OFFICIAL STATEMENT. NEW ISSUE BANK QUALIFIED In the opinion of Gilmore & Bell, PC, Wichita, Kansas, Bond Counsel, under existing law and assuming continued compliance with certain requirements of the Internal Revenue Code of 1986, as amenced (the "Code", the intereston the Series 2000 Bonds is excluded from gross income for federal Income tax purposes, isnot an item of tax preference for purposes ofthe federal alteruative minimum tax imposed on individuals and corporations, and is excluded from computation of Kansas adjusted gross income. The Series 2000 Bonds have been designated as “qualified tax-exempt obligations” within the meaning of Section 265(0)(3) ofthe Code. See “LEGAL MATTERS - Opinion of Bond Counsel” herein. $1,240,000 CITY OF NEWTON, KANSAS WATER UTILITY SYSTEM REVENUE BONDS SERIES 2000 Dated: February 1, 2000 Due: September 1, as shown below The Series 2000 Bonds the "Series 2000 Bonds") will be issued by City of Newton, Kansas (the "City") pursuant to the Bond Resolution (as herein defined), as fully registered bonds without coupons in the denomination of $5,000 or any integral multiples thereof (the " Authorized Denomination") and shall be numbered in such manner as the Bond Registrar shall determine. Principal will be payableannually fon September 1. beginning Principal will be payable upon presentation au Treasurer of the State of Kansas, Topeka, Ki registrar and paying agent (the "Paying Agent” and "Bond Registrar"). Interest e on each Series 2000 Bond shall be paid to the persons who are the registered owners of the Series 2000 Bonds as of the close of business on the fifteenth day (whether or not a business day) of the calendar month preceding each interest payment date by check or draft of the Paying Agent mailed to such registered owner or, in the case of an interest payment to a registered owner of $500,000 of more in grcgate principal amount of Series 2000 Bonds, by electronic transfer. The Series 2000 Bonds shall be special obligations of the City payable solely from, and secured as to the payment of principal and interest by a pledge of the Net Revenues derived by the City fom the operation of its Water Utility System (the "System"). THE SERIES 2000 BONDS SHALL NOT BE OR CONSTITUTE A GENERAL OBLIGATION OF THE CITY, NOR SHALL THEY ‘CONSTITUTE AN INDEBTEDNESS OF THE CITY WITHIN THE MEANING OF ANY CONSTITUTIONAL, STATUTORY OR CHARTER PROVISION, LIMITATION OR RESTRICTION, AND THE TAXING POWER OF THE CITY IS NOT PLEDGED ‘TO THE PAYMENT OF THE SERIES 2000 BONDS, EITHER AS TO PRINCIPAL OR INTEREST. See "THE SERIES 2000 BONDS-Security for the Series 2000 Bonds." herein, Under the Bond Resolution, Additional Bonds and Additional Obligations may be issued by the City on a parity with the Series 2000 Bonds (The Series 2000 Bonds and any Additional Bonds shall hereinafter be referred collectively as the "Bonds"), ‘The payment ofthe principal of, redemption premium, ifany, and interest on the Series 2000 Bonds is subject to certain risk Factors ‘and investment considerations as described under the caption "RISK FACTORS AND INVESTMENT CONSIDERATIONS" herein. MATURITY SCHEDULE Interest Maturity Interest Rate Yield Date Rate Yield 2000 4.20% PAR 2005 3.20% PAR 2001 4.60% PAR 2006 5.30% PAR 2002 60,000 4.80% PAR 2007 5.40% PAR 2003 60,000 5.00% PAR 2008 5.50% PAR 2008 65,000 5.10% PAR 2009 5.60% PAR ‘TERM BONDS {$525,000 Maturing September 1, 2014, 6.00% at a Price of 100.00 (All plus accrued interest, if any) ‘The Series 2000 Bonds are subject to redemption prior to maturity as described herein. See "THE SERIES 2000 BONDS-Redemptios: Provisions" herein, ‘The Series 2000 Bonds are offered when, as and if issued by the City, subject to the approval of legality by Gilmore & Bell, PC. Wichita, Kansas, Bond Counsel. Itis expected that the Series 2000 Bonds will be available for delivery through the facilities ofthe Depository ‘Trust Company, New York, New York, on or about February 15, 2000 THE DATE OF THIS OFFICIAL STATEMENT IS JANUARY 31, 2000 George K. Baum & Company‘THE BONDS HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION UNDER ‘THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER ANY STATE SECURITIES OR "BLUE SKY" LAWS. ‘THE BONDS ARE OFFERED PURSUANT TO AN EXEMPTION FROM REG AND EXCHANGE COMMISSION. ISTRATION WITH THE SECURITIES IN MAKING AN INVESTMENT DECISION INVESTORS MUST RELY ON THEIR OWN EXAMINATION OF THE CITY AND THE TERMS OF THE OFFERING, INCLUDING THE MERITS AND RISKS INVOLVED. THESE BONDS HAVE NOT BEEN RECOMMENDED BY ANY FEDERAL OR STATE SECURITIES COMMISSION OR REGULATORY AUTHORITY. FURTHERMORE, THE FOREGOING AUTHORITIES HAVE NOT CONFIRMED THE ACCURACY OR DETERMINED THE ADEQUACY OF THIS DOCUMENT. ANY REPRESENTATION TO ‘THE CONTRARY MAY BE A CRIMINAL OFFENSE. No dealer, broker, salesman or other person has been authorized by the City or the Underwriters to give any {formation or to make any representations with respect to the Bonds other than those contained in this Official Statement, and, if given or made, such other information or representations must not be relied upon as having been authorized by of the foregoing, This Official Statement does not constitute an offer to sell or the solicitation of any offer to buy nor shall there by any sale of the Bonds by any person in any jurisdiction in which it is unlawful for such person to make such offer, solicitation or sale. The information set forth herein has been furnished by the City and other sources which are believed to be reliable, but such information is not guaranteed as to accuracy or completeness, and is not to be construed as a representation, by the Underwriters. The information and expressions of opinion herein are subject to change without notice and neither the delivery of this Official Statement nor any sale made hereunder shall, under any circumstances, create implication that there has been no change in the affairs of the City since the date hereof.TABLE OF CONTENTS. INTRODUCTORY STATEMENT General Matters Definitions Continuing Disclosure Additional Information THE SERIES 2000 BONDS Authority for the Series 2000 Bonds Security for the Series 2000 Bonds Description of the Series 2000 Bonds Designation of Paying Agent and Bond Registrar Method and Place of Payment of the Bonds Registration, Transfer and Exchange of Bonds Mutilated, Lost, Stolen or Destroyed Bonds Nonpresentment of Bonds Payments Due on Saturdays, Sundays and Holidays Redemption Provisions Optional Redemption Mandatory Redemption Selection of Bonds to be Redeemed Notice and Effect of Call for Redemption RISK FACTORS AND INVESTMENT CONSIDERATIONS Special Obligations Debt Service Source Taxation of Interest on the Series 2000 Bonds Market for the Series 2000 Bonds Lack of Bond Rating Secondary Market Debt Service Reserve Account Legal Matters Limitations on Remedies Available to Owners of Bonds Year 2000 Compliance Suitability of Investment APPLICATION