New Issue Date of Sale:

Investment Rating: Standard & Poor’s ... (Rating Requested)

Tuesday, October 22, 2013 Between 9:30 and 9:45 A.M., C.D.T. (Open Speer Auction Internet Sale)

Official Statement Subject to compliance by the City with certain covenants, in the opinion of Chapman and Cutler LLP, Bond Counsel, under present law, interest on the Bonds is excludible 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 Bonds is not exempt from present State of Illinois income taxes. See “TAX EXEMPTION” herein for a more complete discussion. The Bonds are “qualified tax-exempt obligations” under Section 265(b)(3) of the Internal Revenue Code of 1986, as amended. See “QUALIFIED TAX-EXEMPT OBLIGATIONS” herein.

$9,465,000*

CITY OF AURORA Kane, DuPage, Kendall and Will Counties, Illinois General Obligation Refunding Bonds, Series 2013 Dated Date of Delivery

Book-Entry

Bank Qualified

Due December 30, 2015-2025

The $9,465,000* General Obligation Refunding Bonds, Series 2013 (the “Bonds”) are being issued by the City of Aurora, Kane, DuPage, Kendall and Will Counties, Illinois (the “City”). Interest is payable semiannually on June 30 and December 30 of each year, commencing June 30, 2014. Interest is calculated based on a 360-day year of twelve 30-day months. The Bonds will be issued using a book-entry system. The Depository Trust Company (“DTC”), New York, New York, will act as securities depository for the Bonds. The ownership of one fully registered Bond for each maturity will be registered in the name of Cede & Co., as nominee for DTC, and no physical delivery of Bonds will be made to purchasers. The Bonds will mature on December 30 in the following years and amounts. AMOUNTS*, MATURITIES, INTEREST RATES, PRICES OR YIELDS AND CUSIP NUMBERS Principal Amount* $ 45,000 45,000 45,000 50,000 1,200,000 1,240,000

Due Dec. 30 ... 2015 ... 2016 ... 2017 ... 2018 ... 2019 ... 2020

Interest Rate ______% ______% ______% ______% ______% ______%

Yield or Price ______% ______% ______% ______% ______% ______%

CUSIP Number _________ _________ _________ _________ _________ _________

Principal Due Interest Amount* Dec. 30 Rate $1,270,000 ... 2021 ______% 1,315,000 ... 2022 ______% 1,365,000 ... 2023 ______% 1,415,000 ... 2024 ______% 1,475,000 ... 2025 ______%

Yield or Price ______% ______% ______% ______% ______%

CUSIP Number _________ _________ _________ _________ _________

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

OPTIONAL REDEMPTION The Bonds due December 30, 2015-2021, inclusive, are not subject to optional redemption. The Bonds due December 30, 2022-2025, inclusive, are callable in whole or in part on any date on or after December 30, 2021, at a price of par and accrued interest. If less than all the Bonds are called, they shall be redeemed in such principal amounts and from such maturities as determined by the City and within any maturity by lot. See “OPTIONAL REDEMPTION” herein. PURPOSE, LEGALITY AND SECURITY The Bond proceeds will be used to advance refund a portion of the City’s outstanding General Obligation Bonds, Series 2006 and to pay costs of issuing the Bonds. See “PLAN OF FINANCING” herein. In the opinion of Chapman and Cutler LLP, Chicago, Illinois, Bond Counsel, the Bonds will constitute valid and legally binding obligations of the City payable both as to principal and interest from ad valorem taxes levied against all taxable property therein without limitation as to rate or amount, except that the rights of the owners of the Bonds and the enforceability of the Bonds may be limited by bankruptcy, insolvency, moratorium, reorganization and other similar laws affecting creditors’ rights and by equitable principles, whether considered at law or in equity, including the exercise of judicial discretion. This Official Statement is dated October 4, 2013, and has been prepared under the authority of the City. An electronic copy of this Official Statement is available from the www.speerfinancial.com web site under “Debt Auction Center/Competitive Official Statement Sales Calendar”. Additional copies may be obtained from Mr. Brian Caputo, Chief Financial Officer/City Treasurer, City of Aurora, 44 East Downer Place, Aurora, Illinois 605073302, or from the Independent Public Finance Consultants to the City: Established 1954

Speer Financial, Inc. INDEPENDENT PUBLIC FINANCE CONSULTANTS *Subject to change.

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

For purposes of compliance with Rule 15c2-12 of the Securities and Exchange Commission, this document, as the same may be supplemented or corrected by the City from time to time (collectively, the “Official Statement”), may be treated as an Official Statement with respect to the Bonds described herein that is deemed near final as of the date hereof (or the date of any such supplement or correction) by the City. This Official Statement, when further supplemented by an addendum or addenda specifying the maturity dates, principal amounts and interest rates of the Bonds, together with any other information required by law or deemed appropriate by the City, shall constitute a “Final Official Statement” of the City with respect to the Bonds, as that term is defined in Rule 15c2-12. Any such addendum shall, on and after the date thereof, be fully incorporated herein and made a part hereof by reference. No dealer, broker, salesman or other person has been authorized by the City to give any information or to make any representations with respect to the Bonds other than as contained in this Official Statement or the Final Official Statement and, if given or made, such other information or representations must not be relied upon as having been authorized by the City. Certain information contained in this Official Statement and the Final Official Statement may have been obtained from sources other than records of the City and, while believed to be reliable, is not guaranteed as to completeness. THE INFORMATION AND EXPRESSIONS OF OPINION IN THIS OFFICIAL STATEMENT AND THE FINAL OFFICIAL STATEMENT ARE SUBJECT TO CHANGE, AND NEITHER THE DELIVERY OF THIS OFFICIAL STATEMENT OR THE FINAL OFFICIAL STATEMENT NOR ANY SALE MADE UNDER EITHER SUCH DOCUMENT SHALL CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE CITY SINCE THE RESPECTIVE DATES THEREOF. References herein to laws, rules, regulations, ordinances, resolutions, agreements, reports and other documents do not purport to be comprehensive or definitive. All references to such documents are qualified in their entirety by reference to the particular document, the full text of which may contain qualifications of and exceptions to statements made herein. Where full texts have not been included as appendices to this Official Statement or the Final Official Statement, they will be furnished on request. This Official Statement does not constitute an offer to sell, or solicitation of an offer to buy, any securities to any person in any jurisdiction where such offer or solicitation of such offer would be unlawful. The tax advice contained in this Official Statement is not intended or written by the City, its Bond Counsel, or any other tax practitioner to be used, and it cannot be used, by any taxpayer for the purpose of avoiding penalties that may be imposed on the taxpayer. The tax advice contained in this Official Statement was written to support the promotion or marketing of the Bonds. Each taxpayer should seek advice based on the taxpayer’s particular circumstances from an independent tax advisor.

` TABLE OF CONTENTS BOND ISSUE SUMMARY ................................................................................................................. CITY OF AURORA – City Council and Aldermen .................................................................................... THE CITY ..................................................................................................................................... Transportation ............................................................................................................................ Education .................................................................................................................................. Community Life.......................................................................................................................... SOCIOECONOMIC INFORMATION .................................................................................................... Population Trend......................................................................................................................... Population ........................................................................................................................... City of Aurora Population ........................................................................................................ Employment .............................................................................................................................. Kane County Private, Non-Agricultural Employment Covered by the Illinois Unemployment Insurance Act .... DuPage County Private, Non-Agricultural Employment Covered by the Illinois Unemployment Insurance Act . Will County Private, Non-Agricultural Employment Covered by the Illinois Unemployment Insurance Act ..... Major City Employers ............................................................................................................. Major Area Employers ............................................................................................................ Employment By Industry ......................................................................................................... Employment By Occupation ...................................................................................................... Unemployment ........................................................................................................................... Annual Average Employment Rates ............................................................................................ Building Permits ......................................................................................................................... Building Permits .................................................................................................................... Housing .................................................................................................................................... Specified Owner-Occupied Units ................................................................................................ Mortgage Status .................................................................................................................... Development Activity in the City of Aurora ........................................................................................ Business Recruitment .............................................................................................................. Business Expansion and Retention .............................................................................................. Community and Regional Improvements....................................................................................... Downer Street Bridges Reconstruction .................................................................................... Aurora University ............................................................................................................ Aurora Public Library ....................................................................................................... RiverEdge Park ............................................................................................................... Fiber Optic ..................................................................................................................... Workforce Development .......................................................................................................... Marketing and Public Relations.................................................................................................. Aurora Area Commercial Development Totals ............................................................................... Income ..................................................................................................................................... Median Family Income ............................................................................................................ Median Household Income ....................................................................................................... Per Capita Personal Income for the Ten Highest Income Counties in the State ......................................... Ranking of Median Family Income ............................................................................................. Retail Activity ............................................................................................................................ 1.00% Retailers’ Occupation, Service Occupation and Use Tax .......................................................... PLAN OF FINANCING ..................................................................................................................... The Refunded Bonds – Outstanding General Obligation Bonds, Series 2006 ................................................. DEBT INFORMATION ..................................................................................................................... General Obligation Debt Summary – By Issue ..................................................................................... City General Obligation Bonded Debt ............................................................................................... Detailed Overlapping Bonded Debt ................................................................................................... Statement of Bonded Indebtedness .................................................................................................... PROPERTY ASSESSMENT AND TAX INFORMATION .......................................................................... City Equalized Assessed Valuation ................................................................................................... (i)

Page 1 2 2 3 3 3 4 4 4 4 5 5 5 5 6 6 7 7 8 8 8 8 9 9 9 9 9 10 10 10 10 10 10 10 11 11 11 11 11 12 12 13 13 13 14 14 15 15 16 17 17 18 18

` TABLE OF CONTENTS (continued) Kane County Representative Tax Rates .............................................................................................. DuPage County Representative Tax Rates .......................................................................................... Will County Representative Tax Rates ............................................................................................... City Tax Extensions and Collections ................................................................................................. Principal City Taxpayers ............................................................................................................... REAL PROPERTY ASSESSMENT, TAX LEVY AND COLLECTION PROCEDURES ..................................... Tax Levy and Collection Procedures ................................................................................................. Exemptions ............................................................................................................................... Truth in Taxation Law .................................................................................................................. FINANCIAL INFORMATION ............................................................................................................ Basis of Accounting ..................................................................................................................... Investment Policy ........................................................................................................................ No Consent or Updated Information Requested of the Auditor ................................................................. Summary Financial Information....................................................................................................... Statement of Net Position – Governmental Activities ........................................................................ Statement of Activities – Governmental Activities ........................................................................... General Fund – Balance Sheet ................................................................................................... General Fund – Revenues and Expenditures .................................................................................. General Fund – Budget Financial Information ................................................................................ Fund Balance Policy .................................................................................................................... Recognitions .............................................................................................................................. PENSION AND RETIREMENT OBLIGATIONS ..................................................................................... REGISTRATION, TRANSFER AND EXCHANGE .................................................................................. TAX EXEMPTION .......................................................................................................................... QUALIFIED TAX-EXEMPT OBLIGATIONS ......................................................................................... CONTINUING DISCLOSURE ............................................................................................................ THE UNDERTAKING ...................................................................................................................... Annual Financial Information Disclosure ........................................................................................... Reportable Events Disclosure ......................................................................................................... Consequences of Failure of the City to Provide Information .................................................................... Amendment; Waiver .................................................................................................................... Termination of Undertaking ........................................................................................................... Additional Information .................................................................................................................. Dissemination of Information; Dissemination Agent .............................................................................. OPTIONAL REDEMPTION ............................................................................................................... LITIGATION .................................................................................................................................. CERTAIN LEGAL MATTERS ............................................................................................................ OFFICIAL STATEMENT AUTHORIZATION ........................................................................................ INVESTMENT RATING ................................................................................................................... DEFEASANCE ............................................................................................................................... UNDERWRITING ............................................................................................................................ FINANCIAL ADVISOR..................................................................................................................... CERTIFICATION ............................................................................................................................ APPENDIX A – EXCERPTS OF FISCAL YEAR 2012 AUDITED FINANCIAL STATEMENTS APPENDIX B – DESCRIBING BOOK-ENTRY-ONLY ISSUANCE APPENDIX C – PROPOSED FORM OF OPINION OF BOND COUNSEL APPENDIX D - EXCERPTS OF FISCAL YEAR 2012 AUDITED FINANCIAL STATEMENTS RELATING TO THE CITY’S PENSION PLANS OFFICIAL BID FORM (Open Speer Auction Internet Sale) OFFICIAL NOTICE OF SALE (ii)

Page 18 19 19 20 20 20 20 21 22 23 23 23 23 24 24 25 26 27 28 28 28 29 29 30 32 32 33 33 33 34 34 35 35 35 35 36 36 36 36 37 37 37 37

City of Aurora, Kane, DuPage, Kendall and Will Counties, Illinois General Obligation Refunding Bonds, Series 2013

BOND ISSUE SUMMARY This Bond Issue Summary is expressly qualified by the entire Official Statement, including the Official Notice of Sale and the Official Bid Form, which are provided for the convenience of potential investors and which should be reviewed in their entirety by potential investors. Issuer:

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

Issue:

$9,465,000* General Obligation Refunding Bonds, Series 2013.

Dated Date:

Date of delivery, expected to be November 5, 2013.

Interest Due:

Each June 30 and December 30, commencing June 30, 2014.

Principal Due:

Serially each December 30, commencing December 30, 2015 through 2025, as detailed on the front page of this Official Statement.

Optional Redemption:

The Bonds maturing on or after December 30, 2022, are callable at the option of the City on any date on or after December 30, 2021, at a price of par plus accrued interest. See “OPTIONAL REDEMPTION” herein.

Authorization:

Action of the City Council.

Security:

The Bonds are valid and legally binding obligations of the City payable both as to principal and interest from ad valorem taxes levied against all taxable property therein without limitation as to rate or amount.

Credit Rating:

A credit rating for the Bonds has been requested from Standard & Poor’s Ratings Services, a Division of The McGraw-Hill Companies, Inc.

Purpose:

The Bond proceeds will be used to advance refund a portion of the City’s outstanding General Obligation Bonds, Series 2006 and to pay the costs of issuing the Bonds. See “PLAN OF FINANCING” herein.

Tax Exemption:

Chapman and Cutler LLP, Chicago, Illinois, will provide an opinion as to the tax exemption of the Bonds as discussed under “TAX EXEMPTION” in this Official Statement. Interest on the Bonds is not exempt from present State of Illinois income taxes.

Bank Qualification:

The Bonds are “qualified tax-exempt obligations” under Section 265(b)(3) of the Internal Revenue Code of 1986, as amended. See “QUALIFIED TAX-EXEMPT OBLIGATIONS” herein.

Bond Registrar/Paying Agent:

Amalgamated Bank of Chicago, Chicago, Illinois.

Verification Agent:

Dunbar, Breitweiser & Company, LLP, Bloomington, Illinois.

Delivery:

The Bonds are expected to be delivered on or about November 5, 2013.

Book-Entry Form:

The Bonds will be registered in the name of Cede & Co. as nominee for The Depository Trust Company (“DTC”), New York, New York. DTC will act as securities depository of the Bonds. See APPENDIX B herein.

Denomination:

$5,000 or integral multiples thereof.

Financial Advisor:

Speer Financial, Inc., Chicago, Illinois.

*Subject to change.

1

City of Aurora, Kane, DuPage, Kendall and Will Counties, Illinois General Obligation Refunding Bonds, Series 2013

CITY OF AURORA Kane, DuPage, Kendall and Will Counties, Illinois City Council Thomas J. Weisner Mayor Aldermen Edward J. Bugg Scheketa Hart-Burns William M. Donnell Juany Garza

Richard C. Irvin Lynne M. Johnson Richard B. Mervine

Theodore C. Mesiacos Robert J. O’Connor John S. Peters Michael B. Saville

_____________________________________ Isabel Garcia-Kodron City Clerk

Brian W. Caputo Chief Financial Officer/City Treasurer Alayne M. Weingartz Corporation Counsel

THE CITY The City, currently Illinois’ second largest municipality in terms of population, became a city in 1857 when the two incorporated Villages of East Aurora and West Aurora (as related to the Fox River) so voted. In 1892, when the City’s population was some 12,000, Aurora became known as the “City of Lights” because it was the world’s first city to use electric streetlights. Originally located solely in the southeastern portion of Kane County, the City expanded into DuPage County in 1973, when it annexed a 4,139-acre (6¼ square miles) development district, which now contains the Westfield Fox Valley Mall. In 1996, the City expanded into Kendall and Will Counties with the annexation of 570 acres. The City currently covers 46 square miles and is approximately 36 miles west of downtown Chicago. The population in 1980, according to the U.S. Census Bureau, was 81,293. The 1990 U.S. Census Bureau report for the City’s population was 99,581, which is an increase of 22.50% over 1980. The 2000 Census recorded the population as 142,990. In 2006, a special census resulted in an official population of 164,681 and the 2010 Census recorded a population of 197,899. The City operates under a mayor-council form of government. The Mayor is elected on an at-large basis and serves a term of four years. The City Council consists of twelve aldermen, two of whom are elected on an at-large basis and ten of whom are elected from individual wards, all of whom serve overlapping four-year terms. Other officers are appointed.

2

City of Aurora, Kane, DuPage, Kendall and Will Counties, Illinois General Obligation Refunding Bonds, Series 2013

Basic services provided by the City include police protection, fire protection, emergency medical service, maintenance of highways and streets, refuse and recycling collection, water supply, and library services. Sanitary sewerage treatment is provided by the Fox Metro Water Reclamation District, a separate unit of government. A variety of recreation programs are provided by the Fox Valley Park District, also a separate unit of government. Pursuant to authority granted by Article VII of the 1970 Constitution of the State of Illinois, any municipality which, according to the most recent official U.S. Census, has a population of more than 25,000 is a home rule unit. The City is a home rule unit based upon the 2010 Census and may exercise any power and perform any function pertaining to its government and affairs. Transportation The East-West Tollway (Interstate 88) links Aurora east to Chicago, and west to DeKalb, Dixon, Rock Falls, Sterling and the Quad Cities area on the Illinois-Iowa border. State Highways 25 and 31 run north-south along the Fox River to Batavia, Geneva, St. Charles, and Elgin. Aurora is approximately bordered by Gordon Road on the west, Route 59 on the east, 111th Street on the south and Route 56 on the north. In addition to these roadways, rail transportation, both passenger and freight, is available from Amtrak, the Burlington Northern Railroad, and two freight lines. Metra, the regional commuter transportation authority, provides commuter rail service to Chicago. Commuting time to Chicago via Metra is approximately one hour. Intra and inter-city bus services are also available. The Cityowned airport is located in Sugar Grove Township, just eight miles west of downtown Aurora. The airport is capable of handling jet aircraft and caters to corporate and other private aircraft traffic. Education Illinois’ first public school system was established more than 140 years ago in Aurora. School District Numbers 101, 129, 131, 200, 204, 302 and 308 have a combined enrollment of over 44,800 students. These Districts provide the City with 34 elementary, 11 junior high and five high schools. Indian Prairie School District 204 is the largest of the districts, with an Early Childhood Center, 21 elementary schools, seven middle schools, three high schools and an alternative high school. It serves the far east side of Aurora and much of neighboring Naperville. Students have alternatives to public education in nine parochial elementary schools and four Christian/Catholic high schools. Additionally, the Illinois Mathematics and Science Academy is located in the City, drawing talented Illinois students in mathematics and science and has an enrollment of approximately 650. Advanced education is available through Community College District Numbers 502 and 516, and Aurora University, which have a combined enrollment of approximately 61,500 students. Community Life The City maintains 22 park sites totaling nearly 525 acres, which includes two golf courses and a zoo. The Fox Valley Park District has 164 park sites totaling approximately 2,500 acres. The District operates the Blackberry Historical Farm-Village, a golf course, a nature center, and numerous recreational programs. In addition, the District operates three fitness/athletic centers and two aquatic centers. Also available locally are a symphony orchestra and an historical society.

3

City of Aurora, Kane, DuPage, Kendall and Will Counties, Illinois General Obligation Refunding Bonds, Series 2013

Hospitals located in the City are part of a healthcare network that provide linkages in the Fox Valley region providing physician referral and community education services. Rush-Copley Medical Center is a state-of-the-art 98acre hospital campus on Route 34 located in the southeast area of the City. The $80 million campus includes a $67 million ranch-style hospital and a $13 million physician office building. The complex has 210 beds and a medical staff of about 500 people. Rush-Copley Healthplex, a state-of-the-art fitness center, opened in 1997. Presence Mercy Medical Center located in the northwest area of the City offers a complete continuum of care in both medical treatment and behavioral health services. The Mercy complex has 293 beds and a medical staff of about 430 people. The City is a regional center for museums, the sciences and the performing arts, including the nationally renowned Paramount Arts Centre and Sci-Tech Interactive Center. The City experienced a large boost in its economic base in 1975 with the opening of the Fox Valley Shopping Center (now named Westfield Fox Valley Mall). The Center completed a $12 million renovation in 1998. Anchor retail department stores in the center include Macy's; Carson Pirie Scott; Sears, Roebuck & Co.; and J.C. Penney. Carson's completed a multi-million dollar renovation of their store, formerly occupied by Lord & Taylor. Macy’s completed a multi-million renovation to their store in 1995. Near the Westfield Fox Valley Mall is the regional service center for Metropolitan Life Insurance Company. In 2004, the City’s tax base received another significant boost with the opening of Chicago Premium Outlets at the northeast corner of Interstate 88 and Farnsworth Avenue. Chicago Premium Outlets is an upscale, fashion-oriented center with more than 100 stores. SOCIOECONOMIC INFORMATION The following statistics pertain principally to the City, Kane, DuPage, Kendall and Will Counties and the State of Illinois (the “State”). Population Trend The City’s population has grown at a rate faster than that of both Kane County and the State. Kane County is essentially rural with a number of growing cities, and major developments in DuPage County provide jobs and sales tax revenue (Westfield Fox Valley Mall and Chicago Premium Outlets) for the City in addition to drawing residents of DuPage County toward the Aurora area. A table of population statistics follows. In 1996, the City expanded into rural Kendall and Will Counties. Population(1) 1980 Aurora .................... 81,293 Kane County ............... 278,405 State of Illinois ......... 11,426,518 Note:

(1)

Source:

1990 99,581 319,471 11,430,602

2000 142,990 404,119 12,419,293

2010 197,899 515,269 12,830,632

Percent Increase 2000-2010 38.40% 27.50% 3.31%

U.S. Bureau of Census.

The City’s total population is 197,899 and the City’s population by county for selected prior years was as follows: City of Aurora Population(1) Kane County Portion ............................. DuPage County Portion ........................... Will and Kendall Counties Portion ............... Total City .................................... Note:

(1)

Source:

1980 79,610 1,683 NA 81,293

1990 84,770 14,811 NA 99,581

U.S. Bureau of the Census.

4

2000 100,290 38,905 3,795 142,990

2006 105,813 45,799 13,069 164,681

2010 130,976 49,433 17,490 197,899

City of Aurora, Kane, DuPage, Kendall and Will Counties, Illinois General Obligation Refunding Bonds, Series 2013

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

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

Farm and Forestry ................................... Mining and Quarrying ................................ Construction ........................................ Manufacturing ....................................... Transportation, Communications, Utilities ........... Wholesale Trade ..................................... Retail Trade ........................................ Finance, Insurance, Real Estate ..................... Services(2) ......................................... Total ............................................. Notes:

(1) (2)

(Data as of March for each Year) 2009 2010 2011 655 627 563 130 97 107 8,240 6,797 6,969 29,883 27,699 29,454 7,709 7,209 6,799 10,913 11,261 11,646 20,918 20,202 19,988 9,257 8,850 8,449 75,299 72,923 72,524 163,004 155,665 156,499

2008 735 110 10,790 33,825 8,157 11,246 21,856 9,614 79,685 176,018

2012 569 89 7,129 30,081 6,470 11,934 19,648 8,752 76,283 160,955

Source: Illinois Department of Employment Security. Includes unclassified establishments.

DuPage County Private, Non-Agricultural Employment Covered by the Illinois Unemployment Insurance Act(1) Farm, Forestry, Fisheries ............................ Mining and Quarrying ................................. Construction ......................................... Manufacturing ........................................ Transportation, Communications, Utilities ............ Wholesale Trade ...................................... Retail Trade ......................................... Finance, Insurance, Real Estate ...................... Services(2) .......................................... Total .............................................. Notes:

(1) (2)

(Data as of March for each Year) 2009 2010 2011 310 280 243 90 84 77 23,042 19,192 19,063 53,193 49,208 50,700 37,913 34,566 34,315 47,984 44,552 45,609 61,886 59,906 60,903 39,579 37,239 37,365 237,881 239,883 251,853 501,878 484,910 500,128

2008 338 112 26,903 59,719 41,205 0,669 68,274 43,489 247,072 537,781

2012 342 96 18,558 52,024 34,992 47,015 61,120 38,220 257,521 509,888

Source: Illinois Department of Employment Security. Includes unclassified establishments.

Will County Private, Non-Agricultural Employment Covered by the Illinois Unemployment Insurance Act(1) Farm and Forestry .................................... Mining and Construction .............................. Manufacturing ........................................ Transportation, Communications, Utilities ............ Wholesale Trade ...................................... Retail Trade ......................................... Finance, Insurance, Real Estate ...................... Services(2) .......................................... Total .............................................. Notes:

(1) (2)

2009 261 10,997 19,307 13,320 12,026 25,863 6,754 65,779 154,307

2008 269 14,401 20,391 13,528 12,121 27,175 6,828 66,058 160,771

Source: Illinois Department of Employment Security. Includes unclassified establishments.

5

(Data as of March for each Year) 2010 2011 243 233 9,743 9,500 18,185 19,544 13,461 14,366 12,605 12,854 26,059 26,716 7,875 7,638 67,323 70,479 155,494 161,330

2012 263 9,802 19,512 14,616 13,141 27,673 8,052 74,280 167,339

City of Aurora, Kane, DuPage, Kendall and Will Counties, Illinois General Obligation Refunding Bonds, Series 2013

Following are lists of large employers located in the City and in the surrounding area. Major City Employers(1) Name Caterpillar, Inc. .................................... Rush Copley Medical Center ........................... School District Number 129 ........................... School District Number 131 ........................... Provena Mercy Medical Center ......................... City of Aurora ....................................... Dreyer Medical Clinic ................................ School District Number 204 ........................... Hollywood Casino ..................................... MetLife, Inc. ........................................ Notes: (1) (2)

Approximate Product/Service Employment Construction Machinery ........................................ 2,300 Full Service Hospital ......................................... 2,000 School System ................................................. 1,500(2) School System ................................................. 1,320(2) Medical and Psychiatric Hospital .............................. 1,300 Government .................................................... 1,280 Medical Services .............................................. 1,200 School System ................................................. 1,200(2) Riverboat Casino .............................................. 1,009 Insurance and Financial Services .............................. 760

Source: 2013 Illinois Manufacturers Directory, 2013 Illinois Services Directory and a selective telephone survey. Administrative office and majority of school sites located in the City. Limited number of school sites located in adjacent areas.

Major Area Employers(1) Approximate Name Business or Product Employment Location Wheaton ............. DuPage County Government Center................... Government Administration ............................ 3,400 Naperville .......... Alcatel-Lucent ................................... Telecommunications Research and Development .......... 3,000 Naperville .......... Edward Hospital .................................. General Hospital ..................................... 3,000 Downers Grove ....... Advocate Good Samaritan Hospital.................. Hospital and Health Care Services .................... 2,700 Naperville .......... Nicor Gas ........................................ Gas Utility Divisional and Corporate Headquarters .... 2,264 Downers Grove ....... GCA Services Group, Inc........................... School Maintenance and Cleaning Contractors .......... 2,000 Batavia ............. Fermi Research Alliance........................... High Energy Physics Research Laboratory .............. 1,800 Downers Grove ....... Sara Lee Corp. ................................... Packaged Baked Goods Corporate Headquarters .......... 1,700 Geneva .............. Delnor Hospital .................................. General Hospital ..................................... 1,650 Naperville .......... BP ............................................... Chemical and Petrochemical Research .................. 1,600 Naperville .......... OfficeMax, Inc. .................................. Wholesale Office Equipment Corporate Headquarters .... 1,500 Sugar Grove ......... Waubonsee Community College District Number 516 ... Education ............................................ 1,460 Naperville .......... Nalco Company .................................... Water Treatment Company Headquarters ................. 1,200 Naperville .......... Tellabs .......................................... Communications Corporate Headquarters ................ 900 Wheaton ............. Wheaton College .................................. Private College ...................................... 885 Downers Grove ....... DeVry, Inc. ...................................... Business Education Services .......................... 850 Batavia ............. Suncast Corp. .................................... Plastic Garden Hose Reels and Garden Sheds ........... 800 Naperville .......... North Central College............................. Liberal Arts College ................................. 700 600 Downers Grove ....... Coventry Health Care/First Health, Inc. ........... Health Benefits Services Provider .................... Geneva .............. Peacock Engineering Co............................ Packaging of Shelf-Stable and Refrigerated Food Products ........................................... 600 Downers Grove ....... R.R. Donnelley & Sons Co.......................... Business Consulting .................................. 600 Downers Grove ....... FTD, Inc. ........................................ Direct Flower and Gift Marketing ..................... 509 Downers Grove ....... Ambitech Engineering Corp......................... Engineering, Procurement and Construction Management . 500 Naperville .......... Castrol Industrial North America, Inc. ............ Corporate Headquarters and Lubricating Oils .......... 500 Naperville .......... ConAgra Foods, Inc., Grocery Foods Div. ........... Divisional Headquarters and Food Processing and Packaging .......................................... 500 West Chicago ........ General Mills .................................... Cereal Breakfast Foods ............................... 500 Downers Grove ....... Hillshire Brands Co............................... Bread, Cake and Related Products ..................... 500 Naperville .......... Tiger Direct, Inc. ............................... Mail Order Computer Supplies ......................... 500 Note:

(1)

Source:

2013 Illinois Manufacturers Directory, 2013 Illinois Services Directory and telephone survey.

6

City of Aurora, Kane, DuPage, Kendall and Will Counties, Illinois General Obligation Refunding Bonds, Series 2013

The following tables show employment by industry and by occupation for the City, DuPage County, Kane County and the State as reported by the 2007-2011 American Community Survey 5-Year estimates from the U.S. Bureau of the Census. Employment By Industry(1) Classification Agriculture, Forestry, Fishing and Hunting, and Mining ................................... Construction .................................. Manufacturing ................................. Wholesale Trade ............................... Retail Trade .................................. Transportation and Warehousing, and Utilities . Information ................................... Finance and Insurance, and Real Estate and Rental and Leasing ........................... Professional, Scientific, and Management, Administrative, and Waste Management Services . Educational Services and Health Care and Social Assistance ............................ Arts, Entertainment and Recreation and Accommodation and Food Services .............. Other Services, Except Public Administration .. Public Administration ......................... Total ....................................... Note:

(1)

Source:

DuPage County Number Percent

The City Number Percent

Kane County Number Percent

The State Number Percent

226 4,969 16,082 3,963 10,974 5,134 1,648

0.2% 5.3% 17.1% 4.2% 11.7% 5.5% 1.8%

1,156 24,539 59,805 21,836 50,681 24,993 12,435

0.2% 5.2% 12.7% 4.6% 10.8% 5.3% 2.6%

1,356 16,315 41,968 10,366 28,651 12,276 5,898

0.6% 6.7% 17.1% 4.2% 11.7% 5.0% 2.4%

63,960 343,232 775,663 196,738 659,708 355,486 135,688

1.1% 5.7% 12.8% 3.3% 10.9% 5.9% 2.2%

8,010

8.5%

45,742

9.7%

18,384

7.5%

466,468

7.7%

12,967

13.8%

63,971

13.6%

31,051

12.7%

662,987

11.0%

16,720

17.8%

94,522

20.1%

45,114

18.4%

1,337,455

22.1%

7,741 3,724 1,902 94,060

8.2% 4.0% 2.0% 100.0%

37,942 21,922 11,047 470,591

8.1% 4.7% 2.3% 100.0%

18,678 9,412 5,729 245,198

7.6% 3.8% 2.3% 100.0%

524,925 288,538 232,923 6,043,771

8.7% 4.8% 3.9% 100.0%

2007-2011 American Community Survey 5-Year estimates from the U.S. Bureau of the Census.

Employment By Occupation(1) The City Number Percent Classification Agriculture, Forestry, Fishing and Hunting, and Mining .................................. 226 0.2% Construction ................................. 4,969 5.3% Manufacturing ................................ 16,082 17.1% Wholesale Trade .............................. 3,963 4.2% Retail Trade ................................. 10,974 11.7% Transportation and Warehousing, and Utilities 5,134 5.5% Information .................................. 1,648 1.8% Finance and Insurance, and Real Estate and Rental and Leasing .......................... 8,010 8.5% Professional, Scientific, and Management, Administrative, and Waste Management Services 12,967 13.8% Educational Services and Health Care and Social Assistance ........................... 16,720 17.8% Arts, Entertainment and Recreation and Accommodation and Food Services ............. 7,741 8.2% Other Services, Except Public Administration . 3,724 4.0% 2.0% Public Administration ........................ 1,902 Total ...................................... 94,060 100.0% Note:

(1)

Source:

DuPage County Number Percent

Kane County Number Percent

1,156 24,539 59,805 21,836 50,681 24,993 12,435

0.2% 5.2% 12.7% 4.6% 10.8% 5.3% 2.6%

1,356 16,315 41,968 10,366 28,651 12,276 5,898

0.6% 6.7% 17.1% 4.2% 11.7% 5.0% 2.4%

63,960 343,232 775,663 196,738 659,708 355,486 135,688

1.1% 5.7% 12.8% 3.3% 10.9% 5.9% 2.2%

45,742

9.7%

18,384

7.5%

466,468

7.7%

63,971

13.6%

31,051

12.7%

662,987

11.0%

94,522

20.1%

45,114

18.4%

1,337,455

22.1%

37,942 21,922 11,047 470,591

8.1% 4.7% 2.3% 100.0%

18,678 9,412 5,729 245,198

7.6% 3.8% 2.3% 100.0%

524,925 288,538 232,923 6,043,771

8.7% 4.8% 3.9% 100.0%

2007-2011 American Community Survey 5-Year estimates from the U.S. Bureau of the Census.

7

The State Number Percent

City of Aurora, Kane, DuPage, Kendall and Will Counties, Illinois General Obligation Refunding Bonds, Series 2013

Unemployment The following table shows the trend in annual average unemployment rates for the City, DuPage and Kane Counties and the State. Annual Average Unemployment Rates(1) Calendar The City Year 2003 ................. 7.3% 2004 .................. 6.5% 2005 .................. 6.2% 2006 .................. 4.5% 2007 .................. 5.1% 2008 .................. 6.5% 2009 .................. 10.8% 2010 .................. 10.1% 2011 .................. 9.4% 2012 .................. 8.7% 2013(2) ............... 8.8% Notes:

(1) (2)

DuPage County 5.5% 5.0% 4.7% 3.4% 3.8% 5.0% 8.4% 8.5% 8.0% 7.3% 7.6%

Kane County 6.7% 6.1% 5.8% 4.3% 4.8% 6.2% 10.2% 10.5% 9.8% 8.8% 8.2%

Source: Illinois Department of Employment Security. Preliminary rates for the month of August 2013.

Building Permits Building Permits(1) (Excludes the Value of Land) Calendar Year 2003........... 2004........... 2005........... 2006........... 2007........... 2008........... 2009........... 2010........... 2011........... 2012........... Note:

(1)

No. of Permits 5,657 5,549 4,788 5,927 5,879 4,986 4,698 4,655 4,437 4,560

Source:

the City.

8

Value $452,373,788 399,277,210 349,972,698 426,349,462 282,181,142 362,969,837 322,872,033 130,576,466 95,684,453 167,355,926

State of Illinois 6.7% 6.2% 5.8% 4.6% 5.1% 6.4% 10.0% 10.4% 9.7% 8.9% 9.0%

City of Aurora, Kane, DuPage, Kendall and Will Counties, Illinois General Obligation Refunding Bonds, Series 2013

Housing The 2007-2011 American Community Survey 5-Year estimates from the U.S. Bureau of the Census reported that the median value of the City’s owner-occupied homes was $203,400, which compares with, $309,800 for DuPage County, $241,600 for Kane County and $198,500 for the State. The 2007-2011 American Community Survey market value of specified owner-occupied units for the City, DuPage County, Kane County and the State were as follows: Specified Owner-Occupied Units(1) The City Number Percent Value Under $50,000 .............. 690 1.6% $50,000 to $99,999 ......... 2,382 5.4% $100,000 to $149,999 ....... 6,918 15.8% $150,000 to $199,999 ....... 11,355 25.9% $200,000 to $299,999 ....... 13,418 30.7% $300,000 to $499,999 ....... 7,826 17.9% $500,000 to $999,999 ....... 1,083 2.5% 0.2% $1,000,000 or more ......... 94 Total .................... 43,766 100.0% Note:

(1)

Source:

DuPage County Number Percent 2,821 1.1% 4,676 1.8% 14,371 5.6% 26,931 10.6% 72,555 28.5% 91,527 36.0% 34,391 13.5% 7,320 2.9% 254,592 100.0%

Kane County Number Percent 2,351 1.8% 4,496 3.5% 12,804 9.9% 26,239 20.2% 39,120 30.1% 34,345 26.5% 9,337 7.2% 1,124 0.9% 129,816 100.0%

The State Number Percent 218,208 6.7% 451,967 13.8% 464,158 14.2% 518,957 15.8% 725,004 22.1% 613,486 18.7% 234,600 7.2% 53,191 1.6% 3,279,571 100.0%

2007-2011 American Community Survey 5-Year estimates from the U.S. Bureau of the Census.

Mortgage Status(1) The City Number Percent Value Housing Units with a Mortgage .... 36,946 84.4% 15.6% Housing Units without a Mortgage . 6,820 Total .......................... 43,766 100.0% Note:

(1)

Source:

DuPage County Number Percent 191,178 75.1% 63,414 24.9% 254,592 100.0%

Kane County Number Percent 102,200 78.7% 27,616 21.3% 129,816 100.0%

The State Number Percent 2,272,745 69.3% 1,006,826 30.7% 3,279,571 100.0%

2007-2011 American Community Survey 5-Year estimates from the U.S. Bureau of the Census.

