation of a water system. The Agency also
agrees to maintain certain minimum balances and set aside appropriate amounts of money in
specific accounts for the purposes of payments of the outstanding bonds. The Agency has a
surety bond that provides as a replacement for a debt service reserve account. Annual debt
service requirements to maturity are as follows:
F iscal Year Ending April 30
2013
2014
2015
2016
2017
2018
2019
2020
2021
$
Tolal
$
Principal
Bond Interest
705 ,000
12.585.000
16, 145,000
10,365,000
5.675,000
5,960,000
6.255.000
6,545,000
6 ,875.000
71 , 110,000
$
$
3.506,439
3,176,638
2,458,388
1,795,638
1,395,575
1,106,763
814,944
507,375
171,875
14,933,635
Total
$
$
4,211,439
15,761,638
18.603,388
12,160,638
7,070,575
7 ,066 ,763
7,069,944
7,052 ,375
7,046,875
86,043 ,635
The Agency is also required to have a minimum balance of $3,000,000 in its Replacement
and Contingency Account. The current balance in the account is $4,117,243.
Debt Administration
As shown in Note IV of the Financial Statements, on April 30, 2012, the Agency had
$71,110,000 of revenue bonds outstanding. No bonds were issued during the year and
$500,000 was retired .
(See independent auditors' report)
Page 8
Capital Assets
Beginning
Balance 5/1
Capital Assets not being depreciated
Land and Easements
Construction in progress
3.254,354
$
Total capital assets not being
depreciated
-
$
Ending
Balance 4/30
Retirements/
Adjustments
Additions
$
-
$
3,254,354
3,254,354
3,254,354
Capital Assets being depreciated
Water System
Booster Station and Standpipes
Control System
Other Construction
Furniture, fixtures & equipment
Automobiles and trucks
Leasehold improvements
Temporary Easements
66,398,765
10,674,458
4,513,066
315.499
439.736
563,477
110,117
1,000,000
Total capital assets being depreciated
83,015,118
390,969
83,406,087
Less accumulated depreciation for
Water System
Booster Station and Standpipes
Control System
Other Construction
Furniture, fixtures & equipment
Automobiles and trucks
Leasehold improvements
Temporary Easements
26,393,854
5,948,119
3,651,035
190,542
423.287
459,730
103,117
575,000
1,089,979
271,219
112,433
7,879
3,086
49,313
1,400
25,000
27,483,833
6,219,338
3,763,468
198,421
426,373
509,043
104,517
600.000
Total accumulated depreciation
37,744,684
1.560,309
39,304,993
45,270 ,434
(1.169, 340)
44,101,094
Total Capital Assets being depreciated
$
CAP~ALASSETS.NET
48,524,788
65,398,765
10,848,748
4,710,263
315,499
439,736
582,959
110,117
1,000,000
174.290
197,197
19,482
$
(1 '169, 340) $
-
$
47,355,448
SEE NOTE 3 IN FINANCIAL STATEMENTS
ECONOMIC FACTORS AND IMPACTS
The Agency is supported solely by member usage charges, interest income and other
miscellaneous income.
The current economic conditions, if continued in 2012-13, will continue to have a negative
impact on interest income.
In late 2011, JAWA was notified that the City of Chicago was increasing their water rates over
the next four years beginning January 1, 2012. The percentage rate increases annually are
2012 25%, 2013 15%, 2014 15% and 2015 15%. All of these increases will be incorporated
into the Agency's monthly billing on January 1 of each year.
Also in late 2011 the Agency was notified by the Illinois State Toll Highway Authority that they
were moving forward with the expansion of the 1-90 corridor from O'Hare to Rockford. The
Agency has 16 miles of pipeline that parallels the project and could be impacted by the
construction. The Agency is working closely with the ISTHA to identify potential conflicts and
the financial impact.
(See independent auditors' report)
Page 9
THIS PAGE IS INTENTIONALLY LEFT BLANK
FINAL COMMENTS
The Agency historically works very closely with its member communities. The respective
staffs have a high degree of intergovernmental cooperation. There is the common view that
thoughtful planning and prudent administration of resources will yield efficiency in the
operation of the system and thereby result in affordable, efficient and reliable water service.
Should there be any questions regarding this report or any item contained herein, please
address such questions to:
Kevin C. Lockhart, Deputy Director
Northwest Suburban Municipal Joint Action Water Agency
901 Wellington Avenue
Elk Grove Village, Illinois 60007
{See independent auditors' report)
Page 10
NORTHWEST SUBURBAN MUNICIPAL
JOINT ACTION WATER AGENCY
STATEMENT OF NET ASSETS
As of April 30, 2012
ASSETS
CURRENT ASSETS
Cash and Investments
Accounts receivable
Restricted investments
Total current assets
NONCURRENT ASSETS
Capital assets
Capital assets not being depreciated
Capital assets being depreciated
Accumulated depreciation
Net capital assets
Other noncurrent assets
Gash and Investments
Restricted investments
Accrued interest receivable
Developer receivable
Unamortized bond issuance costs
Total other noncurrent assets
Total noncurrent assets
Total assets
$
2,521,240
2,395,376
7,167,839
12,084,455
3,254,354
83,406,087
(39,304,993)
47,355,448
9,165,990
16,043.401
353,260
24,757
945,467
26,532,875
73,888,323
85.972,778
Page 11
LIABILITIES AND NET ASSETS
CURRENT LIABILITIES
Accounts payable and accrued expenses
Revenue bonds payable - payable from restricted assets
Interest payable- payable from restricted assets
Due to Illinois State Toll Highway Authority
Total current liabilities
$
NONCURRENT llABILITIES
Revenue bonds payable
Unamortized bond premium
Unamortized loss on refunding bonds
Total long-term revenue bonds payable
2,189,665
705,000
1,760,807
20,000
4,675,472
70,405,000
4,772,941
{51826,022)
69,3511919
300,000
2,847,215
2,461,420
Due to Illinois State Toll Highway Authority
Deposits payable - members (trustee accounts)
Deposits payable- members (agency accounts)
Net other postemployment benefits obligation
IMRF net pension obligation
13.~20
16,376
5,638,131
Total other noncurrent liabilities
74,990,050
Total noncurrent liabilities
79,665,522
Total Liabilities
NET ASSETS
Invested in capital assets, net of related debt
Restricted for debt service
Restricted for improvements and replacements
Unrestricted
TOTAL NET ASSETS
See accompanying notes to financial statements.
(17,628,436)
4,854,358
4,306,859
14.774,475
$
6,307,256
Page 12
NORTHWEST SUBURBAN MUNICIPAL
JOINT ACTION WATER AGENCY
STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET ASSETS
For the Year Ended April 30, 2012
OPERATING REVENUES
Charges for services
Billings to members
$ 32,266,959
Total operating revenues
32,266,959
OPERATING EXPENSES
Water pumping and distribution
Administrative
25,149,947
783,143
Total operating expenses
25,933,090
Operating income before depreciation
6,333,869
1,560,309
Depreciation
Operating Income (Loss)
4,773,560
NONOPERATING REVENUES (EXPENSES)
Investment income
Other income
Interest expense (including amortization)
Total nonoperating revenues (expenses)
802,316
5,311
(3,611 ,270)
(2,803,643)
CHANGE IN NET ASSETS
NET ASSETS- BEGINNING OF YEAR
1,969,917
4,337,339
NET ASSETS - END OF YEAR
See accompanying notes to financial statements.
Page 13
NORTHWEST SUBURBAN MUNICIPAL
JOINT ACTION WATER AGENCY
STATEMENT OF CASH FLOWS
For the Year Ended April 30, 2012
CASH FLOWS FROM OPERATING ACTIVITIES
Received from customers
Payments to employees for services
Payments to suppliers for goods and services
Net cash flows from operating activities
$ 31,899,256
(1 '186,358)
(24,449,093)
6,263.805
CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES
None
CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES
Principal payments on bonds
Interest payments on bonds
Payments to Illinois State Toll Highway Authority
Purchase of capital assets
Net cash flows from capital and related financing activities
(500,000)
(3,521 ,614)
(20,000)
(390,969)
(4,432,583)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of investment
Sale of investment
Investment income
Net cash flows from investing activities
(3,309,024)
324 ,715
802,316
(2,181 ,993)
{350,771)
Net Increase (Decrease) in Cash and Cash Equivalents
CASH AND CASH EQUIVALENTS, Beginning of Year
19,170,540
CASH AND CASH EQUIVALENTS, END OF YEAR
$ 18,819,769
CONSISTING OF
Cash and investments
Current restricted investments
Noncurrent cash and investments
Noncurrent restricted investments
Cash and Investments
$
34,898,470
(16,078,702)
Less non-cash equivalents
CASH AND CASH EQUIVALENTS
RECONCILIATION OF OPERATING INCOME TO NET CASH FLOWS FROM
OPERATING ACTIVITIES
Operating income
Adjustments to Reconcile Operating Income to Net Cash from Operating Activities
Depreciation
Changes in assets and liabilities
Accounts receivable
Accounts payable and accrued expenses
Net other postemployment benefits obligation
IMRF net pension obligation
NET CASH FLOWS FROM OPERATING ACTIVITIES
See accompanying notes to financial statements.
2,521,240
7,167,839
9,165,990
16,043,401
$ 18,819,768
$
4,773,560
1,560,309
(367,703)
284,813
3,031
9,795
!
~63,80~
Page 14
NORTHWEST SUBURBAN MUNICIPAL JOINT ACTION WATER AGENCY
NOTES TO FINANCIAL STATEMENTS
As of and for the Year Ended April 30,2012
NOTE 1- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The financial statements of the Northwest Suburban Municipal Joint Action Water Agency (the Agency)
have been prepared in conformity with accounting principles generally accepted in the United States of
America. The Governmental Accounting Standards Board (GASB) is the accepted standard-setting body
for establishing governmental accounting and financial reporting principles.
The significant accounting principles and policies utilized by the Agency are described below.
A. REPORTING ENTITY
The Agency was organized on March 17, 1981. The Agency assumed all contracts, debts, liabilities,
obligations, and assets of the Northwest Suburban Water System Venture under Chapter 127, par. 743 .1
of the Illinois Revised Statutes titled "Intergovernmental Cooperation Act." The purposes and objectives of
the Agency are:
1) To provide water to member municipalities on a wholesale basis .
2) To plan, construct, acquire, develop, operate, maintain or contract for facilities for receiving,
storing, and transmitting water from Lake Michigan for the principal use and mutual benefit of the
municipalities and their water users.
3)
To provide adequate supplies of such water on an economical and efficient basis for the
municipalities .
At April 30, 2012, the following municipalities were members of the Agency:
Village
Village
Village
Village
of Elk Grove Village
of Hanover Park
of Hoffman Estates
of Mount Prospect
City of Rolling Meadows
Village of Schaumburg
Village of Streamwood
The Agency is an intergovernmental agency created under the Illinois Intergovernmental Cooperation Act
and is governed by a Board of Directors, which consists of one elected official from each member
municipality.
This report includes all of the funds of the Northwest Suburban Municipal Joint Action Water Agency. The
reporting entity for the Agency consists of (a} the primary government, (b) organizations for which the
primary government is financially accountable, and (c) other organizations for which the nature and
significance of their relationship with the primary government are such that their exclusion would cause
the reporting entity's financial statements to be misleading or incomplete. A legally separate organization
should be reported as a component unit if the elected officials of the primary government are financially
accountable for the organization. The primary government is financially accountable if it appoints a voting
majority of the organization's governing body and (1) it is able to impose its will on that organization or (2)
there is a potential for the organization to provide specific financial benefits to or burdens on the primary
government. The primary government may be financially accountable if an organization is fiscally
dependent on the primary government .