OF BOND PROCEEDS, Sources of Funds Uses of Funds GENERAL INFORMATION CONCERNING THE CITY Size and Location Government and Organization of the City Elected Officials Appointed Officials E SSSe0rCCMH Yanannaaueaauvune wNnun BBS 12 12 12 12 13Municipal Services and Utilities Transportation and Communication Facilities Educational Institutions and Facilities Medical and Health Facilities Recreational, Cultural and Religious Facilities ‘THE WATER UTILITY SYSTEM Description of the Water Utility System Current System Service Charges Water Connections, Production and Usage Water Utility System - Revenues and Expenses STATEMENT OF REVENUES AND EXPENSES WATER FUND B GB 13 13 13 14 14 14 15 15 16 SUMMARY OF WATER FUND REVENUES & EXPENDITURES FOR THE YEAR ENDED DECEMBER 31, 1999 PRELIMINARY - UNAUDITED Debt Service Debt Service Coverage BOND RATING ELIGIBILITY TO SECURE THE DEPOSIT OF PUBLIC FUNDS ABSENCE OF LITIGATION LEGAL MATTERS Approval of Series 2000 Bonds Opinion of Bond Counsel Federal Tax Exemption Kansas Tax Exemption Other Tax Consequences UNDERWRITING MISCELLANEOUS AUTHORIZATION OF OFFICIAL STATEMENT APPENDIX A - Audited Financial Statements for the Year Ended December 31, 1998 APPENDIX B - Economic and Financial Information Concerning the City APPENDIX C - Summary of Financing Documents u 18 18 19 19 19 19 19 20 20 20 20 21 21 aOFFICIAL STATEMENT $1,240,000 CITY OF NEWTON, KANSAS WATER UTILITY SYSTEM REVENUE BONDS SERIES 2000 INTRODUCTORY STATEMENT ral Matters The purpose of this Official Statement is to furnish information relating to City of Newton, Kansas (the "City" or the "City"), the City's Water Utility System (the "System") and the Water Utility System Revenue Bonds, Series 2000 (the "Series 2000 Bonds"), of the City, dated February 1, 2000, to be issued in the principal amount of $1,240,000. The Appendices to this Official Statement are integral parts of this document, to be read in their entirety. All financial and other information presented herein has been compiled by the City. The presentation of information herein, including tables of receipts from various taxes, is intended to show recent historic information, and is not intended to indicate future or continuing trends in the financial Position or other affairs of the City. No representation is made that past experience, as might be shown by such financial or other information, will necessarily continue or be repeated in the future Definitions Capitalized terms not otherwise defined herein shall have the meanings ascribed thereto in APPENDIX C “SUMMARY OF FINANCING DOCUMENTS - Definitions”. Continuing Disclosure The Securities and Exchange Commission (the “SEC”) has promulgated amendments to its Rule 15c2-12 (the “Rule”) requiring continuous secondary market disclosure for certain issues, In the Bond Resolution, hereinafter defined, the City has covenanted to provide annually certain financial information and operating data and other information necessary to comply with the Rule, and to transmit the same to certain National Repositories and the Municipal Securities Rulemaking Board, as applicable. This covenant is for the benefit of and is enforceable by the owners of the Bonds. The City has never failed to comply in all material respects with any previous undertakings with regard to said Rule or to provide annual reports or notices of material events, For more information regarding the City’s continuing disclosure undertaking, see APPENDIX A - “SUMMARY OF FINANCING DOCUMENTS - Continuing Disclosure Instructions”Additional Information Additional information regarding the City or the Bonds may be obtained from Mr. Ronald R. Ahsmuhs, City Clerk/Finance Director, City Hall, 201 East 6th, P.O. Box 426, Newton, Kansas 67114, (316/284-6001), or from George K. Baum & Company, 100 North Main, Suite 810, Wichita, Kansas 67202, (316/264-9351). THE SERIES 2000 BONDS Authority for the Series 2000 Bonds The Series 2000 Bonds are being issued pursuant to and in full compliance with the Constitution and statutes of the State of Kansas (the "State"), including K,S.A. 10-101 to 10-125, inclusive, K.S.A. 10-620 et seq., K.S.A, 10-1201 ef seg., as amended and supplemented from time to time (the "Act"), an ordinance passed by the governing body of the City and a resolution adopted by the governing body of the City on January 25, 2000 (jointly the "Bond Resolution"), Security for th ries 2000 Bon: The Series 2000 Bonds shall be special obligations of the City payable solely from, and secured as to the payment of principal and interest by a pledge of, the Net Revenues derived by the City from the operation of the System. THE SERIES 2000 BONDS SHALL NOT BE OR CONSTITUTE A GENERAL OBLIGATION OF THE City, NOR SHALL THEY CONSTITUTE AN INDEBTEDNESS OF THE City WITHIN THE MEANING OF ANY CONSTITUTIONAL, STATUTORY OR CHARTER PROVISION, LIMITATION OR RESTRICTION, AND THE ‘TAXING POWER OF THE City IS NOT PLEDGED TO THE PAYMENT OF THE SERIES 2000 BONDS, EITHER AS TO PRINCIPAL OR INTEREST. The Series 2000 Bonds shall stand on a parity and be equally and ratably secured with respect. to the payment of principal and interest from the Net Revenues derived from the operation of the System and in all other respects with any Parity Bonds and Parity Obligations. The City, in accordance with and subject to applicable legal requirements, wil fix, establish, ‘maintain and collect such rates and charges for the use and services furnished by or through the System as will produce Revenues sufficient to (a) pay the Expenses of the System; (b) enable the City to have in each Fiscal Year, Net Revenues not less than 125% of Debt Service Requirements for such Fiscal Year on all Parity Bonds and Parity Obligations at the time Outstanding; and 110% of the Debt Service Requirements for such Fiscal Year on any Subordinate Lien Bonds and (c) provide reasonable and adequate reserves for the payment of the Parity Bonds and the interest thereon and for the protection and benefit of the System as provided in the Bond Resolution. Description of the Series 2000 Bonds ‘The Series 2000 Bonds shall consist of fully registered bonds in the denomination of $5,000 or any integral multiples thereof (the "Authorized Denomination") and shall be numbered in such manner as the Bond Registrar shall determine. All of the Series 2000 Bonds shall be dated February1, 2000, shall become due in the amounts, on the Stated Maturities, and subject to redemption and Payment, prior to their Stated Maturities, and shall bear interest at the rates per annum set forth on the cover page of this Official Statement. The Series 2000 Bonds shall bear interest (computed on the basis of twelve 30-day months) from the later of the Dated Date or the most recent Interest Payment Date to which interest has been paid on the Interest Payment Dates in the manner hereinafter set forth The City will at all times maintain a paying agent and bond registrar