HomeMy Public PortalAboutR2677R E S O L U T I O N NO. 2677
A RESOLUTION DECLARING THE INTENT OF THE METROPOLITAN ST. LOUIS
SEWER DISTRICT TO ISSUE ITS WASTEWATER SYSTEM REVENUE BONDS IN
THE MAXIMUM PRINCIPAL AMOUNT OF NOT TO EXCEED $60,000,000 FOR
THE PURPOSE OF CONSTRUCTING, IMPROVING, RENOVATING, REPAIRING,
REPLACING AND EQUIPPING NEW AND EXISTING DISTRICT SEWER
FACILITIES AND SYSTEM, INCLUDING SEWER DISPOSAL AND TREATMENT
PLANTS AND SANITARY INTERCEPTOR SEWERS.
WHEREAS, the Metropolitan St. Lo uis Sewer District (the “District”), a body
corporate, a municipal corporation and a political subdivision duly organized and existing under
the Constitution and laws of the State of Missouri and the District’s Charter (Plan), as amended,
approved by the voters for its government (the “Charter”), owns and operates a revenue
producing sanitary sewer system (the “System”).
WHEREAS, the District desires to make certain additions, extensions and improvements
to the System and is authorized under the provisions of the Charter to issue and sell revenue
bonds for the purpose of providing funds for such purpose, upon obtaining the required voter
approval and provided that the principal of and interest on such revenue bonds shall be payable
solely from the revenues derived from the operation of the System.
WHEREAS, at a special bond election duly held in the District on February 3, 2004
(the “Election ”), voters authorized the District to issue its sewer system revenue bonds in the
amount of f ive h undred million d ollars ($500,000,000) for the purpose of constructing,
improving, renovating, repairing, replacing and equipping new and existing District sewer
facilities and system, including sewer disposal and treatment plants, sanitary interceptor sewers
and acquisition of easements and real property related thereto, the cost of operation and
maintenance of said sewer system and the principal of and interest on said revenue bonds to be
payable solely from the revenues derived by the District from the operation of the System,
including all future extensions and improvements thereto.
WHEREAS, the District has previously issued, or is in the process of issuing,
wastewater system revenues bonds in the aggregate principal amount of $400,000,000 in five
different series which were authorized pursuant to the Election .
WHEREAS, the District has determined that it is necessary and desirable and in the best
interests of the citizens of the area served by the System for the District to make additions,
extensions and improvements to the System (the “Project”), and to finance the costs of the
Project by issuing its Wastewater System Revenue Bonds, Series 2006C in an aggregate
principal amount of not to exceed $60,000,000 (the “Bonds”).
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WHEREAS, in connection with the marketing and sale of the Bonds, the District desires
to authorize the preparation and distribution of a Preliminary Official Statement regarding the
Bonds (the “Preliminary Officia l Statement”).
BE IT RESOLVED BY THE METROPOLITAN ST. LOUIS SEWER DISTRICT, AS
FOLLOWS:
Section 1. Declaration of Intent. The District hereby determines and declares its
intent to issue the Bonds in a principal amount to be determined by subsequent ordinance of the
District, to provide funds to finance the costs of the Project, including reimbursement of
expenditures, such Bonds to be limited and special revenue obligations payable solely out of
System revenues.
Section 2. Reimbursement of Expenditures. The District expects to incur capital
expenditures on and after the date of adoption of this Resolution (the “Expenditures ”), and the
District intends to reimburse itself for such Expenditures solely from the proceeds of the B onds
in an amount which, depending on the date of issuance of the Bonds, may aggregate a maximum
of $60,000,000. The District hereby declares that the funds to be advanced to pay Expenditures
are or will be available only for a temporary period and it is necessary to reimburse the District
for Expenditures made on and after the date hereof. This Resolution constitutes a declaration of
official intent under Treasury Regulation Section 1.150-2 issued under the Internal Revenue
Code of 1986, as amended.
Section 3. Sale of the Bonds. The District shall sell the Bonds pursuant to a
Purchase Contract (the “Purchase Contract”), between the District and A.G. Edwards & Sons,
Inc.; Edward D. Jones & Co. L.P.; Stifel Nicolaus & Company, Incorporated; Backstrom,
McCarley Berry & Co., LLC and Siebert Brandford Shank and Co., LLC (collectively, the
“Underwriters”), under which the District agrees to sell the Bonds to the Underwriters upon the
terms and conditions as set forth in the Purchase Contract.
Section 4. Further Authorization and Direction. The District hereby authorizes
and directs Gilmore & Bell, P.C. and the Hardwick Law Firm LLC, Co -Bond Counsel, the
Underwriters and their counsel, the District’s Executive Director, Secretary-Treasurer and
Gen eral Counsel, financial advisors and other officers and representatives of the District, to
prepare, for submission to and final action by the District, all appropriate legal and financing
documents necessary to effect the authorization, issuance and sale of the B onds and any other
actions contemplated hereunder in connection with the issuance and sale thereof.
Section 5. Th e Preliminary Official Statement is hereby approved in substantially the
form attached hereto as Exhibit A, with such changes and additions thereto as the Chairman of
the Board of Trustees of the District or the Executive Director of the District shall deem
necessary or appropriate, and the appropriate officers and representatives of the District are
hereby authorized to use such document in connection with the marketing and public sale of the
Bonds.
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Section 6. For the purpose of enabling the Underwriters to comply with the
requirements of Rule 15c2-12(b)(1) of the Securities and Exchange Commission, the appropriate
officers of the District are hereby authorized, if requested, to provide the Underwriters a letter or
certification to the effect that the District deems the information regarding the District contained
in the Preliminary Official Statement to be “final” as of its date, except for the omission of such
information as is permitted by Rule 15c2-12(b)(1), and to take such other actions or execute such
other documents as such officers in their reasonable judgment deem necessary to enable the
Underwriters to comply with the requirement of such Rule.
Section 7. The District agrees to provide to the Underwriters within seven business
days of the date of sale of the Bonds or within sufficient time to accompany any confirmation
that requests payment from any customer of the Underwriters, whichever is earlier, sufficient
copies of the final Official Statement to enable the Underwriters to comply with th e requirements
of Rule 15c2-12(b)(4) of the Securities and Exchange Commission and with the requirements of
Rule G-32 of the Municipal Securities Rulemaking Board.
Section 8 . Further Authority . The District shall, and the officers, agents and
employees of the District are hereby authorized and directed to take such further action and
execute such other documents, certificates and instruments, including, without limitation, any
credit enhancement or security documents, arbitrage certificate, closing certificates and tax
forms, as may be necessary or desirable to carry out and comply with the intent of this
Resolution, and to carry out, comply with and perform the duties of the District with respect to
the Bonds and the documents to be executed by the District in connection therewith.
Section 9 . Effective Date. This Resolution shall be in full force and effect from and after
its passage and approval.
ADOPTED by the Board of Trustees this 12th day of October, 2006 by the following
vote – Ayes: D.B. Rosenberg, E. Harshman, J.H. Goffstein, C. Karam and J.H. Buford.
Nays: None.
_________________________________
Chair of the Board of Trustees of The
Metropolitan St. Louis Sewer District
(Seal)
ATTEST:
_________________________________
Secretary-Treasurer
EXHIBIT A
PRELIMINARY OFFICIAL STATEMENT
This Preliminary Official Statement and the information contained herein are subject to completion and amendment without notice. These securities may not be sold nor may offers to buy be accepted prior to the time the Official Statement is delivered in final form. Under no circumstances shall this Preliminary Official Statement constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of these securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. PRELIMINARY OFFICIAL STATEMENT DATED _________________, 2006
NEW ISSUE Ratings: Underlying: Book-Entry Only
Insured : ____
See “RATINGS” herein
In the opinion of Gilmore & Bell, P.C., St. Louis, Missouri, and the Hardwick Law Firm, LLC, Kansas City, Missouri, Co -Bond Counsel,
under existing law and assuming continued compliance with certain requirements of the Internal Revenue Code of 1986, as amended, the interest
on the Series 2006C Bonds (including any original issue discount properly allocable to an owner thereof) is excluded from gross income for
federal and Missouri income tax purposes and is not an item of tax preference for purposes of the federal alternative minimum tax imposed on
individuals and corporations. The Series 2006C Bonds have not been designated as “qualified tax-exempt obligations” within the meaning of
Section 265(b)(3) of the Internal Revenue Code of 1986, as amended. See the section herein captioned “TAX MATTERS” and the form of opinion
of Co -Bond Counsel attached hereto as Appendix E.
$60,000,000
The Metropolitan St. Louis Sewer District
Wastewater System Revenue Bonds
Series 2006C
Dated: Date of Delivery Due: May 1, as shown on the inside cover
The Wastewater System Revenue Bonds, Series 2006C (the “Series 2006C Bonds”) will be issued by The Metropolitan St. Louis Sewer
District (the “District”) pursuant to the herein defined Bond Ordinance to provide funds to (i) finance a portion of the costs of a program of capital
improvements to the District’s wastewater facilities and system, (ii) fund a debt service reserve account for the Series 2006C Bonds (defined
herein), and (iii) pay the costs of issuance of the Series 2006C Bonds. The Series 2006C Bonds will be secured by a pledge of certain revenues of the District as further described herein under the section captioned “SECURITY AND SOURCES OF PAYMENT FOR THE SERIES 2006C
BONDS.”
The Series 2006C Bonds are issuable only as fully registered bonds and when issued will be registered in the name of Cede & Co., as
registered owner and nominee for The Depository Trust Company (“DTC”), New York, New York. See the section herein captioned “THE
SER IES 2006C BONDS – Book-Entry Only System.” Principal of the Series 2006C Bonds is payable to the registered owners of the Series
2006C Bonds on May 1 in the years shown on the inside cover hereof. Interest on the Series 2006C Bonds is payable semiannually on May 1 and
November 1 of each year, beginning on May 1, 2007.
The Series 2006C Bonds and the interest thereon are limited obligations of the District payable solely from the Pledged Revenues,
as defined herein. The Series 2006C Bonds and the interest thereon shall not constitute a general or moral obligation of the District nor a
debt, indebtedness, or obligation of, or a pledge of the faith and credit of, the District or the State of Missouri (the “Sta te”) or any political
subdivision thereof, within the meaning of any constitutional, statutory or charter provision whatsoever. Neither the faith and credit nor
the taxing power of the District, the State, or any political subdivision thereof is pledged to the payment of the principal of, premium, if
any, or interest on the Series 2006C Bonds or other costs incident thereto. The District has no authority to levy any taxes to pay the Series
2006C Bonds. Neither the members of the Board of Trustees of the District nor any person executing the Series 2006C Bonds shall be
liable personally on the Series 2006C Bonds by reason of the issuance thereof.
The Series 2006C Bonds are subject to optional and mandatory sinking fund redemption as described herein. See the section herein
captioned “THE SERIES 2006C BO NDS - Optional and Mandatory Redemption.”
[The District is considering having all or a portion of the Series 2006C Bonds insured by a municipal bond insurer. There is no
assurance that the District can or will obtain bond insurance on all or any portion of the Series 2006C Bonds. See the section herein
captioned “SECURITY AND SOURCES OF PAYMENT FOR THE SERIES 2006C BONDS – Possible Series 2006C Credit Facility.”]
See inside cover for maturities, principal amounts, interest rates, prices and CUSIP numbers.
This cover page contains information for quick reference only. Investors must read the entire Official Statement to obtain
information essential to the making of an informed investment decision.
The Series 2006C Bonds are offered when, as and if issued by the District and accepted by the Underwriters, subject to prior placement,
withdrawal or modification of the offer without notice and subject to the approval of their validity by Gilmore & Bell, P.C., St. Louis, Missouri,
and the Hardwick Law Firm, LLC, Kansas City, Missouri, Co -Bond Counsel, and subject to certain other conditions. Certain legal matters will be
passed upon for the District by its General Counsel, and for the Underwriters by their co-counsel, Armstrong Teasdale LLP, St. Louis, Missouri,
and White Coleman & Associates, LLC, St. Louis, Missouri. It is expected that the Series 2006C Bonds will be available for delivery through the
facilities of DTC in New York, New York on or about November [__], 2006.
Siebert Brandford Shank & Co., L.L.C. Backstrom McCarley Berry & Co.
The date of this Official Statement is November __, 2006.
$60,000,000
The Metropolitan St. Louis Sewer District
Wastewater System Revenue Bonds
Series 2006C
MATURITY SCHEDULE *
Base CUSIP: 592481 1
$______________* Serial Bonds
Maturity
(May 1)
Principal
Amount
Interest
Rate Price CUSIP 1
2027 $ % %
2028
2029
2030
2031
2032
2033 2034
2035
2036
$ __________*____% Term Bonds due May 1, 20__*, Price _____, CUSIP1 _____
$___________*____% Term Bonds due May 1, 20__*, Price _____, CUSIP1 _____
* Preliminary, subject to change.
1 CUSIP numbers shown above have been assigned by an organization not affiliated with the District. The District was not responsible for the selection of CUSIP numbers nor does it make any representation as to the correctness of
such numbers on the Series 2006C Bonds or as indicated herein.
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
BOARD OF TRUSTEES
Dee Joyce-Hayes, Chair
Charles Karam, Vice Chair
James H. Buford, Member
John Goffstein, Member
Ellen Harshman, Member
David B. Rosenberg, Member
ADMINISTRATION
Jeffrey L. Theerman, P.E., Executive Director
Karl J. Tyminski, CPA, Secretary -Treasurer
Randy E. Hayman, Esq., General Counsel
Janice M. Zimmerman, Director of Finance
Brian Hoelscher, P.E., Director of Engineering
Dave St. Pierre, P.E., Director of Operations
ADVISORS AND CONSULTANTS
Co-Bond Counsel
Gilmore & Bell, P.C. Hardwick Law Firm, LLC
St. Louis, Missouri Kansas City, Missouri
Financial Advisors to the District
Public Financial Management Valdés & Moreno, Inc.
Des Moines, Iowa and St. Louis, Missouri Kansas City, Missouri
Co-Counsel to the Underwriters
Armstrong Teasdale LLP White Coleman & Associates, LLC
St. Louis, Missouri St. Louis, Missouri
Feasibility Consultant
Black & Veatch Corporation
Overland Park, Kansas and St. Louis, Missouri
Independent Auditor
Hochschild Bloom & Company LLP
Chesterfield, Missouri
REGARDING USE OF THIS OFFICIAL STATEMENT
____________________________________
THE SERIES 2006C BONDS HAVE NOT BEEN REGISTERED WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION UNDER THE SECURITIES ACT OF 1933, AS AMENDED, NOR HAS ANY DOCUMENT BEEN QUALIFIED UNDER THE TRUST INDENTURE ACT
OF 1939, AS AMENDED, IN RELIANCE UPON EXEMPTIONS CONTAINED IN SUCH ACTS. IN MAKING AN INVESTMENT DECISION, INVESTORS MUST RELY ON THEIR OWN
EXAMINATIONS OF THE DISTRICT AND THE TERMS OF THE OFFERING. THE SERIES 2006C 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 OFFICIAL STATEMENT. ANY REPRESENTATION TO THE CONTRARY MAY BE A
CRIMINAL OFFENSE.
IN CONNECTION WITH THE OFFERING OF THE SERIES 2006C BONDS, THE
UNDERWRITERS MAY OVER ALLOT OR EFFECT TRANSACTIONS THAT STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SERIES 2006C BONDS AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF
COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
The Underwriters have provided the following sentence for inclusion in this Official Statement: The Underwriters have
reviewed the information in this Official Statement in accordance with, and as part of, their respective responsibilities to investors
u nder the federal securities laws as applied to the facts and circumstances of this transaction, but the Underwriters do not
guarantee the accuracy or completeness of such information.
No dealer, broker, salesman or other person has been authorized by the District, the Underwriters or the Financial
Advisors to give any information or to make any representations with respect to the Series 2006C Bonds other than those
contained in this Official Statement, and, if given or made, such other information or repres entations must not be relied upon as
having been authorized by any of the foregoing. This Official Statement does not constitute an offer to sell or the solicitation of an
offer to buy nor shall there be any sale of the Series 2006C 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 District an d 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 Financial Advisors or the Underwriters. Statements contained in this Official Statement which
involve estimates, forecasts or matters of opinion, whether or not exp ressly so described herein, are intended solely as such and are not
to be construed as a representation of fact. 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 any
implication that the information herein is correct as of any time subsequent to its date.
______________________________
CAUTIONARY STATEMENT S REGARDING FORWARD- LOOKING STATEMENTS IN THIS OFFICIAL STATEMENT
______________________________
Certain statements included or incorporated by reference in this Official Statement constitute “forward-looking
statements” within the meaning of the United States Private Securities Litigation Reform Act of 1995, Section 21E of the United
States Securities Exchange Act of 1934, as amended, and Section 27A of the United States Securities Act of 1933, as amended.
Such statements are generally identifiable by the terminology used such as “plan,” “expect,” “estimate,” “anticipate,” “project,”
“budget” or other similar words.
THE ACHIEVEMENT OF CERTAIN RESULTS OR OTHER EXPECTATIONS CONTAINED IN SUCH
FORWARD -LOOKING STATEMENTS INVOLVE KNOWN AND UNKNOWN RISKS, UNCERTAINTIES AND OTHER
FACTORS WHICH MAY CAUSE ACTUAL RESULTS, PERFORMANCE OR ACHIEVEMENTS DESCRIBED TO BE
MATERIALLY DIFFERENT FROM ANY FUTURE RESULTS, PERFORMANCE OR ACHIEVEMENTS EXPRESSED OR
IMPLIED BY SUCH FORWARD-LOOKING STATEMENTS. NEITHER THE DISTRICT NOR ANY OTHER PARTY
PLANS TO ISSUE ANY UPDATES OR REVISIONS TO THOSE FORWARD-LOOKING STATEMENTS IF OR WHEN
THEIR EXPECTATIONS, OR EVENTS, CONDITIONS OR CIRCUMSTANCES UPON WHICH SUCH STATEMENTS ARE
BASED OCCUR.
TABLE OF CONTENTS
INTRODUCTION .................................................................. 1
Purpose of the Official Statement..................................... 1
The District ..................................................................... 1
Purpose of and Authority for the Series
2006C Bonds ........................................................... 1
Security and Sources of Payment for the
Series 2006C Bonds ................................................. 2
Continuing Disclosure Information .................................. 4
Additional Information .................................................... 4
THE SERIES 2006C BONDS ................................................. 4
General ........................................................................... 4
Optional and Mandatory Redemption ............................... 5
Effect of Notice of Redemption........................................ 7
Book-Entry Only System ................................................. 7
Registration, Transfer and Exchange of
Bonds Upon Discontinuance of Book-
Entry Only System ................................................. 10
SECURITY AND SOURCES OF PAYMENT FOR THE
SERIES 2006C BONDS ................................................ 10
General ......................................................................... 10
Pledged Revenues ......................................................... 11
Flow of Funds ............................................................... 12
Deposits to and Uses of Moneys in the Debt
Service Reserve Account........................................ 14
Rate Covenant............................................................... 15
Senior and Subordinate Bonds ....................................... 16
Possible Series 2006C Credit Facility ............................. 16
PLAN OF FINANCE ............................................................ 16
Purpose of and Authority for the Series
2006C Bonds ......................................................... 16
Capital Finance Plans of the District............................... 17
Estimated Sources and Uses of Funds ............................ 18
THE DISTRICT.................................................................... 18
General ......................................................................... 18
Organization and Management....................................... 19
Board of Trustees .......................................................... 20
Administration .............................................................. 21
The System ................................................................... 22
Employees and Employee Relations............................... 23
Economic Conditions in the District ............................... 23
Security......................................................................... 23
Insurance ...................................................................... 24
THE CIRP AND THE PHASE I PROJECTS ......................... 24
General ......................................................................... 24
The Phase I Projects [UPDATE FROM
DISTRICT TO COME] .......................................... 25
Historic Capital Improvement Expenditures ................... 27
Financing Plans for Phase I of the CIRP ......................... 27
FINANCIAL OPERATIONS OF THE DISTRICT ................ 28
General ......................................................................... 28
Budget an d Appropriation Process ................................. 28
Finance Department ...................................................... 29
Fund Structure............................................................... 29
Basis of Accounting ...................................................... 29
Financial Statements...................................................... 30
Selected Financial Data of the District............................ 30
Management’s Discussion and Analysis ......................... 32
Sewer Rates and Revenues ............................................ 35
Rate Commission and Rate Settin g Process .................... 35
Billing and Collections .................................................. 37
Rate Increases ............................................................... 37
Historical and Projected Sewer Rates and
Charges ................................................................. 38
Customer Accounts ....................................................... 39
Largest User Charge Customers ..................................... 39
User Charge Revenues................................................... 39
Outstanding Indebtedness .............................................. 40
Pro Forma Statement of Pledged Revenues,
Expenses and Debt Service Coverage ..................... 41
Employee Benefits ........................................................ 42
Other Post Employment Benefits ................................... 42
Tax Limitation Amendment – Hancock
Amendment ........................................................... 42
REGULATORY REQUIREMENTS ..................................... 43
General ......................................................................... 43
TAX MATTERS................................................................... 44
Opinion of Bond Counsel .............................................. 44
Collateral Tax Consequences ......................................... 45
LITIGATION ....................................................................... 46
LEGAL MATTERS .............................................................. 46
RATINGS ............................................................................ 46
CONTINUING DISCLOSURE ............................................. 47
UNDERWRITING................................................................ 48
CERTAIN RELATIONSHIPS ............................................... 48
ENGINEERING AND FEASIBILITY CONSULTANT ......... 48
FINANCIAL ADVISORS ..................................................... 48
INDEPENDENT AUDITORS ............................................... 48
MISCELLANEOUS ............................................................. 49
APPENDIX A: Independent Auditor’s Report, Management
Discussion and Analysis and Basic Financial
Statements of the District for the fiscal years
ended June 30, 2006 and 2005
APPENDIX B: Information Regarding the District’s
Service Area
APPENDIX C: Definitions and Summaries of Certain
Provisions of th e Bond Ordinance and
the Continuing Disclosure Agreement
APPENDIX D: Engineering and Financial Feasibility
Report
APPENDIX E: Form of Opinion of Co-Bond Counsel
OFFICIAL STATEMENT
$60,000,000∗
The Metropolitan St. Louis Sewer District
Wastewater System Revenue Bonds
Series 2006C
INTRODUCTION
The following introductory information is not a summary of this Official Statement. It is only a
brief description of, and qualified by and subject in all respects to more complete and detailed
information contained elsewhere in, this Official Statement, including the cover page and appendices
hereto and the documents described herein. The order and placement of materials in this Official
Statement, including the Appendices hereto, are not to be deemed to be a determination of relevance,
materiality or relative importance. This Official Statement, including the cover page and Appendices,
should be considered in its entirety. The offering of the Series 2006C Bonds to potential investors is
made only by means of the entire Official Statement. All capitalized terms used in this Official Statement
and not otherwise defined herein have the meanings set forth in the Bond Ordinance, as defined below.