Page 15
NORTHWEST SUBURBAN MUNICIPAL JOINT ACTION WATER AGENCY
NOTES TO FINANCIAL STATEMENTS
As of and for the Year Ended April 30, 2012
NOTE I- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
A.
REPORTING ENTITY (con/.)
A legally separate, tax exempt organization should be reported as a component unit of a reporting entity if
all of the following criteria are met: (1) The economic resources received or held by the separate
organization are entirely or almost entirely for the direct benefit of the primary government, its component
units, or its constituents; (2) The primary government is entitled to, or has the ability to otherwise access,
a majority of the economic resources received or held by the separate organization; (3) The economic
resources received or held by an individual organization that the specific primary government, or its
component units, is entitled to, or has the ability to otherwise access, are significant to that primary
government. Blended component units. although legally separate entities, are, in substance. part of the
government's operations and are reported with similar funds of the primary government. This report does
not contain any component units and the Agency should not be included as a component unit of any of its
members.
B.
MEASUREMENT FOCUS, BASIS OF ACCOUNTING, AND FINANCIAL STATEMENT PRESENTATION
The financial statements are reported using the economic resources measurement focus and the accrual
basis of accounting. Under the accrual basis of accounting, revenues are recognized when earned and
expenses are recorded when the liability is incurred or economic asset used. Revenues, expenses, gains,
losses, assets, and liabilities resulting from exchange and exchange-like transactions are recognized
when the exchange takes place.
Private-sector standards of accounting and financial reporting issued prior to December 1, 1989.
generally are followed in the Agency's financial statements to the extent that those standards do not
conflict with or contradict guidance of the Governmental Accounting Standards Board. The Agency also
has the option of following subsequent private-sector guidance subject to this same limitation. The
Agency has elected to follow subsequent private-sector guidance.
Preparation of financial statements in conformity with accounting principles generally accepted in the
United States of America requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Page 16
NORTHWEST SUBURBAN MUNICIPAL JOINT ACTION WATER AGENCY
NOTES TO FINANCIAL STATEMENTS
As of and for the Year Ended April 30, 20 12
NOTE I- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
C. ASSe:TS, LIABILITIES AND NET ASSETS
1.
Deposns and Investments
For purposes of the statement of cash flows, the Agency considers all highly liquid investments with an
initial maturity of three months or less when acquired to be cash equivalents .
Illinois Statutes authorize the Agency to make deposits/investments in insured commercial banks, savings
and loan institutions, obligations of the U.S. Treasury and U.S. Agencies, insured credit union shares,
money market mutual funds with portfolios of securities issued or guaranteed by the United States or
agreement to repurchase these same obligations, repurchase agreements, short-term commercial paper
rated within the three highest classifications by at least two standard rating services, and the Illinois
Funds Investment Pool.
Additional restrictions may arise from local charters, ordinances, resolutions and grant resolutions.
Investments are stated at fair value, which is the amount at which an investment could be exchanged in a
current transaction between willing parties . Fair values are based on quoted market prices. No
investments are reported at amortized cost. Adjustments necessary to record investments at fair value
are recorded in the operating statement as increases or decreases in investment income. The difference
between the bank statement balance and carrying value is due to outstanding checks and/or deposits in
transit.
Illinois Funds is an investment pool managed by the State of Illinois, Office of the Treasurer, which allows
governments within the State to pool their funds for investment purposes. Illinois Fuf'lds Is not registered
with the SEC as an investment company, but does operate in a manner consistent with Rule 2a7 of the
Investment Company Act of 1940. lnves1men1s in Illinois Funds are valued at Illinois Fund's share price,
the price for which the investments could be sold .
See Note II. for further information.
2.
Receivab/es/Payables
The Agency states accounts receivable at the amounts billed to customers . The carrying amount of
accounts receivable is reduced by a valuation allowance that reflects management's best estimate of
amounts that will not be collected. The Agency considers the entire amount of the receivable to be
collectible and has therefore estima1ed the valuation allowance to be zero at April 30, 2012.
3.
Restricted Assets
Mandatory segregations of assets are presented as restricted assets. Such segregations are required by
bond agreements and other external parties . Current liabilities payable from these restricted assets are so
classified. When both restricted and unrestricted resources are available for use and using restricted
resources is appropriate. it is the Agency's policy to use restricted resources first, then unrestricted
resources.
Page 17
NORTHWEST SUBURBAN MUNICIPAL JOINT ACTION WATER AGENCY
NOTES TO FINANCIAL STATEMENTS
As of and for the Year Ended April 30, 2012
NOTE 1- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
C.
ASSETS, LIABILITIES AND NET ASSETS (cont.)
4.
CAPITAL ASSETS
Capital assets include property, plant and equipment. Capital assets are defined by the government as
assets with an initial cost of more than $5,000 and an estimated useful life in excess of one year . All
capital assets are valued at historical cost, or estimated historical cost if actual amounts are unavailable.
Donated capital assets are recorded at their estimated fair value at the date of donation. Capital assets In
service are depreciated or amortized using the straight-line method over the following useful lives:
Water system
Booster station and standpipes
Other construction
Easements
Control system
Furniture, fixtures, and equipment
Automobiles and trucks
Leasehold impro\oements
40- 60 years
40- 50 years
40- 50 years
40 years
15 years
5-7 years
5 years
7 years
Maintenance and repairs are charged to expense in the year incurred. Expenses that extend the useful
life or increase productivity of property, plant, and equipment are capitalized.
Interest has been capitalized on assets acquired with debt. The amount of interest capitalized was
calculated by offsetting interest expense incurred from the date of the borrowing until completion of the
project, with interest earned on invested proceeds over the same period.
Buy-Back of Facilities, Reservoirs, and Site at O'Hare- Due from the City of Chicago
Section 3.4 of the Water Purchase Agreement between the Agency and the City of Chicago (the City)
states that the Agency agrees to sell and the City agrees to buy the facilities and reservoirs, together with
any interest in the site, at a price equal to the aggregate costs of the facilities, reservoirs, and site as
determined. Payments shall be solely in the form of a credit against any amounts due and owing the City
for lake water furnished .
The Agency will convey to the City its entire right (title and interest) in the facilities and the reservoirs,
together with any interest in the site, 30 days after the later of the date all of the obligations issued in
whole or in part to finance the provision of the Agency project or any expansion thereof or addition thereto
and any obligations issued to refund any of such securities have been paid In full as to principal and
interest or at such time as the credits granted by the City equal the aggregate costs of the facilities and
reservoirs as determined.
The credits shall be determined as follows: each billing to the Agency, computed on the basic charge as
adjusted with respect to all quantities of lake water furnished in a calendar year up to the minimum annual
quantity applicable to such year, shall be reduced by a credit to the Agency equal to 12% of the net
charges on any billlo the Agency for such quantities. With respect to any additional quantities of lake
water furnished during such calendar year, billings shall be reduced by a credit to the Agency equal to
25% of the net charges on any bill to the Agency for such quantities. Such credits shall commence with
the first billing to the Agency and continue until such time as the City shall have credited the Agency with
an amount equal to the aggregate cost of the facilities and reservoirs. As of April 30, 2012, the Agency
has been fully reimbursed for their aggregate costs incurred for the site at O'Hare and the property has
been conveyed to the City of Chicago. Should the Agency incur further expansion costs at the site they
would be eligible for additional reimbursements.
Page 18
NORTHWEST SUBURBAN MUNICIPAL JOINT ACTION WATER AGENCY
NOTES TO FINANCIAL STATEMENTS
As of and for the Year Ended April 30, 2012
NOTE 1- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
C. ASSETS, LIABILmES AND NET ASSETS
5.
(cont.)
Other Assets
Debt issuance costs are deferred and amortized over the term of the debt issue.
6.
Compensated Absences
Under terms of employment. employees are granted sick leave and vacations in varying amounts . Only
benefits considered to be vested are disclosed in these statements . Vested vacation pay is accrued when
earned in the financial statements. The liability at April 30, 2012 is $87,424 and is included in the financial
statements within accounts payable and accrued expenses.
In the event of termination, there are no amounts due to Agency employees at April 30, 2012 for
accumulated sick leave.
7.
Long- Term Obligations
Long-term debt and other obligations are reported as Agency liabilities . Bond premiums and discounts
are deferred and amortized over the life of the bonds using the straight-line or effective interest method.
Gains or losses on prior refundings are amortized over the remaining life of the old debt or the life of the
new debt, whichever is shorter.
D. REVENUES AND EXPENSES
The Agency distinguishes operating revenues and expenses from nonoperating items . Operating
revenues and expenses generally result from providing services and producing and delivering goods in
connection with the Agency's principal ongoing operations. The principal operating revenues of the
Agency are charges to customers for sales and services. Operating expenses for the Agency include the
cost of sales and services, administrative expenses, and depreciation on capital assets. AU revenues and
expenses not meeting this definition are reported as nonoperating revenues and expenses.
E.
EFFECT OF NEW ACCOUNTING STANDARDS ON CURRENT PERIOD FINANCIAL STATEMENTS
The Governmental Accounting Standards Board (GASB) has approved GASB Statement No . 60,
Accounting and Financial Reporting for Service Concession Arrangements; Statement No . 61, The
Financial Reporting Entity: Omnibus; Statement No. 62, Codification of Accounting and Financial
Reporting Guidance Contained in Pre-November 30, 1989 FASB and A/CPA Pronouncements;
Statement No . 63, Financial Reporting of Deferred Outflows of Resources, Deferred Inflows of
Resources, and Net Position; and Statement No . 64, Derivative Instruments: Application of Hedge
Accounting Termination Provisions- an amendment of GASB Statement No. 53. Application of these
standards may restate portions of these financial statements.
Page 19
NORTHWEST SUBURBAN MUNICIPAL JOINT ACTION WATER AGENCY
NOTES TO FINANCIAL STATEMENTS
As of and for the Year Ended April 30, 2012
NOTE II- CASH AND INVESTMENTS
As of April 30, 2012, cash, cash equivalents and investments at year end consisted of the following:
Canying
Value
Deposits with financial institutions
U.S. Treasury obligations
U.S. Agency obligations
State and local bonds
Money market mutual funds
Illinois funds
Total deposits and im.estments
Bank
Balance
$
2,516,417
13,193,650
2,542,897
342,155
13,868,672
2,434,679
$
$
34,898,470
$ 35,012,740
Per statement of net assets
Cash and investments
$
Current restricted investments
Noncurrent cash and investments
Noncurrent restricted i m.estments
2,521,240
7,167,839
9,165,990
16,043,401
Total deposits and im.estments
$
2.544,402
13,193,650
2,542,897
342,155
13,868,672
2,520,964
ASSOCiated Risks
Custodial credit
Custodial credit, interest rate
Custodial credit, interest rate
Custodial credit, credit, interest rate
Custodial credit, interest rate
Credit. interest rate
34,898,470
Deposits in each local and area bank are insured by the FDIC in the amount of $250,000 for time and
savings accounts (including NOW accounts), $250,000 for interest-bearing demand deposit accounts,
and unlimited amounts for nonlnterest bearing transaction accounts.
A. Custodial Credit Risk
1.
Deposits
Custodial credit risk is the risk that in the event of a financial institution failure, the Agency's deposits may
not be returned to the Agency. The Agency's investment policy requires pledging of collateral for all bank
balances in excess of federal depository insurance, at an amount not less than 110% of the fair market
value of the funds secured.