meeting the qualifications set forth in the Bond Resolution. The City reserves the right to appoint a successor paying agent or bond registrar. No resignation or removal of the paying agent or bond registrar shall become effective until a successor has been appointed and has accepted the duties of paying agent or bond registrar, Every paying agent or bond registrar appointed by the City shall at all times meet the requirements of Kansas law. The Treasurer of the State of Kansas, Topeka, Kansas (the "Bond Registrar” and "Paying Agent") has been designated by the City as paying agent for the payment of principal of and interest ‘on the Series 2000 Bonds and bond registrar with respect to the registration, transfer and exchange of Series 2000 Bonds. Method and Place of Payment of the Bonds The principal of, or Redemption Price, and interest on the Bonds shall be payable in any coin of currency which, on the respective dates of payment thereof, is legal tender for the payment of public and private debts. ‘The principal or Redemption Price of each Bond shall be paid at Maturity to the Person in whose hame such Bond is registered on the Bond Register at the Maturity thereof, upon presentation and surrender of such Bond at the principal office of the Paying Agent The interest payable on each Bond on any Interest Payment Date shall be paid to the Owner of such Bond as shown on the Bond Register at the close of business on the Record Date for such interest (a) by check or draft mailed by the Paying Agent to the address of such Owner shown on the Bond Register or at such other address asis furnished to the Paying Agent in writing by such Owner or (b) in the case of an interest payment to any Owner of $500,000 or more in aggregate principal amount of Bonds, by electronic transfer to such Owner upon written notice given to the Bond Registrar by such Owner, not less than 15 days prior to the Record Date for such interest, containing the electronic transfer instructions including the bank (which shall bein the continental United States), ABA routing number and account number to which such Owner wishes to have such transfer directed Notwithstanding the foregoing, any Defaulted Interest with respect to any Bond shall cease to be payable to the Owner of such Bond on the relevant Record Date and shall be payable to the Owner in whose name such Bond is registered at the close of business on the Special Record Date for the payment of such Defaulted Interest, which Special Record Date shall be fixed as hereinafter specified. The City shall notify the Paying Agent in writing of the amount of Defaulted Interestproposed to be paid on each Bond and the date of the proposed payment (which date shall be at least 30 days after receipt of such notice by the Paying Agent) and shall deposit with the Paying Agent an amount of money equal to the aggregate amount proposed to be paid in respect of such Defaulted Interest. Following receipt of such funds the Paying Agent shall fix a Special Record Date for the payment of such Defaulted Interest which shall be not more than 15 nor less than 10 days prior to the date of the proposed payment. The Paying Agent shall notify the City of such Special Record Date and shall cause notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor to be mailed, by first class mail, postage prepaid, to each Owner of a Bond entitled to such notice not less than 10 days prior to such Special Record Date. In any case where a Bond Payment Date is not a Business Day, then payment of principal, Redemption Price or interest need not be made on such Bond Payment Date but may be made on the next succeeding Business Day with the same force and effect as if made on such Bond Payment Date, and no interest shall accrue for the period after such Bond Payment Date Registrs ‘ransfer Exchange of Bonds As long as any of the Bonds remain Outstanding, each Bond when issued shall be registered in the name of the Owner thereof on the Bond Register. Bonds may be transferred and exchanged only on the Bond Register as hereinafter provided. Upon surrender of any Bond at the principal office of the Bond Registrar, the Bond Registrar shall transfer or exchange such Bond for anew Bond or Bonds in any authorized denomination of the same Stated Maturity and in the same aggregate principal amount as the Bond that was presented for transfer or exchange. Bonds presented for transfer or exchange shall be accompanied by a written instrument or instruments of transfer or authorization for exchange, in a form and with guarantee of signature satisfactory to the Bond Registrar, duly executed by the Owner thereof or by the Owner's duly authorized agent Inall cases in which the privilege of transferring or exchanging Bonds is exercised, the Bond Registrar shall authenticate and deliver Bonds in accordance with the provisions of the Bond Resolution. The City shall pay the fees and expenses of the Bond Registrar for the registration, transfer and exchange of Bonds. Any additional costs or fees that might be incurred in the secondary market, other than fees of the Bond Registrar, are the responsibility of the Owners of the Bonds. In the event any Owner fails to provide a correct taxpayer identification number to the Paying Agent, the Paying Agent may make a charge against such Owner sufficient to pay any governmental charge required to be paid as a result of such failure The City and the Bond Registrar shall not be required (a) to register the transfer or exchange of any Bond that has been called for redemption after notice of such redemption has been mailed by the Paying Agent and during the period of 15 days next preceding the date of mailing of such notice of redemption; or (b) to register the transfer or exchange of any Bond during a period beginning at the opening of business on the day after receiving written notice from the City of its intent to pay Defaulted Interest and ending at the close of business on the date fixed for the payment of Defaulted Interest.Mutilated, Lost, Stolen or Destroyed Bonds f(a) any mutilated Bond is surrendered to the Bond Registrar or the Bond Registrar receives evidence to its satisfaction of the destruction, loss or theft of any Bond, and (b) there is delivered to the City and the Bond Registrar such security or indemnity as may be required by each of them, then, in the absence of notice to the City or the Bond Registrar that such Bond has been acquired by a bona fide purchaser, the City shall execute and, upon the City’s request, the Bond Registrar shall authenticate and deliver, in exchange for or in lieu of any such mutilated, destroyed, lost or stolen Bond, a new Bond of the same Stated Maturity and of like tenor and principal amount. If any such ‘mutilated, destroyed, lost or stolen Bond has become or is about to become due and payable, the City, in its discretion, may pay such Bond instead of issuing a new Bond. Upon the