Purpose of the Official Statement
The purpose of this Official Statement is to set forth certain information concerning The
Metropolitan St. Louis Sewer District (the “District”), a body corporate, municipal corporation and
political subdivision organized and existing under the laws of the State of Missouri (the “State”), and th e
District’s Charter (Plan), approved by the voters of the City of St. Louis, Missouri (the “City”) and St. Louis County, Missouri (the “County”) at a special election on February 9, 1954, as amended and
approved by the voters of the City and the County at a special election on November 7, 2000 (collectively
and as amended, the “Charter”) and the $60,000,000 principal amount of Wastewater System Revenue
Bonds, Series 2006C (the “Series 2006C Bonds”) to be issued by the District. See the sections herein
captioned “THE DISTRICT” and “THE SERIES 2006C BONDS.”
The District
The District was created in 1954 to provide a metropolitan-wide system of wastewater treatment
and sanitary sewerage facilities for the collection, treatment and disposal of sewage to serve the City and
most of the more heavily populated areas of the County. When the District began operations, it took over
the publicly owned wastewater and stormwater drainage facilities within its jurisdiction and began the
construction of an extensive system of collector and interceptor sewers and treatment facilities. The
District’s service area now encompasses 524 square miles, including all 62 square miles of the City and
462 square miles (approximately 90%) of the County. The current population served by the District is
approximately 1.4 million. A map of the District’s service area is included on the back cover hereof. See
the sections herein captioned “THE DISTRICT,” “THE CIRP AND THE PHASE I PROJECTS,”
“FINANCIAL OPERATIONS OF THE DISTRICT,” and “REGULATORY REQUIREMENTS.”
Purpose of and Authority for the Series 2006C Bonds
At a special election held on February 3, 2004, voters within the District approved the issuance by
the District of $500,000,000 in sewer system revenue bonds to enable the District to comply with federal and state clean water requirements. The District may use the proceeds of such revenue bonds for the
∗ Preliminary, subject to change.
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purpose of constructing, repairing, replacing and equipping new and existing District wastewater
facilities. The District plans to use the proceeds of the Series 2006C Bonds to finance a portion of the
costs of “Phase I” of the District’s capital improvement and replacement program (the “CIRP”). See the
section herein captioned “THE CIRP AND THE PHASE I PROJECTS.”
The District will issue the Series 2006C Bonds pursuant to such voter authorization, a Master
Bond Ordinance (the “Master Bond Ordinance”) that was approved by the Board of Trustees (the
“Board”) of the District on April 22, 2004, and an Ordinance (the “2006 Ordinance,” which together
with the Master Bond Ordinance is referred to herein as the “Bond Ordinance”) expected to be approved
by the Board on November 9, 2006, to provide funds to (i) finance a portion of the costs of Phase I of its
CIRP (collectively, the “Projects”), (ii) fund a debt service reserve account (the “Debt Service Reserve
Account”) for the Series 2006C Bonds, and (iii) pay the costs of issuance of the Series 2006C Bonds.
See the sections herein captioned “PLAN OF FINANCE” and “THE CIRP AND THE PHASE I
PROJECTS.”
On May 6, 2004, the District issued $175,000,000 principal amount of its Wastewater System
Revenue Bonds, Series 2004A (the “Series 2004A Bonds”). Under the Master Bond Ordinance, the
Series 2006C Bonds are on a parity with the Series 2004A Bonds. In addition to the Series 2004A Bonds
and the Series 2006C Bonds, the District has issued four additional series of bonds payable from
wastewater system revenues (“SRF Bonds”) that were purchased by the State Environmental Improvement and Energy Resources Authority of the State of Missouri (the “Authority”) through the
Missouri State Revolving Fund Program (the “SRF Program”) of the Authority and the Missouri
Department of Natural Resources (“DNR”). See the section herein captioned “PLAN OF FINANCE.”
The SRF Bonds were issued as Subordinate Bonds (as defined herein) under the Master Bond Ordinance.
With the issuance of the Series 2006C Bonds and the expected issuance of additional SRF Bonds in the principal amount of $14,205,000 in November 2006, the District will have $40,000,000 of its voter
authorization remaining. See the section herein captioned “PLAN OF FINANCE—Capital Finance
Plans of the District.”
A description of the Series 2006C Bonds is contained in this Official Statement under the caption
“THE SERIES 2006C BONDS.” All references to the Series 2006C Bonds are qualified in their
entirety by the definitive form thereof and the provisions with respect thereto in the Bond Ordinance. See Appendix C – DEFINITIONS AND SUMMARIES OF CERTAIN PROVISIONS OF THE BOND
ORDINANCE AND THE CONTINUING DISCLOSURE AGREEMENT for the definitions of all
capitalized words used herein and not otherwise defined herein.
Security and Sources of Payment for the Series 2006C Bonds
General. The Series 2006C Bonds are revenue bonds secured by and payable from certain
revenues of the District received from operation of its wastewater System (as defined herein). The Series
2006C Bonds are also secured by amounts in the Renewal and Extension Fund (as defined herein) and i n
the Debt Service Reserve Account, which will be funded in part with a portion of the proceeds of the
Series 2006C Bonds at the time of issuance of the Series 2006C Bonds, and by the Series 2006C Credit Facility (as defined herein), if any. See the section herein captioned “SECURITY AND SOURCES OF
PAYMENT FOR THE SERIES 2006C BONDS.”
The Series 2006C Bonds and the interest thereon are limited obligations of the District as
provided therein payable solely from the Pledged Revenues, as defined herein. The Series 2006C Bonds
and the interest thereon shall not constitute a general or moral obligation of the District nor a debt,
indebtedness, or obligation of, or a pledge of the faith and credit of, the District or the State or any political subdivision thereof, within the meaning of any constitutional, statutory or charter provision
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whatsoever. Neither the faith and credit nor the taxing power of the District, the State, or any political
subdivision thereof is pledged to the payment of the principal of, premium, if any, or interest on the Series
2006C Bonds or other costs incident thereto. The District has no authority to levy any taxes to pay the
Series 2006C Bonds. Neither the members of the Board nor any person executing the Series 2006C
Bonds shall be liable personally on the Series 2006C Bonds by reason of the issuance thereof.
Pledged Revenues. The Series 2006C Bonds are voter-approved revenue bonds secured by a
pledge of certain revenues of the System, referred to herein as “Pledged Revenues.” Pledged Revenues
means (a) Net Operating Revenues (as defined herein), (b) Investment Earnings (as defined herein), (c)
Hedge Receipts and (d) all moneys paid or required to be paid into, and all moneys and securities on
deposit from time to time in, the funds and accounts specified in the Bond Ordinance, but excluding any
amounts required in the Bond Ordinance to be set aside pending, or used for, rebate to the United States
government pursuant to Section 148(f) of the Code, including, but not limited to, amounts in the Rebate
Fund created in the Bond Ordinance. See the section herein captioned “SECURITY AND SOURCES OF PAYMENT FOR THE SERIES 2006C BONDS – Pledged Revenues” and “ – Flow of Funds”
and “FINANCIAL OPERATIONS OF THE DISTRICT – Selected Financial Data of the District”
for further discussion of the specific District revenues constituting Pledged Revenues under the Bond
Ordinance.
Renewal and Extension Fund and Debt Service Reserve Account. The Bond Ordinance
establishes a Renewal and Extension Fund into which the District may deposit a portion of the Pledged
Revenues. The Bond Ordinance also establishes a Debt Service Reserve Account for the Series 2004A
Bonds, the Series 2006C Bonds, and other Senior Bonds (as defined herein), if any. The Debt Service
Reserve Account will be funded in part from proceeds of the Series 2006C Bonds in the amount of
$____________, which together with funds already on deposit in the Debt Service Reserve Account will equal the Debt Service Reserve Requirement for the Senior Bonds. Whenever for any reason the amount
in the Payments Account established under the Bond Ordinance is insufficient to pay all interest or
Principal falling due on the Senior Bonds (as defined below), including the Series 2006C Bonds, within
the next seven days (or, in the case of Senior Bonds bearing interest at a Variable Rate, the next Business
Day) the District will make up any deficiency by transfers first from the Renewal and Extension Fund and
second from the funds and accounts of the District relating to Subordinate Bonds (as defined below) which are not Subordinate SRF Bonds (as defined below). Whenever, on the date such interest or
Principal is due, there are insufficient moneys in the Payments Account available to make such payment,
the District shall, without further instructions, apply so much as may be needed of the moneys in the Debt
Service Reserve Account to prevent default in the payment of such interest or Principal, with priority to
interest payments. See the section herein captioned “SECURITY AND SOURCES OF PAYMENT
FOR THE SERIES 2006C BONDS – Debt Service Reserve Account.”
The Bond Ordinance authorizes the District to issue additional Bonds thereunder which may be
either “Senior Bonds” or “Subordinate Bonds,” subject to certain requirements of the Bond Ordinance.
The Bond Ordinance defines “Senior Bonds” as Bonds, which may have a right to payment and to be
secured by a lien on a parity with the Series 2004A Bonds and the Series 2006C Bonds (except with
respect to any Credit Facility which may be available only to one or more series of Senior Bonds) with
respect to the Pledged Revenues. The Bond Ordinance defines “Subordinate Bonds” as Bonds,
including Subordinate SRF Bonds (defined in the Bond Ordinance as SRF Bonds which are Sub ordinate
Bonds) which may have a right to payment from the Pledged Revenues and be secured by a lien on the
Pledged Revenues expressly junior and subordinate to the Senior Bonds. The Series 2006C Bonds and
any other Senior Bonds or Subordinate Bonds issued by the District previously or in the future under the Master Bond Ordinance are referred to herein collectively as the “Bonds.” See “DEFINITIONS AND
SUMMARIES OF CERTAIN PROVISIONS OF THE BOND ORDINANCE AND THE
CONTINUING DISCLOSURE AGREEMENT” in Appendix C hereto for a discussion of the
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requirements that must be satisfied under the Bond Ordinance prior to the issuance of additional Bonds
thereunder.
[Possible Series 2006C Credit Facility. The District is considering having all or a portion of the
Series 2006C Bonds insured by a municipal bond insurer. There is no assurance that the District can or
will obtain bond insurance on all or any portion of the Series 2006C Bonds. See the section herein
captioned “SECURITY AND SOURCES OF PAYMENT FOR THE SERIES 2006C BONDS –
Possible Series 2006C Credit Facility.”]
Continuing Disclosure Information
At the time of issuance of the Series 2006C Bonds, the District will enter into a Disclosure
Dissemination Agent Agreement dated as of November 1, 2006 (the “Continuing Disclosure
Agreement”) with Digital Assurance Certification, L.L.C. (“DAC”), under which the District will
designate DAC as Dissemination Agent. Pursuant to the Continuing Disclosure Agreement, the District will covenant to provide certain financial and operating information with respect to the District on an on -
going basis and notice of certain events to the state repository, if any, and to each nationally recognized
municipal securities information repository in accordance with Rule 15c2-12 promulgated by the United
States Securities and Exchange Commission under the Securities Exchange Act of 1934, as the same may
be amended from time to time (“Rule 15c2-12”). These covenants have been made in order to assist the
Underwriters in complying with Rule 15c2-12. See “DEFINITIONS AND SUMMARIES OF
CERTAIN PROVISIONS OF THE BOND ORDINANCE AND THE CONTINUING
DISCLOSURE AGREEMENT” in Appendix C hereto.
Additional Information
Appendix A to this Official Statement contains the Independent Auditor’s Report, Manag ement
Discussion and Analysis and Basic Financial Statements of the District for the fiscal years ended June 30,
2006 and 2005. Appendix B to this Official Statement contains certain information regarding the service
area of the District. Appendix C to this Official Statement includes definitions of certain capitalized
terms used in this Official Statement and summaries of certain provisions of the Bond Ordinance and the
Continuing Disclosure Agreement. Appendix D to this Official Statement contains an engineering and financial feasibility report prepared by Black & Veatch Corporation, the District’s feasibility consultant.
Appendix E to this Official Statement contains the proposed form of the opinion which is anticipated to
be rendered by Co-Bond Counsel at the time of delivery of the Series 2006C Bonds.
Brief descriptions of the Series 2006C Bonds, the Bond Ordinance, and the District are included
in this Official Statement. Such descriptions, information and summaries provided herein do not purport
to be comprehensive or definitive. All references herein to any documents are qualified by the terms of
such documents in their entirety. Until the issuance and delivery of the Series 2006C Bonds, copies of
the documents described herein may be obtained from A.G. Edwards, as representative of the
underwriters of the Series 2006C Bonds. After delivery of the Series 2006C Bonds, copies of such
documents will be available for inspection at the corporate trust office of The Bank of New York Trust Company, N.A., in St. Louis, Missouri, as the Paying Agent under the Bond Ordinance (the “Paying
Agent”).
THE SERIES 2006C BONDS
General
The Bond Ordinance authorizes the issuance of Bonds thereunder from time to time in one or
more series. The Bond Ordinance further authorizes the execution, issuance and delivery of a series of
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Bonds thereunder to be designated as “The Metropolitan St. Louis Sewer District Wastewater System
Revenue Bonds, Series 2006C” (the “Series 2006C Bonds”) in the aggregate principal amount of
$60,000,000, which series of Bonds shall be executed, issued and delivered under, and secured by, the
Bond Ordinance. Senior Bonds (in addition to the Series 2006C Bonds) and Subordinate Bonds may also
be issued from time to time as provided in, and subject to the limitations set forth in, the Bond Ordinance.
See “DEFINITIONS AND SUMMARIES OF CERTAIN PROVISIONS OF THE BOND
ORDINANCE AND THE CONTINUING DISCLOSURE AGREEMENT” in Appendix C hereto.
The Series 2006C Bonds shall be issued in fully registered form in the denomination of $5,000
each or integral multiples thereof and shall be dated the date of delivery thereof. Each Series 2006C
Bond shall be numbered in a convenient manner, established by The Bank of New York Trust Company,
N.A., in St. Louis, Missouri (the “Bond Registrar”) and shown by the Bond Register. The Series 2006C
Bonds shall bear interest at the rates per annum set forth on the inside cover hereof, computed on the basis
of a 360-day year consisting of twelve 30-day months, payable on May 1, 2007 and semiannually
thereafter on each May 1 and November 1 of each year and shall mature on May 1 in the years and in the
principal amounts as set forth on the inside cover hereof, unless earlier called for redemption.
So long as any of the Series 2006C Bonds are in book-entry form, the principal, redemption
premium, if any, and interest on such Series 2006C Bonds are payable by check or draft mailed, or wire
transfer, to Cede & Co. as Registered Owner thereof and will be redistributed by DTC and the
Participants as described below under “Book-Entry Only System.”
Optional and Mandatory Redemption
Optional Redemption of Series 2006C Bonds by District. The Series 2006C Bonds maturing on or
after May 1, 20___ are subject to redemption prior to maturity at the option of the District on or after May 1, 20___, in whole or in part at any time, at the redemption prices (expressed as percentages of Principal)
set forth in the table below plus accrued interest on such redemption date:
Redemption Dates
(dates inclusive) Redemption Prices
Mandatory Redemption of Series 2006C Bonds. The Series 2006C Bonds maturing in the years
20__* and 20__* are Term Bonds and are subject to mandatory redemption prior to maturity on May 1 of
the years, in the amounts, and at the prices provided below.
As and for a sinking fund for the retirement prior to maturity of the Series 2006C Bonds that are
Term Bonds, there shall be deposited in the Payments Account from the Revenue Fund an amount
sufficient to redeem the f ollowing principal amounts of the Series 2006C Bonds on May 1 of each year
specified below (each such date being referred to as a “mandatory redemption date”):
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Series 2006C Bonds Maturing May 1, 20__*
Year* Principal Amount*
+Final Matu rity
* Preliminary, subject to change.
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Series 2006C Bonds Maturing May 1, 20__*
Year* Principal Amount*
+Final Maturity
The District shall redeem such an aggregate Principal amount of the Series 2006C Bonds at a
redemption price equal to the Principal amount thereof plus the interest due thereon to the mandatory
redemption date.
Selection of Bonds to be Redeemed; Redemption Among Series. If less than all of the Bonds of
like maturity of any series shall be called for redemption, the particular Bonds, or portions of Bonds, to be
redeemed shall be selected by the Paying Agent in such equitable manner as the Paying Agent may
determine. The portion of any Bond of a denomination of more than $5,000 to be redeemed shall be in
the Principal amount of $5,000 or an integral multiple thereof, and, in selecting portions of such Bonds for redemption, the District shall treat each such Bond as representing that number of Bonds which is
obtained by dividing the Principal of such Bond to be redeemed in part by $5,000. Subject to the
redemption provisions of any Series Ordinance, the District in its discretion may redeem the Bonds of any
series, or a portion of the Bonds of any such series, before it redeems the Bonds of any other series.
Within any particular series, any redemption of Bonds shall be effected in the manner provided in the
Master Bond Ordinance and in any Series Ordinance.
Notice of Redemption. Unless waived by any registered owner of Bonds to be redeemed and
except as may be otherwise provided in a Series Ordinance, of ficial notice of any such redemption shall
be given by the Bond Registrar on behalf of the District by mailing a copy of an official redemption
notice by first class mail, at least 30 days and not more than 60 days prior to the date fixed for redemption to the registered owner of the Bond or Bonds to be redeemed at the address shown on the Bond Register
or at such other address as is furnished in writing by such registered owner to the Bond Registrar.
All official notices of redemption shall be dated, shall contain the complete official name of the
Bond issue, and shall state: (1) the redemption date; (2) the redemption price; (3) the interest rate and
maturity date of the Bonds being redeemed; (4) if less than all the Outstanding Bonds are to be redeemed,
the Bond numbers, and, where part of the Bonds evidenced by one Bond certificate are being redeemed,
the respective Principal amounts of such Bonds to be redeemed; (5) 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 such date; and (6) the place
where such Bonds are to be surrendered for payment of the redemption price (which place of payment
shall be the pr incipal payment office of the Paying Agent or at such other office designated by the Paying Agent for such purpose) and the name, address, and telephone number of a person or persons at the
Paying Agent who may be contacted with respect to the redemption.
Any notice of redemption of any Bonds may specify that the redemption is contingent upon the
deposit of moneys with the Paying Agent in an amount sufficient to pay the redemption price (which
price shall include the redemption premium, if any) of all the Bonds or portions of Bonds which are to be redeemed on that date. Prior to any redemption date, the District shall deposit with the Paying Agent an
amount of money sufficient to pay the redemption price of all the Bonds or portions of Bonds which are
to be redeemed on that date.
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For so long as DTC is effecting book–entry transfers of the Bonds, the Bond Registrar shall
provide the notices specified in the Bond Ordinance to DTC. It is expected that DTC shall, in turn, notify
its participants and that the participants, in turn, will notify or cause to be notified the Beneficial Owners.
Any failure on the part of DTC or a participant, or failure on the part of a nominee of a Beneficial Owner
of a Bond (having been mailed notice from the Bond Registrar, a participant or otherwise) to notify the
Beneficial Owner of the Bond so affected, shall not affect the validity of the redemption of such Bond.
Any defect in any notice of redemption shall not affect the validity of proceedings for redemption
of the Bonds.
Effect of Notice of Redemption
Official notice of redemption having been given in the manner and under the conditions provided
in the Bond Ordinance and moneys for payment of the redemption price being held by the Paying Agent
as provided in the Bond Ordinance, the Bonds or portions of Bonds called for redemption shall, on the redemption date designated in such notice, become and be due and payable at the redemption price
provided for redemption of such Bonds or portions of Bonds on such date, and from and aft er such date
interest on the Bonds or portions of Bonds called for redemption shall cease to accrue, such Bonds or
portions of Bonds shall cease to be entitled to any lien, benefit, or security under the Bond Ordinance, and
the owners of such Bonds or portions of Bonds shall have no rights in respect thereof except to receive
payment of the redemption price thereof. Upon surrender for partial redemption of any Bond, there shall
be prepared for and delivered to the registered owner a new Bond or Bonds of the same series, maturity,
and interest rate in the amount of the unpaid Principal.
Book-Entry Only System
General. When the Series 2006C Bonds are issued, ownership interests will be available to
purchasers only through a book-entry only system (the “Book-Entry Only System”) maintained by The
Depository Trust Company (“DTC”), New York, New York. DTC will act as securities depository for
the Series 2006C Bonds. Initially, the Series 2006C Bonds 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 Series 2006C Bond certificate will be issued for each maturity of the Series 2006C Bonds listed on the inside cover hereof, in the
aggregate principal amount of such maturity, and will be deposited with DTC or the Paying Agent, as
DTC’s agent.