Development Activity in the City of Aurora The following are highlights from four key areas of work that the City’s economic development targeted in 2012. Business Recruitment Grundfos, the world’s largest pump manufacturer based in Denmark, opened a 105,000 square foot facility at the Meridian Business Campus. The facility will employ about 95 workers. Dyson, the maker of vacuum cleaners, opened a 15,000 square foot call center at the Meridian Business Campus. The center will employ about 300 employees. Xpedx, a distributor of packaging and printing supplies, opened a 320,000 square foot facility at 901 Bilter Road. The facility will employee about 200 workers. Amerix, a technology solutions company, opened a 4,320 square foot center at the Aurora Corporate Center. The company will employ about 20 workers. Facility Supply Systems, a green janitorial supply company, opened a 5,940 square foot center at the Aurora Corporate Center. The company will employ approximately 16 workers. 9

City of Aurora, Kane, DuPage, Kendall and Will Counties, Illinois General Obligation Refunding Bonds, Series 2013

Air 802, the manufacturer of high quality for wired and wireless equipment, opened an 8,922 square foot center at the Aurora Corporate Center. The company will employ 10 employees. Fox Valley Farms, the dairy distributor of soft serve ice cream mix, is building a 25,000 square foot facility at the Aurora Corporate Center. The facility will employ 33 workers. Nexvision, a video/film production company, opened a 3,480 studio at the Aurora Corporate Center. The company will employ 5 workers. D-Wing, a construction company for residential/commercial remodeling, opened a 2,350 square foot center at 1585 Beverly Court. The company will employ 7 workers. Corporate Technical Center (Sequel Youth and Family Services), a center that develops/operates behavioral, emotional or physically challenged programs, opened a 40,000 square foot facility at 998 Bilter Road. The center will employ 175 workers. BLNB Holdings, a 7,705 square foot facility at 1585 Beverly Court will employ 11 workers. Business Expansion and Retention Toyota has added a training center to its facility at 2350 Sequoia Drive. Mitutoyo America, the world’s largest metrology company, is expanding its facility at 945 Corporate Center by 87,000 square feet. They will add 15 new jobs. Community and Regional Improvements Downer Street Bridges Reconstruction The City completed the reconstruction of two bridges in downtown Aurora at a cost of $7.83 million. This was completed in one construction season and brought the bridges back to their original look from 1904. Aurora University Aurora University is constructing a new $12 million STEM (Science, Technology, Engineering and Math) Academy building as a continuing partnership with the City and local school districts. Aurora Public Library The Aurora Public Library is constructing a new 92,000 square feet $28 million main library facility in downtown Aurora. RiverEdge Park The City completed construction of a grant funded $13.2 million outdoor park/music venue along the Fox River in downtown Aurora. Fiber Optic The City extended its fiber optic loop north of the East-West Tollway (I-88) at a total cost of $2 million. 10

City of Aurora, Kane, DuPage, Kendall and Will Counties, Illinois General Obligation Refunding Bonds, Series 2013

Workforce Development Teachers, counselors, and student attended the fifth annual ‘Did You Know?’ Manufacturing Career Awareness Event that took place in November 2011, at Waubonsee Community College’s Academic and Professional Center in Sugar Grove, Illinois. The event was open to area high school students who were looking to pursue a technical career. The event attracted 100 students rotating to different sessions. The sessions included: building a positive work/school culture, manufacturing companies with interactive displays, where to go for job training and further education, and how to have a successful career. Marketing and Public Relations The City’s economic development commission continued its successful “CEO Testimonial” web series on its website at www.investinaurora.org. In the series, chief executive officers from various Aurora firms have been interviewed about their companies and why they chose Aurora to locate their business. Aurora Area Commercial Development Totals(1) 2009 Job Creation .............. 937 Total Investment .......... $124,800,000 Note:

(1)

2010 644 $55,342,000

2011 1,145 $217,995,001

2012 887 $85,348,851

Development statistics are estimated.

Income According to the 2007-2011 American Community Survey 5-Year estimates from the U.S. Bureau of the Census, the City had a median family income of $70,530. This compares to $94,049 for DuPage County, $79,686 for Kane County and $69,658 for the State. The following table represents the distribution of family incomes for the City, DuPage County, Kane County and the State at the time of the 2007-2011 American Community Survey. Median Family Income(1) The City Number Percent Value Under $10,000 .............. 1,860 4.1% $10,000 to $14,999 ......... 1,087 2.4% $15,000 to $24,999 ......... 2,699 5.9% $25,000 to $34,999 ......... 4,143 9.0% $35,000 to $49,999 ......... 5,828 12.7% $50,000 to $74,999 ......... 8,592 18.7% $75,000 to $99,999 ......... 7,241 15.8% $100,000 to $149,999 ....... 8,165 17.8% $150,000 to $199,999 ....... 3,375 7.4% 6.3% $200,000 or more ........... 2,872 Total .................... 45,862 100.0% Note: (1)

Source:

DuPage County Number Percent 3,963 1.7% 3,250 1.4% 8,873 3.7% 13,840 5.8% 21,969 9.2% 38,936 16.3% 37,126 15.6% 53,390 22.4% 27,076 11.3% 30,153 12.6% 238,576 100.0%

Kane County Number Percent 3,723 2.9% 2,303 1.8% 6,923 5.4% 9,420 7.4% 14,394 11.3% 23,167 18.1% 20,552 16.1% 25,953 20.3% 11,354 8.9% 10,132 7.9% 127,921 100.0%

The State Number Percent 131,841 4.2% 86,610 2.7% 224,421 7.1% 260,262 8.3% 389,862 12.4% 606,737 19.2% 486,151 15.4% 547,784 17.4% 212,016 6.7% 207,841 6.6% 3,153,525 100.0%

2007-2011 American Community Survey 5-Year estimates from the U.S. Bureau of the Census.

11

City of Aurora, Kane, DuPage, Kendall and Will Counties, Illinois General Obligation Refunding Bonds, Series 2013

According to the 2007-2011 American Community Survey 5-Year estimates from the U.S. Bureau of the Census, the City had a median household income of $62,358. This compares to $77,598 for DuPage County, $69,496 for Kane County, and $56,576 for the State. The following table represents the distribution of household incomes for the City, DuPage County, Kane County and the State at the time of the 2007-2011 American Community Survey. Median Household Income(1) Number Value Under $10,000 .............. 2,981 $10,000 to $14,999 ......... 1,845 $15,000 to $24,999 ......... 4,713 $25,000 to $34,999 ......... 6,311 $35,000 to $49,999 ......... 8,749 $50,000 to $74,999 ......... 11,861 $75,000 to $99,999 ......... 9,348 $100,000 to $149,999 ....... 9,899 $150,000 to $199,999 ....... 3,696 $200,000 or more ........... 3,143 Total .................... 62,546 Note: (1)

Source:

The City Percent 4.8% 2.9% 7.5% 10.1% 14.0% 19.0% 14.9% 15.8% 5.9% 5.0% 100.0%

DuPage County Number Percent 10,554 3.1% 8,192 2.4% 20,974 6.2% 25,263 7.5% 37,669 11.2% 59,441 17.7% 49,399 14.7% 62,355 18.6% 29,651 8.8% 32,153 9.6% 335,651 100.0%

Kane County Number Percent 6,226 3.7% 5,186 3.1% 12,889 7.6% 14,557 8.6% 20,368 12.0% 31,799 18.8% 25,374 15.0% 29,719 17.5% 12,099 7.1% 11,311 6.7% 169,528 100.0%

The State Number Percent 324,506 6.8% 225,927 4.7% 480,204 10.1% 462,115 9.7% 628,998 13.2% 884,623 18.5% 627,813 13.2% 656,199 13.7% 243,765 5.1% 238,852 5.0% 4,773,002 100.0%

2007-2011 American Community Survey 5-Year estimates from the U.S. Bureau of the Census.

Per Capita Personal Income for the Ten Highest Income Counties in the State(1) Rank 2007-2011 1 ..................... Lake County ................. $38,512 2 ..................... DuPage County ............... 38,405 3 ..................... McHenry County .............. 32,318 4 ..................... Monroe County ............... 31,570 5 ..................... Kendall County .............. 31,325 6 ..................... Will County ................. 30,199 7 ..................... Kane County ................. 29,864 8 ..................... Woodford County ............. 29,886 9 ..................... Cook County ................. 29,920 10 ..................... Sangamon County ............. 29,167 Note:

(1)

Source: U.S. Bureau of the Census. American Community 5-Year Estimates.

12

2007-2011

City of Aurora, Kane, DuPage, Kendall and Will Counties, Illinois General Obligation Refunding Bonds, Series 2013

The following shows a ranking of median family income for the Chicago metropolitan area from the 2007-2011 American Community Survey. Ranking of Median Family Income(1) Ill. Family Income County DuPage County ............. $94,049 Lake County ............... 93,260 Kendall County ............ 90,696 McHenry County ............ 87,133 Will County ............... 86,372 Kane County ............... 79,686 Cook County ............... 65,842 Note:

(1)

Ill. Rank 1 2 3 4 5 8 20

Source: U.S. Bureau of the Census. 2007-2011 American Community 5-Year Estimates.

Retail Activity Following is a summary of the City’s sales tax receipts as collected and disbursed by the State. 1.00% Retailers’ Occupation, Service Occupation and Use Tax(1) Calendar Year State Sales Tax Annual Percent Distributions(2) Change + (-) Ending December 31 2003 .................................. $18,078,519 2.20%(3) 2004 .................................. 20,112,094 11.25% 2005 .................................. 21,014,769 4.49% 2006 .................................. 22,683,925 7.94% 2007 .................................. 22,027,898 (2.89%) 2008 .................................. 21,667,726 (1.64%) 2009 .................................. 19,778,567 (8.72%) 2010 .................................. 21,111,296 6.74% 2011 .................................. 22,585,797 6.98% 2012 .................................. 23,515,202 4.11% Growth from 2003 to 2012................................................................ 30.07% Notes:

(1) (2)

(3)

Source: the City. Tax distributions are based on records of the Illinois Department of Revenue relating to the 1% municipal portion of the Retailers’ Occupation, Service Occupation and Use Tax, collected on behalf of the City. The municipal 1% includes tax receipts from the sale of food and drugs which are not taxed by the State. The 2003 percentage is based on a 2002 sales tax of $17,688,784.

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

13

City of Aurora, Kane, DuPage, Kendall and Will Counties, Illinois General Obligation Refunding Bonds, Series 2013

PLAN OF FINANCING Bond proceeds will be used to fund an escrow (the “Escrow”) to advance refund a portion of the City’s outstanding General Obligation Bonds, Series 2006 (the “Refunded Bonds”), as listed below, and to pay the costs of issuance of the Bonds. The Refunded Bonds Outstanding General Obligation Bonds, Series 2006 Maturity Date 12/30/2013 ........ 12/30/2014 ........ 12/30/2015 ........ 12/30/2016 ........ 12/30/2017 ........ 12/30/2018 ........ 12/30/2019 ........ 12/30/2020 ........ 12/30/2021 ........ 12/30/2022 ........ 12/30/2023 ........ 12/30/2024 ........ 12/30/2025 ........ 12/30/2026 ........ 12/30/2027 ........ 12/30/2028 ........ 12/30/2029 ........ 12/30/2030 ........ 12/30/2031 ........ 12/30/2032 ........ 12/30/2033 ........ 12/30/2034 ........ 12/30/2035 ........ 12/30/2036 ........ Total ........... Note:

(1)

Outstanding Amount $ 900,000 935,000 965,000 1,015,000 1,060,000 1,105,000 1,150,000 1,205,000 1,255,000 1,315,000 1,380,000 1,445,000 1,520,000 1,585,000 810,000 850,000 885,000 930,000 970,000 1,025,000 1,070,000 1,125,000 1,185,000 1,240,000 $26,925,000

Amount Refunded(1) $ 0 0 0 0 0 0 1,150,000 1,205,000 1,255,000 1,315,000 1,380,000 1,445,000 1,520,000 0 0 0 0 0 0 0 0 0 0 0 $9,270,000

Redemption Price(s) N/A N/A N/A N/A N/A N/A 100% 100% 100% 100% 100% 100% 100% N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A

Redemption Dates(s) N/A N/A N/A N/A N/A N/A 12/30/2014 12/30/2014 12/30/2014 12/30/2014 12/30/2014 12/30/2014 12/30/2014 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A

Subject to change.

Bond proceeds will be used to purchase direct full faith and credit obligations of the United States of America (the “Government Securities”), the principal of which together with interest to be earned thereon will be sufficient (i) to pay when due the interest on the Refunded Bonds as stated above, and (ii) to pay principal of and call premium, if any, on the Refunded Bonds on their redemption dates. The remaining bond proceeds will be used to pay the costs of issuing the Bonds. The Government Securities will be held in an escrow account created pursuant to an escrow agreement (the “Escrow Agreement”) dated as of the date of delivery, between the City and Amalgamated Bank of Chicago, Chicago, Illinois, as Escrow Agent (the “Escrow Agent”). The mathematical calculations: (a) of the adequacy of the deposit made pursuant to the Escrow Agreement to provide for the payment of certain interest, principal and call premiums on the Refunded Bonds, and (b) supporting the opinion of Bond Counsel that the interest of the Bonds is excludable from gross income of the owners thereof for federal income tax purposes will be verified by Dunbar, Breitweiser & Company, LLP, Independent Certified Public Accountant, Bloomington, Illinois, at the time of delivery of the Bonds. All moneys and Government Securities deposited for the payment of Refunded Bonds, including interest thereon, are required to be applied solely and irrevocably to the payment of the Refunded Bonds. 14

City of Aurora, Kane, DuPage, Kendall and Will Counties, Illinois General Obligation Refunding Bonds, Series 2013

DEBT INFORMATION After issuance of the Bonds and the refunding, the City’s general obligation debt will be $165,975,000*. A large portion of the debt service for the City's general obligation debt is expected to be abated from sources other than general ad valorem taxes. The City also has outstanding $30,090,000 of Series 2006 Waterworks and Sewerage Revenue Bonds, $2,680,000 of Series 2012 Golf Course Revenue Bonds, $5,815,000 of debt certificates, and $10,184,710 of IEPA loans. General Obligation Debt Summary - By Issue(1) (Principal Only) Issue Series 2006(2)(3)(4)(5) ....................................... Series 2007(3) ................................................ Series 2008(3)(4) ............................................. Series 2009A(3) ............................................... Series 2009B(3) ............................................... Series 2011(3)(4) ............................................. Series 2012A(4) ............................................... Series 2012B(3) ............................................... Series 2012C(3) ............................................... The Bonds(3)(5) ............................................... Sub-Total(5) ................................................ Less: Self-Supporting Debt(3)(5) .............................. Total Property Tax Supported Debt(4)(5)(6) .................. Notes: (1) (2) (3)

(4)

(5) (6)

Outstanding Principal $17,655,000 8,190,000 74,860,000 12,915,000 4,665,000 8,955,000 19,200,000 6,905,000 3,165,000 9,465,000 $165,975,000 (89,995,000) $ 75,980,000

Source: the City. Excludes the bonds proposed to be refunded. Expected to be abated, in whole or in part, by the application of real estate transfer taxes, home-rule sales taxes, gaming taxes, stormwater management fees, water and sewer service fees, developer contributions, and other sources. A portion, $8,940,000 (excluding bonds proposed to be refunded), of Series 2006 is supported by property tax. A portion, $45,205,000, of Series 2008 is property tax supported, A portion, $2,635,000 of Series 2011 is property tax supported and all of Series 2012A is property tax supported. Subject to change. Does not include the portion of the Bonds expected to be supported by property tax.

*Subject to change.

15

City of Aurora, Kane, DuPage, Kendall and Will Counties, Illinois General Obligation Refunding Bonds, Series 2013

City General Obligation Bonded Debt(1) (Principal Only) Calendar Series Series Year 2006(2) 2007(2) 2013 ...... $ 900,000 $2,680,000 2014 ...... 935,000 2,665,000 2015 ...... 965,000 2,705,000 2016 ...... 1,015,000 140,000 2017 ...... 1,060,000 0 2018 ...... 1,105,000 0 2019 ...... 1,150,000 0 2020 ...... 1,205,000 0 2021 ...... 1,255,000 0 2022 ...... 1,315,000 0 2023 ...... 1,380,000 0 2024 ...... 1,445,000 0 2025 ...... 1,520,000 0 2026 ...... 1,585,000 0 2027 ...... 810,000 0 2028 ...... 850,000 0 2029 ...... 885,000 0 2030 ...... 930,000 0 2031 ...... 970,000 0 2032 ...... 1,025,000 0 2033 ...... 1,070,000 0 2034 ...... 1,125,000 0 2035 ...... 1,185,000 0 2036 ...... 1,240,000 0 2037 ...... 0 0 2038 ...... 0 0 2039 ...... 0 0 2040 ...... 0 0 2041 ...... 0 0 Total ... $26,925,000 $8,190,000 Notes: (1) (2) (3)

Series 2008(2) $ 2,860,000 1,650,000 1,695,000 1,765,000 1,835,000 1,910,000 1,985,000 2,065,000 2,160,000 2,255,000 2,355,000 2,460,000 2,575,000 2,695,000 2,825,000 2,960,000 3,100,000 3,245,000 3,400,000 3,570,000 3,750,000 3,935,000 4,130,000 4,340,000 4,555,000 4,785,000 0 0 0 $74,860,000

Series Series Series 2009A(2) 2009B(2) 2011 $ 920,000 $ 335,000 $1,225,000 940,000 345,000 1,330,000 960,000 350,000 1,360,000 985,000 360,000 1,405,000 1,010,000 370,000 1,445,000 1,040,000 380,000 1,335,000 1,075,000 395,000 330,000 1,110,000 405,000 330,000 1,150,000 420,000 95,000 1,195,000 420,000 100,000 1,240,000 440,000 0 1,290,000 445,000 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 $12,915,000 $4,665,000 $8,955,000

Series Series 2012A 2012B(2) $ 145,000 $ 480,000 270,000 525,000 270,000 535,000 270,000 540,000 270,000 555,000 280,000 570,000 275,000 580,000 290,000 595,000 540,000 605,000 550,000 625,000 660,000 640,000 675,000 655,000 690,000 0 710,000 0 725,000 0 745,000 0 760,000 0 780,000 0 805,000 0 825,000 0 850,000 0 875,000 0 900,000 0 925,000 0 955,000 0 990,000 0 1,020,000 0 1,055,000 0 1,095,000 0 $19,200,000 $6,905,000

Less: Bonds Total Series The Proposed to Outstanding 2012C(2) Bonds(2)(3) be Refunded(3) Bonds(3) $ 600,000 $ 0 $ 0 $ 10,145,000 625,000 0 0 9,285,000 635,000 45,000 0 9,520,000 645,000 45,000 0 7,170,000 660,000 45,000 0 7,250,000 0 50,000 0 6,670,000 0 1,200,000 (1,150,000) 5,840,000 0 1,240,000 (1,205,000) 6,035,000 0 1,270,000 (1,255,000) 6,240,000 0 1,315,000 (1,315,000) 6,460,000 0 1,365,000 (1,380,000) 6,700,000 0 1,415,000 (1,445,000) 6,940,000 0 1,475,000 (1,520,000) 4,740,000 0 0 0 4,990,000 0 0 0 4,360,000 0 0 0 4,555,000 0 0 0 4,745,000 0 0 0 4,955,000 0 0 0 5,175,000 0 0 0 5,420,000 0 0 0 5,670,000 0 0 0 5,935,000 0 0 0 6,215,000 0 0 0 6,505,000 0 0 0 5,510,000 0 0 0 5,775,000 0 0 0 1,020,000 0 0 0 1,055,000 0 0 0 1,095,000 $3,165,000 $9,465,000 $(9,270,000) $165,975,000

Cumulative Principal Retired(3) Amount Percent $ 10,145,000 6.11% 19,430,000 11.71% 28,950,000 17.44% 36,120,000 21.76% 43,370,000 26.13% 50,040,000 30.15% 55,880,000 33.67% 61,915,000 37.30% 68,155,000 41.06% 74,615,000 44.96% 81,315,000 48.99% 88,255,000 53.17% 92,995,000 56.03% 97,985,000 59.04% 102,345,000 61.66% 106,900,000 64.41% 111,645,000 67.27% 116,600,000 70.25% 121,775,000 73.37% 127,195,000 76.64% 132,865,000 80.05% 138,800,000 83.63% 145,015,000 87.37% 151,520,000 91.29% 157,030,000 94.61% 162,805,000 98.09% 163,825,000 98.70% 164,880,000 99.34% 165,975,000 100.00%

Source: the City. Expected to be abated from revenue from the Casino Gaming Taxes, the City home rule sales tax, water and sewer revenues, real estate transfer tax, developer fees, drainage fees and other sources. Subject to change.

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City of Aurora, Kane, DuPage, Kendall and Will Counties, Illinois General Obligation Refunding Bonds, Series 2013

Detailed Overlapping Bonded Debt(1) (As of August 1, 2013) Outstanding Debt(2)

Applicable to City Percent(3) Amount

Schools: School District Number 101 ........................... $ 94,240,000 9.82% School District Number 129 ........................... 100,545,000 49.97% School District Number 131 ........................... 89,332,519 88.03% School District Number 200 ........................... 187,120,000 0.06% School District Number 204 ........................... 279,260,000 32.35% School District Number 302 ........................... 107,378,381 3.70% School District Number 308 ........................... 382,013,190 1.15% Community College Number 502 ......................... 322,425,000 3.83% Community College Number 516 ......................... 84,916,775 16.91% Total Schools ...........................................................................

9,254,368 50,242,337 78,639,416 112,272 90,340,610 3,973,000 4,393,152 12,348,878 14,359,427 $263,663,460

Others: DuPage County ........................................ $244,955,000 4.28% Kane County .......................................... 77,945,000 11.40% DuPage County Forest Preserve District ............... 220,555,485 4.28% Kane County Forest Preserve District ................. 208,735,866 11.40% Batavia Library District ............................. 3,800,000 2.27% Batavia Park District ................................ 4,727,930 6.60% Fox Valley Park District ............................. 61,727,265 71.00% Naperville Park District ............................. 20,780,000 2.19% Total Others ............................................................................ Total Schools and Others Overlapping Bonded Debt ........................................

$ 10,484,074 8,885,730 9,439,775 23,795,889 86,260 312,043 43,826,358 455,082 $ 97,285,211 $360,948,671

Notes:

(1) (2) (3)

$

Source: DuPage and Kane Counties. Kendall and Will Counties have been excluded since they consist of approximately 10% of the City's 2012 EAV. Includes alternate revenue source bonds. Percentages are based on 2012 EAV, the most recent available.

Statement of Bonded Indebtedness(1) Amount Applicable City EAV of Taxable Property, 2012 ................. $ 3,251,499,874 Estimated Actual Value, 2012 ....................... $ 9,754,499,622

Ratio To Equalized Estimated Assessed Actual 100.00% 33.33% 300.00% 100.00%

Direct Bonded Debt (2)(3) .......................... $ Paid From Non-Property Tax Sources(3) .............. Net Direct Debt(2)(3) ............................ $

165,975,000 (89,995,000) 75,980,000

5.10% (2.77%) 2.33%

1.70% (0.92%) 0.78%

Overlapping Bonded Debt: Schools ............................................ $ Other .............................................. Total Overlapping Bonded Debt(4) ................. $ Total Direct and Overlapping Bonded Debt(2)(3) ... $

263,663,460 97,285,211 360,948,671 436,928,671

8.11% 2.99% 11.10% 13.43%

2.70% 1.00% 3.70% 4.48%

Notes:

(1) (2) (3) (4)

Source: Kane and DuPage Counties Clerks. Does not include water and sewer revenue bonds and the debt certificates. Subject to change. As of August 1, 2013.

17

Per Capita (2010 Census 197,899) $16,430.10 $49,290.29 $ $

838.69 (454.75) 383.94

$ 1,332.31 491.59 $ 1,823.90 $ 2,207.84

City of Aurora, Kane, DuPage, Kendall and Will Counties, Illinois General Obligation Refunding Bonds, Series 2013

PROPERTY ASSESSMENT AND TAX INFORMATION The City's 2012 total EAV is comprised of 74.44% residential, 17.21% commercial, 8.27% industrial, 0.03% farm, and 0.04% railroad property valuations. City Equalized Assessed Valuation(1) Property Class: 2008 Residential ........... $3,250,613,934 Farm.................. 1,244,196 Commercial ............ 664,325,891 Industrial ............ 303,808,658 Railroad .............. 853,846 Total ............... $4,220,846,525 ...................... Total by County: ...... Kane County ........... $2,001,714,381 DuPage County ......... 1,790,478,973 Kendall County ........ 131,450,428 Will County ........... 297,202,743 Total ............... $4,220,846,525 Percent Change +(-) ... 5.16%(2) Notes:

(1) (2)

2009 $3,215,060,697 1,367,617 652,132,768 317,484,799 1,022,515 $4,187,068,396

Levy Years 2010 $3,017,867,140 1,397,339 616,823,178 301,946,177 1,107,906 $3,939,141,740

2011 $2,730,761,797 1,514,150 582,824,054 282,100,080 1,334,424 $3,598,534,505

2012 $2,420,269,205 1,134,056 559,731,771 268,945,014 1,419,828 $3,251,499,874

$1,959,260,286 1,808,716,577 130,434,946 288,656,587 $4,187,068,396 (0.80%)

$1,809,362,652 1,728,074,480 120,944,577 280,760,031 $3,939,141,740 (5.92%)

$1,625,951,658 1,606,824,629 112,030,593 253,727,625 $3,598,534,505 (8.65%)

$1,416,825,772 1,495,257,879 100,884,689 238,531,534 $3,251,499,874 (9.64%)

Source: Kane, DuPage, Kendall and Will County Clerks. Percentage change based on 2007 EAV of $4,013,571,269.

Kane County Representative Tax Rates(1) (Per $100 EAV) 2008 City Rates: General ................................... $1.1949 Bonds and Interest ........................ 0.0957 I.M.R.F. .................................. 0.0000 Police Pension ............................ 0.1608 Firefighters Pension ...................... 0.1453 Library ................................... 0.2448 Prior Period Adjustment ................... 0.0635 Total City Rates(2) ..................... $1.9050 .......................................... Kane County ............................... 0.3336 Kane County Forest Preserve ............... 0.1932 Aurora Township ........................... 0.1450 Aurora Township Road Funds ................ 0.0691 Fox Valley Park District .................. 0.4014 Unit School District 129 .................. 4.1225 Community College District 516 ............ 0.3995 Total Tax Rates(3) ...................... $7.5693 Notes:

(1) (2) (3)

2009

Levy Years 2010

2011

2012

$1.1333 0.0965 0.0000 0.2309 0.1912 0.2542 0.0046 $1.9107

$1.0228 0.1026 0.0688 0.2578 0.2117 0.2548 0.0497 $1.9682

$1.1560 0.1123 0.0756 0.2230 0.1975 0.2503 0.0000 $2.0147

$ 1.2794 0.1243 0.1011 0.2632 0.2233 0.2853 0.0000 $ 2.2765

0.3398 0.1997 0.1486 0.0703 0.4122 4.1835 0.4043 $7.6691

0.3730 0.2201 0.1664 0.0764 0.4803 4.2740 0.4070 $7.9653

0.3990 0.2609 0.1882 0.0860 0.5286 5.1603 0.4710 $9.1087

0.4336 0.2710 0.2162 0.0979 0.5863 5.8896 0.5312 $10.3022

Source: Kane County Clerk and the City. The City is a home-rule municipality and based on the 1970 Illinois Constitution has no statutory tax rate limits. Representative tax rates for other government units are from Aurora Township tax code 5, which represents the largest portion of the City’s 2012 EAV in Kane County.

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City of Aurora, Kane, DuPage, Kendall and Will Counties, Illinois General Obligation Refunding Bonds, Series 2013

DuPage County Representative Tax Rates(1) (Per $100 EAV) 2008 City Rates: General ................................... $1.2070 Bond & Interest ........................... 0.0954 I.M.R.F. .................................. 0.0000 Police Pension ............................ 0.1624 Firefighters Pension ...................... 0.1468 Library ................................... 0.2473 Total City Rates(2) ..................... $1.8589 .......................................... DuPage County ............................. 0.1557 DuPage County Forest Preserve ............. 0.1206 Naperville Township ....................... 0.0420 Naperville Township Road Funds ............ 0.0376 Fox Valley Park District .................. 0.3990 Unit School District 204 .................. 4.4858 Community College District 502 ............ 0.1858 Total Tax Rates(3) ...................... $7.2854 Notes:

(1) (2) (3)

2009

Levy Years 2010

2011

2012

$1.1488 0.0965 0.0000 0.2250 0.1862 0.2543 $1.9108

$1.0725 0.1026 0.0696 0.2604 0.2139 0.2548 $1.9738

$1.1676 0.1123 0.0764 0.2253 0.1995 0.2503 $2.0314

$1.2923 0.1243 0.1021 0.2658 0.2256 0.2855 $2.2956

0.1554 0.1217 0.0419 0.0370 0.4219 4.4987 0.2127 $7.4001

0.1659 0.1321 0.0454 0.0401 0.4793 4.8927 0.2349 $7.9642

0.1773 0.1414 0.0483 0.0411 0.5340 5.2200 0.2495 $8.4430

0.1929 0.1542 0.0379 0.0433 0.5905 5.7047 0.2681 $9.2872

Source: DuPage County Clerk and the City. The City is a home-rule municipality and based on the 1970 Illinois Constitution has no statutory tax rate limits. Representative tax rates for other government units are from Naperville Township tax code 7045, which represents the largest portion of the City's 2012 EAV in DuPage County.

Will County Representative Tax Rates(1) (Per $100 EAV) 2009

Levy Years 2010

2011

2012

The City: Total City Rates(2) ..................... $1.8392

$1.9097

$1.9674

$ 1.9052

$ 2.3849

Will County ............................... 0.4751 Will County Building Commission ........... 0.0191 Will County Forest Preserve ............... 0.1445 Wheatland Township ........................ 0.0314 Wheatland Township Road & Bridge .......... 0.0427 City of Aurora SSA 34-X ................... 0.3172 Fox Valley Park District .................. 0.3915 School District 308-U ..................... 5.0600 Community College District 516 ............ 0.3842 Total Tax Rates ......................... $8.7049

0.4833 0.0191 0.1519 0.0319 0.0433 0.3216 0.4201 5.0600 0.4052 $8.8461

0.5077 0.0197 0.1567 0.0331 0.0474 0.3529 0.4671 5.8245 0.4131 $9.7896

0.5351 0.0200 0.1693 0.0328 0.0503 0.4066 0.4897 6.6317 0.4309 $10.6716

0.5696 0.0212 0.1859 0.0344 0.0528 0.4421 0.6247 7.3758 0.5729 $12.2643

2008

Notes:

(1) (2) (3)

Source: DuPage County Clerk and the City. The City is a home-rule municipality and based on the 1970 Illinois Constitution has no statutory tax rate limits. Representative tax rates for other government units are from Naperville Township tax code 7045, which represents the largest portion of the City's 2012 EAV in Will County.

19

City of Aurora, Kane, DuPage, Kendall and Will Counties, Illinois General Obligation Refunding Bonds, Series 2013

City Tax Extensions and Collections(1) (Includes Township Road and Bridge Levy, Excludes Library) Levy Year 2004 2005 2006 2007 2008 2009 2010 2011 2012

Coll. Taxes Year Extended(2) ........ 2005 ......... $49,168,579 ........ 2006(5) ...... 58,402,714 ........ 2007 ......... 62,607,912 ........ 2008 ......... 67,328,337 ........ 2009 ......... 69,106,548 ........ 2010 ......... 70,028,262 ........ 2011 ......... 68,267,554 ........ 2012 ......... 64,174,532 ........ 2013 ......... 65,940,316

Notes:

(1) (2) (3) (4) (5)

Current Collections Amount(3) Percent $49,499,767 100.67% 57,680,483 98.76% 62,173,915 99.31% 67,176,454 99.77% 68,721,377 99.44% 69,894,824 99.81% 68,101,873 99.76% 64,036,650 99.79% ------ In Collection ------

Total Collections Amount(4) Percent $49,774,378 101.23% 58,037,291 99.37% 62,501,611 99.83% 67,179,966 99.78% 69,183,939 100.11 69,917,907 99.84% 68,102,983 99.76% 64,037,326 99.79% ------ In Collection ------

Source: the City’s audited financial statements. Taxes Extended have been adjusted for abatements and Township Road and Bridge. Current collections in both Kane and DuPage Counties include taxes paid under protest. Total collections include back taxes, penalties, etc. After the effect of a prior-year adjustment.

Principal City Taxpayers(1) County Taxpayer Name Business/Service 2012 EAV(2) Kane............ Simon/Chelsea Chicago Development, LLC .............. Shopping Center ................................... $ 43,833,612 DuPage/Kane ..... Liberty Illinois LP ................................. Real Estate ....................................... 35,823,623 DuPage .......... Westfield Shoppingtown .............................. Shopping Center ................................... 32,591,040 Kane............ Toyota Motor Sales, U.S.A., Inc. .................... Automotive ........................................ 25,090,163 Kane............ Aurora Industrial Holding Company LLC ............... Real Estate ....................................... 18,667,454 DuPage .......... AIMCO ............................................... Apartments ........................................ 14,144,440 DuPage .......... Amli Residential Property ........................... Residential Property .............................. 12,222,010 DuPage .......... Reliant Energy Aurora LP ............................ Industrial Property ............................... 8,633,020 DuPage .......... Fox Valley Villages LLC ............................. Real Property ..................................... 7,684,430 Kane............ Wal-Mart Real Estate Business Trust ................. Retail ............................................ 7,582,577 Total ................................................................................................................. $206,272,369 Ten Largest Taxpayers as a Percent of the City's 2012 EAV ($3,251,499,874) ............................................ 6.34% Notes:

(1) (2)

Source: DuPage and Kane Counties. Kendall and Will Counties have been excluded since they consist of approximately 10% of the City's 2012 EAV. Every effort has been made to seek out and report the largest taxpayers. However, many of the taxpayers listed contain multiple parcels, and it is possible that some parcels and their valuations have been overlooked. The 2012 EAV is the most current available.

REAL PROPERTY ASSESSMENT, TAX LEVY AND COLLECTION PROCEDURES Tax Levy and Collection Procedures Local assessment officers determine the assessed valuation of taxable real property and railroad property not held or used for railroad operations. The Illinois Department of Revenue (the “Department”) assesses certain other types of taxable property, including railroad property held or used for railroad operations. Local assessment officers’ valuation determinations are subject to review at the county level and then, in general, to equalization by the Department. Such equalization is achieved by applying to each county’s assessments a multiplier determined by the Department. The purpose of equalization is to provide a common basis of assessments among counties by adjusting assessments toward the statutory standard of 33-1/3% of fair cash value. Farmland is assessed according to a statutory formula which takes into account factors such as productivity and crop mix. Taxes are extended against the assessed values after equalization.