issuance of any new Bond, the City may require the payment by the Owner of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses (including the fees and expenses of the Paying Agent) connected therewith. Nonpresentment of Bonds Ifany Bond is not presented for payment when the principal thereof becomes due at Maturity, if funds sufficient to pay such Bond have been made available to the Paying Agent all liability of the City to the Owner thereof for the payment of such Bond shall forthwith cease, determine and be completely discharged, and thereupon it shall be the duty of the Paying Agent to hold such funds, without liability for interest thereon, for the benefit of the Owner of such Bond, who shall thereafter be restricted exclusively to such funds for any claim of whatever nature on his part under this Bond Resolution or on, or with respect to, said Bond. Ifany Bond is not presented for payment within four (4) years following the date when such Bond becomes due at Maturity, the Paying Agent shall repay to the City the funds theretofore held by it for payment of such Bond, and such Bond shall, subject tothe defense of any applicable statute of limitation, thereafter be an unsecured obligation of the City, and the Owner thereof shall be entitled to look only to the City for payment, and then only to the extent of the amount so repaid to it by the Paying Agent, and the City shall not be liable for any interest thereon and shall not be regarded as a trustee of such money. Payments Due on Saturdays, Sundays and Holidays In any case where a Bond Payment Date is not a Business Day, then payment of principal, Redemption Price or interest need not be made on such Bond Payment Date but may be made on the next succeeding Business Day with the same force and effect as if made on such Bond Payment Date, and no interest shall accrue for the period after such Bond Payment Date. Redemption Provisions Optional Redemption. At the option of the City, Series 2000 Bonds or portions thereof maturing on September 1, 2014 may be called for redemption and payment prior to their Stated Maturity on September 1, 2009, and thereafter as a whole at any time or in part (selection of maturities and the amount of Series 2000 Bonds of each maturity to be redeemed to be determined by the City in such equitable manner as it may determine) on any Interest Payment Date, at the Redemption Price of 100% (expressed as a percentage of the principal amount), plus accrued interest thereon to the Redemption Date.Mandatory Redemption. 20/4 Term Bonds, The 2014 Term Bonds shall be subject to mandatory redemption and payment prior to Stated Maturity pursuant to the mandatory redemption requirements hereinafter set forth at a Redemption Price equal to 100% (expressed as a percentage of the principal amount), plus accrued interest to the Redemption Date. The payments which are to be deposited into the Debt Service Account shall be sufficient to redeem, and the City shall redeem ‘on September 1 in each year, the following principal amounts of such 2014 Term Bonds: Principal Amount Year $ 95,000 2010 100,000 2011 105,000 2012 110,000 2013 115,000 * 2014 *Final Maturity Selection of Bonds to be Redeemed. Bonds shall be redeemed only in an Authorized Denomination. When less than all of the Bonds are to be redeemed and paid prior to their Stated Maturity, such Bonds shall be redeemed in such manner as the City shall determine, Bonds of less than a full Stated Maturity shall be selected by the Bond Registrar in minimum Authorized Denomination in such equitable manner as the Bond Registrar may determine, In the case of a partial redemption of Bonds by lot when Bonds of denominations greater than a minimum Authorized Denomination are then Outstanding, then for all purposes in connection with such redemption each minimum Authorized Denomination of face value shall be treated as though it were a separate Bond of a minimum Authorized Denomination. If it is determined that one or more, but not all, of the ‘minimum Authorized Denomination value represented by any Bond is selected for redemption, then upon notice of intention to redeem such minimum Authorized Denomination, the Owner or the Owner's duly authorized agent shall forthwith present and surrender such Bond to the Bond Registrar: (1) for payment of the Redemption Price and interest to the Redemption Date of such minimum Authorized Denomination value called for redemption, and (2) for exchange, without charge to the Owner thereof, for a new Bond or Bonds of the aggregate principal amount of the unredeemed portion of the principal amount of such Bond. If the Owner of any such Bond fails to present such Bond to the Paying Agent for payment and exchange as aforesaid, such Bond shall, nevertheless, become due and payable on the redemption date to the extent of the minimum Authorized Denomination value called for redemption (and to that extent only) Notice and Effect of Call for Redemption. Unless waived by any Owner of Bonds to be redeemed, ifthe City shall call any Bonds for redemption and payment prior to the Stated Maturity thereof, the City shall give written notice of its intention to call and pay said Bonds to the State Treasurer and the Purchaser. In addition, the City shall cause the Bond Registrar to give written notice of redemption to the Owners of said Bonds. Each of said written notices shall be deposited in the United States first class mail not less than 30 days prior to the Redemption Date.All official notices of redemption shall be dated and shall contain the following information. (a) the Redemption Date; (b) the Redemption Price; (c) if less than all Outstanding Bonds are to be redeemed, the identification (and, in the case of partial redemption of any Bonds, the respective Principal amounts) of the Bonds to be redeemed; (4) a statement that on the Redemption Date the Redemption Price will become due and payable upon each such Bond or portion thereof called for redemption and that interest thereon shall cease to accrue from and after the Redemption Date; and (c) the place where such Bonds are to be surrendered for payment of the Redemption Price, which shall be the principal office of the Paying Agent. The failure of any Owner to receive notice given as heretofore provided or an immaterial defect therein shall not invalidate any redemption Prior to any Redemption Date, the City shall deposit with the Paying Agent an amount of ‘money sufficient to pay the Redemption Price of all the Bonds or portions of Bonds that are to be redeemed on such Redemption Date. Official notice of redemption having been given as aforesaid, the Bonds or portions of Bonds to be redeemed shall become due and payable on the Redemption Date, at the Redemption Price therein specified, and from and after the Redemption Date (unless the City defaults in the payment of the Redemption Price) such Bonds or portion of Bonds shall cease to bear