So long as Cede & Co., as nominee of DTC, is the registered owner of the Series 2006C Bonds,
the Beneficial Owners of the Series 2006C Bonds will not receive or have the right to receive physical
delivery of the Series 2006C Bonds and will not be or be considered to be owners thereof under the Bond
Ordinance, and references herein to the Bondowners or registered owners of the Series 2006C Bonds
shall mean Cede & Co. and shall not mean the Beneficial Owners of the Series 2006C Bonds.
The following discussion will not apply to any Series 2006C Bonds issued in certificate form due
to the discontinuance of the DTC Book-Entry Only System, as described below.
DTC and its Participants. DTC, the world’s largest depository, is a limited-purpose trust
company organized under the New York Banking Law, a “banking organization” within the meaning of
the New York Banking Law, a member of the Federal Reserve System, a “clearing corporation” within
the meaning of the New York Uniform Commercial Code and a “clearing agency” registered pursuant to
the provisions of Section 17A of the Securities Exchange Act of 1934, as amended. DTC holds and
provides asset servicing for over 2.2 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
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(“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, in turn, is owned by a number of Direct Participants of DTC and members of the National Securities Clearing Corporation, Fixed Income Clearing Corporation and Emerging Markets
Clearing Corporation (“NSCC,” “FICC” and “EMCC,” also subsidiaries of DTCC), as well as by the
New York Stock Exchange, Inc., the American Stock Exchange LLC and the National Association of
Securities Dealers, Inc. Access to the DTC system is also available to others, such as both U.S. and non -
U.S. securities brokers and dealers, banks, trust companies and clearing corporations that clear through or
maintain a custodial relationship with a Direct Participant, either directly or indirectly (the “Indirect Participants” and collectively with the Direct Participants, the “Participants”). DTC has Standard &
Poor’s highest rating: AAA. 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 and
www.dtc.org.
Purchase of Ownership Interests. Purchases of the Series 2006C Bonds under the DTC system must be made by or through Direct Participants, which will receive a credit for the Series 2006C Bonds
on DTC’s records. The ownership interest of each actual purchaser of each Series 2006C Bond (the
“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 Series 2006C Bonds are to be
accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of
Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interest
in the Series 2006C Bonds, except in the event that use of the book-entry system for the Series 2006C
Bonds is discontinued.
Transfers. To facilitate subsequent transfers, all Series 2006C Bonds deposited by Direct
Participants with DTC are registered in the name of DTC’s partnership nominee, Cede & Co., or such
other name as may be requested by an authorized representative of DTC. The deposit of the Series 2006C
Bonds with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not
effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Series 2006C Bonds. DTC’s records reflect only the identity of the Direct Participants to whose accounts
such Series 2006C Bonds are credited, which may or may not be the Beneficial Owners. The Direct and
Indirect Participants will remain responsible for keeping account of their holdings on behalf of their
customers.
Notices. 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. Redemption notices shall be sent to DTC. If less
than all of the Series 2006C Bonds 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. Beneficial Owners of Series
2006C Bonds may wish to take certain steps to augment transmission to them of notices of significant events with respect to the Series 2006C Bonds, such as redemptions, defaults, and proposed amendments
to the Bond documents. For example, Beneficial Owners of Series 2006C Bonds may wish to ascertain
that the nominee holding the Series 2006C Bonds for their benefit has agreed to obtain and transmit
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notices to Beneficial Owners, in the alternative, Beneficial Owners may wish to provide their names and
addresses to the registrar and request that copies of the notices be provided directly to them.
Voting. Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with
respect to the Series 2006C Bonds unless authorized by a Direct Participant in accordance with DTC’s
Procedures. Under its usual procedures, DTC mails an omnibus proxy (“Omnibus Proxy”) to the
District as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.’s consenting or
voting rights to those Direct Participants to whose accounts the Series 2006C Bonds are credited on the
record date (identified in a listing attached to the Omnibus Proxy).
Payments of Principal and Interest. So long as any Series 2006C Bond is registered in the name
of DTC’s nominee, all payments of principal of, premium, if any, and interest on such Series 2006C Bond
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 District 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 nor its nominee, the District or the Paying Agent, subject to any statutory
and regulatory requirements as may be in effect from time to time. Payment of principal of, premium, if any, and interest on the Series 2006C Bonds to Cede & Co. (or such other nominee as may be requested
by an authorized representative of DTC) is the responsibility of the District or the Paying Agent,
disbursement of such payments to Direct Participants is the responsibility of DTC, and disbursement of
such payments to the Beneficial Owners is the responsibility of Direct and Indirect Participants.
Discontinuation of Book-Entry Only System. DTC may discontinue providing its services as depository with respect to the Series 2006C Bonds at any time by giving reasonable notice to the District
or the Paying Agent. Under such circumstances, in the event that a successor depository is not obtained,
the Series 2006C Bonds are required to be printed and delivered as described in the Bond Ordinance.
The use of the system of book-entry only transfers through DTC (or a successor securities
depository) may be discontinued as described in the Bond Ordinance. In that event, the Series 2006C
Bond certificates will be printed and delivered as described in the Bond Ordinance.
None of the Underwriters, the District nor the Paying Agent will have any responsibility or
obligations to any Direct Participants or Indirect Participants or the persons for whom they act with
respect to (i) the accuracy of any records maintained by DTC or any such Direct Participant or Indirect
Participant; (ii) the payment by any Participant of any amount due to any Beneficial Owner in respect of
the principal of, premium, if any, or interest on the Series 2006C Bonds; (iii) the delivery by any such
Direct Participant or Indirect Participant of any notice to any Beneficial Owner that is required or
permitted under the terms of the Bond Ordinance to be given to owners of the Series 2006C Bonds;
(iv) the selection of the Beneficial Owners to receive payment in the event of any partial redemption of the
Series 2006C Bonds; or (v) any consent given or other action taken by DTC as Bondholder.
The information above concerning DTC and DTC’s book-entry system has been obtained from
sources believed to be reliable, but is not guaranteed as to accuracy or completeness by and is not to be
construed as a representation by the District, the Paying Agent or the Underwriters. The District, the
Paying Agent and the Underwriters make no assurances that DTC, Direct Participants, Indirect
Part icipants or other nominees of the Beneficial Owners will act in accordance with the procedures
described above or in a timely manner.
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Registration, Transfer and Exchange of Bonds Upon Discontinuance
of Book-Entry Only System
The District shall cause the Bond Register for the registration and for the transfer of the Bonds as provided in the Bond Ordinance to be kept by the Bond Registrar. The Bonds shall be registered as to
Principal and interest on the Bond Register upon presentation thereof to the Bond Registrar which shall
make notation of such registration thereon; provided that the District reserves the right to issue coupon
Bonds payable to bearer whenever to do so would not result in any adverse federal tax consequences.
Bonds may be transferred by surrender for transfer at the principal corporate trust office of the
Bond Registrar or at such other office designated by the Bond Registrar for such purpose, duly endorsed
for transfer or accompanied by an assignment duly executed by the registered owner or the registered
owner’s attorney duly authorized in writing. The District shall cause to be executed and the Bond
Registrar shall authenticate and deliver in the name of the transferee or transferees a new Bond or Bonds
of the same series, maturity, interest rate, aggregate Principal amount, and tenor, of any authorized
denomination or denominations, and bearing numbers not then outstanding.
Bonds may be exchanged at the principal corporate trust office of the Bond Registrar or at such
other office designated by the Bond Registrar for such purpose, for a like aggregate Principal amount of
Bonds of other authorized denominations of the same series, maturity, and interest rate, and bearing
numbers not then outstanding. The District shall cause to be executed and the Bond Registrar shall
authenticate and deliver Bonds which the Bondholder making the exchange is entitled to receive.
The Bond Registrar shall not be required to transfer or exchange any Bond after notice calling
such Bond for redemption has been given or during the period of 15 days (whether or not a Business Day
for the Bond Registrar, but excluding the date of giving such notice of redemption and including such
15th day) immediately preceding the giving of such notice of redemption.
In any exchange or registration of transfer of any Bond, the owner of the Bond shall not be required to pay any charge or fee; provided, however, if and to whatever extent any tax or governmental
charge is at any time imposed on any such exchange or transfer, the District or the Bond Registrar may
require payment of a sum sufficient for such tax or charge. In the event any Bondholder fails to provide a
correct taxpayer identification number to the Bond Registrar, the Bond Registrar may impose a charge
against such Bondholder sufficient to pay any governmental charge required to be paid as a result of such failure. In compliance with Section 3406 of the Internal Revenue Code, such amount may be deducted by
the Paying Agent from amounts otherwise payable to such Bondholder hereunder or under the Bonds.
SECURITY AND SOURCES OF PAYMENT FOR THE SERIES
2006C BONDS
General
The Series 2006C Bonds are revenue bonds secured by and payable from Pledged Revenues. The
Series 2006C Bonds are also secured by amounts on deposit in the Renewal and Extension Fund and the
Debt Service Reserve Account and by the Series 2006C Credit Facility, if any.
The Series 2006C Bonds and the interest thereon are limited obligations of the District as provided therein payable solely from the Pledged Revenues. The Series 2006C Bonds and the interest
thereon shall not constitute a general or moral obligation of the District nor a debt, indebtedness, or
obligation of, or a pledge of the faith and credit of, the District or the State or any political subd ivision
thereof, within the meaning of any constitutional, statutory or charter provision whatsoever. Neither the
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faith and credit nor the taxing power of the District, the State, or any political subdivision thereof is
pledged to the payment of the principal of, premium, if any, or interest on the Series 2006C Bonds or
other costs incident thereto. The District has no authority to levy any taxes to pay the Series 2006C
Bonds. Neither the members of the Board nor any person executing the Series 2006C Bonds shall be
liable personally on the Series 2006C Bonds by reason of the issuance thereof.
Pledged Revenues
Pursuant to the Bond Ordinance, the District has pledged all Pledged Revenues to the payment of
the Principal of, premium, if any, and interest on all Bonds issued thereunder. Such pledge is for the
equal and proportionate benefit and security of the Series 2006C Bonds and any other Senior Bonds
issued under the terms of the Bond Ordinance regardless of the time or times of their issuance or maturity.
In the Bond Ordinance, the District covenants that it will not issue obligations of any kind or nature
payable from, or with a lien on, the Pledged Revenues or any part thereof having a prior lien over or, except as permitted in the Bond Ordinance for the issuance of Senior Bonds, on a parity with the Series
2006C Bonds. Notwithstanding the foregoing, the Bond Ordinance permits the issuance of Subordinate
Bonds secured by the Pledged Revenues on a subordinate basis to the Series 2004A Bonds, the Series
2006C Bonds, and any other Senior Bonds issued in the future.
“Pledged Revenues” means (a) Net Operating Revenues of the System, (b) Investment Earnings
(defined in the Bond Ordinance as all interest received on and profits derived from investments of moneys
in all funds and accounts of the District other than investments derived from or with respect to
(i) stormwater revenues, as described below, (ii) all funds and accounts established in connection with
SRF Bonds and (iii) obligations issued by the District on behalf of its subdistricts), (c) Hedge Receipts
and (d) all moneys paid or required to be paid into, and all moneys and securities on deposit from time to time in, the funds and accounts specified in the Bond Ordinance, but excluding any amounts requ ired in
the Bond Ordinance to be set aside pending, or used for, rebate to the United States government pursuant
to Section 148(f) of the Code, including, but not limited to, amounts in the Rebate Fund created in the
Bond Ordinance.
The Bond Ordinance defines the “System” as the sanitary sewer system of the District, as it now
exists and as it may be added to, extended, improved and equipped, either from the proceeds of the Bonds
or from any other sources at any time, including, without limitation, (a) all sanitary sewers, all combined
sewers, all sanitary and combined sewer pumping stations, all wastewater treatment plants, and all
equipment used in connection therewith, all facilities for the collection, treatment and disposal of sewage
and wastewater, including industrial wastes, and (b) all other facilities or property of any nature or
description, real or personal, tangible or intangible, owned or used by the District in the collection,
treatment and disposal of wastewater.
The Bond Ordinance defines “Net Operating Revenues” as all Operating Revenues (as defined
in the Bond Ordinance), after provision for payment of all Expenses of Operation and Maintenance (as
defined in the Bond Ordinance). The Bond Ordinance broadly defines “Operating Revenues” as all
income and revenue of any nature derived from the operation of the System, including periodic wastewater billings, service charges, other charges for wastewater service and the availability thereof
(other than any special assessment proceeds), connection or tap fees (whether accounted for as revenues
or as contributed capital), net proceeds from business interruption insurance, the principal of gifts,
bequests, contributions, grants and donations available to pay debt service of Bonds, and any amounts
deposited in escrow in connection with the acquisition, construction, remodeling, renovation and
equipping of facilities to be applied during the period of determination to pay interest on Bonds.
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The Bond Ordinance expressly excludes the following from the definition of Operating
Revenues: (1) any profits or losses on the early extinguishment of debt or on the sale or other disposition,
not in the ordinary course of business, of investments or fixed or capital assets, and local, state or federal
grants or other moneys received for the payment of Expenses of Operation and Maintenance, (2) local,
state, or federal grants, loans (including Government Loans), capital improvement contract payments, or
other moneys received for capital improvements to the System, (3) Investment Earnings, (4) any
stormwater charges (referred to herein as the “Stormwater Service Charges”) and (5) any property tax revenues. The Stormwater Service Charge consists of a charge for stormwater collection and treatment
currently imposed by the District in the amount of $0.24 per month per account, which totaled
approximately $1,248,563 for the District’s fiscal year ending June 30, 2006. Although revenues from
the Stormwater Service Charge are not included in Operating Revenues and thus not available for
payment of debt service on any Bonds issued under the Bond Ordinance, including the Series 2006C
Bonds, such revenues are accounted for and included in the amount of “Operating Revenues” identified in
the Independent Auditor’s Report and Basic Financial Statements included as Appendix A to this Official
Statement. See the section below captioned “FINANCIAL OPERATIONS OF THE DISTRICT –
Selected Financial Data of the District,” for information regarding revenues, expenses and changes in
net assets for the District’s last five fiscal years and an Agreed-Upon Procedures Report provided by the
District’s independent accountants regarding the revenues and expenses of the District net of certain
revenue and expense items not included in Pledged Revenues.
Flow of Funds
Bond Ordinance Funds and Accounts. The Bond Ordinance establishes or ratifies the
establishment of the following funds and accounts and provides that the moneys deposited in such funds and accounts shall be held by Bank of America, N.A., St. Louis, Missouri, as the depository (the
“Depository”) for the account of the District, in trust for the purposes set forth in the Bond Ordinance:
(1) Wastewater Revenue Fund (the “Revenue Fund”),
(2) Wastewater Sinking Fund (the “Sinking Fund”), and within
such Sinking Fund, a Payments Account and a Debt Service Reserve
Account,
(3) Wastewater Renewal and Extension Fund (the “Renewal
and Extension Fund”),
(4) Wastewater Rebate Fund (the “Rebate Fund”), and within
such Rebate Fund a Series 2006C Rebate Account, and
(5) Wastewater Project Fund (the “Project Fund”), and within
such Project Fund a Series 2006C Project Account and a Series
2006C Costs of Issuance Account.
Deposits to and Uses of Moneys in the Revenue Fund. The Bond Ordinance requires that the District deposit all Operating Revenues into the Revenue Fund from time to time as and when received.
The Bond Ordinance also requires that the District apply moneys in the Revenue Fund, prior to the
occurrence and continuation of an Event of Default under the Bond Ordinance, in the following order of
priority:
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(1) to pay Expenses of Operation and Maintenance,
(2) to deposit into the Sinking Fund the amounts required by
the Bond Ordinance, as described below under the heading
captioned “Deposits to and Uses of Money in the Sinking Fund,”
(3) to deposit into the Rebate Fund the amounts required by
Bond Ordinance,
(4) to make Replenishment Payments (as defined in the Bond
Ordinance) to the Debt Service Reserve Account and to pay to any
Credit Facility Provider any amounts due under a Credit Facility
Agreement, including Additional Interest,
(5) to pay any amounts due any Reserve Account Credit
Facility Provider pursuant to a Reserve Account Credit Facility
Agreement,
(6) to deposit the amounts required to be deposited into the
funds and accounts created by any Series Ordinance authorizing the
issuance of Subordinate Bonds, for the purpose of paying Principal
of (whether at maturity, upon mandatory redemption or as otherwise
required by a Series Ordinance relating to Subordinate SRF Bonds)
and interest on Subordinate Bonds, making Hedge Payments under
Subordinate Hedge Agreements, and accumulating reserves for such
payments,
(7) to make Accumulation Payments (as defined in the Bond
Ordinance) to the Debt Service Reserve Account in accordance with
the Bond Ordinance, and
(8) to pay any amounts required to be paid with respect to
any Other System Obligations.
In addition to, and after, the deposits described above, the District may from time to time deposit into the Renewal and Extension Fund any moneys and securities held in the Revenue Fund in excess of
45 days’ estimated Expenses of Operation and Maintenance.
If at any time the amounts in any account of the Sinking Fund are less than the amounts required
by the Bond Ordinance, and there are not on deposit in the Renewal and Extension Fund available
moneys sufficient to cure any such deficiency, as described herein under the subsection captioned
“Deposits to and Uses of Moneys in the Renewal and Extension Fund,” then the District shall
withdraw from the funds and accounts of the District relating to Subordinate Bonds which are not
Subordinate SRF Bonds and deposit in such account of the Sinking Fund, as the case may be, the amount
necessary (or all the moneys in such funds and accounts, if less than the amount required) to make up
such deficiency.
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Deposits to and Uses of Moneys in the Sinking Fund. After the District deposits all Operating
Revenues into the Revenue Fund and applies such moneys to pay Expenses of Operation and
Maintenance, then the Bond Ordinance provides for deposits to and uses of moneys in the accounts and
subaccounts in the Sinking Fund as follows:
Payments Account – General. Sufficient moneys shall be paid in periodic installments from the
Revenue Fund into the Payments Account for the purpose of paying the Principal of and interest
(excluding Additional Interest) on the Senior Bonds as they become due and payable and for the purpose
of making Hedge Payments under Senior Hedge Agreements. Amounts held in the Payments Account
shall be used solely to pay interest (excluding Additional Interest) and Principal of the Senior Bonds as
the same become due and payable (whether at maturity or upon redemption) and to pay Hedge Payments
under Senior Hedge Agreements when due. As of the date of this Official Statement, there are no Senior
Hedge Agreements in effect.
Interest. Except as otherwise provided in any Series Ordinance authorizing Senior SRF Bonds,
on or before the 30th day preceding each Interest Payment Date for Senior Bonds (or, in the case of
Senior Bonds bearing interest at a Variable Rate, on or before the Business Day preceding each Interest
Payment Date), the District shall deposit in the Payments Account an amount which, together with any
other moneys already on deposit therein and available to make such payment and, in the case of Senior
SRF Bonds, anticipated investment earnings on reserve funds held by a bond trustee relating to such
Senior SRF Bonds, is not less than the interest (excluding Additional Interest) coming due on such Senior
Bonds on such Interest Payment Date. The District shall also deposit and continue to deposit all Hedge
Receipts under Senior Hedge Agreements in the Payments Account from time to time as and when
received.
Principal. Except as otherwise provided in any Series Ordinance authorizing Senior SRF Bonds, on or before the 30th day preceding each Principal Maturity Date for Senior Bonds, the District shall
deposit in the Payments Account an amount which, together with any other moneys already on deposit
therein and available to make such payment, is not less than the Principal coming due on such Senior
Bonds on such Principal Maturity Date.
Hedge Payments. On or before the 30th day preceding each payment date for Hedge Payments
under Senior Hedge Agreements, the District shall deposit in the Payments Account an amount which,
together with any other moneys already on deposit therein and available to make such payment, is not less
than such Hedge Payments coming due on such payment date.
Application of Moneys in Payments Account. No further payments need be made into the
Payments Account whenever the amount available in the Payments Account, if added to the amount then
in the Debt Service Reserve Account (without taking into account any amount available to be drawn on any Reserve Account Credit Facility), is sufficient to retire all Senior Bonds then Outstanding and to pay
all unpaid interest accrued and to accrue prior to such retirement. No moneys in the Payments Account
shall be used or applied to the optional purchase or redemption of Senior Bonds prior to maturity unless:
(i) provision shall have been made for the payment of all the Senior Bonds; or (ii) such moneys are
applied to the purchase and cancellation of Senior Bonds which are subject to mandatory rede mption on
the next mandatory redemption date, which falls due within 12 months, such Senior Bonds are purchased
at a price not more than would be required for mandatory redemption, and such Senior Bonds are
cancelled upon purchase; or (iii) such moneys are applied to the purchase and cancellation of Senior
Bonds at a price less than the amount of Principal which would be payable on such Senior Bonds,
together with interest accrued through the date of purchase, and such Senior Bonds are cancelled upon
purchase; or (iv) such moneys are in excess of the then required balance of the Payments Account and are
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applied to redeem a part of the Senior Bonds Outstanding on the next succeeding redemption date for
which the required notice of redemption may be given.
Deposits to and Uses of Moneys in the Debt Service Reserve Account
Upon the issuance of the Series 2006C Bonds, the District shall deposit into the Debt Service
Reserve Account from the proceeds of the Series 2006C Bonds the amount of $___________. The Bond
Ordinance requires that the District deposit into the Debt Service Reserve Account the amounts specified
in Series Ordinances with respect to Senior Bonds. Notwithstanding the foregoing, there shall be no
deposit into the Debt Service Reserve Account with respect to any SRF Bonds nor shall the Debt Service
Reserve Account secure any SRF Bonds.