20

City of Aurora, Kane, DuPage, Kendall and Will Counties, Illinois General Obligation Refunding Bonds, Series 2013

Property tax levies of each taxing body are filed in the office of the county clerk of each county in which territory of that taxing body is located. The county clerk computes the rates and amount of taxes applicable to taxable property subject to the tax levies of each taxing body and determines the dollar amount of taxes attributable to each respective parcel of taxable property. The county clerk then supplies to the appropriate collecting officials within the county the information needed to bill the taxes attributable to the various parcels therein. After the taxes have been collected, the collecting officials distribute to the various taxing bodies their respective shares of the taxes collected. Taxes levied in one calendar year are due and payable in two installments during the next calendar year. Taxes that are not paid when due, or that are not paid by mail and postmarked on or before the due date, are subject to a penalty of 1-1/2% per month until paid. Unpaid property taxes, together with penalties, interest and costs, constitute a lien against the property subject to the tax. Exemptions An annual General Homestead Exemption (the “General Homestead Exemption”) provides that the Equalized Assessed Valuation (“EAV”) of certain property owned and used for residential purposes (“Residential Property”) may be reduced by the amount of any increase over the 1977 EAV, up to a maximum reduction of $3,500 for assessment years prior to assessment year 2004 in counties with less than 3,000,000 inhabitants, and a maximum reduction of $5,000 for assessment year 2004 through 2007 in all counties. Additionally, the maximum reduction is $5,500 for assessment year 2008 and the maximum reduction is $6,000 for assessment year 2009 and thereafter in all counties. The Homestead Improvement Exemption applies to Residential Properties that have been improved or rebuilt in the 2 years following a catastrophic event. The exemption is limited to $45,000 through December 31, 2003, and $75,000 per year beginning January 1, 2004 and thereafter, to the extent the assessed value is attributable solely to such improvements or rebuilding. Additional exemptions exist for senior citizens. The Senior Citizens Homestead Exemption (“Senior Citizens Homestead Exemption”) operates annually to reduce the EAV on a senior citizen’s home for assessment years prior to 2004 by $2,000 in counties with less than 3,000,000 inhabitants. For assessment years 2004 and 2005, the maximum reduction is $3,000 in all counties. For assessment years 2006 and 2007, the maximum reduction is $3,500 in all counties. In addition, for assessment year 2008 and thereafter, the maximum reduction is $4,000 for all counties. Furthermore, beginning with assessment year 2003, for taxes payable in 2004, property that is first occupied as a residence after January 1 of any assessment year by a person who is eligible for the Senior Citizens Homestead Exemption must be granted a pro rata exemption for the assessment year based on the number of days during the assessment year that the property is occupied as a residence by a person eligible for the exemption. A Senior Citizens Assessment Freeze Homestead Exemption (“Senior Citizens Assessment Freeze Homestead Exemption”) freezes property tax assessments for homeowners, who are 65 and older and receive a household income not in excess of the maximum income limitation. The maximum income limitation is $35,000 for years prior to 1999, $40,000 for assessment years 1999 through 2003, $45,000 for assessment years 2004 and 2005, $50,000 from assessment years 2006 and 2007 and for assessments year 2008 and after, the maximum income limitation is $55,000. In general, the Senior Citizens Assessment Freeze Homestead Exemption limits the annual real property tax bill of such property by granting to qualifying senior citizens an exemption as to a portion of the valuation of their property. In counties with a population of 3,000,000 or more, the exemption for all assessment years is equal to the EAV of the residence in the assessment year for which application is made less the base amount. Furthermore, for those counties with a population of less than 3,000,000, the Senior Citizens Assessment Freeze Homestead Exemption is as follows: through assessment year 2005 and for assessment year 2007 and later, the exempt amount is the difference between (i) the current EAV of their residence and (ii) the base amount, which is the EAV of a senior citizen’s residence for the year prior to the year in which he or she first qualifies and applies for the Exemption (plus the EAV of improvements since such year). For assessment year 2006, the amount of the Senior Citizens Assessment Freeze Homestead Exemption phases out as the amount of household income increases. The amount of the Senior Citizens Assessment Freeze Homestead Exemption is calculated by using the same formula as above, and then multiplying the resulting value by a ratio that varies according to household income. 21

City of Aurora, Kane, DuPage, Kendall and Will Counties, Illinois General Obligation Refunding Bonds, Series 2013

Another exemption available to disabled veterans operates annually to exempt up to $70,000 of the Assessed Valuation of property owned and used exclusively by such veterans or their spouses for residential purposes. Also, certain property is exempt from taxation on the basis of ownership and/or use, such as public parks, not-for-profit schools and public schools, churches, and not-for-profit hospitals and public hospitals. However, individuals claiming exemption under the Disabled Persons’ Homestead Exemption (“Disabled Persons’ Homestead Exemption”) or the Disabled Veterans Standard Homestead Exemption (“Disabled Veterans Standard Homestead Exemption”) cannot claim the aforementioned exemption. Furthermore, beginning with assessment year 2007, the Disabled Persons’ Homestead Exemption provides an annual homestead exemption in the amount of $2,000 for property that is owned and occupied by certain persons with a disability. However, individuals claiming exemption as a disabled veteran or claiming exemption under the Disabled Veterans Standard Homestead Exemption cannot claim the aforementioned exemption. In addition, the Disabled Veterans Standard Homestead Exemption provides disabled veterans an annual homestead exemption starting with assessment year 2007 and thereafter. Specifically, (i) those veterans with a serviceconnected disability of 75% are granted an exemption of $5,000 and (ii) those veterans with a service-connected disability of less than 75%, but at least 50% are granted an exemption of $2,500. Furthermore, the veteran’s surviving spouse is entitled to the benefit of the exemption, provided that the spouse has legal or beneficial title of the homestead, resides permanently on the homestead and does not remarry. Moreover, if the property is sold by the surviving spouse, then an exemption amount not to exceed the amount specified by the current property tax roll may be transferred to the spouse’s new residence, provided that it is the spouse’s primary residence and the spouse does not remarry. However, individuals claiming exemption as a disabled veteran or claiming exemption under the Disabled Persons’ Homestead Exemption cannot claim the aforementioned exemption. Beginning with assessment year 2007, the Returning Veterans’ Homestead Exemption (“Returning Veterans’ Homestead Exemption”) is available for property owned and occupied as the principal residence of a veteran in the assessment year the veteran returns from an armed conflict while on active duty in the United States armed forces. This provision grants a homestead exemption of $5,000, which is applicable in all counties. In order to apply for the Returning Veterans’ Homestead Exemption, the individual must pay real estate taxes on the property, own the property or have either a legal or an equitable interest in the property, “or a leasehold interest of land on which a single family residence is located, which is occupied as a principle residence of a veteran returning from an armed conflict involving the armed forces of the United States who has an ownership interest therein, legal, equitable or as a lessee, and on which the veteran is liable for the payment of property taxes.” Those individuals eligible for the Returning Veterans’ Homestead Exemption may claim the Returning Veterans’ Homestead Exemption, in addition to other homestead exemptions, unless otherwise noted. Truth in Taxation Law Legislation known as the Truth in Taxation Law (the “Law”) limits the aggregate amount of certain taxes which can be levied by, and extended for, a taxing district to 105% of the amount of taxes extended in the preceding year unless specified notice, hearing and certification requirements are met by the taxing body. The express purpose of the Law is to require published disclosure of, and hearing upon, an intention to adopt a levy in excess of the specified levels.

22

City of Aurora, Kane, DuPage, Kendall and Will Counties, Illinois General Obligation Refunding Bonds, Series 2013

FINANCIAL INFORMATION Basis of Accounting The City records and reports its financial transactions in accordance with generally accepted accounting principles. Consequently, the City prepares government-wide financial statements and fund financial statements each year. The government-wide financial statements are designed to provide a broad overview of the City’s finances and are prepared using the accrual basis of accounting. The fund financial statements provide information on the financial position and the financial operating results for the City’s various accounting entities (funds). Either the accrual or the modified accrual basis of accounting is used depending upon the type of fund concerned. The financial statements of the City are audited annually by certified public accountants. The financial statements that follow are summaries and do not purport to be the complete, audited financial statements, copies of which are available upon request. Investment Policy On December 14, 1999, the City adopted a formal policy governing its investment activities. Although the City is a home-rule community, the City’s investment policy includes a provision that restricts its investments to those permitted by Illinois’ Public Funds Investment Act, which applies to non-home rule communities. In doing so, the City restricted itself to investment instruments with limited risk. It is the policy of the City to apply the “prudent investor rule” which states: “Investments shall be made with judgment and care under circumstances then prevailing, which persons of prudence, discretion and intelligence exercise in the management of their own affairs, not for speculation, but for investment, considering the probable safety of their capital as well as the probable income to be derived.” For funds other than the Police Pension Fund, Firefighters’ Pension Fund and Retiree Health Insurance Trust Fund, the City concentrates its investments primarily in U.S. Treasury Bills, Certificates and Notes with maturities of 24 months or less to meet objectives of (1) preservation of capital; (2) liquidity; (3) maximizing rate of return; and (4) maintaining public trust. Police Pension and Firefighters’ Pension Funds are invested under like statutory provisions, but include maturity periods up to 30 years. Over 90% of the pension funds are managed by six separate nationally recognized money managers in accordance with oversight policies of the respective governing Pension Fund Board of Trustees. Money in the Retiree Health Insurance Trust Fund is invested pursuant to a trust agreement and an investment policy that permit the purchase of both fixed-income and equity securities. The trust agreement and investment policy also require reasonable diversification of assets so as to reduce the potential for large losses. Currently, the fund has engaged one outside fixed-income securities manager and one outside equity securities manager to assist with investment activities. The fund is governed by a five-member board. No Consent or Updated Information Requested of the Auditor The tables and excerpts (collectively, the “Excerpted Financial Information”) contained in this “FINANCIAL INFORMATION” section and in APPENDIX A are from the audited financial statements of the City, including the audited financial statements for the fiscal year ended December 31, 2012 (the “2012 Audit”). The 2012 Audit has been prepared by Sikich LLP, Independent Certified Public Accountants and Advisors, Aurora, Illinois, (the “Auditor”), and approved by formal action of the City Council. The City has not requested the Auditor to update information contained in the Excerpted Financial Information; nor has the City requested that the Auditor consent to the use of the Excerpted Financial Information in this Official Statement. Other than as expressly set forth in this Official Statement, the financial information contained in the Excerpted Financial Information has not been updated since the date of the 2012 Audit. The inclusion of the Excerpted Financial Information in this Official Statement in and of itself is not intended to demonstrate the fiscal condition of the City since the date of the 2012 Audit. Questions or inquiries relating to financial information of the City since the date of the 2012 Audit should be directed to the City.

23

City of Aurora, Kane, DuPage, Kendall and Will Counties, Illinois General Obligation Refunding Bonds, Series 2013

Summary Financial Information The following tables are summaries and do not purport to be the complete audits, copies of which are available upon request. See APPENDIX A for excerpts of the City's 2012 fiscal year audit. Statement of Net Position Governmental Activities(1) 2008 ASSETS: Cash and Investments ......................... Receivables, Net of Allowance: Property Taxes: General and Pension Levies ................. Special Service Area Levies ................ Other Taxes ................................. Loans Receivable ............................ Rental Fees ................................. Development Participation ................... Interest .................................... Miscellaneous ............................... Deferred Charges/Prepaid Expenses ............ Due from Fiduciary Funds ..................... Due from Other Governments ................... Due to/From Other Funds ...................... Property Held for Resale ..................... Prepaid Items ................................ Restricted Assets: Restricted Cash and Investments ............. Capital Assets: Non-Depreciable ............................. Depreciable (Net of Accumulated Depreciation) DEFERRED OUTFLOWS OF RESOURCES: Unamortized Loss of Refunding ............... Total Assets and Deferred Outflows of Resources ............................. LIABILITIES: Accounts Payable ............................. Accrued Payroll .............................. Retainage Payable ............................ Accrued Interest Payable ..................... Other Unearned Revenue ....................... Due to Fiduciary Funds ....................... Due to Other Governments ..................... Deposits Payable ............................. Noncurrent Liabilities: Due Within One Year ......................... Due in More than one Year ................... Unamortized Bond Premium .................... Total Liabilities .......................... DEFERRED INFLOWS OF RESOURCES: Unavailable Revenue - Property Taxes ......... Total Liabilities and Deferred Inflows of Resources ............................. NET POSITION: Investment in Capital Assets, Net of Related Debt ................................ Restricted For: Working Cash ................................ Redevelopment/Economic Development .......... Streets and Transportation .................. Public Safety ............................... Sanitation .................................. Health and Welfare .......................... Debt Service ................................ Unrestricted ................................. Total Net Position ........................ Note:

(1)

$197,615,207

2009 $147,481,074

Audited as of December 31 2010 2011 $133,242,577

2012

$145,373,765

$140,988,737

67,678,790 1,369,892 14,493,977 3,060,404 19,209 3,015,000 0 11,697,136 1,563,353 0 5,614,036 0 0 0

71,424,540 1,359,854 15,986,157 3,137,926 113,857 2,015,000 0 12,447,814 1,437,188 0 6,194,982 (127,476) 0 0

68,635,680 1,472,964 19,285,335 2,971,808 26,707 1,045,000 0 16,247,520 1,285,260 92,099 5,725,433 (7,783) 574,163 0

63,850,924 1,482,620 18,770,481 2,825,291 88,387 0 0 14,152,344 1,319,271 0 6,617,370 0 452,616 0

64,815,751 1,427,567 18,271,596 462,166 825,278 0 2,232 11,625,045 0 0 6,944,557 0 337,695 111,402

1,018,460

1,083,435

1,025,935

1,074,260

0

198,580,532 286,085,150

164,750,317 377,649,617

187,921,068 385,585,180

174,455,165 389,084,262

178,705,204 392,136,758

596,226

674,898

606,162

254,232

421,130

$792,407,372

$805,629,183

$825,735,108

$819,800,988

$817,075,118

$ 12,099,892 8,092,316 4,283,060 366,277 13,746,661 0 309,942 1,220,131

$ 16,206,955 9,530,566 1,137,427 377,562 16,345,221 851,332 259,291 1,097,258

$ 8,596,198 9,353,088 415,943 55,935 19,468,967 317,789 240,026 1,302,175

$ 7,357,863 9,770,536 509,958 44,323 24,256,564 102,854 375,633 1,231,179

$ 6,753,520 10,900,746 1,180,298 71,841 16,657,742 25,421 507,297 1,103,615

15,264,029 259,107,405 2,206,618 $316,696,331

16,908,398 276,676,724 1,811,040 $341,201,774

18,178,479 274,329,391 0 $332,257,991

17,716,891 267,084,717 0 $328,450,518

19,598,918 258,438,318 0 $315,237,716

$ 68,715,089

$ 72,362,793

$ 69,649,401

$ 64,959,672

$ 66,143,673

$385,411,420

$413,564,567

$401,907,392

$393,410,190

$381,381,389

$360,690,801

$373,628,698

$403,827,533

$400,801,028

$418,850,676

440,186 14,468,971 6,481,385 20,673,332 180,230 0 11,879,494 (7,818,447) $406,995,952

441,213 12,413,210 6,387,830 18,627,653 208,778 0 770,788 (20,413,554) $392,064,616

441,844 17,956,030 6,703,361 17,079,971 311,273 0 2,135,047 (24,627,343) $423,827,716

442,102 22,453,977 8,949,374 19,140,246 0 4,959,129 1,530,550 (31,885,608) $426,390,798

442,550 22,829,022 10,650,562 18,852,666 0 5,817,166 1,823,882 (43,572,795) $435,693,729

Source: the City.

24

City of Aurora, Kane, DuPage, Kendall and Will Counties, Illinois General Obligation Refunding Bonds, Series 2013

Statement of Activities Governmental Activities(1) 2008

Audited Fiscal Year Ended December 31 2009 2010 2011

2012

GOVERNMENTAL ACTIVITIES: Net Function (Expense) Revenue: General Government ........................... Public Safety ................................ Streets and Transportation ................... Health and Welfare ........................... Culture and Recreation ....................... Sanitation ................................... Economic Development ......................... Interest ..................................... Total Governmental Activities ..............

$ (15,129,865) (93,427,891) (33,958,497) (5,279,746) (8,109,716) (91,077) (13,329,304) (6,863,786) $(176,189,882)

$ (19,389,876) (100,681,753) (16,756,827) (5,469,475) (8,215,166) (177,500) (21,699,994) (9,193,424) $(181,584,015)

$ (9,411,079) (101,718,844) (4,089,275) 964,097 (5,475,559) 0 (11,858,643) (9,010,597) $(140,599,900)

$ (14,019,525) (101,049,465) (17,005,264) (757,966) (4,571,614) 0 (11,204,962) (8,690,804) $(157,299,600)

$ (16,019,582) (105,237,726) (12,695,798) (544,925) 5,228,472 0 (14,673,809) (8,005,624) $(151,948,992)

GENERAL REVENUES: Taxes: Property and Replacement .................... Sales ....................................... Utility ..................................... Income ...................................... Real Estate Transfer ........................ Food and Beverage ........................... Gaming ...................................... Hotel/Motel ................................. Other ....................................... Investment Income ............................ Miscellaneous ................................ Special Item - Disposal of Land .............. Contributions ................................ Transfers .................................... Total General Revenues .....................

$ 79,201,939 39,760,622 10,756,816 15,589,361 1,805,490 3,616,354 12,729,676 417,698 830,184 4,114,618 1,593,393 0 29,302,023 1,000,000 $ 200,718,174

$ 82,845,255 36,434,096 10,362,550 13,385,104 1,260,381 3,419,497 11,809,475 373,696 855,881 1,375,305 1,008,521 0 0 865,000 $ 163,994,761

$ 85,791,335 38,657,829 10,125,801 12,960,748 1,352,542 3,554,765 10,624,299 393,253 913,533 294,340 1,160,863 0 0 550,000 $ 166,379,308

$ 82,425,418 40,911,661 10,231,247 14,334,299 1,396,683 3,728,894 10,241,111 436,624 905,063 405,583 1,003,328 (6,957,229) 0 800,000 $ 159,862,682

$ 79,226,198 41,957,531 10,163,505 17,388,869 1,921,008 4,002,735 9,044,541 463,512 1,019,382 197,271 1,306,832 (4,973,299) 0 725,000 $ 162,443,085

Change in Net Position .......................

$ 24,528,292

$ (17,589,254)

$ 25,779,408

$

2,563,082

$ 10,494,093

Net Position, Beginning ......................

$ 384,730,901

$ 406,995,952

$ 392,064,616

$ 423,827,716

$ 426,390,798

2,657,918

5,983,692

0

(1,191,162)

$ 392,064,616

$ 423,827,716

$ 426,390,798

$ 435,693,729

Prior Period Adjustment ..................... Net Position, Ending ......................... Note:

(1)

(2,263,241) $ 406,995,952

Source: the City.

25

City of Aurora, Kane, DuPage, Kendall and Will Counties, Illinois General Obligation Refunding Bonds, Series 2013

General Fund Balance Sheet(1) 2009

2008 ASSETS: Cash and Investments ......................... Receivables: Property Taxes .............................. Due From Other Governments .................. Other Taxes ................................. Other Receivables ........................... Due From Other Funds ......................... Total Assets ............................... DEFERRED OUTFLOWS OF RESOURCES: None ......................................... Total Assets and Deferred Outflows of Resources .............................. LIABILITIES: Accounts Payable ............................. Accrued Payroll .............................. Deposits Payable ............................. Due to Other Funds ........................... Due to Fiduciary Funds ....................... Due to Other Governments ..................... Unearned Revenue ............................. Total Liabilities .......................... DEFERRED INFLOWS OF RESOURCES: Unavailable Revenue - Property Taxes ......... Total Liabilities and Deferred Inflows of Resources .............................. FUND BALANCES: Unassigned ................................... Total Liabilities, Deferred Outflows of Resources Fund Balances ................... Note:

(1)

Audited as of December 31 2010

2011

2012

$ 22,869,363

$ 20,318,906

$ 24,865,994

$ 18,380,550

$ 25,643,967

63,718,790 235,029 13,335,405 8,569,396 0 $108,727,983

67,464,540 328,748 14,377,133 9,138,577 216,009 $111,843,913

64,675,680 442,526 18,074,413 9,010,458 37,190 $117,106,261

59,874,349 246,113 15,774,883 9,123,302 106,159 $103,505,356

60,855,751 324,947 16,885,445 8,632,129 0 $112,342,239

$

$

$

$

$

0

0

0

0

0

$108,727,983

$111,843,913

$117,106,261

$103,505,356

$112,342,239

$

5,803,573 8,088,213 0 2,885,000 0 162,765 8,989,714 $ 25,929,265

$ 4,567,383 9,508,949 0 0 851,332 206,245 9,719,477 $ 24,853,386

$ 3,882,801 9,287,606 0 9,656,892 317,789 172,123 9,592,135 $ 32,909,346

$ 3,467,510 9,743,991 0 0 102,854 313,919 9,375,222 $ 23,003,496

$ 2,228,324 10,872,872 1,094,415 6,500,000 25,421 485,856 9,166,869 $ 30,373,757

$ 63,386,235

$ 67,043,295

$ 64,283,670

$ 59,517,612

$ 60,756,201

$ 89,315,500

$ 91,896,681

$ 97,193,016

$ 82,521,108

$ 91,129,958

$ 19,412,483

$ 19,947,232

$ 19,913,245

$ 20,984,248

$ 21,212,281

$108,727,983

$111,843,913

$117,106,261

$103,505,356

$112,342,239

Source: the City.

26

City of Aurora, Kane, DuPage, Kendall and Will Counties, Illinois General Obligation Refunding Bonds, Series 2013

General Fund Revenues and Expenditures(1) Audited Years Ending December 31 2009 2010

2011

2012

$ 65,992,477 3,908,752 34,591,849 12,960,748 10,125,801 3,554,765 393,253 1,309,478 8,330,828 4,081,237 25,293 216,615 $145,491,096

$ 64,387,553 3,394,432 27,595,814 14,334,299 10,231,247 3,728,894 436,624 1,326,045 7,901,634 3,616,937 14,896 295,875 $137,264,250

$ 60,148,522 3,385,646 29,529,923 17,388,869 10,163,505 4,002,735 463,512 1,175,006 9,510,126 4,434,260 20,583 272,695 $140,495,382

$ 15,621,175 93,151,648 13,934,641 186,020 0 7,182,201 11,201,617 $141,277,302

$ 17,579,883 102,573,670 11,839,036 0 6,166,732 5,391,620 1,974,142 $145,525,083

$ 16,777,012 97,430,776 10,180,929 0 5,982,685 3,948,222 1,873,623 $136,193,247

$ 16,837,826 100,267,856 10,440,927 0 6,257,915 4,060,108 2,102,717 $139,967,349

$ 4,050,112

$

534,749

$

$ 1,071,003

$

528,033

Other Financing Sources: Transfers Out ............................... Total Other Financing Sources ..............

$ $

0 0

$ $

0 0

$ $

$ $

0 0

$ $

(300,000) (300,000)

Excess of Revenues and Other Sources Over (Under) Expenditures ........................ Fund Balance - January 1 ..................... Ending Fund Balance - December 31 ............

$ 4,050,112 15,362,371 $ 19,412,483

$

534,749 19,412,483 $ 19,947,232

$

$ 1,071,003 19,913,245 $ 20,984,248

$

2008 REVENUES: Property Tax ................................. Replacement Tax .............................. Sales Tax .................................... State Income Tax ............................. Utility Tax .................................. Food and Beverage Tax ........................ Other Taxes .................................. Other Governmental Sources ................... Licenses, Permits, Fees and Fines ............ Charges for Services ......................... Interest Income .............................. All Other .................................... Total Revenues .............................

$ 63,185,395 4,339,489 33,235,235 15,589,361 10,756,816 3,616,354 417,698 1,271,476 8,237,026 5,889,360 321,801 305,036 $147,165,047

$ 65,150,394 3,567,756 32,545,538 13,385,104 10,362,550 3,419,497 373,696 1,189,488 6,496,137 4,971,108 91,731 259,052 $141,812,051

EXPENDITURES: General Government ........................... Public Safety ............................... Streets and Transportation ................... Sanitation ................................... Health and Welfare ........................... Culture and Recreation ....................... Other ........................................ Total Expenditures .........................

$ 16,343,126 91,406,304 15,193,832 252,275 0 7,858,681 12,060,717 $143,114,935

Excess of Revenues Over (Under) Expenditures .

Note:

(1)

Source: the City.

27

(33,987) 0 0

(33,987) 19,947,232 $ 19,913,245

228,033 20,984,248 $ 21,212,281

City of Aurora, Kane, DuPage, Kendall and Will Counties, Illinois General Obligation Refunding Bonds, Series 2013

General Fund Budget Financial Information(1) Estimated Actual Twelve Months Ending 12/31/13 REVENUES: Property Tax .............................................. Replacement Tax ........................................... Sales Tax ................................................. State Income Tax .......................................... Utility Tax ............................................... Food and Beverage Tax ..................................... Other Taxes ............................................... Other Governmental Sources ................................ Licenses, Permits, Fees and Fines ......................... Charges for Services ...................................... Interest Income ........................................... All Other ................................................. Total Revenues ..........................................

$61,377,900 3,532,000 36,010,000 19,000,000 9,790,000 5,150,000 562,600 1,425,700 6,090,700 5,654,000 105,000 453,401 $149,151,301

EXPENDITURES: General Government ........................................ Public Safety ............................................ Streets and Transportation ................................ Health and Welfare ........................................ Culture and Recreation .................................... Economic Development ...................................... Total Expenditures ......................................

$18,179,171 104,717,121 11,812,255 6,962,191 4,376,101 1,880,116 $147,926,955

Excess of Revenues Over (Under) Expenditures ..............

$

Note:

(1)

1,224,346

Source: the City.

Fund Balance Policy On September 14, 1999, the City adopted a policy establishing a target fund balance for the General Fund. Under that policy, the General Fund balance target for a given fiscal year is the greater of a) $1,000,000 plus 25% of the prior fiscal year’s property tax levy, or b) 10% of expenditures and other financing uses of the General Fund as originally budgeted for the given fiscal year. A 3/5 vote of the City Council is required for expenditures and/or budgeting which would cause the balance to decrease below the target. Recognitions For its Comprehensive Annual Financial Reports for the fiscal years ended December 31, 1998 through 2011 financial statements, the City received from the Government Finance Officers Association (the “GFOA”) the Certificate of Achievement for Excellence in Financial Reporting. The Certificate of Achievement is a prestigious national award recognizing conformance with the highest standards for preparation of state and local government financial reports. In addition, the GFOA recognized the City with the Distinguished Budget Presentation Award for its 2000 through 2013 budgets. In order to receive this award, a governmental unit must publish a budget document that meets program criteria as a policy document, an operations guide, a financial plan, and a communications device. The Chief Financial Officer/City Treasurer is a past President of the Illinois Government Finance Officers Association (“IGFOA”) and a current Member-at-Large on the IGFOA Executive Board.

28

City of Aurora, Kane, DuPage, Kendall and Will Counties, Illinois General Obligation Refunding Bonds, Series 2013

PENSION AND RETIREMENT OBLIGATIONS The latest audited pension information is contained in APPENDIX D herein. The police and fire pensions are subject to audit. Currently, the pensions are not fully funded. The state law provides for fully funding over an extended period. The City annually funds the actuarially required contribution. In the event that contributions and investment revenue are insufficient for the pension obligation, the City will be required to increase its contribution by increasing revenues or decreasing expenditures on other services. The Illinois Municipal Retirement Fund (IMRF) is held by the State, which sets the annual contribution by the City. The full annual amount is funded each year. In addition to providing the pension benefits described above, the City provides postemployment healthcare benefits for retired employees through a single-employer defined benefit plan (OPEB plan). The benefit levels, retiree contributions, and employer contributions are governed by the City and can be amended by the City through its personnel manual and union contracts. Retiree and employer contributions are deposited into a separate trust fund of the City. Benefits are paid from the assets of the trust fund. Employer contributions are made based upon a consideration of an annual actuarial valuation. REGISTRATION, TRANSFER AND EXCHANGE See also APPENDIX B for information on registration, transfer and exchange of book-entry bonds. The Bonds will be initially issued as book-entry bonds. The City shall cause books (the “Bond Register”) for the registration and for the transfer of the Bonds to be kept at the principal office maintained for the purpose by the Bond Registrar in Chicago, Illinois. The City will authorize to be prepared, and the Bond Registrar shall keep custody of, multiple bond blanks executed by the City for use in the transfer and exchange of Bonds. Any Bond may be transferred or exchanged, but only in the manner, subject to the limitations, and upon payment of the charges as set forth in the Bond Ordinance. Upon surrender for transfer or exchange of any Bond at the principal office maintained for the purpose by the Bond Registrar, duly endorsed by, or accompanied by a written instrument or instruments of transfer in form satisfactory to the Bond Registrar and duly executed by the registered owner or such owner’s attorney duly authorized in writing, the City shall execute and the Bond Registrar shall authenticate, date and deliver in the name of the registered owner, transferee or transferees (as the case may be) a new fully registered Bond or Bonds of the same maturity and interest rate of authorized denominations, for a like aggregate principal amount. The execution by the City of any fully registered Bond shall constitute full and due authorization of such Bond, and the Bond Registrar shall thereby be authorized to authenticate, date and deliver such Bond, provided, however, the principal amount of outstanding Bonds of each maturity authenticated by the Bond Registrar shall not exceed the authorized principal amount of Bonds for such maturity less Bonds previously paid. The Bond Registrar shall not be required to transfer or exchange any Bond following the close of business on the fifteenth day of the month in which an interest payment date occurs on such Bond (known as the record date), nor to transfer or exchange any Bond after notice calling such Bond for redemption has been mailed, nor during a period of fifteen days next preceding mailing of a notice of redemption of any Bonds.

29

City of Aurora, Kane, DuPage, Kendall and Will Counties, Illinois General Obligation Refunding Bonds, Series 2013

The person in whose name any Bond shall be registered shall be deemed and regarded as the absolute owner thereof for all purposes, and payment of the principal of or interest on any Bonds shall be made only to or upon the order of the registered owner thereof or such owner’s legal representative. All such payments shall be valid and effectual to satisfy and discharge the liability upon such Bond to the extent of the sum or sums so paid. No service charge shall be made for any transfer or exchange of Bonds, but the City or the Bond Registrar may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any transfer or exchange of Bonds except in the case of the issuance of a Bond or Bonds for the unredeemed portion of a bond surrendered for partial redemption. TAX EXEMPTION Federal tax law contains a number of requirements and restrictions which apply to the Bonds, including investment restrictions, periodic payments of arbitrage profits to the United States of America, requirements regarding the proper use of bond proceeds and the facilities financed therewith, and certain other matters. The City has covenanted to comply with all requirements that must be satisfied in order for the interest on the Bonds to be excludible from gross income for federal income tax purposes. Failure to comply with certain of such covenants could cause the interest on the Bonds to become includible in gross income for federal income tax purposes retroactively to the date of issuance of the Bonds. Subject to the City’s compliance with the above-referenced covenants, under present law, in the opinion of Bond Counsel, interest on the Bonds is excludible from the gross income of the owners thereof for federal income tax purposes, and is not included as an item of tax preference in computing the federal alternative minimum tax for individuals and corporations, but the interest on the 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 City with respect to certain material facts within the City’s knowledge and upon the mathematical computation of the yield on the Bonds and the yield on certain investments by Dunbar, Breitweiser & Company, LLP, Independent 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 result. The Internal Revenue Code of 1986, as amended (the “Code”), includes provisions for an alternative minimum tax (“AMT”) for corporations in addition to the corporate regular tax in certain cases. The AMT for a corporation, if any, depends upon the corporation’s alternative minimum taxable income (“AMTI”), which is the corporation’s taxable income with certain adjustments. One of the adjustment items used in computing the AMTI of a corporation (with certain exceptions) is an amount equal to 75% of the excess of such corporation’s “adjusted current earnings” over an amount equal to its AMTI (before such adjustment item and the alternative tax net operating loss deduction). “Adjusted current earnings” would generally include certain tax-exempt interest, including the interest on the Bonds. Ownership of the 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 Bonds should consult their tax advisors as to the applicability of any such collateral consequences. The issue price (the “Issue Price”) for each maturity of the Bonds is the price at which a substantial amount of such maturity of the Bonds is first sold to the public. The Issue Price of a maturity of the Bonds may be different from the price set forth, or the price corresponding to the yield set forth, on the cover page hereof. 30

City of Aurora, Kane, DuPage, Kendall and Will Counties, Illinois General Obligation Refunding Bonds, Series 2013

If the Issue Price of a maturity of the Bonds is less than the principal amount payable at maturity, the difference between the Issue Price of each such maturity, if any, of the Bonds (the “OID Bonds”) and the principal amount payable at maturity is original issue discount. For an investor who purchases an OID Bond in the initial public offering at the Issue Price for such maturity and who holds such OID Bond to its stated maturity, subject to the condition that the City complies with the covenants discussed above, (a) the full amount of original issue discount with respect to such OID Bond constitutes interest which is excludable from the gross income of the owner thereof for federal income tax purposes; (b) such owner will not realize taxable capital gain or market discount upon payment of such OID Bond at its stated maturity; (c) such original issue discount is not included as an item of tax preference in computing the alternative minimum tax for individuals and corporations under the Code, but is taken into account in computing an adjustment used in determining the alternative minimum tax for certain corporations under the Code, as described above; and (d) the accretion of original issue discount in each year may result in certain other collateral federal income tax consequences in each year even though a corresponding cash payment may not be received until a later year. Based upon the stated position of the Illinois Department of Revenue under Illinois income tax law, accreted original issue discount on such OID Bonds is subject to taxation as it accretes, even though there may not be a corresponding cash payment until a later year. Owners of OID Bonds should consult their own tax advisors with respect to the state and local tax consequences of original issue discount on such OID Bonds. Owners of Bonds who dispose of Bonds prior to the stated maturity (whether by sale, redemption or otherwise), purchase Bonds in the initial public offering, but at a price different from the Issue Price, or purchase Bonds subsequent to the initial public offering should consult their own tax advisors. If a Bond is purchased at any time for a price that is less than the Bond’s stated redemption price at maturity or, in the case of an OID Bond, its Issue Price plus accreted original issue discount (the “Revised Issue Price”), the purchaser will be treated as having purchased a 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 Bond is disposed of (to the extent such accrued discount does not exceed gain realized) or, at the purchaser’s election, as it accrues. Such treatment would apply to any purchaser who purchases an OID Bond for a price that is less than its Revised Issue Price. The applicability of the market discount rules may adversely affect the liquidity or secondary market price of such Bond. Purchasers should consult their own tax advisors regarding the potential implications of market discount with respect to the Bonds. An investor may purchase a 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 Bond 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 Bond. Investors who purchase a 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 Bond. There are or may be pending in the Congress of the United States of America legislative proposals, including some that carry retroactive effective dates, that, if enacted, could alter or amend the federal tax matters referred to above or affect the market value of the 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 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.

31

City of Aurora, Kane, DuPage, Kendall and Will Counties, Illinois General Obligation Refunding Bonds, Series 2013

The Internal Revenue Service (the “Service”) has an ongoing program of auditing tax-exempt obligations to determine whether, in the view of the Service, interest on such tax-exempt obligations is includible in the gross income of the owners thereof for federal income tax purposes. It cannot be predicted whether or not the Service will commence an audit of the Bonds. If an audit is commenced, under current procedures, the Service may treat the City 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 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 Bonds, are in certain cases required to be reported to the Service. Additionally, backup withholding may apply to any such payments to any 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 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 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 Bonds. Prospective purchasers of the Bonds should consult their tax advisors regarding the applicability of any such state and local taxes. QUALIFIED TAX-EXEMPT OBLIGATIONS Subject to the City’s compliance with certain covenants, in the opinion of Bond Counsel, the Bonds are “qualified tax-exempt obligations” under the small issuer exception provided under Section 265(b)(3) of the Code, which affords banks and certain other financial institutions more favorable treatment of their deduction for interest expense than would otherwise be allowed under Section 265(b)(2) of the Code. CONTINUING DISCLOSURE The City will enter into a Continuing Disclosure Undertaking (the “Undertaking”) for the benefit of the beneficial owners of the Bonds to send certain information annually and to provide notice of certain events to the Municipal Securities Rulemaking Board (the “MSRB”) pursuant to the requirements of Section (b)(5) of Rule 15c2-12 (the “Rule”) adopted by the Securities and Exchange Commission (the “Commission”) under the Securities Exchange Act of 1934. No person, other than the City, has undertaken, or is otherwise expected, to provide continuing disclosure with respect to the Bonds. The information to be provided on an annual basis, the events which will be noticed on an occurrence basis and a summary of other terms of the Undertaking, including termination, amendment and remedies, are set forth below under “THE UNDERTAKING.” The City has represented that it has not failed to comply in all material respects with each and every undertaking previously entered into by it pursuant to the Rule. A failure by the City to comply with the Undertaking will not constitute a default under the Bond Ordinance and the beneficial owners of the Bonds are limited to the remedies described in the Undertaking. See “THE UNDERTAKING - Consequences of Failure of the City to Provide Information.” The City must report any failure to comply with the Undertaking in accordance with the Rule. Any broker, dealer or municipal securities dealer must consider such report before recommending the purchase or sale of the Bonds in the secondary market. Consequently, such a failure may adversely affect the transferability and liquidity of the Bonds and their market price. Bond Counsel expresses no opinion as to whether the Undertaking complies with the requirements of Section (b)(5) of the Rule. 32

City of Aurora, Kane, DuPage, Kendall and Will Counties, Illinois General Obligation Refunding Bonds, Series 2013

THE UNDERTAKING The following is a brief summary of certain provisions of the Undertaking of the City, and does not purport to be complete. The statements made under this caption are subject to the detailed provisions of the Undertaking, a copy of which is available upon request from the City. Annual Financial Information Disclosure The City covenants that it will disseminate its Annual Financial Information and its Audited Financial Statements, if any (as described below) to the MSRB in such manner and format and accompanied by identifying information as is prescribed by the MSRB or the Commission at the time of delivery of such information within 210 days after the last day of the City’s fiscal year (currently December 31). If Audited Financial Statements are not available when the Annual Financial Information is filed, the City will file unaudited financial statements. The City will submit Audited Financial Statements to the MSRB’s Electronic Municipal Market Access (“EMMA”) system within 30 days after availability to the City. MSRB Rule G-32 requires all EMMA filings to be in word-searchable PDF format. This requirement extends to all documents to be filed with EMMA, including financial statements and other externally prepared reports. “Annual Financial Information” means: 1. 2. 3. 4.

The table under the heading of “Retailers’ Occupation, Service Occupation and Use Tax” within this Official Statement; All of the tables under the heading “PROPERTY ASSESSMENT AND TAX INFORMATION” within this Official Statement; All of the tables under the heading “DEBT INFORMATION” within this Official Statement; and All of the tables under the heading “FINANCIAL INFORMATION” within this Official Statement.

“Audited Financial Statements” means financial statements of the City as audited annually by independent certified public accountants. Audited Financial Statements are expected to continue to be prepared according to Generally Accepted Accounting Principles as applicable to governmental units (i.e., as subject to the pronouncements of the Governmental Accounting Standards Board and subject to any express requirements of State law). Reportable Events Disclosure The City covenants that it will disseminate in a timely manner (not in excess of ten business days after the occurrence of the Reportable Event) Reportable Events Disclosure to the MSRB in such manner and format and accompanied by identifying information as is prescribed by the MSRB or the Commission at the time of delivery of such information. MSRB Rule G-32 requires all EMMA filings to be in word-searchable PDF format. This requirement extends to all documents to be filed with EMMA, including financial statements and other externally prepared reports. The “Events” are: 1. 2. 3. 4. 5.

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

33

City of Aurora, Kane, DuPage, Kendall and Will Counties, Illinois General Obligation Refunding Bonds, Series 2013

6.

7. 8. 9. 10. 11. 12. 13.

14.

Adverse tax opinions, the issuance by the Internal Revenue Service of proposed or final determinations of taxability, Notices of Proposed Issue (IRS Form 5701-TEB) or other material notices or determinations with respect to the tax status of the security, or other material events affecting the tax status of the security Modifications to the rights of security holders, if material Bond calls, if material, and tender offers Defeasances Release, substitution or sale of property securing repayment of the securities, if material Rating changes Bankruptcy, insolvency, receivership or similar event of the City* The consummation of a merger, consolidation, or acquisition involving the City or the sale of all or substantially all of the assets of the City, other than in the ordinary course of business, the entry into a definitive agreement to undertake such an action or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms, if material Appointment of a successor or additional trustee or the change of name of a trustee, if material.