2.
Investments
For an investment, custodial credit risk is the risk that, in the event of the failure of the counterparty, the
Agency will not be able to recover the value of its investments or collateral securities that are in the
possession of an outside party. To limit its exposure, the Agency's investment policy requires all security
transactions that are exposed to custodial credit risk to be processed on a delivery versus payment (DVP)
basis with the underlying investments he!d by an independent third-party custodian and evidenced by
safekeeping receipts.
Page 20
NORTHWEST SUBURBAN MUNICIPAL JOINT ACTION WATER AGENCY
NOTES TO FINANCIAL STATEMENTS
As of and for the Year Ended April 30, 2012
NOTE II- CASH AND INVESTMENTS (cont.)
B. Credit Risk
Credit risk is the risk an issuer or other counterparty to an investment will not fulfill its obligations. To limit
its exposure to credit risk, the Agency's investment policy required that it primarily invest In U.S. Treasury
obligations and external investment pools. Illinois Funds is an investment pool managed by the State of
Illinois, Office of the Treasurer. which allows governments within the State to pool their funds for
investment purposes. Illinois Funds is not registered with the SEC as an investment company, but does
operate in a manner consistent with Rule 27 of the Investment Company Act of 1940. Investments in
Illinois Funds are valued at Illinois Fund's share price, the price for which the investments could be sold.
Illinois Funds are not rated. The Agency's investments in state and local bonds were rated Aa2 by
Moody's lnv~stor Service and AA by Standard & Poor's.
C. Interest Rate Risk
Interest rate risk is the risk changes in interest rates will adversely affect the fair value of an investment. In
accordance with its formal investment policy, the Agency limits its exposure to interest rate risk by
structuring the portfolio to provide liquidity for short and long-term cash flow needs while providing a
reasonable rate of return based on the current market.
As of April 30, 2012, the Agency's investments were as follows:
Investment Type
U.S. Treasury obligations
U.S. Agency obligations
State and local bonds
Money market mutual funds
Total
$
$
Fair
Value
13,193,650
2,542,897
342,155
13,868,672
29,947,374
Investment Maturities in Years
Less than
More than
6-10
10
1-5
1
165,708 $ 13,027,942 $
$
- $
2,542,897
342,155
13,868 ,672
- $ 2,542,897
$ 14,034,380 $ 13,370,097 $
Page 21
NORTHWEST SUBURBAN MUNICIPAL JOINT ACTION WATER AGENCY
NOTES TO FINANCIAL STATEMENTS
As of and for the Year Ended April 30, 2012
NOTE Ill- CAPITAL ASSETS
Capital asset activity for the year ended April 30, 2012, was as follows:
Balance
5/1/2011
Capital assets not being
depreciated/amortized
Easements
$
Total capital assets not being
depreciated/amortized
Capital assets being
depreciated/amortized
Water system
Booster station and
standpipes
Control system
Other construction
Furniture, fixtures, and
equipment
Automobiles and trucks
Leasehold impro\.€ments
Temporary easements
3, 254,354
Additions
Deletions
$
$
65,398,765
65,398,765
174,290
197,197
83,015,118
37,744,684
$
48,524,788
10,B48,748
4,710,263
315,499
439,736
582,959
110,117
1,000,000
19,482
Less accumulated depreciation/amortization for:
Water system
26,393,854
Booster station and standpipes
5,948,119
Control system
3,651,035
Other construction
190,542
Furniture, fixtures, and
equipment
423,287
Automobiles and trucks
459,730
Leasehold impro\.€ments
103,117
Temporary easements
575,000
Net Capital Assets
3.254,354
3,254,354
439,736
563,477
110,117
1,000,000
Total accumulated
depreciat ion/amortization
$
3,254,354
10,674.458
4,513,066
315,499
Total capital assets being
depreciated/amortized
Balance
4130/2012
$
390,969
83,406,087
1,089,979
271,219
112,433
7,879
27,483,833
6,219,338
3,763,468
198,421
3,086
49,313
1,400
25,000
426,373
509.043
104,517
600,000
1,560,309
39.304.993
(1' 169, 340)
$
$
47,355.448
Page 22
NORTHWEST SUBURBAN MUNICIPAL JOINT ACTION WATER AGENCY
NOTES TO FINANCIAL STATEMENTS
As of and for the Year Ended April 30, 2012
NOTE
IV- LONG-TERM OBLIGATIONS
A. LONG TERM OBLIGATIONS SUMMARY
Long-term obligation activity for the year ended April 30, 2012 is as follows:
Re~.enue bonds
Due to IL State Toll
Highway Authority
Other liabilities
Unamortized bond premium
Unamortized loss on refunding bond
Other post employment benefit payable
IMRF net pension obligation
Total Long-Term Obligations
B.
Balance
5/1/2011
$ 71,610,000
Additions
$
Reductions
$
500,000
Balance
4/30/2012
$ 71.110.000
Due Within
One Year
$
705,000
20,000
320.000
20,000
340,000
22,448
(102,634)
4.795,389
(5, 928. 656)
10,089
6,581
$
70,833,403
4,772.941
(5,826,022)
13,120
16.376
3,031
9,795
$
12,826
$
439,814
$
70,406,415
$
725,000
REVENUE BONDS PAYABLE
Revenue bonds outstanding at year end are as follows:
Date
Series
9/1/1997 Water Special Obligation Bond,
Series 1997A
2/15/2003 Water Supply System Revenue
Refunding Bond
3/13/2008 Water Supply System Revenue
Refunding Bond
To tar
Final
Maturity
Interest
Rate
Original
Amount
Outstanding
Amount
4/30/2012
5/1/2016 3.85- 5.25%
$ 12,755,000
5/1/2015 3.00- 5.00%
46,240,000
29,815,000
5/1/2020 4.60- 5.00%
31,310,000
31,310,000
$ 90,305,000
$ 71,110,000
$
9,985,000
Page 23
NORTHWEST SUBURBAN MUNICIPAL JOINT ACTION WATER AGENCY
NOTES TO FINANCIAL STATEMENTS
As of and for the Year Ended April 30, 2012
NOTE IV- LONG-TERM OBLIGATIONS
B. REVENUE BONDS PAYABLE(cont.)
Revenue bonds debt service requirements \o maturity follows:
Year Ending
Principal
April 30
c.
2013
2014
2015
2016
2017
2018-2021
$
705.000
12.585.000
16,145,000
10,365,000
5,675,000
25,635,000
Totals
$
71,110,000
Interest
Total
$
3,506,439
3.176,638
2,458,387
1, 795,638
1,395,575
2,600,956
$
4,211,439
15,761 ,638
18,603,387
12,160,638
7,070,575
28,235,956
$
14,933,633
$
86,043,633
REVENUE BOND RESOLUTION DISCLOSURES
The above bonds are limited obligations of the Agency. The bonds have a claim for payment solely from
and are secured by the revenue of the Agency's Water Supply System (the System). after paying the
expense of operation and maintenance, and from certain accounts and sub-accounts as provided in the
General Resolution . Revenues of the System will consist primarily of payment received by the Agency
pursuant to Water Supply Agreements for the sale of water lo the members on a "take or pay" basis.
Those payments are to be sufficient to meet all requirements of the General Resolution, regardless of the
Agency's ability to complete the System or to supply water. The Agency does not have the power to levy
taxes. Even though the Agency has accumulated a large deficit invested in capital assets net of related
debt, its ability to continue as a going concern is assured because of the commitments of the member
communities to use water supplied by the Agency.
Revenues of the System, as defined in the General Resolution (the Resolution). consist of (a) all receipts
derived from the Water Supply Agreements or any other contract for the supply of water, other than
deposits in the Member Deposit Accounts or similar accounts for the Agency's customers; (b) aU income
derived from the investment of monies held pursuant to the Resolution and required to be deposited in
the Revenue Account; and (c) all income. fees. water service charges, and all rates, rents, and receipts
derived by the Agency directly or indirectly from the ownership and operation of the System and the sale
of water. These revenues are to be deposited with the trustee.
Water Supply System Revenue Bond and Note Resolution Disclosures
This Resolution establishes and governs the use of the following funds and accounts that were employed
by the Agency in its operations during the year:
The Agency Revenue Account
The Agency Operation and Maintenance Account
Page 24
NORTHWEST SUBURBAN MUNICIPAL JOINT ACTION WATER AGENCY
NOTES TO FINANCIAL STATEMENTS
As of and for the Year Ended April 30, 2012
NOTE IV- LONG-TERM OBLIGATIONS (cont.)
C.
REVENUE BOND RESOLUTION DISCLOSURES
(cont.)
The Debt Service Account, in which the following sub-accounts are established :
The Bond Interest Sub-Account
The Bond Principal Sub-Account
The Debt Service Reserve Account
The General Account, in which the following sub-accounts are established :
The Replacements and Contingencies Sub-Account
The General Surplus Sub-Account
The Member Depos it Account
The Agency Revenue Account
This account shall be maintained by the Trustee and all revenues shall be paid to the Trustee for deposit
to this account. All amounts deposited in any month in the Revenue Account shall be paid and credited to
the various accounts and subaccounts and disbursed for the purposes of those accounts and subaccounts, all in the amounts, at the times, and for the purposes as provided In the Resolution.
The Agency Ooeration and Maintenance Account
The Agency Operation and Maintenance Account is established by the Resolution as a separate and
distinct account of the Agency, to be used as provided in the Resolution. The Operation and Maintenance
Account may be maintained at any authorized depository of the Agency and is not required to be
maintained by the Agency at the Trustee. As soon as practical in each month after any revenues and
other amounts have been deposited in the Revenue Account, the Trustee shall cause from the revenues
and other amounts deposited in the Revenue Account in that month (and not previously paid to any other
account) an amount to be withdrawn from the Revenue Account and paid to the Agency for deposit in the
Operation and Maintenance Account.
The amount to be paid to the Agency in each month shall be a sum that shall be sufficient, together with
amounts already on deposit in the Operation and Maintenance Account. to enable the Agency (a) to pay
the expenses of operations and maintenance (exclusive of water purchase costs and power costs) for the
then current month and to retain in the Operation and Maintenance Account as of the end of that month
an amount sufficient to pay the expenses of operations and maintenance (exclusive of water purchase
costs and power costs) for the next two months, (b) to pay water purchase costs for the then current
month, and (c) to pay power costs for the then current month and to retain in the Operation and
Maintenance Account as of the end of that month an amount sufficient to pay power costs for the next
month. The Trustee shall be entitled, upon notice to the Agency, to deduct from the amounts to be paid to
the Agency under this paragraph all amounts owed to the Trustee for its fees that are then due (except
the initial Trustee's fee) and to pay those amounts to itself for its own account.
The Debt Service Account
The Debt Service Account is established by the Resolution as a separate and distinct account to be
maintained by the Trustee and to be used as provided in the Resolution . The Bond Interest Sub-Account
and the Bond Principal Sub-Account are established as sub-accounts.
Page 25
NORTHWEST SUBURBAN MUNICIPAL JOINT ACTION WATER AGENCY
NOTES TO FINANCIAL STATEMENTS
As of and for the Year Ended April 30, 2012
NOTE IV- LONG-TERM OBLIGATIONS (cont.)
C. REVENUE BOND RESOLUTION DISCLOSURES (cont.)
In each month, the Trustee, after making payments to the Operation and Maintenance Account, shall
make deposits to the Debt Service Account to meet the requirements of the Bond Principal and Bond
Interest Sub-Accounts as follows:
Bond Interest Sub-Account
There shall be credited in each month to the Bond Interest Sub-Account an amount equal to one-sixth of
the interest to come due on the bonds on the next interest payment date, until there shall be on deposit in
the Bond Interest Sub-Account the full amount of that interest.