Whenever for any reason the amount in the Payments Account is insufficient to pay all interest or
Principal becoming due on the Senior Bonds within the next seven days (or, in the case of Senior Bonds
bearing interest at a Variable Rate, on the next Business Day), the District shall make up any deficiency by transfers first from the Renewal and Extension Fund and second from the funds and accounts of the
District relating to Subordinate Bonds which are not Subordinate SRF Bonds. Whenever, on the date that
such interest or Principal is due, there are insufficient moneys in the Payments Account available to make
such payment, the District shall, without further instructions, apply so much as may be needed of the
moneys in the Debt Service Reserve Account to prevent default in the payment of such interest or
Principal, with priority to interest payments. Whenever by reason of any such application or otherwise
(other than required Accumulation Payments, as required in the Bond Ordinance) the amount remaining
to the credit of the Debt Service Reserve Account is less than the amount then required to be in the Debt
Service Reserve Account, such deficiency shall be remedied by monthly deposits (“Replenishment
Payments”) from the Revenue Fund, to the extent funds are available in the Revenue Fund for such
purpose after all required transfers set forth above have been made.
The District may elect to satisfy in whole or in part the Debt Service Reserve Requirement by
means of a Reserve Account Credit Facility, subject to certain requirements as set forth in the Bond
Ordinance. See “DEFINITIONS AND SUMMARIES OF CERTAIN PROVISIONS OF THE
BOND ORDINANCE AND THE CONTINUING DISCLOSURE AGREEMENT” in Appendix C
hereto.
Deposits to and Uses of Moneys in the Renewal and Extension Fund. All sums accumulated
and retained in the Renewal and Extension Fund shall be used first to prevent default in the payment of
interest on or Principal of the Senior Bonds when due and then shall be applied by the District from time
to time, as and when the District shall determine, to the following purposes and, prior to the occurrence
and continuation of an Event of Default, in the order of priority determined by the District in its sole discretion: (a) for the purposes for which moneys held in the Revenue Fund may be applied pursuant to
the Bond Ordinance and as described above, (b) to pay any amounts which may then be due and owing
under any Hedge Agreement (including termination payments, fees, expenses, and indemnity payments),
(c) to pay any governmental charges and assessments against the System or any part thereof which may
then be due and owing, (d) to make acquisitions, betterments, extensions, repairs, or replacements or other capital improvements (including the purchase of equipment) to the System deemed necessary by the
District (including payments under contracts with vendors, suppliers, and contractors for the foregoing
purposes), (e) to acquire Senior Bonds by redemption or by purchase in the open market at a price not
exceeding the callable price as provided and in accordance with the terms and conditions of the Bond
Ordinance, which Senior Bonds may be any of the Senior Bonds, prior to their respective maturities, and
when so used for such purposes the moneys shall be withdrawn from the Renewal and Extension Fund and deposited into the Payments Account for the Senior Bonds to be so redeemed or purchased, and (f)
for any other purpose of the District.
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Rate Covenant
The Bond Ordinance provides that the District shall continuously own, control, operate, and
maintain the System in an efficient and economical manner and on a revenue producing basis and shall at
all times prescribe, fix, maintain, and collect rates, fees, and other charges for the services, facilities, and
commodities furnished by the System fully sufficient at all times to:
(1) provide for 100% of the Expenses of Operation and Maintenance and for the
accumulation in the Revenue Fund of a reasonable reserve therefor; and
(2) produce Net Operating Revenues in each Fiscal Year which, together with
Investment Earnings:
(a) will equal at least 125% of the Debt Service Requirement on all
Senior Bonds then Outstanding for the year of computation and 115% of
the Debt Service Requirement on all Bonds then Outstanding for the year
of computation;
(b) will enable the District to make all required payments, if any, into
the Debt Service Reserve Account and the Rebate Fund and to any Credit
Facility Provider, any Reserve Account Credit Facility Provider, and any
Qualified Hedge Provider;
(c) will enable the District to accumulate an amount to be held in the
Renewal and Extension Fund which, in the judgment of the District, is
adequate to meet the costs of major renewals, replacements, repairs,
additions, betterments, and improvements to the System, necessary to
keep the same in good operating condition or as is required by any
governmental agency having jurisdiction over the System; and
(d) will remedy all deficiencies in requ ired payments into any of the
funds and accounts established under the Bond Ordinance from prior
Fiscal Years.
If the District fails to prescribe, fix, maintain, and collect rates, fees, and other charges, or to
revise such rates, fees, and other charges, in accordance with these provisions of the Bond Ordinance, the
owners of not less than 25% in aggregate Principal amount of the Bonds then Outstanding, without regard
to whether any Event of Default shall have occurred, may institute and prosecute in any court of
competent jurisdiction an appropriate action to compel the District to prescribe, fix, maintain, or collect
such rates, fees, and other charges, or to revise such rates, fees, and other charges, in accordance with the
requirements of the Bond Ordinance.
Senior and Subordinate Bonds
Upon satisfaction of certain conditions, the Bond Ordinance permits the District, for specified
purposes, to issue additional Senior Bonds without express limit as to principal amount, which will be
equally and ratably secured on a parity basis with the Series 2004A Bonds and the Series 2006C Bonds under the Bond Ordinance. The District may issue additional Senior Bonds in the future to finance part of
the cost of capital improvements identified in the CIRP. See the section herein captioned “PLAN OF
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FINANCE – Capital Finance Plans of the District.” The issuance of additional Senior Bonds may, for
a period of time, dilute the security for the Series 2006C Bonds. The Bond Ordinance also permits the
District to issue Subordinate Bonds which would be secured by a lien on the Pledged Revenues that
would be junior and subordinate to the Series 2006C Bonds and any other Senior Bonds. See
“DEFINITIONS AND SUMMARIES OF CERTAIN PROVISIONS OF THE BOND ORDINANCE
AND THE CONTINUING DISCLOSURE AGREEMENT” in Appendix C hereto.
Possible Series 2006C Credit Facility
The District is considering having all or a portion of the Series 2006C Bonds insured by a
municipal bond insurer. There is no assurance that the District can or will obtain bond insurance on all or
any portion of the Series 2006C Bonds. If the District does obtain bond insurance on any portion of the
Series 2006C Bonds, information with respect to the bond insurer will be provided in the final Official
Statement.
PLAN OF FI NANCE
Purpose of and Authority for the Series 2006C Bonds
At a special election held on February 3, 2004, voters within the District approved the issuance by
the District of $500,000,000 in sewer system revenue bonds to enable the District to comply with f ederal
and state clean water requirements. The District may use the proceeds of such revenue bonds for the
purpose of constructing, repairing, replacing and equipping new and existing District wastewater
facilities. The District plans to use the proceeds of the Series 2006C Bonds to finance a portion of the
cost of “Phase I” of the District’s capital improvement and replacement program (the “CIRP”) as
discussed below.
The District will issue the Series 2006C Bonds pursuant to such voter authorization and the Bond
Ordinance to provide funds to (i) finance a portion of the costs of Phase I of its CIRP (collectively, the
“Projects”), (ii) provide additional funds for the Debt Service Reserve Account, and (iii) pay the costs of
issuance of the Series 2006C Bonds. See the section herein captioned “THE CIRP AND THE PHASE
I PROJECTS.”
Capital Finance Plans of the District
The District’s CIRP identifies an estimated $3.7 billion in capital improvement needs for
wastewater system improvements which are to be financed over the next 16 years. In May 2003, the
Board approved a resolution that identified proposed expenditures by the District for capital
improvements through the District’s fiscal year ending June 30, 2006 on a portion of the projects that are
included in the CIRP (referred to herein as “Phase I” of the CIRP). The District estimates that the cost of
the projects identified in Phase I of the CIRP will be approximately $647 million. For a detailed
discussion of Phase I of the CIRP, including those Projects to be financed with the proceeds of the Series
2006C Bonds, the other projects that the District anticipates will be financed with proceeds of future financings under the Bond Ordinance, and projects to be financed in Phase I by the District with current
revenues on a “pay-as-you-go” basis, see the section herein captioned “THE CIRP AND THE PHASE I
PROJECTS.”
The Series 2006C Bonds constitute a portion of the $500,000,000 principal amount of sewer
system revenue bonds approved by the voters of the District at the February 3, 2004 special election. The
District has previously issued four series of bonds from this authorization which are payable from the
revenues of its wastewater system: (1) its Wastewater System Revenue Bonds, Series 2004A (the “Series
2004A Bonds”) currently outstanding in the aggregate principal amount of $173,500,000; (2) its
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Subordinate Wastewater System Revenue Bonds (State Revolving Fund Program), Series 2004B (the
“Series 2004B SRF Bonds”) currently outstanding in the aggregate principal amount of $159,025,000;
(3) its Subordinate Wastewater System Revenue Bonds (State Revolving Fund Program), Series 2005A
(the “Series 2005A SRF Bonds”) currently outstanding in the aggregate principal amount of $6,800,000;
and (4) its Subordinate Wastewater System Revenue Bonds (State Revolving Fund Program), Series
2006A (the “Series 2006A SRF Bonds”) currently outstanding in the aggregate principal amount of
$42,715,000. The District plans to issue $14,205,000 in bonds (the “Series 2006B SRF Bonds”) payable from wastewater system revenues to be purchased by the State Environmental Improvement and Energy
Resources Authority of the State of Missouri through the Missouri State Revolving Fund Program (the
“SRF Program”) in November 2006. The District also anticipates issuing the balance of its voter
authorization, $40,000,000, in one or more future financings.
During fiscal year 2005, the Missouri Department of Natural Resources (“DNR”) made a direct
loan to the District in the amount of $535,600 (the “West Watson and Nanell Loan”) for the purpose of
paying a portion of the cost of construction and extension of the existing West Watson and Nanell
regional subdistrict, discussed below under the section captioned “THE DISTRICT – The System.”
The West Watson and Nanell Loan is payable through November 1, 2014; however, because the District
has classified the loan as special assessment debt, principal and interest thereon will be repaid from
additional tax assessments on property within the subdistrict, not from System revenues. During fiscal year 2004, the District closed on a direct loan to the District in the amount of $374,680 (the “Ozark and
Table Rock Loan”) to finance a portion of the cost of constructing and expanding the sewer system
within Ozark and Table Rock subdistrict, as discussed further in the section captioned “THE DISTRICT
– The System.” The Ozark and Table Rock Loan is payable through November 1, 2013; however,
because the District has classified the loan as special assessment debt, principal and interest thereon will
be repaid from additional tax assessments on property within the subdistrict, not from System revenues.
Estimated Sources and Uses of Funds
The following table summarizes the anticipated sources and uses of funds in connection with the
issuance of the Series 2006C Bonds:
Sources of Funds
Par amount of Series 2006C Bonds $
Plus original issue premium
Less original issue discount ( )
Total $
Uses of Funds
Deposit to Series 2006C Project Account $
Deposit to Debt Service Reserve Account
Deposit to the Series 2006C Costs of Issuance Account
(to pay costs of issuance of the Series 2006C Bonds,
including Underwriters’ fee and premium for
Series 2006C Credit Facility, if any)
Total $
THE DISTRICT
General
The District is organized pursuant to Article VI, Section 30 of the Missouri Constitution which
empowers the people of St. Louis County, Missouri (the “County”) and the City of St. Louis, Missouri
(the “City”) “to establish a metropolitan district for functional administration of services common to the
area included therein.” The District is the only special district in the State established pursuant to that
section of the Missouri Constitution. The Charter (Plan) of The Metropolitan St. Louis District, approved
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in 1954 by voters in the City and that portion of the County included in the District at that time (as
subsequently amended by the voters of the City and County at a special election on November 7, 2000,
the “Charter”), established the District. The District was created to provide a metropolitan-wide system
of wastewater treatment and sanitary sewerage facilities for the collection, treatment and disposal of
sewage to serve the City and most of the more heavily populated areas of the County. Before the
District’s creation, the City, various municipalities in the County and private sewer companies provided
sewer service that primarily included only collecting and transporting sewage from small geographic areas to nearby rivers and streams with little or no treatment. Most of the municipalities or private sewer
companies serving the area did not have the jurisdictional authority or financial resources needed to
eliminate health hazards from untreated sewage.
When the District began operations in 1956 it took over the publicly owned wastewater and
stormwater drainage facilities within its jurisdiction and began the construction of an extensive system of
collector and interceptor sewers and treatment facilities. In 1977, voters approved the District’s
annexation of a 270 square mile area of the lower Missouri River and lower Meramec River watersheds in
the County. The District purchased the Fee Fee Trunk Sewer Company and the Missouri Bottoms Sewer
Company in 1978. The District has since acquired other investor -owned or municipally operated systems.
The District’s service area now encompasses 524 square miles including all 62 square miles of
the City of St. Louis and 462 square miles (approximately 90%) of St. Louis County, including 92
municipalities. Only the extreme western parts of the County are not served by the District. The District
provides sanitary sewer collection and treatment and stormwater management to a population of
approximately 1.4 million. As of July 1, 2006, the District served approximately 433,000 accounts,
including approximately 362,000 single-family residencies, approximately 45,000 multi-family
apartments and condos and approximately 26,000 commercial/industrial businesses. For further description of the District’s service area, see the service area map located on the back cover of this
Official Statement. For certain economic and demographic information regarding the City and the
County, see Appendix B to this Official Statement.
The Charter describes the District as “a body corporate, a municipal corporation and a political
subdivision of the state.” Following a detailed planning process, in November 2000 a number of
proposed amendments to the Charter encompassing a variety of subjects were placed on the ballot by the
District’s Board. The amendments were proposed by a number of groups in order to update the District’s
procedures and improve its operations. Voters approved all four amendments by wide margins. The
amendments provided additional flexibility and structure to several aspects of District operations,
including (1) establishment of an independent 15-member Rate Commission to review adjustments to the
District’s wastewater and stormwater charges before the Board acts on them; (2) authorization for the District to issue revenue bonds on a District-wide basis and lowering the margin required for passage of
both revenue and general obligation bonds to be consistent with the Missouri Constitution; (3) requiring a
mandatory rotation of outside auditors every five years and the appointment of an internal auditor;
(4) requiring a periodic independent management audit; and (5) permitting the investment of District
funds in the same manner as authorized by the Missouri Constitution for the investment of State funds.
Other amendments to the Charter include (1) limiting the term on Trustee and a three-member civil
service commission (the “Civil Service Commission”) appointments to two terms (eight years), (2)
requiring the publication of Board vacancies, and (3) requiring the Board to make a written report to the
Mayor and Board of Alderman of the City and to the County Executive and County Council on an annual
basis.
The District’s Charter requires it to adopt a continuing five-year strategic and operating plan on an annual basis. The strategic and operating plan states the District’s objectives for the succeeding five
years and includes objective targets by which to measure the District’s performance in meeting these
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objectives. See Appendix D – “Engineering and Financial Feasibility Report” for further discussion
of the history and process by which the District develops its strategic and operating plan.
The District is subject to the provisions of the Federal Water Pollution Control Act, as amended,
33 U.S.C. 1251 et seq ., commonly referred to as the Clean Water Act, the stated objective of which is to
restore and maintain the chemical, physical, and biological integrity of the nation’s waters. The District is
also subject to the Missouri Clean Water Law, Sections 644.006 through 644.141, Revised Statutes of
Missouri, as amended, among other laws and regulations. The regulatory requirements are administered by the United States Environmental Protection Agency through the Missouri Department of Natural
Resources. See the section herein captioned “REGULATORY REQUIREMENTS.”
Organization and Management
General. The Charter established the Board as the governing body of the District. The Board is
composed of six-members, with three members appointed by the Mayor of St. Louis and three members appointed by the St. Louis County Executive. No more than two trustees from each area can be of the
same political affiliation. According to the Charter, the Board enacts District ordinances, determines
policies, and appoints the Executive Director, the Secretary-Treasurer and the Internal Auditor. See
Appendix D – “Engineering and Financial Feasibility Report” for a discussion of the roles and
responsibilities of these administrative personnel. The Executive Director appoints all other District
officials. Among its duties, the Board makes all appropriations, approves contracts for improvements,
and engages an accounting firm to perform the annual independent audit of the District. Each member of
the Board chairs one of the Board’s standing committees: Audit, Customer Relations, Finance,
Intergovernmental Relations, Personnel and MBE/WBE and Program Management.
Administration of district-wide operations is by the executive staff under the direct supervision of the Executive Director. The Civil Service Commission serves in an advisory position regarding personnel
administration and civil service matters, and hears appeals of disciplinary actions. The 15-member Rate
Commission (defined herein), an advisory body established pursuant to the amendments to the District’s
Charter adopted on November 7, 2000, makes recommendations to the Board regarding all proposed
changes in wastewater rates, stormwater rates and tax rates or regarding changes in structure to the
foregoing. See the section herein captioned “FINANCIAL OPERATIONS OF THE DISTRICT –
Rate Commission and Rate Setting Process.”
Recent Board Initiatives. In response to certain events that were perceived to have resulted in a
loss of public confidence in the District’s management and governance, in March 2003 the Mayor and the
County Executive appointed five new trustees in an effort to regain public confidence and trust. The new
trustees’ mandate was to restore ratepayer confidence in the District’s leadership and fiscal accountability. In pursuit of that objective, the Board instigated an in-depth review of the District’s policies and practices.
The Board made a number of policy decisions based on that review and implemented a process of
measuring the District’s effectiveness in several key areas. Expert consultants have, and are currently
conducting, procedural reviews in areas such as finance, information technology, engineering,
organizational structure and strategic planning. As a result of these Board initiatives, the District has implemented enhancements to strategic planning, budgetary review and financial reporting processes.
See the section herein captioned “FINANCIAL OPERATIONS OF THE DISTRICT – The Finance
Department” for a discussion of certain of the practices being implemented in the Finance Department as
a result of one of these procedural reviews. [UPDATE FROM DISTRICT TO COME]
Among the initiatives implemented by the Board is a revised code of ethics for Board members
and District employees concerning conflicts of interest. The new policy strictly prohibits any activities that could be construed as a conflict between personnel and District needs, and makes individuals
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responsible for reporting any potential conflicts. The Board also examined the initial 2004 operating
budget and challenged management to review every expense item, which resulted in a revised 2004
operating budget with expenses of $8.3 million less than the original proposed budget and expenses $2.2
million below the 2003 budget. See the section herein captioned “FINANCIAL OPERATIONS OF
THE DISTRICT – Management’s Discussion and Analysis.”
The Board also implemented a series of organizational changes to the District’s management at
the end of fiscal year 2003 designed to reduce costs, streamline operations and eliminate dual reporting
relationships. The District flattened its management structure by reducing the number of departments
from 12 to 7 and the number of director-level positions from 14 to 9. These actions are consistent with
the Boar d’s effort to streamline the District and provide for a more efficient span of control. [UPDATE
FROM DISTRICT TO COME]
Board of Trustees
The current members of the Board are the following:
Current
Name Principal Occupation Term Expires
Dee Joyce-Hayes – Chair March 15, 2008
Charles Karam - Vice Chair March 14, 2008
James H. Buford March 15, 2010
John Goffstein March 15, 2009
Ellen Harshman March 14, 2009
David B. Rosenberg March 14, 2010 _______________
Set forth below is certain biographical information on the members of the Board. [MSD TO PROVIDE]
Dee Joyce-Hayes, Chair (St. Louis City).
Charles Karam, Vice Chair (St. Louis County).
James H. Buford (St. Louis City).
John Goffstein (St. Louis City).
Ellen Harshman (St. Louis County).
David B. Rosenberg (St. Louis County).
Administration
Management of the District is provided by a management team that reports to the Board,
including an Executive Director, Assistant Executive Director, Secretary-Treasurer, Internal Auditor, General Counsel, and Directors of Finance, Engineering, Human Relations, Operations and Information
Systems. Set forth below is certain biographical information regarding selected members of the executive
management staff of the District:
Jeffrey L. Theerman, P .E., Executive Director. Mr. Theerman has been employed by the District
for over 19 years, and has served as Executive Director since ____________. Mr. Theerman previously served as Acting Executive Director beginning in October 2003. During his tenure with the District, he
has also served in various senior level management capacities within wastewater operations. Prior to
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joining the District, Mr. Theerman served for four years as an environmental protection engineer with the
Illinois Environmental Protection Agency. Mr. Theerman earned a B.S. in Civil Engineering from the
University of Missouri-Rolla and a M.S. in Civil Engineering from Southern Illinois University-
Edwardsville.
Karl J. Tyminski, CPA, Secretary-Treasurer. Mr. Tyminski serves as the S ecretary-Treasurer of
the District, and has served in such position for over 17 years. Prior to becoming Secretary-Treasurer, he
served as the Director of Internal Audit of the District. Prior to joining the District, Mr. Tyminski held
various financial and accounting related positions with Anheuser-Busch Companies, Chase-Lincoln Bank
and Deloitte & Touche. Mr. Tyminski earned a B.S. in Accounting from the State University of New
York at Albany and an M.S. in Management Science from the Stevens Institute of Technology.
Randy E. Hayman, Esq., General Counsel. Mr. Hayman has served as General Counsel to the
District for over five years. Prior to joining the District, Mr. Hayman was in private practice with various
law firms and also served as an Assistant Attorney General with the Missouri Attorney General’s office.
Mr. Hayman earned a Bachelor of Arts degree from the University of Michigan and a Juris Doctorate
from the Georgetown University Law Center.
Janice M. Zimmerman, Director of Finance. Ms. Zimm erman has served as the Director of
Finance of the District for over five years. Prior to joining the District, Ms. Zimmerman spent 12 years in
the banking and savings and loan industries and nine years in public education finance. Ms. Zimmerman
has a B.S . in Business from Eastern Illinois University and a Masters of Finance degree from St. Louis
University.
Brian Hoelscher, P.E., Director of Engineering. [INFORMATION TO COME].
Dave St. Pierre, P.E., Director of Operations. [INFORMATION TO COME].
The System
The District owns and operates a system of sanitary, stormwater and combined collection sewers,
pumping stations, and wastewater treatment facilities in its service area. The District provides sewer
collection, pumping and treatment services within three watersheds located within the District’s service
area – the Mississippi River watershed, the Missouri River watershed and the Meramec River watershed.