Consequences of Failure of the City to Provide Information The City shall give notice in a timely manner to the MSRB of any failure to provide disclosure of Annual Financial Information and Audited Financial Statements when the same are due under the Undertaking. In the event of a failure of the City to comply with any provision of the Undertaking, the beneficial owner of any Bond may seek mandamus or specific performance by court order, to cause the City to comply with its obligations under the Undertaking. A default under the Undertaking shall not be deemed a default under the Bond Ordinance, and the sole remedy under the Undertaking in the event of any failure of the City to comply with the Undertaking shall be an action to compel performance. Amendment; Waiver Notwithstanding any other provision of the Undertaking, the City by ordinance authorizing such amendment or waiver, may amend the Undertaking, and any provision of the Undertaking may be waived, if: (a) (i) The amendment or the waiver is made in connection with a change in circumstances that arises from a change in legal requirements, including, without limitation, pursuant to a “no-action” letter issued by the Commission, a change in law, or a change in the identity, nature, or status of the City, or type of business conducted; or (ii) The Undertaking, as amended, or the provision, as waived, would have complied with the requirements of the Rule at the time of the primary offering, after taking into account any amendments or interpretations of the Rule, as well as any change in circumstances; and (b) The amendment or waiver does not materially impair the interests of the beneficial owners of the Bonds, as determined by parties unaffiliated with the City (such as Bond Counsel). *This event is considered to occur when any of the following occur: the appointment of a receiver, fiscal agent or similar officer for the City in a proceeding under the U.S. Bankruptcy Code or in any other proceeding under state or federal law in which a court or governmental authority has assumed jurisdiction over substantially all of the assets or business of the City, or if such jurisdiction has been assumed by leaving the existing governing body and officials or officers in possession but subject to the supervision and orders of a court or governmental authority, or the entry of an order confirming a plan of reorganization, arrangement or liquidation by a court or governmental authority having supervision or jurisdiction over substantially all of the assets or business of the City.

34

City of Aurora, Kane, DuPage, Kendall and Will Counties, Illinois General Obligation Refunding Bonds, Series 2013

In the event that the Commission or the MSRB or other regulatory authority approves or requires Annual Financial Information or notices of a Reportable Event to be filed with a central post office, governmental agency or similar entity other than the MSRB or in lieu of the MSRB, the City shall, if required, make such dissemination to such central post office, governmental agency or similar entity without the necessity of amending the Undertaking. Termination of Undertaking The Undertaking shall be terminated if the City shall no longer have any legal liability for any obligation on or relating to repayment of the Bonds under the Bond Ordinance. The City shall give notice to the MSRB in a timely manner if this paragraph is applicable. Additional Information Nothing in the Undertaking shall be deemed to prevent the City from disseminating any other information, using the means of dissemination set forth in the Undertaking or any other means of communication, or including any other information in any Annual Financial Information or Audited Financial Statements or notice of occurrence of a Reportable Event, in addition to that which is required by the Undertaking. If the City chooses to include any information from any document or notice of occurrence of a Reportable Event in addition to that which is specifically required by the Undertaking, the City shall have no obligation under the Undertaking to update such information or include it in any future disclosure or notice of occurrence of a Reportable Event. Dissemination of Information; Dissemination Agent When filings are required to be made with the MSRB in accordance with the Undertaking, such filings are required to be made through its EMMA system for municipal securities disclosure or through any other electronic format or system prescribed by the MSRB for purposes of the Rule. The City may, from time to time, appoint or engage a Dissemination Agent to assist it in carrying out its obligations under the Undertaking, and may discharge any such Agent, with or without appointing a successor Dissemination Agent. OPTIONAL REDEMPTION Bonds due December 30, 2015-2021, inclusive, are not subject to optional redemption. Bonds due December 30, 2022-2025, inclusive, are callable in whole or in part on any date on or after December 30, 2021, at a price of par and accrued interest. If less than all the Bonds are called, they shall be redeemed in such principal amounts and from such maturities as determined by the City and within any maturity by lot. The Bond Registrar will give notice of redemption, identifying the Bonds (or portions thereof) to be redeemed, by mailing a copy of the redemption notice by first class mail not less than thirty (30) days nor more than sixty (60) days prior to the date fixed for redemption to the registered owner of each Bond (or portion thereof) to be redeemed at the address shown on the registration books maintained by the Bond Registrar. Unless moneys sufficient to pay the redemption price of the Bonds to be redeemed are received by the Bond Registrar prior to the giving of such notice of redemption, such notice may, at the option of the City, state that said redemption will be conditional upon the receipt of such moneys by the Bond Registrar on or prior to the date fixed for redemption. If such moneys are not received, such notice will be of no force and effect, the City will not redeem such Bonds, and the Bond Registrar will give notice, in the same manner in which the notice of redemption has been given, that such moneys were not so received and that such Bonds will not be redeemed. Otherwise, prior to any redemption date, the City will deposit with the Bond Registrar an amount of money sufficient to pay the redemption price of all the Bonds or portions of Bonds which are to be redeemed on the date. 35

City of Aurora, Kane, DuPage, Kendall and Will Counties, Illinois General Obligation Refunding Bonds, Series 2013

Subject to the provisions for a conditional redemption described above, notice of redemption having been given as described above and in the Bond Ordinance, the Bonds or portions of Bonds so to be redeemed will, on the date fixed for redemption, become due and payable at the redemption price therein specified, and from and after such date (unless the City shall default in the payment of the redemption price) such Bonds or portions of Bonds shall cease to bear interest. Upon surrender of such Bonds for redemption in accordance with said notice, such Bonds will be paid by the Bond Registrar at the redemption price. LITIGATION There is no litigation of any nature now pending or threatened restraining or enjoining the issuance, sale, execution or delivery of the Bonds, or in any way contesting or affecting the validity of the Bonds or any proceedings of the City taken with respect to the issuance or sale thereof. CERTAIN LEGAL MATTERS Certain legal matters incident to the authorization, issuance and sale of the Bonds are subject to the approving legal opinion of Chapman and Cutler LLP, Chicago, Illinois, as Bond Counsel (the “Bond Counsel”), who has been retained by, and acts as, Bond Counsel to the City. Bond Counsel has not been retained or consulted on disclosure matters, and has not undertaken to review or verify the accuracy, completeness or sufficiency of this Official Statement or other offering material relating to the 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 City, reviewed only those portions of this Official Statement involving the description of the Bonds, the security for the Bonds (excluding forecasts, projections, estimates or any other financial or economic information in connection therewith), the description of the federal tax exemption of the interest on the Bonds and the “bank-qualified” status of the Bonds, if any. This review was undertaken solely at the request and for the benefit of the City, and did not include any obligation to establish or confirm factual matters set forth herein. OFFICIAL STATEMENT AUTHORIZATION This Official Statement has been authorized for distribution to prospective purchasers of the Bonds. All statements, information, and statistics herein are believed to be correct but are not guaranteed by the consultants or by the City, and all expressions of opinion, whether or not so stated, are intended only as such. INVESTMENT RATING The City has supplied certain information and material concerning the Bonds and the City to the rating service shown on the cover page of this Official Statement, including certain information and materials which may not have been included in this Official Statement, as part of its application for an investment rating on the 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. Generally, such rating service bases its rating on such information and material, and also on such investigations, studies and assumptions that it may undertake independently. There is no assurance that such rating will continue for any given period of time or that it may not be lowered or withdrawn entirely by such rating service if, in its judgment, circumstances so warrant. Any such downward change in or withdrawal of such rating may have an adverse effect on the secondary market price of the Bonds. An explanation of the significance of the investment rating may be obtained from the rating agency: Standard & Poor’s Ratings Services, 55 Water Street, New York, New York 10041, telephone 212-438-2000. The City will provide appropriate periodic credit information to the rating service to maintain a rating on the Bonds.

36

City of Aurora, Kane, DuPage, Kendall and Will Counties, Illinois General Obligation Refunding Bonds, Series 2013

DEFEASANCE The Bonds are being defeased by the irrevocable deposit of full faith and credit obligations of the United States of America, obligations the timely payment of which are guaranteed by the United States Treasury, or certificates of participation in a trust comprised solely of full faith and credit obligations of the United States of America (collectively, the “Government Obligations”) with a bank or trust company acting as escrow agent. Any such deposit must be of sufficient amount that the receipts from the Government Obligations plus any cash on deposit will be sufficient to pay debt service on the Bonds when due or as called for redemption. UNDERWRITING The Bonds were offered for sale by the City at a public, competitive sale on October 22, 2013. The best bid submitted at the sale was submitted by ____________________ (the “Underwriter”). The City awarded the contract for sale of the Bonds to the Underwriter at a price of $___________. The Underwriter has represented to the City that the Bonds have been subsequently re-offered to the public initially at the yields or prices set forth in the addendum to this Official Statement. FINANCIAL ADVISOR The City has engaged Speer Financial, Inc. as financial advisor (the “Financial Advisor”) in connection with the issuance and sale of the Bonds. The Financial Advisor is a Registered Municipal Advisor in accordance with the rules of the Municipal Securities Rulemaking Board (the “MSRB”). The Financial Advisor will not participate in the underwriting of the Bonds. The financial information included in the Official Statement has been compiled by the Financial Advisor. Such information does not purport to be a review, audit or certified forecast of future events and may not conform with accounting principles applicable to compilations of financial information. The Financial Advisor is not a firm of certified public accountants and does not serve in that capacity or provide accounting services in connection with the Bonds. The Financial Advisor is not obligated to undertake any independent verification of or to assume any responsibility for the accuracy, completeness or fairness of the information contained in this Official Statement, nor has the Financial Advisor entered into an agreement with the City regarding the City’s continuing disclosure undertaking. CERTIFICATION We have examined this Official Statement dated October 4, 2013, for the $9,465,000* General Obligation Refunding Bonds, Series 2013 of the City, believe it to be true and correct and will provide to the purchaser of the Bonds at the time of delivery a certificate confirming to the purchaser that to the best of our knowledge and belief information in the Official Statement was at the time of acceptance of the bid for the Bonds and, including any addenda thereto, was at the time of delivery of the Bonds true and correct in all material respects and does not include any untrue statement of a material fact, nor does it omit the statement of any material fact required to be stated therein, or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading.

/s/ THOMAS J. WEISNER Mayor CITY OF AURORA Kane, DuPage, Kendall and Will Counties, Illinois

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

*Subject to change.

37

APPENDIX A CITY OF AURORA KANE, DUPAGE, KENDALL AND WILL COUNTIES, ILLINOIS EXCERPTS OF FISCAL YEAR 2012 AUDITED FINANCIAL STATEMENTS

A-1 817,075,118

421,130

Total Deferred Outflows of Resources

Total Assets and Deferred Outflows of Resources

421,130

236,975,592

32,165

32,165

236,943,427

181,538,488

392,136,758 816,653,988

15,774,823

178,705,204

22,744,499 1,995,849

5,588,344 109,734 146,448 6,626,204 2,419,038

$

64,815,751 1,427,567 18,271,596 462,166 825,278 2,232 11,625,045 6,944,557 337,695 111,402 -

$ 140,988,737 -

Total

1,054,050,710

453,295

453,295

1,053,597,415

573,675,246

194,480,027

64,815,751 1,427,567 18,271,596 5,588,344 462,166 825,278 111,966 11,625,045 146,448 13,570,761 337,695 111,402 2,419,038

$ 163,733,236 1,995,849

Primary Government Governmental Business-Type Activities Activities

December 31, 2012

DEFERRED OUTFLOWS OF RESOURCES Unamortized Loss on Refunding

Total Assets

ASSETS Cash and Investments Restricted Cash and Investments Receivables, Net of Allowance Where Applicable Property Taxes General and Pension Levies Special Service Areas Levies Other Taxes Utility Customers Loans Receivable Rental Fees Interest Miscellaneous Inventory Due from Other Governments Property Held for Resale Prepaid Items Other Postemployment Benefits Asset Capital Assets Nondepreciable Depreciable (Net of Accumulated Depreciation)

CITY OF AURORA, ILLINOIS

STATEMENT OF NET POSITION

$

51,408,848

278

278

51,408,570

7,310,596

5,128,617

9,638,809 205,704 90,828 1,037,306 -

27,996,710 -

Component Unit Aurora Public Library

1,823,882 442,550 18,852,666 10,650,562 5,817,166 22,829,022 (43,572,795) $ 435,693,729

TOTAL NET POSITION

418,850,676

381,381,389

66,143,673

NET POSITION Net Investment in Capital Assets Restricted for Debt Service Working Cash Public Safety Streets and Transportation Health and Welfare Economic Development Unrestricted

Total Liabilities and Deferred Inflows of Resources

Total Deferred Inflows of Resources

66,143,673

315,237,716

Total Liabilities DEFERRED INFLOWS OF RESOURCES Unavailable Revenue - Property Taxes

19,598,918 258,438,318

6,753,520 10,900,746 1,180,298 71,841 16,657,742 507,297 25,421 1,103,615

LIABILITIES Accounts Payable Accrued Payroll Retainage Payable Accrued Interest Payable Other Unearned Revenue Due to Other Governments Due to Fiduciary Funds Deposits Payable Noncurrent Liabilities Due Within One Year Due in More than One Year $

3,184,371 24,765,720

160,897,280

48,128,221

-

-

48,128,221

1,877,897 42,603,174

1,239,165 639,469 5,761 154,567 823,756 138,611 645,821

$ 188,847,371

$

5,008,253 442,550 18,852,666 10,650,562 5,817,166 22,829,022 (18,807,075)

579,747,956

429,509,610

66,143,673

66,143,673

363,365,937

21,476,815 301,041,492

7,992,685 11,540,215 1,186,059 226,408 17,481,498 645,908 25,421 1,749,436

Total

$ 624,541,100

$

Primary Government Governmental Business-Type Activities Activities

December 31, 2012

STATEMENT OF NET POSITION (Continued)

CITY OF AURORA, ILLINOIS

$

$

18,008,514

62,306 8,649,057

9,297,151

33,400,334

9,624,689

9,624,689

23,775,645

971,201 22,048,755

132,129 446,231 157,415 19,914 -

Component Unit Aurora Public Library

A-2 $

COMPONENT UNIT Aurora Public Library 10,827,434

$ 237,959,236

TOTAL PRIMARY GOVERNMENT

27,923,402 1,427,840 1,934,761 2,222,436

204,450,797

20,588,032 112,902,507 29,621,587 12,825,038 5,589,522 14,673,809 8,250,302

33,508,439

$

Expenses

Total Business-Type Activities

Business-Type Activities Water and Sewer Downtown Parking Commuter Parking Golf Operations

Total Governmental Activities

FUNCTIONS/PROGRAMS PRIMARY GOVERNMENT Governmental Activities General Government Public Safety Streets and Transportation Health and Welfare Culture and Recreation Economic Development Interest

$

$

$

195,785

55,514,390

34,765,663

30,113,165 807,228 2,024,724 1,820,546

20,748,727

4,510,988 6,352,306 581,212 9,233,448 70,773 -

Charges for Services

For the Year Ended December 31, 2012

STATEMENT OF ACTIVITIES

CITY OF AURORA, ILLINOIS

$

$

$

277,776

11,445,052

-

-

11,445,052

386,259 5,782,775 3,043,691 1,987,649 244,678

$

$

$

837,306

24,481,685

4,173,659

4,173,659 -

20,308,026

57,462 926,216 10,561,802 2,974 8,759,572 -

Program Revenues Operating Capital Grants and Grants and Contributions Contributions

NET POSITION, DECEMBER 31

NET POSITION, JANUARY 1, RESTATED

Prior Period Adjustment

$ 435,693,729

425,199,636

(1,191,162)

426,390,798

NET POSITION, JANUARY 1

45,481

$ 188,847,371

183,371,007

(370,521)

183,741,528

5,476,364

162,443,085 10,494,093

444,665 316,187 9,629 (725,000)

-

5,430,883

5,430,883

6,363,422 (620,612) 89,963 (401,890)

-

-

79,226,198 41,957,531 10,163,505 17,388,869 1,921,008 4,002,735 9,044,541 463,512 1,019,382 197,271 1,306,832 (4,973,299) 725,000

CHANGE IN NET POSITION

Total

General Revenues Taxes Property and Replacement Sales Utility Income Real Estate Transfer Food and Beverage Tax Gaming Tax Hotel/Motel Other Investment Income Miscellaneous Special Item - Disposal of Property Transfers

-

(151,948,992)

-

-

(151,948,992)

$ (16,019,582) $ (105,237,726) (12,695,798) (544,925) 5,228,472 (14,673,809) (8,005,624)

$ 624,541,100

608,570,643

(1,561,683)

610,132,326

15,970,457

162,488,566

79,226,198 42,402,196 10,163,505 17,388,869 1,921,008 4,002,735 9,044,541 463,512 1,019,382 513,458 1,316,461 (4,973,299) -

-

(146,518,109)

5,430,883

6,363,422 (620,612) 89,963 (401,890)

(151,948,992)

$

$ (16,019,582) $ (105,237,726) (12,695,798) (544,925) 5,228,472 (14,673,809) (8,005,624)

18,008,514

17,868,736

(37,383)

17,906,119

139,778

9,656,345

9,487,168 4,097 165,080 -

(9,516,567)

-

-

-

-

-

Net (Expense) Revenue and Change in Net Position Component Primary Government Unit Aurora Governmental Business-Type Public Activities Activities Total Library

A-3

TOTAL ASSETS AND DEFERRED OUTFLOWS OF RESOURCES $ 112,342,239

-

Total Deferred Outflows of Resources

$

6,916,347

-

-

6,916,347

112,342,239

1,820,389

3,960,000 6,208 1,129,750 -

$

Debt Service

60,855,751 16,885,445 8,632,129 324,947 -

25,643,967

-

$

DEFERRED OUTFLOWS OF RESOURCES None

Total Assets

ASSETS Cash and Investments Receivables, Net of Allowance Where Applicable Property Taxes General and Pension Levies Special Service Areas Levies Other Taxes Loans Receivable Interest Rental Fees Miscellaneous Due from Other Governments Due from Other Funds Prepaid Items Property Held for Resale

ASSETS AND DEFERRED OUTFLOWS OF RESOURCES

General

December 31, 2012

GOVERNMENTAL FUNDS

BALANCE SHEET

CITY OF AURORA, ILLINOIS

-

-

114,454,011

1,427,567 1,386,151 2,534,350 646,651 2,232 2,984,167 5,489,860 11,917,783 15,695 337,695

87,711,860

$ 114,454,011

$

Other Governmental Funds

$ 233,712,597

-

-

233,712,597

64,815,751 1,427,567 18,271,596 2,534,350 652,859 2,232 11,616,296 6,944,557 11,917,783 15,695 337,695

$ 115,176,216

Total Governmental Funds

TOTAL LIABILITIES, DEFERRED INFLOWS OF RESOURCES AND FUND BALANCES

Total Fund Balances

$ 112,342,239

21,212,281

21,212,281

-

-

91,129,958

Total Liabilities and Deferred Inflows of Resources FUND BALANCES Nonspendable Prepaid Items Restricted Debt Service Working Cash Public Safety Streets and Transportation Health and Welfare Economic Development Capital Projects Unrestricted Assigned Public Safety Health and Welfare Capital Projects Specific Purposes Unassigned

60,756,201 60,756,201

30,373,757

2,228,324 10,872,872 1,094,415 9,166,869 6,500,000 25,421 485,856

Total Deferred Inflows of Resources

$

DEFERRED INFLOWS OF RESOURCES Unavailable Revenue - Property Taxes

Total Liabilities

LIABILITIES Accounts Payable Accrued Payroll Retainage Payable Deposits Payable Unearned Revenue Due to Other Funds Due to Fiduciary Funds Due to Other Governments

LIABILITIES, DEFERRED INFLOWS OF RESOURCES AND FUND BALANCES

General

$

$

6,916,347

1,823,882

-

1,823,882 -

-

5,092,465

3,960,000

3,960,000

1,132,465

2,715 1,129,750 -

Debt Service

93,478,195

74,955 348,099 34,334,642 (3,214,051)

442,550 18,852,666 10,650,562 5,817,166 22,829,022 3,326,889

15,695

20,975,816

1,427,472

1,427,472

19,548,344

4,395,510 6,055 1,180,298 9,200 8,518,057 5,417,783 21,441

$ 114,454,011

$

Other Governmental Funds

116,514,358

74,955 348,099 34,334,642 17,998,230

1,823,882 442,550 18,852,666 10,650,562 5,817,166 22,829,022 3,326,889

15,695

117,198,239

66,143,673

66,143,673

51,054,566

6,626,549 10,878,927 1,180,298 1,103,615 18,814,676 11,917,783 25,421 507,297

$ 233,712,597

$

Total Governmental Funds

A-4

NET POSITION OF GOVERNMENTAL ACTIVITIES

The net position of the internal service funds is included in the governmental activities in the statement of net position

Long-term liabilities, including bonds payable, are not due and payable in the current period and, therefore, are not reported in the governmental funds General obligation bonds Tax increment revenue bonds Installment contracts Notes payable Illinois EPA loan Compensated absences Insurance claims payable Termination benefits Net pension obligation Net other postemployment benefits obligation Less amounts included in internal service funds below

$ 435,693,729

3,869,828

(147,040,000) (17,190,000) (2,720,000) (6,018,326) (1,360,175) (13,808,964) (8,261,814) (60,524) (3,362,275) (76,341,029) 22,070,778

(71,841)

(1,452,999)

Premiums or discounts on long-term liabilities and gains and losses on debt refundings are capitalized and amortized at the government-wide level

Interest on long-term liabilities is not accrued in governmental funds, but rather is recognized as an expenditure when due

84,750

570,841,962

$ 116,514,358

Other long-term receivables are not available to pay for current period expenditures and, therefore, are deferred in the governmental funds

Capital assets used in governmental activities are not financial resources and, therefore, are not reported in the governmental funds

Amounts reported for governmental activities in the statement of net position are different because:

FUND BALANCES OF GOVERNMENTAL FUNDS

December 31, 2012

RECONCILIATION OF FUND BALANCES OF GOVERNMENTAL FUNDS TO THE GOVERNMENTAL ACTIVITIES IN THE STATEMENT OF NET POSITION

CITY OF AURORA, ILLINOIS

GOVERNMENTAL FUNDS

FUND BALANCES, DECEMBER 31

FUND BALANCES, JANUARY 1

21,212,281

20,984,248

228,033

(300,000)

Total Other Financing Sources (Uses) NET CHANGE IN FUND BALANCES

(300,000) -

OTHER FINANCING SOURCES (USES) Transfers In Transfers (Out) Proceeds from the Sale of Capital Assets Refunding Bonds Issued Premium on Refunding Bonds Issued

139,967,349

-

16,837,826 100,267,856 10,440,927 6,257,915 4,060,108 2,102,717 -

140,495,382

60,148,522 64,934,190 1,175,006 6,974,853 4,434,260 2,535,273 20,583 272,695

528,033

$

$

General

$

$

1,823,882

1,530,550

293,332

21,295,476

10,939,800 10,070,000 285,676

(21,002,144)

27,369,449

20,330,000 7,039,449

-

6,367,305

4,000,885 1,921,008 444,678 95 639 -

Debt Service

For the Year Ended December 31, 2012

EXCESS (DEFICIENCY) OF REVENUES OVER EXPENDITURES

Total Expenditures

EXPENDITURES Current General Government Public Safety Streets and Transportation Health and Welfare Culture and Recreation Economic Development Capital Outlay Debt Service Principal Interest and Other Charges

Total Revenues

REVENUES Property Taxes Other Taxes Intergovernmental Licenses, Fees and Permits Impact Fees Recovery of Costs Charges for Services Fines and Forfeits Development Participation Investment Income Donations Other

CITY OF AURORA, ILLINOIS STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES

$

$

93,478,195

95,015,565

(1,537,370)

(3,660,489)

17,826,600 (27,741,400) 2,978,132 3,095,000 181,179

2,123,119

62,734,431

5,991,707 1,569,114

679,814 3,251,520 7,217,030 5,334,052 1,629,073 12,539,907 24,522,214

64,857,550

12,956,814 21,636,823 21,346,092 49,708 30,600 746,605 7,637,981 176,049 37,000 239,878

Other Governmental Funds

117,530,363

(1,016,005)

17,334,987

28,766,400 (28,041,400) 2,978,132 13,165,000 466,855

(18,350,992)

230,071,229

26,321,707 8,608,563

17,517,640 103,519,376 17,657,957 11,591,967 5,689,181 14,642,624 24,522,214

211,720,237

77,106,221 88,492,021 22,965,776 7,024,561 30,600 746,605 12,072,241 2,535,273 95 197,271 37,000 512,573

$ 116,514,358

$

Total Governmental Funds

A-5

CITY OF AURORA, ILLINOIS

(1,214,803)

Changes in net pension assets/obligations are reported only in the statement of activities

(12,482,247) 248,141 (154,957) (7,951,431)

Some expenses in the statement of activities do not require the use of current financial resources and, therefore, are not reported as expenditures in governmental funds Depreciation Amortization of bond premiums Amortization of gain or loss on refunding Loss on disposal of capital assets (special item)

CHANGES IN NET POSITION OF GOVERNMENTAL ACTIVITIES

10,494,093

(748,462)

(1,745,779)

Revenues in the statement of activities that are not available in governmental funds are not reported as revenue in governmental funds until received

The change in net position of internal service funds is reported with governmental activities

(7,448,974)

Changes in net other postemployment benefits obligations are reported only in the statement of activities

(56,778)

18,479,175

The repayment of long-term debt is reported as an expenditure when due in governmental funds but as a reduction of principal outstanding in the statement of activities

The change in the accrual of interest is reported as a reduction of interest expense on the statement of activities

(13,165,000) 10,160,000 (466,855) 321,855

9,218,731

The issuance of long-term debt and related costs are shown on the fund financial statements as other financing sources (uses) and current expenditures, but are recorded as long-term liabilities and deferred outflows of resources on the government-wide statements Issuance of refunding bonds Payment of refunded bonds Premium on issuance of bonds Loss on refunding

Contributions of capital assets are reported only in the statement of activities

(1,016,005)

18,517,482

$

$

Governmental funds report capital outlay as expenditures; however, they are capitalized and depreciated in the statement of activities

Amounts reported for governmental activities in the statement of activities are different because:

NET CHANGE IN FUND BALANCES TOTAL GOVERNMENTAL FUNDS

For the Year Ended December 31, 2012

RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES TO THE GOVERNMENTAL ACTIVITIES IN THE STATEMENT OF ACTIVITIES

_________________________________

LEFT BLANK

THIS PAGE INTENTIONALLY

__________________________________

A-6 208,357,792

-

Total Deferred Outflows of Resources

Total Assets and Deferred Outflows of Resources

-

208,357,792

Total Assets

DEFERRED OUTFLOW OF RESOURCES Unamortized Loss on Refunding

180,640,312

Total Noncurrent Assets

28,617,800

32,165

32,165

28,585,635

25,593,755

25,150,892

15,911,636

165,626,852 172,162,419

9,239,256

6,535,567

2,991,880

351,720 3,366 124,486 -

2,090,399 421,909

442,863

$

6,501,718 1,976,175

Total Capital Assets

NONCURRENT ASSETS Due from Other Governments Other Postemployment Benefits Asset Capital Assets Nondepreciable Depreciable (Net of Accumulated Depreciation)

27,717,480

Total Current Assets

20,654,100 1,573,940 5,236,624 106,368 146,448

$

CURRENT ASSETS Cash and Investments Restricted Cash and Investments Receivables Accounts, Net of Allowance Interest Miscellaneous Due from Other Funds Due from Other Governments Prepaid Items Inventory $

236,975,592

32,165

32,165

236,943,427

206,234,067

197,313,311

181,538,488

15,774,823

6,501,718 2,419,038

30,709,360

5,588,344 109,734 124,486 146,448

22,744,499 1,995,849

Total

$

27,789,396

-

-

27,789,396

-

-

-

-

-

27,789,396

172,419 8,749 1,700,000 95,707 -

25,812,521 -

TOTAL NET POSITION

NET POSITION Net Investment in Capital Assets Restricted for Debt Service Unrestricted

Total Liabilities

Total Noncurrent Liabilities

NONCURRENT LIABILITIES Deposits Payable Compensated Absences Payable Termination Benefits Other Postemployment Benefits Obligation Claims Payable Illinois EPA Loan Payable (Less Current Portion) Bonds Payable (Less Current Portion)

Total Current Liabilities

CURRENT LIABILITIES Accounts Payable Accrued Payroll Retainage Payable Accrued Interest Payable Other Unearned Revenue Due to Other Funds Due to Other Governments Claims Payable Compensated Absences Payable Termination Benefits Illinois EPA Loan Payable, Due Within One Year Bonds Payable, Due Within One Year

138,458,221 2,762,462 23,329,461

43,807,648

39,978,309

29,395,000

645,821 1,393,281 8,544,207

3,829,339

701,384 695,000

1,140,012 508,058 5,761 154,567 390,296 138,611 73,331 22,319

$ 164,550,144

$

December 31, 2012

December 31, 2012

$

$

24,297,227

22,439,059 421,909 1,436,259

4,320,573

3,270,686

2,356,833

284,572 629,281 -

1,049,887

355,000

99,153 131,411 433,460 14,977 15,886

160,897,280 3,184,371 24,765,720

48,128,221

43,248,995

31,751,833

645,821 1,677,853 629,281 8,544,207

4,879,226

701,384 1,050,000

1,239,165 639,469 5,761 154,567 823,756 138,611 88,308 38,205

Total

$ 188,847,371

$

Business-Type Activities Other Water and Enterprise Sewer Fund Funds

PROPRIETARY FUNDS

PROPRIETARY FUNDS

Governmental Activities Internal Service Funds

STATEMENT OF NET POSITION (Continued)

STATEMENT OF NET POSITION

Business-Type Activities Other Water and Enterprise Sewer Fund Funds

CITY OF AURORA, ILLINOIS

CITY OF AURORA, ILLINOIS

$

$

3,869,828

3,869,828

23,919,568

20,645,114

-

13,118,516 7,526,598 -

3,274,454

-

126,971 21,819 1,700,000 735,216 690,448 -

Governmental Activities Internal Service Funds

A-7

PROPRIETARY FUNDS

258,538

312,578 8,680 9,629 (1,549,519) (90,879) (1,309,511)

NONOPERATING REVENUES (EXPENSES) Sales Tax Investment Income Gain on Sale of Property Recovery of Cost Interest Expense Intergovernmental Expense

5,685,629 159,235,036

CHANGE IN NET POSITION

NET POSITION, JANUARY 1

158,864,515 164,550,144

NET POSITION, JANUARY 1, RESTATED

NET POSITION, DECEMBER 31

(370,521)

4,173,659

Prior Period Adjustment

(1,000,000)

Total Transfers

(1,000,000)

TRANSFERS Transfers In Transfers (Out)

CONTRIBUTIONS

2,511,970

INCOME (LOSS) BEFORE CONTRIBUTIONS AND TRANSFERS

Total Nonoperating Revenues (Expenses)

444,665 3,609 (189,736) -

3,821,481

24,297,227

24,506,492

-

24,506,492

(209,265)

-

275,000

275,000 -

(484,265)

(742,803)

765,250

4,140,698

OPERATING INCOME (LOSS)

22,447

4,630,051

2,607,151 714,693 1,180,625 127,582

4,652,498

4,650,156 2,342

DEPRECIATION

$

$

7,962,179

22,150,986

9,587,640 3,970,865 7,213,052 1,379,429

30,113,165

30,113,165 -

OPERATING INCOME (LOSS) BEFORE DEPRECIATION

$

$

$

$

Business-Type Activities Other Water and Enterprise Sewer Fund Funds

For the Year Ended December 31, 2012

Total Operating Expenses Excluding Depreciation

OPERATING EXPENSES EXCLUDING DEPRECIATION Personnel Services Materials and Supplies Other Services and Charges Miscellaneous

Total Operating Revenues

OPERATING REVENUES Charges for Services Other

CITY OF AURORA, ILLINOIS

STATEMENT OF REVENUES, EXPENSES AND CHANGES IN FUND NET POSITION

188,847,371

183,371,007

(370,521)

183,741,528

5,476,364

4,173,659

(725,000)

275,000 (1,000,000)

2,027,705

(1,050,973)

444,665 316,187 8,680 9,629 (1,739,255) (90,879)

3,078,678

4,905,948

7,984,626

26,781,037

12,194,791 4,685,558 8,393,677 1,507,011

34,765,663

34,763,321 2,342

Total

$

$

3,869,828

4,618,290

-

4,618,290

(748,462)

-

-

1,700,000 (1,700,000)

(748,462)

20,994

20,994 -

(769,456)

-

(769,456)

24,487,210

24,487,210 -

23,717,754

23,717,754 -

Governmental Activities Internal Service Funds

_________________________________

LEFT BLANK

THIS PAGE INTENTIONALLY

__________________________________

A-8 $

14,679,611 (18,560,195) 312,578 (3,568,006)

(760,882) 4,959,825 4,198,943

CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from Sale and Maturities on Investment Securities Purchase of Investment Securities Interest on Investments

Net Cash from Investing Activities

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

CASH AND CASH EQUIVALENTS, JANUARY 1

CASH AND CASH EQUIVALENTS, DECEMBER 31

(4,626,390)

(1,639,819) (1,346,876) (90,879) (1,548,816)

(843,676)

CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Property, Plant and Equipment Acquired or Constructed Bond Proceeds Principal Paid on Bonds and Illinois EPA Loans Intergovernmental Infrastructure Charges Interest and Fiscal Agents' Fees

Net Cash from Noncapital Financing Activities

8,277,190

9,629 146,695 (1,000,000)

Net Cash from Capital and Related Financing Activities

Governmental Activities Internal Service Funds

$

1,118,486

1,875,829

(757,343)

(481,299)

(485,695) 4,396

(941,545)

(119,736) 2,714,281 (3,245,000) (291,090)

719,665

444,665 275,000

(54,164)

$

5,317,429

6,835,654

(1,518,225)

(4,049,305)

14,679,611 (19,045,890) 316,974

(5,567,935)

(1,759,555) 2,714,281 (4,591,876) (90,879) (1,839,906)

(124,011)

9,629 591,360 (725,000)

8,223,026

$

4,221,754

6,091,405

(1,869,651)

(1,916,156)

11,625,000 (14,168,841) 627,685

-

-

-

-

46,505

$ 29,875,829 $ 4,632,292 $ 34,508,121 $ 3,556,741 20,176,269 (12,141,517) (2,152,153) (14,293,670) (22,920,056) (9,457,122) (2,534,303) (11,991,425) (766,449)

CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Recovery of Costs Intergovernmental Income Due to/from Other Funds Transfers In (Out)

Net Cash from Operating Activities

CASH FLOWS FROM OPERATING ACTIVITIES Receipts from Customers and Users Receipts from Interfund Services Payments to Suppliers Payments to Employees/Retirees

Business-Type Activities Other Water and Enterprise Sewer Fund Funds Total

TOTAL NONCASH TRANSACTIONS

NONCASH TRANSACTIONS Contributions of Capital Assets Unrealized Gain/Loss on Investments

4,198,943 18,029,097

8,277,190

165,752 16,588 42,307 61,705

170,758 26,506

(237,336) 68,731

4,140,698

3,821,481

$

$

4,173,659

4,173,659

$ 22,228,040

$

CASH AND INVESTMENTS Cash and Cash Equivalents Investments TOTAL CASH AND INVESTMENTS

$

$

NET CASH FROM OPERATING ACTIVITIES

RECONCILIATION OF OPERATING INCOME (LOSS) TO NET CASH FLOWS FROM OPERATING ACTIVITIES Operating Income (Loss) Adjustments to Reconcile Operating Income (Loss) to Net Cash from Operating Activities Depreciation (Increase) Decrease in Accounts Receivable Interfund Service Receivable Prepaid Expenses Inventory Increase (Decrease) in Accounts Payable Accrued Payroll Claims Payable Other Unearned Revenue Deposits Compensated Absences Termination Benefits Other Postemployment Benefits Obligation/Asset

$

$

$

$

$

$

-

-

2,512,308

1,118,486 1,393,822

5,317,429 19,422,919

8,223,026

41,505 26,902 158,594 16,588 48,666 (16,661) 144,460

(250,385) 68,731

4,905,948

3,078,678

$

$

4,173,659

4,173,659 -

$ 24,740,348

$

(54,164) $

(129,253) 396 (7,158) 6,359 (16,661) 82,755

(13,049) -

765,250

(742,803) $

Business-Type Activities Other Water and Enterprise Sewer Fund Funds Total

PROPRIETARY FUNDS For the Year Ended December 31, 2012

PROPRIETARY FUNDS

For the Year Ended December 31, 2012

CITY OF AURORA, ILLINOIS STATEMENT OF CASH FLOWS (Continued)

CITY OF AURORA, ILLINOIS

STATEMENT OF CASH FLOWS

4,221,754 21,590,767

46,505

(103,882) 373 445,409 426,903 -

15,256 31,902 -

-

(769,456)

$

$

(612,087)

(612,087)

$ 25,812,521

$

$

$

Governmental Activities Internal Service Funds

A-9

NET POSITION HELD IN TRUST FOR PENSION/OPEB BENEFITS

Total Liabilities

LIABILITIES Accounts Payable Benefits Payable Due to Others

Total Assets

ASSETS Cash and Short-Term Investments Investments, at Fair Value Money Market Mutual Funds Illinois Funds Negotiable Certificates of Deposit U.S. Treasury Securities U.S. Agency Securities Corporate Bonds Municipal Bonds Foreign Bonds Corporate Equity Securities Equity Mutual Funds Accrued Interest Accounts Receivable Due from General Fund Prepaid Expenses

725,523

175,528 549,995 -

289,513,757

7,753,459 3,794,197 10,049,965 54,111,105 13,936,717 41,295,583 59,180 235,761 73,312,429 82,924,027 1,763,686 14,828 25,421 12,478

224,921

$ 288,788,234

$

$

$

$

$

39,496

39,496

39,496

-

39,496

Agency Funds

53,821,269

27,677,466 119,453

Total Additions DEDUCTIONS Benefits Administrative Expenses

December 31

January 1

NET POSITION HELD IN TRUST FOR PENSION/OPEB BENEFITS

NET INCREASE

$ 288,788,234

262,763,884

26,024,350

27,796,919

25,958,414

Net Investment Income

Total Deductions

26,944,031 (985,617)

19,309,538 7,634,493

27,862,855

21,031,359 6,831,496

Total Investment Income Less Investment Expense

Investment Income Net Appreciation in Fair Value of Investments Interest

Total Contributions

$

For the Year Ended December 31, 2012

December 31, 2012

ADDITIONS Contributions Employer Contributions Employee Contributions

STATEMENT OF CHANGES IN FIDUCIARY NET POSITION

STATEMENT OF FIDUCIARY NET POSITION

Pension and OPEB Trust Funds

CITY OF AURORA, ILLINOIS

CITY OF AURORA, ILLINOIS

A-10

1.