Bond Principal Sub-Account
There shall be credited in each month to the Bond Principal Sub-Account an amount equal to one-twelfth
of the principal to come due on the next principal payment date on bonds. either at maturity or pursuant to
sinking fund installments, until there shalt be on deposit in the Bond Principal Sub-Account the full amount
of that principal.
The Debt Service Reserve Account
The Debt Service Reserve Account is established by the Resolution as a separate and distinct account to
be maintained by the Trustee and to be used as provided by the Resolution.
The Agency shall pay to the Trustee any amount required for deposit in the Debt Service Reserve
Account so that the value of the account is equal to the maximum amount of principal of and interest on
outstanding bonds of the Agency that is to come due in a 12-month period ending on any May 1 (the Debt
Service Reserve Requirement). The value of the Debt Service Reserve Account from time-to-time shall
be the value of the investments of the account plus the surety bond coverage of the Debt Service
Reserve Account Insurance Policy or any substitute surety bond and Debt Service Reserve Account
Insurance Policy.
In the event a drawing is made on the Debt Service Reserve Account Insurance Policy or monies are
withdrawn from the Debt Service Reserve Account. the Agency shall be obligated to reinstate the
maximum limits of such Debt Service Reserve Account Insurance Policy and to restore any moneys
withdrawn so that within 12 months following such drawing or withdrawal, the amount on deposit in the
Debt Service Reserve Account (including the surety bond coverage) equals the Debt Service Reserve
Requirement. Presently, the Debt Service Reserve Requirement is met by a Reserve Account Insurance
Policy provided by Municipal Bond Insurance Association. See "Reserve Account and Bond Guaranty
Insurance Policies."
Reserve Account and Bond Guaranty Insurance Policies
Reserve Account Insurance Policy
Page 26
NORTHWEST SUBURBAN MUNICIPAL JOINT ACTION WATER AGENCY
NOTES TO FINANCIAL STATEMENTS
As of and for the Year Ended April30, 2012
NOTE IV- LONG-TERM OBLIGATIONS (cont.)
C.
REVENUE BOND RESOLUTION DISCLOSURES (cont.)
The Municipal Bond Insurance Association (MBIA) has issued a surety bond (the Reserve Account
Insurance Policy) in a dollar amount that calculates to be equal to the Debt Service Reserve
Requirement. The Reserve Account Insurance Policy provides that upon notice to MBIA of insufficient
amounts being on deposit in the Debt Service Reserve Account to pay the principal of (at maturity or
pursuant to mandatory redemption requirements) and interest on the bonds and other parity bonds that
may be issued, up to the face amount of the Reserve Account Insurance Policy, MBIA will promptly
deposit with the Trustee an amount sufficient to pay the principal of and interest on the bonds or the
available amount of the Reserve Account Insurance Policy, whichever is less. The available amount of
the Reserve Account Insurance Policy will be the face amount of the Reserve Account Insurance Policy
less the amount of any previous deposits by MBIA with the Trustee that have not been reimbursed by the
Agency. The Agency will be required to reimburse MBIA. within one year, the amount of any deposit
made by MBIA with the Trustee under the Reserve Account Insurance Policy. Such reimbursement shall
be made only after all required deposits to the Operation and Maintenance Account and the Debt Service
Reserve Account have been made. The Trustee is required to reimburse MBIA, with interest, until the
face amount of the Reserve Account Insurance Policy is reinstated before any deposit is made to the
General Account. No optional redemption of bonds may be made until any Reserve Account Insurance
Policy is so reinstated. The Reserve Account Insurance Policy will be held by the Trustee in the Debt
Service Reserve Account and is provided as an alternative to the Agency depositing funds equal to the
Debt Service Reserve Requirement for outstanding bonds.
The Reserve Account Insurance Policy is extended to 2015 and is cancelable at the sole discretion of
MBIA, on either May 1, 2005 or May 1, 2010, upon 10 years advance notice. The premium for such policy
has been paid in full by the Agency when the 1986 Bonds were issued. If the Reserve Account Insurance
Policy is canceled by MBIA at one of the predetermined dates with advance notice to the Agency, the
Agency will be obligated over the five years preceding the termination date to fund fully, in equal monthly
installments, the Debt Service Reserve Account to an amount equa! to the Debt Service Reserve
Requirement or to provide a substitute surety bond.
A substitute surety bond is a surety bond or other obligation provided by an insurance company or other
institution (surety bond provider), which surety bond provider provides surety bonds or other similar
obligations for municipal bonds, which are rated in one of the top two ratings of a nationally recognized
rating agency. The legal rights under the substitute surety bond must, in the opinion of nationally
recognized bond counsel selected by the Agency, be not less favorable to the holders of bonds than
would be the Reserve Account Insurance Policy. If, at the time the substitute surety bond becomes
effective, any bonds are covered by a policy of insurance issued by MBIA (other than the Reserve
Account Insurance Policy), the surety bond provider must be satisfactory to MBIA. The Agency is
required, in each year the Reserve Account Insurance Policy is outstanding, to provide MBIA with a
certificate from Bond Counsel or Agency Counsel that all legal covenants of the Agency as described in
the Resolution have been met and a certificate from the Agency's auditors that all financial covenants
have been met.
Page 27
NORTHWEST SUBURBAN MUNICIPAL JOINT ACTION WATER AGENCY
NOTES TO FINANCIAL STATEMENTS
As of and for the Year Ended April 30, 2012
NOTE IV- LONG-TERM OBLIGATIONS (cont.)
C.
REVENUE BOND RESOLUTION DISCLOSURES
(cont.)
Bond Guaranty Insurance
The MBIA policy unconditionally and irrevocably guarantees the fuJI and complete payment required to be
made by or on behalf of the Agency to the Trustee or its successor of an amount equal to (i) the principal
(either at the stated maturity or by an advancement of maturity pursuant to a mandatory sinking fund
payment) and interest on the bonds as such payments shall become due but shall not be so paid (except
that in the event of any acceleration of the due date or such principal by reason of mandatory or optional
redemption or acceleration resulting from the default or otherwise, other than an advancement of maturity
pursuant to a mandatory sinking fund payment, the payments guaranteed by the MBIA policy shall be
made in such amounts and at such times as such payments of principal would have been due had there
not been any such acceleration) and (ii) the reimbursement of any such payment that is subsequently
recovered from any owner of the bonds pursuant to a final judgment by a court of competent jurisdiction
that such payment constitutes an avoidable preference to such owner within the meaning of any
applicable bankruptcy law (a Preference),
Water Supply System Refunding Revenue Bonds, Series 2003
MBIA Insurance Corporation (the Insurer) has issued a policy containing the following provisions, such
policy being on file at Bank One, National Association, Chicago, Illinois.
The Insurer, in consideration of the payment of the premium and subject to the terms of this policy,
hereby unconditionally and irrevocably guarantees to any owner, as hereinafter defined, of the following
described obligations, the full and complete payment required to be made by or on behalf of the Issuer to
Bank One, National Association or its successor (the Paying Agent) of an amount equal to (i) the principal
of (either at the stated maturity or by any advancement of maturity pursuant to a mandatory sinking fund
payment) and interest on, the obligations (as that term is defined below) as such payments shall become
due but shall not be so paid (except that in the event of any acceleration of the due date of such principal
by reason of mandatory or optional redemption or acceleration resulting from default or otherwise, other
than any advancement of maturity pursuant to a mandatory sinking fund payment, the payments
guaranteed hereby shall be made in such amounts and at such times as such payments of principal
would have been due had there not been any such acceleration); and (ii) the reimbursement of any such
payment which is subsequently recovered from any owner pursuant to a final judgment by a court of
competent jurisdiction that such payment constitutes an avoidable preference to such owner within the
meaning of any applicable bankruptcy law. The amounts referred to in clauses (i) and (ii) of the preceding
sentence shall be referred to herein collectively as the "Insured Amounts." "Obligations~ shall mean:
$46,240,000, Northwest Suburban Municipal Joint Action Water Agency, Cook, DuPage, and Kane
Counties, Illinois, Water Supply System Refunding Revenue Bonds, Series 2003.
The General Account
The General Account is established by the Resolution as a separate and distinct account to be
maintained by the Trustee and to be used as provided in the Resolution. Within this account, there are
established as sub-accounts a Replacements and Contingencies Sub-Account and a General Surplus
Sub-Account.
Page 28
NORTHWEST SUBURBAN MUNICIPAL JOINT ACTION WATER AGENCY
NOTES TO FINANCIAL STATEMENTS
As of and for the Year Ended April 30, 20-12
NOTE
IV- LONG-TERM OBLIGATIONS (cont.)
C.
REVENUE BOND RESOLUTION DISCLOSURES (cont.)
Replacements and Contingencies Sub-Account
In each month beginning with May 1, 1985, the Trustee shall, after making all required payments to the
Operation and Maintenance Account, the Debt Service Reserve Account cause from the revenues and
other amounts deposited in the Revenue Account (and not previously paid to any other account) an
amount to be withdrawn from the Revenue Account and deposited to the credit of the Replacements and
Contingencies Sub-Account as provided in this paragraph. The amount required to be so credited to the
Replacements and Contingencies Sub-Account in each month shall be $50,000 or such greater amount
as shall be required by any series resolution or pursuant to Section 918 of the Resolution or pursuant to
any resolution of the board from time-to-time establishing a greater credit requirement. These accounts
will be used to fund deficiencies in other accounts. This account has a balance of $4,117,243 at April 30,
2012. The current required minimum balance in the account is $3,000,000.
General Surplus Sub-Account
After all required credits have been made in each month to the Replacements and Contingencies SubAccount and after all required credits or payments have been made to other funds and accounts, the
Trustee shall credit to the General Surplus Sub-Account the amount, if any, by which the value of the
Replacements and Contingencies Sub-Account exceeds the replacements and contingencies
requirements of $3,000,000 or higher if determined by the Board. No amounts were credited to this
account as of April 30, 2012.
The Member Deposit Account
As security for payment of the Agency's obligations under the Resolution, the Agency shalt pay to the
Trustee on or before the tenth day of each fiscal year an amount which, together with amounts already on
deposit in the Member Deposit Account established by the Resolution in the name of the Agency, equals
the maximum amount of the member's estimated share (as set forth in the budget) of the costs for any
month in that fiscal year.
D.
INSTANTANEOUS DEFEASANCE OF
1997A $12,755,000
On August 20, 1997. the Agency passed a resolution providing for the issuance of $12,755,000 of Water
Special Obligation Bonds of 1997A. On August 20, 1997, the Agency passed a resolution that provided
for an amended and restated escrow agreement in order to redeem the previously in-substance defeased
Water Supply System Revenue Bonds of 1996 and to refund the Water Special Obligation Bonds of
1997A.
Proceeds were used to redeem outstanding 1986 bonds.
The escrow account from the prior in-substance defeasance of the 1996 bond issue will be used to satisfy
the Debt Service Requirements of the 1997A issue, with excess from the escrow account paid to the
Agency.
The proceeds in escrow are not subject to lien for any purpose other than in connection with the
defeasance.
Page 29
NORTHWEST SUBURBAN MUNICIPAL JOINT ACTION WATER AGENCY
NOTES TO FINANCIAL STATEMENTS
As of and for the Year Ended April 30, 2012
NOTE
IV- LONG-TERM OBLIGATIONS (cont.)
D.