interest. In addition to the foregoing notice, the City shall provide such notices of redemption as are required by the Disclosure Instructions. The Paying Agent is also directed to comply with any mandatory or voluntary standards then in effect for processing redemptions of municipal securities established by the State or the Securities and Exchange Commission. Failure to comply with such standards shall not affect or invalidate the redemption of any Bond. RISK FACTORS AND INVESTMENT CONSIDERATIONS A PROSPECTIVE PURCHASER OF THE SERIES 2000 BONDS DESCRIBED HEREIN SHOULD BE AWARE THAT THERE ARE CERTAIN RISKS ASSOCIATED WITH THE SERIES 2000 BONDS WHICH MUST BE RECOGNIZED. THE FOLLOWING STATEMENTS REGARDING CERTAIN RISKS ASSOCIATED WITH THE OFFERING SHOULD NOT BE CONSIDERED AS A COMPLETE DESCRIPTION OF ALL RISKS TO BE CONSIDERED IN THE DECISION TO PURCHASE THE SERIES 2000 BONDS. PROSPECTIVE PURCHASER OF THE SERIES 2000 BONDS SHOULD ANALYZE CAREFULLY THE INFORMATION CONTAINED IN THIS OFFICIAL STATEMENT AND ADDITIONAL INFORMATION IN THE FORM OF THE COMPLETE DOCUMENTS. SUMMARIZED HEREIN, COPIES OF WHICH ARE AVAILABLE AND MAY BE OBTAINED FROM THE PURCHASER. Special Obligations The Series 2000 Bonds are special, limited obligations of the City, Neither the Series 2000 Bonds nor the interest thereon constitute a general obligation or indebtedness of, nor is the payment thereof guaranteed by the City, or any governmental subdivision, agency or instrumentality. The Series 2000 Bonds are not payable in any manner from tax revenues,Debt Service Source ‘The Series 2000 Bonds are payable solely from the Net Revenues of the City arising out of or in connection with its interest in the System. While the future ability of the City to meet its obligations under the Bond Resolution is based upon assumptions and business judgments which the City believes are reasonable and appropriate, they are subject to conditions which may change in the future to an extent that presently cannot be determined, Thus, no assurance can be given that revenues will be realized by the City in amounts sufficient to pay the principal of and interest on the Series 2000 Bonds as they become due. Taxation of Interest on the Series 2000 Bonds ‘An opinion of Bond Counsel will be obtained to the effect that interest earned on the Series 2000 Bonds is excludable from gross income for federal income tax purposes under current provisions of the Code, and applicable rulings and regulations under the Code; however, an application for a ruling has not been made and an opinion of counsel is not binding upon the Internal Revenue Service. There can be no assurance that the present provisions of the Code, or the rules and regulations thereunder, will not be adversely amended or modified, thereby rendering the interest earned on the Series 2000 Bonds includable in gross income for federal income tax purposes. The City has covenanted in the Bond Resolution and in other documents and certificates to be delivered in connection with the issuance of the Series 2000 Bonds to comply with the provisions of the Code, including those which require the City to take or omit to take certain actions after the issuance of the Series 2000 Bonds. Because the existence and continuation of the excludability of the interest on the Series 2000 Bonds depends upon events occurring after the date of issuance of the Series 2000 Bonds, the opinion of Bond Counsel described under "LEGAL MATTERS" assumes the compliance by the City with the provisions of the Code described above and the regulations relating thereto. No opinion is expressed by Bond Counsel with respect to the excludability of the interest on the Series 2000 Bonds in the event of noncompliance with such provisions, The failure of the City to comply with the provisions described above may cause the interest on the Series 2000 Bonds to become includable in gross income as of the date of issuance Market for the Series 2000 Bonds Lack of Bond Rating. The Series 2000 Bonds are not rated and no application has been made for a rating Secondary Market. There is no assurance that a secondary market will develop for the purchase and sale of the Series 2000 Bonds. It is the present practice of the Purchaser, however, to make a secondary market as dealers in issues of municipal bonds which the Purchaser distributes. The Purchaser intends to continue this practice with respect to the Series 2000 Bonds, but is not obligated to do so. Prices of bonds traded in the secondary market, though, are subject to adjustment upward and downward in response to changes in the credit markets. From time to time it may be necessary for the Purchaser to suspend indefinitely secondary market trading in the Series 2000 Bonds as a result of the financial condition or market position of the Purchaser, prevailing market conditions, lack of adequate current financial information about the City, or a material adverse change in thefinancial condition of the City, whether or not the Series 2000 Bonds are in default as to principal and interest payments, and other factors which in the opinion of the Purchaser may give rise to uncertainty concerning prudent secondary market practices Debt Service Reserve Account Pursuant to the Bond Resolution, an amount equal to the least of (i) 10% of the original principal of al Parity Bonds; (ji) the maximum annual Debt Service Requirement forall Parity Bonds; or (iii) 125% of the average annual Debt Service Requirements for all Parity Bonds (the "Debt Service Reserve Requirement") will be deposited in the Debt Service Reserve Account, Moneys in the Debt Service Reserve Account may be invested in Permitted Investments. Moneys, including such Permitted Investments, may be applied by the City to prevent default in payment of the principal of and interest on the Parity Bonds in accordance with the Bond Resolution in the event funds on hand in the Debt Service Account are insufficient to provide funds for payments due on any Payment Date. In the event the City is required to sell such Permitted Investments for such purpose, the price realized upon such sale may not equal the Debt Service Reserve Requirement. Inthe event ofa default by the City under the Bond Resolution, moneys deposited in the Debt Service Reserve Account may, under certain circumstances and, ordinarily under the supervision of and under order of the courts, be applied for purposes other than payment of the Parity Bonds. Such Purposes may include preservation of and security for the System, maintenance of insurance, payment of expenses incurred in attempting to operate the System and payment of other similar costs Legal Matters Various state and federal laws, regulations and constitutional provisions apply to the obligations created by the Series 2000 Bonds. There is no assurance that there will not be any change in, interpretation of, or addition to such applicable laws, provisions