A.

The Aurora Public Library (the Library) operates and maintains the City’s public library facilities. The Library’s Board is appointed by the Mayor with the consent of the City Council. The Library may not issue bonded debt without City Council’s approval and its annual budget and property tax levy request are subject to the City Council’s approval. Separate audited financial statements as of December 31, 2012 are available from the Library’s administrative offices located at 1 E. Benton Street, Aurora, Illinois 60505.

The Aurora Public Library

The component unit column in the basic financial statements includes the financial data of the City’s component unit. It is reported in a separate column to emphasize that it is legally separate from the City.

Discretely Presented Component Unit

The City was incorporated in 1857 and is a municipal corporation governed by an elected board under the mayor/council form of government. It is a “home rule” unit under the Illinois Constitution. As required by GAAP, these financial statements present the City (the primary government) and its component units. In evaluating how to define the reporting entity, management has considered all potential component units. The decision to include a potential component unit in the reporting entity was based upon the significance of its operational or financial relationship with the primary government.

Reporting Entity

The financial statements of the City of Aurora, Illinois (the City) have been prepared in conformity with accounting principles generally accepted in the United States of America, as applied to government units (hereinafter referred to as generally accepted accounting principles (GAAP)). The Governmental Accounting Standards Board (GASB) is the accepted standard-setting body for establishing governmental accounting and financial reporting principles. The more significant of the City’s accounting policies are described below.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

December 31, 2012

NOTES TO FINANCIAL STATEMENTS

CITY OF AURORA, ILLINOIS

1. B.

Fiduciary funds are used to account for assets held on behalf of outside parties, including other governments, or on behalf of other funds within the government. The City utilizes pension trust funds and agency funds which are generally used to account for assets that the City holds in a fiduciary capacity or on behalf of others as their agent.

Proprietary funds are used to account for activities similar to those found in the private sector, where the determination of net income is necessary or useful for sound financial administration. Goods or services from such activities can be provided either to outside parties (enterprise funds) or to other departments or agencies primarily within the government (internal service funds).

Governmental funds are used to account for all or most of the City’s general activities, including the collection and disbursement of restricted or committed monies (special revenue funds), the funds committed, restricted or assigned for the acquisition or construction of capital assets (capital projects funds), the funds committed, restricted or assigned for the servicing of long-term debt (debt service funds) and the management of funds held in trust where the interest earnings can be used for governmental services (permanent fund). The general fund is used to account for all activities of the general government not accounted for in some other fund.

Funds are classified into the following categories: governmental, proprietary and fiduciary.

A fund is a separate accounting entity with a self-balancing set of accounts. The minimum number of funds are maintained consistent with legal and managerial requirements.

The City uses funds to report on its financial position and changes in its financial position. Fund accounting is designed to demonstrate legal compliance and to aid financial management by segregating transactions related to certain government functions or activities.

Fund Accounting

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

CITY OF AURORA, ILLINOIS NOTES TO FINANCIAL STATEMENTS (Continued)

A-11

1.

C.

The Water and Sewer Fund accounts for the activities of the water operations and sewer collection system. The City operates the water treatment plant, sewerage pumping stations and collection systems and the water distribution system.

The City reports the following major proprietary funds:

The Debt Service Fund accounts for the City’s principal and interest payments related to general government debt issued.

The General Fund is the City’s primary operating fund. It accounts for all financial resources of the general government, except those accounted for in another fund.

The City reports the following major governmental funds:

Separate financial statements are provided for governmental funds, proprietary funds and fiduciary funds, even though the latter are excluded from the government-wide financial statements. Major individual governmental funds and major individual enterprise funds are reported as separate columns in the fund financial statements.

The statement of activities demonstrates the degree to which the direct expenses of a given function, segment or program are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. Program revenues include (1) charges to customers or applicants who purchase, use or directly benefit from goods, services or privileges provided by a given function or segment and (2) grants and standard revenues that are restricted to meeting the operational or capital requirements of a particular function or segment. Taxes and other items not properly included among program revenues are reported instead as general revenues.

The government-wide financial statements (i.e., the statement of net position and the statement of activities) report information on all of the nonfiduciary activities of the City. The effect of material interfund activity has been eliminated from these statements. Governmental activities, which normally are supported by taxes and intergovernmental revenues, are reported separately from business-type activities, which rely to a significant extent on fees and charges for support.

Government-Wide and Fund Financial Statements

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

CITY OF AURORA, ILLINOIS NOTES TO FINANCIAL STATEMENTS (Continued)

1.

D.

C.

Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both “measurable” and “available.” Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. The City considers revenues to be available if they are collected within 60 days of the end of the current fiscal period, except for sales taxes and telecommunication taxes which use a 90-day period and income taxes which use a 120-day period (due to a temporary slowdown in remittance from the state). Expenditures generally are recorded when a fund liability is incurred. However, debt service expenditures are recorded only when payment is due, unless due the first day of the following fiscal year.

The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting, as are the proprietary fund and fiduciary fund financial statements (except the agency funds which do not have a measurement focus). Revenues and additions are recorded when earned and expenses and deductions are recorded when a liability is incurred. Property taxes are recognized as revenues in the year for which they are levied (i.e., intended to finance). Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met. Operating revenues/expenses include all revenues/expenses directly related to providing enterprise fund services. Incidental revenues/expenses are reported as nonoperating.

Measurement Focus, Basis of Accounting and Financial Statement Presentation

The City reports pension and other postemployment benefit (OPEB) trust funds as fiduciary funds to account for the Police Pension Fund, Firefighters’ Pension Fund and Retiree Health Insurance Trust Fund. Furthermore, the City reports the following agency funds as fiduciary funds: Section 125 Medical Fund, Section 125 Dependent Care Fund and the CN/EJE Coalition Fund.

Internal Service Funds account for the City’s self-insured property, casualty, workers’ compensation and health insurance programs and the employee benefits, including vacation, sick leave and severance provided to other departments or agencies of the City on a cost reimbursement basis. These are reported as part of the governmental activities on the government-wide financial statements as they provide services to the City’s governmental funds/activities.

Additionally, the City reports the following proprietary fund type:

Government-Wide and Fund Financial Statements (Continued)

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

CITY OF AURORA, ILLINOIS NOTES TO FINANCIAL STATEMENTS (Continued)

A-12

E.

D.

For purposes of the statement of cash flows, the City’s proprietary funds consider their demand deposits and all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents.

Cash and Cash Equivalents

Cash and Investments

The City reports unavailable/unearned revenue on its financial statements. Unavailable/unearned revenues arise when a potential revenue does not meet both the measurable and available or earned criteria for recognition in the current period. Unavailable/unearned revenues also arise when resources are received by the City before it has a legal claim to them or prior to the provision of services, as when grant monies are received prior to the incurrence of qualifying expenditures. In subsequent periods, when both revenue recognition criteria are met, or when the City has a legal claim to the resources, the unavailable/unearned revenue is removed from the financial statements and revenue is recognized.

In applying the susceptible to accrual concept to intergovernmental revenues (i.e., federal and state grants), the legal and contractual requirements of the numerous individual programs are used as guidance. There are, however, essentially two types of these revenues. In one, monies must be expended on the specific purpose or project before any amounts will be paid to the City; therefore, revenues are recognized based upon the expenditures recorded. In the other, monies are virtually unrestricted as to purpose of expenditure and are generally revocable only for failure to comply with prescribed eligibility requirements, such as equal employment opportunity. These resources are reflected as revenues at the time of receipt or earlier if they meet the availability criterion.

Property taxes, sales taxes and telecommunication taxes owed to the state at year end, utility taxes, franchise taxes, licenses, charges for services, food and beverage taxes and interest associated with the current fiscal period are all considered to be susceptible to accrual and are recognized as revenues of the current fiscal period. Fines and permit revenue are considered to be measurable and available only when cash is received by the City.

Measurement Focus, Basis of Accounting and Financial Statement Presentation (Continued)

I.

H.

G.

F.

E.

Payments made to vendors for services that will benefit periods beyond the date of this report are recorded as prepaid items/expenses.

Prepaid Items/Expenses

Enterprise funds, based on certain bond covenants, are required to establish and maintain prescribed amounts of resources (consisting of cash and temporary investments) that can be used only for specified purposes indicated in the bond ordinances.

Restricted assets in governmental activities/funds include cash with paying agent in the debt service fund.

Restricted Assets

Inventory is valued at the lower of cost or market on a first-in/first-out (FIFO) basis.

Inventory

Property taxes are recognized as receivable in the year that they attach as an enforceable lien and are levied. Funds utilizing the modified accrual basis of accounting treat property taxes receivable as unavailable revenue until the measurable and available criteria have been met (the year intended to finance and collected within 60 days after year end). On the accrual basis, property taxes are recognized as revenue in the year intended to finance, regardless of when collected. Property taxes receivable more than one year old have been fully offset by an allowance account.

Property Taxes

City investments with a maturity of one year or less when purchased and nonnegotiable certificates of deposit are stated at amortized cost. City investments with a maturity greater than one year when purchased are reported at fair value. All investments in the pension and other postemployment benefit (OPEB) trust funds are stated at fair value. Fair value is based on quoted market prices at December 31 for debt securities, equity securities and mutual funds and contract values for insurance contracts. Illinois Funds, an investment pool created by the state legislature under the control of the State Treasurer, is a money market mutual fund that maintains a $1 per share value.

Investments

Cash and Investments (Continued)

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

1.

1.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

CITY OF AURORA, ILLINOIS NOTES TO FINANCIAL STATEMENTS (Continued)

CITY OF AURORA, ILLINOIS NOTES TO FINANCIAL STATEMENTS (Continued)

A-13

1.

J.

$ 100,000 100,000 50,000 50,000

-

Buildings, Land Improvements and Infrastructure Vehicles Machinery, Furniture and Equipment, Software

Assets

Years 20-65 8 5-15

Major outlays for capital assets and improvements are capitalized as projects are constructed. Interest incurred during the construction phase of capital assets of business-type activities is included as part of the capitalized value of the assets constructed. Property, plant and equipment is depreciated using the straight-line method over the following estimated useful lives:

The costs of normal maintenance and repairs, including street overlays that do not add to the value of the asset or materially extend asset lives are not capitalized.

Such assets are recorded at historical cost or estimated historical cost if purchased or constructed. Donated capital assets are recorded at estimated fair market value at the date of donation.

Land Building Improvements, Land Improvements and Infrastructure (All Systems) Intangible Assets Vehicles, Machinery, Furniture and Equipment Works of Art, Historical Artifacts

Asset Class

Capitalization Threshold

Capital assets, which include property, plant, equipment and infrastructure assets (e.g., roads, bridges, sidewalks and similar items), are reported in the applicable governmental or business-type activities columns in the government-wide financial statements. Capital assets are defined by the City as assets with an initial, individual cost in excess of the following and an estimated useful life in excess of one year.

Capital Assets

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

CITY OF AURORA, ILLINOIS NOTES TO FINANCIAL STATEMENTS (Continued)

1.

N.

M.

L.

K.

In the government-wide financial statements and proprietary funds in the fund financial statements, long-term debt and other long-term obligations are reported as liabilities in the applicable governmental activities, business-type activities or proprietary fund financial statements. Bond premiums and discounts and gains/losses on refunding are deferred and amortized over the life of the bonds. Bonds payable are reported net of the applicable bond premium or discount.

Long-Term Obligations

Advances between funds, as reported in the fund financial statements, are offset by a fund balance nonspendable account in applicable governmental funds to indicate that they are not available for appropriation and are not expendable available financial resources.

Activity between funds that are representative of lending/borrowing arrangements outstanding at the end of the fiscal year are referred to as either “due to/from other funds” (i.e., the current portion of interfund loans) or “advances to/from other funds” (i.e., the noncurrent portion of interfund loans). All other outstanding balances between funds are reported as “due to/from other funds.”

Interfund Receivables/Payables

All other interfund transactions, except interfund service transactions and reimbursements, are reported as transfers.

Interfund service transactions are accounted for as revenues, expenditures or expenses. Transactions that constitute reimbursements to a fund for expenditures/expenses initially made from it that are properly applicable to another fund, are recorded as expenditures/expenses in the reimbursing fund and as reductions of expenditures/expenses in the fund that is reimbursed.

Interfund Transactions

Accumulated unpaid vacation, sick pay and other employee benefit amounts for proprietary funds are recorded as earned by employees in those funds.

Accumulated unpaid vacation, sick pay and other employee benefit amounts for governmental funds are accrued in these funds as a current liability to the extent that employees have retired or terminated at year end but have not been paid. The remaining liability is reported in the Employee Compensated Benefits Fund (an internal service fund).

Vacation, Sick Pay and Other Employee Benefits

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

CITY OF AURORA, ILLINOIS NOTES TO FINANCIAL STATEMENTS (Continued)

A-14

O.

N.

In the government-wide financial statements, restricted net positions are legally restricted by outside parties for a specific purpose. Net investment in capital assets represents the book value of capital assets less any long-term debt issued to acquire or construct the capital assets.

The City has established a policy requiring that the General Fund balance be maintained at the greater of either (a) 10% of expenditures and other financing sources as originally budgeted for the fiscal year or (b) $1.0 million plus 25% of the current fiscal year’s property tax levy. This is reported as part of unassigned fund balance.

The City’s flow of funds assumption prescribes that the funds with the highest level of constraint are expended first. If restricted or unrestricted funds are available for spending, the restricted funds are spent first. Additionally, if different levels of unrestricted funds are available for spending, the City considers committed funds to be expended first followed by assigned funds and then unassigned funds.

In the fund financial statements, governmental funds report nonspendable fund balance for amounts that are either not in spendable form or legally or contractually required to be maintained intact. Restrictions of fund balance are reported for amounts constrained by legal restrictions from outside parties for use for a specific purpose, or externally imposed by outside entities or from enabling legislation adopted by the City. Committed fund balance is constrained by formal actions of the City Council, which is considered the City’s highest level of decision making authority. Formal actions include resolutions and ordinances approved by the City Council. Assigned fund balance represents amounts constrained by the City’s intent to use them for a specific purpose. The authority to assign fund balance has been delegated to the City’s Chief Financial Officer/City Treasurer or through the approved budget of the City. Any residual fund balance in the General Fund, including fund balance targets and any deficit fund balance of any other governmental fund is reported as unassigned.

Fund Balance/Net Position

In the fund financial statements, governmental funds recognize bond premiums and discounts, as well as bond issuance costs, during the current period. The face amount of debt issued is reported as other financing sources. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as expenditures/expenses in the period incurred.

Long-Term Obligations (Continued)

2.

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets, deferred outflows, liabilities and deferred inflows and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenditures/expenses during the reporting period. Actual results could differ from those estimates.

Use of Estimates

In addition to assets, the statement of financial position will sometimes report a separate section for deferred outflows of resources. This separate financial statement element, deferred outflows of resources, represents a consumption of net position that applies to a future period(s) and so will not be recognized as an outflow of resources (expense/expenditure) until then. In addition to liabilities, the statement of financial position will sometimes report a separate section for deferred inflows of resources. This separate financial statement element, deferred inflows of resources, represents an acquisition of net position that applies to a future period(s) and so will not be recognized as an inflow of resources (revenue) until that time.

Deferred Outflows/Inflows of Resources

Restricted net position and restricted fund balance resulting from enabling legislation adopted by the City consists of $5,970,778 restricted by the original ordinances to be used for public safety and $5,530,855 restricted by the original ordinances to be used for health and welfare at December 31, 2012.

Fund Balance/Net Position (Continued)

The City’s property tax becomes a lien on real property on January 1 of the year it is levied. The 2012 levy was adopted December 18, 2012 and attached as an enforceable lien as of January 1, 2012. The City does not have a statutory tax rate limit. Property taxes are deposited with the County Treasurers who remit to the City its respective share of the collections. Taxes levied in one year become due and payable in two installments during the following year, on or about June 1 and September 1. The 2012 levy is intended to finance the 2013 fiscal year and, therefore, is reported as unavailable revenue at December 31, 2012.

PROPERTY TAXES

Q.

P.

O.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

1.

1.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

CITY OF AURORA, ILLINOIS NOTES TO FINANCIAL STATEMENTS (Continued)

CITY OF AURORA, ILLINOIS NOTES TO FINANCIAL STATEMENTS (Continued)

A-15

Custodial credit risk for deposits with financial institutions is the risk that in the event of a bank’s failure, the City’s deposits may not be returned to it. The City’s investment policy requires pledging of collateral with a fair value of 110% of all bank balances in excess of federal depository insurance with the collateral held by an agent of the City in the City’s name.

City Deposits with Financial Institutions

It is the policy of the City to invest its funds in a manner which will provide the highest investment return with the maximum security while meeting daily cash flow demands and conforming to all state and local statutes governing the investment of public funds, using the “prudent person” standard for managing the overall portfolio. The primary objectives of the policy are safety (preservation of capital and protection of investment principal), liquidity and yield.

The Police and Firefighters’ Pension Funds can invest in the same securities as the City, plus the following: mutual funds, equity securities, investment grade corporate debt securities and variable annuities.

In accordance with the City’s investment policy, the City’s monetary assets may be placed in all instruments permitted by the Illinois Public Funds Investment Act. This act permits deposits and investments in commercial banks, savings and loan institutions, obligations of the U.S. Treasury and U.S. agencies, obligations of states and their political subdivisions, credit union shares, repurchase agreements, commercial paper rated within the three highest classifications by at least two standard rating services and Illinois Funds.

The City maintains a cash and investment pool that is available for use by all funds except the pension trust funds. Each fund’s portion of this pool is displayed on the financial statements as “cash and investments.” In addition, investments are separately held by several of the City’s funds. The deposits and investments of the pension trust funds are held separately from those of other funds. The investments are governed by the following four separate investment policies: one policy for the City and the Library adopted by the City Council and one policy each for the Police and Firefighters’ Pension Funds and the Retiree Health Insurance Trust Fund approved by their respective boards. $ 36,714,211

$ 19,278,116 17,436,095

Less than 1

5,063,845 78,987,413 $ 84,051,258

$

$

$

-

-

Investment Maturities (in Years) 1-5 6-10

$

Commercial Paper Illinois Funds

Diversification by Instrument

10% 50%

Percent of Portfolio

Concentration of credit risk - The investment portfolio of the City shall not exceed the diversification standards below:

Custodial credit risk for investments is the risk that, in the event of the failure of the counterparty to the investment, the City will not be able to recover the value of its investments that are in possession of an outside party. To limit its exposure, the City’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 held by a third party acting as the City’s agent separate from where the investment was purchased. Illinois Funds and the money market mutual funds are not subject to custodial credit risk.

The City limits its exposure to credit risk, the risk that the issuer of a debt security will not pay its par value upon maturity, by primarily investing in U.S. Treasury obligations, U.S. Government agency notes and state and local obligations rated in the highest two categories by national rating agencies. The U.S. agency securities are rated Aaa. The state and local obligations are rated A1 to Aaa by Moody’s. Certain U.S. agency securities and state and local obligations are not rated.

-

-

Greater than 10 $

In accordance with its investment policy, the City limits its exposure to interest rate risk by structuring the portfolio so that securities mature to meet cash requirements for ongoing operations, thereby avoiding the need to sell securities on the open market prior to maturity and investing operating funds primarily in shorter-term securities, money market mutual funds or similar investment pools. Unless matched to a specific cash flow, the City does not directly invest in securities maturing more than three years from the date of purchase.

$ 120,765,469

$ 24,341,961 96,423,508

U.S. Government Agency Notes State and Local Obligations TOTAL

Fair Value

Investment Type

The following table presents the investments and maturities of the City’s debt securities as of December 31, 2012:

City Investments

CASH AND INVESTMENTS (Continued)

3.

3.

CASH AND INVESTMENTS

CITY OF AURORA, ILLINOIS NOTES TO FINANCIAL STATEMENTS (Continued)

CITY OF AURORA, ILLINOIS NOTES TO FINANCIAL STATEMENTS (Continued)

A-16

$ 60,049,222

5,000,000

$ 29,259,233 5,635,839 20,025,553 128,597

Fair Value

$

$

Less than 1

-

-

-

$ 32,466,952

5,000,000

$ 12,583,326 2,289,201 12,465,828 128,597

$ 22,118,863

-

$ 15,236,825 674,579 6,207,459 -

$

$

5,463,407

-

1,439,082 2,672,059 1,352,266 -

Investment Maturities (in Years) 1-5 6-10 Greater than 10

The Police Pension Fund limits its exposure to credit risk, the risk that the issuer of a debt security will not pay its par value upon maturity, by primarily investing in obligations guaranteed by the United States Government, securities issued by agencies of the United States Government that are explicitly or implicitly guaranteed by the United States Government and investment grade bonds. The U.S. agency obligations are rated Aaa by Moody’s. The corporate bonds are rated Baa3 to Aaa by Moody’s. However, certain U.S. agency investments, the money market mutual funds and corporate bonds are not rated. The foreign bonds and negotiable certificates of deposit are rated Aa3 by Moody’s.

In accordance with its investment policy, the Police Pension Fund limits its exposure to interest rate risk by structuring the portfolio to provide liquidity for operating funds and maximizing yields for funds not needed for expected current cash flows. The investment policy does not limit the maximum maturity length of investments in the Police Pension Fund.

TOTAL

U.S. Treasury Obligations U.S. Agency Obligations Corporate Bonds Foreign Bonds Negotiable Certificates of Deposit

Investment Type

The following table presents the investments and maturities of the Police Pension Fund’s debt securities as of December 31, 2012:

Police Pension Fund Investments

Custodial credit risk for deposits with financial institutions is the risk that in the event of a bank’s failure, the Police and Firefighters’ Pension Funds’ deposits may not be returned to them. The Police and Firefighters’ Pension Funds’ investment policies require all bank balances to be covered by federal depository insurance.

Police and Firefighters’ Pension Funds Deposits with Financial Institutions

40% 10% 47% 3%

Percent of Portfolio

TOTAL

U.S. Treasury Obligations U.S. Agency Obligations Corporate Bonds Foreign Bonds Negotiable Certificates of Deposit

Investment Type

$ 49,675,855

5,000,000

$ 22,886,220 5,387,591 16,294,880 107,164

Fair Value

$

$

Less than 1

-

-

-

5,000,000

9,349,726 3,333,317 10,301,030 107,164

$ 28,091,237

$

$ 17,220,874

-

$ 11,639,848 583,953 4,997,073 -

Investment Maturities (in Years) 1-5 6-10

$

$

4,363,744

-

1,896,646 1,470,321 996,777 -

Greater than 10

The following table presents the investments and maturities of the Firefighters’ Pension Fund’s debt securities as of December 31, 2012:

Firefighters’ Pension Fund Investments

Securities in any one company should not exceed 5% of the total Police Pension Fund and no more than 10% of the total Police Pension Fund should be invested in any one industry. Individual treasury securities may represent 100% of the total Police Pension Fund, while the total allocation to treasury bonds and notes may represent up to 100% of the Police Pension Fund’s aggregate bond position.

Equities Mutual Funds/Variable Annuities Fixed Income Cash and Cash Equivalents

Diversification by Instrument

Concentration of credit risk - The Police Pension Fund’s investment policy specifies the following preferred asset allocations by investment type:

Custodial credit risk for investments is the risk that, in the event of the failure of the counterparty to the investment, the Police Pension Fund will not be able to recover the value of its investments that are in possession of an outside party. To limit its exposure, the Police Pension Fund’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 held by a third party acting as the Police Pension Fund’s agent separate from where the investment was purchased in the Police Pension Fund’s name. The money market mutual funds and mutual funds are not subject to custodial credit risk.

No financial institution shall hold more than 20% of the City’s total investment portfolio. Furthermore, the amount of monies deposited and/or invested in a financial institution shall not exceed 75% of the capital stock and surplus of such institution.

The City’s investment policy does not specifically prohibit the use of or the investment in derivatives.

Police Pension Fund Investments (Continued)

City Investments (Continued)

CASH AND INVESTMENTS (Continued)

3.

3.

CASH AND INVESTMENTS (Continued)

CITY OF AURORA, ILLINOIS NOTES TO FINANCIAL STATEMENTS (Continued)

CITY OF AURORA, ILLINOIS NOTES TO FINANCIAL STATEMENTS (Continued)

A-17 40% 10% 47% 3%

Percent of Portfolio

Securities in any one company should not exceed 5% of the total Firefighters’ Pension Fund and no more than 10% of the total Firefighters’ Pension Fund should be invested in any one industry. Individual treasury securities may represent 100% of the total Firefighters’ Pension Fund, while the total allocation to treasury bonds and notes may represent up to 100% of the Firefighters’ Pension Fund’s aggregate bond position.

Equities Mutual Funds/Variable Annuities Fixed Income Cash and Cash Equivalents

Diversification by Instrument

Concentration of credit risk - The Firefighters’ Pension Fund’s investment policy specifies the following preferred asset allocations by investment type:

Custodial credit risk for investments is the risk that, in the event of the failure of the counterparty to the investment, the Firefighters’ Pension Fund will not be able to recover the value of its investments that are in possession of an outside party. To limit its exposure, the Firefighters’ Pension Fund’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 held by a third party acting as the Firefighters’ Pension Fund’s agent separate from where the investment was purchased in the Firefighters’ Pension Fund’s name. The money market mutual funds and mutual funds are not subject to custodial credit risk.

The Firefighters’ Pension Fund limits its exposure to credit risk, the risk that the issuer of a debt security will not pay its par value upon maturity, by primarily investing in obligations guaranteed by the United States Government, securities issued by agencies of the United States Government that are explicitly or implicitly guaranteed by the United States Government and investment grade corporate bonds. The U.S. agency obligation are rated Aaa by Moody’s. The corporate bonds are rated Baa3 to Aaa by Moody’s. Certain corporate bond, U.S. agency obligation and the money market mutual fund investments are not rated. The foreign bonds and negotiable certificates of deposit are rated Aa3 by Moody’s.

The deposits and investments of the Retiree Health Insurance Trust Fund are held separately from those of the City.

In accordance with its investment policy, the Firefighters’ Pension Fund limits its exposure to interest rate risk by structuring the portfolio to provide liquidity for operating funds and maximizing yields for funds not needed for expected current cash flows. The investment policy does not limit the maximum maturity length of investments in the Firefighters’ Pension Fund.

$

$

9,963,234

49,965

1,965,652 2,913,287 4,975,150 59,180

Fair Value

$

$

-

49,965

49,965

Less than 1

$

$

2,046,367

-

508,988 157,518 1,379,861 -

$

$

2,915,178

-

824,633 99,992 1,990,553 -

Investment Maturities (in Years) 1-5 6-10

$

$

4,951,724

-

632,031 2,655,777 1,604,736 59,180

Greater than 10

The Retiree Health Insurance Trust Fund limits its exposure to interest rate risk by structuring the portfolio to provide liquidity for operating funds and maximizing yields for funds not needed for expected current cash flows. The investment policy does not limit the maximum maturity length of investments in the Retiree Health Insurance Trust Fund.

TOTAL

U.S. Treasury Obligations U.S. Agency Obligations Corporate Bonds Municipal Bonds Negotiable Certificates of Deposit

Investment Type

The following table presents the investments and maturities of the Retiree Health Insurance Trust Fund’s investment in debt securities as of December 31, 2012:

Custodial credit risk for deposits with financial institutions is the risk that in the event of a bank’s failure, the Retiree Health Insurance Trust Fund’s deposits may not be returned to them. The Retiree Health Insurance Trust Fund requires pledging of collateral with a fair value of 110% for all depository accounts, time deposit accounts, money market mutual funds or investments in certificates of deposits of financial institutions in excess of FDIC. The collateral is required to be held by an independent third party depository or the Federal Reserve Bank in the Retiree Health Insurance Trust Fund’s name.

Retiree Health Insurance Trust Fund Deposits with Financial Institutions

Permitted Deposits and Investments - The Retiree Health Insurance Trust Fund Statement of Investment Policies and Objectives authorizes the Retiree Health Insurance Trust Fund to invest in stocks traded on major U.S. and non-U.S. exchanges, securities listed on NASDAQ, mutual funds and commingled funds. Investment grade fixed income instruments are permitted subject to manager guidelines. Investments in options, futures, commodities and nonmarketable illiquid investments are prohibited. Specific guidelines for permitted investments for each manager will be maintained.

Retiree Health Insurance Trust Fund Investments

Firefighters’ Pension Fund Investments (Continued)

CASH AND INVESTMENTS (Continued)

3.

3.

CASH AND INVESTMENTS (Continued)

CITY OF AURORA, ILLINOIS NOTES TO FINANCIAL STATEMENTS (Continued)

CITY OF AURORA, ILLINOIS NOTES TO FINANCIAL STATEMENTS (Continued)

A-18

4.

Capital Assets Being Depreciated Buildings and Land Improvements Machinery and Equipment Vehicles Infrastructure Total Capital Assets Being Depreciated

GOVERNMENTAL ACTIVITIES Capital Assets not Being Depreciated Land Land Right of Way Works of Art Construction in Progress Total Capital Assets not Being Depreciated

Increases

Decreases

Ending Balance

180,587,832 9,629,329 11,495,557 355,336,694 557,049,412

68,000 12,291,402 1,071,282 9,691,044 23,121,728

12,241,745 246,403 155,811 78,719 12,722,678

168,414,087 21,674,328 12,411,028 364,949,019 567,448,462

$ 39,187,462 $ 409,349 $ 326,800 $ 39,270,011 99,582,618 3,597,902 103,180,520 977,267 977,267 34,707,818 17,268,405 16,698,817 35,277,406 174,455,165 21,275,656 17,025,617 178,705,204

Beginning Balance

Capital asset activity for the year ended December 31, 2012 was as follows:

CAPITAL ASSETS

Custodial credit risk for investments is the risk that, in the event of the failure of the counterparty to the investment, the Retiree Health Insurance Trust Fund will not be able to recover the value of its investments that are in possession of an outside party. To limit its exposure, the Retiree Health Insurance Trust Fund 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 held by a third party acting as the Retiree Health Insurance Trust Fund’s agent separate from where the investment was purchased in the Retiree Health Insurance Trust Fund’s name. The money market mutual funds are not subject to custodial credit risk.

The Retiree Health Insurance Trust Fund limits its exposure to credit risk, the risk that the issuer of a debt security will not pay its par value upon maturity, by primarily investing in obligations guaranteed by the United States Government or securities issued by agencies of the United States Government or money market mutual funds that are primarily invested in U.S. Treasury and agency obligations that are explicitly or implicitly guaranteed by the United States Government. However, the investment policy is silent regarding exposure to credit risk. The U.S. agency obligation and the money market mutual funds are rated Aaa by Moody’s. The corporate bonds are rated Baa3 to Aaa by Moody’s. The municipal bonds are rated Aa3 by Moody’s. Certain corporate bond, negotiable certificates of deposit and U.S. agency obligation investments are not rated.

Retiree Health Insurance Trust Fund Deposits with Financial Institutions (Continued)

Total Capital Assets Being Depreciated, Net

$ 196,286,045

181,313,555

4,552,635 27,453,391 45,562,183 3,242,684 1,808,219 82,619,112

8,441,215 89,920,567 158,901,291 4,520,851 2,148,743 263,932,667

Beginning Balance

Capital Assets Being Depreciated Land Improvements Building Infrastructure Machinery and Equipment Vehicles Total Capital Assets Being Depreciated

BUSINESS-TYPE ACTIVITIES CAPITAL ASSETS, NET

10,639,481

Ending Balance

7,586,985

392,136,758

4,669,632 $ 38,943,932 246,403 7,549,572 155,811 9,927,707 63,847 118,890,493 5,135,693 175,311,704

Decreases

$

$

2,101,760

224,933

346,756 1,784,716 2,474,723 210,486 89,267 4,905,948

342,386 514,389 3,911,418 119,736 242,952 5,130,881

35,922 1,840,905 1,876,827

Increases

$

$

1,074,494

-

85,000 81,301 166,301

85,000 81,301 166,301

1,074,494 1,074,494

Decreases

$ 197,313,311

181,538,488

4,899,391 29,153,107 48,036,906 3,453,170 1,816,185 87,358,759

8,783,601 90,349,956 162,812,709 4,640,587 2,310,394 268,897,247

$ 12,389,135 3,385,688 15,774,823

Ending Balance

$ 563,539,427 $ 31,915,137 $ 24,612,602 $ 570,841,962

389,084,262

$ 12,353,213 2,619,277 14,972,490

Less Accumulated Depreciation for Land Improvements Building Infrastructure Machinery and Equipment Vehicles Total Accumulated Depreciation

Increases

$ 39,460,002 $ 4,153,562 $ 6,774,005 1,021,970 9,573,549 509,969 112,157,594 6,796,746 167,965,150 12,482,247

Beginning Balance

BUSINESS-TYPE ACTIVITIES Capital Assets not Being Depreciated Land Construction in Progress Total Capital Assets not Being Depreciated

GOVERNMENTAL ACTIVITIES CAPITAL ASSETS, NET

Total Capital Assets Being Depreciated, Net

GOVERNMENTAL ACTIVITIES (Continued) Less Accumulated Depreciation for Buildings and Land Improvements Machinery and Equipment Vehicles Infrastructure Total Accumulated Depreciation

CAPITAL ASSETS (Continued)

4.

3.

CASH AND INVESTMENTS (Continued)

CITY OF AURORA, ILLINOIS NOTES TO FINANCIAL STATEMENTS (Continued)

CITY OF AURORA, ILLINOIS NOTES TO FINANCIAL STATEMENTS (Continued)

A-19

5.

4.

2,143,650 2,911,459 6,667,881 470,387 288,870

$ 12,482,247

$

$

$

284,800

$

24,586

7,449 467

68,892 1,655

13,165 1,096 1,195 1,214

$

1,502 13,382 7,816 256 2,147

155,250 18,960 6,800 8,140

Additions

$

$

31,350

248

142 669 749 195 -

21,375 1,770 4,080 2,122

Reductions

$

$

278,036

76,341 1,874

1,360 13,809 8,262 61 3,361

147,040 17,190 2,720 6,018

December 31

$

$

19,598

-

145 690 735 61 -

10,180 2,605 520 4,662

Current Portion

* These liabilities are primarily retired by the General Fund (for compensated absences through contributions to the Internal Service Fund).

TOTAL GOVERNMENTAL ACTIVITIES

GOVERNMENTAL ACTIVITIES General Obligation Bonds Tax Increment Revenue Bonds/Notes Debt Certificates Notes Payable Illinois EPA Loan-Heathercrest Sanitary Sewer Rehabilitation Compensated Absences* Insurance Claims Payable Termination Benefits* Net Pension Obligation* Net Other Postemployment Benefit Obligation* Unamortized Bond Premium

January 1

The following is a summary of changes in bonds, contracts payable and other long-term liabilities during 2012 (in thousands of dollars):

LONG-TERM DEBT

TOTAL DEPRECIATION EXPENSE - GOVERNMENTAL ACTIVITIES

GOVERNMENTAL ACTIVITIES General Government Public Safety Streets and Transportation Culture and Recreation Economic Development

Depreciation expense was charged to functions of the primary government as follows:

CAPITAL ASSETS (Continued)

CITY OF AURORA, ILLINOIS NOTES TO FINANCIAL STATEMENTS (Continued)

5.

$

$

46,262

563 -

6,303 668 2,912 49 55 1,717

33,995

30,750 3,245

$

$

2,881

66 34

135

2,680

2,680

Additions

$

$

1,700

2

496 35 153 3 17 86

3,905

660 3,245

Reductions

$

$

44,480

629 32

5,807 633 2,759 46 38 1,766

32,770

30,090 2,680

December 31

$

$

74,860

12,915

$85,500,000 2008 Corporate Purpose serial bonds, due in annual installments of $1,650,000 to $4,785,000 from December 30, 2009 to December 30, 2038, interest from 3.5% to 5.0% $15,460,000 2009A Taxable Corporate Purpose serial bonds, due in annual installments of $740,000 to $1,290,000 from December 30, 2010 to December 30, 2024, interest from 1.25% to 5.00%. Pursuant to the American Recovery and Reinvestment Act, the City is eligible to receive a rebate from the U.S. Treasury Department of 25% of the interest paid each year. The net interest rate for the Series 2009A Build America Bonds, after rebate, is 0.94% to 3.75%.

26,925

8,190

$

Total

$22,075,000 2007 Corporate Purpose refunding serial bonds, due in annual installments of $140,000 to $3,285,000 from December 30, 2008 to December 30, 2016, interest from 4.0% to 5.0%

$31,070,000 2006 Corporate Purpose serial bonds, due in annual installments of $175,000 to $1,585,000 from December 30, 2007 to December 30, 2036, interest from 4.25% to 4.75%

General Obligation Bonds

$

920

2,860

2,680

900

Current Portion

1,877

-

510 35 153 3 38 88

1,050

695 355

Current Portion

Bonds payable at December 31, 2012 are comprised of the following, excluding the refunded bonds that are defeased in-substance.