INSTANTANEOUS DEFEASANCE OF 1997A
$12,755,000 (cont.)
Although the requirements that satisfy defeasance have been met for the 1997 A issue, the financial
statements do not reflect the satisfaction of the liability of the 1997 A $12,265,000 bond issue, thus, both
the debt and the corresponding escrow are to be reflected on the financial statements. The amount of
outstanding bonds that will be paid from escrow at April 30, 2012 is $9,985,000.
E.
PRIOR YEAR DEFEASANCE OF DEBT
On March 13, 2008, the Agency issued $31,310,000 Water Supply System Revenue Refunding Bonds,
Series 2008 to advance refund, through an in-substance defeasance, $29,405,000 of the Water Supply
System Revenue Refunding Bond Series of 1997. The proceeds of the 2008 bonds were placed in an
irrevocable trust to provide all future debt service payments on the old bonds. As a result, these bonds
are considered defeased and the liability has been removed from the Agency's financial statements.
Defeased bonds remaining outstanding at April 30, 2012 are $7,870,000.
F.
EASEMENT AGREEMENT WITH THE ILLINOIS STATE
TOLL HtGHWA Y AUTHORITY
The Agency entered into an agreement with the Illinois State Toll Highway Authority for right-of-way on
the tollway. The agreement calls for a payment of $800,000 to be paid in 40 installments at $20,000
annually. As of April 30, 2012, $320,000 is outstanding.
NOTE
V- EMPLOYEES RETIREMENT SYSTEM
ILLINOIS MUNICIPAL RETIREMENT FUND
The Agency's defined benefit pension plan, Illinois Municipal Retirement (IMRF) an agent multi-employer
plan, provides retirement, disability, annual cost of living adjustments and death benefits to plan members
and beneficiaries. IMRF acts as a common investment and administrative agent for local governments
and school districts in Illinois. The Illinois Pension Code establishes the benefit provisions of the plan that
can only be amended by the Illinois General Assembly. IMRF issues a financial report that includes
financial statements and required supplementary information. That report may be obtained at
www.imrf.org/pubs/pubs_homepage.htm or by writing to the Illinois Municipal Retirement Fund, 2211 York
Road, Suite 500, Oak Brook Illinois 60523.
All employees hired in positions that meet or exceed the prescribed annual hourly standard must be
enrolled in IMRF as participating members. Public Act 96-0889 created a second tier for IMRF's Regular
Plan. Effective January 1, 2011, IMRF assigns a benefit tier to a member when he or she is enrolled In
IMRF. The tier is determined by the member's first IMRF participation date. If the member first
participated in IMRF before January 1, 2011, they participate in Regular Tier 1. If the member first
participated in !MRF on or after January 1, 2011, they participate in Regular Tier 2.
Page 30
NORTHWEST SUBURBAN MUNICIPAL JOINT ACTION WATER AGENCY
NOTES TO FINANCIAL STATEMENTS
As of and for the Year Ended April 30, 2012
NOTE V- EMPLOYEES RETIREMENT SYSTEM (cont.)
For Regular Tier 1, pension benefits vest after eight years of service. Participating members who retire at
or after age 60 with 8 years of service are entitled to an annual retirement benefit, payable monthly for life
in- an amount equal to 1 213% of their final rate (average of the highest 48 consecutive months earnings
during the last 10 years) of earnings for each year of credited service up to 15 years and 2% for each
year thereafter. For Regular Tier 2, pension benefits vest after ten years of service. Participating
members who retire at or after age 67 with 10 years of service, or age 62 with 35 years of service are
entitled to an annual retirement benefit as described above. IMRF also provides death and disability
benefits. These benefit provisions and all other requirements are established by. Illinois Compiled
Statutes. Participating members are required to contribute 4.5% of their annual salary to IMRF. The
Agency Is required to contribute the remaining amounts necessary to fund the coverage of its own
employees in JMRF, as specified by statute. For calendar year 2011, the Agency's contribution rate was
12.69 percent of annual covered payroll. The Agency's required contribution rate was 13.50 percent.
Annual Pension Cost
The Agency annual required contribution for the current year and related information for the plan is
follows:
Actuarial Valuation Date
Contribution rates:
Employer
Employee
Annual required contribution
Contributions made
Percent of annual required contribution contributed
Actuarial cost method
Asset valuation method
Amortization method
Amortization period
Actuarial assumptions:
Investment rate of return
Projected salary increases
Inflation rate included
Cost-of-living adjustments
as
12/31/2009
12.69%
4.50%
$163,244
$153,449
94.00%
Entry~age normal
5 year smoothed.
Market
Level percentage of
payroll
10 years, open
7.50%
0.4 to 10%
4.00%
3.00%
Page 31
NORTHWEST SUBURBAN MUNICIPAL JOINT ACTION WATER AGENCY
NOTES TO FINANCIAL STATEMENTS
As of and for the Year Ended April 30, 20 12
NOTE V- EMPLOYEES RETIREMENT SYSTEM (cont.)
IMRF Net Pension Obligation
The following is the IMRF net pension obligation calculation from the actuarial report:
Illinois Municipal
Retirement
Annual required contribution
Interest on net pension obligation
Adjustment to annual required contribution
$
163,244
163,244
(153,449)
Annual pension cost
Contributions made
Change in net pension obligation
IMRF net pension obligation, beginning of year
9,795
6,581
IMRF net pension obligation, end ofyear
$
16,376
Trend Information
Trend information gives an indication of the progress made in accumulating sufficient assets to pay
benefits when due.
Fiscal
Year
Illinois Municipal
Retirement
Annual pension cost (APC)
2012
2011
2010
$
163,244
142,199
120,904
Contributions made
2012
2011
2010
$
153,449
135,618
120,904
Percentage of APC contributed
2012
2011
2010
IMRF net pension obligation
2012
2011
2010
94.00%
95.00%
100.00%
$
16,376
6,581
Page 32
NORTHWEST SUBURBAN MUNICIPAL JOINT ACTION WATER AGENCY
NOTES TO FINANCIAL STATEMENTS
As of and for the Year Ended April 30, 2012
NOTE V- EMPLOYEES RETIREMENT SYSTEM (cont.)
Funded Status and Funding Pr:ogress
The Agency's actuarial value of plan assets for the current year and related information is as follows:
Illinois Municipal
Retirement
Actuarial Valuation Date
Actuarial Valuation of Assets (a)
Actuarial Accrued Liability (AAL) - Entry Age (b)
Unfunded AAL (UAAL) (b - a)
Funded Ratio (a/b)
Covered Payroll (c)
UAAL as a Percentage of Covered Payroll ((b -a)/c)
$
$
$
$
12131/2009
2,474,170
3,263,867
789,697
75.80%
1,209,215
65 .31%
The schedules of funding progress. presented as RSI following the notes to the financial statements,
present multiyear trend information about whether the actuarial value of plan assets is increasing or
decreasing over time relative to the actuarial accrued liability for benefits.
NOTE VI- OTHER POSTEMPLOYMENT BENEFITS
The Agency's group health insurance plan provides coverage to active employees and retirees (or other
qualified terminated employees) at blended premium rates. This results in another postemployment
benefit (OPEB} for the retirees, commonly referred to as an implicit rate subsidy. Contribution
requirements are established through personnel policy guidelines and may be amended by the action of
the governing body.
The Agency provides pre and post Medicare postretirement healthcare benefits to all retirees who worked
for the Agency, were enrolled in one of the Agency's healthcare plans at the time of retirement, and
receive a pension from the Agency through IMRF. Spouses and dependents of retirees are eligible to
continue healthcare coverage while the retiree is alive if they were enrolled at the time of retirement.
Surviving spouses and dependents of employees are eligible for COBRA coverage . The amount payable
under the Agency health plan will be reduced by the amount payable under Medicare for those expenses
that are covered under both.
Page 33
NORTHWEST SUBURBAN MUNICIPAL JOINT ACTION WATER AGENCY
NOTES TO FINANCIAL STATEMENTS
As of and for the Year Ended April 30, 2012
NOTE VI- OTHER POSTEMPLOYMENT BENEFITS
The Agency's annual other postemployment benefit (OPES) costs (expense) is calculated based on the
annual required contribution of the employer (ARC), an amount actuarially determined in accordance with
parameters of GASB Statement No . 45 . The ARC represents a level of funding that if paid on an ongoing
basis, is projected to cover normal cost each year and amortize any unfunded actuarial liabilities (or
funding excess) over a period not to exceed thirty years. The following table shows the components of the
Agency's annual OPES cost for the year, the amount actually contributed to plan, and changes in the
Agency's net OPES obligation to the plan.
01her
Postemployment
Benefits
Annual required contribution
Interest on net OPEB obligation
Adjustment to annual required contribution
$
3,999
283
(235)
4 ,047
1,016
Annual OPEB cost
Contributions made
Increase in net OPEB obligation (asset)
3,031
Net OPES Obligation (Asset)- Beginning of Year
Net OPEB Obligation (Asset)- End of Year
10,089
$
13,120
The Agency's annual OPEB cost. the percentage of annual OPES cost contributed to the plan. and the
net OPEB obligation for April 30, 2012 and the two preceding years were as follows:
Percentage of
Annual OPEB
Annual OPEB
Net OPEB
Cost
Contributed
Fiscal Year Ended
Cost
Liability
2012
2011
2010
$
4,047
4,047
3,782
25.11% $ 13,120
25.11%
10,089
6.55%
7,058
Page 34
NORTHWEST SUBURBAN MUNICIPAL JOINT ACTION WATER AGENCY
NOTES TO FINANCIAL STATEMENTS
As of and for the Year Ended April 30, 2012
NOTE VI- OTHER POSTEMPLOYMENT BENEFITS (cont.)
The funded status of the plan as of the April 30, 2010 actuarial valuation was as follows:
Other
Postemployment
Benefits
Actuarial Valuation of Assets (a)
Actuarial Accrued Liability (AAL) - Entry Age (b)
Unfunded AAL (UAAL) (b - a)
Funded Ratio (a/b)
Covered Payroll (c)
UAAL as a Percentage of Covered Payroll ((b- a)/c)
$
$
$
$
29,214
29,214
0.00%
1,128.587
2.59%
Actuarial valuations of an ongoing plan involve estimates for the value of reported amounts and
assumptions about the probability of occurrence of events far into the future. Examples include
assumptions about future employment, mortality, and the healthcare cost trend. Amounts determined
regarding the funded status of the plan and annual required contributions of the employer are subject to
continual revision as actual results are compared with past expectations and new estimates are made
about the future. The schedule of funding progress, presented as required supplementary information
following the notes to the financial statements, presents multiyear trend information that shows whether
the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued
liabilities for benefits.
Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as
understood by the employer and plan members) and include the types of benefits provided at the time of
each valuation and the historical pattern of sharing benefit costs between the employer and plan
members to that point. The methods and assumptions used include techniques that are designed to
reduce short-term volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with
the long-term perspective of the calculations.
In the April 30, 2010 actuarial valuation, the entry age actuarial cost method was used. The actuarial
assumptions include a 4% investment rate of return and an annual healthcare cost trend of 13.1% initially,
reduced by decrements to an ultimate rate of 4.5%. Both rates include a 3.0% inflation assumption and a
4.0% wage inflation assumption. The actuarial value of Retiree Health Plan assets was not determined as
the Agency has not advance funded its obligation . The plan's unfunded actuarial accrued liability is being
amortized as a level percentage of projected payroll on an open basis. The amortization period at April
30, 2010, was 30 years.