and regulations which would have ‘a material effect, either directly or indirectly, on the City or the taxing authority of the City. Limitations on Remedies Available to Owners of Bonds The enforceability of the rights and remedies of the owners of Bonds, and the obligations incurred by the City in issuing the Bonds, are subject to the following: the federal Bankruptcy Code and applicable bankruptcy, insolvency, reorganization, moratorium, or similar laws relating to or affecting the enforcement of creditors’ rights generally, now or hereafter in effect; usual equity Principles which may limit the specific enforcement under state law of certain remedies; the exercise by the United States of America of the powers delegated to it by the United States Constitution; and the reasonable and necessary exercise, in certain unusual situations, of the police power inherent in the State of Kansas and its governmental subdivisions in the interest of serving a legitimate and significant public purpose. Bankruptcy proceedings, or the exercise of powers by the federal or state government, if initiated, could subject the owners of the Bonds to judicial discretion and interpretation of their rights in bankruptcy and otherwise, and consequently may involve risks of delay, limitation or modification of their rights.Year 2000 Compliance Any interruption of data flow by reason of the so-called "Year 2000" issue and the cost of, updating computer systems to solve such issues could have a material effect on the City’s business, financial condition or results of operations. To date, the City believes it has taken the necessary and recommended steps in assuring compliance. Additionally, the Paying Agent has been assured by its software provider that its programs are in compliance with the Year 2000 requirements. There is no assurance that additional Year 2000 problems may be discovered subsequent to the date of issuance of the Series 2000 Bonds, which may have an adverse effect on the City and the Series 2000 Bonds. Suitability of Investment ‘An investment in the Series 2000 Bonds involves a certain degree of risk. The interest rate borne by the Series 2000 Bonds (as compared to prevailing interest rates on more secure tax exempt bonds such as those which constitute general obligations of fiscally sound municipalities) is intended to compensate the investor for assuming this element of risk. Furthermore, the tax exempt feature of the Series 2000 Bonds is more valuable to high tax bracket investors than to investors who are in low tax brackets, and so the value of the interest compensation to any particular investor will vary with individual tax rates. Each prospective investor should carefully examine this Offical Statement, including the Appendices hereto, and its own financial condition to make a judgment as to its ability to bear the economic risk of such an investment, and whether or not the Series 2000 Bonds are an appropriate investment. NO REPRESENTATION OR ASSURANCE CAN BE MADE OR GIVEN THAT REVENUES WILL BE REALIZED BY THE CITY IN AMOUNTS SUFFICIENT TO PAY THE PRINCIPAL OF, REDEMPTION PREMIUM, IF ANY, AND INTEREST ON THE SERIES2000 BONDS. THE FOREGOING STATEMENTS REGARDING CERTAIN RISKS ASSOCIATED WITH THE OFFERING SHOULD NOT BE CONSIDERED AS A COMPLETE DESCRIPTION OF ALL RISKS TO BE CONSIDERED IN THE DECISION TO PURCHASE THE SERIES 2000 BONDS. Prospective Purchasers of the Series 2000 Bonds should analyze carefully the information. contained in this Official Statement and additional information in the form of the complete documents summarized herein, copies of whick are available and may be obtained from the City prior to the sale of the Series 2000 Bonds, and thereafter, from the Purchaser. BALANCE OF THIS PAGE INTENTIONALLY LEFT BLANK ——————————————————— 10APPLICATION OF BOND PROCEEDS. ‘The following table itemizes the sources of funds available, and how such funds are expected to be used Sources of Funds: Proceeds of the Bonds $1,240,000.00 Water Funds on Hand 124,000.00 TOTAL $1,364,000 00 ses of Funds Elevated Water Tower $907,726.01 South Water Line Loop 301,478.38 Debt Service Reserve 124,000.00 Costs of Issuance, Underwriters Discount, Miscellaneous 30,795.61 TOTAL $1,364,000,00 GENERAL INFORMATION CONCERNING THE CITY Size and Location The City is the county seat of Harvey County, Kansas, and is located approximately 20 miles north of Wichita, Kansas. The City encompasses approximately 9,6 square miles and is the largest city in Harvey County with a current estimated population of 17,623 persons. Government and Organization of the City The City was incorporated in 1872 and became a city of the first class in 1969, The City operates under a Commissi the City Commission are elected to four-year terms, with no more than three elected in each odd- numbered year. The City Manager is appointed by the Commission and is charged with the efficient and effective administration of the City. The following tables list the principal elected and appointed executive offices of the City. Elected Officials Name Title ‘Term Expires Kathryn Gaeddert Mayor April, 2001 Carl Harris Vice Mayor April, 2003 Todd Loescher Commissioner April, 2001 Willis Heck Commissioner April, 2001 Grant Scott Commissioner April, 2003 u n-Maanager form of government. The five members ofAppointed Officials Name Title James M. Heinicke City Manager Ronald R. Ahsmuhs City Clerk/Finance Director Robert D. Myers City Attorney Municipal Services and Utilities The City owns and operates it own water and sewer utility systems, Kansas Gas & Electric, a Western Resources Company supplies both electricity and natural gas to the area. Telephone service is provided by Southwestern Bell and Multimedia Cablevision operates a cable television system, The City has 33 sworn police officers and 33 firefighters which provide continuous full-time protection to the City. The City operates an emergency ambulance service for the area. ‘Transportation and Communi ‘The Newton area is served by the BNSF Railroad and the Union Pacific System. Newton is. at the junction of the four-lane, divided, north-south Interstate 135 and the two-lane, east-west, U.S 50 Highways, The four-lane, divided east-west Interstate 70 is 60 miles north of the City. Within three miles of the intersection of U.S. 50 and I-135 highways in Newton, is the City/County airport and Industrial Airpark, The airport, managed by the City of Newton, has a 7,000 foot runway that will accommodate commercial jets, and a 3,500 foot crosswind runway. Educational Institutions and Facilities Unified School District No. 373 operates eight elementary schools, two middle schools and one senior high school in the City and surrounding area. The district estimates a projected total enrollment (grades K-12) of 3,421 FTE. for the 1999/2000 school year. In addition, there are two parochial schools located in the City. Hutchinson Community College