TOTAL BUSINESS-TYPE ACTIVITIES

2000 Illinois EPA Loan 2009A Illinois EPA Loan 2009B Illinois EPA Loan 2010 Illinois EPA Loan Termination Benefits Compensated Absences Net Other Postemployment Benefit Obligation Unamortized Bond Premium

Total Revenue Bonds

BUSINESS-TYPE ACTIVITIES Revenue Bonds Water and Sewer Revenue Bonds Golf Course Revenue Bonds

January 1

LONG-TERM DEBT (Continued)

CITY OF AURORA, ILLINOIS NOTES TO FINANCIAL STATEMENTS (Continued)

A-20 $

17,265 $

3,280

$3,700,000 2009 tax increment revenue notes, due in annual installments of $120,000 to $410,000, through December 30, 2024, interest at 7.00% $

6,195

$7,265,000 2008B tax increment revenue bonds, due in annual installments of $335,000 to $755,000, through December 30, 2023, interest at 6.50%

TOTAL

6,015

1,775 $

$6,660,000 2008A tax increment revenue bonds, due in annual installments of $200,000 to $610,000, through December 30, 2027, interest at 6.75%

$

2,605

180

405

245

1,775

$229,000 Note Payable due in 11 annual installments of $17,000 to $23,000, through August 2021, interest variable

$575,000 Note Payable due in 12 annual installments of $39,000 to $54,000, through August 2021, interest variable

$101,000 Note Payable due in 16 annual installments of $2,500 to $8,041, through August 2021, interest at 5.2%

$150,000 Note Payable due in 16 annual installments of $5,000 to $14,000, through August 2021, interest at 5.2%

$290,000 Note Payable due in ten annual installments of $18,000 to $42,000, through August 2013, interest at 4.2%

$

Notes Payable

$7,140,000 2004B tax increment revenue bonds, due in annual installments of $170,000 to $1,775,000, through December 30, 2013, interest from 4.90% to 5.85%

10,180

$

147,040 $

TOTAL

TOTAL

Tax Increment Revenue Bonds and Notes

460

$

TOTAL

Debt Certificates

$

$

$

$2,680,000 2012 Golf Course Revenue Refunding Bonds, due in annual installments of $355,000 to $410,000, through January 1, 2020, interest at 2.5%

Golf

TOTAL

$33,485,000 2006 Waterworks and Sewerage serial revenue bonds, due in annual installments of $385,000 to $2,090,000, through December 1, 2036, interest from 4.00% to 4.75%

Water and Sewer

$

3,095

$3,095,000 2012D Corporate Purpose refunding serial bonds, due in annual installments of $235,000 to $500,000 from December 30, 2013 to December 30, 2020, interest from 2.0% to 3.0%

600

480

945

335

Current Portion

Revenue and Alternate Revenue Source Bonds

$4,760,000 Series 2006 Special Service Area No. 34 refunding debt certificates, due in annual installments of $35,000 to $580,000, through December 30, 2019, interest at 4.0%

3,165

$3,165,000 2012C Corporate Purpose refunding serial bonds, due in annual installments of $600,000 to $660,000 from December 30, 2013 to December 30, 2017, interest at 2.0%

6,905

$6,905,000 2012B Corporate Purpose refunding serial bonds, due in annual installments $480,000 to $655,000 from December 30, 2013 to December 30, 2024, interest from 2.0% to 2.5%

4,665 $

6,320

$

Total

$6,320,000 2011 Corporate Purpose refunding serial bonds, due in annual installments of $945,000 to $1,135,000 from December 30, 2013 to December 30, 2018, interest from 2.0% to 3.0%

$5,590,000 2009B Corporate Purpose refunding serial bonds, due in annual installments of $270,000 to $445,000 from December 30, 2010 to December 30, 2024, interest from 2.0% to 3.7%

General Obligation Bonds (Continued)

LONG-TERM DEBT (Continued)

5.

5.

LONG-TERM DEBT (Continued)

CITY OF AURORA, ILLINOIS NOTES TO FINANCIAL STATEMENTS (Continued)

CITY OF AURORA, ILLINOIS NOTES TO FINANCIAL STATEMENTS (Continued)

$

192

446

58

86

42

$

2,720 $

2,720

2,680 $

2,680 $

30,090 $

30,090 $

Total

20

47

5

8

42

520

520

355

355

695

695

Current Portion

A-21

5.

TOTAL

$69,513 Illinois EPA loan related to a bio-infiltration system, due in semiannual installments of $1,335, through June 2030, interest at 0%

$2,988,143 Illinois EPA loan related to the separation of certain combined sewer lines, due in semiannual installments to be determined, through June 2030, interest at 0%

$

10,605 $

46

2,759

633

$685,871 Illinois EPA loan related to certain watermain replacements, due in semiannual installments to be determined, through January 2030, interest at 0%

1,360 $

5,807

$

6,018 $

$10,000,000 Illinois EPA low interest loan related to the water plant expansion project, due in semiannual installments of $337,665, through September 2022, interest at 2.905%

$2,546,144 Illinois EPA low interest loan related to the Heathercrest Sanitary Sewer Rehabilitation, due in semiannual installments of $89,444, through June 2021, interest at 2.535%

Illinois EPA Loans

$

1,500

$4,500,000 Note Payable due in three annual installments of $1,500,000, through June 2013, interest at 0%

TOTAL

2,500

$2,500,000 Note Payable due on November 5, 2013, interest due in semiannual installments at 7.5%

110 $

1,084

$

Total

$4,360,000 Series 2005 Promissory Note due in annual installments of $183,146 to $281,457, through December 2014, interest at 5.07%

$140,000 Note Payable due in 12 annual installments of $8,000 to $13,000, through August 2021, interest variable

Notes Payable (Continued)

LONG-TERM DEBT (Continued)

CITY OF AURORA, ILLINOIS NOTES TO FINANCIAL STATEMENTS (Continued)

12

846

3

153

35

510

145

4,662

1,500

2,500

528

Current Portion

5.

TOTAL

2013 2014 2015 2016 2017 2018-2022 2023-2027 2028-2032 2033-2037 2038-2042

December 31,

$

$

147,040

10,180 9,200 9,370 7,055 6,860 28,965 24,360 20,935 25,330 4,785

$

$

82,003

6,422 5,992 5,658 5,305 5,060 21,852 15,835 10,673 4,966 240

General Obligation Bonds Principal Interest

$

$

17,265

2,605 890 960 1,015 1,090 6,755 3,950 -

$

$

8,108

1,142 983 923 859 791 2,750 660 -

TIF Bonds/Notes Principal Interest

$

$

2,720

520 560 555 570 305 210 -

$

$

340

109 88 66 43 21 13 -

Installment Contracts/ Debt Certificates Principal Interest

The annual requirements to amortize all debt outstanding (except compensated absences, insurance claims, the NPO and the NOPEBO) as of December 31, 2012, are as follows (in thousands of dollars):

Debt Service to Maturity

In fiscal year 2004, the City implemented GASB Statement No. 45, Accounting and Financial Reporting by Employers for Postemployment Benefits Other than Pensions. This pronouncement required the City to calculate and record a net other postemployment benefit obligation (NOPEBO) at December 31, 2004. The NOPEBO is, in general, the cumulative difference between the actuarial required contribution and the actual contributions since January 1, 2004.

Net Other Postemployment Benefit Obligation

In fiscal year 1997, the City implemented GASB Statement No. 27, Employer’s Accounting for Pension Costs. This pronouncement required the City to calculate and record a net pension obligation (NPO) at December 31, 1996. The NPO is, in general, the cumulative difference between the actuarial required contributions and the actual contributions since 1986.

Net Pension Obligation

The City offered health care termination benefits to certain personnel during the years ended December 31, 2009, 2010 and 2011. Under the terms of the agreement, the City is required to pay 100% of an employee’s and their dependent’s health insurance premiums for 4 to 12 months, based on an employee’s years of service. As of December 31, 2012, six retirees were participating in the early retirement incentive with an estimated liability of $98,728. This liability was calculated assuming a health care cost trend rate of 7%. All benefits are expected to be paid in 2013.

Termination Benefits

LONG-TERM DEBT (Continued)

CITY OF AURORA, ILLINOIS NOTES TO FINANCIAL STATEMENTS (Continued)

A-22

$

TOTAL

10,605

846 865 885 904 925 4,653 955 572 -

$

$

1,084

199 180 161 141 121 282 $

$

6,018

4,662 648 92 98 99 419 $

$

320

250 32 9 8 7 14 -

Notes Payable Principal Interest

$

$

32,770

1,050 1,090 1,135 1,175 1,215 5,595 6,030 7,715 7,765 $

$

20,636

1,418 1,379 1,341 1,301 1,260 5,629 4,429 2,933 946

Revenue and Alternate Revenue Source Bonds Principal Interest

On December 20, 2012, the City issued $2,680,000 Golf Course Revenue Refunding Serial Bonds, Series 2012 to refund, through a current refunding, $2,705,000 of the Series 2000 Golf Course Serial Alternate Revenue Source Bonds. As a result of the refunding, the City achieved cash flow savings of $401,161 and an economic gain of $443,350.

On October 1, 2012, the City issued $3,095,000 Corporate Purpose Refunding Serial Bonds, Series 2012D to refund, through a current refunding, $3,150,000 of the Series 2002 Special Service Area No. 34 Debt Certificates. As a result of the refunding, the City achieved cash flow savings of $407,220 and an economic gain of $385,605.

On October 2, 2012, the City issued $3,165,000 Corporate Purpose Refunding Serial Bonds, Series 2012C to refund, through a current refunding, $3,245,000 of the Corporate Purpose Refunding Serial Bonds, Series 2004B. As a result of the refunding, the City achieved cash flow savings of $249,558 and an economic gain of $304,599.

On October 2, 2012, the City issued $6,905,000 Corporate Purpose Refunding Serial Bonds, Series 2012B to refund, through a current refunding, $6,915,000 of the Corporate Purpose Serial Bonds, Series 2004A. As a result of the refunding, the City achieved cash flow savings of $995,994 and an economic gain of $1,028,755.

Current Refunding

The bonds of several issues are subject to redemption and payment prior to their maturity, at the option of the City.

$

2013 2014 2015 2016 2017 2018-2022 2023-2027 2028-2032 2033-2036

December 31,

Illinois EPA Loans Principal Interest

Debt Service to Maturity (Continued)

The amount remaining after payment into the above four accounts

Surplus Revenue

Making up deficiencies in the aforementioned accounts, paying of junior lien bonds and for any other lawful corporate purpose

Cost of extraordinary maintenance, necessary replacement and improvement or extension of the system

Paying principal and interest on bonds when there are insufficient funds in the bond and interest account

Paying principal and interest on bonds

Expenses of operating, maintaining and repairing the system

Nature of Authorized Expenditures

TOTAL

RESTRICTED BOND ORDINANCE ACCOUNTS Bond and Interest Account Bond Reserve Account Depreciation, Improvement and Extension Account

964 2,234,411 527,087 $ 2,762,462

$

The City has complied with all significant limitations, restrictions and bond covenants during the year ended December 31, 2012. The restricted assets and restricted net position for purposes other than bond proceeds and the expenses of operating, maintaining and repairing the system, is as follows:

$8,000 per month until the account aggregates a minimum of $500,000

Depreciation, Improvement and Extension

$30,000 per month until account aggregates an amount equal to bond and interest requirements for any succeeding fiscal year

Amount sufficient to pay the current bond and interest maturities

Bond and Interest

Bond Reserve

Sufficient amount to pay reasonable expenses for one month’s operations

Amount

Operation and Maintenance

Account

The revenue bond ordinances require that all revenues derived from the operation of the Water and Sewer Fund be segregated in separate accounts, in the priority indicated by the order of the following:

REVENUE BONDS

6.

5.

LONG-TERM DEBT (Continued)

CITY OF AURORA, ILLINOIS NOTES TO FINANCIAL STATEMENTS (Continued)

CITY OF AURORA, ILLINOIS NOTES TO FINANCIAL STATEMENTS (Continued)

A-23

9.

8.

7.

The City contributes to three defined benefit pension plans, the Illinois Municipal Retirement Fund (IMRF), an agent multiple-employer public employee retirement system; the Police Pension Plan, which is a single-employer pension plan; and the Firefighters’ Pension Plan, which is also a single-employer pension plan. The benefits, benefit levels, employee contributions and employer contributions for all three plans are governed by Illinois Compiled Statutes (ILCS) and can only be amended by the Illinois General Assembly. The Police and Firefighters’ Pension Plans both issue separate reports on the pension plans that include required supplementary information and trend information. These statements can be obtained from the Treasurer of the pension plans at 44 E. Downer Place, Aurora, Illinois 60507-2067. IMRF also issues a publicly available report that includes financial statements and supplementary information for the plan as a whole, but not for individual employers. That report can be obtained from IMRF, 2211 York Road, Suite 500, Oak Brook, Illinois 60523.

DEFINED BENEFIT PENSION PLANS

On March 23, 1976, the City passed an ordinance enabling the City to provide financing for economic development projects, pollution control projects and hospital facilities by the issuance of industrial or mortgage revenue bonds. The bonds are secured solely by the property financed and are payable solely from the payments received on the underlying mortgage loans on the property. The City is not obligated in any manner for the repayment of the bonds. Accordingly, the bonds outstanding are not reported as a liability in these financial statements. As of December 31, 2012, there were 33 series of bonds outstanding. The aggregate principal amount payable for the series which could be determined was $233,432,356. The aggregate principal amount payable for the other series of bonds could not be determined; however, the original issue amounts of the bonds totaled $549,555,000.

INDUSTRIAL AND MORTGAGE REVENUE BONDS

The City offers its employees a deferred compensation plan created in accordance with Internal Revenue Code Section 457. The plan, available to all employees, permits them to defer a portion of their salary until future years. The deferred compensation is not available to employees until termination, retirement, death or unforeseeable emergency. At December 31, 2012, the plan assets have been placed in trust for the benefit of employees. Accordingly, the plan assets are not reported in the City’s financial statements.

DEFERRED COMPENSATION PLAN

CITY OF AURORA, ILLINOIS NOTES TO FINANCIAL STATEMENTS (Continued)

9. A.

Police sworn personnel are covered by the Police Pension Plan. Although this is a single-employer pension plan, the defined benefits and employee and employer contribution levels are governed by Illinois Compiled Statutes (40 ILCS 5/3-1) and may be amended only by the Illinois legislature. The City accounts for the plan as a pension trust fund.

Police Pension Plan

IMRF also provides death and disability benefits. These benefit provisions and all other requirements are established by state statute. Participating members are required to contribute 4.5% of their annual salary to IMRF. The City is required to contribute the remaining amounts necessary to fund IMRF as specified by statute. The employer contribution and required employer contribution for 2012 was 13.60% of covered payroll.

Employees hired on or after January 1, 2011 are eligible for Tier 2 benefits. For Tier 2 employees, pension benefits vest after ten years of service. Participating members who retire at age 62 (reduced benefits) or after age 67 (full benefits) with ten years of credited service are entitled to an annual retirement benefit, payable monthly for life, in an amount equal to 1 2/3% of their final rate of earnings, for each year of credited service up to 15 years, and 2% for each year thereafter.

All employees (other than those covered by the Police or Firefighters’ Pension Plans) hired in positions that meet or exceed the prescribed annual hourly standard must be enrolled in IMRF as participating members. IMRF provides two tiers of pension benefits. Employees hired prior to January 1, 2011 are eligible for Tier 1 benefits. For Tier 1 employees, pension benefits vest after eight years of service. Participating members who retire at age 55 (reduced benefits) or after age 60 (full benefits) with eight years of credited service are entitled to an annual retirement benefit, payable monthly for life, in an amount equal to 1 2/3% of their final rate of earnings, for each year of credited service up to 15 years, and 2% for each year thereafter.

Illinois Municipal Retirement Fund

Plan Descriptions

DEFINED BENEFIT PENSION PLANS (Continued)

CITY OF AURORA, ILLINOIS NOTES TO FINANCIAL STATEMENTS (Continued)

A-24

A.

Employees are required by ILCS to contribute 9.91% of their base salary to the Police Pension Plan. If an employee leaves covered employment with less than 20 years of service, accumulated employee contributions may be refunded without accumulated interest. The City is required to contribute the remaining amounts necessary to finance the plan and the administrative costs as actuarially determined by an enrolled actuary. Effective January 1, 2011, the City has until the year 2040 to fund 90% of the past service cost for the Police Pension Plan. For the year ended December 31, 2012, the City’s contribution was 39.98% of covered payroll.

Tier 2 employees (those hired on or after January 1, 2011) attaining the age of 55 or older with ten or more years of creditable service are entitled to receive an annual retirement benefit equal to the average monthly salary obtained by dividing the total salary of the police officer during the 96 consecutive months of service within the last 120 months of service in which the total salary was the highest by the number of months of service in that period. Police officers’ salary for pension purposes is capped at $106,800, plus the lesser of ½ of the annual change in the Consumer Price Index or 3.00% compounded. The annual benefit shall be increased by 2.50% of such salary for each additional year of service over 20 years up to 30 years to a maximum of 75.00% of such salary. Employees with at least ten years may retire at or after age 50 and receive a reduced benefit (i.e., ½% for each month under 55). The monthly benefit of a Tier 2 police officer shall be increased annually at age 60 on the January 1st after the police officer retires, or the first anniversary of the pension starting date, whichever is later. Noncompounding increases occur annually, each January thereafter. The increase is the lesser of 3.00% or ½ of the change in the Consumer Price Index for the proceeding calendar year.

Tier 2 employees (those hired on or after January 1, 2011) attaining the age of 55 or older with ten or more years of creditable service are entitled to receive an annual retirement benefit equal to the average monthly salary obtained by dividing the total salary of the firefighter during the 96 consecutive months of service within the last 120 months of service in which the total salary was the highest by the number of months of service in that period. Firefighters’ salary for pension purposes is capped at $106,800, plus the lesser of ½ of the annual change in the Consumer Price Index or 3.00% compounded. The annual benefit shall be increased by 2.50% of such salary for each additional year of service over 20 years up to 30 years to a maximum of 75.00% of such salary. Employees with at least ten years may retire at or after age 50 and receive a reduced benefit (i.e., ½% for each month under 55). The monthly benefit of a Tier 2 firefighter shall be increased annually at age 60 on the January 1st after the firefighter retires, or the first anniversary of the pension starting date, whichever is later. Noncompounding increases occur annually, each January thereafter. The increase is the lesser of 3.00% or ½ of the change in the Consumer Price Index for the proceeding calendar year.

The Firefighters’ Pension Plan provides retirement benefits through two tiers of benefits as well as death and disability benefits. Tier 1 employees (those hired prior to January 1, 2011) attaining the age of 50 or older with 20 or more years of creditable service are entitled to receive an annual retirement benefit equal to onehalf of the salary attached to the rank held at the date of retirement. The annual benefit shall be increased by 2.50% of such salary for each additional year of service over 20 years up to 30 years to a maximum of 75.00% of such salary. Employees with at least ten years but less than 20 years of credited service may retire at or after age 60 and receive a reduced benefit. The monthly benefit of a covered employee who retired with 20 or more years of service after January 1, 1977 shall be increased annually, following the first anniversary date of retirement and be paid upon reaching the age of at least 55 years, by 3.00% of the original pension and 3.00% compounded annually thereafter.

Fire sworn personnel are covered by the Firefighters’ Pension Plan. Although this is a single-employer pension plan, the defined benefits and employee and employer contribution levels are governed by Illinois Compiled Statutes (40 ILCS 5/4-1) and may be amended only by the Illinois legislature. The City accounts for the plan as a pension trust fund.

The Police Pension Plan provides retirement benefits through two tiers of benefits as well as death and disability benefits. Tier 1 employees (those hired prior to January 1, 2011) attaining the age of 50 or older with 20 or more years of creditable service are entitled to receive an annual retirement benefit equal to one-half of the salary attached to the rank held on the last day of service, or for one year prior to the last day, whichever is greater. The annual benefit shall be increased by 2.50% of such salary for each additional year of service over 20 years up to 30 years to a maximum of 75.00% of such salary. Employees with at least eight years but less than 20 years of credited service may retire at or after age 60 and receive a reduced benefit. The monthly benefit of a police officer who retired with 20 or more years of service after January 1, 1977 shall be increased annually, following the first anniversary date of retirement and be paid upon reaching the age of at least 55 years, by 3.00% of the original pension and 3.00% compounded annually thereafter.

Plan Descriptions (Continued) Firefighters’ Pension Plan

A.

Police Pension Plan (Continued)

Plan Descriptions (Continued)

DEFINED BENEFIT PENSION PLANS (Continued)

9.

9.

DEFINED BENEFIT PENSION PLANS (Continued)

CITY OF AURORA, ILLINOIS NOTES TO FINANCIAL STATEMENTS (Continued)

CITY OF AURORA, ILLINOIS NOTES TO FINANCIAL STATEMENTS (Continued)

A-25

9.

C.

B.

A.

December 31, 2010

Entry-age Normal 5 Year Smoothed Market Level Percentage of Payroll 30 Years, Open

Actuarial Valuation Date

Actuarial Cost Method

Asset Valuation Method

Amortization Method

Amortization Period

Illinois Municipal Retirement

30 Years, Closed

Level Percentage of Payroll

Market

Entry-age Normal

December 31, 2011

Police Pension

Employer contributions have been determined as follows:

Annual Pension Costs

30 Years, Closed

Level Percentage of Payroll

Market

Entry-age Normal

December 31, 2011

Firefighters’ Pension

There are no significant investments (other than U.S. Government guaranteed obligations) in any one organization that represent 5.0% or more of plan net assets for either the Police or the Firefighters’ Pension Plans. Information for IMRF is not available.

Significant Investments

Covered employees are required to contribute 9.455% of their base salary to the Firefighters’ Pension Plan. If an employee leaves covered employment with less than 20 years of service, accumulated employee contributions may be refunded without accumulated interest. The City is required to finance the plan and the administrative costs as actuarially determined by an enrolled actuary. Effective January 1, 2011, the City has until the year 2040 to fund 90% of the past services costs for the Firefighters’ Pension Plan. For the year ended December 31, 2012, the City’s contribution was 38.33% of covered payroll.

Firefighters’ Pension Plan (Continued)

Plan Descriptions (Continued)

DEFINED BENEFIT PENSION PLANS (Continued)

CITY OF AURORA, ILLINOIS NOTES TO FINANCIAL STATEMENTS (Continued)

9. C.

.4% to 10.0%

c) Additional Projected Salary Increases Seniority/Merit

Not Available

5.5% Compounded Annually

7.0% Compounded Annually

Police Pension

Not Available

5.5% Compounded Annually

7.0% Compounded Annually

Firefighters’ Pension

2010 2011 2012

Percentage of APC Contributed

2010 2011 2012

2010 2011 2012

Actual Contributions

NPO

2010 2011 2012

Annual Pension Cost (APC)

Calendar Year

Police Pension

$

99.75% 99.80% 91.22%

9,901,400 10,364,821 8,270,619

193,078 182,758 587,571

99.96% 100.12% 94.80%

8,268,900 8,574,474 7,380,005

$ 8,271,961 8,564,154 7,784,818

Firefighters’ Pension

340,662 $ 1,284,308 $ 659,194 1,305,521 673,294 2,101,410

91.82% 92.56% 99.69%

3,822,990 3,961,882 4,603,427

$ 4,163,652 $ 9,926,672 4,280,414 10,386,034 4,617,527 9,066,508

Illinois Municipal Retirement

Employer annual pension costs (APC), actual contributions and the net pension obligation (NPO) are as follows. The NPO is the cumulative difference between the APC and the contributions actually made.

4.0% Compounded Annually

7.5% Compounded Annually

Illinois Municipal Retirement

b) Projected Salary Increase Attributable to Inflation

Significant Actuarial Assumptions a) Rate of Return on Present and Future Assets

Annual Pension Costs (Continued)

DEFINED BENEFIT PENSION PLANS (Continued)

CITY OF AURORA, ILLINOIS NOTES TO FINANCIAL STATEMENTS (Continued)

A-26

9.

D.

C.

Firefighters’ Pension

$

587,571

404,813 182,758

7,784,818 7,380,005

$

$

48.74% 26,708,019 570.10%

$

65.50% 38,825,698 102.77%

297,095,318 144,783,442 152,261,876

$

39,902,496

115,654,588 75,752,092

Police Pension

$

$

52.46% 19,252,373 551.91%

106,255,544

223,524,431 117,268,887

Firefighters’ Pension

See the schedules of funding progress in the required supplementary information immediately following the notes to financial statements for additional information related to the funded status of the plans.

Actuarial Accrued Liability (AAL) Actuarial Value of Plan Assets Unfunded Actuarial Accrued Liability (UAAL) Funded Ratio (Actuarial Value of Plan Assets/AAL) Covered Payroll (Active Plan Members) UAAL as a Percentage of Covered Payroll

Illinois Municipal Retirement

The funded status of the plans as of December 31, 2012, based on actuarial valuations performed as of the same date, is as follows. The actuarial assumptions used to determine the funded status of the plans are the same actuarial assumptions used to determine the employer APC of the plans as disclosed in Note 9-C:

Funded Status

The NPO is reported as a liability in the City’s governmental activities column in the government-wide financial statements at December 31, 2012.

673,294 $ 2,101,410

$

NET PENSION OBLIGATION, END OF YEAR

795,889 1,305,521

9,066,508 8,270,619

14,100 659,194

4,617,527 4,603,427

$ 4,603,427 $ 9,030,372 $ 7,779,759 49,440 91,386 12,793 (35,340) (55,250) (7,734)

Police Pension

Increase in Net Pension Obligation Net Pension Obligation, Beginning of Year

Annual Pension Cost Contributions Made

Annual Required Contribution Interest on Net Pension Obligation Adjustment to Annual Required Contribution

Illinois Municipal Retirement

The NPO at December 31, 2012 has been calculated as follows:

Annual Pension Costs (Continued)

DEFINED BENEFIT PENSION PLANS (Continued)

CITY OF AURORA, ILLINOIS NOTES TO FINANCIAL STATEMENTS (Continued)

10.

CLAIMS PAYABLE, DECEMBER 31

CLAIMS PAYABLE, JANUARY 1 Add Claims Incurred and Claims Adjustment Less Claims Paid

$ 2,938,919

2,432,288 2,944,633

$ 3,451,264

$ 3,451,264

3,638,968 3,052,943

$ 2,865,239

Workers’ Compensation 2012 2011

$ 4,587,679

2,396,186 1,425,034

$ 3,616,527

$ 3,616,527

1,798,584 1,831,947

$ 3,649,890

General Liability 2012 2011

A reconciliation of the claims liability for workers’ compensation and general liability is as follows:

The City is self-insured for workers’ compensation. In order to limit its exposure to losses, the City has purchased specific stop-loss coverage limiting its exposure to $600,000 per occurrence, which is the same coverage as the prior year, with specific excess coverage providing insurance above $600,000 per occurrence up to the statutory maximum. The City has hired a third party administrator to review, process and pay claims, as directed by the City’s human resources director/risk manager. Claims incurred are charged to the City’s Property and Casualty Insurance Fund.

Workers’ Compensation

The City is self-insured for general liability insurance up to $2,000,000. The City has purchased specific stop-loss coverage for claims from $2,000,000 to $20,000,000, which is the same coverage as the prior year. The City has hired a third party administrator to review, process and pay claims as directed by the City’s human resources director/risk manager.

Liability Insurance

The City has purchased third party indemnity coverage for property and casualty losses. The City is covered up to 90% of the replacement cash value for property, with a selfinsured retention of $50,000 per occurrence, which is the same coverage as the prior year.

Property Insurance

The City is exposed to various risks of loss, including but not limited to, property and casualty, general and public officials’ liability, workers’ compensation and employee’s health. The City uses a combination of purchased third party indemnity insurance and selfinsurance with specific and aggregate stop-loss coverage to limit its exposure to losses. The coverage by area is as follows:

RISK MANAGEMENT

CITY OF AURORA, ILLINOIS NOTES TO FINANCIAL STATEMENTS (Continued)

A-27

10.

$ 1,285,211

CLAIMS PAYABLE, DECEMBER 31

$ 1,177,649

$ 1,272,283 17,926,162 18,020,796

Settled claims did not exceed the insurance coverage in the current year or the prior two fiscal years.

The insurance programs are funded through monthly charges to the various city funds and the terminated individuals and are accounted for in the Property and Casualty Insurance Fund and the Employee Health Insurance Fund. The excess of such charges over health care claims paid, premiums for insurance coverage in excess of self-insured amounts, premiums for group life insurance and charges for administration of the program, if any, is reported as an operating transfer.

Life insurance benefits for each city employee are provided through insurance.

$ 1,177,649 18,522,141 18,414,579

CLAIMS PAYABLE, JANUARY 1 Add Claims Incurred Less Claims Paid

Health Insurance 2012 2011

For the self-insurance program the City has purchased stop-loss coverage to limit its exposure to losses from self-insured health insurance. The specific stop-loss coverage, on a policy year of January 1 - December 31, 2012, is $325,000 per individual, which is the same coverage as the prior year, with an aggregate specific attachment of $40,000. Therefore, claims in excess of $325,000 per individual are aggregated until the amount reaches $40,000, with excess amounts above this reimbursed by the aggregate specific carrier, up to $2,000,000 per policy year.

The City is partially self-insured for health care benefits provided to its employees, retirees and their dependents. Such employees may elect to receive benefits under a Health Care Maintenance Organization (HMO) program or under the City’s self-insurance program. The same coverage is offered to individuals who, upon termination, qualify for retirement. Such individuals reimburse the City a stipulated monthly premium charge and receive coverage. Under the HMO option, all covered health charges are the responsibility of the HMO, the City pays the premiums for this coverage in excess of the employee/retiree contribution.

Health Care and Insurance Benefits

RISK MANAGEMENT (Continued)

CITY OF AURORA, ILLINOIS NOTES TO FINANCIAL STATEMENTS (Continued)

13.

12.

11.

Amounts received and receivable from grantor agencies are subject to audit and adjustment by grantor agencies, principally the federal government. Any disallowed claims, including amounts already collected, may constitute a liability of the applicable funds. The amount, if any, of expenditures which may be disallowed by the grantor cannot be determined at this time although the City expects such amounts, if any, to be immaterial.

Grants

The City is a defendant in various lawsuits. Although the outcome of these lawsuits is not presently determinable, in the opinion of the City’s attorney the resolution of these matters will not have a material adverse effect on the financial condition of the City. As disclosed in Note 10, a liability of $4,587,679 has been accrued for probable losses on liability claims.

Litigation

TOTAL

General Debt Service Nonmajor Governmental Fiduciary

- $ 6,525,421 11,917,783 5,417,783 25,421 -

Due To

$ 11,943,204 $ 11,943,204

$

Due From

Due from/to other funds at December 31, 2012 consist of the following:

INTERFUND ACCOUNTS

The City has entered into various agreements with private organizations to encourage economic development in the City. Some of these agreements provide for rebating a portion of property taxes and/or sales taxes to the private organizations if certain benchmarks of development are achieved. During the fiscal year ended December 31, 2012, approximately $3,931,463 in property taxes and $982,210 in sales taxes were rebated under these agreements. Approximately $19,322,156 in property taxes and $2,358,907 in sales taxes may be rebated if certain criteria are met in future years.

DEVELOPMENT ASSISTANCE

B.

A.

CONTINGENT LIABILITIES

CITY OF AURORA, ILLINOIS NOTES TO FINANCIAL STATEMENTS (Continued)

A-28

13.

$11,917,783 due from other funds to the nonmajor governmental funds. This balance relates primarily to a) an unliquidated reallocation of $6.0 million of homerule sales taxes from the General Fund to Capital Improvements Fund A (a nonmajor capital projects fund) and b) an unliquidated transfer of $4.9 million from the TIF District #2 Fund to the TIF District #7 Fund (a nonmajor special revenue fund). The city expects that the obligation will be liquidated within one year.

$5,517,783 due to nonmajor governmental funds from other funds. This balance relates primarily to an unliquidated transfer to the TIF District #7 Fund (a nonmajor special revenue fund) from the TIF District #2 Fund. The city expects that the obligation will be liquidated within one year.

x

x

x

$10,939,800 transferred to the Debt Service Fund from other funds. This amount relates primarily to routine annual transfers of $4.1 million, $1.7 million, $3.6 million, and $1.0 million to the Debt Service Fund from the Gaming Tax Fund, Stormwater Management Fee Fund, Safety, Health, and Public Enhancement Fee Fund, and the Water and Sewer Fund, respectively, for the payment of general obligation bond debt service. The transfers will not be repaid.

The purposes of significant interfund transfers are as follows:

$ 29,041,400 $ 29,041,400

TOTAL

- $ 300,000 10,939,800 17,826,600 27,741,400 1,000,000 275,000 -

$

Transfer Out

General Debt Service Nonmajor Governmental Water and Sewer Nonmajor Enterprise

Transfer In

Interfund transfers during the year ended December 31, 2012 consisted of the following:

$6,525,421 due to other funds from the General Fund. This balance relates primarily to an unliquidated reallocation of home-rule sales taxes to Capital Improvements Fund A from the General Fund. The city expects that the obligation will be liquidated within one year.

x

The purpose of significant due from/to other funds is as follows:

INTERFUND ACCOUNTS (Continued)

CITY OF AURORA, ILLINOIS NOTES TO FINANCIAL STATEMENTS (Continued)

14.

13.

$27,741,400 transferred from the nonmajor governmental funds to other funds. This amount relates primarily to a) a routine transfer of $4.1 million from the Gaming Tax Fund (a nonmajor special revenue fund) to the Debt Service Fund for the payment of general obligation bond debt service, b) a routine transfer of $1.7 million from the Stormwater Management Fee Fund (a nonmajor special revenue fund) to the Debt Service Fund for the payment of general obligation bond debt service, c) a routine transfer of $3.6 million from the Safety, Health, and Public Enhancement Fee Fund (a nonmajor special revenue fund) to the Debt Service Fund for the payment of general obligation bond debt service, d) a transfer of transfer of $11.6. million from the TIF District #2 Fund (a nonmajor special revenue fund) to the TIF District #7 Fund for future redevelopment projects, and e) a transfer of $4.0 million from the TIF District #2 Fund (a nonmajor special revenue fund) to the TIF District #8 Fund for future redevelopment projects. $1,000,000 transferred from the Water and Sewer Fund to other funds. This amount relates to a routine annual transfer to the Debt Service Fund for the payment of debt service on certain general obligation bonds. The transfer will not be repaid.

x

x

A.

On September 30, 1989, the Fox Valley Park District (the Park District) entered into an agreement with the City to jointly construct three family aquatic centers for the joint use by the citizens of both governmental agencies. The agreement specifies that the City will finance all construction costs of the centers. The Park District will repay the City 50% of the construction costs on December 31 of each full year of operations at a minimum of $200,000 per center per year exclusive of any accrued interest on indebtedness incurred by the City and exclusive of any interest on deferred payments from the Park District to the City.

Fox Valley Park District

INTERGOVERNMENTAL AGREEMENT

The TIF #2 Farnsworth Fund, a Nonmajor governmental fund, reports a deficit fund balance of $3,214,051 at December 31, 2012.

$17,826,600 transferred to other funds from nonmajor governmental funds. This amount relates primarily to a) a transfer of $11.6 million to the TIF District #7 Fund (a nonmajor special revenue fund) from the TIF District #2 Fund and a transfer of $4.0 million to the TIF District #8 Fund (a nonmajor special revenue fund) from the TIF District #2 Fund. Both of these transfers provided resources for future redevelopment projects. The transfers will not be repaid.

x

Significant Interfund Transfers (Continued)

INTERFUND ACCOUNTS (Continued)

CITY OF AURORA, ILLINOIS NOTES TO FINANCIAL STATEMENTS (Continued)

A-29

B.

A.

The District shall own, operate and maintain the sanitary sewer improvements. The City shall own, operate and maintain the remaining improvements, which include certain storm sewer, water main and duct improvements. The principal amount of the receivable to be paid by the District is recorded in the Water and Sewer Fund. The receivable to be paid by the District each year is as follows:

On April 19, 2006, the Fox Metro Water Reclamation District (the District) entered into an agreement with the City to construct a new sanitary sewer system and other improvements in the downtown area. The agreement specifies that the City will finance all construction costs of the improvements. In return, the District will pay the City 50% of the debt service payments related to the 2006 Waterworks and Sewerage serial revenue bonds as well as additional amounts to be determined upon completion of the improvements.

Fox Metro Water Reclamation District

$ 1,129,750

TOTAL RECEIVABLE

200,000 200,000 200,000 200,000 200,000 129,750

$

2013 2014 2015 2016 2017 2018

Splash Country

All real estate and all other personal property at said centers shall be titled in the names of the City and the Park District, each to own an individual 50% interest. The Park District agreed to be fully responsible for all daily operations including management and administration of the family aquatic centers. In addition, the principal amount of the receivable to be paid by the Park District is recorded in the Debt Service Fund offset by deferred revenue in the fund financial statements, but recognized as revenue in the government-wide financial statements. The receivable to be paid by the Park District each year is as follows:

Fox Valley Park District (Continued)

15.

TOTAL RECEIVABLE

2013 2014 2015 2016 2017 2018-2022 2023-2027 2028-2032 2033-2037

Fox Metro Water Reclamation District (Continued) 153,563 160,505 167,526 174,627 181,812 1,041,473 1,306,942 1,657,778 1,657,492 $ 6,501,718

$

All health care benefits are provided through the City’s self-insured health plan. The benefit levels are the same as those afforded to active employees. Benefits include general inpatient and outpatient medical services; mental, nervous and substance abuse care; vision care; dental care and prescriptions. Upon a retiree reaching age 65 years of age, Medicare becomes the primary insurer and the City’s plan becomes secondary. Until a retiree reaches age 65, $5,000 of life insurance coverage is provided at no cost.

The City provides postemployment health care and life insurance benefits to its retirees. To be eligible for benefits, an employee must qualify for retirement under one of the City’s retirement plans. Elected officials are eligible for benefits if they qualify for retirement through IMRF.

Benefits Provided

In addition to providing the pension benefits described, the City provides postemployment health care and life insurance benefits (OPEB) for retired employees through a singleemployer defined benefit plan. The benefits, benefit levels, employee contributions and employer contributions are governed by the City and can be amended by the City through its personnel manual and union contracts. The OPEB plan issues a separate report that includes required supplementary information and trend information. This report can be obtained from the Treasurer of the plan at 44 E. Downer Place, Aurora, IL 60507-2067. The activity of the plan is reported in the City’s Retiree Health Insurance Trust Fund.

Plan Description

OTHER POSTEMPLOYMENT BENEFITS

B.

INTERGOVERNMENTAL AGREEMENT (Continued)

14.

14.

INTERGOVERNMENTAL AGREEMENT (Continued)

CITY OF AURORA, ILLINOIS NOTES TO FINANCIAL STATEMENTS (Continued)

CITY OF AURORA, ILLINOIS NOTES TO FINANCIAL STATEMENTS (Continued)

A-30

15.