Page 35
NORTHWEST SUBURBAN MUNICIPAL JOINT ACTION WATER AGENCY
NOTES TO FINANCIAL STATEMENTS
As of and for the Year Ended April 30,2012
NOTE VII- OTHER INFORMATION
A.
CLAIMS AND JUDGMENTS
From time to time, the Agency is party to various pending claims and legal proceedings. Although the
outcome of such maHers cannot be forecasted with certainty, it is the opinion of management and the
Agency's legal counsel that the likelihood is remote that any such claims or proceedings will have a
material adverse effect on the Agency's financial position or results of operations.
B. RISK MANAGEMENT
The Agency is exposed to various risks of loss related to torts; theft of, damage to, or destruction of
assets; errors, and omissions: workers compensation: and health care of its employees. Employee
health/medial risks are covered by private insurance.
Municipal Insurance Cooperative Agency (MICA)
The Agency participates in the MICA. MICA is a public entity risk pool whose members are Illinois
municipalities. MICA manages and funds first-party property losses, third-party liability claims, workers'
compensation claims, and public officials' liability claims of its members. There have been no significant
reductions in coverage in the past year. No settlements have exceeded insurance coverage in the past
three years. The Agency's payments to MICA are displayed on the financial statements as expenses.
Management of MICA consists of a Board of Directors compromised of one appointed representative
from each member. In addition, there are three officers, a Benefit Administrator, and a Treasurer. The
Agency does not exercise any control over activities of MICA beyond its representation on the Board of
Directors.
Page 36
NORTHWEST SUBURBAN MUNICIPAL
JOINT ACTION WATER AGENCY
ILLINOIS MUNICIPAL RETIREMENT FUND
SCHEDULE OF EMPLOYER CONTRIBUTIONS AND ANALYSIS OF FUNDING PROGRESS
As of and for the Year Ended April 30, 2012
Fiscal
Year
4/30/12
4/30/11
4/30/10
4/30/09
4/30/08
4/30/07
Actuarial
Valuation
Date
12/31/11
12/31/10
12/31/09
12/31/08
12/31/07
12131/06
Percentage
ofAPC
Contributed
Annual Pension
Cost (APC)
$
Actuarial
Value of
Assets
(a)
$ 2,474,170
2,990,776
2,702,091
2,821,725
2,840,569
2,470,147
94%
95%
100%
100%
100%
100%
163,244
142,199
120,904
106,461
110,224
127,368
Actuarial Accrued
Liability (AAL)
Entry Age
3,263,867
3,486,925
3,187,970
3,159,328
2,951,849
2,534,763
$
Unfunded
AAL
(UAAL)
{b-a)
{b~
$
Net Pension
Obligation
$
789,697
496,149
485,879
337,603
111,280
64,616
Funded
Ratio
Covered
Payroll
{alb~
(c)
16,376
6,581
UAAL as a
Percentage of
Covered Payroll
( (b-a)/c)
75.80% $ 1,209,215
85.77%
1,175,201
84.76%
1,152,563
89.31%
1,104,371
96.23%
1'101 '136
97.45%
983,536
65.31%
42.22%
42.16%
30.57%
10.11%
6.57%
On a market value basis, the actuarial value of assets as of December 31, 2011, is $2,355,798 .
On a market basis, the funded ratio would be 72.18%.
See independent auditors' report.
Page 37
NORTHWEST SUBURBAN MUNICIPAL
JOINT ACTION WATER AGENCY
OTHER POSTEMPLOYMENT BENEFIT PLAN
SCHEDULE OF EMPLOYER CONTRIBUTIONS AND ANALYSIS OF FUNDING PROGRESS
As of and for the Year Ended April 30, 2012
Fiscal
Year
$
4/30/12
4/30/11
4/30/10
Actuarial
Valuation
Date
4/30/10
4/30/09
Percentage
of OPEB Cost
Contributed
Annual OPEB
Cost
Actuarial
Value of
Assets
(a}
$
$
29,214
25.479
$
25 .11%
25.11%
6.53%
4,047
4,047
3,522
Actuarial Accrued
Liability (AAL)
Entry Age
(b)
NetOPEB
Obligation
Unfunded
AAL
(UAAL)
(b-a}
$
29,214
25,479
Funded
Ratio
(a/b)
0.00%
0.00%
See independent auditors' report.
Covered
Payroll
(c)
$ 1,128,587
1,085,180
13,120
10,089
7,058
UAAL as a
Percentage of
Covered Payroll
( (b-a)/c)
2.59%
2.35%
Page 38
NORTHWEST SUBURBAN MUNICIPAL JOINT ACTION WATER AGENCY
BUDGETARY INFORMATION
For the Year Ended April 30, 2012
BUDGETS AND BUDGETARY ACCOUNTING
The Agency is required to prepare an annual budget 90 days prior to the beginning of each fiscal year,
and the budget shall be adopted no later than 60 days prior to the beginning of each fiscal year.
Budgetary control is at the fund level. Management may exceed budgeted amounts on a line item basis
without Board approval. All amendments to the fund totals must be approved by the Board.
The annual budget is adopted on a basis consistent with GAAP. Budgeted amounts lapse at fiscal yearend.
Page 39
NORTHWEST SUBURBAN MUNICIPAL
JOINT ACTION WATER AGENCY
SCHEDULE OF CHANGES IN NET ASSETS- RESTRICTED ACCOUNTS
For the Year Ended April 30, 2012
Bond
Interest
INCREASES
Contributions from members
and transfers
Interest Income
$
Total increases
DECREASES
Bond Principal
Interest Expense
Total Decreases
NET INCREASE (DECREASE)
3,022,262
Debt
Service
Reserve
Bond
Principal
$
500,000
$
500,000
3,022,262
Total
92,844
3,522,262
92,844
92,844
3,615,106
$
300,000
300,000
3,028.262
300,000
3,328.262
3.028.262
3,028,262
(6,000)
ACCOUNT BALANCES- RESTRICTED
BEGINNING OF YEAR
2,366,980
ACCOUNT BALANCES- RESTRICTED
END OF YEAR
$
2,360,980
$
200,000
92,844
286,844
300,000
3,411,665
6,078,645
3,504,509
6,365,489
500,000
$
Less interest payable from
restricted accounts
NET ASSETS - RESTRICTED FOR
DEBT SERVICE END OF YEAR
(1,511.131)
$
4,854,358
Page 40
NORTHWEST SUBURBAN MUNICIPAL
JOINT ACTION WATER AGENCY
SCHEDULE OF OPERATING EXPENSES- BUDGET AND ACTUAL
OPERATIONS AND MAINTENANCE ACCOUNT
For the Year Ended April30, 2012
Budget
ADMINISTRATION
Salaries
FICA
IMRF
Life and health insurance
Professional meetings
Communications
Meetings and travel
Liability insurance
Dues and subscriptions
Machinery and equipment
Easement agreements
Photocopy
Printing and postage
Office supplies
Transportation
Technical services
Building maintenance
Professional services
Trustee and bank fees
TOTAL ADMINISTRATION EXPENSES
EXCLUDING DEPRECIATION
$
$
Actual
328,292
24,950
41,595
67,500
3,310
2,750
200
130,000
600
2,000
21,007
890
1,300
900
3,600
19,800
13,000
30,000
17,000
$
708,694
$
306,963
14,062
43.432
66,023
7,253
3,908
272
143,171
790
961
240
1,615
1,316
5,968
130,381
12,065
37,388
7.335
783,143
Page 41
NORTHWEST SUBURBAN MUNICIPAL
JOINT ACTION WATER AGENCY
SCHEDULE OF OPERATING EXPENSES- BUDGET AND ACTUAL (continued)
OPERATIONS AND MAINTENANCE ACCOUNT
For the Year Ended April 30, 2012
Actual
Budget
WATER PUMPING AND DISTRIBUTION
Salaries
Overtime
FICA
IMRF
Unemployment insurance
Life and health insurance
Communications
Diesel fuel
Natural gas
Chlorine and chemicals
Safety and training
Contractual services
Uniforms
Office supplies
Professional development
Laboratory
Transportation
Tools and parts
Building maintenance and supplies
Equipment rental
Electrical parts
Mechanical parts
Instrument parts
Maintenance agreements
Miscellaneous
T -Main repairs
T -Main parts
Power - electric
Water purchase
Capital expenditures
$
822,771
56,301
65,949
111,554
1,784
191,075
90,180
22,283
8,500
29,120
2,500
120,300
3,575
3,500
11,500
2,600
42,000
4,300
5,000
5,000
70,000
42,000
26,000
5,700
1,400
85,000
30,000
885,967
24,251,593
113,800
$
25,540,916
27,111 ,252
Total water pumping and distribution
(390,969)
Less amounts capitalized
TOTAL WATER PUMPING AND DISTRIBUTION EXPENSES
EXCLUDING DEPRECIATION
TOTAL OPERATING EXPENSES EXCLUDING
DEPRECIATION
834,768
48,003
76.252
124,997
2,189
174,393
87,549
25,171
10,932
20,828
2,694
72,463
3,268
2,899
3,240
1,410
45,008
702
2,440
3,257
77,346
40,997
23.732
5,773
(225)
60,604
8,854
588,928
22,760,616
431,828
27.111.252
$
27,819,946
25.149.947
$
25,933,090
Page 42
NORTHWEST SUBURBAN MUNICIPAL
JOINT ACTION WATER AGENCY
LONG-TERM DEBT REQUIREMENTS
WATER SPECIAL OBLIGATION BONDS, SERIES 1997A
As of April 30, 2012
September 1, 1997
September 1, 1997
May 1, 2016
$12,755,000
$5,000
3.85% - 5.25%
May 1
First Trust Illinois
Bonds Dated
Date of Issue
Date of Maturity
Authorized Issue
Denomination of Bonds
Interest Rates
Principal Maturity Date
Payable at
FUTURE PRINCIPAL AND INTEREST REQUIREMENTS
Fiscal
Year
2013
2014
2015
2016
Current
Long-Term
Interest
Principal
Total
$
205,000
3,385,000
6,345,000
50,000
$
494,176
404,375
161 '125
1,250
$
699,176
3,789,375
6,506,125
51,250
$
9,985,000
$
1,060,926
$
11,045,926
$
205,000
9,780,000
9,985,000
$
494,176
566,750
1,060,926
$
699,176
10,346,750
11,045,926
$
$
$
Page 43
NORTHWEST SUBURBAN MUNICIPAL
JOINT ACTION WATER AGENCY
LONG-TERM DEBT REQUIREMENTS
WATER SUPPLY SYSTEM REVENUE REFUNDING BONDS, SERIES 2003
As of April 30, 2012
Bonds Dated
Date of Issue
Date of Maturity
Authorized Issue
Denomination of Bonds
Interest Rates
Principal Maturity Date
Payable at
February 15, 2003
February 15, 2003
May 1, 2015
$46,240,000
$5 ,000
3.00% - 5.00%
May 1
Cede & Co.
FUTURE PRINCIPAL AND INTEREST REQUIREMENTS
Fiscal
Year
2013
2014
2015
2016
Current
Long-Term
Interest
Principal
Total
$
500,000
9,200,000
9,800,000
10.315,000
$
1,475,750
1,235,750
760,750
257,875
$
1,975,750
10,435,750
10,560,750
10,572,875
$
29,815,000
$
3.730,125
$
33,545,125
$
500,000
29.315,000
29.815,000
$
1,475,750
2,254,375
3.730,125
$
1,975,750
31,569,375
33,545,125
$
$
$
Page 44
NORTHWEST SUBURBAN MUNICIPAL
JOINT ACTION WATER AGENCY
LONG-TERM DEBT REQUIREMENTS
WATER SUPPLY SYSTEM REVENUE REFUNDING BONDS, SERIES 2008
As of April 30, 2012
Bonds Dated
Date of Issue
Date of Maturity
Authorized Issue
Denomination of Bonds
Interest Rates
Principal Maturity Date
Payable at
March 13, 2008
March 13, 2008
May 1, 2020
$31,310,000
$5,000
4.603% - 5.000%
May 1
The Bank of New York Trust Company N.A.