In addition, the District provides a variety of other services, including sanitary sewer maintenance,
stormwater sewer maintenance, floodwater control, monitoring of industrial waste, issuance of
pretreatment discharge permits, engineering design and specification, construction of sewer lines, plan
review and approvals, issuance of connection permits, public education and customer service.
Collection and Trunk Sewers. The District owns and maintains approximately 9,630 miles of
collection and trunk sewers, ranging in size from six inches to 29 feet in diameter. They are classified as one of three types: sanitary, storm or combined. Sanitary sewers accommodate household and industrial
waste. Storm sewers carry rainwater and surface water runoff. Combined sewers carry both types of
waste. The District’s system currently includes approximately 4,731 miles of sanitary sewers,
approximately 2,961 miles of stormwater sewers and approximately 1,428 miles of combined sewers that
handle both wastewater and stormwater flows. Maintenance of the system is controlled and conducted
out of three regional facilities.
Pumping Stations. The District owns and maintains 267 sanitary and stormwater pumping
stations which move the flow of wastewater through the System. In addition, the District is responsible
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for the operation and maintenance of __ large flood wall pump stations built by the U.S. Corps of
Engineers as well as __ other stormwater pumping stations that it owns.
Wastewater Treatment Facilities. The District currently owns and operates eight wastewater
treatment facilities. These facilities treated an average flow of 291 million gallons of wastewater per day
(“MGD”) in fiscal year 2006. The Bissell Point and Lemay wastewater treatment plants are the District’s
two largest plants. Both of these plants serve the Mississippi River watershed. The two plants have a
combined average design capacity of 317 MGD with average daily flow in fiscal year 2005 of 218.49
MGD. This represents about 75.0% of the total design capacity of all of the District’s treatment plants.
The Coldwater Creek and Missouri River wastewater treatment plants serve the Missouri River
watershed. These two plants have a combined average design capacity of 68 MGD with average daily
flow for fiscal year 2005 of 46.90 MGD.
The remaining wastewater treatment plants serve the Meramec River Basin. These facilities have
a combined average design capacity of 128 MGD with average daily flow of 25.95 MGD in fiscal year
2005.
[UPDATE]As part of Phase I of the CIRP, the District is currently constructing a new wastewater
treatment plant, a collection system to support the new treatment plant, including a tunnel system and
pump stations, and an educational visitors center, referred to herein as the “Lower Meramec Project,” to
serve the wastewater treatment requirements of portions of its service area. The Lower Meramec Project, estimated to cost more than $231 million, is the largest project currently under construction by the
District. The Lower Meramec Project will replace the District’s existing Meramec and Baumgartner
Lagoon treatment plants. With an ultimate maximum capacity of 56 MGD, the plant initially will be
capable of receiving and treating an average daily wastewater flow rate of 15 MGD. The new facility will
convey treated water into the Mississippi River instead of the more environmentally sensitive Meramec River. Construction of the treatment plant portion of the Lower Meramec Project is anticipated to be
complete in late 2006. See the sections herein captioned “THE CIRP AND THE PHASE I
PROJECTS – The Phase I Projects” and “ – Financing Plans for Phase I of the CIRP.”
[UPDATE]Pre-construction work on the treatment plant portion of the Lower Meramec Project
began in early 2001, construction of the new treatment plant began in late 2003, and final completion of
the treatment plant is projected for late 2006. The treatment plant portion of the Lower Meramec Project is the largest element of an estimated $231 million program in and around the new plant. Future
components of the program include a four-mile-long tunnel and major pump station to carry wastewater
to the new facility and a wetlands educational and recreational facility at the plant site. Eventually, this
new facility will enable the District to eliminate a total of four wastewater treatment facilities over the
next 13 years. For more information regarding the regulatory requirements that necessitated the construction of the Lower Meramec Project, see the section herein captioned “REGULATORY
REQUIREMENTS.”
Employees and Employee Relations
The District currently employees approximately 763 employees, 546 of which are represented by one of six unions: American Federation of State, County and Municipal Employees; the Bricklayers; the
International Association of Machinists; International Brotherhood of Electrical Workers; the Ope rating
Engineers; and the Service Employees International Union. The District had one labor dispute in 1977.
For the past 25 years, the District has had no record of any labor dispute or work stoppage and considers
its employee relations to be excellent. The District also retains private companies and consultants, from
time to time, to supplement and expand its existing staffing resources.
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Economic Conditions in the District
Generally, the District’s major revenue sources do not fluctuate with the local and national
economy as much as local governments that depend on sales or income taxes for their major sources of
revenue. The District has its own internal barometers for measuring economic development within the
District. Such factors are listed below for fiscal years 2006 and 2005:
2006 2005
Sewer Plan Reviews:
Number of Plans Approved 865 875
Number of Miles of Sewers 60 65
Sewer Construction Permits: Number of Permits Issued 2,146 1,494
Number of Miles of Sewers 61 71
Customer Connections:
Number of Connection Permits Issued 1,086 1,594
Connection Fee Revenue $2,100,000 $3,700,000
Value of Sewers Dedicated to
the District by Developers
$51,500,000
$14,800,000
Over the years, the St. Louis economy has undergone a transformation from reliance on
traditional manufacturing industries to those industries based on advanced technology and service. The St. Louis area is a center for health care, banking, finance, transportation, tourism, and education and has
a strong and diverse manufacturing economy. For more information on economic and demographic
trends in the City and the County, see Appendix B hereto.
Security
The System is subject to safety and security inspections on a continuing basis by the District. All
treatment plants are maintained as secure facilities with fences, locked gates and electronic surveillance
equipment. The District does not represent that any existing or additional safety or security measures will
be adequate in the event that terrorist activities are directed at the System. Further, damage to
components to the System could have a material adverse impact on the District’s expenditures for repairs
to the System.
Insurance
The District maintains third-party commercial insurance coverage for various risks while self -
insuring for other risks and liabilities. Present commercial insurance coverage is maintained for property,
boiler and machinery, excess flood, combined liability, excess liability, excess workers’ compensation, public official performance bond, public entity fiduciary liability, crime, major facility pollution liability
and sewer backup (main truck line and overcharged line). Such policies contain liability limits,
deductions and retentions that management of the District believes to be customary for similar
enterprises. Total premiums for third-party insurance cover for fiscal year 2006 equaled $_________, an
approximately __% increase over fiscal year 2005.
In addition, the District has established a risk management program and self-insures a portion of
the risk related to officers’, directors’, and general liability; its obligation to provide workers’
compensation and medical and hospitalization benefits to its employees; and water backup claims to its
customers. The District purchases re-insu rance to cover the remaining risk on such items. The estimated
liabilities for payment of incurred (both reported and unreported) but unpaid claims relating to these
matters are included in the District’s financial statements as a component of current deposits and accrued
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expenses. At June 30, 2006 and 2005, these liabilities amounted to $2,733,584 and $3,050,225,
respectively. The District obtains periodic funding valuations from the third-party administrators
managing the self-insurance programs and adjusts the charges as required to maintain the appropriate
level of estimated claims liability. For more information regarding the District’s self-insurance program,
see Note 10 to the audited financial statements of the District contained in Appendix A to this Official
Statement.
THE CIRP AND THE PHASE I PROJECTS
General
The District developed the CIRP which identifies proposed expenditures by the District for
capital improvements to the District’s sewer facilities through 2018, with an estimated cost of $3.7
billion. The general objectives of the CIRP are to meet federal and state requirements and District policy
regarding water pollution control, to provide a satisfactory level of service to users of the District’s sewer
and stormwater system, including alleviation of basement back-up, and to rebuild part of the District’s
decaying infrastructure system. The CIRP addresses the District’s infrastructure capital improvement
projects involving the repair, replacement and upgrade of sanitary and combined (sanitary and stormwater) sewers. The following table summarizes the projects identified in the CIRP between 2007
and 2012:
Fiscal Year Ending June 30,
Description 2007 2008 2009 2010 2011 2012 Total
($000) ($000) ($000) ($000) ($000) ($000) ($000)
Sewer System Overflow
SSO Control Plan and Planning 12,325 16,600 16,200 15,700 15,300 14,800 90,925
Early Action Plan 98,095 148,000 43,000 57,000 85,000 33,000 464,095
Combined System Overflow
LTCP & Planning 12,325 12,700 12,410 12,200 12,300 12,300 74,235
Early Action Project 8,828 14,886 13,438 5,705 3,000 0 46,857
Capital Projects 25,432 0 10,000 20,000 40,000 5,000 100,432
Other
Wastewater Treatment Projects 130,230 16,000 83,000 30,000 50,000 160,000 469,230
City Shed -- Condition 0 5,000 5,000 5,000 5,000 5,000 25,000
City Shed -- Capacity 4,000 0 0 0 0 0 4,000
CMOM 7,500 10,000 11,000 11,000 11,000 12,000 62,500
Total
298,735 224,186 194,048 156,605 221,600 242,100 1,337,274
The Projects to be financed with the proceeds of the Series 2006C Bonds constitute a portion of
the infrastructure projects identified in the CIRP and generally consist of constructing, improving,
renovating, repairing, replacing and equipping new and existing wastewater facilities and systems, including construction of one new wastewater treatment plant and improvements to five of the District’s
existing eight sewer disposal and treatment plants, sanitary interceptor sewers and acquisition of
easements and real property related thereto. For further discussion of the Projects to be financed with the
proceeds of bonds issued pursuant to the $500 million of bonds authorized by the February 2004 election
and on a “pay-as-you-go” basis for the Phase I of the CIRP, see the subsection below captioned “The Phase I Projects” and Appendix D – “Engineering and Feasibility Report.” The District will use the
proceeds of previously issued Bonds, the Series 2006C Bonds, and any Bonds issued by the District in the
future under the Bond Ordinance to finance the majority of the infrastructure projects identified in Phase I
of the CIRP. The District will also finance a portion of the capital improvement projects identified in
Phase I of the CIRP with available revenues on a “pay-as-you-go” basis.
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The Phase I Projects [UPDATE FROM DISTRICT TO COME]
A summary of the actual and proposed expenditures for Phase I of the CIRP, including the Phase
I Projects to be financed with the proceeds of the Series 2006C Bonds and the capital improvement
projects anticipated to be financed with Bonds issued and to be issued by the District under the Bond
Ordinance, is set forth in the table below.
SUMMARY OF ACTUAL AND ANTICIPATED PHASE I CIRP EXPENDITURES (1)
Fiscal Years 2004 through 2007
Fiscal Year
Ending June 3 0
Sanitary
Replacement
Lower
Meramec Project Total
2004 Actual
2005 Actual
2006 Actual
2007 Anticipated
Total
_______________________
Source: The District.
(1) Estimated.
The District anticipates that it will finance the wastewater improvement capital projects that will
not be funded with the proceeds of bonds issued pursuant to the February 2004 election on a “pay-as-you-
go” basis using available revenues. In addition, the District has identified $___________ in additional
wastewater system improvements through the District’s fiscal year ending June 30, 20[__]. See
Appendix D – “Engineering and Feasibility Report.”
[DISCUSSION OF PHASE I PROJECTS COMPLETED AND REMAINING; UPDATE
TABLES]
The District has completed the following Projects of the Phase I portion of the CIRP:
Project Cost
Coldwater Treatment Plant upgrade
Missouri River Treatment Plant upgrade
Grand Glaize Treatment Plant upgrade
Lower Meramec Project – visitor’s center and
and electrical supply and Baumgartner
Treatment Plant Lagoon closing
Design work for infrastructure collection
and improvements
Lemay Overflow Regulation System
Total:
The District has completed the following capital improvement projects identified in Phase I of the
CIRP:
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Project Estimated Cost
Lower Meramec Project – new treatment plant
Baumgartner Tunnel construction
Baumgartner Pump Station construction
Total:
The District anticipates that the following Projects of the Phase I portion of the CIRP will be
financed with the proceeds of the Series 2006C Bonds and future financings under the Bond Ordinance:
Project Estimated Cost
Coldwater Treatment Plant upgrade
Missouri River Treatment Plant upgrade
Grand Glaize Treatment Plant upgrade
Lower Meramec Project – visitor’s center and
and electrical supply and Baumgartner
Treatment Plant Lagoon closing
Design work for infrastructure collection
and improvements
Lemay Overflow Regulation System
Total:
The District anticipates that the following capital improvement projects identified in Phase I of
the CIRP will be financed with the proceeds of the Series 2006C Bonds and future financings under the
Bond Ordinance:
Project Estimated Cost
Lower Meramec Project – new treatment plant
Baumgartner Tunnel construction
Baumgartner Pump Station construction
Total:
Historic Capital Improvement Expenditures
Prior to issuance of the Series 2004A Bonds, the District financed substantially all of the capital improvements to its facilities from available revenues on a “pay-as-you-go” basis. Since 1993, the
District has financed in excess of $800 million in capital improvements in this manner. Some of the more
significant capital improvements financed in this manner include:
• Construction of a new secondary treatment operation at the Bissell Point Treatment Plant
at a cost of approximately $150 million
• Rehabilitation of sewers adjacent to the Mississippi River at a cost of approximately $153
million
• Rehabilitation of sewers along the River Des Peres at a cost of approximately $175
million
• Construction of deep tunnels in various sections of the St. Louis area at a cost of
approximately $70 million
• [UPDATE FROM DISTRICT TO COME]
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The following sets forth the District’s historic capital improvement expenditures for
improvements to its wastewater system facilities for fiscal years 1997 through 2006.
Fiscal Year Ending June 30 Capital Improvement Expenditures
1997 $85,308,899
1998 80,204,292
1999 72,882,901
2000 67,024,301
2001 50,653,501
2002 70,687,845
2003 91,124,792
2004 88,923,498*
2005 140,402,733*
2006 133,592,404*
Total $961,009,457 ___________________
Source: The District.
* Includes expenditures funded both by Bond proceeds and on a “pay-as-you-go” basis from available
revenues.
Financing Plans for Phase I of the CIRP
There are two primary funding sources for financing the capital improvements identified in Phase
I of the CIRP: (1) debt, including Bonds issued under the Bond Ordinance, and (2) available Operating
Revenues. The following table sets forth the existing and anticipated major funding sources for Phase I of the CIRP for fiscal years 2004 through 2007. In addition, the District has had and anticipates that it will
have certain grant proceeds and interest earnings available to finance the costs of Phase I of the CIRP.
See “Appendix D – Engineering and Feasibility Report” for additional discussion of the District’s
anticipated sources and uses of funds for financing Phase I projects and additional capital improvements
to its wastewater system through its fiscal year ending June 30, 2006.
PROJECTED MAJOR FUNDING SOURCES FOR PHASE I OF THE CIRP
Fiscal Year Ending June 30
Description 2004 2005 2006 2007
Debt Financing(1)
Series 2004A Bonds 175,000,000 Series 2004B Bonds 161,281,000
Series 2005A Bonds 6,800,000
Series 2006A Bonds 42,715,000
Series 2006B Bonds(2) 14,205,000
Series 2006C Bonds 60,000,000
Future Bonds 40,000,000
System Revenues (3) 2,398,227 5,370,512 13,937,211 125,394,050
Total 338,678,227 12,170,512 56,652,211 239,599,050 _____________________
Source: The District.
(1) This category includes proceeds the District expects to receive in connection with issuance of the Bonds and future
additional Bonds under the Bond Ordinance.
(2) Expected to be issued in November 2006.
(3) Does not include revenues from the District’s Stormwater Service Charge.
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FINANCIAL OPERATIONS OF THE DISTRICT
General
The District is supported by various taxes and user charges imposed on taxpayers and users of its
facilities within its boundaries. The District has the power, subject to voter approval, to issue general
obligation bonds, District-wide revenue bonds, sub-district revenue bonds, or special assessment bonds.
The Executive Director is responsible for preparing the annual budget of the District and is
responsible for drawing warrants to meet the financial obligations of the District. The Executive Director
appoints the Director of Finance, who is responsible for assisting the Executive Director in preparing the
annual budget, maintaining the accounting records of the District, and certifying that all warrants are
proper and valid under the District’s Charter. The Secretary-Treasurer is appointed by the Board and is
responsible for custody of the funds of the District and investing the funds of the District pursuant to the
Charter of the District and State law.
Budget and Appropriation Process
The Executive Director of the District is responsible for preparing the District’s annual budget.
Not later than the fifteenth day of March in each year, the Executive Director must submit to the Board a
budget for the ensuing year. The Charter requires that the Board adopt the budget no later than June 30.
In the event that the Board does not pass a new budget by June 30, the prior year’s budget continues in
force until the Board adopts a new budget. The proposed budget is available for public inspection and the
District conducts public hearings on the proposed budget prior to its adoption. On or before the thirtieth
day of June in each fiscal year the Board shall determine the amount of taxes that will be required during the next succeeding fiscal year to pay the principal of and interest on general obligation bonds issued and
certain costs of operations, maintenance, construction and improvements. The budget provides a
complete financial plan for the budget year for all District funds. In no event can the total amount of
expenditures for the budget year from any fund exceed the estimated revenues to be actually received plus
any unencumbered balance or less any deficit estimated for the beginning of the budget year.
Finance Department
As a result of initiatives implemented by the Board in 2003, a procedural review by retired
executives serving as independent management consultants of the District’s financial processes and
information technology operations was completed in __________ 2004. The Finance Department is
enhancing its efforts to substantially reduce its portfolio of accounts receivable, using a combination of
internal collection efforts, liens and service shut-off. In addition, a portion of the District’s billing and
past -due collections has been outsourced to several outside vendors. These agencies will focus on
collecting overdue sewer bills from ratepayers. This outsourcing initiative will also bring new
information systems technology to the District. The 2003 follow-up audit by the Missouri State Auditor
praised the significant steps taken to rectify weaknesses in billing and collection policies, procedures and
record keeping. [UPDATE FROM DISTRICT TO COME]
In 2005, the Government Finance Officers Association of the United States and Canada honored
the District for excellence in budgeting, financial accounting and full disclosure. For the 18th consecutive
year, the District earned the Distinguished Budget Presentation Award, the highest form of recognition in
government budgeting. For the 17th consecutive year, the District also received the Certificate of
Achievement for Excellence in Financial Reporting, the highest recognition in governmental accounting
and financial reporting.
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Fund Structure
General Fund. The General Fund was established to provide for the ordinary operations of the
District. Since 1978, all operation and maintenance has been funded out of the General Fund. The
General Fund receives revenues from ad valorem property taxes levied on all property, real and personal,
within the District’s boundaries based on assessed valuations established by the City and County
assessors. Tax rates vary by subdistrict and purpose, and are levied in accordance with the Charter of the
District. Currently, a main source of income for the General Fund is a wastewater user charge. The
General Fund also receives miscellaneous income from a number of sources, and reimbursement of
engineering services provides other non-operating funds. Revenues from the operation of the City of
Arnold wastewater treatment plant and other contract wastewater treatment plants are also deposited in
the General Fund.
The District’s Operating Funds consist of the Wastewater Revenue Fund and the Stormwater Revenue Fund. Wastewater user charge revenues are deposited into the Wastewater Revenue Fund and
revenues from the District’s Stormwater Service Charge are deposited into the Stormwater Revenue Fund.
The District also maintains an Emergency Fund. This fund is intended to be used for emergency repairs
and replacements in the event that no other funds are readily available. District policy requires that a
minimum balance of $4 million be maintained in the Emergency Fund. As of June 30, 2006, the
Emergency Fund had a balance of $4,527,488.
Basis of Accounting
The accounts of the District are maintained on the full accrual basis and are reported as a single
enterprise. Separate accounting records are maintained for certain subdistricts and to account for
restricted resources; however, interorganizational transactions and balances are eliminated for reporting
purposes.
Financial Statements
The accounts of the District are audited annually by an independent firm of certified public
accountants. The accounting firm of Rubin, Brown, Gornstein & Co. LLP has served as auditor for the District continuously since 2001. The District’s audited financial statements for the fiscal years ended
June 30, 2006 and 2005 are attached hereto as Appendix A.
Selected Financial Data of the District
The District follows Governmental Accounting Standards Board Statement No. 33, “Accounting Reporting for Non-Exchange Transactions,” which establishes accounting and financial standards for
non-exchange transactions involving financial or capital resources. On July 1, 2001, the District adopted
the provisions of the Governmental Accounting Standards Board Statement No. 34, “Basic Financial
Statements – and Management’s Discussion and Analysis – for State and Local Governments,” Statement
No. 37, “Basic Financial Statements – and Management’s Discussion and Analysis – for State and Local Governments: “Omnibus,” and Statement No. 38, “Certain Financial Statement Note Disclosures” as of
and for the year ended June 30, 2002. This resulted in a change in the format and content of the basic
financial statements and accompanying notes to the financial statements. The financial statements for the
year ended June 30, 2001 were restated to reflect the adoption of Statement No. 34. As a result of the
adoption of such statement, historical financial data not restated will not be comparable to the data
presented under the new format. During 2005, the District adopted Governmental Accounting Standards Board Statement No. 40, “Deposit and Investment Risk Disclosures, an Amendment of GASB Statement
No. 3,” the adoption of which modified certain financial statement disclosure requirements. The new
standard enhances the deposit and investment risk disclosures by updating the previous custodial credit
- 32 -
risk disclosure requirements and addressing other common risks, including concentrations of credit risk,
interest rate risk, and foreign currency risk. The implementation of Statement No. 40 had no effect on
financial statement amounts.