is located near the City and provides a two-year curriculum and vocational and technical courses of study. Bethel College, a private four year program, is located just north of the City. ledical and Health Facilities The Newton Medical Center, operating in a new facility in the southern part of the City of Newton, has 66 beds and approximately 400 personnel. Clinic and specialty facilities are located adjacent to the new hospital. In addition, the highly recognized and specialized Hertzler Clinic is located within seven miles of Newton. Only one other of Kansas’ 105 counties has more doctors per capita than Harvey County. Prairie View, Inc., an in-patient and out-patient mental health hospital, also serves a wide area of the State with mental health services Recreational, Cult i There is recreation available in Newton including sporting events, movie theaters, parks, swimming pools, golf courses and tennis courts. Cultural opportunities such as community theater, 12symphony and museums are located in the County. Fifty-two churches serve the area. Annual community activities include the Chisholm Trail Festival, the Bethel Fall Fest, the Harvey County Fair and the Sand Creek Folk Art Festival THE WATER UTILITY SYSTEM Description of the Water Utility System Ownership and operation of the Water Utility department comprises an essential element of the City’s services. Newton has access to high quality supplies of groundwater from the Equus Beds aquifer, and the water requires very limited treatment. Newton supplies water to all resident businesses and households, as well as a rural water district, The Newton utility also provides Pumping, storage and distribution for the City of North Newton, Kansas, The City of Newton is the sole provider of water service in the City. The entire production system is modern and generally in sound condition. It was determined through testing in 1994 that treatment to prevent high levels of copper in the water was required A total renovation was completed in 1998, resulting in a state-of-the-art treatment plant. The City of Newton is a member and 40% owner of Wholesale Water District No. 17. Other cities in the water district are Halstead (20%), Sedgwick (20%), and North Newton (20%). ‘The water district is in the process of constructing water transmission lines from the Newton Treatment Facility to the cities of Halstead and Sedgwick. Additionally, four wells have been drilled for water supply. The City of Newton will treat the water and Pump it to other member cities. The water district will be financing the capital improvements with a loan of approximately $2,000,000 from the State of Kansas Revolving Loan Fund for drinking water. Current System Service Charges On June 22, 1999, the City adopted Ordinance No. 4302-99 establishing new water rates as follows Water Rate (Monthly) All Meter Sizes (5/8" to 6") Inside City Limits Outside City Limits Ist 300 cubic feet $7.25 $11.60 Each additional 100 cubic feet 230 3.70 Sales Tax on water only: 1.0% residential customers 5.9% commercial customers aaaeaaanEEmmememmemmmeeeeeeeeeeeee BALANCE OF THIS PAGE INTENTIONALLY LEFT BLANK _—_—_———eeeee eesWater Connections, Production and Usage The following table provides a history of water connections and gallons of water pumped and sold in the City of Newton: Year 1994 1995 1996 1997 1998 Water Connections 6,649 6,697 6,767 6,848 6,946 Gallons Pumped (Raw Water) 874,097,000 810,431,000 839,013,000 811,115,000 883,630,000 Cubic Feet Pumped (Raw Water) 116,701,869 108,201,736 112,017,757 108,293,057 117,974,633 Gallons Sold 773,560,000 713,938,000 802,000,000 724,658,000 827,816,000 Cubic Feet Sold 103,279,039 95,318,825 107,076,101 96,750,067 110,522,830 Note: The difference between gallons pumped and gallons sold includes water for utility plant use, fire fighting, bulk water and leakage The following is a list of the ten largest users of the Water System in 1998 by annual consumption: User 1. Kansas Christian Home 2. Newell Oil Company 3. Unified School District No. 373 4, Newton Medical Center 5. Harvey County 6. Dillon Stores 7. Friendly Acres 8. Hehr Glass 9. Fox Ridge Golf, Inc. 10, Prairie Inn Water Uti stem - Revenues and Expenses ‘A five-year Year Revenues _* 1994 $1,639,328 1995 1,524,096 1996 1,582,440, 1997 1,18,713 1998 1,758,725, Total revenues includes interest : Total operating expense exclusive of depreciation and amortization Source: City financial statements Consumption (Cubic Feet) 1, \ \ 128,400 .030,900, 009,500 965,800 801,300 750,400 590,400 563,500 457,000 423,000 tory of System operating revenues and expenses is as follows: Expenses? $1,089,204 1,080,148 1,239,408 131 7,153 1,393,383CITY OF NEWTON, KANSAS STATEMENT OF REVENUES AND EXPENSES WATER FUND 1996 1997 1998 Operating revenues Service fees $1,572,194 $1,514,757 $1,751,993, Other 10,246 3,056 6,132 Total revenues, 1,582,440 1,518,713 1,758,725 Operating Expenses: General Operations 693,725 727,995 746,585 Production 139,113 129,462 158,259 ‘Transmission and distribution 406,570 459,716 488,539 Depreciation and amortization 95,126 89.811 89,609 Total expenses 1,334,534 406,964 1,482,992 Operating Income: Non-operating revenues (expenses) 247,906 n749 275,733, Interest Income 13.072 -0- -0- Waterworks portion of joint venture loss -0- “0. (7,919) Interest Expense -0- “0. “0. Income before transfers 260,978 111,749 267.814 Operating transfers out: Transfer to bond and interest fund (105,160) (105,143) (134,422) ‘Transfer to other funds 216,800) 298.300) 250,000 ‘Net income (loss) (60,982) (291,694) (116,608) ‘Add Back Depreciation and Amortization 95,126 89.811 89,609 Operating Transfers Out 321,960 403,443 384,422 Funds Available for Debt Service S$ 356,104 S$ 201,560 $357,423 —X—_——_—_—_—_——— BALANCE OF THIS PAGE INTENTIONALLY LEFT BLANK ————— es 15CITY OF NEWTON, KANSAS SUMMARY OF WATER FUND REVENUES & EXPENDITURES FOR THE YEAR ENDED DECEMBER 31, 1999 PRELIMINARY - UNAUDITED Revenues Service Fees $1,846,841,69 Other Revenue 53,738.69 TOTAL REVENUE $1,900,580.38 Expenditures ‘Administration $927,020.16 Distribution/ Transmission 510,212.05 Production 218,124.20 TOTAL EXPENDITURES $1,655,356.41 Revenues Over Expenditures 245,223.97 Add Back Capital Outlay $7,000.00 Transfers 440,943.50 FUNDS AVAILABLE FOR DEBT SERVICE S 693,167.47 TT __ BALANCE OF THIS PAGE INTENTIONALLY LEFT BLANK ————————— 16Debt Service Following is the debt service on the Series 2000 Water Utility System Revenue Bonds Debt Service Schedule Maturity Principal Amount Interest Total September 1, 2000 $ 80,000 $39,640.42 S$ 119,640.42 September 1, 2001 55,000 64,595.00 119,595.00 September 1, 2002 60,000 62,065.00 122,065.00 September 1, 2003 60,000, 59,185.00 119,185.00 September 1, 2004 65,000 56,185.00 121,185.00 September 1, 2005 70,000 52,870.00 122,870.00 September 1, 2006 75,000 49,230.00 124,230.00 September 1, 2007 80,000 45,255.00 125,255.00 September 1, 2008 85,000 40,935.00 125,935.00 September 1, 2009 85,000 36,260.00 121,260.00 September 1, 2010 95,000 31,500.00 126,500.00 September 1, 2011 100,000 25,800.00 125,800.00 September 1, 2012 105,000 19,800.00 124,800.00 September 1, 2013 110,000. 