FUTURE PRINCIPAL AND INTEREST REQUIREMENTS
Fiscal
Year
2013
2014
2015
2016
2017
2018
2019
2020
2021
Principal
$
- $
5,675,000
5,960,000
6,255,000
6,545,000
6,875,000
1,536,513
1,536,513
1,536,513
1,536,513
1,395,575
1,106,763
814,944
507,375
171,873
$
1,536,513
1,536,513
1,536,513
1,536,513
7,070,575
7,066,763
7,069,944
7,052,375
7,046,873
31,310,000
$
10.142,582
$
41,452,582
$
-
$
$
$
1,536,513
8,606,069
10,142,582
$
31,310,000
31,310,000
1,536,513
39,916,069
41,452,582
$
Current
Long-Term
Total
Interest
$
Page 45
NORTHWEST SUBURBAN MUNICIPAL
JOINT ACTION WATER AGENCY
SCHEDULE OF INSURANCE IN FORCE
As of April30, 2012
AgenUinsurer
Municipal Insurance Cooperative Agency
Description of
Coverage
Property
Amount of
Coverage
$1 ,000,000/0ccurrence
Municipal Insurance Cooperative Agency
Liability, Automobile Liability,
Employee Benefits Liability,
and Errors & Omissions
$800 ,000/0ccurrence
Municipal Insurance Cooperative Agency
Workers' Compensation
$1 00,000/Employers Liability
Municipal Insurance Cooperative Agency
Crime
$500,000/0ccurrence
Municipal Insurance Cooperative Agency
Excess Workers' Compensation
$750 ,000/E mplayers Liability
Municipal Insurance Cooperative Agency
Boiler and Machinery
$50,000,000/0ccurrence
Municipal Insurance Cooperative Agency
Excess Property
$400 ,000/0ccurrence
Municipal Insurance Cooperative Agency
Excess Liability including public
officials' liability
$9,000,000/0ccurrence
Page 46
NORTHWEST SUBURBAN MUNICIPAL
JOiNT ACTION WATER AGENCY
SCHEDULE OF CHANGE IN TRUSTEE ACCOUNTS - BANK OF NEW YORK
For the Year Ended April 30, 2012
Bond Rebate Bond Escrow
1994 & 1997
2003
INCREASES
Inter-account transfers
Interest
Member deposits
$
2
Total increases
2
DECREASES
Inter-account transfers
Expenses
Interest
Principal
Total decreases
NET INCREASE (DECREASE)
ACCOUNT BALANCES,
BEGINNING OF YEAR
ACCOUNT BALANCES.
END OF YEAR
$
$
-
Debt Service
Bond
Bond
Principal
Interest
Trust
Revenue
$
-
$
706,522
-
$
3,022.262
500,000
706,522
3,022.262
500,000
504,352
200,000
3,028,262
704,352
3.028.262
2
2,170
1,715
9,687,789
1,717
$ 9,689 ,959
300.000
300,000
(6,000)
200,000
300,000
2,366,980
$
- $
2,360,980
$
500,000
Page 47
General
Replacements
and
Contingencies
Debt Service
Debt Service
Cost of
Reserve
Issuance
$
-
$
92,844
-
$
De~osits
$
92 ,844
Improvements
and
Extensions
Member
1,426
100,000
221
1.426
100,221
$
Trust
$
2,650,274
2,650.274
100,000
92,844
(1 00,000)
400,186
3.411,665
$
3,504,509
$
-
$
1,426
4,217,243
2,845,790
4,117,243
$ 2,847,216
$
$
2,750,274
801,015
3,522,262
7,073,551
100,000
400,186
3,532 ,614
500,000
400,186
100,000
Total
Sur~lus
4,532.800
(299,965)
2,650,274
2,540,751
489,581
6,515,716
29,836,479
9,165 ,990
$ 32 ,377,230
189,616
$
Page 48
THIS PAGE IS INTENTIONALLY LEFT BLANK
NORTHWEST SUBURBAN MUNICIPAL
JOINT ACTION WATER AGENCY
SCHEDULE OF CHANGES IN ACCOUNT BALANCES
MEMBERS' DEPOSIT ACCOUNTS
As of and for the Year Ended April 30, 2012
Balances
Ma}" 1
Balances
Increases/
Interest
Decreases
A~ri130
TRUSTEE ACCOUNTS
Deposits
Village of Elk Grove
Village of Hanover Park
Village of Hoffman Estates
Village of Mount Prospect
City of Rolling Meadows
Village of Schaumburg
Village of Streamwood
TOTAL DEPOSITS
546,016
256,968
418,163
331,264
242,303
778,203
272,873
$2,845,790
$
485,733
199,089
336,846
329,973
206,239
662,414
238,398
$2,458,692
$
$
$
276
129
208
166
121
390
136
1,426
$
$
- $
~
$
546,291
257,097
418,371
331,430
242,424
778,593
273,009
2,847,215
AGENCY ACCOUNTS
Deposits
Village of Elk Grove
Village of Hanover Park
Village of Hoffman Estates
Village of Mount Prospect
City of Rolling Meadows
Village of Schaumburg
Village of Streamwood
TOTAL DEPOSITS
$
$
462
237
447
324
204
774
280
2,728
$
-
$
$
-
$
486,195
199,326
337,293
330,297
206,443
663,188
238,678
2,461,420
Page 49
THIS PAGE IS INTENTIONALLY LEFT BLANK
STATISTICAL SECTION (UNAUDITED)
This part of the Northwest Suburban Municipal Joint Action Water Agency's comprehensive annual
financial report presents detailed information as a context for understanding what the information in the
financial statements, note disclosures, and required supplementary information says about the Agency's
overall financial health.
Contents
Financial Trends
These schedules contain trend information to help the _reader understand how
the Agency's financial performance and well-being have changed over time.
50-51
Revenue Capacity
These schedules contain information to help the reader assess the Agency's most
significant local revenue source, water sales.
52-55
Debt Capacity
These schedules present information to help the reader assess the affordability of
the Agency's current levels of outstanding debt and the Agency's ability to issue
additional debt in the future.
56-57
Demographic and Economic Information
These schedules offer demographic and economic indicators to help the reader
understand the environment within which the Agency's financial activities take place.
58-60
Operating Information
These schedules contain service and infrastructure data to help the reader understand
how the information in the Agency's financial report relates to the services the Agency
provides and the activities it performs.
61 -62
Sources: Unless otherwise noted, the information in these schedules is derived from the comprehensive
annual financial reports for the relevant year. The Northwest Suburban Municipal Joint Action Water
Agency implemented GASB Statement 34 in 2005; schedules presenting government-wide information
include information beginning in that year.
THIS PAGE IS INTENTIONALLY LEFT BLANK
NORTHWEST SUBURBAN MUNICIPAL
JOINT ACTION WATER AGENCY
NET ASSETS BY COMPONENT
Last Eight Fiscal Years
2005
Fiscal Year
BUSINESS- TYPE ACTIVITIES
Invested In capital assets,
net of related debt
Restricted
Unrestricted
TOTAL BUSINESS TYPE-ACTIVITES
$
s
(32,397,834) $
10,254,876
10.852.355
(11 ,290.603) s
2006
(29.508,558) $
10,739,433
10.830.084
(7.939.041) s
2007
(26,052,981)
20.945.759
1.238.212
(3.869.010)
2008
s
s
(24, 154,284) $
21,503.891
3.904.757
1,254.364 s
2010
2009
(24,856,416)
16,723,687
10.880.603
2.747,874
s
s
(14,877,640) $
8,970,684
9.960.219
4,053.263 s
2011
(16,790,890}
9.268.337
11.859.892
4.337.339
2012
s
s
(17 ,628,436)
9,161.217
14,774,475
6,307,256
Data Source
Audited Financial Statements
GASB S-34 implemented In 2005
Page 50
NORTHWEST SUBURBAN MUNICIPAL
JOINT ACTION WATER AGENCY
CHANGE IN NET ASSETS
Last Eight Fiscal Years
2005
Fiscal Year
EXPENSES
Business-type activities
Water
Purchases of water
All other
Total business-type activity expenses
$
OPERATING REVENUES
Business-type activities
Charges for Services
Water
Total business-type activity expenses
OPERAnNG INCOME
Business-type activities
NON-OPERATING REVENUES
Business-type activities
Investment earnings
Miscellaneous
Total business-type activity expenses
CHANGE IN NET ASSETS
Business-type activities
16,020,213
9.077,289
25.097.502
2006
$
$
2008
2009
2010
2011
2012
18,911,558
8,603.961
27.515.519
s 17,170.n6
81198.976
25.369,752
$ 18,911,558
8.603.961
27.515.519
$ 20,831 ,029
$ 21,961,240
$ 22,760,616
8,743,242
29.574.271
9.231,181
31.192.421
8,344.053
31.104.669
27,098,916
27,098.916
29,525.193
29,525.193
27.662,560
27,662,560
29.186.778
29,186.778
28.075.200
28,075,200
30,073.987
30,073,987
30.654.804
30.654,804
32,266,959
32,266,959
2,001.414
4.155.442
147,041
3,817.026
559.681
499,716
(537,617)
1,162,290
813,416
1,075,673
1,257.762
679,108
1,936,870
1'158.568
922.354
11,475
933,829
805.673
821,693
147 780
1.306,348
805,673
821.693
5,123.374
$ 1.493.510
$ 1.305.389
813,416
$
17,17o.ns
8.198,975
25.369,751
2007
2,814,830
1,075,673
$
5231 '115
$
2,083.911
$
$
284,076
802,316
5.311
807,627
$
1.969,917
Data Source
Audited Financial Statements
GASB S-34 Implemented In 2005
Page 51
NORTHWEST SUBURBAN MUNICIPAL
JOINT ACTION WATER AGENCY
SCHEDULE OF REVENUE BY SOURCE
Last Ten Fiscal Years
Fiscal
Operating
Year
Revenue
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
$ 32,266,959
30,654,804
30,073,987
28,075,200
29,186,778
27,662,560
29,525,193
27,098,916
25,357,489
26,174,087
Non-0 eera ling
Other
Interest
$
802,316
821,693
805,673
922,354
1,158,568
1,257,762
1,075,673
813,416
922,989
1,176,979
$
5,311
11,475
147,780
671,638
1,991
113,009
Total
$ 33,074,586
31,476,497
30,879,660
29,009,029
30,493,126
29,591,960
30,600,866
27,912,332
26,282,469
27,464,075
Note: Average members rate per thousand gallons paid to the City of Chicago for fiscal year 2012
was $2.11
Data Source
Agency Records
Page 52
NORTHWEST SUBURBAN MUNICIPAL
JOINT ACTION WATER AGENCY
SCHEDULE OF EXPENSES BY FUNCTION
Last Ten Fiscal Years
Non-Operating
Operating
Fiscal
Year
Purchase
of Water
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