Governmental Accounting Standards Board Statement No. 43, “Financial Reporting for Post-
employment Benefit Plans Other Than Pension Plans” and Governmental Accounting Standards Board
Statement No. 45, “Accounting and Financial Reporting by Employers for Post-employment Benefits
Other Than Pension Plans” establish accounting and financial reporting standards for post-employment benefits other than pensions. As part of a total compensation package, many governments offer post-
employment benefit plans other than pensions such as health care, life insurance and so forth. Statement
No. 43 establishes uniform financial reporting standards for other post-employment benefit (“OPEB”)
plans and applies to OPEB trust funds included in the financial reports of plan sponsors or employers, as
well as in stand-alone financial reports. Statement No. 45 establishes standards for the measurement,
recognition and display of OPEB expenses and expenditures and related liabilities and assets, note
disclosure, and, if applicable, required supplementary information in the financial reports of state and
local government employers. Statement No. 43 will be effective for the District for the fiscal year ending
June 30, 2007, and Statement No. 45 will be effective for the District for the fiscal year ending June 30,
2008. Management of the District has not yet completed its assessment of the statements. See
“FINANCIAL OPERATIONS OF THE DISTRICT – Other Post Employment Benefits” for
additional discussion of the District’s OPEB liabilities.
The following table illustrates the financial result of operations of the District for the fiscal years
ended June 30, 2006 and 2005. The Stormwater Service Charge is included in “Operating Revenues” in
the following chart. Revenues from the Stormwater Service Charge are not included in Pledged Revenues
and, therefore, are not available to pay debt service on the Bonds issued under the Bond Ordinance, including the Series 2006C Bonds. The following financial information is intended to provide historical
information on the financial health of the District.
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS
($000)
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2006 2005
Operating revenues:
Sewer service charges, net $ 203,880 $ 183,513
Provision doubtful service charge accounts (3,161) (1,546)
Licenses, permits and other fees 5,210 6,549
Other 873 78
Total Operating Revenues $ 206,802 $ 188,994
Nonoperating revenues:
Property taxes levied by District $ 23,211 $ 22,016
Investment income 7,610 5,502
Grant revenue 1,425 1,553
Other 1,027 1,038
Total Nonoperating Revenues $ 33,273 $ 30,109
Total Pled ged Revenues $ 240,075 $ 219,103
Operating expenses:
Pumping and treatment $ 38,316 $ 35,514
Collection system maintenance 27,792 25,225
Engineering 8,737 6,851
General and administrative 37,055 37,047
Depreciation 43,980 44,443
Other 20,009 13,294
Total Operating Expenses $ 175,889 $ 162,374
Nonoperating Expenses:
Total Nonoperating Expenses $ 3,565 $ 3,098
Total Expenses $ 179,454 $ 175,472
Net Pledged Revenues $ 60,621 $ 43,631
Annual Debt Service 12,744,598
Debt Service Coverage 5.04x
The District engaged its independent accountants to perform certain agreed-upon procedures in
connection with the schedule of Pledged Revenues, as shown below, and prepare an Agreed-Upon
Procedures Report, dated ____________, 2006. The schedule of Pledged Revenues was prepared by the
District to show what Pledged Revenues would have been available historically to pay debt service on the
Bonds. The District’s independent accountants performed certain procedures to compare and agree (1)
the District’s total operating revenues, nonoperating revenues and operating expenses and (2) revenues,
not included in Pledged Revenues, such as Stormwater Revenues, property tax revenues, capital grant
revenues and certain interest income, all as reported in the District’s audited financial statements for the
years ended June 30, 2006 and 2005, as shown on the table above, with the Pledged Revenues schedule
provided by the District to the independent accountants. The independent auditor’s report concluded that
all amounts presented on the schedule provided by the District were agreed to either audited financial statements of the District or other financial information provided by the District. The schedule below was
attached to the Agreed-Upon Procedures Report.
SCHEDULE OF PLEDGED REVENUES
FOR THE YEARS ENDED JUNE 30, 2006 AND 2005
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2006 2005
____________________
Management’s Discussion and Analysis
The following Management’s Discussion and Analysis is excerpted from the financial statements
of the District for the Fiscal Years ended June 30, 2006 and 2005. For the full discussion (which
discussion is unaudited as noted therein), see the financial statements of the District for the Fiscal Years
ended June 30, 2006 and 2005 included in Appendix A to this Official Statement.
General. The management of the District has provided this discussion and analysis to be used in
combination with the District’s financial statements for the Fiscal Years ended June 30, 2006 and 2005,
which are included in Appendix A to this Official Statement. This narrative is intended to provide the
reader with more insight into management’s knowledge of the transactions, events and conditions reflected in the accompanying financial statements and the fiscal policies that govern the District’s
operations.
Financial Highlights.
• Net capital assets increased by $143.8 million due to increased levels of spending for
CIRP.
♦ Collection and pumping plant $92.1 million
♦ Depreciation $42.3 million
♦ Construction in Progress $90.0 million
♦ Land $0.1 million
♦ General Plant and equipment $1.0 million
♦ Treatment and disposal plant and equipment $2.9 million
• Cash and cash equivalents balances increased by $36.5 million, while investment
balances decreased by $41.1 million, from fiscal year 2005 to fiscal year 2006. The shift
from longer-term investments to cash and cash equivalents occurred as a result of the
current interest rate environment in which an inverted yield curve makes short-term
investments more attractive than long-term investments.
• Bonds and notes payable balances increased by $37.6 million in most part due to the
issuance of the Series 2006A Bonds in the amount of $42.7 million. Retirements of $5.5
million, and changes in the unamortized premium balance and the balance of bond
issuance costs netting to $0.4 million combine for the remaining $5.1 million in change.
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• Capital contributions increased by $36.7 million due to the gifting of assets related to 293
devel opments in fiscal year 2006 versus 194 in fiscal year 2005.
• Operating revenues increased by $17.8 million as a result of the rate increase that took
affect in July 2005.
Financial Analysis. The overall financial condition of the District is strong as indicated by the
increase in net assets over the past year. The District had income before contributions of $60.6 million in
fiscal year 2006, compared to $43.6 million in 2005 and $35.3 million in 2004. Plans for maintaining the
District’s ability to meet future spending needs are discussed in greater detail in the section of the MD&A
entitled “Decisions Impacting the Future.”
Total net assets increased $112.1 million, or 6.0% over prior year. This change is the result of an
increase in total assets of $144.0 million and an increase in liabilities of $31.9 million.
Net capital assets increased by $143.8 million in fiscal year 2006 from fiscal year 2005
accounting for the overwhelming majority of the change in total assets. Current, restricted and other assets account for the other $0.2 million of the $144.0 million dollar increase. The change in net capital
assets can be attributed to an increase in collection and pumping plant of $92.1 million and an increase in
construction in progress of $90.0 million with an offsetting increase in accumulated depreciation of $42.3
million. The remaining increase of $4.0 million is a combination of treatment and disposal plant and
equipment, general plant and equipment, and land.
The change in total liabilities of $31.9 million is representative of an increase in non-current
liabilities of $36.3 million and a decrease of current liabilities of $4.4 million. Non-current liabilities
increased by $36.3 million almost exclusively due to the issuance of the Series 2006A Bonds through the
SRF Program in the amount of $42.7 million. The retirement of bonds totaling $5.5 million, less a net
change in unamortized premium and accretion of bond issuance costs of $0.4 million, and a $1.7 million change in the current portion of bonds payable combine to offset the $42.7 million and account for the
change in non-current bonds and notes payable. An increase in deposits and accrued expenses of $0.4
million rounds out the variance in non-current liabilities from fiscal year 2005 to fiscal year 2006.
Net assets increased $112.1 million, which was $53.7 million over 2005. The largest contributing
factor in the increase in net assets is the increased level of capital contributions. In fiscal year 2006, capital contributions totaled $51.5 million while in fiscal year 2005 they were $14.8 million. This change
accounts for $36.7 million of the total change in net assets, and is a result of a larger number of
developments being gifted to the District.
Another significant factor in the $53.7 million increase in net assets was the increase in sewer
service charge revenues totaling $20.4 million as a result of the rate increase that took effect in July of
2005.
Operating expenses increased by $13.5 million over the prior year. The largest increase in
operating expenses occurred in other operating expenses in the amount of $6.7 million. This increase is a
result of greater spending on infrastructure repair and data collection projects. Additionally, pumping and
treatment, collection system maintenance, and engineering expenses increased by $2.8 million, $2.6
million, and $1.9 million respectively, while depreciation expenses decreased by $0.5 million.
Non-operating expenses decreased by $9.5 million over the prior year. The decrease can be
attributed to the capital improvement surcharge refund. $5.7 million of the refund was expensed in fiscal
year 2005, while only $0.1 million was charged in fiscal year 2006. The other major contributing factor
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to the $9.5 million decrease is a drop in the net loss on the disposal and sale of a utility plant in the
amount of $3.0 million. In fiscal year 2005, land valued at over $3.0 million was gifted to the City of
Maplewood.
The net increase in cash and cash equivalents experienced a $194.5 million increase in relation to
fiscal year 2005. The most significant reason for that increase is the cash flow from investment activities.
In fiscal year 2006, cash flow from investment activities was a positive $49.4 million while in fiscal year
2005 the District had a negative cash flow from investment activities of $105.9 million. Bond proceeds originally converted to long-term investments have been converted to cash to cover CIRP expenses and to
take advantage of better interest rates on short-term investments.
Cash outflows from capital and related financing activities increased by $40.5 million in fiscal
year 2006. In fiscal year 2006, the District’s proceeds from the issuance of debt increased by $35.6
million. Payments for capital improvements decreased by $14.8 million, principal and interest and fees
paid on debt declined by a combined $3.7 million, cash refunded for the clean water capital improvement
surcharge increased by $5.8 million, and proceeds from capital grants declined by $0.4 million.
Total capital assets net of depreciation increased $143.8 million over the prior year. The most
significant increase was to construction in progress, which rose by $90.0 million. Collection and
pumping plant also increased by a significant amount of $66.3 million in large part due to the increase in
contributed assets. Treatment and disposal plant and equipment decreased by $12.1 million as depreciation outpaced additions in this asset category. Finally, general plant and equipment decreased by
$0.5 million in relation to the prior year, and land increased by less than $0.1 million.
The District ended fiscal year 2006 with $379.9 million in long-term debt outstanding, consisting
mainly of revenue bonds. The increase of $37.2 million is a result of new issues in the amount of $42.7
million. For additional information related to the District’s long-term debt, see Note 5 to the financial
statements.
During fiscal year 2007, the District plans to issue the Series 2006C Bonds and an additional $40
million in bonds previously approved by the voters in February 2004. These bonds will continue to fund
the first of four phases of a 20-year wastewater capital improvement program projected to total $3.7
billion in expenditures. The remaining phases are expected to be funded through a combination of
additional bonds, if approved by the voters, and additional rate increases.
The District also plans to address the current lack of funding to adequately support the operation
and maintenance of the St. Louis Region’s existing stormwater infrastructure. The District intends to
recommend a change in stormwater funding by modifying the current monthly 24¢ per customer fixed
charge to a variable charge based on impervious area. A combined rate proposal addressing both the
wastewater and stormwater funding issues will be subject to review by the District’s Board of Trustees and Rate Commission (defined below). The District anticipates submitting a formal funding proposal for
consideration by the third quarter of fiscal year 2007.
In addition to these major funding initiatives, the District will also be embarking on the
implementation of the first year of a multi-year strategic technology plan. This comprehensive plan is
based on a year long review of all District technology systems and business processes during the past
fiscal year and is designed to dramatically improve connectivity and interaction between District
Departments, increase overall District efficiency and enhance customer service for all District ratepayers.
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Sewer Rates and Revenues
The primary source of funding for the operation and maintenance of the District’s sewerage and
drainage system is a user charge that averaged $271.44 per year for a single-family residence in fiscal
year 2006. The District’s charges for residential wastewater service are tied to the amount of measured
water usage during a winter quarter. For residential properties without water meters, the charges are
based on housing attributes (such as the number of rooms, baths, and toilets) that correlate to water usage.
That methodology is the same billing methodology used by the City of St. Louis Water Division for its
non-metered properties. Multi-family residential and commercial and industrial rates are proportionate to
the single-family charge and are based on water consumption and the strength of the discharge.
The District has other sources of revenue. Real and personal property taxes were levied by the
District in an amount of almost $23.2 million in fiscal year 2006 to service subdistrict indebtedness, fund
subdistrict construction and/or to fund part of the District’s stormwater operating expenses. The District also receives some federal, state, and local grants to help defray the cost of constructing sewage treatment
and drainage facilities and improvements. The District also charges fees for plan review, permits,
construction inspection of new system development, and special discharges. The District charges a
uniform connection fee in all service areas.
The District may issue general obligation bonds and revenue bonds to finance the cost of
improvements and extensions to the sewer system. The District also may issue, on behalf of each of its
subdistricts, general obligation bonds or revenue bonds. The issuance of general obligation bonds,
payable from a general tax levy on all taxable property within the District or a subdistrict, requires the
approval of either a four-sevenths or two-thirds majority of the voters voting at an election held in the
District or subdistrict, as the case may be. General obligation bonds outstanding cannot exceed five percent of the assessed valuation of the area benefited. Subdistricts may also issue revenue bonds,
payable from user charges after a similar procedure, but require only a simple majority vote.
Rate Commission and Rate Setting Process
General. Pursuant to the amendments to the District’s Charter adopted on November 7, 2000, the
District established a rate commission (“Rate Commission”) to review and make recommendations to the Board regarding all proposed changes in wastewater rates, stormwater rates and tax rates or change in
the structure of any of the foregoing. Upon receipt of a rate change notice from the District pursuant to
the Charter, the Rate Commission recommends changes in rates to the Board that will be necessary to pay
interest and principal falling due on bonds issued to finance assets of the District, the costs of operation
and maintenance and such amounts as may be required to cover emergencies and anticipated
delinquencies.
Membership. The Rate Commission consists of one representative from each of fifteen (15)
organizations within the District, each of which have been identified and designated by the Board as a
“Rate Commission Representative Organization.” The organizations selected by the Board are diverse
and represent residential customers, commercial and industrial customers, environmental interests, labor interests, community and neighborhood organizations and nonprofit organizations. The current Rate
Commission Representative Organizations are as follows:
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Building & Construction Trades Council
FOCUS St. Louis
Missouri Industrial Energy Consumers
Home Builders Association of Greater St. Louis
St. Louis County Municipal League
Engineers Club of St. Louis
League of Women Voters of St. Louis Human Development Corporation of Metro St. Louis
Missouri Botanical Garden
St. Louis Association of Realtors
Associated General Contractors of St. Louis
International Institute
Regional Chamber & Growth Association
Sierra Club
St. Louis Council of Construction Consumers
These organizations reviewed and recommended the rate increase that was approved by the Board
and became effective in August 2003 and the additional rate increases approved by the Board on March 11, 2003, which became effective on July 1, 2004 and July 1, 2005. [Discussion of new rate
increases to come.]
Rate Setting Process. Pursuant to the Charter, whenever the District proposes or recommends a
change in rates, it shall give written notice (“Rate Change Notice”) to the Board and the Rate
Commission. Upon receipt of a Rate Change Notice and after review of same, the Rate Commission shall cause at least one public hearing to be held on the record regarding the proposed rate change. The Rate
Commission shall issue its rate recommendation report (“Rate Commission Report”) to the Board and
to the public no later than one hundred twenty (120) days after receipt of a Rate Change Notice. If the
Board accepts the Rate Commission Report or if the Board is deemed to have accepted a Rate
Commission Report as set forth in the Charter, the Board enacts an ordinance consistent with the Rate
Commission Report. The Board may reject, or fail to accept, the Rate Commission Report only upon a finding that such report does not conform to the requirements of the Charter. No ordinance to effect a
change in rates shall be introduced for adoption under the Charter prior to the earlier of forty-five (45)
days after receipt of the Rate Commission Report or forty-five (45) days after the date on which the Rate
Commission Report is due. For further discussion of the Rate Commission and the rate setting process,
see Appendix D – “Engineering and Financial Feasibility Report.”
Pursuant to the Charter, any change in a rate recommended to the Board by the Rate Commission
must be accompanied by a statement of the Rate Commission that the proposed rate change, and all
portions thereof:
(1) is consistent with constitutional, statutory or common law as amended from time to time;
(2) enhances the District’s ability to provide adequate sewer and drainage systems and
facilities, or related services;
(3) is consistent with and not in violation of any covenant or provision relating to any
outstanding bonds or indebtedness of the District;
(4) does not impair the ability of the District to comply with applicable Federal or State laws
or regulations as amended from time to time; and
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(5) imposes a fair and reasonable burden on all classes of ratepayers.
Billing and Collections
The District bills residential and commercial customers monthly for sewer service charges. As
described below, sewer bills are calculated upon several different bases, including the amount of water
used each quarter, the winter -quarter usage only or, when water meters are not in use, the structure of the
building. For customers whose bills are based upon water usage, the District purchases data from the
three water agencies serving the metropolitan area: the St. Louis City Water Division, Missouri American
Water Company and Kirkwood Water.
In the City of St. Louis, most single-family homes and smaller multi-unit buildings are not
equipped with water meters. There are also a small number of properties in the County that use well
water. When no water meter reading is available, the District calculates the bill based on the attributes of
the structure, including the number of rooms, toilets, baths and separate showers.
Single-family residential properties that have water meters are billed based on the winter quarter
water usage. The winter quarter is defined as the 3-month water meter reading taken in February, March
or April. With each July sewer bill the service charges are calculated on a 91-day prorated amount using
the previous winter quarter water meter reading. The monthly usage remains the same until the following
July, when the process is repeated. For single-family customers who have limited income, the District
offers a Low-Income Assistance program. For eligible customers, the monthly sewer bill is reduced by
50% each month.
Commercial and multi-unit properties are billed based on the amount of water used each quarter
or, in a few cases, each month. The District’s bill is based on one-third of the prior quarter’s reading and
remains the same amount for three months. The process is repeated for the next 3 months. In the case of commercial properties, there is an additional compliance charge on each month’s bill and the bill may
include a surcharge for difficult to treat industrial waste or there may be a reduction factor, based on
water used in processing and not entering the sewer system. Multi-unit property owners also have the
option of being billed on the winter quarter reading or on each quarter reading.
The District currently has approximately 431,500 accounts that are billed monthly, including
approximately 361,000 residential accounts, 44,500 multi-unit accounts, and 26,000 commercial
accounts. These accounts are divided between 3 billing cycles each month.]
The District is currently implementing a new billing system, using the same billing parameters
described above, but billing on a more frequent basis. The District anticipates that under the new policy,
it will bill a portion of its accounts on a daily basis. The District believes that this change in billing
frequency will further improve cash flows and accounts receivable.
Rate Increases
Pursuant to the rate review and setting procedures discussed under the caption “Rate
Commission and Rate Setting Process” above, the District submitted to the Rate Commission a request
to increase wastewater user charge rates in May 2002. Following its review of the District’s request, the Rate Commission issued a Rate Commission Report in October 2002 recommending a three-step increase
in wastewater user charges, which report was accepted by the Board in December 2002. In early 2003,
the District decided to postpone a planned ballot issue regarding the District’s issuance of sewer revenue
bonds. As a result, the District subsequently submitted a proposed amendment to the proposed schedule
of wastewater user charge increases, which amendments were recommended by the Rate Commission in
May 2003 and accepted by the Board on June 12, 2003.
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The amended schedule of wastewater rate increases provides for an estimated initial increase in
the average monthly single family residential sewer bill of $2.90 per month, which is an approximately
21% increase, and is expected to generate approximately $30 million in additional wastewater user charge
revenues in 2004. The Rate Commission recommended subsequent wastewater rate increases of $3.71
per month effective July 1, 2004 and $1.80 per month effective July 1, 2005. The Board approved the
recommended rate increase of $2.90 per month on July 24, 2003, which increase became effective
August 1, 2003 and has been implemented by the District since such time. On March 11, 2004, the Board approved the recommended additional rate increases to become effective on July 1, 2004 and July 1,
2005. [UPDATE FROM DISTRICT TO COME]
Historical and Projected Sewer Rates and Charges
The following table sets forth the wastewater sewer user charge rates in effect on June 30, 2003,
the rate increase approved by the Board and which became effective August 1, 2003, and the July 1, 2004 and July 1, 2005 rate increases approved by the Board at its March 11, 2004 meeting. The rates in effect
as of July 1, 2005 remain in effect as of the date of this Official Statement. Prior to the August 1, 2003
increase, such rates had remained unchanged since October 1, 1997.
As of Effective Ef fective Effective
Type of Monthly Charge June 30,
2003
August 1,
2003
July 1,
2004
July 1,
2005
Base Charge - $/Bill
Billing & Collection Charge $ 0.74 $ 0.85 $ 0.85 $ 0.85
System Availability Charge 4.83 5.30 6.45 7.05
Total Base (Residential) Service Charge $ 5.57 $ 6.15 $ 7.30 $ 7.90
Compliance Charge - $/Bill (a) $ 8.56 $ 11.80 $ 12.15 $ 12.55
Total Nonresidential Service Charge $ 14.13 $ 17.95 $ 19.45 $ 20.45
Volume Charge
Metered - $/Ccf $ 1.05 $ 1.34 $ 1.66 $ 1.81
Unmetered - $/Bill
Each Room $ 0.69 $ 0.88 $ 1.08 $ 1.18
Each Water Closet 2.58 3.28 4.04 4.42
Each Bath 2.15 2.74 3.37 3.69
Each Separate Shower 2.15 2.74 3.37 3.69
Extra Strength Surcharges - $/ton (a)
Suspended Solids over 350 mg/l $ 87.20
Suspended Solids over 300 mg/l (b) $ 162.88 $ 200.15 $ 218.90
Biological Oxygen Demand:
(BOD’s) over 300 mg/l 217.90 319.24 412.58 461.44
Chemical Oxygen Demand:
(COD’s) over 600 mg/l 108.95 159.62 206.29 230.72 _________________________
(a) Applicable only to nonresidential customers.
(b) Reflects reduction in suspended solid normal strength threshold from 350 mg/l to 300 mg/l.
Key: Ccf – Hundred Cubic Feet. mg/l – milligram per liter.
Source: The District.