1

1,378

925

453

December 31, 2010 December 31, 2011 December 31, 2012

Fiscal Year Ended

$

13,674,943 13,331,086 12,974,168

Annual OPEB Cost $

4,548,786 4,580,046 5,380,735

Employer Contributions 33.26% 34.36% 41.47%

Percentage of Annual OPEB Cost Contributed $

58,206,798 66,957,838 74,551,271

Net OPEB Obligation (Asset)

The City’s annual OPEB cost, the percentage of annual OPEB cost contributed to the plan and the net OPEB obligation for 2010, 2011 and 2012 were as follows:

Annual OPEB Costs and Net OPEB Obligation

The City negotiates the contribution percentages between the City and employees through the union contracts and personnel policy. All retirees contribute 20%-29% of the actuarially determined premium to the plan and the City contributes the remainder to cover the cost of providing the benefits to the retirees via the self-insured plan. Since the City is self-insured, this amount fluctuates on an annual basis. For the fiscal year ended December 31, 2012, retirees contributed $1,654,351 and the City contributed $5,380,735. Active employees do not contribute to the plan until retirement.

Funding Policy

Participating Employers

TOTAL

Retirees and Beneficiaries Currently Receiving Benefits Terminated Employees Entitled to Benefits but not yet Receiving Them Active Employees

At December 31, 2012, membership consisted of:

Membership

OTHER POSTEMPLOYMENT BENEFITS (Continued)

CITY OF AURORA, ILLINOIS NOTES TO FINANCIAL STATEMENTS (Continued)

15.

$ 74,551,271

7,593,433 66,957,838

12,974,168 5,380,735

$ 11,182,621 4,687,049 (2,895,502)

$

$

197,518,139 26,735,905 170,782,234 13.54% 72,083,003 236.92% Actuarial valuations of an ongoing plan involve estimates of 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 the ARCs 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 financial statements, presents multi-year 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.

Actuarial Accrued Liability (AAL) Actuarial Value of Plan Assets Unfunded Actuarial Accrued Liability (UAAL) Funded Ratio (Actuarial Value of Plan Assets/AAL) Covered Payroll (Active Plan Members) UAAL as a Percentage of Covered Payroll

Funded Status and Funding Progress. The funded status of the plan as of December 31, 2012 was as follows:

NET OPEB OBLIGATION, END OF YEAR

Increase in Net OPEB Obligation Net OPEB Obligation, Beginning of Year

Annual OPEB Cost Contributions Made

Annual Required Contribution Interest on Net OPEB Obligation Adjustment to Annual Required Contribution

The net OPEB obligation (NOPEBO) as December 31, 2012 was calculated as follows:

Annual OPEB Costs and Net OPEB Obligation (Continued)

OTHER POSTEMPLOYMENT BENEFITS (Continued)

CITY OF AURORA, ILLINOIS NOTES TO FINANCIAL STATEMENTS (Continued)

A-31

18.

17.

16.

A.

Financial statements for the Aurora Public Library (the Library), including government-wide and fund financial statements, are available in the Library’s separately audited financial statements as of December 31, 2012, which can be obtained from the Library’s administrative offices located at 1 E. Benton Street, Aurora, Illinois 60505.

Financial Information

COMPONENT UNIT - AURORA PUBLIC LIBRARY

Net positions of governmental activities and business-type activities have been restated by $(1,191,162) and $(370,521), respectively, due to the write off of previous bond issuance costs which were being amortized over the life of the bonds. With the implementation of GASB Statement No. 65, the City is required to expense these amounts as the bonds are issued and to apply this change retroactively.

PRIOR PERIOD ADJUSTMENT

During the year ended December 31, 2012, the City disposed of property at a loss of $4,973,299.

SPECIAL ITEM

In the December 31, 2012 actuarial valuation, the entry-age actuarial cost method was used. The actuarial assumptions included 7.0% investment rate of return (net of administrative expenses) and an initial annual healthcare cost trend rate of 7.5% reduced by 0.25% each year to arrive at an ultimate healthcare cost trend rate of 5.0%. Both rates include a 3.0% inflation assumption. The actuarial value of assets was based on fair value at December 31, 2012. The plan’s unfunded actuarial accrued liability is being amortized as a level percentage of projected payroll on an open 30-year basis.

Actuarial Methods and Assumptions. 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 of benefit costs between the employer and plan members to that point. The actuarial 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.

Annual OPEB Costs and Net OPEB Obligation (Continued)

Investment Type

$ 21,993,563

7,701,150 14,292,413

7,701,150 4,876,764 $ 12,577,914

$

Less than 1

$

$

9,415,649

9,415,649

$

$

-

-

Investment Maturities in Years 1-5 6-10

$

$

-

-

Greater than 10

The Library limits its exposure to credit risk, the risk that the issuer of a debt security will not pay its par value upon maturity, by primarily investing in U.S. Treasury obligations, U.S. Government agency notes and state and local obligations rated in the highest two categories by national rating agencies. The state and local obligations are rated Aa2 to Aaa by Moody’s, or are not rated. Certain U.S. agency obligations are not rated.

In accordance with the City’s investment policy, the Library limits its exposure to interest rate risk by structuring the portfolio so that securities mature to meet cash requirements for ongoing operations, thereby avoiding the need to sell securities on the open market prior to maturity and investing operating funds primarily in shorterterm securities, money market mutual funds or similar investment pools. Unless matched to a specific cash flow, the Library does not directly invest in securities maturing more than three years from the date of purchase.

TOTAL

$

Fair Value

The following table presents the investments and maturities of the Library’s debt securities as of December 31, 2012:

Library Investments

Custodial credit risk for deposits with financial institutions is the risk that in the event of a bank’s failure, the Library’s deposits may not be returned to it. The City’s investment policy requires pledging of collateral with a fair value of 110% of all bank balances in excess of federal depository insurance with collateral held by the City or its agent, in the City’s name.

Library Deposits with Financial Institutions

Deposits and Investments

U.S. Agency Obligations State and Local Obligations

B.

COMPONENT UNIT - AURORA PUBLIC LIBRARY (Continued)

18.

15.

OTHER POSTEMPLOYMENT BENEFITS (Continued)

CITY OF AURORA, ILLINOIS NOTES TO FINANCIAL STATEMENTS (Continued)

CITY OF AURORA, ILLINOIS NOTES TO FINANCIAL STATEMENTS (Continued)

A-32

18.

C.

B.

10% 50%

Percent of Portfolio

The Library recognizes property tax revenues when they become both measurable and available in the fiscal year that the tax levy is intended to finance. Therefore, the entire 2012 tax levy has been recorded as deferred revenue on the financial statements.

Property taxes for the 2012 levy year attach as an enforceable lien on January 1, 2012, on property values assessed as of the same date. Taxes are levied by December of the same year by passage of a tax levy ordinance. Tax bills are prepared by the counties and issued on or about May 1, 2013 and August 1, 2013, and are payable in two installments, on or about June 1, 2013 and September 1, 2013. The counties collect such taxes and remits them periodically.

Receivables

The City’s investment policy does not specifically prohibit the use of or the investment in derivatives.

No financial institution shall hold more than 20% of the Library’s total investment portfolio. Furthermore, the amount of monies deposited and/or invested in a financial institution shall not exceed 75% of the capital stock and surplus of such institution.

Commercial Paper Illinois Funds

Diversification by Instrument

Concentration of credit risk - The investment portfolio of the Library shall not exceed the diversification standards below:

Custodial credit risk for investments is the risk that, in the event of the failure of the counterparty to the investment, the Library will not be able to recover the value of its investments that are in possession of an outside party. To limit its exposure, the City’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 held by a third party acting as the City’s agent separate from where the investment was purchased or by the trust department of the bank where purchased, in the City’s name. The money market mutual funds are not subject to custodial credit risk.

Library Investments (Continued)

Deposits and Investments (Continued)

COMPONENT UNIT - AURORA PUBLIC LIBRARY (Continued)

CITY OF AURORA, ILLINOIS NOTES TO FINANCIAL STATEMENTS (Continued)

18.

3,001,230 199,103 210,057 3,410,390

Less Accumulated Depreciation for Buildings Machinery and Equipment Vehicles Total Accumulated Depreciation

$ 11,887,191

$

$

730,930

(68,509)

205,168 12,425 217,593

149,084 149,084

799,439 799,439

Increases

$

$

178,908

29,824

69,589 69,589

99,413 99,413

149,084 149,084

Decreases

$ 12,439,213

7,310,596

3,206,398 141,939 210,057 3,558,394

10,375,362 283,569 210,059 10,868,990

$ 3,381,186 1,747,431 5,128,617

Ending Balance

$ $

GOVERNMENTAL ACTIVITIES Culture and Recreation TOTAL DEPRECIATION EXPENSE - GOVERNMENTAL ACTIVITIES

217,593

217,593

Depreciation expense was charged to functions/programs of the governmental activities as follows:

GOVERNMENTAL ACTIVITIES CAPITAL ASSETS, NET

7,408,929

10,375,362 233,898 210,059 10,819,319

Capital Assets Being Depreciated Buildings Machinery and Equipment Vehicles Total Capital Assets Being Depreciated

Total Capital Assets Being Depreciated, Net

$ 3,381,186 1,097,076 4,478,262

Beginning Balance

The following is a summary of the capital asset activity for the year ended December 31, 2012:

Capital Assets

GOVERNMENTAL ACTIVITIES Capital Assets not Being Depreciated Land and Land Improvements Construction in Progress Total Capital Assets not Being Depreciated

D.

COMPONENT UNIT - AURORA PUBLIC LIBRARY (Continued)

CITY OF AURORA, ILLINOIS NOTES TO FINANCIAL STATEMENTS (Continued)

A-33

18.

E.

2.

1.

$ 21,835,000 $ 12,913,052

TOTAL

425,000 $ 876,208 555,000 708,844 560,000 693,619 570,000 676,819 580,000 659,719 3,105,000 3,029,495 3,460,000 2,543,191 3,915,000 1,991,282 4,505,000 1,310,875 4,160,000 423,000

$

2013 2014 2015 2016 2017 2018-2022 2023-2027 2028-2032 2033-2037 2038-2042

Year

19,200,000

2,635,000

$ 21,835,000

$

Corporate Purpose Serial Bonds Principal Interest

Annual debt service requirements to maturity are as follows:

Debt Service to Maturity

TOTAL

$19,200,000 2012A Corporate Purpose serial bonds, due in annual installments of $145,000 to $1,095,000 from December 30, 2013 to December 30, 2041, interest from 3.00% to 4.00%. While a general obligation of the City, the principal and interest is to be repaid with the Library’s tax levy.

$2,740,000 2011 Corporate Purpose Refunding serial bonds, due in annual installments of $95,000 to $330,000 from December 30, 2012 to December 30, 2022, interest from 2.00% to 3.00%. While a general obligation of the City, the principal and interest is to be repaid with the Library’s tax levy.

General Obligation Bonds

Bonds payable at December 31, 2012 are comprised of the following:

Long-Term Debt

COMPONENT UNIT - AURORA PUBLIC LIBRARY (Continued)

CITY OF AURORA, ILLINOIS NOTES TO FINANCIAL STATEMENTS (Continued)

18.

3.

TOTAL

$ 20,136,613

7,913 380,481

27,084 147,463 $ 3,691,274

$ 19,200,000 546,201 2,018

Additions

$ 2,900,000 522,327 94,400

Balance January 1

$

$

807,931

20,604

-

265,000 522,327 -

Deletions

$ 23,019,956

507,340

34,997

$ 21,835,000 546,201 96,418

Balance December 31

$

$

971,201

-

-

425,000 546,201 -

Current Portion

Changes in long-term debt during the year ended December 31, 2012 is as follows:

Changes in Long-Term Debt

Long-Term Debt (Continued)

General Obligation Bonds Compensated Absences Net Pension Obligation Net Other Postemployment Benefit Obligation Unamortized Bond Premium

E.

COMPONENT UNIT - AURORA PUBLIC LIBRARY (Continued)

CITY OF AURORA, ILLINOIS NOTES TO FINANCIAL STATEMENTS (Continued)

A-34

65,621,368

68,785,978

71,714,555

75,752,092

2009

2010

2011

2012

87,989,628

74,354,004

$

(1) Actuarial Value of Assets

2008

2007

Actuarial Valuation Date December 31,

$

115,654,588

109,869,903

106,584,635

101,138,862

103,624,121

100,049,018

(2) Actuarial Accrued Liability (AAL) Entry-Age Normal

65.50%

65.27%

64.54%

64.88%

71.75%

87.95% $

(3) Funded Ratio (1) / (2)

December 31, 2012

39,902,496

38,155,348

37,798,657

35,517,494

29,270,117

12,059,390

(4) Unfunded Actuarial Accrued Liability (UAAL) (2) - (1) $

38,825,698

37,357,819

39,058,616

44,263,265

42,779,026

40,348,241

(5) Covered Payroll

102.77%

102.13%

96.77%

80.24%

68.42%

29.89%

UAAL as a Percentage of Covered Payroll (4) / (5)

93,631,059 103,639,618 106,721,205 117,268,887

2009 2010 2011 2012

92,697,208 83,184,455

$

(1) Actuarial Value of Assets

2008

2007

Actuarial Valuation Date December 31,

223,524,431

203,497,114

196,856,226

186,297,859

174,217,151

$ 160,350,904

(2) Actuarial Accrued Liability (AAL) Entry-Age Normal

52.46%

52.44%

52.65%

50.26%

47.75%

57.81% $

(3) Funded Ratio (1) / (2)

December 31, 2012

106,255,544

96,775,909

93,216,608

92,666,800

91,032,696

67,653,696

(4) Unfunded Actuarial Accrued Liability (UAAL) (2) - (1)

FIREFIGHTERS' PENSION FUND

SCHEDULE OF FUNDING PROGRESS

SCHEDULE OF FUNDING PROGRESS

ILLINOIS MUNICIPAL RETIREMENT FUND

CITY OF AURORA, ILLINOIS

CITY OF AURORA, ILLINOIS

19,252,373

18,653,043

18,711,049

19,102,729

18,943,346

$ 18,051,520

(5) Covered Payroll

551.91%

518.82%

498.19%

485.10%

480.55%

374.78%

UAAL as a Percentage of Covered Payroll (4) / (5)

A-35

126,755,289

2010

144,783,442

114,040,858

2009

2012

102,471,498

2008

131,842,905

$ 115,624,649

2007

2011

(1) Actuarial Value of Assets

Actuarial Valuation Date December 31,

297,045,318

263,290,575

247,567,688

236,796,407

223,697,402

$ 204,396,008

(2) Actuarial Accrued Liability (AAL) Entry-Age Normal

48.74%

50.08%

51.20%

48.16%

45.81%

56.57% $

(3) Funded Ratio (1) / (2)

December 31, 2012

152,261,876

131,447,670

120,812,399

122,755,549

121,225,904

88,771,359

(4) Unfunded Actuarial Accrued Liability (UAAL) (2) - (1)

26,708,019

25,922,346

25,007,815

26,158,149

24,913,911

$ 23,362,736

(5) Covered Payroll

570.10%

507.08%

483.10%

469.28%

486.58%

379.97%

UAAL as a Percentage of Covered Payroll (4) / (5)

18,831,066 22,378,004

2008 2009

24,199,774 26,735,905

2011 2012

24,193,191

$ 15,608,508

2007

2010

(1) Actuarial Value of Assets

Actuarial Valuation Date December 31,

197,518,139

165,242,261

172,968,000

173,681,516

157,770,027

$ 155,475,378

(2) Actuarial Accrued Liability (AAL) Entry-Age Normal

(4) Unfunded Actuarial Accrued Liability (UAAL) (2) - (1)

13.54%

14.65%

13.99%

12.88%

11.94%

170,782,234

141,042,487

148,774,809

151,303,512

138,938,961

10.04% $ 139,866,870

(3) Funded Ratio (1) / (2)

December 31, 2012

(5) Covered Payroll

72,083,003

65,237,549

64,712,359

72,367,412

72,246,059

$ 66,557,105

OTHER POSTEMPLOYMENT BENEFIT PLAN

SCHEDULE OF FUNDING PROGRESS

SCHEDULE OF FUNDING PROGRESS

POLICE PENSION FUND

CITY OF AURORA, ILLINOIS

CITY OF AURORA, ILLINOIS

236.92%

216.20%

229.90%

209.08%

192.31%

210.15%

UAAL as a Percentage of Covered Payroll (4) / (5)

A-36

3,961,882

4,603,427

2012

3,822,990

2010

2011

4,470,590

2009

4,128,288

4,372,016

$

Employer Contributions

2008

2007

Year Ended December 31,

Percentage Contributed

Year Ended December 31,

$

4,603,427

4,273,127

4,163,652

4,470,590

4,372,016

4,128,288

100.00%

92.72%

91.82%

100.00%

100.00%

100.00%

2012

2011

2010

2009

2008

2007

7,380,005

8,574,474

8,268,900

6,729,000

6,570,934

$ 5,511,901

Employer Contributions

December 31, 2012

December 31, 2012

7,779,759

8,558,590

8,268,060

6,728,930

6,544,272

$ 5,510,761

Annual Required Contribution (ARC)

FIREFIGHTERS' PENSION FUND

ILLINOIS MUNICIPAL RETIREMENT FUND

Annual Required Contribution (ARC)

SCHEDULE OF EMPLOYER CONTRIBUTIONS

CITY OF AURORA, ILLINOIS

SCHEDULE OF EMPLOYER CONTRIBUTIONS

CITY OF AURORA, ILLINOIS

94.86%

100.19%

100.01%

100.00%

100.41%

100.02%

Percent Contributed

A-37

10,364,821

8,270,619

2012

7,821,000

2009

2011

7,152,523

2008

9,901,400

$ 6,145,484

2007

2010

Employer Contributions

Year Ended December 31,

9,030,372

10,349,019

9,900,826

7,820,659

7,150,811

$ 6,144,161

Annual Required Contribution (ARC)

December 31, 2012

POLICE PENSION FUND

SCHEDULE OF EMPLOYER CONTRIBUTIONS

CITY OF AURORA, ILLINOIS

91.59%

100.15%

100.01%

100.00%

100.02%

100.02%

Percent Contributed

2012

2011

2010

2009

2008

2007

Year Ended December 31, $

5,380,735

4,580,046

4,548,786

6,911,969

6,810,269

17,790,881

Employer Contributions $

11,182,621

11,773,685

12,361,724

11,951,819

13,052,085

16,764,385

Annual Required Contribution (ARC)

December 31, 2012

OTHER POSTEMPLOYMENT BENEFIT PLAN

SCHEDULE OF EMPLOYER CONTRIBUTIONS

CITY OF AURORA, ILLINOIS

48.12%

38.90%

36.80%

57.83%

52.18%

106.12%

Percentage Contributed

A-38

Prior to December 31 the budget is legally enacted through passage of an ordinance.

The Mayor may transfer budgeted amounts between departments within any fund. Transfers between objects within a department or within a fund without departmental segregation may be made by the Chief Financial Officer/City Treasurer. The legal level of budgetary control is the department level or, where no departmental segregation of a fund exists, the fund level. Three budget amendments were approved by the City Council.

All budgets lapse at year end.

•

•

A public hearing is held to obtain citizen comments.

•

•

The Mayor submits to the City Council a proposed budget for all funds except the Permanent Fund and Agency Funds. The budget includes proposed expenditures and the means of financing them.

•

The City budget represents departmental expenditures and estimated revenues authorized by the budget. The budget is adopted on the modified accrual basis of accounting and the current financial resources measurement focus, consistent with GAAP. The City follows these procedures in establishing the budgetary data reflected in the required supplementary information:

BUDGETS AND BUDGETARY ACCOUNTING

December 31, 2012

NOTES TO REQUIRED SUPPLEMENTARY INFORMATION

CITY OF AURORA, ILLINOIS

_________________________________

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APPENDIX B DESCRIBING BOOK-ENTRY-ONLY ISSUANCE 1. The Depository Trust Company (“DTC”), New York, New York, will act as securities depository for the Bonds (the “Securities”). The Securities will be issued as fully-registered securities registered in the name of Cede & Co. (DTC’s partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully-registered Security certificate will be issued for each issue of the Securities, each in the aggregate principal amount of such issue, and will be deposited with DTC. 2. DTC, the world’s largest securities depository, is a limited-purpose trust company organized under the New York Banking Law, a “banking organization” within the meaning of the New York Banking Law, a member of the Federal Reserve System, a “clearing corporation” within the meaning of the New York Uniform Commercial Code, and a “clearing agency” registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non-U.S. equity issues, corporate and municipal debt issues, and money market instruments (from over 100 countries) that DTC’s participants (“Direct Participants”) deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book-entry transfers and pledges between Direct Participants’ accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation (“DTCC”). DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly (“Indirect Participants”). DTC has a Standard & Poor’s rating of AA+. The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at www.dtcc.com. 3. Purchases of Securities under the DTC system must be made by or through Direct Participants, which will receive a credit for the Securities on DTC’s records. The ownership interest of each actual purchaser of each Security (“Beneficial Owner”) is in turn to be recorded on the Direct and Indirect Participants’ records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Securities are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in Securities, except in the event that use of the book-entry system for the Securities is discontinued. 4. To facilitate subsequent transfers, all Securities deposited by Direct Participants with DTC are registered in the name of DTC’s partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of DTC. The deposit of Securities with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Securities; DTC’s records reflect only the identity of the Direct Participants to whose accounts such Securities are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers.

B-1

5. Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Beneficial Owners of Securities may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the Securities, such as redemptions, tenders, defaults, and proposed amendments to the Security documents. For example, Beneficial Owners of Securities may wish to ascertain that the nominee holding the Securities for their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names and addresses to the registrar and request that copies of notices be provided directly to them. 6. Redemption notices shall be sent to DTC. If less than all of the Securities within an issue are being redeemed, DTC’s practice is to determine by lot the amount of the interest of each Direct Participant in such issue to be redeemed. 7. Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to Securities unless authorized by a Direct Participant in accordance with DTC’s MMI Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the City as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.’s consenting or voting rights to those Direct Participants to whose accounts Securities are credited on the record date (identified in a listing attached to the Omnibus Proxy). 8. Redemption proceeds, distributions, and dividend payments on the Securities will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC’s practice is to credit Direct Participants’ accounts upon DTC’s receipt of funds and corresponding detail information from the City or the Paying Agent, on payable date in accordance with their respective holdings shown on DTC’s records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in “street name,” and will be the responsibility of such Participant and not of DTC, the Paying Agent, or the City, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of redemption proceeds, distributions, and dividend payments to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the City or the Paying Agent, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants. 9. A Beneficial Owner shall give notice to elect to have its Securities purchased or tendered, through its Participant, to any Tender/Remarketing Agent, and shall effect delivery of such Securities by causing the Direct Participant to transfer the Participant’s interest in the Securities, on DTC’s records, to any Tender/Remarketing Agent. The requirement for physical delivery of Securities in connection with an optional tender or a mandatory purchase will be deemed satisfied when the ownership rights in the Securities are transferred by Direct Participants on DTC’s records and followed by a book-entry credit of tendered Securities to any Tender/Remarketing Agent’s DTC account. 10. DTC may discontinue providing its services as depository with respect to the Securities at any time by giving reasonable notice to the City or the Paying Agent. Under such circumstances, in the event that a successor depository is not obtained, Security certificates are required to be printed and delivered. 11. The City may decide to discontinue use of the system of book-entry-only transfers through DTC (or a successor securities depository). In that event, Security certificates will be printed and delivered to DTC. 12. The information in this section concerning DTC and DTC’s book-entry system has been obtained from sources that the City believes to be reliable, but the City takes no responsibility for the accuracy thereof.

B-2

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APPENDIX C PROPOSED FORM OF OPINION OF BOND COUNSEL

(To Be Dated the Date of Issuance)

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

City of Aurora, Kane, DuPage, Will and Kendall Counties, Illinois $9,465,000 General Obligation Refunding Bonds, Series 2013

Ladies and Gentlemen: We hereby certify that we have examined a certified copy of the proceedings of the City Council of the City of Aurora, Kane, DuPage, Will and Kendall Counties, Illinois (the “City”), passed preliminary to the issuance by the City of its General Obligation Refunding Bonds, Series 2013 (the “Bonds”), in the aggregate principal amount of $9,465,000, dated the date hereof, maturing on December 30 of the years and in the principal amounts, and bearing interest at the respective rates per annum, as follows: YEAR 2015 2016 2017 2018 2019 2020

PRINCIPAL AMOUNT $

45,000 45,000 45,000 50,000 1,200,000 1,240,000

INTEREST RATE %

YEAR

PRINCIPAL AMOUNT

INTEREST RATE

2021 2022 2023 2024 2025

$1,270,000 1,315,000 1,365,000 1,415,000 1,475,000

%

and we are of the opinion that such proceedings show lawful authority for said issue under the Constitution and the laws of the State of Illinois now in force. The Bonds maturing on and after December 30, 20__, are subject to redemption prior to maturity at the option of the City, in whole or in part in any order of maturity selected by the City (less than all of a single maturity to be so redeemed to be selected by lot within such maturity in the manner provided in the ordinance of the City authorizing the issuance of the Bonds), on December 30, 20__, and on any date thereafter, at a redemption price of 100% of the principal amount thereof being redeemed plus accrued interest to the date fixed for redemption. We further certify that we have examined the form of Bond prescribed for said issue, and find the same in due form of law, and in our opinion said issue, to the amount named, is valid and legally binding upon the City, and all taxable property in the City is subject to the levy of taxes to pay the same without limitation as to rate or amount, except that the rights of the owners of the Bonds and the enforceability of the Bonds may be limited by bankruptcy, insolvency, moratorium, reorganization and other similar laws affecting creditor’s rights and by equitable principles, whether considered at law or in equity, including the exercise of judicial discretion. C-1

It is also our opinion that, subject to the compliance by the City with certain covenants, under present law, interest on the Bonds is excludible from the gross income of the owners thereof for federal income tax purposes, and is not included as an item of tax preference in computing the alternative minimum tax for individuals and corporations under the Internal Revenue Code of 1986, as amended, but is taken into account, however, in computing an adjustment used in determining the federal alternative minimum tax for certain corporations. Failure to comply with certain of such covenants of the City could cause the interest on the Bonds to be included in gross income for federal income tax purposes retroactively to the date of the issuance of the Bonds. Ownership of the Bonds may result in other federal tax consequences to certain taxpayers, and we express no opinion regarding any such collateral consequences arising with respect to the Bonds. It is also our opinion, subject to compliance by the City with certain covenants, that the Bonds are “qualified tax-exempt obligations” under Section 265(b)(3) of the Code. We express no opinion herein as to the accuracy, adequacy or completeness of the Official Statement relating to the Bonds or any other material or information furnished to any person in connection with any offer or sale of the Bonds. In rendering this opinion, we have relied upon certifications of the City with respect to certain material facts solely within the knowledge of the City, and on the mathematical computation of the yield on the Bonds and the yield on certain investments by Dunbar Breitweiser & Co., LLP, Certified Public Accountants. Our opinion represents our legal judgment based upon our review of the law and the facts that we deem relevant to render such opinion, and is not a guarantee of result. This opinion is given as of the date hereof, and we assume no obligation to revise or supplement this opinion to reflect any facts or circumstances that may hereafter come to our attention or any changes in law that may hereafter occur. Respectfully submitted,

CLJarik/ljk

C-2

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APPENDIX D CITY OF AURORA KANE, DUPAGE, KENDALL AND WILL COUNTIES, ILLINOIS EXCERPTS OF FISCAL YEAR 2012 AUDITED FINANCIAL STATEMENTS RELATING TO THE CITY’S PENSION PLANS

D-1

9.

8.

7.

The City contributes to three defined benefit pension plans, the Illinois Municipal Retirement Fund (IMRF), an agent multiple-employer public employee retirement system; the Police Pension Plan, which is a single-employer pension plan; and the Firefighters’ Pension Plan, which is also a single-employer pension plan. The benefits, benefit levels, employee contributions and employer contributions for all three plans are governed by Illinois Compiled Statutes (ILCS) and can only be amended by the Illinois General Assembly. The Police and Firefighters’ Pension Plans both issue separate reports on the pension plans that include required supplementary information and trend information. These statements can be obtained from the Treasurer of the pension plans at 44 E. Downer Place, Aurora, Illinois 60507-2067. IMRF also issues a publicly available report that includes financial statements and supplementary information for the plan as a whole, but not for individual employers. That report can be obtained from IMRF, 2211 York Road, Suite 500, Oak Brook, Illinois 60523.

DEFINED BENEFIT PENSION PLANS

On March 23, 1976, the City passed an ordinance enabling the City to provide financing for economic development projects, pollution control projects and hospital facilities by the issuance of industrial or mortgage revenue bonds. The bonds are secured solely by the property financed and are payable solely from the payments received on the underlying mortgage loans on the property. The City is not obligated in any manner for the repayment of the bonds. Accordingly, the bonds outstanding are not reported as a liability in these financial statements. As of December 31, 2012, there were 33 series of bonds outstanding. The aggregate principal amount payable for the series which could be determined was $233,432,356. The aggregate principal amount payable for the other series of bonds could not be determined; however, the original issue amounts of the bonds totaled $549,555,000.

INDUSTRIAL AND MORTGAGE REVENUE BONDS

The City offers its employees a deferred compensation plan created in accordance with Internal Revenue Code Section 457. The plan, available to all employees, permits them to defer a portion of their salary until future years. The deferred compensation is not available to employees until termination, retirement, death or unforeseeable emergency. At December 31, 2012, the plan assets have been placed in trust for the benefit of employees. Accordingly, the plan assets are not reported in the City’s financial statements.

DEFERRED COMPENSATION PLAN

CITY OF AURORA, ILLINOIS NOTES TO FINANCIAL STATEMENTS (Continued)

9. A.

Police sworn personnel are covered by the Police Pension Plan. Although this is a single-employer pension plan, the defined benefits and employee and employer contribution levels are governed by Illinois Compiled Statutes (40 ILCS 5/3-1) and may be amended only by the Illinois legislature. The City accounts for the plan as a pension trust fund.

Police Pension Plan

IMRF also provides death and disability benefits. These benefit provisions and all other requirements are established by state statute. Participating members are required to contribute 4.5% of their annual salary to IMRF. The City is required to contribute the remaining amounts necessary to fund IMRF as specified by statute. The employer contribution and required employer contribution for 2012 was 13.60% of covered payroll.

Employees hired on or after January 1, 2011 are eligible for Tier 2 benefits. For Tier 2 employees, pension benefits vest after ten years of service. Participating members who retire at age 62 (reduced benefits) or after age 67 (full benefits) with ten years of credited service are entitled to an annual retirement benefit, payable monthly for life, in an amount equal to 1 2/3% of their final rate of earnings, for each year of credited service up to 15 years, and 2% for each year thereafter.

All employees (other than those covered by the Police or Firefighters’ Pension Plans) hired in positions that meet or exceed the prescribed annual hourly standard must be enrolled in IMRF as participating members. IMRF provides two tiers of pension benefits. Employees hired prior to January 1, 2011 are eligible for Tier 1 benefits. For Tier 1 employees, pension benefits vest after eight years of service. Participating members who retire at age 55 (reduced benefits) or after age 60 (full benefits) with eight years of credited service are entitled to an annual retirement benefit, payable monthly for life, in an amount equal to 1 2/3% of their final rate of earnings, for each year of credited service up to 15 years, and 2% for each year thereafter.

Illinois Municipal Retirement Fund

Plan Descriptions

DEFINED BENEFIT PENSION PLANS (Continued)

CITY OF AURORA, ILLINOIS NOTES TO FINANCIAL STATEMENTS (Continued)

D-2

A.

Employees are required by ILCS to contribute 9.91% of their base salary to the Police Pension Plan. If an employee leaves covered employment with less than 20 years of service, accumulated employee contributions may be refunded without accumulated interest. The City is required to contribute the remaining amounts necessary to finance the plan and the administrative costs as actuarially determined by an enrolled actuary. Effective January 1, 2011, the City has until the year 2040 to fund 90% of the past service cost for the Police Pension Plan. For the year ended December 31, 2012, the City’s contribution was 39.98% of covered payroll.

Tier 2 employees (those hired on or after January 1, 2011) attaining the age of 55 or older with ten or more years of creditable service are entitled to receive an annual retirement benefit equal to the average monthly salary obtained by dividing the total salary of the police officer during the 96 consecutive months of service within the last 120 months of service in which the total salary was the highest by the number of months of service in that period. Police officers’ salary for pension purposes is capped at $106,800, plus the lesser of ½ of the annual change in the Consumer Price Index or 3.00% compounded. The annual benefit shall be increased by 2.50% of such salary for each additional year of service over 20 years up to 30 years to a maximum of 75.00% of such salary. Employees with at least ten years may retire at or after age 50 and receive a reduced benefit (i.e., ½% for each month under 55). The monthly benefit of a Tier 2 police officer shall be increased annually at age 60 on the January 1st after the police officer retires, or the first anniversary of the pension starting date, whichever is later. Noncompounding increases occur annually, each January thereafter. The increase is the lesser of 3.00% or ½ of the change in the Consumer Price Index for the proceeding calendar year.

Tier 2 employees (those hired on or after January 1, 2011) attaining the age of 55 or older with ten or more years of creditable service are entitled to receive an annual retirement benefit equal to the average monthly salary obtained by dividing the total salary of the firefighter during the 96 consecutive months of service within the last 120 months of service in which the total salary was the highest by the number of months of service in that period. Firefighters’ salary for pension purposes is capped at $106,800, plus the lesser of ½ of the annual change in the Consumer Price Index or 3.00% compounded. The annual benefit shall be increased by 2.50% of such salary for each additional year of service over 20 years up to 30 years to a maximum of 75.00% of such salary. Employees with at least ten years may retire at or after age 50 and receive a reduced benefit (i.e., ½% for each month under 55). The monthly benefit of a Tier 2 firefighter shall be increased annually at age 60 on the January 1st after the firefighter retires, or the first anniversary of the pension starting date, whichever is later. Noncompounding increases occur annually, each January thereafter. The increase is the lesser of 3.00% or ½ of the change in the Consumer Price Index for the proceeding calendar year.

The Firefighters’ Pension Plan provides retirement benefits through two tiers of benefits as well as death and disability benefits. Tier 1 employees (those hired prior to January 1, 2011) attaining the age of 50 or older with 20 or more years of creditable service are entitled to receive an annual retirement benefit equal to onehalf of the salary attached to the rank held at the date of retirement. The annual benefit shall be increased by 2.50% of such salary for each additional year of service over 20 years up to 30 years to a maximum of 75.00% of such salary. Employees with at least ten years but less than 20 years of credited service may retire at or after age 60 and receive a reduced benefit. The monthly benefit of a covered employee who retired with 20 or more years of service after January 1, 1977 shall be increased annually, following the first anniversary date of retirement and be paid upon reaching the age of at least 55 years, by 3.00% of the original pension and 3.00% compounded annually thereafter.

Fire sworn personnel are covered by the Firefighters’ Pension Plan. Although this is a single-employer pension plan, the defined benefits and employee and employer contribution levels are governed by Illinois Compiled Statutes (40 ILCS 5/4-1) and may be amended only by the Illinois legislature. The City accounts for the plan as a pension trust fund.

The Police Pension Plan provides retirement benefits through two tiers of benefits as well as death and disability benefits. Tier 1 employees (those hired prior to January 1, 2011) attaining the age of 50 or older with 20 or more years of creditable service are entitled to receive an annual retirement benefit equal to one-half of the salary attached to the rank held on the last day of service, or for one year prior to the last day, whichever is greater. The annual benefit shall be increased by 2.50% of such salary for each additional year of service over 20 years up to 30 years to a maximum of 75.00% of such salary. Employees with at least eight years but less than 20 years of credited service may retire at or after age 60 and receive a reduced benefit. The monthly benefit of a police officer who retired with 20 or more years of service after January 1, 1977 shall be increased annually, following the first anniversary date of retirement and be paid upon reaching the age of at least 55 years, by 3.00% of the original pension and 3.00% compounded annually thereafter.

Plan Descriptions (Continued) Firefighters’ Pension Plan

A.

Police Pension Plan (Continued)

Plan Descriptions (Continued)

DEFINED BENEFIT PENSION PLANS (Continued)

9.

9.

DEFINED BENEFIT PENSION PLANS (Continued)

CITY OF AURORA, ILLINOIS NOTES TO FINANCIAL STATEMENTS (Continued)

CITY OF AURORA, ILLINOIS NOTES TO FINANCIAL STATEMENTS (Continued)

D-3

9.

C.

B.

A.

December 31, 2010

Entry-age Normal 5 Year Smoothed Market Level Percentage of Payroll 30 Years, Open

Actuarial Valuation Date

Actuarial Cost Method

Asset Valuation Method

Amortization Method

Amortization Period

Illinois Municipal Retirement

30 Years, Closed

Level Percentage of Payroll

Market

Entry-age Normal

December 31, 2011

Police Pension

Employer contributions have been determined as follows:

Annual Pension Costs

30 Years, Closed

Level Percentage of Payroll

Market

Entry-age Normal

December 31, 2011

Firefighters’ Pension

There are no significant investments (other than U.S. Government guaranteed obligations) in any one organization that represent 5.0% or more of plan net assets for either the Police or the Firefighters’ Pension Plans. Information for IMRF is not available.

Significant Investments

Covered employees are required to contribute 9.455% of their base salary to the Firefighters’ Pension Plan. If an employee leaves covered employment with less than 20 years of service, accumulated employee contributions may be refunded without accumulated interest. The City is required to finance the plan and the administrative costs as actuarially determined by an enrolled actuary. Effective January 1, 2011, the City has until the year 2040 to fund 90% of the past services costs for the Firefighters’ Pension Plan. For the year ended December 31, 2012, the City’s contribution was 38.33% of covered payroll.

Firefighters’ Pension Plan (Continued)

Plan Descriptions (Continued)

DEFINED BENEFIT PENSION PLANS (Continued)

CITY OF AURORA, ILLINOIS NOTES TO FINANCIAL STATEMENTS (Continued)

9. C.

.4% to 10.0%

c) Additional Projected Salary Increases Seniority/Merit

Not Available

5.5% Compounded Annually

7.0% Compounded Annually

Police Pension

Not Available

5.5% Compounded Annually

7.0% Compounded Annually

Firefighters’ Pension

2010 2011 2012

Percentage of APC Contributed

2010 2011 2012

2010 2011 2012

Actual Contributions

NPO

2010 2011 2012

Annual Pension Cost (APC)

Calendar Year

Police Pension

$

99.75% 99.80% 91.22%

9,901,400 10,364,821 8,270,619

193,078 182,758 587,571

99.96% 100.12% 94.80%

8,268,900 8,574,474 7,380,005

$ 8,271,961 8,564,154 7,784,818

Firefighters’ Pension

340,662 $ 1,284,308 $ 659,194 1,305,521 673,294 2,101,410

91.82% 92.56% 99.69%

3,822,990 3,961,882 4,603,427

$ 4,163,652 $ 9,926,672 4,280,414 10,386,034 4,617,527 9,066,508

Illinois Municipal Retirement

Employer annual pension costs (APC), actual contributions and the net pension obligation (NPO) are as follows. The NPO is the cumulative difference between the APC and the contributions actually made.