$ 22,760,616
21,961,240
20,831,029
18,911,558
17,170,776
16,454,913
17,885,118
16,020,213
15.923,709
16,211,410
Salaries
Benefits
$
1,691,082
1,658,560
1,584,003
1,518,758
1,440,687
1,210,785
1,315,076
1,230,205
1,163,135
1,078,017
Utilities
Insurance
$
143,171
130,852
128,095
140,177
98,407
154,888
210,235
211,474
134,296
107,372
$
600,993
1,066,823
1,208,856
1,116,664
1' 152,04()
1,113,799
1,154,914
1,066,454
1,089,762
1,163,922
Other
$
737,228
625,903
602,363
617,921
596,541
732,253
681,523
526,691
494,333
647,352
Depreciation
$
1,560,309
2,114,453
1,572,262
1,572,680
1.585,017
1,549,512
1.556,747
1,575,744
1,560,066
1,553,143
Interest
$ 3,524,342
3,549,579
3,562,427
3,697,282
3,261,862
4,245,882
4.422.635
4,384,751
4,717,309
6,057,575
Amortization
Bond
Expense·
$
Total
86,928 $ 31,104,669
31,192,421
85,011
29,574,271
85,236
(59,521)
27,515,519
25.369,751
64.421
67,367
25,529,399
27,257,584
31,336
81,970
25,097,502
88,378
25,170,988
(23,878)
26,794,913
*Excludes Penalty Expense
Data Source
Agency Records
Page 53
NORTHWEST SUBURBAN MUNICIPAL
JOINT ACTION WATER AGENCY
CENSUS*
As of April 30, 2012
Water Census
Village of Elk Grove
Village of Hanover Park
Village of Hoffman Estates
Village of Mount Prospect
City of Rolling Meadows
Village of Schaumburg
Village of Streamwood
TOTAL
Area served (in square miles)
Facilities
Pumping Station
Booster Station
Reservoir Capacity (gallons)
Water mains (miles)
Population
Residential
32,745
37,973
51,895
54,167
23,419
74,227
39,858
314,284
9,881
10,079
12,761
11,029
5,536
22,795
10,396
82,477
Commercial/
Industrial
1,926
296
799
982
405
2,414
669
7,491
Total
11,807
10,375
13,560
12,011
5,941
25,209
11,065
89,968
78.2
1
4
30,000,000
55
"Based on 2010 Census
Page 54
NORTHWEST SUBURBAN MUNICIPAL
JOINT ACTION WATER AGENCY
DELIVERED WATER AVERAGE PER DAY
(Million Gallons)
Last Ten Fiscal Years
Members
Village of Elk Grove
Village of Hanover Park
Village of Hoffman Estates
Village of Mount Prospect
City of Rolling Meadows
Village of Schaumburg
Village of Streamwood
TOTAL
Fiscal Year
11/12
10111
09/10
08109
07108
06/07
05106
04/05
03/04
02/03
2003
7.240
2.842
5.553
4.302
2.808
10.324
3.468
36.535
2004
6.452
2.715
5.307
4.161
2.669
9.884
3.410
34.598
2005
5.960
2.644
5.358
4.057
2.607
9.604
3.314
33.542
MAXIMUM PUMP AGES !MGD)
Maximum
Month
Maximum
39.571
36.760
37.470
37.690
40.746
41 .937
50.000
40.147
41.021
50.620
July
July
August
August
July
August
July
July
July
July
50.954
41.117
45.132
43.515
49.107
52.944
83.000
48.399
54.906
59.274
2006
6.388
2.963
5.823
4.534
2.742
10.305
3.496
36.251
Da}:
July 21
July 22
Aug 6
July 17
Aug 7
Aug 1
June 26
Aug 2
July 2
July 3
2007
5.758
2.941
5.234
4.060
2.490
9.444
3.290
33.21 7
2008
5.749
2.784
5.347
3.919
2.494
9.373
3.387
33.053
2009
5.109
2.592
5.026
3.751
2.726
8.804
3.300
31.308
2010
4.879
2.597
5.310
3.637
2.478
8.543
3.201
30.645
2011
5.055
2.549
4.910
3.572
2.225
8.444
2.969
29.734
2012
4.998
2.517
4.427
3.415
2.106
8.414
2.943
28.820
Maximum Hour
51.450
42.224
46.509
44 .071
54.340
53.500
64.000
57 .216
58.910
60.880
Data Source
Agency Records
Page 55
NORTHWEST SUBURBAN MUNICIPAL
JOINT ACTION WATER AGENCY
RATIOS OF OUTSTANDING DEBT BY TYPE
Last Ten Fiscal Years
Fiscal
Year
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
Revenue
Bonds
$
71 '11 0,000
71,610,000
71,895,000
72,075,000
77,645,000
80,915,000
85,610,000
89,610,000
95,910,000
105,035,000
Percentage of
Personal
Income•
3.95%
0.70%
0.86%
0.87%
0.93%
0.97%
1.03%
1.07%
1.15%
1.26%
Per
Capita•
226
228
228
229
246
257
272
284
304
333
Note: Details of the Agency's outstanding debt can be found in the notes to the financial statements.
* See the schedule of Demographic and Economic Information on page 57 for personal income and
population data. For the purpose of reporting, the Village of Mount Prospect's per capita was used
and applied to the total population to determine the Agency's outstanding debt as a percentage of
the population's personal income.
Data Source
Audited Financial Statements
Page 56
NORTHWEST SUBURBAN MUNICIPAL
JOINT ACTION WATER AGENCY
SCHEDULE OF REVENUE BOND COVERAGE
Last Ten Fiscal Years
Operating
Net Available
Year
Revenues
Ex~ensesd
Debt Service
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
$ 32,266,959
$ 25,933,090
$ 6,333,869
30,654,804
30,073,987
29,009,029
30,493,123
27,662,560
29,525,193
27,098,916
25,357,489
26,174,087
25,443,378
24,354,346
22,305,078
20,458.452
19,666,637
20,997,725
18,647,817
16,275,803
16,575,336
5,211,426
5,719,641
6,703,951
10,034,671
7,995,923
8,527,468
8,451,099
9,081,686
9,598,751
Fiscal
~·
Schedule Debt Service Regulrement
Princi[!al
$
500,000
285,000
180,000
5,570,000
4,540,000
4,540,000
5,855,000
5,755,000
4,710,000
Interest
$ 3,002,263
3,549,579
3,561,138
3,038.263
3,266,363
3,681,656
3,821,000
4,046,695
4,064,989
5,282,712
Total
$
3,502,263
3,834,579
3,741,138
3,038,263
~.836,363
8,221,656
8,361,000
9,901,695
9,819,989
9,992,712
Coverage
1.81
1.36
1.53
2.21
1.14
0.97
1.02
0.85
0.92
0.96
Operating expenses exclude depreciation.
Data Source
Agency Records
Page 57
NORTHWEST SUBURBAN MUNICIPAL
JOINT ACTION WATER AGENCY
DEMOGRAPHIC AND ECONOMIC INFORMATION
Last Ten Calendar Years
Calendar
Year
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
(1)
Population
54,167
54,167
56,265
56,265
56,265
56,265
56,265
56,265
56,265
56,265
(2)
Equalized
Assessed Value
NA
1,834,680,607
2,017,411,353
1,979,496,030
1,870,325,316
1,597,309,461
1,594,975, 722
1,491,177,145
1,321,886,943
1,355,301 '118
(1)
Per
Capita
Personal
Income
Personal
Income
$
1,798,831,903
1,767,577,544
1,488,996,960
1,488,996,960
1,488,996,960
1,488,996,960
1 ,488,996,960
1,488,996,960
1,488,996,960
1,488,996,960
Note: Village of Mount Prospect, Illinois information reported as
$
(3)
Unemployment
Rate
33,209
32,632
26,464
26,464
26,464
26,464
26,464
26,464
26,464
26,464
7.40%
7.80%
7.90%
4.50%
3.40%
3.20%
4.40%
4.60%
5.30%
5.30%
a representative example.
Data Source
(1) U.S. Census Bureau
(2) Office of the County Clerk
(3) Department of Labor Statistics
Page 58
NORTHWEST SUBURBAN MUNICIPAL
JOINT ACTION WATER AGENCY
PRINCIPAL EMPLOYERS
Current Year and Nine Years Ago
2002
Emelo~er
Caremark, Inc.
Bosch Tools
Met life
Cummins-Allison Corp
Wai-Mart Stores, Inc.
Village of Mount Prospect
Rauland Borg
Mount Prospect S.D. 57
Township High school S.D. 214
Siemens Building Technologies
Output Technologies Inc.
Community Consolidated S.D. 59
NTN Bearing Corporation
Bank One
Em~lo~ees
Rank
500
2011
%of
Total Village
Poeulation
0.89%
273
278
3
0.49%
0.49%
304
2
0.54%
230
240
6
5
0.41%
0.43%
185
197
176
127
7
B
9
10
0.35%
0.33%
0.31%
0.23%
2,510
Emelo:tees
4
4.47%
800
576
445
435
330
306
300
298
250
235
3,975
Rank
1
2
3
4
5
6
7
8
9
10
%of
Total Village
Poeulation
1.48%
1.06%
0.82%
0.80%
0.61%
0.56%
0.55%
0.55%
0.46%
0.43%
7.32%
Note: VIllage of Mount Prospect, Illinois Information reported as a representative example.
Data Source
VIllage Records
Page 59
NORTHWEST SUBURBAN MUNICIPAL
JOINT ACTION WATER AGENCY
FULL TIME EQUIVALENT EMPLOYEES
Last Ten Fiscal Years
Function/Program
Water Department
Administration
Water Operations
AGENCY TOTAL
2003
2004
3
11
14
2005
3
11
14
2006
3
11
14
2008
2007
3
11
14
3
11
14
2009
3
11
14
2011
2010
3
11
14
3
11
14
2012
3
11
14
3
11
14
Data Source
Agency Records
Page60
NORTHWEST SUBURBAN MUNICIPAL
JOINT ACTION WATER AGENCY
OPERATING INDICATORS
Last Tan Fiscal Years
Function/Program
Water
Water mains Installed {lineal miles)
Water billed (1 ,000 gallons)
2003
2004
2005
2007
2006
2009
2008
2011
2010
2012
~
~
~
~
~
~
~
~
~
13.335.275
12.243,188
13,231,528
12,123,968
12,123,968
12,064 .366
11,427,627
11.185.344
11,031.683
M
10,870.507
Data Source
Agency Records
Page 61
NORTHWEST SUBURBAN MUNICIPAL
JOINT ACTION WATER AGENCY
CAPITAL ASSET STATISTICS BY FUNCTION
Last Ten Fiscal Years
Function/Program
Water
Water mains (miles)
Storage Capacity (millions
of gallons)
2003
55
34
2004
55
35
2005
55
36
2006
55
37
2007
55
38
2008
55
39
2009
55
39
2010
55
39
2011
55
39
2012
55
39
Data Source
Agency Records
Page62
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APPENDIX D
CUSIPS
Year
(May 1)
Amount
2014
2015
2016
2017
2018
2019
2020
2021
$ 5,680,000
5,850,000
355,000
355,000
365,000
375,000
380,000
7,610,000
Interest Rate
3.0%
3.0
2.0
2.0
3.0
3.0
3.0
4.0
Cusip
Number
(667806)*
GX5
GY3
GZ0
HA4
HB2
HC0
HD8
HE6
* CUSIP data herein provided by Standard & Poor’s, CUSIP Service Bureau, a division of The McGraw-Hill Companies, Inc.
D-1
[THIS PAGE INTENTIONALLY LEFT BLANK]
Northwest Suburban Municipal Joint Action Water Agency (Cook, DuPage and Kane Counties, Illinois) • Water Supply System Revenue Refunding Bonds, Series 2013