In addition to the foregoing wastewater rates and charges, the District imposes a monthly
Stormwater Service Charge, currently $0.24 per account per month. The revenues derived from such
Stormwater Service Charge are not included in the Pledged Revenues under the Bond Ordinance an d are
not available for the payment of debt service on any Bonds issued under the Bond Ordinance, including
the Series 2006C Bonds.
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Customer Accounts
The District imposes a user charge on all customers that use its system of sewers, treatment plants
and other facilities. The number of customers per category of accounts is as follows:
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
NUMBER OF CUSTOMERS BY TYPE
LAST TEN FISCAL YEARS
Fiscal Year Ending
June 30
Single-Family
Residential
Multi-Family
Residential
Commercial/
Industrial
Total
Accounts
1997 351,983 47,265 26,289 425,537
1998 348,605 46,154 26,030 420,789
1999 349,759 45,787 25,939 421,485
2000 351,367 45,348 25,918 422,633
2001 352,656 45,074 25,779 423,509
2002 356,988 45,209 25,831 428,027
2003 357,226 44,947 25,670 427,843
2004 358,541 45,264 25,839 429,645
2005 359,748 44,802 25,200 429,750
2006 361,132 44,582 25,712 431,426 _________________
Source: The District.
Largest User Charge Customers
The following table lists the District’s ten largest wastewater user charge customers for the fiscal
year ended June 30, 2006.
Percent
Customer User Charges of Total
Anheuser-Busch Companies, Inc.1 $8,192,292 4.08%
Mallinckrodt, Inc. 1,488,243 0.74%
Saint Louis Zoo 694,355 0.35%
Chrysler Corporation 661,330 0.33%
Sigma Aldrich 609,368 0.30%
ABC Dairy, Inc. 546,200 0.27%
Rockwood Pigments NA, Inc. 545,495 0.27%
St. Louis Coca-Cola Bottling Co. 545,079 0.27%
City of St. Louis 542,146 0.27%
Sensient Colors Inc. 499,146 0.25%
Total: $14,324,188 7.14%
___________________________________
1 Anheuser-Busch has had a significant reduction in contributed wastewater over the past few years due to several
successful water conservation and reduction projects. Although further conservation measures are expected in the future, compensating increases in production levels are also expected that should result in projected wastewater volumes at about the same level contributed in 2006.
Source: The District.
User Charge Revenues
The following table shows the amount of wastewater user charge revenues which were billed and
collected by the District for the fiscal years ended June 30, 2002 through June 30, 2006.
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Collections as a
Wastewater Wastewater % of Wastewater
Year Charges Billed Charges Collected Charges Billed
2002 $122,121,537 $120,584,791 98.74%
2003 120,536,983 120,661,072 100.10
2004 143,460,747 134,703,455 93.90
2005 176,372,150 172,569,955 97.84
2006 195,728,732 189,709,994 96.92
__________________________
Source: The District.
Outstanding Indebtedness
Direct Bonded Indebtedness. As of the date of this Official Statement, the District has no
outstanding general obligation indebtedness on either a District-wide or subdistrict basis.
Other Outstanding Debt. The District obtained a short-term direct loan from DNR in
January 2004. The proceeds of the direct loan, in the approximate amount of $69,500,000, are being used
by the District to finance a portion of the cost of the Lower Meramec Project. The District anticipates that
it will make the monthly payments due on the DNR loan through January 15, 2005 with available System revenues. See the section herein captioned “PLAN OF FINANCE – Finance Plans of the District.”
The District ended Fiscal Year 2006 with $378.9 million in long-term debt outstanding. The increase of
$36.2 million is a result of new issues in the amount of $42.7 million, retirements of $5.5 million, and
changes in unamortized premium and bond issue costs of $1.0 million. The following table summarizes
the outstanding long-term debt for the District at the end of Fiscal Year 2006 and Fiscal Year 2005:
Total Long-Term Debt Outstanding (000s) 2006 2005
Revenue Bonds:
Series 2004A $173,500 $175,000
Series 2004B 156,245 160,152
Series 2005A 6,800 6,800
Series 2006A 42,715 0
West Watson and Nanell Loan Agreement 486 536
Ozark and Tablerock Loan Agreement 116 147
Energy Loan Program 79 89
$379,941 $342,724
Source: The District
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Pro Forma Statement of Pledged Revenues, Expenses and Debt
Service Coverage
The following table shows a five year projection of Pledged Revenues, expenses and debt service coverage, as well as other system revenues available for paying the costs of Phase I Projects and
additional CIRP projects.
2007 2008 2009 2010 2011
Revenue Under Existing Rates (a) 195,211,100 194,853,000 194,717,200 194,632,300 194,546,600
Additional Revenue Required:
2007 (increase of 0.0%) 0 0 0 0 0
2008 (increase of 15.0%) 28,293,000 29,208,000 29,195,000 29,182,000
2009 (increase of 13.0%) 28,645,000 29,098,000 29,085,000
2010 (increase of 12.0%) 30,351,000 30,338,000
2011 (increase of 12.0%) 33,978,000
Total Additional Revenue 0 28,293,000 57,853,000 88,644,000 122,583,000
Total Service Charge 195,211,100 223,146,000 252,570,000 283,276,300 317,129,600
Other Operating Revenue 4,600,800 4,810,900 5,130,100 5,139,100 5,148,000
Connection Fee Revenue 4,600,000 4,646,000 4,692,000 4,739,000 4,786,000
Interest Income-Reserve Fund 2,947,400 3,696,500 4,234,400 4,307,300 4,314,100
Interest Income-Operations 235,400 42,300 0 0 0
Interest Income-Arnold 1,305,000 1,283,100 1,260,200 1,236,300 1,211,300
Total Revenue 208,899,700 237,624,800 267,866,900 298,698,000 332,589,000
Operation and Maintenance
Expense 106,651,700 108,692,600 111,842,700 115,978,100 119,579,000
Pledged Revenue 76,142,500 116,341,800 156,044,200 182,719,900 213,010,000
Non-Pledged Revenue 18,052,700 6,295,200 0 0 0
Total Net Revenue 84,195,200 122,637,000 156,044,200 182,719,900 213,010,000
Debt Service
Existing Revenue Bonds 9,636,600 9,611,000 9,593,400 9,643,900 9,778,600
Proposed Revenue Bonds 1,726,000 10,174,100 15,652,300 16,495,100 16,495,100
Existing SRF Loans 10,953,700 12,129,800 13,951,400 13,731,400 13,956,800
Prop osed SRF Loans 0 2,272,232 5,083,270 5,752,886 5,749,550
Commercial Paper 1,333,300 2,000,000 666,700 0 0
Total Projected Debt Service 23,649,600 36,187,132 44,947,070 45,623,286 45,980,050
Net Revenue After Debt 60,545,600 86,449,868 111,097,130 137,096,614 167,029,950
Routine Annual Improvements 6,209,600 6,457,300 6,542,100 2,636,400 2,715,400
Additions to Operating Reserve 1,451,300 1,737,900 0 0 0
Net Revenues Available for
CIRP and Other Purposes
Debt Coverage (c) 769.9% 744.2% 66.8% 699.6% 811.4%
Source: The District.
(a) Existing Wastewater rates effective July 1, 2005.
(b) Does not include funds set aside for a minimum operating reserve equal to 60 days of operating expenses.
(c) Total Net Revenue/Total Projected Debt Service.
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Employee Benefits
The District currently maintains a noncontributory single employer defined benefit plan (the
“Pension Plan”) providing retirement benefits as well as death and disability benefits to all full-time
District employees. A Pension Committee consisting of two members of the District’s Board of Trustees,
two elected employee members and four members of the District’s management staff administer the
Pension Plan. The Pension Plan is exempt from the requirements of the Employee Retirement Income
Security Act of 1974 (“ERISA”) and, as such, is not subject to ERISA’s reporting requirements. As a
noncontributory plan, the District’s employees do not contribute to the Pension Plan. Ordinances
establishing the Pension Plan provide for actuarially determined annual contributions, paid solely by the
District, that are sufficient to pay benefits when due. Contributions of $7,184,531 and $6,775,520,
excluding certain professional fees paid by the District, were made to the Pension Plan during the Pension
Plan’s fiscal years ended December 31, 2005 and 2004, respectively. These contributions were made in accordance with actuarially determined contribution requirements based on actuarial valuations
performed at January 1, 2005 and 2004, respectively, and for 2005 consisted of (a) $4,576,505 normal
cost plus (b) $2,106,780 amortization of the actuarial accrued assets in excess of the actuarial accrued
liability and prior changes (c) multiplied by an inflation factor of 1.075. The District provides cer tain
professional fees, office space, utilities, and other services to the Pension Plan at no cost. Other costs of
administering the Pension Plan are financed from plan net assets. For more information regarding the
District’s Pension Plan, see Note 7 to the audited financial statements of the District contained in
Appendix A to this Official Statement.
The District also offers its employees a deferred compensation plan (the “Deferred
Compensation Plan”) created in accordance with Internal Revenue Code Section 457. The Deferred Compensation Plan, available to all District employees, permits them to defer a portion of their salary
until future years. The deferred compensation is not available to employees until separation from service,
or in special approved circumstances due to financial hardship as defined by the Pension Plan. Plan assets
are held in trust for the exclusive benefit of participants and their beneficiaries. As a result, the assets and
liabilities of the Deferred Compensation Plan are not included in the District’s financial statements. For
more information regarding the District’s Deferred Compensation Plan, see Note 8 to the audited
financial statements of the District contained in Appendix A to this Official Statement.
Other Post Employment Benefits
In addition to providing the Pension Plan and the Deferred Compensation Plan, the District
provides post-employment health care benefits, in accordance with District policy, to employees who
elect early retirement from the District or who retire from the District on or after attaining age 62. As of
June 30, 2006 and 2005, 109 and 105 retirees, respectively, met the eligibility requirements. The District
pays the monthly group health insurance premium for the individual until the retiree becomes eligible or
Medicare at age 65. During fiscal year 2006 and 2005, expenses of $444,648 and $363,249, respectively,
were recognized for post-retirement health care premiums as those premiums were paid. For more information regarding the District’s Other Post Employment Benefits, see Note 9 to the audited financial
statements of the District contained in Appendix A to this Official Statement. Also see the section herein
captioned “FINANCIAL OPERATIONS OF THE DISTRICT – Selected Financial Data of the
Dist rict .”
Tax Limitation Amendment – Hancock Amendment
An amendment to the Missouri Constitution limiting taxation and governmental spending was
approved by Missouri voters on November 4, 1980. The amendment (popularly known as the Hancock
Amendment) limits the rate of increase and the total amount of taxes on property which may be imposed
in any year, and the limit may not be exceeded without voter approval. Provisions are included in the
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amendment for rolling back tax rates to produce an amount of revenues equal to that of the previous year
if the definition of the tax base is changed or if property is reassessed. The tax levy on the assessed
valuation of new construction is exempt from this limitation.
The Hancock Amendment also requires a political subdivision of the State to seek voter approval
in order to increase any “tax, license or fee” over existing rates. A Missouri court has held that the
District’s current wastewater user charge structure does not constitute a “tax, license or fee” for purposes
of the Hancock Amendment’s voter approval requirements. The Hancock Amendment does not prohibit an increase in the District’s wastewater user charges to pay debt service on the Bonds because voters in
the District approved the issuance of the Bonds at the February 2004 election, including increases in the
District’s wastewater user charges sufficient to pay debt service on the Bonds.
REGULATORY REQUIREMENTS
General
The District is subject to the provisions of the Federal Water Pollution Control Act, as ame nded,
33 U.S.C. 1251 et seq., commonly referred to as the “Clean Water Act ,” the stated objective of which is
to restore and maintain the chemical, physical, and biological integrity of the nation’s waters. The District is also subject to the Missouri Clean Water Law, Sections 644.006 through 644.141, Revised
Statutes of Missouri, as amended, among other laws and regulations. The regulatory requirements are
administered by the United States Environmental Protection Agency (“EPA”) through the Missouri
Department of Natural Resources (“DNR”).
The Clean Water Act imposes several permit and regulatory requirements on wastewater
treatment systems. Public sewage treatment plant owners and operators such as the District are required
to provide secondary treatment as established by federal regulation for all wastewater discharge from
treatment plants into waters of the United States. Under the Clean Water Act, states also establish water
quality standards, classifying water body uses, and pollutant control criter ia to protect those uses. All
sewage system discharges require National Pollutant Discharge Elimination System (“NPDES”) permits
specifying the permissible pollutant levels in wastewater effluent discharged from the plants. In addition to secondary treatment requirements for publicly-owned treatment plants, all discharges from plants and
combined sewer overflows (“CSO”) may be subject to additional stringent controls (which are then
incorporated into NPDES permits) if such discharges are required to achieve the water quality standards
established by the state pursuant to federal regulations. Under state law, the State also requires treatment
plants to obtain state surface water discharge permits, which, in the discretion of EPA and DNR, may be issued jointly with the NPDES permit. Major wastewater treatment systems also must adopt and enforce
pretreatment regulations for industries and other non-domestic sources discharging into sewers.
Treatment plants are also subject to Clean Water Act and state regulations governing sludge use and
disposal.
The Clean Water Act is enforced by EPA through administrative orders and procedures.
Violations may be the basis for federal lawsuits brought on EPA’s behalf by the U.S. Department of
Justice or by private citizens.
In an action titled State of Missouri ex rel. William L. Webster, et al. v. The Metropolitan
St. Louis Sewer District , the State sought to enforce compliance by the District with respect to certain
alleged past and continuing violations of the Clean Water Act, the Missouri Clean Water Law §§ 644.006,
et seq., RSMo, and Missouri State Operating Permits issued to various sewage treatment facilities and other facilities owned and operated by the District. An Amended Consent Judgment was entered by the
circuit court on January 20, 1989. A Satisfaction of Judgment and Termination of Continuing Jurisdiction
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Over Modified Consent Judgment was filed by the Missouri Attorney General on December 13, 2002. In
addition, on or about July 29, 2002, the District entered into a Settlement Agreement with DNR, the
Missouri Clean Water Commission (the “Commission”), and the Missouri Attorney General regarding
the District’s Baumgartner Sewage Treatment Facility. The purpose of the Settlement Agreement was for
the District to achieve and then continue to achieve compliance with its Missouri State Operating Permit
effluent limitations at Baumgartner. Ultimately, the District anticipates taking the Baumgartner lagoon
offline on or before December 31, 2006. This is expected to be accomplished by connecting the current sewage flow going to Baumgartner to the new Lower Meramec treatment facility. Furthermore, the
parties agreed that the District will complete closure of the Baumgartner lagoon pursuant to Federal
regulations within 24 months of taking the Baumgartner lagoon offline. Should the District fail to meet
any of the deadlines set out in the Settlement Agreement or violate any of the terms contained therein, the
penalties for each missed deadline could be imposed on a graduated basis, with a maximum of $10,000
per day, per violation.
No enforcement action has been initiated or threatened by DNR. Nonetheless, the District is in
voluntary discussions with the regulatory agencies regarding environmental compliance issues. The
discussions involve alleged, unpermitted discharges of untreated wastewater from CSO and sanitary
sewer overflows (“SSO”) that constitute violations of the Clean Water Act 33 U.S.C. § 1311. At this
time the District’s senior staff and General Counsel are in preliminary discussions with EPA and DNR and have presented the CIRP to both organizations for their review and consideration. By statute, each
day of an unlawful discharge represents a day of violation, and the Missouri Clean Water Law provides
for a civil penalty with a maximum of $20,000 per day, per violation. As of the date of this Official
Statement, no lawsuits have been filed in this matter. Since July 22, 2003, the District has met a number
of times with EPA, DNR, the United States Department of Justice (“DOJ”), and DOJ’s technical consultant. On August 20, 2004, the District received from EPA Region VII a Section 308 letter, which
is an official request for information and documentation. On January 19, 2005 the District provided an
initial response to the Section 308 letter. Another Section 308 letter from EPA Region VII, dated
September 22, 2006, is being reviewed by the District, and the District is in the process of responding to
the letter. No substantive further action has taken place to date.
TAX MATTERS
Opinion of Bond Counsel
Federal and Missouri Tax Exemption. In the opinion of Gilmore & Bell, P.C. and the Hardwick Law Firm, LLC, Co -Bond Counsel, under existing law, the interest on the Series 2006C Bonds (including
any original issue discount properly allocable to an owner thereof) is excludable from gross income for
federal and Missouri 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 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 the preceding sentence are subject to the condition that the District 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 2006C Bonds in order that interest thereon be, or continue to be, excludable from
gross income for federal and Missouri income tax purposes. The District has covenanted to comply with
each such requirement. Failure to comply with certain of such requirements could cause the interest on the Series 2006C Bonds to be so includible in gross income retroactive to the date of issuance of the
Series 2006C Bonds. The Series 2006C Bonds are not “qualified tax-exempt obligations” for purposes of
Section 265(b) of the Code.
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Original Issue Discount. In the opinion of Co-Bond Counsel, subject to the conditions set forth
above, the original issue discount in the selling price of each Series 2006C Bond sold in the initial
offering at a price less than the principal amount thereof (hereinafter referred to as the “OID Bonds”), to
the extent properly allocable to each owner of such OID Bond, is excludable from gross income for
federal income tax purposes with respect to such owner. Original issue discount is the excess of the stated
redemption price at maturity of an OID Bond over the initial offering price to the public (excluding
underwriters and intermediaries) at which price a substantial amount of the OID Bonds were sold. Under Sections 1272 and 1288 of the Code, original issue discount on tax-exempt bonds accrues on a compound
basis. The amount of original issue discount that accrues to an owner of an OID Bond during any accrual
period generally equals (i) the issue price of such OID Bond plus the amount of original issue discount
accrued in all prior accrual periods, multiplied by (ii) the yield to maturity of such OID Bond (determined
on the basis of compounding at the close of each accrual period and properly adjusted for the length of the
accrual period), less (iii) any interest payable on such OID Bond during such accrual period. The amount
of original issue discount so accrued in a particular accrual period will be considered to be received
ratably on each day of the accrual period, will be excluded from gross income for federal income tax
purposes, and will increase the owner’s tax basis in such OID Bond. Any gain realized by an owner from
a sale, exchange, payment or redemption of an OID Bond will be treated as gain from the sale or
exchange of such OID Bond. Purchasers of OID Bonds should consult with their individual tax advisors to determine the treatment of original issue discount for federal income tax purposes and State and local
income tax consequences of owning such OID Bonds
Series 2006C Bonds Purchased at a Premium. Certain Series 2006C Bonds have an initial
offering price which exceeds the stated redemption price of such Bonds at maturity. The excess of the
purchase price of a Series 2006C Bond over its stated redemption price at maturity constitutes premium on such Bond. A purchaser of a Series 2006C Bond must amortize any premium over such Bond’s term
using constant yield principles, based on the purchaser’s yield to maturity. As premium is amortized, the
amount of tax-exempt interest deemed received by the pur chaser and the purchaser’s basis in such Bond
each are reduced by a corresponding amount. The adjustment to a purchaser’s tax basis will result in an
increase in the gain (or decrease in the loss) to be recognized for federal income tax purposes upon a sa le
or disposition of such Bond prior to its maturity. Even though the purchaser’s basis is reduced, no federal income tax deduction is allowed. Purchasers of any Series 2006C Bonds at a premium, whether at the
time of initial issuance or afterward, should consult with their own tax advisors as to the determination
and treatment of premium for federal income tax purposes and state and local tax consequences of owning
such Bonds.
Co-Bond Counsel expresses no opinion regarding other federal tax consequences arising with
respect to the Series 2006C Bonds.
Collateral Tax Consequences
Prospective purchasers of the Series 2006C Bonds should be aware that there may be tax
consequences of purchasing the Series 2006C Bonds other than those discussed under the caption “Opinion of Bond Counsel,” including the following: (i) Section 265 of the Code denies a deduction for
interest on indebtedness incurred or continued to purchase or carry the Series 2006C Bonds or, in the case
of a financial institution, that portion of such institution’s interest expense allocable to interest on the
Series 2006C Bonds; (ii) with respect to insurance companies subject to the tax imposed by Section 831
of the Code, Section 832(b)(5)(B)(i) reduces the deduction for loss reserves by 15 percent of the sum of
certain items, including interest on the Series 2006C Bonds; (iii) interest on the Series 2006C Bonds earned by certain foreign corporations doing business in the United States could be subject to a branch
profits tax imposed by Section 884 of the Code; (iv) passive investment income, including interest on the
Series 2006C Bonds, may be subject to federal income taxation under Section 1375 of the Code for
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Subchapter S 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 (v) Section 86 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 2006C Bonds. Co-Bond Counsel express no opinion regarding these tax consequences.
Purchasers of the Series 2006C Bonds should consult their own tax advisors as to the applicability of
these consequences.
LITIGATION
To the knowledge of the District there is no legal action, suit, proceeding, inquiry or investigation
at law or in equity before or by any court, public board or body for which the District has been served
with process or official notice or threatened against or affecting the District or any reasonable basis therefor, wherein an unfavorable decision, ruling or finding would adversely affect the transaction
contemplated by this Official Statement or the validity of the Series 2006C Bonds, the Bond Ordinance,
or any agreement or instrument to which the District is a party and which is used or contemplated for use
in the transactions contemplated by this Official Statement, and no member, employee or agent of the
District has been served with any legal process regarding such litigation or other proceeding.
The District is a defendant in a number of suits arising out of its operations and activities. To the
best knowledge of the District’s General Counsel, no litigation is pending or threatened which, in the
opinion of the District’s General Counsel, if decided adversely to the District, would be likely to result,
either individually or in the aggregate, in final judgments against the District which would materially
adversely affect its ability to meet debt service payments on the Series 2006C Bonds when due, or its
obligations under the Bond Ordinance, or materially adversely affect its financial condition.