13,500.00 123,500.00 September 1, 2014 115,000 6,900.00 121,900.00 TOTAL, $1,240,000 $603,720.42 $1,843,720.42 Debt Service Coverage Actual 1998 Water Utility System Revenue $1,758,725 Actual 1998 Water Utility System Expenses (Before depreciation, amortization and transfers) $1,401,302 Revenue available for debt service $357,723 Maximum Annual Debt Service $126,500 Coverage of maximum annual debt service by revenue available for debt service 2.82 Times rr BALANCE OF THIS PAGE INTENTIONALLY LEFT BLANK aBOND RATING The Bonds of this issue will not be rated ELIGIBILITY TO SECURE THE DEPOSIT OF PUBLIC FUNDS. Pursuant to K S.A, 80-2532, banks are allowed to hold the Series 2000 Bonds, as security for the deposit of public funds. Pursuant to K.S.A. 19-1402, banks are allowed to hold revenue bonds of any municipality or quasi-municipal corporation of the State of Kansas, as security for the deposit of public funds, if approved by the State Bank Commissioner. An application has been submitted to the State Bank Commissioner requesting that the Series 2000 Bonds be approved as security for deposit of public funds ABSENCE OF LITIGATION There is no controversy, suit or other proceedings of any kind pending or threatened wherein or whereby any question is raised or may be raised, questioning, disputing or affecting in any way the legal organization of the City or its boundaries, or the right or title of any of its officers to their respective offices, or the legality of any official act shown to have been done in the transcript leading, up to the issuance of the Bonds, or the constitutionality or validity of the indebtedness represented by the Bonds shown to be authorized in the transcript, or the validity of the Bonds or any of the proceedings in relation to the issuance or sale thereof, or the pledging of the revenues of the System to pay the principal of and interest thereon There is no controversy, suit or other proceeding of any kind pending or threatened wherein or whereby any question is raised or may be raised, questioning, disputing or affecting in any way the legal organization of the Issuer or its boundaries, or the right or title of any of its officers to their respective offices, or the legality of any official act or the constitutionality or validity of the indebtedness represented by the Series 2000 Bonds or the validity of said Series 2000 Bonds or any of the proceedings in relation to the issuance or sale thereof, or the pledging of the revenues of the System to pay the principal of and interest thereon. LEGAL MATTERS Approval of Series 2000 Bonds All matters incident to the authorization and issuance of the Series 2000 Bonds are subject to the approval of Gilmore & Bell, PC., Wichita, Kansas, Bond Counsel, ‘The factual and financial information appearing herein has been supplied or reviewed by certain officials of the Issuer and its certified public accountants, as referred to herein. Bond Counsel expresses no opinion as to the accuracy or sufficiency thereof, except for the matters appearing in the sections of this Official Statement captioned "THE SERIES 2000 BONDS,” "LEGAL MATTERS," and "APPENDIX C- SUMMARY OF FINANCING DOCUMENTS." Certain legal matters have been passed on for the Issuer by Robert D, Myers, Esq,, Newton, Kansas 18Opinion of Bond Counsel Federal Tax Exemption. In the opinion of Bond Counsel, under existing law, the interest on the Series 2000 Bonds is excluded from gross income for federal income tax purposes and is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations. It should be noted, however, that for the purpose of computing the alternative ‘minimum tax imposed on corporations (as defined for federal income tax purposes), such interest is taken into account in determining adjusted current earnings. The opinions set forth in this paragraph are subject to the condition that the Issuer comply with all requirements of the Internal Revenue Code of 1986, as amended (the "Code") that must be satisfied subsequent to the issuance of the Series 2000 Bonds in order that interest thereon be, or continue to be, excluded from gross income for federal income tax purposes. The Issuer has covenanted to comply with all such requirements. Failure to comply with certain of such requirements may cause interest on the Series 2000 Bonds to be included in gross income for federal income tax purposes retroactive to the date of issuance of the Series 2000 Bonds. The Series 2000 Bonds are “qualified tax-exempt obligations" for purposes of Code 2265(b)(3), and, in the case of certain financial institutions (within the meaning of Code ?265(b)(5)), adeduction is allowed for 80% of that portion of such financial institutions’ interest expense allocable to interest on the Series 2000 Bonds. Kansas Tax Exemption. The interest on the Series 2000 Bondsis excluded from computation of Kansas adjusted gross income. Other Tax Consequences. Bond Counsel expresses no opinion regarding other federal or state tax consequences arising with respect to the Series 2000 Bonds. However, prospective purchasers of the Series 2000 Bonds should be aware that there may be tax consequences of purchasing the Series 2000 Bonds other than those discussed under the caption "Opinion of Bond Counsel," including the following: (a) Code 265 denies a deduction for interest on indebtedness incurred or continued to purchase or carry the Series 2000 Bonds, except with respect to certain financial institutions (within the meaning of Code 265(b)(5)); (b) with respect to insurance companies subject to the tax imposed by Code 83 1, Code 832(b)(5)(B)i) reduces the deduction for oss reserves by 15 percent of the sum of certain items, including interest on the Series 2000 Bonds; (c) interest on the Series 2000 Bonds earned by certain foreign corporations doing business in the United States could be subject to a branch profits tax imposed by Code ?884; (d) passive investment income, including interest on the Series 2000 Bonds, may be subject to federal income taxation under Code 71375 for Subchapter $ corporations that have Subchapter C earnings and profits at the close of the taxable year, if greater than 25% of the gross receipts of such Subchapter S corporation is passive investment income; and (e) Code 286 of the Code requires recipients of certain Social Security and certain Railroad Retirement benefits to take into account, in determining gross income, receipts or accruals of interest on the Series 2000 Bonds. Bond Counsel expresses no opinion regarding these tax consequences. Purchasers of the Series 2000 Bonds should consult their own tax advisors as to the applicability of these tax consequences. 19