4.0% Compounded Annually

7.5% Compounded Annually

Illinois Municipal Retirement

b) Projected Salary Increase Attributable to Inflation

Significant Actuarial Assumptions a) Rate of Return on Present and Future Assets

Annual Pension Costs (Continued)

DEFINED BENEFIT PENSION PLANS (Continued)

CITY OF AURORA, ILLINOIS NOTES TO FINANCIAL STATEMENTS (Continued)

D-4

9.

D.

C.

Firefighters’ Pension

$

795,889 1,305,521

9,066,508 8,270,619

673,294 $ 2,101,410

14,100 659,194

4,617,527 4,603,427

$

587,571

404,813 182,758

7,784,818 7,380,005

$ 4,603,427 $ 9,030,372 $ 7,779,759 49,440 91,386 12,793 (35,340) (55,250) (7,734)

Police Pension

$

$

48.74% 26,708,019 570.10%

$

152,261,876

297,095,318 144,783,442

65.50% 38,825,698 102.77%

$

39,902,496

115,654,588 75,752,092

Police Pension

$

$

52.46% 19,252,373 551.91%

106,255,544

223,524,431 117,268,887

Firefighters’ Pension

See the schedules of funding progress in the required supplementary information immediately following the notes to financial statements for additional information related to the funded status of the plans.

Actuarial Accrued Liability (AAL) Actuarial Value of Plan Assets Unfunded Actuarial Accrued Liability (UAAL) Funded Ratio (Actuarial Value of Plan Assets/AAL) Covered Payroll (Active Plan Members) UAAL as a Percentage of Covered Payroll

Illinois Municipal Retirement

The funded status of the plans as of December 31, 2012, based on actuarial valuations performed as of the same date, is as follows. The actuarial assumptions used to determine the funded status of the plans are the same actuarial assumptions used to determine the employer APC of the plans as disclosed in Note 9-C:

Funded Status

The NPO is reported as a liability in the City’s governmental activities column in the government-wide financial statements at December 31, 2012.

NET PENSION OBLIGATION, END OF YEAR

Increase in Net Pension Obligation Net Pension Obligation, Beginning of Year

Annual Pension Cost Contributions Made

Annual Required Contribution Interest on Net Pension Obligation Adjustment to Annual Required Contribution

Illinois Municipal Retirement

The NPO at December 31, 2012 has been calculated as follows:

Annual Pension Costs (Continued)

DEFINED BENEFIT PENSION PLANS (Continued)

CITY OF AURORA, ILLINOIS NOTES TO FINANCIAL STATEMENTS (Continued)

15.

14.

TOTAL RECEIVABLE

2013 2014 2015 2016 2017 2018-2022 2023-2027 2028-2032 2033-2037

Fox Metro Water Reclamation District (Continued) 153,563 160,505 167,526 174,627 181,812 1,041,473 1,306,942 1,657,778 1,657,492 $ 6,501,718

$

All health care benefits are provided through the City’s self-insured health plan. The benefit levels are the same as those afforded to active employees. Benefits include general inpatient and outpatient medical services; mental, nervous and substance abuse care; vision care; dental care and prescriptions. Upon a retiree reaching age 65 years of age, Medicare becomes the primary insurer and the City’s plan becomes secondary. Until a retiree reaches age 65, $5,000 of life insurance coverage is provided at no cost.

The City provides postemployment health care and life insurance benefits to its retirees. To be eligible for benefits, an employee must qualify for retirement under one of the City’s retirement plans. Elected officials are eligible for benefits if they qualify for retirement through IMRF.

Benefits Provided

In addition to providing the pension benefits described, the City provides postemployment health care and life insurance benefits (OPEB) for retired employees through a singleemployer defined benefit plan. The benefits, benefit levels, employee contributions and employer contributions are governed by the City and can be amended by the City through its personnel manual and union contracts. The OPEB plan issues a separate report that includes required supplementary information and trend information. This report can be obtained from the Treasurer of the plan at 44 E. Downer Place, Aurora, IL 60507-2067. The activity of the plan is reported in the City’s Retiree Health Insurance Trust Fund.

Plan Description

OTHER POSTEMPLOYMENT BENEFITS

B.

INTERGOVERNMENTAL AGREEMENT (Continued)

CITY OF AURORA, ILLINOIS NOTES TO FINANCIAL STATEMENTS (Continued)

D-5

15.

1

1,378

925

453

December 31, 2010 December 31, 2011 December 31, 2012

Fiscal Year Ended

$

13,674,943 13,331,086 12,974,168

Annual OPEB Cost $

4,548,786 4,580,046 5,380,735

Employer Contributions 33.26% 34.36% 41.47%

Percentage of Annual OPEB Cost Contributed $

58,206,798 66,957,838 74,551,271

Net OPEB Obligation (Asset)

The City’s annual OPEB cost, the percentage of annual OPEB cost contributed to the plan and the net OPEB obligation for 2010, 2011 and 2012 were as follows:

Annual OPEB Costs and Net OPEB Obligation

The City negotiates the contribution percentages between the City and employees through the union contracts and personnel policy. All retirees contribute 20%-29% of the actuarially determined premium to the plan and the City contributes the remainder to cover the cost of providing the benefits to the retirees via the self-insured plan. Since the City is self-insured, this amount fluctuates on an annual basis. For the fiscal year ended December 31, 2012, retirees contributed $1,654,351 and the City contributed $5,380,735. Active employees do not contribute to the plan until retirement.

Funding Policy

Participating Employers

TOTAL

Retirees and Beneficiaries Currently Receiving Benefits Terminated Employees Entitled to Benefits but not yet Receiving Them Active Employees

At December 31, 2012, membership consisted of:

Membership

OTHER POSTEMPLOYMENT BENEFITS (Continued)

CITY OF AURORA, ILLINOIS NOTES TO FINANCIAL STATEMENTS (Continued)

15.

$ 74,551,271

7,593,433 66,957,838

12,974,168 5,380,735

$ 11,182,621 4,687,049 (2,895,502)

$

$

197,518,139 26,735,905 170,782,234 13.54% 72,083,003 236.92% Actuarial valuations of an ongoing plan involve estimates of 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 the ARCs 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 financial statements, presents multi-year 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.

Actuarial Accrued Liability (AAL) Actuarial Value of Plan Assets Unfunded Actuarial Accrued Liability (UAAL) Funded Ratio (Actuarial Value of Plan Assets/AAL) Covered Payroll (Active Plan Members) UAAL as a Percentage of Covered Payroll

Funded Status and Funding Progress. The funded status of the plan as of December 31, 2012 was as follows:

NET OPEB OBLIGATION, END OF YEAR

Increase in Net OPEB Obligation Net OPEB Obligation, Beginning of Year

Annual OPEB Cost Contributions Made

Annual Required Contribution Interest on Net OPEB Obligation Adjustment to Annual Required Contribution

The net OPEB obligation (NOPEBO) as December 31, 2012 was calculated as follows:

Annual OPEB Costs and Net OPEB Obligation (Continued)

OTHER POSTEMPLOYMENT BENEFITS (Continued)

CITY OF AURORA, ILLINOIS NOTES TO FINANCIAL STATEMENTS (Continued)

D-6

18.

17.

16.

15.

A.

Financial statements for the Aurora Public Library (the Library), including government-wide and fund financial statements, are available in the Library’s separately audited financial statements as of December 31, 2012, which can be obtained from the Library’s administrative offices located at 1 E. Benton Street, Aurora, Illinois 60505.

Financial Information

COMPONENT UNIT - AURORA PUBLIC LIBRARY

Net positions of governmental activities and business-type activities have been restated by $(1,191,162) and $(370,521), respectively, due to the write off of previous bond issuance costs which were being amortized over the life of the bonds. With the implementation of GASB Statement No. 65, the City is required to expense these amounts as the bonds are issued and to apply this change retroactively.

PRIOR PERIOD ADJUSTMENT

During the year ended December 31, 2012, the City disposed of property at a loss of $4,973,299.

SPECIAL ITEM

In the December 31, 2012 actuarial valuation, the entry-age actuarial cost method was used. The actuarial assumptions included 7.0% investment rate of return (net of administrative expenses) and an initial annual healthcare cost trend rate of 7.5% reduced by 0.25% each year to arrive at an ultimate healthcare cost trend rate of 5.0%. Both rates include a 3.0% inflation assumption. The actuarial value of assets was based on fair value at December 31, 2012. The plan’s unfunded actuarial accrued liability is being amortized as a level percentage of projected payroll on an open 30-year basis.

Actuarial Methods and Assumptions. 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 of benefit costs between the employer and plan members to that point. The actuarial 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.

Annual OPEB Costs and Net OPEB Obligation (Continued)

OTHER POSTEMPLOYMENT BENEFITS (Continued)

CITY OF AURORA, ILLINOIS NOTES TO FINANCIAL STATEMENTS (Continued)

74,354,004 65,621,368 68,785,978 71,714,555 75,752,092

2010 2011 2012

87,989,628

2009

$

(1) Actuarial Value of Assets

2008

2007

Actuarial Valuation Date December 31, $

115,654,588

109,869,903

106,584,635

101,138,862

103,624,121

100,049,018

(2) Actuarial Accrued Liability (AAL) Entry-Age Normal

65.50%

65.27%

64.54%

64.88%

71.75%

87.95% $

(3) Funded Ratio (1) / (2)

December 31, 2012

39,902,496

38,155,348

37,798,657

35,517,494

29,270,117

12,059,390

(4) Unfunded Actuarial Accrued Liability (UAAL) (2) - (1)

ILLINOIS MUNICIPAL RETIREMENT FUND

SCHEDULE OF FUNDING PROGRESS

CITY OF AURORA, ILLINOIS

$

38,825,698

37,357,819

39,058,616

44,263,265

42,779,026

40,348,241

(5) Covered Payroll

102.77%

102.13%

96.77%

80.24%

68.42%

29.89%

UAAL as a Percentage of Covered Payroll (4) / (5)

D-7

106,721,205

117,268,887

2012

103,639,618

2010

2011

93,631,059

2009

92,697,208

83,184,455

$

(1) Actuarial Value of Assets

2008

2007

Actuarial Valuation Date December 31,

223,524,431

203,497,114

196,856,226

186,297,859

174,217,151

$ 160,350,904

52.46%

52.44%

52.65%

50.26%

47.75%

57.81% $

(3) Funded Ratio (1) / (2)

106,255,544

96,775,909

93,216,608

92,666,800

91,032,696

67,653,696

19,252,373

18,653,043

18,711,049

19,102,729

18,943,346

$ 18,051,520

(5) Covered Payroll

551.91%

518.82%

498.19%

485.10%

480.55%

374.78% 102,471,498 114,040,858 126,755,289

2008 2009 2010

2012

144,783,442

131,842,905

$ 115,624,649

2007

2011

(1) Actuarial Value of Assets

Actuarial Valuation Date December 31,

297,045,318

263,290,575

247,567,688

236,796,407

223,697,402

$ 204,396,008

(2) Actuarial Accrued Liability (AAL) Entry-Age Normal

48.74%

50.08%

51.20%

48.16%

45.81%

56.57% $

(3) Funded Ratio (1) / (2)

152,261,876

131,447,670

120,812,399

122,755,549

121,225,904

88,771,359

(4) Unfunded Actuarial Accrued Liability (UAAL) (2) - (1)

December 31, 2012

December 31, 2012

UAAL as a Percentage of Covered Payroll (4) / (5)

POLICE PENSION FUND

FIREFIGHTERS' PENSION FUND

(4) Unfunded Actuarial Accrued Liability (UAAL) (2) - (1)

SCHEDULE OF FUNDING PROGRESS

SCHEDULE OF FUNDING PROGRESS

(2) Actuarial Accrued Liability (AAL) Entry-Age Normal

CITY OF AURORA, ILLINOIS

CITY OF AURORA, ILLINOIS

26,708,019

25,922,346

25,007,815

26,158,149

24,913,911

$ 23,362,736

(5) Covered Payroll

570.10%

507.08%

483.10%

469.28%

486.58%

379.97%

UAAL as a Percentage of Covered Payroll (4) / (5)

D-8

24,199,774

26,735,905

2012

22,378,004

2009

2011

18,831,066

2008

24,193,191

$ 15,608,508

2007

2010

(1) Actuarial Value of Assets

Actuarial Valuation Date December 31,

197,518,139

165,242,261

172,968,000

173,681,516

157,770,027

$ 155,475,378

(2) Actuarial Accrued Liability (AAL) Entry-Age Normal

(4) Unfunded Actuarial Accrued Liability (UAAL) (2) - (1)

13.54%

14.65%

13.99%

12.88%

11.94%

170,782,234

141,042,487

148,774,809

151,303,512

138,938,961

10.04% $ 139,866,870

(3) Funded Ratio (1) / (2)

December 31, 2012

72,083,003

65,237,549

64,712,359

72,367,412

72,246,059

$ 66,557,105

(5) Covered Payroll

236.92%

216.20%

229.90%

209.08%

192.31%

210.15%

UAAL as a Percentage of Covered Payroll (4) / (5)

2012

2011

2010

2009

2008

2007

Year Ended December 31, $

4,603,427

3,961,882

3,822,990

4,470,590

4,372,016

4,128,288

Employer Contributions

December 31, 2012

$

4,603,427

4,273,127

4,163,652

4,470,590

4,372,016

4,128,288

Annual Required Contribution (ARC)

ILLINOIS MUNICIPAL RETIREMENT FUND

SCHEDULE OF EMPLOYER CONTRIBUTIONS

SCHEDULE OF FUNDING PROGRESS

OTHER POSTEMPLOYMENT BENEFIT PLAN

CITY OF AURORA, ILLINOIS

CITY OF AURORA, ILLINOIS

100.00%

92.72%

91.82%

100.00%

100.00%

100.00%

Percentage Contributed

D-9

Employer Contributions

$ 5,511,901

6,570,934

6,729,000

8,268,900

8,574,474

7,380,005

Year Ended December 31,

2007

2008

2009

2010

2011

2012

7,779,759

8,558,590

8,268,060

6,728,930

6,544,272

$ 5,510,761

Annual Required Contribution (ARC)

December 31, 2012

FIREFIGHTERS' PENSION FUND

SCHEDULE OF EMPLOYER CONTRIBUTIONS

CITY OF AURORA, ILLINOIS

94.86%

100.19%

100.01%

100.00%

100.41%

100.02%

Percent Contributed

2012

2011

2010

2009

2008

2007

Year Ended December 31,

8,270,619

10,364,821

9,901,400

7,821,000

7,152,523

$ 6,145,484

Employer Contributions

9,030,372

10,349,019

9,900,826

7,820,659

7,150,811

$ 6,144,161

Annual Required Contribution (ARC)

December 31, 2012

POLICE PENSION FUND

SCHEDULE OF EMPLOYER CONTRIBUTIONS

CITY OF AURORA, ILLINOIS

91.59%

100.15%

100.01%

100.00%

100.02%

100.02%

Percent Contributed

D-10

4,580,046

5,380,735

2012

4,548,786

2010

2011

6,911,969

2009

17,790,881

6,810,269

$

Employer Contributions

2008

2007

Year Ended December 31, $

11,182,621

11,773,685

12,361,724

11,951,819

13,052,085

16,764,385

Annual Required Contribution (ARC)

December 31, 2012

OTHER POSTEMPLOYMENT BENEFIT PLAN

SCHEDULE OF EMPLOYER CONTRIBUTIONS

CITY OF AURORA, ILLINOIS

48.12%

38.90%

36.80%

57.83%

52.18%

106.12%

Percentage Contributed

The Mayor may transfer budgeted amounts between departments within any fund. Transfers between objects within a department or within a fund without departmental segregation may be made by the Chief Financial Officer/City Treasurer. The legal level of budgetary control is the department level or, where no departmental segregation of a fund exists, the fund level. Three budget amendments were approved by the City Council. All budgets lapse at year end.

•

Prior to December 31 the budget is legally enacted through passage of an ordinance.

A public hearing is held to obtain citizen comments.

The Mayor submits to the City Council a proposed budget for all funds except the Permanent Fund and Agency Funds. The budget includes proposed expenditures and the means of financing them.

•

•

•

•

The City budget represents departmental expenditures and estimated revenues authorized by the budget. The budget is adopted on the modified accrual basis of accounting and the current financial resources measurement focus, consistent with GAAP. The City follows these procedures in establishing the budgetary data reflected in the required supplementary information:

BUDGETS AND BUDGETARY ACCOUNTING

December 31, 2012

NOTES TO REQUIRED SUPPLEMENTARY INFORMATION

CITY OF AURORA, ILLINOIS

OFFICIAL BID FORM (OPEN SPEER AUCTION INTERNET SALE) City of Aurora 44 East Downer Place Aurora, Illinois 60507-3302

October 22, 2013 Speer Financial, Inc.

Members of the City Council: For the $9,465,000* General Obligation Refunding Bonds, Series 2013 of the City of Aurora, Kane, DuPage, Kendall and Will Counties, Illinois, as described in the annexed Official Notice of Sale, which is expressly made a part of this bid, we will pay you $_______________________ (no less than $9,400,000). The Bonds will bear interest as follows (each rate a multiple of 1/8 or 1/100 of 1%). The Bonds are dated the date of delivery, expected to be on or about November 5, 2013. The discount is subject to adjustment allowing the same $___________ gross spread per $1,000 bond as bid herein. MATURITIES* – DECEMBER 30 $45,000 45,000 45,000 50,000

... ... ... ...

2015 2016 2017 2018

________% ________% ________% ________%

$1,200,000 ... 2019 ________% 1,240,000 ... 2020 ________% 1,270,000 ... 2021 ________%

$1,315,000 1,365,000 1,415,000 1,475,000

... ... ... ...

2022 2023 2024 2025

________% ________% ________% ________%

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

Maturities: _______ Term Maturity _______

Maturities: _______ Term Maturity _______

Maturities: _______ Term Maturity _______

Maturities: _______ Term Maturity _______

The Bonds are to be executed and delivered to us in accordance with the terms of this bid accompanied by the approving legal opinion of Chapman and Cutler LLP, Chicago, Illinois. The City will pay for the legal opinion. The underwriter agrees to apply for CUSIP numbers within 24 hours and pay the fee charged by the CUSIP Service Bureau and will accept the Bonds with the CUSIP numbers as entered on the Bonds. As evidence of our good faith, we have wire transferred or enclosed herewith a check or Surety Bond payable to the order of the Treasurer of the City in the amount of TWO PERCENT OF PAR (the “Deposit”) under the terms provided in your Official Notice of Sale. Attached hereto is a list of members of our account on whose behalf this bid is made.

Form of Deposit Check One: Certified/Cashier’s Check [ ] Financial Surety Bond [] Wire Transfer []

Account Manager Information

Bidders Option Insurance

Name

We have purchased insurance from:

Address

Name of Insurer (Please fill in)

By

_____________________

Amount: $189,300 City

Premium: _____________

State/Zip

Direct Phone (

)

FAX Number (

)

Maturities: (Check One) [__] ______________Years [__] All

E-Mail Address

The foregoing bid was accepted and the Bonds sold by ordinance of the City on October 22, 2013, and receipt is hereby acknowledged of the good faith Deposit which is being held in accordance with the terms of the annexed Official Notice of Sale. CITY OF AURORA, KANE, DUPAGE, KENDALL AND WILL COUNTIES, ILLINOIS Mayor

*Subject to change.

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

Gross Interest

$

Less Premium/Plus Discount

$

True Interest Cost

$ %

True Interest Rate TOTAL BOND YEARS AVERAGE LIFE

Post Sale Revision

86,891.04 9.180 Years

OFFICIAL NOTICE OF SALE $9,465,000* CITY OF AURORA Kane, DuPage, Kendall and Will Counties, Illinois General Obligation Refunding Bonds, Series 2013 The City of Aurora, Kane, DuPage, Kendall and Will Counties, Illinois (the “City”), will receive electronic bids on the SpeerAuction (“SpeerAuction”) website address “www.SpeerAuction.com” for its $9,465,000* General Obligation Refunding Bonds, Series 2013 (the “Bonds”), on an all or none basis between 9:30 A.M. and 9:45 A.M., C.D.T., Tuesday, October 22, 2013. To bid, bidders must have: (1) completed the registration form on the SpeerAuction website, and (2) requested and received admission to the City’s sale (as described below). Award will be made or all bids rejected at a meeting of the City on that date. The City reserves the right to change the date or time for receipt of bids. Any such change shall be made not less than twenty-four (24) hours prior to the revised date and time for receipt of the bids for the Bonds and shall be communicated by publishing the changes in the Amendments Page of the SpeerAuction webpage and through Thompson Municipal News. The Bonds will constitute valid and legally binding obligations of the City payable both as to principal and interest from ad valorem taxes levied against all taxable property therein without limitation as to rate or amount, except that the rights of the owners of the Bonds and the enforceability of the Bonds may be limited by bankruptcy, insolvency, moratorium, reorganization and other similar laws affecting creditors’ rights and by equitable principles, whether considered at law or in equity, including the exercise of judicial discretion. Bidding Details Bidders should be aware of the following bidding details associated with the sale of the Bonds. (1)

(2)

(3) (4) (5) (6)

All bids must be submitted on the SpeerAuction website at www.SpeerAuction.com. No telephone, telefax or personal delivery bids will be accepted. The use of SpeerAuction shall be at the bidder’s risk and expense and the City shall have no liability with respect thereto, including (without limitation) liability with respect to incomplete, late arriving and non-arriving bid. Any questions regarding bidding on the SpeerAuction website should be directed to Grant Street Group at (412) 391-5555 x 370. Bidders may change and submit bids as many times as they like during the bidding time period; provided, however, each and any bid submitted subsequent to a bidder’s initial bid must result in a lower true interest cost (“TIC”) with respect to a bid, when compared to the immediately preceding bid of such bidder. In the event that the revised bid does not produce a lower TIC with respect to a bid the prior bid will remain valid. If any bid in the auction becomes a leading bid two (2) minutes prior to the end of the auction, then the auction will be automatically extended by two (2) minutes from the time such bid was received by SpeerAuction. The auction end time will continue to be extended, indefinitely, until a single leading bid remains the leading bid for at least two minutes. The last valid bid submitted by a bidder before the end of the bidding time period will be compared to all other final bids submitted by others to determine the winning bidder or bidders. During the bidding, no bidder will see any other bidder’s bid, but bidders will be able to see the ranking of their bid relative to other bids (i.e., “Leader”, “Cover”, “3rd” etc.) On the Auction Page, bidders will be able to see whether a bid has been submitted.

Rules of SpeerAuction Bidders must comply with the Rules of SpeerAuction in addition to the requirements of this Official Notice of Sale. To the extent there is a conflict between the Rules of SpeerAuction and this Official Notice of Sale, this Official Notice of Sale shall control. Rules (1) (2) (3) (4)

A bidder (“Bidder”) submitting a winning bid (“Winning Bid”) is irrevocably obligated to purchase the Bonds at the rates and prices of the winning bid, if acceptable to the City, as set forth in the related Official Notice of Sale. Winning Bids are not officially awarded to Winning Bidders until formally accepted by the City. Neither the City, Speer Financial, Inc., nor Grant Street Group (the “Auction Administrator”) is responsible for technical difficulties that result in loss of Bidder’s internet connection with SpeerAuction, slowness in transmission of bids, or other technical problems. If for any reason a Bidder is disconnected from the Auction Page during the auction after having submitted a Winning Bid, such bid is valid and binding upon such Bidder, unless the City exercises its right to reject bids, as set forth herein. Bids which generate error messages are not accepted until the error is corrected and bid is received prior to the deadline.

*Subject to change.

City of Aurora, Kane, DuPage, Kendall and Will Counties, Illinois $9,465,000* General Obligation Refunding Bonds, Series 2013 Official Notice of Sale (continued)

(5) (6) (7) (8) (9) (10)

Bidders accept and agree to abide by all terms and conditions specified in the Official Notice of Sale (including amendments, if any) related to the auction. Neither the City, Speer Financial, Inc., nor the Auction Administrator is responsible to any bidder for any defect or inaccuracy in the Official Notice of Sale, amendments, or Preliminary Official Statement as they appear on SpeerAuction. Only Bidders who request and receive admission to an auction may submit bids. SpeerAuction and the Auction Administrator reserve the right to deny access to SpeerAuction website to any Bidder, whether registered or not, at any time and for any reason whatsoever, in their sole and absolute discretion. Neither the City, Speer Financial, Inc., nor the Auction Administrator is responsible for protecting the confidentiality of a Bidder’s SpeerAuction password. If two bids submitted in the same auction by the same or two or more different Bidders result in same True Interest Cost, the first confirmed bid received by SpeerAuction prevails. Any change to a submitted bid constitutes a new bid, regardless of whether there is a corresponding change in True Interest Cost. Bidders must compare their final bids to those shown on the Observation Page immediately after the bidding time period ends, and if they disagree with the final results shown on the Observation Page they must report them to SpeerAuction within 15 minutes after the bidding time period ends. Regardless of the final results reported by SpeerAuction, Bonds are definitively awarded to the winning bidder only upon official award by the City. If, for any reason, the City fails to: (i) award the Bonds to the winner reported by SpeerAuction, or (ii) deliver the Bonds to winning bidder at settlement, neither the City, Speer Financial, Inc., nor the Auction Administrator will be liable for damages.

The City reserves the right to reject all proposals, to reject any bid proposal not conforming to this Official Notice of Sale, and to waive any irregularity or informality with respect to any proposal. Additionally, the City reserves the right to modify or amend this Official Notice of Sale; however, any such modification or amendment shall not be made less than twenty-four (24) hours prior to the date and time for receipt of bids on the Bonds and any such modification or amendment will be announced on the Amendments Page of the SpeerAuction webpage and through Thompson Municipal News. The Bonds will be in fully registered form in the denominations of $5,000 and integral multiples thereof in the name of Cede & Co. as nominee of The Depository Trust Company (“DTC”), New York, New York, to which principal and interest payments on the Bonds will be paid. Individual purchases will be in book-entry only form. Interest on each Bond shall be paid by check or draft of the Bond Registrar to the person in whose name such Bond is registered at the close of business on the fifteenth day of the month immediately preceding the interest payment date. The principal of the Bonds shall be payable in lawful money of the United States of America at the principal office maintained for the purpose by the Bond Registrar in Chicago, Illinois. Semiannual interest is due June 30 and December 30 of each year commencing June 30, 2014, and is payable by Amalgamated Bank of Chicago, Chicago, Illinois (the “Bond Registrar”). The Bonds are dated the date of delivery. If the winning bidder is not a direct participant of DTC and does not have clearing privileges with DTC, the Bonds will be issued as Registered Bonds in the name of the purchaser. At the request of such winning bidder, the City will assist in the timely conversion of the Registered Bonds into book-entry bonds with DTC as described herein. MATURITIES* – DECEMBER 30 $45,000 45,000 45,000 50,000

... ... ... ...

2015 2016 2017 2018

$1,200,000 ... 2019 1,240,000 ... 2020 1,270,000 ... 2021

$1,315,000 1,365,000 1,415,000 1,475,000

... ... ... ...

2022 2023 2024 2025

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

Bonds due December 30, 2015-2021, inclusive, are not subject to optional redemption. Bonds due December 30, 2022-2025, inclusive, are callable in whole or in part and on any date on or after December 30, 2021, at a price of par and accrued interest. If less than all the Bonds are called, they shall be redeemed in any order of maturity as determined by the City and within any maturity by lot. All interest rates must be in multiples of one-eighth or one one-hundredth of one percent (1/8 or 1/100 of 1%), and not more than one rate for a single maturity shall be specified. The rates bid shall be in non-descending order. The differential between the highest rate bid and the lowest rate bid shall not exceed three percent (3%). All bids must be for all of the Bonds, must be for not less than $9,400,000. *Subject to change.

City of Aurora, Kane, DuPage, Kendall and Will Counties, Illinois $9,465,000* General Obligation Refunding Bonds, Series 2013 Official Notice of Sale (continued)

Award of the Bonds: The Bonds will be awarded on the basis of true interest cost, determined in the following manner. True interest cost shall be computed by determining the annual interest rate (compounded semi-annually) necessary to discount the debt service payments on the Bonds from the payment dates thereof to the dated date and to the bid price. For the purpose of calculating true interest cost, the Bonds shall be deemed to become due in the principal amounts and at the times set forth in the table of maturities set forth above. In the event two or more qualifying bids produce the identical lowest true interest cost, the winning bid shall be the bid that was submitted first in time on the SpeerAuction webpage. The Bonds will be awarded to the bidder complying with the terms of this Official Notice of Sale whose bid produces the lowest true interest cost rate to the City as determined by the City’s Financial Advisor, which determination shall be conclusive and binding on all bidders; provided, that the City reserves the right to reject all bids or any non-conforming bid and reserves the right to waive any informality in any bid. Bidders should verify the accuracy of their final bids and compare them to the winning bids reported on the SpeerAuction Observation Page immediately after the bidding. The discount, if any, is subject to pro rata adjustment if the maturity amounts of the Bonds are changed, allowing the same dollar amount of profit per $1,000 bond as submitted on the Official Bid Form. The dollar amount of profit must be written on the Official Bid Form for any adjustment to be allowed, and is subject to verification. The true interest cost of each bid will be computed by SpeerAuction and reported on the Observation Page of the SpeerAuction webpage immediately following the date and time for receipt of bids. These true interest costs are subject to verification by the City’s Financial Advisor, will be posted for information purposes only and will not signify an actual award of any bid or an official declaration of the winning bid. The City or its Financial Advisor will notify the bidder to whom the Bonds will be awarded, if and when such award is made. The winning bidder will be required to make the standard filings and maintain the appropriate records routinely required pursuant to MSRB Rules G-8, G-11 and G-32. The winning bidder will be required to pay the standard MSRB charge for Bonds purchased. In addition, the winning bidder who is a member of the Securities Industry and Financial Markets Association (“SIFMA”) will be required to pay SIFMA’s standard charge per bond. Each bid shall be accompanied by a certified or cashier’s check on, or a wire transfer from, a solvent bank or trust company or a Financial Surety Bond for TWO PERCENT OF PAR payable to the Treasurer of the City as evidence of good faith of the bidder (the “Deposit”). The Deposit of the successful bidder will be retained by the City pending delivery of the Bonds and all others will be promptly returned. Should the successful bidder fail to take up and pay for the Bonds when tendered in accordance with this Notice of Sale and said bid, said Deposit shall be retained as full and liquidated damages to the City caused by failure of the bidder to carry out the offer of purchase. Such Deposit will otherwise be applied on the purchase price upon delivery of the Bonds. No interest on the Deposit will accrue to the purchaser. If a wire transfer is used for the Deposit, it must be sent according to the following wire instructions: Amalgamated Bank of Chicago Corporate Trust One West Monroe Chicago, IL 60603 ABA # 071003405 Credit To: 3281 Speer Bidding Escrow RE: City of Aurora, Kane, DuPage, Kendall and Will Counties, Illinois bid for $9,465,000* General Obligation Refunding Bonds, Series 2013 The wire shall arrive in such account no later than 30 minutes prior to the date and time of the sale of the Bonds. Contemporaneously with such wire transfer, the bidder shall send an email to [email protected] with the following information: (1) indication that a wire transfer has been made, (2) the amount of the wire transfer, (3) the issue to which it applies, and (4) the return wire instructions if such bidder is not awarded the Bonds. The City and any bidder who chooses to wire the Deposit hereby agree irrevocably that Speer Financial, Inc. (“Speer”) shall be the escrow holder of the Deposit wired to such account subject only to these conditions and duties: (i) if the bid is not accepted, Speer shall, at its expense, promptly return the Deposit amount to the unsuccessful bidder; (ii) if the bid is accepted, the Deposit shall be forwarded to the City; (iii) Speer shall bear all costs of maintaining the escrow account and returning the funds to the bidder; (iv) Speer shall not be an insurer of the Deposit amount and shall have no liability except if it willfully fails to perform, or recklessly disregards, its duties specified herein; and (v) income earned on the Deposit, if any, shall be retained by Speer. *Subject to change.

City of Aurora, Kane, DuPage, Kendall and Will Counties, Illinois $9,465,000* General Obligation Refunding Bonds, Series 2013 Official Notice of Sale (continued)

If a Financial Surety Bond is used for the Deposit, it must be from an insurance company licensed to issue such a bond in the State of Illinois and such bond must be submitted to Speer prior to the opening of the bids. The Financial Surety Bond must identify each bidder whose deposit is guaranteed by such Financial Surety Bond. If the Bonds are awarded to a bidder using a Financial Surety Bond, then that purchaser is required to submit its Deposit to the City in the form of a certified or cashier’s check or wire transfer as instructed by Speer or the City not later than 3:00 P.M. on the next business day following the award. If such Deposit is not received by that time, the Financial Surety Bond may be drawn by the City to satisfy the Deposit requirement. The City covenants and agrees to enter into a written agreement or contract, constituting an undertaking (the “Undertaking”) to provide ongoing disclosure about the City for the benefit of the beneficial owners of the Bonds on or before the date of delivery of the Bonds as required under Section (b)(5) of Rule 15c2-12 (the “Rule”) adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934. The Undertaking shall be as described in the Official Statement, with such changes as may be agreed in writing by the Underwriter. The City represents that it is in compliance with each and every undertaking previously entered into it pursuant to the Rule. The Underwriter's obligation to purchase the Bonds shall be conditioned upon the City delivering the Undertaking on or before the date of delivery of the Bonds. The winning bidder shall provide a certificate, in form as drafted by or acceptable to Bond Counsel, to evidence the issue price of each maturity of the Bonds, form of which certificate is available upon request. By submitting a bid, any bidder makes the representation that it understands Bond Counsel represents the City in the Bond transaction and, if such bidder has retained Bond Counsel in an unrelated matter, such bidder represents that the signatory to the bid is duly authorized to, and does consent to and waive of and on behalf of such bidder any conflict of interest of Bond Counsel arising from any adverse position to the City in this matter; such consent and waiver shall supersede any formalities otherwise required in any separate understandings, guidelines or contractual arrangements between the bidder and Bond Counsel. Bonds will be delivered to the successful purchaser against full payment in immediately available funds as soon as they can be prepared and executed, which is expected to be on or about November 5, 2013. Should delivery be delayed beyond sixty (60) days from the date of sale for any reason beyond the control of the City except failure of performance by the purchaser, the City may cancel the award or the purchaser may withdraw the good faith deposit and thereafter the purchaser's interest in and liability for the Bonds will cease. The Official Statement, when further supplemented by an addendum or addenda specifying the maturity dates, principal amounts, and interest rates of the Bonds, and any other information required by law or deemed appropriate by the City, shall constitute a “Final Official Statement” of the City with respect to the Bonds, as that term is defined in the Rule. By awarding the Bonds to any underwriter or underwriting syndicate, the City agrees that, no more than seven (7) business days after the date of such award, it shall provide, without cost to the senior managing underwriter of the syndicate to which the Bonds are awarded, up to 100 copies of the Final Official Statement to permit each “Participating Underwriter” (as that term is defined in the Rule) to comply with the provisions of such Rule. The City shall treat the senior managing underwriter of the syndicate to which the Bonds are awarded as its designated agent for purposes of distributing copies of the Final Official Statement to each Participating Underwriter. Any underwriter executing and delivering an Official Bid Form with respect to the Bonds agrees thereby that if its bid is accepted by the City it shall enter into a contractual relationship with all Participating Underwriters of the Bonds for purposes of assuring the receipt by each such Participating Underwriter of the Final Official Statement. By submission of its bid, the senior managing underwriter of the successful bidder agrees to supply all necessary pricing information and any Participating Underwriter identification necessary to complete the Official Statement within 24 hours after award of the Bonds. Additional copies of the Final Official Statement may be obtained by Participating Underwriters from the printer at cost. The City will, at its expense, deliver the Bonds to the purchaser in New York, New York, through the facilities of DTC and will pay for the bond attorney’s opinion. At the time of closing, the City will also furnish to the purchaser the following documents, each dated as of the date of delivery of the Bonds: (1) the unqualified opinion of Chapman and Cutler LLP, Chicago, Illinois, that the Bonds are lawful and enforceable obligations of the City in accordance with their terms and are payable from ad valorem taxes levied against all taxable property of the City, except that the rights of the owners of the Bonds and the enforceability of the Bonds may be limited by bankruptcy, insolvency, moratorium, reorganization and other similar laws affecting creditors’ rights and by equitable principles, whether considered at law or in equity, including the exercise of judicial discretion; (2) the opinion of said attorneys that the interest on the Bonds is exempt from federal income taxes as and to the extent set forth in the Official Statement for the Bonds; and (3) a no litigation certificate by the City. *Subject to change.

City of Aurora, Kane, DuPage, Kendall and Will Counties, Illinois $9,465,000* General Obligation Refunding Bonds, Series 2013 Official Notice of Sale (continued)

The City intends to designate the Bonds as “qualified tax-exempt obligations” pursuant to the small issuer exception provided by Section 265(b) (3) of the Internal Revenue Code of 1986, as amended. The City has authorized the printing and distribution of an Official Statement containing pertinent information relative to the City and the Bonds. Copies of such Official Statement or additional information may be obtained from Mr. Brian Caputo, Chief Financial Officer/City Treasurer, City of Aurora, 44 East Downer Place, Aurora, Illinois 60507-3302 or an electronic copy of this Official Statement is available from the www.speerfinancial.com web site under “Debt Auction Center/Competitive Sales Calendar” from the Independent Public Finance Consultants to the City, Speer Financial, Inc., One North LaSalle Street, Suite 4100, Chicago, Illinois 60602, telephone (312) 346-3700.

/s/ THOMAS J. WEISNER Mayor CITY OF AURORA Kane, DuPage, Kendall and Will Counties, Illinois *Subject to change.

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