See the section herein captioned “REGULATORY REQUIREMENTS” for a discussion of
certain federal and state matters regarding the System.
LEGAL MATTERS
Certain legal matters incident to the authorization, issuance, sale and delivery of the Series 2006C
Bonds are subject to the approval of Gilmore & Bell, P.C., St. Louis, Missouri, and the Hardwick Law
Firm, LLC, Kansas City, Missouri, Co-Bond Counsel, whose approving legal opinion will be delivered
with the Series 2006C Bonds in substantially the form of Appendix E hereto. Certain other legal matters
will be passed on for the District by its General Counsel, and for the Underwriters by their co-counsel,
Armstrong Teasdale LLP, St. Louis, Missouri, and White Coleman & Associates, LLC, St. Louis,
Missouri.
The various legal opinions to be delivered concurrently with the delivery of the Series 2006C
Bonds express the professional judgment of the attorneys rendering the opinions as to the legal issues
explicitly addressed therein. By rendering a legal opinion, the opinion giver does not become an insurer
or guarantor of that expression of professional judgment, of the transaction opined upon, or of the future
performance of parties to such transaction, nor does the rendering of an opinion guarantee the outcome of
any legal dispute that may arise out of the transaction.
RATING S
Moody’s Investor’s Service, Standard & Poor’s, and Fitch Ratings have assigned their respective
municipal bond ratings to the Series 2006C Bonds as shown on the cover page based upon the credit of
the District. Such ratings reflect only the views of such organizations at the time such ratings are given,
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and Underwriters and the District make no representation as to the appropriateness of such ratings. An
explanation of the significance of such ratings may be obtained only from such rating agencies.
The District has furnished the rating agencies with certain information and materials relating to
the Series 2006C Bonds and the District that have not been included in this Official Statement.
Generally, rating agencies base their ratings on the information and materials so furnished and on
investigations, studies and assumptions by the rating agencies. There is no assurance that a particular
rating will be maintained for any given period of time or that it will not be lowered or withdrawn entirely if, in the judgment of the agency originally establishing such rating, circumstances so warrant. Neither
the District nor the Underwriters have undertaken any responsibility to bring to the attention of the
holders of the Series 2006C Bonds any proposed revision or withdrawal of a rating of the Series 2006C
Bonds or to oppose any such proposed revision or withdrawal. Any revision or withdrawal of a rating
could have an adverse effect on the market price and marketability of the Series 2006C Bonds.
[If the District obtains a municipal bond insurance policy on all or a portion of the Series 2006C
Bonds, it is expected that a rating agency or rating agencies will assign an additional rating or additional
ratings to the Series 2006C Bonds, based upon the assumption that a particular bond insurer will issue a
municipal bond insurance policy upon issuance of the Series 2006C Bonds. There is no assurance that
the District can or will obtain bond insurance on all or any portion of the Series 2006C Bonds.]
CONTINUING DISCLO SURE
Pursuant to a Disclosure Dissemination Agent Agreement dated as of November 1, 2006
(the ”Continuing Disclosure Agreement”) between the District and Digital Assurance Certification,
L.L.C. (“DAC”), under which the District has designated DAC as Dissemination Agent, the District has
covenanted for the benefit of the holders and beneficial owners of the Series 2006C Bonds to provide, or cause to be provided, certain financial information and operating data relating to the District to certain
parties by not later than 180 days following the end of the District’s fiscal year (the “Annual Report”),
commencing with the report for the Fiscal Year ending June 30, 2006, and to provide notices of the
occurrence of certain enumerated events, if material. The Annual Report will be filed by the
Dissemination Agent on behalf of the District with each Nationally Recognized Municipal Securities Information Repository and with any information depository designated by the State of Missouri (the
“SID”) as such for purposes of Rule 15c2-12 of the United States Securities and Exchange Commission
under the Securities Exchange Act of 1934, as the same may be amended from time to time (“Rule 15c2 -
12”). The notices of material events will be filed by the Dissemination Agent on behalf of the District
with the Municipal Securities Rulemaking Board (and with the SID, if any). These covenants have been
made in order to assist the Underwriters in complying with Rule 15c2-12. The specific nature of the
information to be contained in the Annual Report and in the notices of material events is summarized in
“DEFINITIONS AND SUMMARIES OF CERTAIN PROVISIONS OF THE BOND ORDINANCE
AND THE CONTINUING DISCLOSURE AGREEMENT” in Appendix C hereto.
The District has never defaulted on any of its continuing disclosure obligations under Rule 15c2 -
12.
The Dissemination Agent has only the duties specifically set forth in the Continuing Disclosure
Agreement. The Dissemination Agent’s obligation to deliver the information at the times and with the
contents described in the Continuing Disclosure Agreement is limited to the extent that the District has
provided such information to the Dissemination Agent as required by the Continuing Disclosure
Agreement. The Dissemination Agent has no duty with respect to the content of any disclosures or notice
made pursuant to the terms of the Continuing Disclosure Agreement. The Dissemination Agent has no
duty or obligation to review or verify any information in the Annual Report, the District’s audited
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financial statements, a Notice Event (as defined in the Continuing Disclosure Agreement), or any other
information, disclosures or notices provided to it by the District and shall not be deemed to be acting in
any fiduciary capacity for the District, the holders of the Series 2006C Bonds or any other party. The
Dissemination Agent has no responsibility for the District’s failure to report to the Dissemination Agent a
Notice Event or a duty to determine the materiality thereof. The Dissemination Agent shall have no duty
to determine, or liability for failing to determine, whether the District has complied with the Continuing
Disclosure Agreement. The Dissemination Agent may conclusively rely upon certifications of the
District at all times.
UNDERWRITING
The Series 2006C Bonds are being purchased for reoffering by the group of underwriters shown
on the cover page hereof (collectively, the “Underwriters”), for whom A.G. Edwards acts as representative, pursuant to a Purchase Contract between the District and the Underwriters. The Purchase
Contract provides that the Underwriters shall purchase all, but not less than all, of the Series 2006C
Bonds at a price of $______________ (which is equal to the aggregate principal amount of the Series
2006C Bonds, plus original issue premium in the amount of $______________, less original issue
discount in the amount of $____________, and less an underwriting discount in the amount of
$_____________).
The Underwriters may offer and sell the Series 2006C Bonds to certain dealers (including dealers
depositing the Series 2006C Bonds into investment trusts) and others at prices lower than the public
offering prices stated on the inside cover page hereof. The initial public offering prices may be changed
from time to time by the Underwriters.
CERTAIN RELATIONSHIPS
Gilmore & Bell, P.C., Co-Bond Counsel, has represented certain of the Underwriters in
transactions unrelated to the issuance of the Series 2006C Bonds, but is not representing any of the
Underwriters in connection with the issuance of the Series 2006C Bonds.
[TEXT TO COME]
ENGINEERING AND FEASIBILITY CONSULTANT
The District has retained Black & Veatch Corporation to serve as the Engineering and Feasibility
Consultant to the District in connection with the issuance of the Series 2006C Bonds. See Appendix D –
“Engineering and Financial Feasibility Report.”
FINANCIAL ADVISORS
Public Financial Management, Des Moines, Iowa, and Valdés & Moreno, Inc., Kansas City,
Missouri, have served as Co-Financial Advisors to the District in connection with the Series 2006C
Bonds, relative to a plan of financing and relative to drafting certain portions of this Official Statement for
the sale of the Series 2006C Bonds. The Co-Financial Advisors have participated in the compilation and
editing of this Official Statement. The Co-Financial Advisors have not, however, independently verified
the factual information contained in this Official Statement nor have they conducted an investigation of
the affairs of the District for the purpose of determining the accuracy or completeness of any of the information contained herein. The Co-Financial Advisors have relied on the diligence and accuracy of
the District which has certified that this Official Statement contains no material misstatement or omission
of information.
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INDEPENDENT AUDITORS
The Independent Auditor’s Report, Management Discussion and Analysis and Basic Financial
Statements of the District for the fiscal years ended June 30, 2006 and 2005, included in Appendix A of
this Official Statement, have been audited by Hochschild Bloom & Company, LLP, independent auditors,
as stated in their report also appearing in Appendix A.
MISCELLANEOUS
The references, excerpts and summaries of all documents referred to herein do not purport to be
complete statements of the provisions of such documents, and reference is made to all such documents for
full and complete statements of all matters of fact relating to the Series 2006C Bonds, the security for the payment of the Series 2006C Bonds and the rights of the owners thereof. During the period of the
offering, copies of drafts of such documents may be examined at the offices of the Underwriters;
following delivery of the Series 2006C Bonds, copies of such documents may be examined at the
corporate trust office of the Paying Agent in St. Louis, Missouri. The information contained in this
Official Statement has been compiled from official and other sources deemed to be reliable, and while not
guaranteed as to completeness or accuracy, is believed to be correct as of this date.
It is anticipated that CUSIP identification numbers will be printed on the Series 2006C Bonds, but
neither the failure to print such numbers on any Series 2006C Bonds nor any error in printing of such
numbers will constitute cause for a failure or refusal by the purchaser thereof to accept delivery of and
pay for any Series 2006C Bonds.
The attached appendices are integral parts of this Official Statement and must be read together
with all of the foregoing statements.
The closing documents will include a certificate by the proper official of the District that, to the
best of his knowledge and belief at the time of the acceptance of the delivery of the Series 2006C Bonds,
this Official Statement and any information furnished by the District supplementary thereto did not and
do not contain any untrue statement of material fact or omit to state a material fact necessary in order to
make the statements made in light of the circumstances under which they were made, not misleading in
any material respect.
Any statement made in this Official Statement involving matters of opinion or of estimates,
whether or not expressly so stated, are set forth as such and not as representations of fact, and no
representation is made that any of the estimates will be realized. 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 any implication that there has been no
change in the information presented herein since the date hereof. This Official Statement is not to be
construed as a contract or agreement between the District, the Paying Agent, or the Underwriters and the
purchasers or Owners of any Series 2006C Bonds.
This Official Statement has been authorized and approved by the District, deemed final pursuant
to a separate certificate, and duly executed and delivered on its behalf by the officials signing below.
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
By: Chair of the Board of Trustees
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By:
Executive Director
By: Secretary-Treasurer
APPENDIX A
INDEPENDENT AUDITOR’S REPORT, MANAGEMENT DISCUSSION AND ANALYSIS AND
BASIC FINANCIAL STATEMENTS
OF
THE METROPOLITAN ST. LOUIS SEWER DISTRICT FOR THE FISCAL YEARS ENDED
JUNE 30, 2006 AND 2005
APPENDIX B
INFORMATION REGARDING THE DISTRICT’S SERVICE AREA
B-1
INFORMATION REGARDING THE DISTRICT’S SERVICE AREA
The Series 2006C Bonds are special, limited obligations of the District and are not an obligation
of the City of St. Louis, Missouri (the “City”), St. Louis County, Missouri (the “County”), the State of
Missouri (the “State”), or any political subdivision of the City, the County or the State. The Series 2006C
Bonds are payable solely from the revenues described in this Official Statement. As described elsewhere
in this Official Statement, the service area of the District consists of the City and most of the County. The
following information regarding the City and the County has been obtained from sources that the District
believes to be reliable, but should not be construed as an indication that the Series 2006C Bonds are
payable from any source other than the revenues of the District described in this Official Statement. See
“SECURITY AND SOURCES OF PAYMENT FOR TH E SERIES 2006C BONDS,” “THE
DISTRICT,” and “THE CIRP AND THE PHASE I PROJECTS” in this Official Statement. Such
information is not guaranteed as to accuracy or completeness by the Underwriters and is not to be
construed as a representation by the Underwriters. The Underwriters have not verified this information.
No representation is made by the Underwriters as to the accuracy or adequacy of such information or as
to the absence of material adverse changes in such information subsequent to the date as to which such
information is provided.
THE SERVICE AREA
As more fully described in this Official Statement under the caption “THE DISTRICT - General”, the District was organized in 1954 to provide a metropolitan-wide system of wastewater
treatment and sanitar y sewerage facilities for the collection, treatment and disposal of sewage within the
City and most of the more heavily populated areas of the County. When the District began operations, it
took over the publicly owned wastewater and stormwater drainage facilities within its then-existing
jurisdiction and began the construction of an extensive system of collector and interceptor sewers and treatment facilities. In subsequent years, voters have approved the District’s annexation of a 270 square
mile area of the lower Missouri River and lower Meramec River watersheds, and the District has
purchased various investor-owned or municipally operated systems serving areas of the County. The
District’s service area now encompasses 524 square miles, including all 62 square miles of the City and
462 square miles of the County. A map showing the District’s current service area appears on the back
cover of this Official Statement.
The City of St. Louis, Missouri
The history of the City of St. Louis dates to 1764 when Pierre Laclede and Auguste Chouteau
selected the site as a fur trading post due in large part to its proximity to the confluence of the Mississippi
and Missouri Rivers. The City was incorporated in 1823, and its current boundaries were established in
1876, when voters approved separation from St. Louis County and establishment of a home rule charter. The City remains a constitutional charter city not a part of any county, and exists under and pursuant to its
Charter and the laws of the State of Missouri. The eastern boundary of the City is formed by the
Mississippi River, and the City is bordered on the north, west and south by the County. The City
occupies approximately 62 square miles of land, all of which lie within the service area of the District.
St. Louis County, Missouri
St. Louis County, Missouri was formed by a proclamation of Governor William Clark on
October 1, 1812, nine years before Missouri attained statehood. In 1876, by vote of the entire county, the
City of St. Louis separated itself from the County. The City of Clayton is the County seat and located in
the east central part of the County. Sixty-six percent of the land area of the County is contained within
the jurisdictional boundaries of 91 self-governing municipalities, containing over two-thirds of the
B-2
County population. The remaining unincorporated area comes under the direct jurisdiction of the County
government. The County is a constitutional charter county operating and existing under its Charter and
the laws of the State of Missouri. The County covers an area of approximately 524 square miles, 462
square miles of which lie within the service area of the District.
ECONOMIC AND DEMOGRAPHIC DATA
Population
The City and the County are a part of the St. Louis Standard Metropolitan Statistical Area (the “St. Louis MSA”), comprised of the City, the County, the Counties of Franklin, Jefferson, Lincoln,
St. Charles, Warren, Washington and the City of Sullivan in Missouri and the Counties of Bond, Calhoun,
Clinton, Jersey, Macoupin, Madison, Monroe in Illinois.
According to the U.S. Census Bureau, the population patterns for the City, the County, and the
St. Louis MSA have been as follows:
City of St. Louis St. Louis County St. Louis MSA
Percentage Percentage Percentage
Year Popula tion Change Population Change Population Change
1960 750,026 N/A 703,532 N/A 2,161,228 N/A
1970 622,236 -17.04% 951,353 35.23% 2,428,655 12.37%
1980 453,085 -27.18% 973,896 2.37% 2,376,998 2.13%
1990 396,685 -12.48% 993,529 2.00% 2,444,097 2.82%
2000 348,189 -12.23% 1,016,315 2.30% 2,603,607 6.53%
2005 344,362 -1.10% 1,004,666 -1.15% 2,778,518 6.72% _____________________
Source: U.S. Census Bureau Population for the years 1960-2000. 2005-2006 represent unofficial estimates of the U.S.
Department of Commerce, Bureau of the Census.
The largest municipalities within the District’s service area are as follows:
Population Population Population
Municipality 2000 1990 1980
St. Louis (City) 348,189 396,685 453,085
Florissant 50,497 51,206 55,721
Chesterfield 46,802 37,991 --
University City 37,428 40,087 42,690
Ballwin 31,283 21,816 12,656
Kirkwood 27,324 27,291 27,73
Hazelwood 26,206 15,512 12,935 Maryland Heights 25,756 25,407 --
Webster Groves 23,230 23,097 22,987
Ferguson 22,406 22,286 24,549
______________
Source: Missouri Census Data Center.
Employment
The following table sets forth information relating to the average composition of non-farm
employment in the City and the County for the years 1990 and 2000:
B-3
City of St. Louis St. Louis County
Employment Employment
Private Employment: 1990 2000 1990 2000
Manufacturing 48,675 35,503 118,736 87,687
Agriculture 631 -- 5,072 6,931
Mining 234 -- 1,241 1,227
Construction 9,977 10,067 34,149 45,746
Transportation, Communication and Utilities 27,154 25,951 38,254 51,152
Wholesale Trade 19,399 15,224 42,228 46,961
Retail Trade 36,083 29,934 121,977 134,854
Finance, Insurance and Real Estate 28,422 25,436 62,176 77,300
Services 99,547 109,830 215,147 279,413
Total Private Employment 270,122 252,951 638,980 731,271
Governmental Employment 51,100 47,092 53,783 59,826
Total 321,222 300,043 692,763 791,097
___________________
Source: U.S. Department of Commerce, Bureau of Economic Analysis; Missouri State Census Data Center.
The following table sets forth the total labor force, number of employed and unemployed workers
in the City and the County for 2001 through 2005:
City of St. Louis (1) St. Louis County(1)
Labor Force Labor Force
Year Employed Unemployed Total Employed Unemployed Total
2001 154,097 11,032 165,129 541,822 22,110 563,932
2002 152,364 13,038 165,402 535,847 26,716 562,563
2003 150,435 14,102 164,537 526,627 29,108 555,735
2004 146,935 14,619 161,554 519,824 30,521 550,345
2005 147,825 13,095 160,920 522,972 28,449 551,421
_________________________________________
(1) Figures are based on unofficial results.
Source: Missouri Department of Employment Security, Missouri Department of Economic Development and U.S. Department of
Labor, Bureau of Labor Statistics.
The following table sets forth unemployment rates for the City, County, State of Missouri and the
United States for 2001 through 2005:
Unemployment Rates(1)
Year
City of
St. Louis
St. Louis
County
State of
Missouri
United
States
2001 6.7% 3.9% 4.5% 4.7%
2002 7.9 4.7 5.2 5.8
2003 8.6 5.2 5.6 6.0 2004 9.0 5.5 5.8 5.5
2005 8.1 5.2 5.4 5.1
_______________________________________
(1) Figures are based on unofficial results.
Source: Missouri Department of Employment Security, Missouri Department of Economic Development and U.S. Department of
Labor, Bureau of Labor Statistics.
Major Employers
The following list sets forth the names and approximate number of employees of major
employers within the City and the County, respectively as of December 31, 2004:
B-4
City of St. Louis
Major Employers
Company
Nature of Business
Approximate Number of
Employees
BJC HealthCare Health Care 21,814
Schnucks Markets Grocery 10,700
SBC Communications, Inc. Telecommunications 9,920
United States Postal Service Government 7,916
City of St. Louis Government 7,632
St. Louis University Education 7,108
St. Louis Public Schools Education 6,236
The May Department Stores Co. Retail 6,000
Anheuser-Busch Cos. Inc. Brewer 5,500
A.G. Edwards and Sons, Inc. Financial 4,551 ________________________
Source: City of St. Louis – 2005 Comprehensive Annual Financial Report and St. Louis Business Journal Book of Lists 2006.
St. Louis County
Major Employers
Company Nature of Business Approximate
Number of
Employees
Boeing Integrated Defense Systems Space and Air Defense 16,259
Washington University in St. Louis Education 12,505
SM Health Care Health Care 11,905
St. John’s Mercy Health Care Health Care 8,699
Daimler Chrysler Corp. Automotive 6,100
Special School District of St. Louis County Education 5,411
Maritz, Inc. Travel and Incentives 5,197
Dierbergs Markets Grocery 5,000
Citigroup Financial 4,600
Edward Jones Financial 4,219
St. Louis County Government Government 4,063
________________________
(1) On January 11, 2002, Ford Motor Company announced its intention to close its assembly plant in the County by mid -
decade. Despite efforts by Missouri officials to encourage Ford to maintain operations in the area and statements by Ford
officials that it would continue to operate its area facility based upon available state and local incentives, on January 23,
2006, Ford unveiled its “The Way Forward” restructuring plan and announced that it would close five of its United States
manufacturing facilities, including the St. Louis Ass embly plant in Hazelwood, Missouri. The plant, which once employed
1,445 workers, has been idle since March 2006. Production is not anticipated to resume and the plant is expected to close in
2008 in accord with the restructuring plan.
Source: St. Louis County -- St. Louis County Department of Planning, compiled from St. Louis Business Journal’s Book of
Lists 2006.
Per Capita Personal Income
The following table presents per capita personal income for the City, the County, the State of
Missouri and the United States for the years 2001 through 2004, the latest date for which such
information is available:
B-5
City of St. Louis (1) St. Louis County(1) State of Missouri(1) United States (1)
Year Per Capita Personal
Income
Per Capita Personal
Income
Per Capita Personal
Income
Per Capita Personal
Income
2001 $31,532 $39,999 $27,809 $30,574
2002 32,577 41,698 28,358 30,810
2003 33,667 43,392 29,210 31,484
2004 34,735 45,101 30,475 33,050
_______________________________________
(1) Per Capita Personal In come is the annual total personal income of residents divided by resident population as of July 1.
“Personal Income” is the sum of net earnings by place of residence, rental income of persons, personal dividend income,
personal interest income, and transfer payments. “Net Earnings” is earnings by place of work — the sum of wage and
salary disbursements (payrolls), other labor income, and proprietors’ income — less personal contributions for social
insurance, plus an adjustment to convert earnings by place of work to a place-of-residence basis. Personal Income is
measured before the deduction of personal income taxes and other personal taxes and is reported in current dollars (no
adjustment is made for price changes).
Source: U.S. Department of Commerce, Bureau of Economic Analysis.
APPENDIX C
DEFINITIONS AND
SUMMARIES OF CERTAIN PROVISIONS OF THE BOND ORDINANCE AND THE
CONTINUING DISCLOSURE AGREEMENT
C-1
APPENDIX D
ENGINEERING AND FINANCIAL FEASIBILITY REPORT
APPENDIX E
FORM OF OPINION OF CO-BOND COUNSEL
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